<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 1995 Commission File Number-I7828
GELMAN SCIENCES INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MICHIGAN 38-1614806
- ------------------------------------ -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 SOUTH WAGNER ROAD
ANN ARBOR, MICHIGAN 48103-9019
- ---------------------------------------- -------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (313) 665-0651
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ---------------------------------------- -------------------------
COMMON STOCK, PAR VALUE $.10 PER SHARE AMERICAN STOCK EXCHANGE
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
------- --------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ________
The aggregate market value of the registrant's voting stock (Common Stock, $.10
Par Value) held by nonaffiliates of the registrant as of October 24, 1995 was
$147,116,304.
The number of outstanding shares of the registrant's Common Stock, as of
October 24, 1995 was 7,821,762 shares, $.10 Par Value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended July
31, 1995, are incorporated by reference into Parts I and II of this report.
Portions of the proxy statement for the 1995 Annual Meeting of Shareholders are
incorporated by reference into Part III of this report.
Portions of the Form 10-Q for the quarterly period ended January 31, 1995, are
incorporated by reference into Part IV of this report.
Exhibit Index at Page 18. Number of Pages 74.
<PAGE> 2
PART I
ITEM 1. BUSINESS.
(A) GENERAL DEVELOPMENT OF BUSINESS
Gelman Sciences Inc. (the "Company") was incorporated in 1959. Unless
the context indicates otherwise, the term "Company" includes Gelman Sciences
Inc. and its subsidiaries.
The Company is a global corporation with its major area of business
being the servicing of the industrial, scientific and medical communities with
its expertise in polymeric membranes. The Company provides the means of
separation and purification of various liquids and gases through the
utilization of these membranes. These separation technologies are applied to
various types of filtration, fluid and analysis, medical and clinical
diagnostic devices.
Product engineering support of this technology is the second area of
business for the Company. This includes the development and manufacture of
membranes, filtration equipment and hardware and disposable filtration devices.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The information set forth under Note I to the financial statements
"Operations by Industry Segment and Geographic Area" on pages 23 and 24 of the
Company's 1995 Annual Report to Shareholders is hereby incorporated herein by
reference.
(C) NARRATIVE DESCRIPTION OF BUSINESS
HEALTH PRODUCTS GROUP
The Health Products Group manufactures a variety of specialized
medical disposable filter devices. These products are used in the medical and
health care markets both domestically and internationally. These products are
sold through sales outlets as either standard catalog items or as original
equipment manufacturer ("OEM") products. These OEM products consist of
intravenous fluid in-line filters, transducer protectors and standard small
volume filtration disposable medical filters. Medical device sales have
accounted for 34%, 31% and 31% of total sales for the years ended July 31,
1995, 1994 and 1993, respectively.
The Health Products Group also provides other products for the health
care industry such as membranes, equipment and reagents for clinical diagnostic
testing by electrophoresis. These products, both in domestic and international
markets, are sold by Company sales personnel and a network of distributors.
Microporous membrane media, used in a variety of medical applications, are
provided by the Health Products Group in bulk roll stock for use in products
of OEMs.
2
<PAGE> 3
BACKLOG AND RAW MATERIALS
Backlog for the Health Products Group amounted to $8,215,000 and
$8,536,000 at October 21, 1995 and 1994, respectively. It is anticipated that
the current backlog will be completed prior to July 31, 1996. No unusual
sources of supply are required to meet manufacturing requirements.
COMPETITION
Competition in the Health Products Group comes from a variety of
competitors, the two most important of which are Millipore Corporation and Pall
Corporation. Both competitors are significantly larger than the Company.
FILTRATION PRODUCTS GROUP
The Filtration Products Group supplies various configurations of
microfiltration media and hardware to the industrial and scientific
communities. Small diameter filter media and hardware are utilized in research
and industrial laboratories for clarification of solutions, microbiological
analysis of water, and sterilization of substances such as tissue culture
media. The sales of laboratory filters and hardware have accounted for 40%,
44%, and 45% of total sales for years ended July 31, 1995, 1994, and 1993,
respectively.
In the industrial process filtration area, products utilized are in
both large diameter filters and high surface area cartridges for clarification
and sterilization of gases, liquids and chemicals. Typical industrial
customers are in the pharmaceutical, electronics, and beverage industries.
These products are sold both domestically and internationally by Company sales
personnel and a network of distributors. The cartridge and capsule sales have
accounted for 24%, 22% and 21% of total sales for the years ended July 31,
1995, 1994 and 1993, respectively.
BACKLOG AND RAW MATERIALS
Backlog for the Filtration Products Group amounted to $5,922,000 and
$5,892,000 at October 21, 1995 and 1994, respectively. It is anticipated that
the current backlog will be completed prior to July 31, 1996. No unusual
sources of supply are required to meet manufacturing requirements.
COMPETITION
In the Filtration Products Group, the Company's primary competitors
are Millipore Corporation, Pall Corporation and Sartorious Membranfilter GmbH
(in Europe), with whom the Company has entered into a partnership agreement to
supply microfiltration media. The Company's prices for such items are
competitive. In addition, competition in this market area is to a high degree
based on product quality and other technical services.
3
<PAGE> 4
GENERAL BUSINESS
EMPLOYEES
Gelman Sciences Inc. employs 720 persons in the United States and 109
persons in non-U.S. operations. The Company relies to a great extent, both
domestically and internationally, on a network of distributors. Domestically
the Company employs 34 sales representatives to work with distributors, make
sales calls in conjunction with their representatives, and handle any technical
support needs that might arise.
PATENTS, TRADEMARKS, LICENSES AND TECHNOLOGICAL CAPABILITY
The Company owns a number of patents and trademarks but does not
consider them to be materially important to its business. The Company relies
to a great extent on its technological skills and product development
achievements to compete effectively.
ENVIRONMENTAL REGULATIONS
Until May 1986, the Company used 1,4-dioxane, an organic chemical, in
manufacturing processes at its main facility in Ann Arbor, Michigan. Over the
years, various storage and waste water disposal methods have been permitted by
the responsible governmental agencies. In January 1986, 1,4-dioxane was
identified in wells near the manufacturing plant. Under a consent judgment
agreed to in October 1992 resolving litigation with the State of Michigan, the
Company is remediating this contamination without admitting wrongdoing.
For a description of the environmental litigation in which the Company is
presently involved, see "Legal Proceedings" Item 3 below, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," at
pages 12 and 13 of the Company's 1995 Annual Report to Shareholders and "Note G
- - Pollution-Related Expenses" to the Company's Consolidated Financial
Statements, at page 22 of the Company's 1995 Annual Report to Shareholders.
4
<PAGE> 5
RESEARCH AND DEVELOPMENT
Product development and research activities of the Company are carried
out on location primarily at its Ann Arbor and Pensacola facilities. Such
activities are concentrated primarily on new products and applications. The
Company expended $5,498,000, $4,877,000, and $4,139,000 in fiscal 1995, 1994
and 1993, respectively, for product development and research activities.
(D) FINANCIAL INFORMATION REGARDING GEOGRAPHIC AREAS
The information set forth under Note I to the financial statements
"Operations by Industry Segment and Geographic Area" on pages 23 and 24 of the
Company's 1995 Annual Report to Shareholders, is hereby incorporated herein by
reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names and ages of the executive
officers of the Company, together with all positions and offices held by such
executive officers. Executive officers are elected annually by, and serve at
the pleasure of, the Board of Directors.
<TABLE>
<CAPTION>
First Elected
Officer of
Name Age Office Held the Company
- ------------------------------ ------ --------------------------------- -------------------
<S> <C> <C> <C>
Charles Gelman 63 Chairman of the Board and 1974
Chief Executive Officer
Kim A. Davis 44 President and Chief Operating Officer 1993
James C. Marshall 52 Senior Vice President 1976
Anthony P. Kelly 47 Vice President, Worldwide Sales 1995
Karen A. Radtke 42 Treasurer 1995
Mark A. Sutter 34 Vice President, Research & Development 1992
Edward J. Levitt 51 Secretary and Corporate Counsel 1991
</TABLE>
Charles Gelman founded Gelman Sciences Inc. in 1959. He was the
Company's President from 1974 to April 1988 and from October 1990 to May 1993.
He has been the Company's Chairman and Chief Executive Officer since 1974.
Kim A. Davis was elected President and Chief Operating Officer of the
Company, effective May 4, 1993, and elected a Director of the Company,
effective March 18, 1995. Mr. Davis is responsible for worldwide operations
including sales, marketing and manufacturing. From January 1991, Mr. Davis was
chief operating officer of Promega Corporation, a Wisconsin-based biotechnology
company. Prior to joining Gelman Sciences and Promega, Mr. Davis was president
and chief executive officer of a privately-held engineering graphics software
company from November 1989.
5
<PAGE> 6
James C. Marshall is the Senior Vice President responsible for
manufacturing operations in Pensacola, Florida. Prior to that, he was
responsible for Ann Arbor Operations, and has worked in the manufacturing
function for the Company for over 30 years.
Anthony P. Kelly was appointed Vice President, Worldwide Sales,
effective September 20, 1995. Mr. Kelly is responsible for selling activities
throughout the world. Mr. Kelly remains Vice President, Sales Asia/Pacific for
Gelman Sciences International, Inc., and a Director and President of Gelman
Sciences Pty. Ltd., the Company's Australian subsidiary.
Karen A. Radtke was appointed Treasurer effective June 5, 1995.
Previously, Ms. Radtke was Treasurer and Tax Director of Hayes Wheels, Inc., a
$500 million international automotive component manufacturer from July 93 to
May 1995. Prior to joining Hayes Wheels, Ms. Radtke served on the General
Motors International Tax Staff since 1988.
Mark A. Sutter was appointed as Vice President, Research &
Development, in May 1992, becoming responsible for all Research & Development
activities. Previously, Mr. Sutter served as Director of Membrane Research &
Development and Cartridge Capsule Product Development and in various marketing
functions for the Company since his hire date of January 1986.
Edward J. Levitt was appointed as Secretary for the Company on March
24, 1994. He was Assistant Vice President-Legal from December 1991 to March
1994. Mr. Levitt was hired in April 1989 as Corporate Counsel and continues to
serve in that capacity.
ITEM 2. PROPERTIES.
The Company owns office and manufacturing facilities located in Ann
Arbor, Michigan containing approximately 180,000 square feet of floor
space. The Company was granted an Industrial Development Bond in July 1989, the
proceeds of which were utilized to purchase land in Pensacola, Florida and
build a 58,000 square foot manufacturing facility which was completed in fiscal
1990. During fiscal 1994, the 1989 Industrial Development Bond was redeemed
The redemption was funded by the issuance of a 1994 Industrial Development
Bond. The amount outstanding under the 1994 Industrial Revenue Bond at July 31,
1995, was $4,697,000. The Company owns 50 acres of vacant land near the Ann
Arbor facility. This is held for resale as part of an out-of-court settlement
related to an environmental lawsuit. The Company also leases buildings in Ann
Arbor and Pleasanton, California containing approximately 58,000 square feet
which are used primarily for office space and manufacturing.
The Company's Australian, British, Canadian, German, Irish, French,
Italian and Japanese subsidiaries lease facilities. The Australian subsidiary
also owns a building containing approximately 43,000 square feet used for
manufacturing. This manufacturing facility is now being leased to a purchaser
of several non-core product lines divested in fiscal 1994. The future
commitments for all non-cancellable facility leases represent $5,732,000.
Substantially all of the existing facilities are used in connection
with the Company's Health and Filtration Product Groups.
6
<PAGE> 7
ITEM 3. LEGAL PROCEEDINGS.
The Company, in the normal course of business, is involved in
incidental, routine litigation. In addition, the Company is currently a party
to various legal actions arising under statutes regulating the discharge of
materials into the environment or otherwise protecting the environment. Those
legal actions involving environmental issues are described below. (See
"Environmental Regulations" in Item 1, above.)
Scarbrough, et al. v. Gelman Sciences Inc., et al. (Circuit Court for
Washtenaw County, Michigan, Case No. 88-35594-CE). By Complaint filed August
8, 1988, and amended September 15, 1988, 27 residents of the Westover
subdivision located near the main facility of the Company sued the Company and
8 other defendants for damages associated with alleged contamination of
residential water supplies and for the cost of court-supervised medical
surveillance. The total demand was $3,095,000. On March 9, 1990, plaintiffs
settled with 7 of the 8 other defendants for $100,000. (The suit against the
remaining other defendant was subsequently dismissed by the Court.)
Thereafter, 15 plaintiffs settled with the Company for a total of $175,535.
Twelve plaintiffs refused to settle. On November 30, 1990, a jury returned a
verdict in favor of the 12 plaintiffs, awarding damages totalling $119,756.
After adjustment for the March 9, 1990, settlement between plaintiffs and 7
other defendants, the net jury verdict against the Company was $62,250, plus
interest. On December 11, 1991, the Court awarded the Company costs totalling
$87,529.38, plus interest. The 12 plaintiffs who went to trial appealed the
outcome of the case. On July 27, 1994, the Court of Appeals affirmed the jury
verdict. On September 21, 1994, the Court of Appeals denied plaintiff's Motion
for Rehearing. Plaintiffs filed an Application for Leave to Appeal with the
Michigan Supreme Court. On June 30, 1995, the Supreme Court denied the
Application. Plaintiffs have filed a Motion for Reconsideration, which is
pending.
Campbell, et al. v. Gelman Sciences Inc. (Circuit Court for Washtenaw
County, Michigan, Case No. 91-41524-CE). On July 30, 1991, a complaint was
filed against the Company by 5 individuals in the Westover residential
subdivision located near the main facility of the Company for damages for
anticipated expenses for future medical monitoring asserted to be necessary
because plaintiffs claim they are subject to increased risk of contracting
serious latent diseases as a result of exposure to air and groundwater
contamination allegedly caused by the Company. The plaintiffs are the children
of some individuals who had sued the Company previously in Scarbrough, et al.
v. Gelman Sciences Inc., et al., discussed above. On August 26, 1991, the
Company filed its answer, denying liability and asking the Court to dismiss
this lawsuit. On October 23, 1992, the Court entered an Order granting summary
judgment to the Company. The case was dismissed by Order dated December 11,
1992. The plaintiffs appealed, and, on February 8, 1995, the Michigan Court of
Appeals affirmed the dismissal.
7
<PAGE> 8
Dawson, et ano v. Gelman Sciences Inc., et al. (Circuit Court for
Washtenaw County, Michigan, Case No. 92-43975-CE). On November 3, 1992, two
residents in the Evergreen subdivision located near the main facility of the
Company filed a Complaint against the Company, the Chairman of the Company, and
eight other defendants for damages associated with alleged contamination of
residential water supplies. On January 7, 1993, the Company and its Chairman
filed their Answers denying liability and cross-claiming against the
co-defendants. On October 27, 1993, the Court granted the motion of the
Company and its Chairman for summary judgment. An Order dismissing this case
was entered on December 15, 1993. Plaintiffs have filed an appeal of this
dismissal. The appeal is pending.
Laird, et ano v. Gelman Sciences Inc., et ano. (Circuit Court for
Washtenaw County, Michigan, Case No. 93-623 CZ). On May 12, 1993, the two
owners of a business located near the main facility of the Company filed a
Complaint against the Company and its Chairman for damages associated with
alleged contamination of the groundwater supply of that business. On November
8, 1993, the Company and its Chairman filed their Answers denying liability.
On December 1, 1994, the parties agreed to a settlement upon payment by the
Company of $30,000 to the plaintiffs. Payment was made and, on stipulation of
the parties, the case was dismissed on January 3, 1995.
"Thermo Chem" Superfund Site, Muskegon, Michigan. By correspondence
dated January 2, 1992, the United States Environmental Protection Agency
("USEPA") identified the Company as a potentially responsible party ("PRP")
under the Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA") for past and future response costs in connection with the Thermo Chem
Superfund site, a waste chemical reclamation and disposal site. The USEPA
issued an Administrative Order mandating remediation of the site to a number of
generator PRPs. On July 22, 1994, the Company and the USEPA entered into a
settlement agreement under which the Company agreed to pay $124,100. A USEPA
administrative consent order based on that agreement became effective February
8, 1995, and the Company paid March 10, 1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
8
<PAGE> 9
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDERS MATTERS.
The information required by this item is set forth under the caption
"Stock Prices" on page 10 of the Company's 1995 Annual Report to the
Shareholders, and is hereby incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is set forth under the caption
"Selected Financial Data" on page 11 of the Company's 1995 Annual Report to
Shareholders, and is hereby incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required by this item is set forth under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 12 and 13 of the Company's 1995 Annual Report to
Shareholders, and is hereby incorporated herein by reference. The Company does
not believe that inflation has had a material impact on its results of
operations over the past three years.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is set forth on pages 14 through
24 of the Company's 1995 Annual Report to Shareholders, and is hereby
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
9
<PAGE> 10
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this item with respect to the Company's
directors is set forth under the caption "Election of Directors" of the
Company's proxy statement for the 1995 Annual Meeting of Shareholders, and is
hereby incorporated herein by reference.
Information called for by this item with respect to the Company's
executive officers is set forth under "Executive Officers of the Registrant" in
Part I of this report.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the Company's executive officers and
directors, the Company believes that during the last fiscal year all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than ten percent beneficial owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is set forth under the captions
"Election of Directors" and "Compensation of Executive Officers" of the
Company's proxy statement for the 1995 Annual Meeting of Shareholders, and is
hereby incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is set forth under the captions
"Principal Shareholders" and "Election of Directors" of the Company's proxy
statement for the 1995 Annual Meeting of Shareholders, and is hereby
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is set forth under the caption
"Compensation of Executive Officers - Certain Relationships and Related
Transactions" of the Company's proxy statement for the 1995 Annual Meeting of
Shareholders, and is hereby incorporated herein by reference.
10
<PAGE> 11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements
The following financial statements and supplementary data are
incorporated by reference from pages 14 through 25 of the Company's
1995 Annual Report to Shareholders:
(A) Consolidated Statements of Operations - Years Ended July 31,
1995, 1994 and 1993.
(B) Consolidated Statements of Stockholders' Equity - Years ended
July 31, 1995, 1994 and 1993.
(C) Consolidated Balance Sheets - July 31, 1995 and 1994.
(D) Consolidated Statements of Cash Flows - Years ended July 31,
1995, 1994 and 1993.
(E) Notes to Consolidated Financial Statements.
(F) Report of Independent Auditors.
(G) Summary of Quarterly Results of Operations - Years ended July
31, 1995 and 1994
(a)(2) Financial Statement Schedules
The following financial statement schedules are submitted in
accordance with Item 14.(d) and are set forth on pages 16 and 17 of
this report:
Report of Independent Auditors
II -- Valuation and Qualifying Accounts - Years ended July 31,
1995, 1994 and 1993.
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
11
<PAGE> 12
(a)(3) Exhibits
(3) Articles of Incorporation and Bylaws
(1) Restated Articles of Incorporation, incorporated by
reference from Exhibit (3)(1) to the Company's Form
10-Q for the quarterly period ended January 31, 1995.
(2) Restated Bylaws
(4) Instruments Defining Rights of Security Holders
(1) Pursuant to 17 CFR 229.601(b)(4)(iii), instruments
with respect to long-term debt issues have been
omitted where the amount of securities authorized
under each such instrument does not exceed 10% of the
total consolidated assets of the Company. The
Company hereby agrees to furnish a copy of each such
instrument to the Commission upon its request.
(10) Material Contracts
(1) Deferred Compensation Agreement between the Company
and James C. Marshall, incorporated by reference from
Exhibit 10(3) to the Company's Form 10-K for the year
ended July 31, 1988.
(2) Employment Agreement between the Company and James C.
Marshall, incorporated by reference from Exhibit
10(4) to the Company's Form 10-K for the year ended
July 31, 1989.
(3) 1978 Employee Stock Option Plan, as amended,
incorporated by reference from Exhibit 10(2) to the
Company's Form 10-K for the year ended July 31, 1987.
(4) 1988 Stock Plan, incorporated by reference from
Exhibit 10(6) to the Company's Form 10-K for the year
ended July 31, 1988.
(5) Warrant Agreement, dated December 16, 1987, with John
A. Geishecker, incorporated by reference to Exhibits
28.4 to the Company's Form S-8 Registration Statement
No. 33-37235 filed with the Securities and Exchange
Commission on October 9, 1990.
(6) Warrant and Stock Appreciation Rights Agreements,
dated January 12, 1989, with John A. Geishecker and
Saul Hymans, incorporated by reference to Exhibits
28.7 and 28.8 to the Company's Form S-8 Registration
Statement No. 33-37235 filed with the Securities and
Exchange Commission on October 9, 1990.
(7) Warrant Agreement, dated January 12, 1989, with Nina
I. McClelland, incorporated by reference to Exhibit
28.10 to the Company's Form S-8 Registration
Statement No. 33-37235 filed with the Securities and
Exchange Commission on October 9, 1990.
(8) Confidentiality, Anti-Competition and Termination
Benefits Agreement between Robert L. Buker and the
Company, incorporated by reference from Exhibit
10(11) to the Company's Form 10-K for year ended July
31, 1993.
12
<PAGE> 13
(9) Confidentiality, Anti-Competition and Termination
Benefits Agreement between Eric Gelman and the
Company, incorporated by reference from Exhibit
10(12) to the Company's Form 10-K for year ended July
31, 1993.
(10) Warrant Agreement, dated September 2, 1992, with
Charles Newman, incorporated by reference from
Exhibit 10(14) to the Company's Form 10-K for year
ended July 31, 1993.
(11) Consent Judgment in Kelley v. Gelman Sciences Inc.
entered October 26, 1992, incorporated by reference
from Exhibit 10(15) to the Company's Form 10-K for
year ended July 31, 1993.
(12) Consent Judgment in State of Michigan v. Gelman
Sciences Inc. entered October 26, 1992, incorporated
by reference from Exhibit 10(16) to the Company's
Form 10-K for year ended July 31, 1993.
(13) Warrant Agreement, dated June 17, 1994, with Robert
Collins, incorporated by reference from Exhibit
10(16) to the Company's Form 10-K for the year ended
July 31, 1994.
(14) Warrant Agreement, dated June 17, 1994, with John
Geishecker, Jr, incorporated by reference from
Exhibit 10(17) to the Company's Form 10-K for the
year ended July 31, 1994
(15) Warrant Agreement, dated June 17, 1994, with Saul
Hymans, incorporated by reference from Exhibit 10(18)
to the Company's Form 10-K for the year ended July
31, 1994.
(16) Warrant Agreement, dated June 17, 1994, with Nina
McClelland, incorporated by reference from Exhibit
10(19) to the Company's Form 10-K for the year ended
July 31, 1994.
(17) Warrant Agreement, dated June 17, 1994, with Charles
Newman, incorporated by reference from Exhibit 10(20)
to the Company's Form 10-K for the year ended July
31, 1994.
(18) Confidentiality, Anti-Competition and Termination
Benefits Agreement between Mark A. Sutter and the
Company, incorporated by reference from Exhibit
10(21) to the Company's Form 10-K for the year ended
July 31, 1994.
(19) Confidentiality, Anti-Competition and Termination
Benefits Agreement between Edward J. Levitt and the
Company, incorporated by reference from Exhibit
10(22) to the Company's Form 10-K for the year ended
July 31, 1994.
(20) Warrant Agreement, dated September 2, 1994, with Dr.
Hajime Kimura, incorporated by reference from Exhibit
10(1) to the Company's Form 10-Q for the quarterly
period ended January 31, 1995.
(21) Employment Agreement dated August 1, 1995, between
the Company and Kim A. Davis.
(22) Employment Agreement dated August 1, 1995, between
the Company and Charles Gelman.
13
<PAGE> 14
(11) Statement re computation of per share earnings for years ended July
31, 1995, 1994 and 1993.
(13) Annual Report to Shareholders for the year ended July 31, 1995.
(21) Subsidiaries of the Registrant.
(27) Financial Data Schedules
(b) Reports on Form 8-K
None
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
By: Charles Gelman
--------------------------------------
GELMAN SCIENCES INC.
Charles Gelman, Chairman of the
Board and Chief Executive Officer
Dated: October 25, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on October 25, 1995.
Charles Gelman
------------------------------------------------------------
Chairman of the Board and
Chief Executive Officer and Director
Kim A. Davis
------------------------------------------------------------
President and Chief Operating Officer
Karen A. Radtke
------------------------------------------------------------
Treasurer
David J. DiMaggio
------------------------------------------------------------
Controller
Robert M. Collins
------------------------------------------------------------
Director
John A. Geishecker, Jr.
------------------------------------------------------------
Director
Saul H. Hymans
------------------------------------------------------------
Director
Hajime Kimura, M.D., Ph.D.
------------------------------------------------------------
Director
Nina I. McClelland
------------------------------------------------------------
Director
Charles Newman
------------------------------------------------------------
Director
15
<PAGE> 16
Coopers & Lybrand Coopers & Lybrand L.L.P.
a professional services firm
To the Board of Directors
and Stockholders of
Gelman Sciences Inc.:
Our report on the consolidated financial statements of Gelman Sciences Inc. and
subsidiaries has been incorporated by reference in this Form 10-K from page 25
of the 1995 Annual Report to Shareholders of Gelman Sciences Inc. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in Part IV, Item 14 on page 17
of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
/s/ Coopers & Lybrand L.L.P.
Detroit, Michigan
September 8, 1995
16
<PAGE> 17
SCHEDULE II -- VALUATION AND
GELMAN SCIENCES INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
Additions
-------------------------------------
Charged to
Balance at Charged to other Balance at
beginning cost and accounts Deductions- end of
Description of period expenses describe (1) describe (2) period
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JULY 31, 1995 $790,000 $564,000 ($14,000) $30,000 $1,310,000
Deducted from Asset Accounts-
Accounts Receivable Allowance
YEAR ENDED JULY 31, 1994 $927,000 $296,000 $8,000 $441,000 $790,000
Deducted from Asset Accounts-
Accounts Receivable Allowance
YEAR ENDED JULY 31, 1993 $749,000 $493,000 ($19,000) $296,000 $927,000
Deducted from Asset Accounts-
Accounts Receivable Allowance
</TABLE>
(1) Change is due to the effect of exchange rate changes on translating
the allowance for accounts receivable account of foreign subsidiaries
in accordance with FASB Statement No. 52, "Foreign Currency Translation."
(2) Uncollectable accounts charged off, net of recoveries.
17
<PAGE> 18
GELMAN SCIENCES INC.
FORM 10-K
INDEX TO EXHIBITS
(3) Articles of Incorporation and Bylaws
(2) Restated Bylaws
(10) Material Contracts
(21) Employment Agreement dated August 1, 1995, between the Company
and Kim A. Davis.
(22) Employment Agreement dated August 1, 1995, between the Company
and Charles Gelman.
(11) Statement re computation of per share earnings for years ended
July 31, 1995, 1994 and 1993
(13) Annual Report to Shareholders for the year ended July 31, 1995
(21) Subsidiaries of the Registrant
(27) Financial Data Schedules
18
<PAGE> 1
EXHIBIT 3
BYLAWS
OF
GELMAN SCIENCES INC.
A MICHIGAN CORPORATION
<PAGE> 2
BYLAWS OF GELMAN SCIENCES INC.
A MICHIGAN CORPORATION
TABLE OF CONTENTS
PAGE
----
ARTICLE I - OFFICES
1.1 Registered Office 1
1.2 Other Offices 1
ARTICLE II - MEETINGS OF SHAREHOLDERS
2.1 Time and Place 1
2.2 Annual Meetings 1
2.3 Special Meetings 1
2.4 Notice of Meetings 1
2.5 List of Shareholders 1
2.6 Quorum; Adjournment 2
2.7 Voting 2
2.8 Telephonic Attendance 2
2.9 Inspectors of Election 2
2.10 Action By Written Consent 2
ARTICLE III - DIRECTORS
3.1 Number and Residence 3
3.2 Election and Term 3
3.3 Resignation 3
3.4 Removal 3
3.5 Nominations for Director 3
3.6 Vacancies 4
3.7 Place of Meetings 4
3.8 Annual Meeting 4
3.9 Regular Meetings 4
3.10 Special Meetings 4
3.11 Quorum 4
3.12 Voting 4
3.13 Telephonic Participation 4
3.14 Action by Written Consent 5
3.15 Committees 5
3.16 Compensation 5
i
<PAGE> 3
PAGE
----
ARTICLE IV - OFFICERS
4.1 Officers and Agents 5
4.2 Compensation 6
4.3 Term 6
4.4 Removal 6
4.5 Resignation 6
4.6 Vacancies 6
4.7 Chairman of the Board 6
4.8 President 6
4.9 Executive Vice Presidents and Vice Presidents 6
4.10 Secretary 6
4.11 Treasurer 7
4.12 Assistant Vice Presidents, Secretaries
and Treasurers 7
4.13 Execution of Contracts and Instruments 7
4.14 Voting of Shares and Securities of
Other Corporations and Entities 7
ARTICLE V - NOTICES AND WAIVERS OF NOTICE
5.1 Delivery of Notices 7
5.2 Waiver of Notice 8
ARTICLE VI - SHARE CERTIFICATES AND SHAREHOLDERS OF RECORD
6.1 Certificates for Shares 8
6.2 Lost or Destroyed Certificates 8
6.3 Transfer of Shares 8
6.4 Record Date 8
6.5 Registered Shareholders 9
ARTICLE VII - INDEMNIFICATION 9
ARTICLES VIII - GENERAL PROVISIONS
8.1 Checks and Funds 9
8.2 Fiscal Year 9
8.3 Corporate Seal 9
8.4 Books and Records 9
8.5 Financial Statements 10
ARTICLE IX - AMENDMENTS 10
ARTICLE X - CONTROL SHARE ACQUISITIONS 10
ARTICLE XI - SCOPE OF BYLAWS 10
ii
<PAGE> 4
GELMAN SCIENCES INC.
ARTICLE I
OFFICES
1.1 Registered Office. The registered office of the Corporation shall
be located at such place in Michigan as the Board of Directors from time to
time determines.
1.2 Other Offices. The Corporation may also have offices or branches
at such other places as the Board of Directors from time to time determines or
the business of the Corporation requires.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 Time and Place. All meetings of the shareholders shall be held at
such place and time as the Board of Directors determines.
2.2 Annual Meetings. An annual meeting of shareholders shall be held
on a date, not later than 180 days after the end of the immediately preceding
fiscal year, to be determined by the Board of Directors. At the annual
meeting, the shareholders shall elect directors and transact such other
business as is properly brought before the meeting and described in the notice
of meeting. If the annual meeting is not held on its designated date, the
Board of Directors shall cause it to be held as soon thereafter as convenient.
Failure to hold an annual meeting at the designated date shall not invalidate
any otherwise valid corporate acts. A proposal, other than a nomination of
persons for election to the Board of Directors complying with the provisions of
Section 3.5 of these Bylaws, by one or more shareholders shall not be properly
brought before an annual meeting if made and received by the Corporation less
than 120 days in advance of the date, disregarding the year, of the proxy for
the previous annual meeting. Any proposal by one or more shareholders shall be
deemed to be made for consideration at the next annual meeting of shareholders
only.
2.3 Special Meetings. Special meetings of the shareholders, for any
purpose, (a) may be called by the Chairman of the Board or the Board of
Directors, and (b) shall be called by the President or Secretary upon written
request (stating the purpose for which the meeting is to be called) of the
holders of a majority of all the shares entitled to vote at the meeting.
2.4 Notice of Meetings. Written notice of each shareholders' meeting,
stating the place, date and time of the meeting and the purposes for which the
meeting is called, shall be given (in the manner described in Section 5.1
below) not less than 10 nor more than 60 days before the date of the meeting to
each shareholder of record entitled to vote at the meeting. Notice of
adjourned meetings is governed by Section 2.6 below.
2.5 List of Shareholders. The officer or agent who has charge of the
stock ledger or stock transfer books for shares of the Corporation shall make
and certify a complete list of the shareholders entitled to vote at a
shareholders' meeting or any adjournment of the meeting. The list shall be
arranged alphabetically within each class and series and shall show the address
of, and the number of shares held by, each shareholder. The list shall be
produced at the meeting and may be inspected by any shareholders at any time
during the meeting. The list shall be prima facie evidence as to the
shareholders entitled to examine it or vote at the meeting.
1
<PAGE> 5
2.6 Quorum; Adjournment. At all shareholders' meetings, the
shareholders present in person or represented by proxy who, as of the record
date for the meeting, were holders of a majority of the outstanding shares of
the Corporation entitled to vote at the meeting, shall constitute a quorum.
Once a quorum is present at a meeting, all shareholders present in person or
represented by proxy at the meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave
less than a quorum. Regardless of whether a quorum is initially present, a
shareholders' meeting may be adjourned to another time and place by a vote of
the shares present in person or by proxy without notice other than announcement
at the meeting; provided, that (a) only such business may be transacted at the
adjourned meeting as might have been transacted at the original meeting; and
(b) if the adjournment is for more than 60 days or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting must be given to each shareholder of record entitled to vote at the
meeting.
2.7 Voting. Each shareholder shall at every meeting of the
shareholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such shareholder except as
otherwise expressly required in the Articles of Incorporation. A vote may be
cast either orally or in writing. When an action, other than the election of
directors, is to be taken by a vote of the shareholders, it shall be authorized
by a majority of the votes cast by the holders of shares entitled to vote
thereon, unless a greater plurality is required by the Articles of
Incorporation or applicable law. Except as otherwise provided by the Articles
of Incorporation, directors shall be elected by a plurality of the votes cast
at an election. Each proxy shall be in writing and signed by the shareholder
or the shareholder's authorized agent or representative. A proxy is not valid
after the expiration of six months after its date unless otherwise provided in
the proxy. All questions regarding the qualification of voters, the validity
of proxies and the acceptance or rejection of votes shall be decided by the
presiding officer of the meeting.
2.8 Telephonic Attendance. When authorized by the Board of Directors,
shareholders may participate in any shareholders' meeting by means of
conference telephone or similar communications equipment by which all persons
participating in the meeting can hear each other if all participants are
advised of the communications equipment and the names of all participants in
the conference.
2.9 Inspectors of Election. The Board of Directors, in advance of a
shareholders' meeting, may appoint one or more inspectors (who may be employees
of the Corporation) to act at the meeting or any adjournment of the meeting.
If inspectors are not so appointed, the officer presiding at the shareholders'
meeting may, and on request of a shareholder entitled to vote at the meeting
shall, appoint one or more inspectors. If an appointed inspector fails to
appear or act, the vacancy may be filled by appointment made by the Board of
Directors before the meeting or at the meeting by the presiding officer. If
appointed, the inspectors shall determine the number of shares outstanding and
the voting power of each, the shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies; receive votes, ballots or
consents; hear and determine challenges and questions arising in connection
with the right to vote; count and tabulate votes, ballots or consents;
determine the result of the election or vote; and do such acts as are proper to
conduct the election or vote with fairness to all shareholders. In the absence
of an inspector, all of the determinations and actions described in the
preceding sentence shall be made and taken by the officer presiding at the
meeting. On request of the officer presiding at the meeting or a shareholder
entitled to vote at the meeting, the inspectors shall make and execute a
written report to the presiding officer of any of the facts found by them and
matters determined by them. The report is prima facie evidence of the facts
stated and the vote as certified by the inspectors.
2.10 Action by Written Consent. To the extent permitted by the
Articles of Incorporation, any action required or permitted to be taken at any
shareholders' meeting may be taken without a meeting, prior notice and a vote,
by written consent of shareholders.
2
<PAGE> 6
ARTICLE III
DIRECTORS
3.1 Number and Residence. The business and affairs of the Corporation
shall be managed by or under the direction of a Board of Directors consisting
of not less than three nor more than eleven members. The number of Directors
shall be determined from time to time solely by a resolution adopted by an
affirmative vote of a majority of the entire Board of Directors. The Directors
shall be divided into three classes, designated Class I, Class II and Class
III. Each class shall consist, as nearly as may be possible, of one-third of
the total number of Directors constituting the entire Board of Directors. At
the 1985 Annual Meeting of Shareholders, Class I Directors were elected for a
one-year term, Class II Directors for a two-year term and Class III Directors
for a three-year term. At each succeeding annual meeting of shareholders,
commencing in 1986, successors to the class of Directors whose term expires at
that annual meeting shall be elected for a three-year term. Directors need not
be Michigan residents or shareholders of the Corporation.
3.2 Election and Term. Except as provided in Section 3.6 below,
Directors shall be elected at the annual shareholders' meeting. Each Director
elected shall hold office for the term for which he or she is elected and until
his or her successor is elected and qualified or until his or her death,
resignation, retirement, disqualification or removal.
3.3 Resignation. A Director may resign by written notice to the
Corporation. A Director's resignation is effective upon its receipt by the
Corporation or a later time set forth in the notice of resignation.
3.4 Removal. A Director or the entire Board may be removed only for
cause.
3.5 Nominations for Director. Only persons who are nominated in
accordance with the procedures set forth in this Section 3.5 shall be eligible
for election as Directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of shareholders by or at
the direction of the Board of Directors or by any shareholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 3.5. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a shareholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than 60 days nor more than 90 days before the meeting; provided, that
if less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to shareholders, notice by the shareholder to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such shareholder's notice shall set forth (a)
as to each person whom the shareholder proposes to nominate for election or
re-election as a Director, (1) the name, age, business, address and residence
address of such person, (2) the principal occupation or employment of such
person, (3) the class and number of shares of the Corporation which are
beneficially owned by such person and (4) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
each such person's written consent to being named in the proxy statement as a
nominee and to serving as a Director if elected); and (b) as to the shareholder
giving the notice (1) the name and address, as they appear on the Corporation's
books, of such shareholder and (2) the class and number of shares of the
Corporation which are beneficially owned by such shareholder. At the request
of the Board of Directors any person nominated by the Board of Directors for
election as a Director shall furnish to the Secretary that information required
to be set forth in a shareholder's notice of nomination which pertains to the
nominee. The Chairman of the meeting shall, if the facts warrant,
3
<PAGE> 7
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if the Chairman
should so determine, the Chairman shall so declare to the meeting and the
defective nominations shall be disregarded.
3.6 Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number of Directors may be filled by the
affirmative vote of a majority of the remaining Directors (even if less than a
quorum) or by a sole remaining Director. Each Director so chosen shall hold
office until the next annual election of Directors by the shareholders and
until his or her successor is duly elected and qualified, or until his or her
resignation or removal. Thereafter, such Director shall hold office until the
expiration of the term of the class into which such Director was elected.
Directors elected to fill vacancies shall be in the same class as the Director
they replaced. If the number of Directors is changed, any increase or decrease
shall be apportioned among the classes of Directors so as to maintain the
number of Directors in each class as nearly equal as possible, but in no case
will a decrease in the number of Directors shorten the term of any incumbent
Director. When the number of Directors is increased by the Board of Directors
and any newly created directorships are filled by the Board, there shall be no
classification of the additional Directors until the next annual meeting of
shareholders.
3.7 Place of Meetings. The Board of Directors may hold meetings at
any location. The location of annual and regular Board of Directors' meetings
shall be determined by the Board and the location of special meetings shall be
determined by the Chairman of the Board.
3.8 Annual Meeting. Each newly elected Board of Directors shall meet
promptly after the annual shareholders' meeting for the purposes of electing
officers and transacting such other business as may properly come before the
meeting. No notice of the annual Directors' meeting shall be necessary to the
newly elected Directors in order to legally constitute the meeting, provided a
quorum is present.
3.9 Regular Meetings. Regular meetings of the Board of Directors or
Board committees may be held without notice at such places and times as the
Board or committee determines at least 30 days before the date of the meeting.
3.10 Special Meetings. Special meetings of the Board of Directors may
be called by the Chairman of the Board or President, and shall be called by the
President or Secretary upon the written request of two Directors, on two days
notice to each Director or committee member by mail or 24 hours notice either
personally, by telephone, telegram, or telex. The notice must specify the
place of the special meeting, but need not specify the business to be
transacted or the purpose of the meeting. Special meetings of Board committees
may be called by the Chairman of the committee or a majority of committee
members pursuant to this Section 3.10.
3.11 Quorum. At all meetings of the Board or a Board committee, a
majority of the Directors then in office or members of such committee shall
constitute a quorum for the transaction of business. If a quorum is not
present at any Board or Board committee meeting, a majority of the Directors
present at the meeting may adjourn the meeting to another time and place
without notice other than announcement at the meeting. Any business may be
transacted at the adjourned meeting which might have been transacted at the
original meeting, provided a quorum is present.
3.12 Voting. The vote of a majority of the members at any Board of
Board committee meeting at which there is a quorum shall be the act of the
Board of Directors or the committee, unless a higher vote is otherwise
required.
3.13 Telephonic Participation. Members of the Board of Directors or
any Board committee may participate in a Board or Board committee meeting by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section 3.13 shall constitute
presence in person at such meeting.
4
<PAGE> 8
3.14 Action by Written Consent. Any action required or permitted to be
taken at any Board or Board committee meeting may be taken without a meeting,
if, before or after the action, all members of the Board or committee consent
in writing to the action. Such consents shall be filed with the minutes of
proceedings of the Board or committee and shall have the same effect as a vote
of the Board or committee for all purposes.
3.15 Committees. The Board of Directors may, by resolution passed by a
majority of the entire Board, designate one or more committees, each consisting
of one or more Directors. The Board may designate one or more Directors as
alternate members of any committee to replace any absent or disqualified member
at any committee meeting. Any committee, to the extent provided in the
resolution of the Board, may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation, except a
committee shall not have the power or authority to:
(a) Amend the Articles of Incorporation.
(b) Adopt an agreement of merger or consolidation.
(c) Recommend to shareholders the sale, lease or exchange of all
or substantially all of the Corporation's property and assets.
(d) Recommend to shareholders a dissolution of the Corporation or
a revocation of a dissolution.
(e) Amend the Bylaws of the Corporation.
(f) Fill vacancies in the Board.
(g) Fix compensation of the Directors for serving on the Board or
on a committee.
(h) Declare a dividend.
(i) Authorize the issuance of stock.
Each committee and its members shall serve at the pleasure of the Board, which
may at any time change the members and powers of, or discharge, the committee.
Each committee shall keep regular minutes of its meetings and report them to
the Board of Directors when required.
3.16 Compensation. The Board, by affirmative vote of a majority of
Directors in office and irrespective of any personal interest of any of them,
may establish reasonable compensation of Directors for services to the
Corporation as directors, officers or members of a Board committee. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation for such service.
ARTICLE IV
OFFICERS
4.1 Officers and Agents. The Board of Directors, at its first meeting
after each annual meeting of shareholders, shall elect a President, a Secretary
and a Treasurer, and may also elect a Chairman of the Board, a Vice Chairman of
the Board and one or more Executive Vice Presidents, Vice Presidents, Assistant
Vice Presidents, Assistant Secretaries and Assistant Treasurers. The Board of
Directors may also from time to time appoint such other officers and agents as
it deems advisable. Any number of
5
<PAGE> 9
offices may be held by the same person, but no officer shall execute,
acknowledge or verify an instrument in more than one capacity. The officers
shall have such powers and duties as may be prescribed by the Board of
Directors and, to the extent not so prescribed, as set forth in this Article IV
and as generally pertain to their offices, subject to the control of the Board
of Directors.
4.2 Compensation. The compensation of all officers of the Corporation
shall be fixed by the Board of Directors.
4.3 Term. Each officer of the Corporation shall hold office for the
term for which he or she is elected or appointed and until his or her successor
is elected or appointed and qualified, or until his or her resignation or
removal. The election or appointment of an officer does not, by itself, create
any contract rights.
4.4 Removal. Any officer elected or appointed by the Board of
Directors may be removed at any time by the Board with or without cause.
4.5 Resignation. An officer may resign by written notice to the
Corporation. The resignation is effective upon its receipt by the Corporation
or at a later time specified in the notice of resignation.
4.6 Vacancies. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors.
4.7 Chairman of the Board. The Chairman of the Board, if such
office is filled, shall be the chief executive officer of the Corporation and a
Director, and shall preside at all shareholders' and Board of Directors'
meetings. The Chairman of the Board shall have the general powers of
supervision and management of the business and affairs of the Corporation
usually vested in the chief executive officer of a corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. The Chairman of the Board may delegate to the other officers such of
his or her authority and duties at such time and in such manner as he or she
deems advisable.
4.8 President. In the absence or non-election of a Chairman of the
Board, the President shall preside at all shareholders' and Board of Directors'
meetings, and shall perform the duties and execute the authority of the
Chairman of the Board. If the office of Chairman of the Board is filled, the
President shall be the chief operating officer of the Corporation and shall
assist the Chairman of the Board in the supervision and management of the
business and affairs of the Corporation. The President may delegate to the
officers other than the Chairman of the Board such of his or her authority and
duties at such time and in such manner as he or she deems appropriate.
4.9 Executive Vice Presidents and Vice Presidents. The Executive Vice
Presidents and Vice Presidents shall assist and act under the direction of the
Chairman of the Board and President. The Board of Directors may designate one
or more Executive Vice Presidents and may grant other Vice Presidents titles
which describe their functions or specify their order of seniority. In the
absence or disability of the President, the authority of the President shall
descend to the Executive Vice Presidents or, if there are none, to the Vice
Presidents in the order of seniority indicated by their titles or otherwise
specified by the Board. If not specified by their titles or the Board, the
authority of the President shall descend to the Executive Vice Presidents or,
if there are none, to the Vice Presidents, in the order of their seniority in
such office.
4.10 Secretary. The Secretary shall act under the direction of the
Chairman of the Board and President. The Secretary shall attend all
shareholders' and Board of Directors' meetings, record minutes of the
proceedings and maintain the minutes and all documents evidencing corporate
action taken by written consent of the shareholders and Board of Directors in
the Corporation's minute book. The Secretary shall perform these duties for
Board committees when required. The Secretary shall see to it that all notices
of shareholders' meetings and special Board of Directors' meetings are duly
given in
6
<PAGE> 10
accordance with applicable law, the Articles of Incorporation and these Bylaws.
The Secretary shall have custody of the Corporation's seal and, when authorized
by the Chairman of the Board, President or the Board of Directors, shall affix
the seal to any instrument requiring it and attest such instrument.
4.11 Treasurer. The Treasurer shall act under the direction of the
Chairman of the Board and President. The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate accounts of the
Corporation's assets, liabilities, receipts and disbursements in books
belonging to the Corporation. The Treasurer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors. The Treasurer shall disburse
the funds of the Corporation as may be ordered by the Chairman of the Board,
the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chairman of the Board, the President and
the Board of Directors (at its regular meetings or whenever they request it) an
account of all his or her transactions as Treasurer and of the financial
condition of the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond for the faithful discharge of his
or her duties in such amount and with such surety as the Board prescribes.
4.12 Assistant Vice Presidents, Secretaries and Treasurers. The
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, if
any, shall act under the direction of the Chairman of the Board, the President
and the officer they assist. In the order of their seniority, the Assistant
Secretaries shall, in the absence or disability of the Secretary, perform the
duties and exercise the authority of the Secretary. The Assistant Treasurers,
in the order of their seniority, shall, in the absence or disability of the
Treasurer, perform the duties and exercise the authority of the Treasurer.
4.13 Execution of Contracts and Instruments. The Board of
Directors may designate an officer or agent with authority to execute any
contract or other instrument on the Corporation's behalf; the Board may also
ratify or confirm any such execution. If the Board authorizes, ratifies or
confirms the execution of a contract or instrument without specifying the
authorized executing officer or agent, the Chairman of the Board, the President
or any Executive Vice President or Vice President may execute the contract or
instrument in the name and on behalf of the Corporation and may affix the
corporate seal to such document or instrument.
4.14 Voting Shares and Securities of Other Corporations and Entities.
Unless the Board of Directors otherwise directs, the Chairman of the Board
shall be entitled to vote or designate a proxy to vote all shares and other
securities which the Corporation owns in any other corporation or entity.
ARTICLE V
NOTICES AND WAIVERS OF NOTICE
5.1 Delivery of Notices. All written notices to shareholders,
Directors and Board committee members shall be delivered personally or by mail
(registered, certified or other first class mail, with postage pre-paid),
addressed to such person at his or her address as it appears on the
Corporation's records or, with respect to a Director, at his or her office on
the Corporation's premises. Written notices to Directors or Board committee
members may also be delivered by telegram, telex, radiogram, cablegram,
facsimile, computer transmission or similar form of communication, addressed to
either address referred to in the preceding sentence. Notices delivered
pursuant to this Section 5.1 shall be deemed to be given at the time when
mailed or otherwise dispatched. The Corporation shall have no duty to change
the written address of any Director, Board committee member or shareholder
unless the Secretary receives written notice of such address change.
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<PAGE> 11
5.2 Waiver of Notice. Any required notice may be waived in writing
(signed by the person entitled to the notice or his or her duly authorized
attorney or legal representative), either before or after the event requiring
notice, or in such other manner as permitted by statute. Neither the business
to be transacted at, nor the purpose of, the meeting need be specified in the
written waiver of notice. Attendance at any shareholders' meeting (in person
or by proxy) or any Board or Board committee meeting constitutes a waiver of
notice of the meeting except if the person attends for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
ARTICLE VI
SHARE CERTIFICATES AND SHAREHOLDERS OF RECORD
6.1 Certificates for Shares. The shares of the Corporation shall be
represented by certificates signed by the Chairman or Vice Chairman of the
Board, President, Executive Vice President or Vice President and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
The officers' signatures may be facsimiles if the certificate is countersigned
by a transfer agent or registered by a registrar other than the Corporation or
its employee. If any officer who has signed or whose facsimile signature has
been placed upon a certificate ceases to be such officer before the certificate
is issued, it may be issued by the Corporation with the same effect as if the
person were such officer at the date of issue.
6.2 Lost or Destroyed Certificates. The Board of Directors may direct
or authorize an officer to direct that a new certificate for shares be issued
in place of any certificate alleged to have been lost or destroyed. When
authorizing such issue of a new certificate, the Board of Directors or officer
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner (or the owner's legal representative) of such lost or
destroyed certificate to give the Corporation an affidavit claiming that the
certificate is lost or destroyed or a bond in such sum as it may direct as
indemnity against any claim that may be made against the Corporation with
respect to such certificate or both.
6.3 Transfer of Shares. Shares of the Corporation are transferable
only on the Corporation's stock transfer books upon surrender to the
Corporation or its transfer agent of a certificate for the shares, duly
endorsed for transfer, and the presentation of such evidence of ownership and
validity of the transfer as the Corporation requires.
6.4 Record Date. The Board of Directors may fix, in advance, a date
as the record date for determining shareholders for any purpose, including
determining shareholders entitled to (a) notice of, and to vote at, any
shareholders' meeting or any adjournment of such meeting; (b) express consent
or dissent from a proposal without a meeting; or (c) receive payment of any
dividend or other distribution or allotment of any rights. The record date
shall not be more than 60 nor less than 10 days before the date of the meeting,
nor more than 60 days before any other action.
If a record date is not fixed:
(a) the record date for determining the shareholders entitled to
notice of, or to vote at, a shareholders' meeting shall be the close of
business on the day next preceding the day on which notice of the meeting
is given, or, if notice is not given, the close of business on the day next
preceding the day on which the meeting is held; and
(b) the record date for determining shareholders for any other
purpose shall be the close of business on the day on which the Board of
Directors adopts the resolution relating to the action.
8
<PAGE> 12
A determination of shareholders of record entitled to notice of, or to vote at,
a shareholders' meeting shall apply to any adjournment of the meeting except
that the Board of Directors may fix a new record date for the adjourned
meeting.
Only shareholders of record on the record date shall be entitled to notice
of, or to participate in, the action relating to the record date,
notwithstanding any transfer of shares on the Corporation's books after the
record date. This Section 6.4 shall not affect the rights of a shareholder and
the shareholder's transferor or transferee as between themselves.
6.5 Registered Shareholders. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of a share for all purposes, including notices, voting, consents, dividends and
distributions, and shall not be bound to recognize any other person's equitable
or other claim to interest in such share, regardless of whether it has actual
or constructive notice of such claim or interest.
ARTICLE VII
INDEMNIFICATION
The Corporation shall indemnify to the fullest extent authorized or
permitted by the Michigan Business Corporation Act any person, and his heirs,
executors, administrators and legal representatives, who is made or threatened
to be made a party to an action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that such person is or
was a director or officer of the Corporation or serves or served, at the
request of the Corporation, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, and
may provide such other indemnification to directors, officers, employees and
agents by insurance, contract or otherwise as is permitted by law and
authorized by the Board of Directors.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Checks and Funds. All checks, drafts or demands for money and
notes of the Corporation must be signed by such officer or officers or such
other person or persons as the Board of Directors from time to time designates.
All funds of the Corporation not otherwise employed shall be deposited or used
as the Board of Directors from time to time designates.
8.2 Fiscal Year. The fiscal year of the Corporation shall end on July
31 or such other date as the Board of Directors from time to time determines.
8.3 Corporate Seal. The Board of Directors may adopt a corporate seal
for the Corporation. The corporate seal, if adopted, shall be circular and
contain the name of the Corporation and the words "Corporate Seal Michigan".
The seal may be used by causing it or a facsimile of it to be impressed,
affixed, reproduced or otherwise.
8.4 Books and Records. The Corporation shall keep within or outside
of Michigan books and records of account and minutes of the proceedings of its
shareholders, Board of Directors and Board committees, if any. The Corporation
shall keep at its registered office or at the office of its transfer agent
within or outside of Michigan records containing the names and addresses of all
shareholders, the number, class and series of shares held by each and the dates
when they respectively became recordholders of shares. Any of such books,
records or minutes may be in written form or in any other form capable of being
converted into written form within a reasonable time.
9
<PAGE> 13
8.5 Financial Statements. The Corporation shall deliver to its
shareholders, within four months after the beginning of each fiscal year, a
financial report (including a statement of income, year-end balance sheet, and,
if prepared by the Corporation, its statement of sources and application of
funds) covering the preceding fiscal year of the Corporation.
ARTICLE IX
AMENDMENTS
These Bylaws may be amended or repealed, or new Bylaws may be adopted, by
action of either the shareholders or a majority of the Board of Directors then
in office. The shareholders may from time to time specify particular
provisions of the Bylaws which may not be altered or repealed by the Board of
Directors.
ARTICLE X
CONTROL SHARE ACQUISITIONS
Section 1. Control shares acquired in a control share acquisition, with
respect to which no acquiring person statement has been filed with the
Corporation, may, at any time during the period ending 60 days after the last
acquisition of control shares or the power to direct the exercise of voting
power of control shares by the acquiring person, be redeemed by the Corporation
at the fair value of the shares.
Section 2. After an acquiring person statement has been filed and after the
meeting at which the voting rights of the control shares acquired in a control
share acquisition are submitted to the shareholders, the shares are subject to
redemption by the Corporation at the fair value of the shares unless the shares
are accorded full voting rights by the shareholders as provided in Section 798
of the Michigan Business Corporation Act.
Section 3. A redemption of shares by the Corporation pursuant to Sections 1
or 2 shall be made upon election by the Board of Directors. Written notice of
the election shall be sent to the acquiring person within seven days after the
election is made. The determination of the Board of Directors as to fair value
shall be conclusive. Payment shall be made for the control shares subject to
redemption within 30 days after the election to redeem is made at a date and
place selected by the Board of Directors. The Board of Directors may adopt
additional procedures to accomplish a redemption.
Section 4. This Article X is adopted pursuant to Section 799 of the
Michigan Business Corporation Act, and the terms used in this section shall
have the meanings of the terms in Section 799.
ARTICLE XI
SCOPE OF BYLAWS
These Bylaws govern the regulation and management of the affairs of the
Corporation to the extent that they are consistent with applicable law and the
Articles of Incorporation.
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<PAGE> 1
EXHIBIT 10.21
EMPLOYMENT AGREEMENT
Agreement made this 1st day of August, 1995, by and between GELMAN
SCIENCES, INC. ("Employer") and KIM A. DAVIS ("Employee").
1. EMPLOYMENT.
A. Employer hereby offers to Employee and Employee
hereby accepts continued employment by Employer on the conditions set forth
herein.
2. DUTIES.
A. Employee has been appointed and shall continue to
serve Employer as President and Chief Operating Officer, reporting in such
capacity directly to the Chief Executive Officer of Employer ("CEO").
B. Employee's duties and powers in such capacity shall
be as determined, from time to time, by CEO.
3. TERM.
A. The term of this Agreement shall be three (3) years
beginning August 1, 1995, which term shall be automatically extended one (1)
year on August 1, 1996 and on August 1 of each year thereafter, unless Employer
shall have given:
(1) not less than six (6) months written notice
of termination to Employee where there has been no change in control
of Employer; or
(2) where there has been a change in control of
Employer, not less than twelve (12) months written notice of
termination to Employee.
B. This Agreement shall be automatically earlier
terminated and the earlier termination shall supersede the later effective date
of an Employer written notice of termination of Agreement provided for in
Paragraph 3.A., only in the following manner:
(1) Upon the death of Employee; or
(2) Upon Employee's resignation, at any time,
after ninety (90) calendar days written notice to Employer where there
has been no change in control of Employer, in which event Employee
shall not be entitled to any additional compensation or benefits; or
<PAGE> 2
(3) Upon Employee's disability whereby Employee
is unable to perform the essential duties of his assigned position for
a period exceeding one hundred eighty (180) calendar days within a one
(1) year period; or
(4) Upon Employer's termination of Employee,
without cause, at any time, after Employer has given ninety (90)
calendar days written notice of termination to Employee, in which
event Employee shall become eligible for termination compensation as
set forth in Paragraph 4.C below; or
(5) Upon Employee's resignation within one (1)
year of a change in control of Employer, after ninety (90) calendar
days written notice to Employer, in which event Employee shall become
eligible for termination compensation in the amount as determined in
Paragraph 4.C below; or
(6) Upon Employer's termination of Employee for
violating any of the provisions of Paragraph 7 below, in which event
Employee shall not be entitled to any additional compensation or
benefits.
4. COMPENSATION.
A. Employer shall pay, and Employee shall accept, as
base compensation for all services rendered, not less than the amount received
per annum effective as of August 1, 1995, less appropriate payroll taxes
("salary"), payable in equal installments in accordance with Employer's normal
payroll periods, with annual reviews and adjustments, if any, at the discretion
of CEO, as approved by the Employer's Board of Directors ("Board").
B. Employee shall, following the conclusion of each full
Employer fiscal year of active employment, become eligible for an incentive
bonus, established at the discretion of the Board, which incentive bonus
effective for the Employer's 1996 fiscal year and the fiscal years thereafter,
shall consist of an amount equal to:
(1) Fifty percent (50%) of the Employee's current
annual salary for achieving the corporate goals, established at the
discretion of Board; or
(2) Seventy-five percent (75%) of the Employee's
current annual salary for exceeding the corporate stretch goals,
established at the discretion of the Board. Incentive bonus, if any,
shall be payable to Employee on or before the seventieth (70th)
calendar day after the Employer's fiscal year end.
C. If this Agreement is earlier terminated pursuant to
Paragraph 3.B.(4) or 3.B.(5), Employee shall become eligible for termination
compensation as follows:
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<PAGE> 3
(1) Where there has been no change in control of
Employer, and:
(a) the Employer is achieving or
exceeding the projected performance plan as approved by the
Board, a severance amount equal to the amount of base
compensation and incentive bonus the Employee would have
received in the year of termination, for the greater of the
remaining balance of the contract or two (2) years;
(b) the Employer is not achieving the
projected performance plan as approved by the Board, a
severance amount equal to the amount of base compensation the
Employee would have received in the year of termination, for
the greater of the remaining balance of the contract or two
(2) years;
(2) Where there has been a change in control of
Employer, and:
(a) the Employer is achieving or
exceeding the projected performance plan as approved by the
Board, a severance amount equal to the amount of base
compensation and incentive bonus the Employee would have
received in the year of termination, for the remaining balance
of the contract plus two (2) years;
(b) the Employer is not achieving the
projected performance plan as approved by the Board, a
severance amount equal to the amount of base compensation the
Employee would have received in the year of termination, for
the remaining balance of the contract plus two (2) years;
(c) immediate vesting of all stock
options and awards; and,
(d) immediate payment of all incentive
awards earned.
To the extent the termination compensation and any
other amounts received as a result of termination are subject to the excise tax
of Internal Revenue Code Section 4999 (or any successor statute), the severance
amount shall be increased by a one (1) time calculation (without a pyramid
effect) of the product derived by multiplying the "excess parachute payments"
(as defined in Code Section 4999) as initially calculated by the applicable
excise tax rate (currently twenty percent (20%)).
Change in control of the Employer means:
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<PAGE> 4
i) the acquisition of beneficial
ownership by any person or entity (or more than one
(1) person or entity acting as a group) of a majority
of the outstanding voting shares of Employer,
accomplished without consent of the Board; or
ii) a tender offer made and
consummated for at least thirty-three percent (33%)
of Employer's common stock, accomplished without
consent of the Board; or
iii) the acquisition of beneficial
ownership by any person or entity (or more than one
(1) person or entity acting as a group) of more than
fifty-one percent (51%) of the total fair market
value of the Employer's assets, accomplished without
the consent of the Board; or
iv) a majority of the members of
the Board are replaced within a one (1) year period,
by persons whose appointment or election is not
endorsed by a majority of the Board prior to the date
of the appointment or election.
The severance amount shall be payable in equal annual
installments to the Employee, which annual installments shall be further
divided into equal payments made at the same frequency as Employee's salary,
less appropriate payroll taxes, commencing with the first payroll period
following Employee's termination, conditioned on Employee's execution of a
release agreement acknowledging that Employee is entitled to no other
compensation and benefits, except as provided in this Agreement, and
effectively waiving any and all claims against Employer, its officers,
directors, employees, affiliates, subsidiaries, successors and assigns arising
out of Employee's employment or separation from employment with Employer. The
Employer shall have the right, at its option and without penalty, to accelerate
payments owed to the Employee.
5. EXPENSES.
A. Employer shall reimburse Employee, upon presentation
of proper documentation, for reasonable expenses incurred by Employee in the
performance of his assigned duties.
B. Employer shall provide Employee with an automobile
befitting Employee's status among other executive employees as President and
Chief Operating Officer, by which to perform his assigned duties, at no cost to
the Employee.
6. BENEFITS.
A. Employee shall be eligible to participate in all
benefit programs that Employer makes available, from time to time, to executive
employees, including such
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<PAGE> 5
benefit programs as medical, dental, life, long-term disability, 401(k), and
others, on the same terms and conditions as other executive employees.
B. (1) Employee shall be covered by an additional,
separate, whole life insurance policy in the amount of One Million
Dollars ($1,000,000) designed to be, and premiums paid annually for a
paid up policy in ten (10) years, the face value of which shall be
payable to the Employee's designated beneficiary upon the Employee's
death, except for the events described in Paragraph 6.B.(2) below
(excluding Employee's death) in which case only the vested portion of
the policy (as defined in Paragraph 6.B.(3) below) shall be payable to
Employee's designated beneficiary;
(1) The premiums for the whole life insurance
policy shall continue to be paid by the Employer during Employee's
employment with Employer and after Employee's separation from
employment with Employer while Employer is making payments to Employee
pursuant to Paragraph 4.C, unless the Employee resigns employment
under Paragraph 3.B.(2), 4.B.(2) above, or the Employee is terminated
from employment under Paragraph 3.B.(6) above, or this Agreement is
terminated pursuant to Paragraph 3.A above, or the Employee dies, or
Employee violates a covenant set forth in Exhibit A, in which event
the Employer's obligations to continue paying the whole life insurance
policy premiums shall cease;
(2) The whole life insurance policy and its cash
value shall become incrementally vested to the Employee at the rate of
ten percent (10%) of the whole life insurance policy's face and cash
value for each full year after August 1, 1995 the Employer is
obligated to continue paying the premiums on the whole life insurance
policy as provided in Paragraph 6.B.(2) above;
(3) At such time as the Employer is no longer
obligated to make payments pursuant to Paragraph 4.C, the Employer
shall transfer ownership of said policy to Employee.
C. Employee shall be eligible for up to six (6) weeks
paid vacation annually, scheduled by mutual agreement between Employee and CEO.
D. Employer shall, during the term of this Agreement,
pay the dues and assessments required for Employee to maintain full membership
privileges at Travis Pointe Country Club.
7. UNDERTAKINGS OF EMPLOYEE.
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<PAGE> 6
A. The parties acknowledge that Employer is engaged in
the business of manufacturing, distributing and selling microporous membranes,
filters and microfiltration products, worldwide. Employee, because of his
position with Employer, will obtain, or have access to, highly confidential,
proprietary information and trade secrets and, as a result, Employee agrees
that:
(1) Employee will execute, and at all times honor
and comply with all of the conditions set forth in, the
Confidentiality and Patent Protection Agreement attached hereto and
made a part hereof as Exhibit A; and
(2) At all times during Employee's employment,
and for three (3) years following the termination of Employee's
employment, Employee will not, directly or indirectly, without the
express written consent of Employer's Board, perform service for, aid,
assist, own, operate, have any financial interest in, or serve as
employee, officer, director, agent, partner, consultant, part-owner,
shareholder, or engage in, any microporous filter business which is
competitive with Employer, or with microporous products provided by
Employer, or with microporous products provided by Employer, and among
the remedies set forth in the above-referenced Confidentiality and
Patent Protection Agreement.
B. Employer relies upon Employee's representation that
Employee will:
(1) competently perform all assigned duties;
(2) carry out all policies, directives and
decisions of Employer's Board and CEO;
(3) not withhold from Employer's Board or CEO,
and will promptly report to CEO, any information which may affect
Employer's business;
(4) refrain from any conduct which is illegal,
dishonest, fraudulent, or detrimental to Employer's business, as
determined by Employer's Board; and
(5) devote his entire time, attention and
energies to the operations of Employer and shall not, during the term
of this Agreement, without consent of the Board, be engaged in any
other business activity requiring any amount of his business time,
whether or not such business activity is pursued for gain, profit or
pecuniary advantage.
8. ENTIRE AGREEMENT.
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<PAGE> 7
This Agreement supersedes and cancels all prior agreements,
whether verbal or written, between Employer and Employee and constitutes the
entire Agreement between the parties. Any amendment or agreement supplemental
hereto shall not be binding upon either party unless executed in writing by
Employer and the Employee.
9. MISCELLANEOUS.
A. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, successors, personal
representatives and assigns.
B. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of Michigan.
C. Any and all notices or any other communication
provided for herein shall be given in writing by certified mail, return receipt
requested, which shall be addressed to the addresses shown immediately below
each party's signature unless notice of a change of address is furnished to the
other parties in the manner provided in this paragraph.
D. This Agreement will be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original but all of
which shall constitute one (1) and the same instrument and agreement.
E. Each paragraph of this Agreement or portion thereof
shall be treated as severable, to the end that if any paragraph or portion
thereof shall be declared illegal, invalid or unenforceable, this Agreement
shall be interpreted so that part only is invalid, without invalidating the
remainder of this Agreement, which shall remain in full force and effect as
though such paragraph or portion thereof had never been contained in this
Agreement, and the affected part shall be interpreted, consistent with the law,
to carry out the intent of the parties.
IN WITNESS WHEREOF, the parties have signed this Employment Agreement
as of the date first above written.
WITNESSES: GELMAN SCIENCES, INC.
By
- ---------------------------------- -------------------------------
Its
- ---------------------------------- -------------------------------
600 South Wagner Road
Ann Arbor, MI 48106-1448
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<PAGE> 8
-------------------------------
KIM A. DAVIS
[home address]
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<PAGE> 9
EXHIBIT A
CONFIDENTIALITY AND PATENT PROTECTION AGREEMENT
This Agreement entered into as of the date last hereinafter written by
and between the undersigned employee (hereinafter "Employee") and GELMAN
SCIENCES, INC., a Michigan corporation (herein "Employer"), pertaining to the
employment of the Employee by the Employer:
WHEREAS, the Employer requires that all employees, as a condition of
their employment, covenant and agree with the Employer to hold its Trade
Secrets in utmost respect and confidence and not to use or disclose such
information in any way in conflict with the Employer's interest.
NOW, THEREFORE, in consideration of the premises upon which this
Agreement is based and of the engagement of the Employee as an employee of the
Employer, the Employee hereby expressly covenants and agrees as follows:
10. The Employer is engaged in the manufacture, distribution and
sale of microporous membranes, textiles and microfiltration products,
worldwide. In conducting such business, the Employer has developed, collected,
compiled, organized, analyzed and/or systematized certain information including
(but not necessarily limited to) customer information, market studies and
research, marketing methods and techniques, operating and pricing policies,
product formulae, product designs and technologies, operating and pricing
policies, product formulae, product designs and technologies, manufacturing
processes and technologies, innovative research and development, and certain
computer software, which information is used by the Employer in conducting its
said business, gives the Employer an advantage or the opportunity to gain an
advantage over its competitors and potential competitors who do not know or use
it, and is not public information and is not generally known in the industry;
such information being collectively and individually referred to herein as
"Trade Secrets". The Employer expects to develop, collect, compile, organize,
analyze and/or systematize the same or similar kinds of information and to
conceive and invent new products, devices, manufacturing processes, software
and technologies, continually and in the future, which information and
inventions shall become Trade Secrets belonging to the Employer and shall be
protected by this Agreement.
11. All Trade Secrets belonging to the Employer and all records
pertaining thereto, including (without limitation) those which may be created
or developed by the Employee, are and shall be and remain the property of the
Employer. The Employee will not ever utilize any Trade Secret belonging to the
Employer or any record pertaining thereto for his benefit or for the benefit of
others, or for any purpose other than in the ordinary course of and in the
furtherance of the Employer's business.
<PAGE> 10
12. The Employee will not ever publish or disclose, nor permit to
be published or disclosed, any Trade Secrets belonging to the Employer to
anyone not authorized to have access thereto without the prior written consent
of the Chief Executive Officer of the Employer ("CEO"). Moreover, the Employee
agrees to report forthwith to the Employer's Board or CEO any violation of this
or any other policy of the Employer applicable to its Trade Secrets, known to
or which may come to the knowledge of the Employee.
13. The Employee will have no obligation of confidentiality as to
any information which is or hereafter becomes generally known among the
Employer's competitors or to the public otherwise than by an unauthorized
disclosure by the Employee or by other improper means. Neither shall the
Employee be held to violate this Agreement by receiving any Trade Secret of the
Employer from a third party having the right to transmit the same, but in such
case the obligations or confidentiality, non-use and non-disclosure set forth
in Paragraphs 2 and 3 above shall apply to all such information so received.
14. The Employee shall promptly disclose to the Employer's Board
or CEO all inventions, discoveries and improvements which the Employee may
make, either solely or jointly with others, while in the employ of the
Employer, relating to products, manufacturing technologies or software used,
manufactured or sold by the Employer during the period of the Employee's
employment with the Employer, or the use, manufacture, development or sale of
which was in contemplation by the Employer during the period of the Employee's
employment with the Employer, and the Employee hereby agrees to assign to the
Employer all of the Employee's interest in and to the same, including the
Employee's interest in and to any domestic and foreign patent rights therein
and any renewals thereof. All expenses of filing any patent applications shall
be borne solely by the Employer, but the Employee shall cooperate in filing and
supporting any such applications.
15. This Agreement shall survive the termination of employment of
the Employee and shall continue with respect to each and all of the Employer's
Trade Secrets in conception or existence as of the date of termination, until
the same shall have become generally known among the Employer's competitors and
potential competitors or to the public at large, other than by unauthorized
disclosure by the Employee or other improper means. The Employee agrees that
upon the termination of his employment he will immediately return to the
Employer all materials, records and drawings provided to the Employee by the
Employer or any of its customers, or generated by the Employee relative to the
Trade Secrets of the Employer.
16. In the event of a breach of threatened breach by the Employee
of this Agreement, it is agreed that the Employer would suffer immediate and
irreparable injuries of such a nature and magnitude that money damages would
not adequately compensate the Employer and that injunctive relief would be
essential for its protection. Such relief
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<PAGE> 11
shall be without prejudice to any other remedy which the Employer may have or
be entitled to receive at law or in equity. To the extent permitted by law,
the Employee waives the requirement of bond as a precondition to issuance of
any such injunction.
17. If any of the provisions of this Agreement shall be held to be
unenforceable for any reason by any Court having jurisdiction of the same, such
provision shall be deemed amended by giving to it that construction most
consistent with this writing which such Court may find to be enforceable in the
matter before it, and all remaining terms and provisions of this Agreement
shall not fall, but this Agreement shall be deemed amended by such holding for
purposes only of the jurisdiction of such Court, and as so amended shall remain
in full force and effect.
18. This Agreement is a prerequisite of employment of the
Employee, and need not be signed or otherwise formally accepted by the Employer
in order to become binding upon the Employee, but shall be deemed and held so
binding and enforceable from and after the date the Employee was first engaged
as an employee of the Employer. The Employee acknowledges receipt of a true
and correct copy of this Agreement and acknowledges that he has read and
understands all of the terms and provisions hereof.
Executed this 1st day of August, 1995.
EMPLOYEE:
----------------------------------
KIM DAVIS
SS Number
----------------------------------
Address
----------------------------------
----------------------------------
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<PAGE> 1
EXHIBIT 10.22
EMPLOYMENT AGREEMENT
Agreement made this 1st day of August, 1995, by and between GELMAN
SCIENCES, INC. ("Employer") and CHARLES GELMAN ("Employee").
1. EMPLOYMENT.
A. Employer hereby offers to Employee and Employee
hereby accepts continued employment by Employer on the conditions set forth
herein.
2. DUTIES.
A. Employee has been appointed and shall continue to
serve Employer as Chairman and Chief Executive Officer, reporting in such
capacity directly to the Employer's Board of Directors ("Board").
B. Employee's duties and powers in such capacity shall
be as determined, from time to time, by the Board.
3. TERM.
A. The term of this Agreement shall be three (3) years
beginning August 1, 1995, which term shall be automatically extended one (1)
year on August 1, 1996 and on August 1 of each year thereafter, unless Employer
shall have given:
(1) not less than six (6) months written notice
of termination to Employee where there has been no change in control
of Employer; or
(2) where there has been a change in control of
Employer, not less than twelve (12) months written notice of
termination to Employee.
B. This Agreement shall be automatically earlier
terminated and the earlier termination shall supersede the later effective date
of an Employer written notice of termination of Agreement provided for in
Paragraph 3.A., only in the following manner:
(1) Upon the death of Employee; or
(2) Upon Employee's resignation, at any time,
after ninety (90) calendar days written notice to Employer where there
has been no change in control of Employer, in which event Employee
shall not be entitled to any additional compensation or benefits; or
<PAGE> 2
(3) Upon Employee's disability whereby Employee
is unable to perform the essential duties of his assigned position for
a period exceeding one hundred eighty (180) calendar days within a one
(1) year period; or
(4) Upon Employer's termination of Employee,
without cause, at any time, after Employer has given ninety (90)
calendar days written notice of termination to Employee, in which
event Employee shall become eligible for termination compensation as
set forth in Paragraph 4.C below; or
(5) Upon Employee's resignation within one (1)
year of a change in control of Employer, after ninety (90) calendar
days written notice to Employer, in which event Employee shall become
eligible for termination compensation in the amount as determined in
Paragraph 4.C below; or
(6) Upon Employer's termination of Employee for
violating any of the provisions of Paragraph 7 below, in which event
Employee shall not be entitled to any additional compensation or
benefits.
4. COMPENSATION.
A. Employer shall pay, and Employee shall accept, as
base compensation for all services rendered, not less than the amount received
per annum effective as of August 1, 1995, less appropriate payroll taxes
("salary"), payable in equal installments in accordance with Employer's normal
payroll periods, with annual reviews and adjustments, if any, at the discretion
of the Employer's Board.
B. Employee shall, following the conclusion of each full
Employer fiscal year of active employment, become eligible for an incentive
bonus, established at the discretion of the Board, which incentive bonus
effective for the Employer's 1996 fiscal year and the fiscal years thereafter,
shall consist of an amount equal to:
(1) Fifty percent (50%) of the Employee's current
annual salary for achieving the corporate goals, established at the
discretion of Board; or
(2) Seventy-five percent (75%) of the Employee's
current annual salary for exceeding the corporate stretch goals,
established at the discretion of the Board.
Incentive bonus, if any, shall be payable to Employee
on or before the seventieth (70th) calendar day after the Employer's fiscal
year end.
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<PAGE> 3
C. If this Agreement is earlier terminated pursuant to
Paragraph , 3.B.(4) or 3.B.(5), Employee shall become eligible for termination
compensation as follows:
(1) Where there has been no change in control of
Employer, and:
(a) the Employer is achieving or
exceeding the projected performance plan as approved by the
Board, a severance amount equal to the amount of base
compensation and incentive bonus the Employee would have
received in the year of termination, for the greater of the
remaining balance of the contract or two (2) years;
(b) the Employer is not achieving the
projected performance plan as approved by the Board, a
severance amount equal to the amount of base compensation the
Employee would have received in the year of termination, for
the greater of the remaining balance of the contract or two
(2) years;
(2) Where there has been a change in control of
Employers, and:
(a) the Employer is achieving or
exceeding the projected performance plan as approved by the
Board, a severance amount equal to the amount of base
compensation and incentive bonus the Employee would have
received in the year of termination, for the remaining balance
of the contract plus two (2) years;
(b) the Employer is not achieving the
projected performance plan as approved by the Board, a
severance amount equal to the amount of base compensation the
Employee would have received in the year of termination, for
the remaining balance of the contract plus two (2) years;
(c) immediate vesting of all stock
options and awards; and,
(d) immediate payment of all incentive
awards earned.
To the extent the termination compensation and any
other amounts received as a result of termination are subject to the excise tax
of Internal Revenue Code Section 4999 (or any successor statute), the severance
amount shall be increased by a one (1) time calculation (without a pyramid
effect) of the product derived by multiplying
-3-
<PAGE> 4
the "excess parachute payments" (as defined in Code Section 4999) as initially
calculated by the applicable excise tax rate (currently twenty percent (20%)).
Change in control of the Employer means:
i) the acquisition of beneficial
ownership by any person or entity (or more than one
(1) person or entity acting as a group) of a majority
of the outstanding voting shares of Employer,
accomplished without consent of the Board; or
ii) a tender offer made and
consummated for at least thirty-three percent (33%)
of Employer's common stock, accomplished without
consent of the Board; or
iii) the acquisition of beneficial
ownership by any person or entity (or more than one
(1) person or entity acting as a group) of more than
fifty-one percent (51%) of the total fair market
value of the Employer's assets, accomplished without
consent of the Board; or
iv) a majority of the members of
the Board are replaced within a one (1) year period,
by persons whose appointment or election is not
endorsed by a majority of the Board prior to the date
of the appointment or election.
The severance amount shall be payable in equal annual
installments to the Employee, which annual installments shall be further
divided into equal payments made at the same frequency as Employee's salary,
less appropriate payroll taxes, commencing with the first payroll period
following Employee's termination, conditioned on Employee's execution of a
release agreement acknowledging that Employee is entitled to no other
compensation and benefits, except as provided in this Agreement, and
effectively waiving any and all claims against Employer, its officers,
directors, employees, affiliates, subsidiaries, successors and assigns arising
out of Employee's employment or separation from employment with Employer. The
Employer shall have the right, at its option and without penalty, to accelerate
payments owed to the Employee.
5. EXPENSES.
A. Employer shall reimburse Employee, upon presentation
of proper documentation, for reasonable expenses incurred by Employee in the
performance of his assigned duties.
B. Employer shall provide Employee with an automobile
befitting Employee's status among other executive employees as Chairman and
Chief Executive Officer, by which to perform his assigned duties, at no cost to
the Employee.
6. BENEFITS.
-4-
<PAGE> 5
A. Employee shall be eligible to participate in all
benefit programs that Employer makes available, from time to time, to executive
employees, including such benefit programs as medical, dental, life, long-term
disability, 401(k), and others, on the same terms and conditions as other
executive employees.
B. Employee shall be eligible for up to six (6) weeks
paid vacation annually, scheduled at the discretion of Employee, and not
inconsistent with the best interest of the Employer.
C. Employer shall, during the term of this Agreement,
pay the dues and assessments required for Employee to maintain full membership
privileges at Travis Pointe Country Club.
7. UNDERTAKINGS OF EMPLOYEE.
A. The parties acknowledge that Employer is engaged in
the business of manufacturing, distributing and selling microporous membranes,
filters and microfiltration products, worldwide. Employee, because of his
position with Employer, will obtain, or have access to, highly confidential,
proprietary information and trade secrets and, as a result, Employee agrees
that:
(1) Employee will execute, and at all times honor
and comply with all of the conditions set forth in, the
Confidentiality and Patent Protection Agreement attached hereto and
made a part hereof as Exhibit A; and
(2) At all times during Employee's employment,
and for three (3) years following the termination of Employee's
employment, Employee will not, directly or indirectly, without the
express written consent of Employer's Board, perform service for, aid,
assist, own, operate, have any financial interest in, or serve as
employee, officer, director, agent, partner, consultant, part-owner,
shareholder, or engage in, any microporous filter business which is
competitive with Employer, or with microporous products provided by
Employer, or with microporous products provided by Employer, and among
the remedies set forth in the above-referenced Confidentiality and
Patent Protection Agreement.
B. Employer relies upon Employee's representation that
Employee will:
(1) competently perform all assigned duties;
(2) carry out all policies, directives and
decisions of Employer's Board;
-5-
<PAGE> 6
(3) not withhold from Employer's Board any
information which may affect Employer's business;
(4) refrain from any conduct which is illegal,
dishonest, fraudulent, or detrimental to Employer's business, as
determined by Employer's Board; and
(5) devote his entire time, attention and
energies to the operations of Employer and shall not, during the term
of this Agreement, without consent of the Board, be engaged in any
other business activity requiring any amount of his business time,
whether or not such business activity is pursued for gain, profit or
pecuniary advantage.
8. ENTIRE AGREEMENT.
This Agreement supersedes and cancels all prior agreements,
whether verbal or written, between Employer and Employee and constitutes the
entire Agreement between the parties. Any amendment or agreement supplemental
hereto shall not be binding upon either party unless executed in writing by
Employer and the Employee.
9. MISCELLANEOUS.
A. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, successors, personal
representatives and assigns.
B. This Agreement shall be interpreted in accordance
with and governed by the laws of the State of Michigan.
C. Any and all notices or any other communication
provided for herein shall be given in writing by certified mail, return receipt
requested, which shall be addressed to the addresses shown immediately below
each party's signature unless notice of a change of address is furnished to the
other parties in the manner provided in this paragraph.
D. This Agreement will be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original but all of
which shall constitute one (1) and the same instrument and agreement.
E. Each paragraph of this Agreement or portion thereof
shall be treated as severable, to the end that if any paragraph or portion
thereof shall be declared illegal, invalid or unenforceable, this Agreement
shall be interpreted so that part only is invalid,
-6-
<PAGE> 7
without invalidating the remainder of this Agreement, which shall remain in
full force and effect as though such paragraph or portion thereof had never
been contained in this Agreement, and the affected part shall be interpreted,
consistent with the law, to carry out the intent of the parties.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties have signed this Employment Agreement
as of the date first above written.
WITNESSES: GELMAN SCIENCES, INC.
By
- ---------------------------------- -------------------------------
Its
- ---------------------------------- -------------------------------
600 South Wagner Road
Ann Arbor, MI 48106-1448
----------------------------------
CHARLES GELMAN
[home address]
-8-
<PAGE> 9
EXHIBIT A
CONFIDENTIALITY AND PATENT PROTECTION AGREEMENT
This Agreement entered into as of the date last hereinafter written by
and between the undersigned employee (hereinafter "Employee") and GELMAN
SCIENCES, INC., a Michigan corporation (herein "Employer"), pertaining to the
employment of the Employee by the Employer:
WHEREAS, the Employer requires that all employees, as a condition of
their employment, covenant and agree with the Employer to hold its Trade
Secrets in utmost respect and confidence and not to use or disclose such
information in any way in conflict with the Employer's interest.
NOW, THEREFORE, in consideration of the premises upon which this
Agreement is based and of the engagement of the Employee as an employee of the
Employer, the Employee hereby expressly covenants and agrees as follows:
10. The Employer is engaged in the manufacture, distribution and
sale of microporous membranes, textiles and microfiltration products,
worldwide. In conducting such business, the Employer has developed, collected,
compiled, organized, analyzed and/or systematized certain information including
(but not necessarily limited to) customer information, market studies and
research, marketing methods and techniques, operating and pricing policies,
product formulae, product designs and technologies, operating and pricing
policies, product formulae, product designs and technologies, manufacturing
processes and technologies, innovative research and development, and certain
computer software, which information is used by the Employer in conducting its
said business, gives the Employer an advantage or the opportunity to gain an
advantage over its competitors and potential competitors who do not know or use
it, and is not public information and is not generally known in the industry;
such information being collectively and individually referred to herein as
"Trade Secrets". The Employer expects to develop, collect, compile, organize,
analyze and/or systematize the same or similar kinds of information and to
conceive and invent new products, devices, manufacturing processes, software
and technologies, continually and in the future, which information and
inventions shall become Trade Secrets belonging to the Employer and shall be
protected by this Agreement.
11. All Trade Secrets belonging to the Employer and all records
pertaining thereto, including (without limitation) those which may be created
or developed by the Employee, are and shall be and remain the property of the
Employer. The Employee will not ever utilize any Trade Secret belonging to the
Employer or any record pertaining thereto for his benefit or for the benefit of
others, or for any purpose other than in the ordinary course of and in the
furtherance of the Employer's business.
<PAGE> 10
12. The Employee will not ever publish or disclose, nor permit to
be published or disclosed, any Trade Secrets belonging to the Employer to
anyone not authorized to have access thereto without the prior written consent
of the Employer's Board of Directors ("Board"). Moreover, the Employee agrees
to report forthwith to the Employer's Board any violation of this or any other
policy of the Employer applicable to its Trade Secrets, known to or which may
come to the knowledge of the Employee.
13. The Employee will have no obligation of confidentiality as to
any information which is or hereafter becomes generally known among the
Employer's competitors or to the public otherwise than by an unauthorized
disclosure by the Employee or by other improper means. Neither shall the
Employee be held to violate this Agreement by receiving any Trade Secret of the
Employer from a third party having the right to transmit the same, but in such
case the obligations or confidentiality, non-use and non-disclosure set forth
in Paragraphs 2 and 3 above shall apply to all such information so received.
14. The Employee shall promptly disclose to the Employer's Board
all inventions, discoveries and improvements which the Employee may make,
either solely or jointly with others, while in the employ of the Employer,
relating to products, manufacturing technologies or software used, manufactured
or sold by the Employer during the period of the Employee's employment with the
Employer, or the use, manufacture, development or sale of which was in
contemplation by the Employer during the period of the Employee's employment
with the Employer, and the Employee hereby agrees to assign to the Employer all
of the Employee's interest in and to the same, including the Employee's
interest in and to any domestic and foreign patent rights therein and any
renewals thereof. All expenses of filing any patent applications shall be
borne solely by the Employer, but the Employee shall cooperate in filing and
supporting any such applications.
15. This Agreement shall survive the termination of employment of
the Employee and shall continue with respect to each and all of the Employer's
Trade Secrets in conception or existence as of the date of termination, until
the same shall have become generally known among the Employer's competitors and
potential competitors or to the public at large, other than by unauthorized
disclosure by the Employee or other improper means. The Employee agrees that
upon the termination of his employment he will immediately return to the
Employer all materials, records and drawings provided to the Employee by the
Employer or any of its customers, or generated by the Employee relative to the
Trade Secrets of the Employer.
16. In the event of a breach of threatened breach by the Employee
of this Agreement, it is agreed that the Employer would suffer immediate and
irreparable injuries of such a nature and magnitude that money damages would
not adequately compensate the Employer and that injunctive relief would be
essential for its protection. Such relief
-2-
<PAGE> 11
shall be without prejudice to any other remedy which the Employer may have or
be entitled to receive at law or in equity. To the extent permitted by law,
the Employee waives the requirement of bond as a precondition to issuance of
any such injunction.
17. If any of the provisions of this Agreement shall be held to be
unenforceable for any reason by any Court having jurisdiction of the same, such
provision shall be deemed amended by giving to it that construction most
consistent with this writing which such Court may find to be enforceable in the
matter before it, and all remaining terms and provisions of this Agreement
shall not fall, but this Agreement shall be deemed amended by such holding for
purposes only of the jurisdiction of such Court, and as so amended shall remain
in full force and effect.
18. This Agreement is a prerequisite of employment of the
Employee, and need not be signed or otherwise formally accepted by the Employer
in order to become binding upon the Employee, but shall be deemed and held so
binding and enforceable from and after the date the Employee was first engaged
as an employee of the Employer. The Employee acknowledges receipt of a true
and correct copy of this Agreement and acknowledges that he has read and
understands all of the terms and provisions hereof.
Executed this 1st day of August, 1995.
EMPLOYEE:
----------------------------------
CHARLES GELMAN
SS Number
----------------------------------
Address
----------------------------------
----------------------------------
-3-
<PAGE> 1
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
PRIMARY AND FULLY DILUTED
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net income for computing primary and fully diluted earnings per common share $6,622,000 $4,754,000 $2,702,000
PRIMARY SHARES
Weighted average number of common shares outstanding 6,828,809 5,787,236 5,435,611
Additions from assumed exercise of stock options and warrants 406,464 520,652 314,933
---------- ---------- ----------
Weighted average of common and common equivalent shares 7,235,273 6,307,888 5,750,543
========== ========== ==========
FULLY DILUTED SHARES
Weighted average number of common shares outstanding 6,828,809 5,787,236 5,435,611
Additions from assumed exercise of stock options and warrants 420,925 548,640 517,099
---------- ---------- ----------
Weighted average of common and common equivalent shares 7,249,734 6,335,876 5,952,710
========== ========== ==========
NET INCOME PER COMMON SHARE
Primary $ 0.92 $ 0.75 $ 0.47
========== ========== ==========
Fully diluted $ 0.92 $ 0.75 $ 0.45
========== ========== ==========
</TABLE>
Primary additions from assumed exercise of stock options and warrants are net
of assumed purchase of common shares at the average market price during the
fiscal year. Fully diluted earnings per share was determined in the same
manner except that the year-end stock price was used. The average and year-end
stock prices were as follows: fiscal 1995 - $15.53 and $19.875, fiscal 1994 -
$10.07 and $13.50, fiscal 1993 - $5.33 and $7.28, respectively. All share and
stock price data have been adjusted retroactively to reflect the two,
three-for-two stock splits effected during fiscal 1994.
<PAGE> 1
EXHIBIT 13
STOCK PRICES
The Company's common stock trades on the American Stock Exchange. The ticker
symbol is "GSC." No cash dividends were paid by the Company during fiscal 1995.
There were 1,180 shareholders of record of the Company on July 31, 1995.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Fiscal Year 1995 1994
- ----------------------------------------------------------------------------------------------------------
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C>
First Quarter 15.25 12.5 8.375 7
Second Quarter 15.875 11.625 11.25 7.375
Third Quarter 17.375 12 12.5 10
Fourth Quarter 19.875 17.75 14 10.125
</TABLE>
HIGHLIGHTS
<TABLE>
<CAPTION>
Dollars in Thousands, except per share data
- -------------------------------------------------------------------------------------------------------
Fiscal Year 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $103,503 $94,963 $86,209
Gross Margin 53,433 47,710 42,545
Net earnings 6,622 4,754+ 2,702
Primary earnings per share .92 .75+ .47
Stockholders' equity 58,773 30,435 22,256
Number of employees 829 844 827
</TABLE>
+Net earnings includes an after-tax charge of $183,000 for early extinguishment
of debt. Without this charge, net earnings would have been $4.9 million or
$.78 per share.
<PAGE> 2
SELECTED FINANCIAL DATA
Gelman Sciences Inc. and Subsidiaries
<TABLE>
<CAPTION>
BALANCE SHEET DATA Dollars in Thousands, except per share data
- ---------------------------------------------------------------------------------------------------------
Year Ended July 31 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 3,010 $ 1,525 $ 1,142 $ 867 $ 811
Accounts receivable-net 23,985 20,859 17,088 16,529 16,348
Inventories 14,944 13,990 12,986 13,331 13,827
Working capital 31,910 23,450 19,133 8,211 21,943
Total assets 81,781 71,687 63,495 61,530 62,903
Long-term debt including current portion 6,017 23,649 23,854 25,624 30,415
Total liabilities 23,008 41,252 41,239 41,879 42,759
Stockholders' equity 58,773 30,435 22,256 19,651 20,144
Stockholders' equity per share 7.54 4.96 3.81 3.45 3.56
- ---------------------------------------------------------------------------------------------------------
OPERATING DATA
- ---------------------------------------------------------------------------------------------------------
Net sales $103,503 $ 94,963 $ 86,209 $ 81,460 $ 76,516
Gross margin 53,433 47,710 42,545 38,499 35,726
Pollution-related expense - - 543 4,988 806
Interest expense 1,314 1,689 2,006 2,590 2,851
Income taxes (credit) 3,365 2,600 2,030 (212) 250
Net earnings (loss) 6,622 4,754 2,702 (1,211) 88
Net earnings (loss) per share .92 .75 .47 (.21) .02
Return on average stockholders' equity 14.8% 18.0% 12.9% N.A. 0.4%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FISCAL YEAR 1995 COMPARED WITH FISCAL YEAR 1994
Net sales for fiscal 1995, increased $8.5 million or 9% to $103.5 million
compared to $95.0 million for fiscal 1994, which included non-recurring sales
of $4.4 million related to divested Australian non-core product lines.
International sales for fiscal 1995 were favorably affected by the weakened
U.S. dollar which increased reported sales by $2.1 million. The Company's sales
growth, adjusted for these items, was 12%.
Worldwide sales of medical devices increased 27% reflecting sales growth for
products in the intravenous therapy applications. Sales of process filtration
products increased 21% compared to fiscal 1994 reflecting strong growth in the
European and Asia/Pacific markets. Laboratory sales increased 9% and membrane
sales were level compared to fiscal 1994. Net sales to customers in the
Americas increased 11% over fiscal 1994 primarily due to a 31% increase in
sales of medical devices. Sales to customers in Europe increased 14% primarily
due to a 29% increase in sales of process products. Sales to customers in the
Asia/Pacific region declined 6% due to the above mentioned non-core product
line divestiture in late fiscal 1994. Without the affect of this divestiture,
sales in this region would have increased 43%. The increase was primarily
attributable to increases in sales of process filtration products in Japan and
Korea.
Gross profit, as a percentage of sales, was 51.6% in fiscal 1995 compared to
50.2% in fiscal 1994. The improvement in gross profit was primarily
attributable to improved operating efficiencies and the divestiture of non-core
product lines.
Selling and administration expense increased by $3.3 million or 9.6% to $37.0
million for fiscal 1995 compared to $33.8 million for fiscal 1994, primarily
due to the Company's drive to increase market share consistent with the overall
growth strategy. Other expense (income) includes gains on foreign currency
transactions and rental income related to the divestiture of non-core
operations. Interest expense decreased $375,000 due to repayment of
outstanding indebtedness and overall reduction in interest rates in the fourth
quarter. The Company's effective tax rate for fiscal 1995 and fiscal 1994 was
34%. During the year, the Company was granted future tax relief and job
training incentives worth $6.1 million from the Michigan Economic Growth
Authority and local government authorities in response to the Company's
decision to remain and expand its manufacturing operations and corporate
headquarters in Ann Arbor, Michigan. The term of the grant is 15 years. As a
condition for the grant, the Company is expected to maintain certain levels of
employment.
Net earnings increased $1.9 million or 39% to $6.6 million or $.92 per share in
fiscal 1995 compared to $4.8 million or $.75 per share in fiscal 1994. Net
earnings for fiscal 1994 included an extraordinary charge of $.03 per share
related to the refinancing of industrial revenue bonds. The weighted average
shares for fiscal 1995 and 1994 were 7.2 million and 6.3 million, respectively,
which includes the effect of the secondary public offering of 1,437,500 shares
of common stock in the third quarter of fiscal 1995.
As more fully described in Note G - Pollution Related Expenses, cash outflows
during fiscal 1995 for the remediation plan, settlement and legal costs
associated with groundwater contamination were $1.1 million. This includes
$425,000 of final payments on previously accrued settlements. The Company
estimates cash outflows for remediation and settlement activities in fiscal
1996 to be approximately $280,000. The ultimate costs incurred by the Company
as a result of the groundwater contamination will depend on the efficacy and
duration of the remediation plan. The ultimate costs to be incurred could
exceed the amount provided for at July 31, 1995. However, it is the opinion of
management that these additional costs, if any, will not have a material
adverse effect on the Company's operations.
Net sales in the fourth quarter of fiscal 1995 increased by 14% over the same
period for fiscal 1994, primarily attributable to a 17% increase in sales to
customers in Europe and Asia/Pacific. Net earnings for the fourth quarter of
fiscal 1995 was $2.2 million or $.27 per share compared to net earnings of $1.5
million or $.23 per share for the fourth quarter of fiscal 1994. Weighted
average shares for the fourth quarter of fiscal 1995 and 1994 were 8.1 million
and 6.5 million, respectively. The improved operating performance resulted
from increased sales volume along with lower interest expense resulting from
the repayment of outstanding indebtedness mentioned above.
FISCAL YEAR 1994 COMPARED WITH FISCAL YEAR 1993
Net sales for fiscal 1994 increased $8.8 million or 10% to $95.0 million as
compared to net sales of $86.2 million for fiscal 1993. Net sales to U.S.
customers were $59.8 million, an increase of $5.9 million or 11% over fiscal
1993. Sales to customers in international markets were $35.2 million, an
increase of $2.8 million or 9% as compared to fiscal 1993. The increase in
sales to U.S. customers was primarily attributable to growth in sales of
medical devices and microporous membranes. The international growth was
partially offset by fluctuations in foreign currency rates. Without the
effects of the fluctuations in foreign currency rates, the increase in
international sales in fiscal 1994 would have been 12% over fiscal 1993.
Worldwide sales of microporous membranes increased 36% compared to fiscal 1993.
This growth was attributable to fulfilling significant orders from original
equipment manufacturers that use bulk membrane in filtration applications and
diagnostic health care kits. Sales of products for the medical devices market
increased 24% in fiscal 1994 over fiscal 1993 due primarily to increased
<PAGE> 4
sales of microfiltration products with hemodialysis treatment and intravenous
therapy applications. Industrial process product sales increased 11% in fiscal
1994, with particularly strong sales in the international markets. Laboratory
product sales increased 4% over fiscal 1993.
Gross profit increased $5.2 million or 12 % to $47.7 million in fiscal 1994 as
compared to $42.5 million in fiscal 1993. As a percentage of net sales, gross
profit was $50.2% compared to 49.4% in fiscal 1993. The improvement in the
Company's gross profit margin was attributable to increased sales volume and a
higher percentage of microporous membrane sales which have a higher gross
margin than other products sold by the Company.
Selling and administration expense increased $2.7 million or 9% to $33.8
million in fiscal 1994 compared to $31.0 million in fiscal 1993. As a
percentage of net sales, these expenses declined to 35.6% compared to 36.0%.
These expenses increased over the prior fiscal year due primarily to higher
selling expenses resulting from increased sales.
Research and development expenses increased $738,000 or 17.8% to $4.9 million
in fiscal 1994 compared to $4.1 million in fiscal 1993 due to a greater new
product development effort. As a percentage of net sales, research and
development expenses increased to 5.1% from 4.8% in fiscal 1993.
During fiscal 1994 all charges and cost recoveries related to pollution
expenses were recorded in a reserve maintained by the Company for
pollution-related charges. The Company had third party cost recoveries of
$750,000 from the settlement of a lawsuit against certain chemical companies.
The Company reached a settlement on a lawsuit for $561,000 with resident
located near its Ann Arbor facilities for damages related to groundwater
contamination. In addition, the Company incurred costs of $1.3 million related
to the implementation of a remediation plan and legal costs of $312,000 in
defense of the these lawsuits. At July 31, 1994, the Company had accrued $1.5
million to complete the remediation plan and to pay for other costs associated
with groundwater contamination
In a series of transactions in fiscal 1994, the Company's Australian subsidiary
sold all of its non-core product lines for cash and a note receivable.
Included in Other expense (income) is a gain of $108,000 or $.02 per share on
the sale of the assets relating to the non-core products. Sales from these
product lines were $4.4 million and $5.0 million for fiscal 1994 and 1993,
respectively.
Interest expense decreased $317,000 or 16% to $1.7 million in fiscal 1994
compared to $2.0 million in fiscal 1993. This change was due to steps taken by
management to secure more favorable interest rates.
The Company's effective tax rate for fiscal 1994 was 34.5% as compared to 42.9%
in fiscal 1993. The lower effective tax rate was attributable to use of net
operating loss carryforwards from certain foreign subsidiaries in fiscal 1994
and use of research and development tax credits.
Net earnings increased $2.1 million or 76% to $4.8 million or $.75 per share in
fiscal 1994 compared to $2.7 million or $.47 per share in fiscal 1993. Net
earnings included an extraordinary charge of $295,000 (net of $112,000 tax
benefit) or $.03 per share to write-off deferred finance charges and the
payment of a premium and fees incurred in connection with the redemption of
industrial development revenue bonds. Excluding these charges, net earnings
would have been $4.9 million or $.78 per share as compared with net earnings of
$2.7 million or $.47 per share in fiscal 1993.
Net sales in the fourth quarter of fiscal 1994 increased by 10% over the same
period for fiscal 1993, primarily attributable to a 15% increase in sales to
U.S. customers. Net earnings for the fourth quarter of fiscal 1994 was
$1,463,000 or $.23 per share compared to net earnings of $794,000 or $.13 per
share for the fourth quarter of fiscal 1993. The improved operating
performance resulted from increased sales volume, improved gross margins, along
with lower interest and pollution expense. Selling and administration expense
increased to 37% of sales for the fourth quarter fiscal 1994. This increase
was attributable to increased commissions related to sales volume and increased
marketing activities.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1995, the Company generated cash from operating activities of
$6.0 million compared to $4.5 million during fiscal 1994. At July 31, 1995,
$1.2 million in cash equivalents were held in an interest-bearing money market
mutual fund. Financing activities included proceeds of a secondary public
offering of $19.4 million used to repay $17 million in outstanding indebtedness
of the Company. Remaining funds plus cash from operating activities were used
for $7.8 million of capital expenditures. Budgeted capital expenditures for
fiscal 1996 are $8 to $10 million, a significant portion to be used for
manufacturing process automation and improvements and upgrades to the Company's
Ann Arbor facility. Management believes that funding for the required capital
expenditures will be achieved through operating cash flow and utilization of
the Company's renegotiated $15 million Credit Agreement.
During the year, the Company reduced its committed level under its revolving
credit facility to $15 million. The measure was taken to reduce fees while
maintaining adequate facilities for future needs. At July 31, 1995, the entire
credit facility was unused.
Working capital at July 31, 1995 and July 31, 1994 was $31.9 million and $23.4
million, respectively. The increased working capital was attributed mainly to
increased trade receivables and inventory levels as a result of higher sales
volume in fiscal 1995 compared to fiscal 1994.
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
Gelman Sciences Inc. and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Balance Sheets -- Assets Dollars in Thousands
- ------------------------------------------------------------------------------------------------------------
July 31 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,010 $ 1,525
Accounts receivable less allowances (1995-$1,310; 1994-$790) 23,985 20,859
Inventories
Finished products 6,320 5,790
Work in process 1,572 1,555
Raw materials and purchased parts 7,052 6,645
- ------------------------------------------------------------------------------------------------------------
14,944 13,990
Other current assets 4,988 3,849
- ------------------------------------------------------------------------------------------------------------
Total Current Assets $ 46,927 40,223
- ------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 1,438 1,433
Buildings and improvements 19,302 18,851
Equipment 49,102 43,270
- ------------------------------------------------------------------------------------------------------------
69,842 63,554
Less allowances for depreciation (37,258) (34,392)
- ------------------------------------------------------------------------------------------------------------
32,584 29,162
INTANGIBLES AND OTHER ASSETS 2,270 2,302
- ------------------------------------------------------------------------------------------------------------
Total Assets $ 81,781 $ 71,687
- ------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS -- LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Notes payable to banks $ 1,368 $ 1,549
Accounts payable 3,813 5,611
Compensation and amounts withheld 5,310 4,273
Other accrued expenses 4,002 3,511
Current maturities of long-term debt 524 1,829
- ------------------------------------------------------------------------------------------------------------
Total Current Liabilities $ 15,017 16,773
- ------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT, EXCLUSIVE OF CURRENT MATURITIES 5,493 21,820
OTHER LONG-TERM LIABILITIES 2,498 2,659
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00 per share-authorized 500,000 shares,
none outstanding
Common stock, par value $.10 per share issued 7,790,000 shares
in 1995 and 6,131,000 shares in 1994. 779 613
Additional capital 35,145 14,055
Retained earnings 23,714 17,092
Foreign currency translation adjustments (565) (875)
Note receivable-common stock (300) (450)
- ------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 58,773 30,435
- ------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 81,781 $ 71,687
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
CONSOLIDATED STATEMENTS OF OPERATIONS/STOCKHOLDERS' EQUITY
Gelman Sciences Inc. and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statements of Operations Dollars in Thousands, except per share data
- --------------------------------------------------------------------------------------------------------------
Year Ended July 31 1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 103,503 $ 94,963 $ 86,209
Cost and expenses:
Cost of products sold 50,070 47,253 43,664
Selling and administration 37,043 33,785 31,044
Research and development 5,498 4,877 4,139
Pollution-related expense - - 543
Other expense (income)-net (409) (178) 81
- --------------------------------------------------------------------------------------------------------------
Operating earnings 11,301 9,226 6,738
Interest expense 1,314 1,689 2,006
- --------------------------------------------------------------------------------------------------------------
Earnings before income taxes and extraordinary item 9,987 7,537 4,732
Income taxes 3,365 2,600 2,030
- --------------------------------------------------------------------------------------------------------------
Net earnings before extraordinary item 6,622 4,937 2,702
- --------------------------------------------------------------------------------------------------------------
Extraordinary item - 183 -
- --------------------------------------------------------------------------------------------------------------
Net earnings $ 6,622 $ 4,754 $ 2,702
- --------------------------------------------------------------------------------------------------------------
Primary earnings per share before extraordinary item $ .92 $ .78 $ .47
Primary earnings per share $ .92 $ .75 $ .47
Fully diluted earnings per share before extraordinary item $ .92 $ .78 $ .45
Fully diluted earnings per share $ .92 $ .75 $ .45
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<TABLE>
<CAPTION>
Consolidated Statements of Stockholders' Equity Dollars in Thousands
- ------------------------------------------------------------------------------------------------------------------------
Foreign
Currency Notes
Common Additional Retained Translation Receivable
Stock Capital Earnings Adjustments Common Stock
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances at July 31, 1992 $253 $11,826 $ 9,643 $ (329) $ (1,742)
- ------------------------------------------------------------------------------------------------------------------------
Net earnings for 1993 2,702
Stock issued under employee plans - 68,050 shares 7 682
Currency translation adjustments (936)
ESOP loan payment 150
- ------------------------------------------------------------------------------------------------------------------------
Balances at July 31, 1993 260 12,508 12,345 (1,265) (1,592)
- ------------------------------------------------------------------------------------------------------------------------
Net earnings for 1994 4,754
Stock issued under employee plans - 161,270
shares 16 1,276
ESOP loan payment 150
Three for two common stock splits 337 (337) (7)
Tax benefit from exercise of stock options 608
Currency translation adjustment 390
Officer loan repayment 992
- ------------------------------------------------------------------------------------------------------------------------
Balances at July 31, 1994 613 14,055 17,092 (875) (450)
- ------------------------------------------------------------------------------------------------------------------------
NET EARNINGS FOR 1995 6,622
STOCK ISSUED:
EMPLOYEE PLANS - 221,730 SHARES 22 1,181
PUBLIC OFFERING - 1,437,500 SHARES 144 19,278
ESOP LOAN PAYMENT 150
TAX BENEFIT FROM EXERCISE OF NON-QUALIFIED STOCK
OPTIONS 631
CURRENCY TRANSLATION ADJUSTMENT 310
- ------------------------------------------------------------------------------------------------------------------------
BALANCES AT JULY 31, 1995 $779 $35,145 $23,714 $ (565) $ (300)
- ------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOW
Gelman Sciences Inc. and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flow Dollars in Thousands
- ---------------------------------------------------------------------------------------------------------
Year Ended July 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 6,622 $ 4,754 $ 2,702
Extraordinary loss related to early extinguishment of debt,
before tax benefit - 295 -
Depreciation and amortization 4,495 4,396 4,452
Increase (decrease) in deferred income taxes 144 627 275
Loss (gain) on sale of property, plant and equipment 54 (196) 31
Stock issued for employee service 389 360 300
Contribution to employee stock ownership plan 150 150 150
(Increase) decrease in inventories (615) (1,431) (47)
(Increase) decrease in accounts receivable (3,071) (3,391) (1,051)
(Increase) decrease in other current assets (1,100) (276) (433)
Increase (decrease) in current liabilities (686) 382 2,285
Increase (decrease) in liabilities for environmental activities (597) (1,154) (515)
Other 179 (25) 21
- ---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,964 4,491 8,170
FINANCING ACTIVITIES
Long-term debt borrowings 25,365 33,011 25,700
Net increase (decrease) in short-term borrowings 60 114 (116)
Principal payments on long-term debt (43,070) (33,196) (28,327)
Net Proceeds from secondary Stock Offering 19,422 - -
Proceeds from exercised stock options 818 924 389
Tax benefit from exercised stock options 631 608 -
Fees paid on early retirement of debt - (52) -
Payment received - note receivable common stock - 992 -
- ---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 3,226 2,401 (2,354)
INVESTING ACTIVITIES
Capital expenditures (7,825) (6,682) (5,860)
Proceeds from sale of property, plant and equipment 43 537 50
(Increase) decrease in intangibles and other assets (47) (347) 66
- ---------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (7,829) (6,492) (5,744)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 124 (17) 203
- ---------------------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,485 383 275
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,525 1,142 867
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,010 $ 1,525 $ 1,142
- ---------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Gelman Sciences Inc. and Subsidiaries
NOTE A-SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Principles of Consolidation: The consolidated financial statements include the
accounts of all subsidiaries after elimination of intercompany accounts and
transactions. The financial data of foreign subsidiaries is translated
using current exchange rates at the end of the year for balance sheet
accounts and average exchange rates for operations. Translation gains and
losses are reflected in stockholders' equity, while transaction gains and
losses are reflected in the statements of operations. Foreign exchange
gains (losses) of $233,000, $77,000 and $(129,000) were recognized in 1995,
1994 and 1993, respectively.
Cash and Cash Equivalents: Cash equivalents consist of highly liquid
money market mutual funds. The carrying amount approximates fair value. At
July 31, 1995, $1.2 million in cash equivalents were held.
Inventories: Inventories are stated at the lower of cost or market. Cost
was determined by the last-in, first-out (LIFO) method at the U.S.
locations, representing approximately 77% and 78% of the July 31, 1995 and
1994 inventories, respectively, and by the first-in, first-out (FIFO)
method for the foreign locations. The current cost of inventories exceeded
their LIFO carrying amount by approximately $2,961,000 and $2,556,000 at
July 31, 1995 and 1994, respectively.
Properties and Depreciation: Properties are stated at cost. Depreciation
is computed using the straight-line method based on the estimated useful
life of the related asset. Included in property, plant and equipment are
capitalized computer software costs. At July 31, 1995 and 1994 the
unamortized amount of these costs was $18,600 and $92,700, respectively.
The amount amortized and charged to expense was $74,100, $153,300 and
$194,000 for the fiscal years ended July 31, 1995, 1994 and 1993,
respectively. The Company capitalized interest costs associated with the
construction of certain capital assets of $74,000 and $91,000 in 1995 and
1994, respectively. No interest was capitalized in 1993.
Intangibles and Other Assets: Intangibles and Other Assets consist
principally of the excess of cost over net assets of acquired companies,
amortized over 30 years and a note receivable related to the sale of
non-core product lines in Australia.
Earnings) Per Share: Primary earnings per share for fiscal 1995, 1994 and
1993 are based on the weighted average of common and common
equivalent shares of 7,235,273, 6,307,388 and 5,750,543, respectively.
Common share equivalents included in the computation represent shares
issuable upon assumed exercise of stock options and warrants which would
have dilutive effect. Fully diluted earnings per share for fiscal 1993 is
based on the weighted average of common and common equivalent shares of
5,952,710. Full dilution had no material effect on earnings per share in
fiscal 1995 and 1994. Fiscal 1995 weighted average shares includes the
effect of the secondary public offering of 1,437,500 shares of common stock.
Financial Instruments: The Company enters into certain financial
instruments to reduce exposure to fluctuating foreign currency exchange
rates and interest rates. Realized and unrealized gains and losses on
forward exchange contracts are recorded as other expense (income)
currently. The Company enters into interest rate financial instruments to
manage exposure to interest rate fluctuations. The difference to be paid or
received on interest rate agreements are included in interest expense
currently. Gains and losses realized upon settlement of these agreements
are deferred and amortized to interest expense over a period relevant to the
agreement if the underlying hedged instrument remains outstanding or
immediately if the underlying hedged instrument is settled. The fee paid on
a interest rate cap agreement is amortized over the life of the agreement.
<PAGE> 9
NOTE B-FINANCING
<TABLE>
<CAPTION>
Financing consisted of the following obligations Dollars in Thousands
- -------------------------------------------------------------------------------------------------------------
as of July 31: 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Industrial Development Revenue Bonds
with maturities through July 1, 2004 $ 4,697 $ 5,045
Borrowings under revolving credit agreement - 13,000
Borrowings under term loan agreement - 4,000
Note payable, State of Michigan, bearing interest
at 7.5%, through January 6, 2002 744 850
Notes payable to banks 1,368 1,549
Other 576 754
- -------------------------------------------------------------------------------------------------------------
Total debt 7,385 25,198
Less current maturities and short-term debt 1,892 3,378
- -------------------------------------------------------------------------------------------------------------
Long-term debt $ 5,493 $21,820
- -------------------------------------------------------------------------------------------------------------
</TABLE>
During fiscal 1995, the Company used proceeds from a common stock offering to
repay outstanding indebtedness under the Company's term loan and revolving
credit agreements.
During fiscal 1995, the Company renegotiated its unsecured revolving Credit
Agreement to reduce the total commitment from $22.5 million to $15 million
reflecting revised working capital needs, obtain market pricing on the total
commitment, and ease financial covenants. The term of the Agreement was
extended to June 2000. Various interest rate options are available to the
Company, including a market rate option which permits the Company to seek
competitive bids from the bank group before a loan is made.
In fiscal 1994, the Company redeemed the 7.98% Industrial Development Revenue
Bonds issued in 1989. The redemption was funded by the issuance of 1994
Industrial Development Revenue Bonds. The 1994 Industrial Development Revenue
Bonds bear interest at 120% of the 90 day Eurodollar rate (approximately 7.3%
at July 31, 1995) with principal and interest due quarterly through July, 2004.
As more fully discussed in Note K-Extraordinary Item, the Company recorded a
$295,000 extraordinary charge in connection with the redemption.
Notes payable to banks of $1,368,000 are short-term borrowings under foreign
subsidiaries' local currency credit lines, supported by a parental guarantee.
Maturities of long-term debt, including the current portion, for the five years
following July 31, 1995 are as follows: $864,000 in 1996; $534,000 in 1997;
$567,000 in 1998; $602,000 in 1999; $641,000 in 2000 and $2,698,000 thereafter.
Interest paid during the years ended July 31, 1995, 1994 and 1993 was
$1,629,000, $1,433,000 and $2,020,000, respectively.
<PAGE> 10
NOTE C-INCOME TAXES
The components of earnings (loss) before income taxes and extraordinary items
consisted of the following:
<TABLE>
<CAPTION>
Dollars in Thousands
- ------------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. $7,860 $6,132 $5,336
Foreign 2,127 1,405 (604)
- ------------------------------------------------------------------------------------------------------
$9,987 $7,537 $4,732
</TABLE>
The provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current payable:
U.S. $ 1,957 $ 1,469 $ 1,481
State 110 88 149
Foreign 1,011 489 138
Deferred (credit):
U.S. 418 556 277
Foreign (131) (2) (15)
- ------------------------------------------------------------------------------------------------------
$ 3,365 $ 2,600 $ 2,030
- ------------------------------------------------------------------------------------------------------
</TABLE>
Income tax benefit attributable to the extraordinary item in fiscal year 1994
amounted to $112,000.
A reconciliation between the provision for income taxes and the amount compared
through the application of the U.S. statutory tax rate (34%) to earnings
before income taxes and extraordinary items is as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income taxes at statutory rate $3,396 $2,563 $ 1,609
Add (deduct):
Effect of foreign losses that had no tax benefit 53 47 342
Foreign rates in excess of U.S. statutory rate 89 104 (30)
Non-deductible travel and entertainment 59 34 13
Operating loss carryforward utilization (38) (161) (13)
Reduction of valuation allowance (210) -- --
State income taxes, net of federal income tax benefit 73 58 98
Foreign sales corporation benefit (89) (26) (10)
Tax Credits and other items 32 (19) 21
- -----------------------------------------------------------------------------------------------------
$3,365 $2,600 $2,030
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
GELMAN SCIENCES INC. AND SUBSIDIARIES
NOTE C-INCOME TAXES (CONTINUED)
Deferred income taxes for 1995 and 1994 reflect the impact of "temporary
differences" between amounts of assets and liabilities for financial reporting
purposes and such amounts as measured by tax laws. Temporary differences and
carryforwards which give rise to a significant portion of deferred tax assets
and liabilities are as follows at July 31:
<TABLE>
<CAPTION>
Dollars in Thousands
- ---------------------------------------------------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Allowance for doubtful accounts $ 131 $ 146
Litigation accruals - 91
Inventory-related transactions 354 283
Administrative and general expenses
not currently deductible 781 779
Environmental accrual 511 720
Foreign operating loss carryforwards 420 460
- ---------------------------------------------------------------------------------------------------------------
$ 2,197 $ 2,479
Less excess tax over book depreciation and amortization 1,823 1,676
- ---------------------------------------------------------------------------------------------------------------
Gross deferred tax asset 374 803
Valuation allowance (210) (460)
- ---------------------------------------------------------------------------------------------------------------
Net deferred tax asset $ 164 $ 343
- ---------------------------------------------------------------------------------------------------------------
Current deferred tax asset $1,597 $ 1,506
Non-current deferred tax liability $1,433 $ 1,163
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The Company has reduced its valuation allowance on foreign operating loss
carryforwards, to reflect the ability to utilize certain subsidiary losses
against future earnings on a more likely than not basis. Net current deferred
tax assets of $1,597,000 and $1,506,000 for fiscal 1995 and 1994 respectively,
are included in other current assets and net non-current deferred tax
liabilities of $1,433,000 and $1,163,000 for fiscal 1995 and 1994,
respectively, are included in other long-term liabilities based on their
relationship to assets and liabilities that generated the temporary difference.
Income taxes paid during the years ended July 31, 1995, 1994, and 1993 were
$1,571,000, $1,210,000 and $2,190,000, respectively. Taxes paid in 1995 and
1994 reflect the benefit received from exercise of stock options under the non-
qualified stock option plan.
No deferred income taxes have been provided on undistributed earnings of
foreign subsidiaries since those earnings are expected to be reinvested
indefinitely in the subsidiaries or will not result in incremental income tax
expense.
NOTE D-SAVINGS AND RETIREMENT PLANS
The Company has a Savings Plan and an Employee Stock Ownership Plan (ESOP)
covering substantially all U.S. employees. The Company contributes to the
Savings Plan $.85 for every dollar contributed by employees up to 6% of their
compensation, with one half of the Company's contribution in Company common
stock. Company contributions charged to operations under these plans were
$875,000, $861,000 and $714,000 for the years ended July 31, 1995, 1994 and
1993, respectively
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
GELMAN SCIENCES INC. AND SUBSIDIARIES
Note E -- Stockholders' Equity
During the year, the shareholders' approved an increase in the number of
authorized shares of common stock from 8 million to 15 million. Also, the
Company issued 1,437,500 shares of common stock at a price of $14.625 per share
in a public common stock offering. The net proceeds of $19.4 million were used
to repay a term note payable to NBD Bank N.A. and to reduce outstanding
indebtedness under the Company's Credit Agreement.
In fiscal 1994, the Company declared two, three-for-two stock splits. A total
of 3,372,523 shares of common stock were issued in connection with the two
splits. The stated par value per share of common stock remained at $.10 and the
value of the shares at par of $337,252 was transferred from additional capital
to common stock. All per share amounts have been restated to retroactively
reflect the stock splits. In September 1990, the Company issued 128,000 shares
(pre-split) of its common stock to an officer of the Company at market value
in exchange for a $992,000 promissory note and cancellation of 128,000 stock
options outstanding. During fiscal 1994, this note was repaid in full plus
accrued interest on the note.
In October 1982, the Trust under the Company's Employee Stock Ownership Plan
acquired 200,000 shares (pre-split) of the Company's common stock. The purchase
price of $2,250,000 was financed by a loan from the Company to the Trust,
repayable over a 15 year period at a 13.5% interest rate. The Company is making
annual contributions to the Trust during the 15-year period of $150,000 per
year to cover the principal payments plus additional contributions to cover
interest.
The Corporation is entitled to a tax deduction for income tax purposes of the
amount that an employee reports as ordinary income from non-qualified stock
options. Since the Corporation recognizes no compensation expense from the
exercise of the options, the tax benefit received is recorded as a reduction to
income taxes payable and an increase to additional capital.
NOTE F-STOCK OPTIONS AND WARRANTS
The Company has granted options under the Company's stock option plans to
certain key employees to purchase the Company's common stock at fair market
value on the date of grant. The options generally become exercisable
cumulatively, in equal installments over a period of four or five years
commencing one year from date of grant and expiring ten years after date of
grant. Changes in the number of shares available under outstanding options
during fiscal years 1993, 1994 and 1995 were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Number of Shares Exercise Price
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at July 31, 1992 315,325 $6.75 to $10.00
Granted 91,150 7.75 to 16.00
Exercised (47,225) 6.75 to 10.00
Canceled (16,300) 7.75 to 10.00
- -----------------------------------------------------------------------------------------------------
Outstanding at July 31, 1993 342,950 $6.75 to $16.00
Granted 110,300 14.25 to 18.38
Exercised (144,149) 4.50 to 10.00
Canceled (5,141) 5.08 to 10.25
Adjustment for Stock Splits 369,398 3.00 to 12.25
- -----------------------------------------------------------------------------------------------------
OUTSTANDING AT JULY 31, 1994 673,358 $3.00 TO $12.25
Granted 189,000 13.50 TO 18.88
Exercised (181,689) 3.00 TO 12.25
Cancelled (38,738) 3.39 TO 12.25
- -----------------------------------------------------------------------------------------------------
OUTSTANDING AT JULY 31, 1995 641,931 $3.39 TO $18.88
- -----------------------------------------------------------------------------------------------------
</TABLE>
At July 31, 1995, 1994 and 1993, options for 305,823, 259,252 and 148,175
shares, respectively were exercisable and options for 80,996, 231,258 and
242,736 shares, respectively, were available for future grants.
During the year, warrants to acquire 40,000 shares of common stock were
exercised at prices ranging from $3.78 to $8.11 and warrants to acquire 9,000
shares at $14.25 were granted. In fiscal 1994, 200 warrants were exercised at
$10.00 and 18,000 warrants were granted to purchase shares at $16.38. These
warrants are exercisable 6 months after the date of grant. At July 31, 1995
and 1994, warrants were outstanding and exercisable to purchase 113,900 and
144,900 shares, respectively, at exercise prices ranging from $3.33 to $14.25.
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
GELMAN SCIENCES INC. AND SUBSIDIARIES
NOTE G - POLLUTION-RELATED EXPENSES
The Company has settled several legal suits related to groundwater
contamination and has begun remediation activities. The remediation plan
requires the Company to treat the groundwater to the extent necessary to reduce
the contaminants to a defined level. The following table shows
pollution-related balance sheet activity:
<TABLE>
<CAPTION>
Dollars in Thousands
- --------------------------------------------------------------------------------------------------------------
Accrued Liability Long-term Debt
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance as of July 31, 1993 $2,881 $1,375
Remediation costs charged to accrued liability (1,258)
Settlement with chemical companies, cost recovery 750
Payments relating to settlements (561) (250)
Defense cost on settlement (312)
- --------------------------------------------------------------------------------------------------------------
Balance as of July 31, 1994 1,500 1,125
Remediation costs charged to accrued liability (567)
Payments relating to settlements (180) (381)
- --------------------------------------------------------------------------------------------------------------
Balance as of July 31, 1995 $ 753 $ 744
- --------------------------------------------------------------------------------------------------------------
</TABLE>
During the year, the Company made final payments on several settlements which
had been accrued for in previous years. At July 31, 1995, $175,000 of the total
accrued liability is classified as other accrued expenses with the remainder
classified as other long-term liabilities. Of the total long-term debt,
$106,250 is classified as current maturities.
Total costs to the Company of pollution-related activities will be dependent
upon the efficacy and duration of the remediation plan. The ultimate costs to
be incurred could exceed the amount provided for at July 31, 1995. However, it
is the opinion of management that these additional costs, if any, will not have
a material adverse effect on the Company's operations because the cash outflows
would be spread over many future years.
NOTE H-OTHER EXPENSE (INCOME)
For the year ended July 31, 1995, other expense (income) includes interest and
rental income of $173,000 related to Australian properties and foreign exchange
gains of $233,000. For the year ended July 31, 1994, other expense (income)
includes a gain of $108,000 on the sale of Australian assets relating to the
Laminar Air Flow product line. Also included are royalties and gains and
losses on sales of other assets.
<PAGE> 14
NOTE I-OPERATIONS BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA
The principal products of the Company are grouped into two segments: the
Filtration Products Group and the Health Products Group. Filtration Products
are primarily comprised of laboratory products, certain membranes and process
filtration products for the biotechnology, pharmaceutical, environmental and
industrial markets. Health Products are primarily comprised of products for
the medical and health industries, including custom-manufactured disposable
filters and certain membranes for original equipment manufacturers in the
healthcare field. In both of the segments, sales and distribution of the
Company's products both domestically and internationally are through Company
salespeople and a network of distributors.
<TABLE>
<CAPTION>
Dollars in Thousands
- ---------------------------------------------------------------------------------------------------------------------
Net Operating Identifiable Depreciation Capital
INDUSTRY SEGMENTS Sales Earnings Assets Expense Expenditures
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JULY 31, 1995
FILTRATION PRODUCTS GROUP $ 66,355 $11,036 $54,975 $3,042 $3,400
HEALTH PRODUCTS GROUP 34,807 6,295 25,626 1,278 4,259
OTHER 2,341 160 1,096 31 166
- ---------------------------------------------------------------------------------------------------------------------
TOTALS $103,503 $17,491 $81,697 $4,351 $7,825
- ---------------------------------------------------------------------------------------------------------------------
Year Ended July 31, 1994
Filtration Products Group $ 62,916 $ 9,749 $49,431 $3,039 $4,223
Health Products Group 29,461 4,833 20,918 1,325 2,338
Other 2,586 115 1,245 41 121
- ---------------------------------------------------------------------------------------------------------------------
Totals $ 94,963 $14,697 $71,594 $4,405 $6,682
- ---------------------------------------------------------------------------------------------------------------------
Year Ended July 31, 1993
Filtration Products Group $ 56,900 $ 7,407 $44,407 $3,069 $3,717
Health Products Group 26,394 4,375 17,356 1,114 2,114
Other 2,915 (14) 1,542 58 29
- ---------------------------------------------------------------------------------------------------------------------
Totals $ 86,209 $11,768 $63,305 $4,241 $5,860
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Net Operating Identifiable
GEOGRAPHIC AREA DATA Sales Earnings Assets Liabilities
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED JULY 31, 1995
U.S. OPERATIONS $ 87,952 $15,521 $62,805 $18,423
EUROPE 16,514 995 10,775 1,965
ASIA/PACIFIC 8,088 872 7,012 2,523
OTHER 3,297 103 1,105 97
ELIMINATION - INTER-AREA SALES (12,348) - - -
- ---------------------------------------------------------------------------------------------------------------------
TOTALS $103,503 $17,491 $81,697 $23,008
- ---------------------------------------------------------------------------------------------------------------------
Year Ended July 31, 1994
U.S. Operations $ 80,147 $13,477 $56,685 $37,026
Europe 13,631 809 7,579 1,428
Asia/Pacific 9,300 328 6,264 2,649
Other 3,095 83 1,066 149
Elimination - Inter-area sales (11,210) - - -
- ---------------------------------------------------------------------------------------------------------------------
Totals $ 94,963 $14,697 $71,594 $41,252
- ---------------------------------------------------------------------------------------------------------------------
Year Ended July 31, 1993
U.S. Operations $ 72,589 $11,932 $50,517 $37,049
Europe 10,564 163 5,938 1,057
Asia/Pacific 8,958 (35) 5,684 2,991
Other 3,142 (292) 1,166 142
Elimination - Inter-area sales (9,044) - -
- ---------------------------------------------------------------------------------------------------------------------
Totals $ 86,209 $11,768 $63,305 $41,239
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
GELMAN SCIENCES INC. AND SUBSIDIARIES
NOTE I-OPERATIONS BY INDUSTRY SEGMENT
AND GEOGRAPHIC AREA (CONTINUED)
Operating earnings are total revenues less operating expenses excluding other
expense (income) and corporate expenses of: 1995 - $6,599,000; 1994 -
$5,649,000; 1993 - $4,949,000. Corporate expenses include an allocated share
of administrative costs and pollution-related expenses. Identifiable assets by
industry segment include both assets directly identified with those operations
and an allocated share of jointly used assets. Corporate assets consist of an
allocated share of the buildings, furniture and fixtures, and equipment.
Asia/Pacific operations are represented by subsidiaries located in Japan and
Australia. European operations are represented by subsidiaries located in the
United Kingdom, Ireland, France, Germany and Italy. Inter-area sales are
accounted for at prices comparable to unaffiliated customer sales. Export
sales to unaffiliated customers were: 1995 - $9,667,000; 1994 - $9,239,000;
1993 - $10,018,000. Net sales to two major customers who distribute the
Company's products approximated $20,176,000, $19,725,000 and $18,245,000 in
1995, 1994 and 1993, respectively.
NOTE J-FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
Foreign Exchange Instruments - The Company enters into forward exchange
contracts to hedge foreign currency transactions on a continuing basis. At July
31, 1995 the Company had contracts outstanding to exchange foreign currencies
for U.S. dollars amounting to approximately $3.4 million denominated in
British pounds, Japanese yen, French francs, Canadian dollars and German
deutschemarks, maturing at various dates. Maximum market risk is limited to
the difference between the spot rate on the date of delivery and the contract
price.
Interest rate instruments - At July 31, 1995, the Company had outstanding a
7.5% interest rate cap on $5 million notional amount effective May 1, 1995
through May 1,1998. During the year, the Company settled its interest rate swap
agreement on $5 million notional amount at a gain of $48,000. The gain was
recorded as a reduction to interest expense as the underlying hedged instrument
was settled during the year. The interest rate cap agreement has been entered
into with a major financial institution which is expected to fully perform
under the terms of the agreement.
NOTE K-EXTRAORDINARY ITEM
During the year ended July 31, 1994, the Company redeemed the 7.98% Industrial
Development Revenue Bonds issued in 1989. The Company recorded a charge of
$295,000 net of $112,000 tax benefit or $.03 per share to write-off deferred
finance charges and record a redemption premium and fees related to the 1989
Bonds.
NOTE L-SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
Summarized quarterly financial information for fiscal years ended July 31, 1995
and July 31, 1994 is presented below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1995 QUARTER ENDED 1994 Quarter Ended
OCT 31 JAN 31 APR 30 JULY 31 Oct 31 Jan 31 Apr 30 July 31
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $24,167 $24,018 $26,893 $28,425 $22,294 $23,282 $24,377 $25,010
Gross margin 12,157 12,445 14,068 14,763 10,918 11,628 12,042 13,122
Research and development 1,308 1,316 1,366 1,508 1,220 1,106 1,188 1,363
Earnings before income
taxes and extraordinary item 1,909 1,989 3,104 2,985 1,388 1,733 2,266 2,150
Income taxes 678 733 1,133 821 490 639 784 687
Extraordinary expense - - - - - - 183 -
Net earnings 1,231 1,256 1,971 2,164 898 1,094 1,299 1,463
Net earnings per share $ .19 $ .19 $ .26 $ .27 $ .15 $ .18 $ .20 $ .23
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
For the third quarter ended April 30, 1994, the Company recorded an
extraordinary charge of $295,000 net of $112,000 tax benefit or $.03 per share
associated with the refinancing of the 1989 Industrial Development Revenue
Bonds.
<PAGE> 16
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Gelman Sciences Inc.
Ann Arbor, Michigan
We have audited the consolidated balance sheets of Gelman Sciences
Inc. and Subsidiaries as of July 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended July 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Gelman
Sciences Inc. and Subsidiaries as of July 31, 1995 and 1994, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended July 31, 1995 in conformity with generally accepted
accounting principles.
As discussed in Note G to the financial statements, the Company has
agreed to perform a remediation program for groundwater contamination. The
ultimate costs of the remediation program could exceed the amount estimated and
accrued at July 31, 1995.
/s/ Coopers & Lybrand L.L.P.
Detroit, Michigan
September 8, 1995
ANNUAL REPORT TO SEC PRINCIPLE BANKS
The Form 10-K Annual Report NBD Bank, N.A., Detroit, Michigan
to the Securities and Exchange Comerica Bank-Detroit, Michigan
Commission provides certain
additional information and GENERAL COUNSEL
is available to Gelman Sciences Brouse & McDowell, Akron, Ohio
Inc. stockholders upon written
request to:
GELMAN SCIENCES INC. AUDITORS
Shareholder Relations Coopers & Lybrand L.L.P., Detroit, Michigan
600 S. Wagner Road
Ann Arbor, MI 48103-9019 TRANSFER AGENT AND REGISTRAR
Society National Bank, Cleveland, Ohio
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
NAME OF THE SUBSIDIARY INCORPORATION
- ---------------------- -------------
Gelman Sciences Ltd. England
Gelman Sciences Pty. Ltd. Australia
Gelman Sciences Inc. Canada
Gelman Ltd. Ireland
Gelman International Ltd. Ireland
Gelman Sciences Technology, Ltd. Israel
Gelman Research and Development, Ltd. Israel
Gelman Italy S.r.l. Italy
Gelman Sciences Japan, Ltd. Japan
Gelman Sciences GmbH Germany
Gelman Sciences S.A. France
Microbe One Inc. Michigan
Gelman Sciences International, Inc. Michigan
Micro Technologies Inc. Michigan
Gelman Sciences Foreign Sales Corporation U.S. Virgin Islands
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (a) Gelman
Sciences Inc. Statement of Operations and Consolidated Statement of Cash Flow
for the twelve months ended July 31, 1995 and the Consolidated Balance Sheet as
of July 31, 1995 and is qualified in its entirety by reference to such (b) Form
10-K for the fiscal year ended July 31, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JUL-31-1995
<CASH> 3,010
<SECURITIES> 0
<RECEIVABLES> 23,985
<ALLOWANCES> 1,310
<INVENTORY> 14,944
<CURRENT-ASSETS> 46,927
<PP&E> 69,842
<DEPRECIATION> 37,258
<TOTAL-ASSETS> 81,781
<CURRENT-LIABILITIES> 15,017
<BONDS> 5,493
<COMMON> 779
0
0
<OTHER-SE> 57,994
<TOTAL-LIABILITY-AND-EQUITY> 81,781
<SALES> 103,503
<TOTAL-REVENUES> 103,503
<CGS> 50,070
<TOTAL-COSTS> 50,070
<OTHER-EXPENSES> 41,568
<LOSS-PROVISION> 564
<INTEREST-EXPENSE> 1,314
<INCOME-PRETAX> 9,987
<INCOME-TAX> 3,365
<INCOME-CONTINUING> 6,622
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,622
<EPS-PRIMARY> .92
<EPS-DILUTED> .92
</TABLE>
