SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) 9-1-95
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-8089 59-1995548
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1250 24th Street, N.W. Washington, D.C. 20037
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 202-828-0850
(Former name or former address, if changed since last report.)
<PAGE>
Item 2. Acquisition of Assets
On September 1, 1995, Danaher Corporation acquired
controlling interest (100% ownership will be completed in 1995) of
Joslyn Corporation. The total cost of acquisition will be
approximately $245 million, inclusive of acquisition costs. The
acquisition will be accounted for as a purchase.
Joslyn is an Illinois corporation with its principal
executive offices located at 30 South Wacker Drive, Chicago, IL
60606. The following description of the Company's business has
been taken from Joslyn's 1994 10-K.
The Company is a holding company for a number of
subsidiaries which are engaged primarily in the manufacturing and
supplying of electrical hardware, apparatus, protective equipment,
air pressurization and dehydration products, and services used in
the construction and maintenance of transmission and distribution
facilities to electric power and telephone companies. The
Company's subsidiaries also manufacture and supply vacuum
switchgear and electrical controls to commercial and industrial
markets as well as protective equipment, connector backshells, and
air and gas dehydration systems to aerospace and defense
companies.
Item 7. Exhibits
(a) Attachment 1 contains financial statements of Joslyn
as specified under Rule 3.05(b)
1. Years ended December 31, 1994, 1993, and 1992.
2. Six Months Ended June 30, 1995.
(b) Attachment 2 contains pro-forma financial statements
and explanatory notes as per Article 11.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DANAHER CORPORATION
By: /s/ C. Scott Brannan
C. Scott Brannan
Vice President and Controller
<PAGE>
ATTACHMENT 1
Consolidated Statement of Income
Joslyn Corporation and Subsidiaries
For the Years Ended December 31, 1994 1993 1992
=====================================================================
==========
Net Sales $216,177,000 $217,707,000 $217,889,000
- ------------------------------------------------------------------------------
- -
Costs and Expenses:
Cost of Goods Sold $159,924,000 $158,232,000 $160,614,000
Selling, Distribution and
Administrative Expense 34,013,000 33,842,000 30,875,000
Profit Sharing Expense 2,308,000 2,191,000 2,596,000
Interest Expense 113,000 135,000 213,000
Investment (Income) (1,668,000) (1,293,000)
(1,246,000)
Other Expense, Net 6,917,000 1,830,000 2,429,000
Environmental Expense 35,000,000 - -
- ------------------------------------------------------------------------------
- -
Income (Loss) before Income Taxes $(20,430,000) $ 22,770,000 $ 22,408,000
Income Tax (Provision) Benefit 9,250,000 (7,900,000)
(8,100,000)
- ------------------------------------------------------------------------------
- -
Net Income (Loss) $(11,180,000) $ 14,870,000 $ 14,308,000
=====================================================================
==========
Net Income (Loss) Per Share $(1.57) $2.10 $2.03
=====================================================================
==========
The accompanying Notes to Consolidated Financial Statements
are an integral part of this statement.
<PAGE>
Consolidated Balance Sheet
Joslyn Corporation and Subsidiaries
December 31, 1994 1993
=====================================================================
==========
Assets
- ------------------------------------------------------------------------------
- -
Current Assets:
Cash and Cash Equivalents $ 39,775,000 $ 41,102,000
Receivables, Less Allowance ($1,582,000 in 1994
and $1,116,000 in 1993) for Doubtful Accounts 28,482,000 25,676,000
Inventories 35,564,000 36,360,000
Deferred Tax and Other Current Assets 15,804,000 10,960,000
- ------------------------------------------------------------------------------
- -
Total Current Assets $119,625,000 $114,098,000
Net Deferred Tax and Other Assets 19,924,000 8,200,000
Net Property, Plant and Equipment 37,955,000 39,984,000
- ------------------------------------------------------------------------------
- -
Total Assets $177,504,000 $162,282,000
=====================================================================
==========
Liabilities and Shareholders' Equity
- ------------------------------------------------------------------------------
- -
Current Liabilities:
Accounts Payable $ 10,674,000 $ 12,308,000
Accrued Liabilities 30,548,000 25,454,000
Income Taxes 2,444,000 3,295,000
- ------------------------------------------------------------------------------
- -
Total Current Liabilities $ 43,666,000 $ 41,057,000
- ------------------------------------------------------------------------------
- -
Postretirement Medical Liability $ 14,712,000 $ 13,990,000
- ------------------------------------------------------------------------------
- -
Environmental Accrual $ 38,500,000 $ 8,000,000
- ------------------------------------------------------------------------------
- -
Shareholders' Equity:
Common Stock, $1.25 Par Value;
Authorized 20,000,000 Shares, Issued 7,154,000
Shares in 1994 and 7,104,000 Shares in 1993 $ 8,943,000 $ 8,880,000
Retained Earnings 72,321,000 91,124,000
Equity Adjustments (638,000)
(769,000)
- ------------------------------------------------------------------------------
- -
Total Shareholders' Equity $ 80,626,000 $ 99,235,000
- ------------------------------------------------------------------------------
- -
Total Liabilities and Shareholders' Equity $177,504,000 $162,282,000
=====================================================================
==========
The accompanying Notes to Consolidated Financial Statements
are an integral part of this balance sheet.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity
Joslyn Corporation and Subsidiaries
Common Stock
------------ Equity Retained
For the Three Years Ended December 31, 1994 Shares Dollars
Adjustments Earnings
=====================================================================
==============================
<S> <C> <C> <C>
<C>
Balance, December 31, 1991 7,055,000 $8,818,000 $
154,000 $77,515,000
1992 Net Income -- --
-- 14,308,000
1992 Cash Dividends ($1.13 Per Share) -- --
-- (7,965,000)
Exercise of Stock Options 84,000 105,000
-- 1,398,000
Purchase of Common Stock (92,000) (115,000)
-- (1,817,000)
Common Stock Transferred to Profit Sharing Plans 21,000 27,000
-- 399,000
Equity Adjustments -- --
(730,000) --
- ------------------------------------------------------------------------------
- ---------------------
Balance, December 31, 1992 7,068,000 $8,835,000
$(576,000) $83,838,000
1993 Net Income -- --
-- 14,870,000
1993 Cash Dividends ($1.16 Per Share) -- --
-- (8,224,000)
Exercise of Stock Options 43,000 54,000
-- 794,000
Purchase of Common Stock (17,000) (21,000)
-- (392,000)
Common Stock Transferred to Profit Sharing Plans 10,000 12,000
-- 238,000
Equity Adjustments -- --
(193,000) --
=====================================================================
==============================
Balance, December 31, 1993 7,104,000 $8,880,000
$(769,000) $91,124,000
1994 Net (Loss) -- --
-- (11,180,000)
1994 Cash Dividends ($1.20 Per Share) -- --
-- (8,551,000)
Exercise of Stock Options 50,000 63,000
-- 928,000
Purchase of Common Stock (20,000) (25,000)
-- (530,000)
Common Stock Transferred to Profit Sharing Plans 20,000 25,000
-- 530,000
Equity Adjustments -- --
131,000 --
=====================================================================
==============================
Balance, December 31, 1994 7,154,000 $8,943,000
$(638,000) $72,321,000
=====================================================================
==============================
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
Joslyn Corporation and Subsidiaries
For the Years Ended December 31, 1994
1993 1992
=====================================================================
==================================
<S> <C> <C>
<C>
Cash Flows from Operating Activities:
Net Income $(11,180,000) $
14,870,000 $ 14,308,000
Adjustments to Reconcile Net Income to
Net Cash Flows from Operating Activities:
Depreciation and Amortization 5,364,000
5,230,000 5,057,000
Deferred Income Tax Provision (Benefit) (16,777,000)
7,000 1,045,000
Change in Assets and Liabilities, Net of
Effects of Acquisitions and Dispositions:
(Increase)Decrease in Receivables (2,806,000)
588,000
(468,000)
Decrease(Increase) in Inventories 2,418,000
(3,506,000)
3,154,000
(Decrease)Increase in Current Liabilities
except Current Environmental Accrual (5,371,000)
(1,725,000)
1,582,000
Increase(Decrease) in Current and Long-term
Environmental Accruals, Net 38,487,000
(2,671,000)
(5,377,000)
Increase in Postretirement Medical
Liability 722,000
761,000 899,000
Other, Net 465,000
23,000 (2,517,000)
- ------------------------------------------------------------------------------
- -------------------------
Net Cash Flows from Operating Activities $ 11,322,000 $
13,577,000 $
17,683,000
=====================================================================
==================================
Cash Flows from Investing Activities:
Capital Expenditures $ (3,434,000) $
(3,428,000) $ (2,742,000)
Acquisitions of Businesses (2,500,000)
(429,000) (9,851,000)
Proceeds from Sales of Property, Plant and
Equipment and Dispositions 845,000
693,000 2,786,000
- ------------------------------------------------------------------------------
- -------------------------
Net Cash Flows from Investing Activities $ (5,089,000) $
(3,164,000) $
(9,807,000)
=====================================================================
==================================
Cash Flows from Financing Activities:
Cash Dividends $ (8,551,000) $
(8,224,000) $ (7,965,000)
Purchase of Joslyn Common Stock (555,000)
(413,000) (1,932,000)
Transfer of Joslyn Common Stock to Profit
Sharing Plans 555,000
250,000 426,000
Exercise of Stock Options 991,000
848,000 1,503,000
- ------------------------------------------------------------------------------
- -------------------------
Net Cash Flows from Financing Activities $ (7,560,000) $
(7,539,000) $ (7,968,000)
=====================================================================
==================================
Net (Decrease)Increase in Cash and Cash Equivalents $ (1,327,000) $
2,874,000 $
(92,000)
Cash and Cash Equivalents at Beginning of Year 41,102,000
38,228,000
38,320,000
- ------------------------------------------------------------------------------
- -------------------------
Cash and Cash Equivalents at End of Year $ 39,775,000 $
41,102,000 $
38,228,000
=====================================================================
==================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of this statement.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JOSLYN CORPORATION and SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation: The Consolidated Financial Statements include
accounts of the corporation and all subsidiaries, after elimination of
intercompany accounts and transactions.
Cash and Cash Equivalents: Cash and cash equivalents of $39,775,000 and
$41,102,000 at December 31, 1994 and 1993, respectively, include cash
equivalents which are highly liquid investments with original maturities
or put dates of three months or less. They are recorded at cost which
approximates market.
Also included in this balance sheet caption are equity securities, all of
which are classified as "available-for-sale", as defined in Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". This new standard, which became
effective in 1994 on a prospective basis, was adopted by the corporation in
the first quarter of 1994 and requires certain securities to be recorded at
market and their unrealized holding gains or losses to be recorded in
shareholders' equity. (See the Equity Adjustments section of this note.)
Joslyn's available-for-sale securities have a market value of $3,727,000 and
$4,704,000 and an aggregate cost of $3,793,000 and $4,089,000 on December 31,
1994 and 1993, respectively. At December 31, 1994 and December 31, 1992,
there were immaterial gross unrealized gains and immaterial gross unrealized
losses. At December 31, 1993, there were gross unrealized gains of $633,000
and immaterial gross unrealized losses. SFAS No. 115 also requires several
new disclosures about investments, if they are material. None of these
disclosures are material.
At December 31, 1994 and 1993, cash and cash equivalents also included
$1,984,000 and $608,000, respectively, of restricted funds used to guarantee a
self-insurance program with an insurance company.
Equity Adjustments: Included in equity adjustments are cumulative foreign
currency translation adjustments, pension liability adjustments and a
valuation
reserve required by SFAS No. 115 in 1994 to adjust investments classified as
available-for-sale securities from cost to market. The valuation reserve at
December 31, 1994 and the net change for 1994 was an immaterial debit of
$40,000. The cumulative foreign currency translation adjustments at
December 31, 1994, 1993 and 1992 were debit balances of $364,000, $260,000
and
$131,000, respectively. The pension liability adjustments consisted of debit
balances of $234,000, $509,000 and $445,000 at December 31, 1994, 1993 and
1992, respectively.
Inventories: At December 31, 1994 and 1993, inventories of $18,190,000 and
$18,424,000, respectively, are valued using the last-in, first-out (LIFO)
method. The remaining inventories are valued at the lower of first-in,
first-out (FIFO) cost or market. If FIFO inventory methods had been used for
all inventories, the December 31, 1994 and 1993 inventories would have been
$9,440,000 and $9,069,000 higher, respectively. During 1994, 1993 and 1992,
certain inventories were reduced, which resulted in a liquidation of some LIFO
inventories valued at lower costs prevailing in prior years. These
liquidations resulted in increasing income before taxes by immaterial amounts
in 1994 and 1993 and by $875,000 in 1992.
<PAGE>
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Depreciation is computed using the straight-line method for financial
statement purposes and accelerated methods for income tax purposes. When
properties are retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the respective accounts and any gain
or loss from disposition is recognized. Maintenance and repair costs are
expensed when incurred and were $4,483,000, $4,261,000 and $3,650,000 in 1994,
1993 and 1992, respectively.
Research and Development: Costs related to research and development
activities
are charged against income as incurred. These costs were approximately
$6,400,000 in 1994, $6,200,000 in 1993 and $5,000,000 in 1992.
Cash Flow Information: Cash paid for interest was $113,000 in 1994, $135,000
in 1993 and $212,000 in 1992. Cash paid for income taxes was $10,029,000 in
1994, $7,999,000 in 1993 and $5,737,000 in 1992.
Net Income Per Share: Net income per share of common stock was computed based
on weighted average shares of 7,124,000 in 1994, 7,086,000 in 1993 and
7,045,000 in 1992.
2. FINANCING ARRANGEMENTS:
At December 31, 1994, 1993 and 1992, the corporation had unused lines of
credit
established with banks of $10.0 million, $15.0 million and $17.5 million,
respectively, that may be drawn as needed. The lines of credit were not used
during 1994, 1993 or 1992. In connection with the line of credit agreements,
the corporation was not required to maintain compensating cash balances in
1994 or 1993. In 1992, the corporation maintained an immaterial cash balance
on certain unused credit lines and paid fees on certain other unused credit
lines. The corporation has complied with the compensating cash balance
requirements of all credit agreements with banks.
<PAGE>
3. PROFIT SHARING AND PENSION BENEFITS:
Most domestic subsidiaries of Joslyn participate in one of two Profit Sharing
Plans. The plans distribute Unit Contributions primarily in relationship to
covered compensation and years of service. For both plans, Company Unit
Contributions are at the discretion of the Board of Directors of each
participating corporation and are related to profit sharing income, as
defined,
for each Company Unit. Company Unit Contributions are made partly in cash and
partly in common stock of Joslyn Corporation. The plans have similar
provisions requiring one year of service for eligibility and five years of
service for vesting. Each member of the Profit Sharing Plans is entitled
to vote the number of Joslyn Corporation shares allocated to that member's
account. Additionally, a 401(k) savings feature is part of the plans which
provides proportionate, fully-vested, Company matching contributions. Profit
sharing expense for both plans was $2,308,000 in 1994, $2,191,000 in 1993 and
$2,596,000 in 1992.
Additional retirement benefits are provided through a frozen non-contributory,
defined benefit pension plan for eligible domestic, salaried employees of
participating units. Effective December 31, 1988, this plan was frozen and no
employees may qualify for participation in the plan thereafter. Benefits are
based on years of service and an average of the five highest consecutive years
of defined compensation, both as accrued at the plan freeze date. No amounts
were contributed in 1994, 1993 and 1992 because of the full funding limitation
in the 1974 Employee Retirement Income Security Act (ERISA). If a qualified
defined benefit pension plan is terminated and all accrued liabilities to
employees and their beneficiaries are satisfied, in general, all remaining
assets in the plan's trust may revert to the employer as income, subject to
significant excise and income taxes.
Joslyn Clark Controls, Inc. and Joslyn Jennings Corporation each also has a
non-contributory, defined benefit pension plan for eligible hourly employees.
The benefits are based on negotiated amounts per year of service. The
corporation's funding policy is to make the contribution required by ERISA.
The three pension plans include provisions limiting benefits in accordance
with the Internal Revenue Code and ERISA. The assets of the three pension
plans consist primarily of stocks and bonds in a Master Trust account which
is managed by an independent investment manager.
Following is a schedule reconciling the aggregate funded status of the pension
plans with the amounts included in the applicable consolidated balance sheet:
<PAGE>
<TABLE>
<CAPTION>
(in thousands)
- ------------------------------------------------------------------------------
- -----------------
As of As of
October 1, 1994 October 1, 1993
- ------------------------------------------------------------------------------
- -----------------
Overfunded Underfunded Overfunded Underfunded
Plan Plans Plan Plans
- ------------------------------------------------------------------------------
- -----------------
<S> <C> <C> <C>
<C>
Assets and Obligations:
Plan Assets at Fair Value $ 40,594 $ 3,499 $
41,391 $ 3,385
Accumulated Benefit Obligation * (29,481) (3,866)
(32,740) (4,258)
- ------------------------------------------------------------------------------
- -----------------
Plan Assets in Excess of (Less than)
Benefit Obligation $ 11,113 $ (367) $
8,651 $ (873)
=====================================================================
==========================
Vested Benefit Obligation * $(28,675) $(3,650)
$(31,866) $(3,981)
=====================================================================
==========================
Funded Status:
Plan Assets at Fair Value $ 40,594 $ 3,499 $
41,391 $ 3,385
Projected Benefit Obligation * (29,481) (3,866)
(32,740) (4,258)
Items Not Yet Recognized
in Earnings:
Unrecognized Net Asset at
January 1, 1985 being
Recognized over 14 Years (1,468) (113)
(1,813) (141)
Unrecognized Net (Gain) Loss (6,037) 556
(3,385) 1,053
Unrecognized Prior Service Cost - 156
- - 173
Adjustment to Recognize Minimum
Liability - (543)
- - (1,042)
- ------------------------------------------------------------------------------
- -----------------
Prepaid (Accrued) Pension Cost $ 3,608 $ (311) $
3,453 $ (830)
=====================================================================
==========================
</TABLE>
* Actuarial present values
<PAGE>
The discount rate used in determining the actuarial present value of the
projected benefit obligation as of October 1, 1994 was 7.50% and as of
October 1, 1993 and 1992 was 6.25%. The expected long-term rate of return
on assets for 1994, 1993 and 1992 was 8.0%.
The components of net pension income (cost) in 1994, 1993 and 1992 are as
follows:
(in thousands)
- --------------------------------------------------------------
1994
1993 1992
- --------------------------------------------------------------
Service Costs-Benefits
Earned During the Period $ (213) $ (218) $ (314)
Interest Cost on Projected
Benefit Obligation (2,286) (2,231) (2,187)
Actual Return on Plan Assets 1,521 3,004 4,189
Net Amortization and Deferrals 965 (549) (1,664)
- --------------------------------------------------------------
Net Pension (Cost) Income $ (13) $ 6 $ 24
==============================================================
4. INCOME TAXES:
In the 1994 third quarter, Joslyn recorded a charge of $35.0 million for
increased environmental reserves, as discussed in Note 6, and a related
deferred tax benefit of $14.0 million. In the 1994 fourth quarter, Joslyn
recorded a $6.2 million charge to other expense, as discussed in Note 10,
and a related deferred tax benefit of $2.1 million.
In the third quarter of 1993, Congress enacted the Revenue Reconciliation Act
of 1993 (RRA) which, among other things, increased the federal statutory rate
from 34% to 35% retroactively to January 1, 1993. In the 1993 third quarter,
the corporation recorded the tax effects of the RRA which increased net income
and earnings per share by approximately two cents ($.02) per share. The
increase reflects the benefits related to the corporation's significant net
deferred tax assets.
Income (loss) before income taxes consists of the following:
(in
thousands)
- --------------------------------------------------------------
1994
1993
1992
- --------------------------------------------------------------
Domestic $(21,268) $20,409 $20,467
Foreign 838 2,361 1,941
- --------------------------------------------------------------
$(20,430)
$22,770 $22,408
==============================================================
<PAGE>
The provision for income taxes consists of the following:
(in thousands)
- --------------------------------------------------------------
1994
1993
1992
- --------------------------------------------------------------
Current:
U.S. Federal $ 5,843 $ 5,801 $ 5,318
Foreign 222 787 594
State and Local 1,462 1,305 1,143
- --------------------------------------------------------------
$ 7,527 $
7,893 $ 7,055
- --------------------------------------------------------------
Deferred:
U.S. Federal $(13,923) $ (6) $ 822
Foreign 59 15 46
State and Local (2,913) (2) 177
- --------------------------------------------------------------
$(16,777) $ 7 $
1,045
- --------------------------------------------------------------
Total Income Tax
Provision (Benefit) $( 9,250) $ 7,900 $ 8,100
==============================================================
<PAGE>
A reconciliation of the statutory U.S. federal income tax
rates to the corporation's effective income tax rates is as
follows:
- --------------------------------------------------------------
1994 1993
1992
- --------------------------------------------------------------
Expected Tax Rates (35.0)% 35.0% 34.0%
State Income Taxes, Net of
Federal Income Tax (4.6) 3.9 4.1
Tax Reductions Related to:
Foreign Sales Corporation (1.3) (1.5) (1.4)
U.S. Tax-exempt Interest (1.6) (1.2) (1.2)
Research and Development
Credit (0.9) (0.5) (0.4)
U.S. Taxes on Foreign Operations - 0.2 0.1
All Other, Net (1.9) (1.2) 1.0
- --------------------------------------------------------------
Effective Tax Rates (45.3)% 34.7% 36.2%
==============================================================
Deferred tax assets and liabilities arise from the tax effects of timing
differences in the recognition of income and expenses for financial
statement and tax purposes. Significant deferred tax assets and liabilities
as of December 31, 1994 and 1993 are as follows:
(in thousands)
- --------------------------------------------------------------
1994 1993
- --------------------------------------------------------------
Assets:
Postretirement Medical $ 5,994 $ 5,077
Environmental Matters 18,867 3,705
Other Employee Benefits 1,658 1,868
Warranties 1,073 1,421
All Other 5,480 4,063
- --------------------------------------------------------------
Gross Deferred Tax Assets $33,072 $16,134
Valuation Allowance (200) (200)
- --------------------------------------------------------------
$32,872
$15,934
==============================================================
Liabilities:
Depreciation $ 4,190 $ 4,552
Pension 1,327 1,246
- --------------------------------------------------------------
Gross Deferred Tax Liabilities $ 5,517 $ 5,798
==============================================================
The corporation's policy is to provide deferred U.S. federal income taxes on
the undistributed cumulative income of its foreign subsidiaries, to the extent
that foreign tax credits are not available. The corporation's tax credit
carry-forwards are not significant.
<PAGE>
5. STOCK OPTIONS:
The shareholders have approved two stock option plans for key employees which
include Incentive Stock Options (ISOs), non-qualified stock options and non-
qualified stock options with tandem stock appreciation rights. Stock options
granted after 1991 and ISOs do not have tandem stock appreciation rights.
These
plans provided for a maximum of 2,081,250 shares that could be delivered upon
exercise of stock options and stock appreciation rights (SARs). Stock options
and SARs are granted at the market value of the corporation's stock on the
date
of grant. Options granted prior to 1990 and in 1994 are exercisable not less
than six months nor more than ten years after the date of the grant. Options
granted from 1990 through 1993 are exercisable not less than six months nor
more than five years after the date of the grant.
An SAR entitles an option holder to elect to receive, in lieu of the exercise
of an option and without payment to the corporation, an amount equal to the
difference between the option price and the market value of the common stock
on
the date the right is exercised. This amount may be paid in cash, in common
shares, or in a combination thereof, subject to approval of a committee of
non-participants. Immaterial expense in 1994 and 1993 and expense of $282,000
in 1992 are included in other expense, net with respect to SARs. The
corporation made payments or issued stock related to the exercise of SARs as
follows:
- --------------------------------------------------------------
Year Number of Rights Option Prices
- --------------------------------------------------------------
1994 10,073 $14.92 to 19.50
1993 12,435 15.29 to 21.17
1992 45,764 14.92 to 21.17
==============================================================
<PAGE>
A summary of activity in the plans is presented below:
- ------------------------------------------------------------------------------
- -
Stock Options and
Stock Appreciation Rights
Shares Option Prices
=====================================================================
==========
Options Outstanding, December 31,1991 322,092 $13.09 to
21.17
Granted in 1992 134,431 21.17 &
27.00
Exercised in 1992 (129,308) 14.92 to
21.17
Cancelled in 1992 (7,812) 19.50 to
21.17
- ------------------------------------------------------------------------------
- -
Options Outstanding, December 31, 1992 319,403 $13.09 to
27.00
Granted in 1993 77,808 24.75
Exercised in 1993 (56,067) 14.92 to
21.17
Cancelled in 1993 (3,054) 13.09 &
18.63
- ------------------------------------------------------------------------------
- -
Options Outstanding, December 31, 1993 338,090 $14.92 to
27.00
Granted in 1994 65,665 25.50
Exercised in 1994 (59,747) 14.92 to
27.00
Cancelled in 1994 - -
- ------------------------------------------------------------------------------
- -
Options Outstanding, December 31, 1994 344,008 $14.92 to
27.00
=====================================================================
==========
Options Exercisable at:
December 31, 1994 278,343 $14.92 to
27.00
December 31, 1993 260,282 14.92 to
27.00
=====================================================================
==========
6. ENVIRONMENTAL AND LEGAL MATTERS:
The corporation previously operated wood treating facilities that chemically
preserved utility poles, pilings and railroad ties. All such treating
operations were discontinued or sold prior to 1982. These facilities used
wood preservatives that included creosote, pentachlorophenol and chromium-
arsenic-copper. While preservatives were handled in accordance with all
appropriate procedures called for at the time, subsequent changes in
environmental laws now require the generators of these spent preservatives
to be responsible for the cost of remedial actions at the sites where spent
preservatives have been deposited.
In the 1994 third quarter, Joslyn recorded an environmental charge of $35.0
million ($21.0 million after tax or $2.95 per share) for increased
environmental reserves. The 1994 charge relates principally to the clean-up
of a former wood treating site located at Panama, Oklahoma. Joslyn was first
notified by the U.S. Environmental Protection Agency (USEPA) in July 1994 that
it is a potentially responsible party (PRP) at the Oklahoma site. Joslyn sold
the site in 1955, after operating it for 16 years. Although one prior and
three subsequent owners have operated a wood treating facility at the site, it
initially appears that Joslyn may be the only significant financially viable
PRP and Joslyn's insurance coverage during such period may be minimal. Joslyn
believes that approximately 20% of the remediation costs at the Oklahoma site
will be expended over the next couple of years and that most of the
remediation will take place during a period five to ten years from now.
<PAGE>
Determining Joslyn's ultimate cost associated with remediating former wood
treating sites is subject to many variables, including the availability of
economical remediation technologies, the volume of contaminated soil,
contributions from other PRPs, insurance recoveries and changes in applicable
laws and regulations. Joslyn's investigation of the Oklahoma site is still
in the preliminary stages. Most of the charge reflects an estimate prepared
by Joslyn's environmental consultants of the costs for environmental response
at the Oklahoma site, based on the limited data about the Oklahoma site that
is currently available, Joslyn's experience with nearly completed clean-ups
and recent actions by USEPA at other sites. This estimate assumes that Joslyn
will be allowed to apply the remediation technologies at the Oklahoma site
that
it has applied elsewhere. Certain of such technologies are among the least
expensive of various alternatives. The balance of the charge reflects
estimates of Joslyn's exposure at certain other locations, for which very
little information is available, that are not currently known to be under
investigation by environmental agencies. Accordingly, there can be no
assurance that Joslyn's estimates of its environmental liabilities will not
change. For instance, if technologies other than those assumed to be
available
are utilized at the Oklahoma site, or if the volume of contaminated soil at
that site is significantly greater than that suggested by preliminary data,
remediation costs could more than double.
In addition to the $35.0 million charge taken in 1994, Joslyn currently has a
$13.5 million reserve remaining (after expenditures and recoveries, including
$6.2 million received in 1994 from insurance and other sources) from a $30.0
million charge in 1987 for estimated remediation costs for known sites then
under investigation by environmental agencies. None of the 1987 charge
relates
to the sites covered by the 1994 charge.
<PAGE>
As of December 31, 1994, the corporation has environmental accruals of
approximately $48.5 million. It is anticipated that approximately $7.0
million to $10.0 million may be spent in 1995 on clean-up and related
activities. Consequently, approximately $10.0 million is classified as a
current liability and the remaining $38.5 million of the reserve is classified
as a long-term liability at December 31, 1994.
There were expenditures of approximately $2.7 million, $2.8 million and $15.0
million in 1994, 1993 and 1992, respectively, on environmental clean-up and
related activities, of former wood treating sites. There were recoveries from
insurance and other parties of $6.2 million, $0.1 million and $9.6 million in
1994, 1993 and 1992, respectively. The total charge to expense in 1994 was
$35.0 million and there were no charges to expense in 1993 and 1992 related
to the environmental accruals.
Joslyn Manufacturing Co., a subsidiary of the corporation, is a defendant in a
class action tort suit. The suit alleges exposure to chemicals and property
devaluation resulting from wood treating operations previously conducted at a
Louisiana site. Both the size of the class and the damages are unspecified.
The corporation has tendered the defense of the suit to its insurance carrier.
The corporation believes that it may have adequate insurance coverage for the
litigation, however, because of the above uncertainties, the corporation is
unable to determine at this time the potential liability, if any.
The corporation is involved in various other claims, legal actions and
complaints arising in the normal course of business. It is the opinion of
Management that such actions and claims will not have a material adverse
effect on the results of operations or financial condition of the corporation.
7. POSTRETIREMENT MEDICAL BENEFITS:
The corporation and its participating domestic subsidiaries provide optional
health care benefits for retired employees under a frozen contributory plan.
Employees may become eligible for these benefits if they were employed by the
corporation at the defined retirement age, were employed at least ten years
and were hired prior to January 1, 1989. The benefits are subject to
deductibles, co-payment provisions and other limitations, which are amended
periodically. Also, the corporation assumed a frozen retiree medical
coverage plan as a result of its acquisition of the Jennings business in 1992.
The following data is for these coverages in aggregate. These benefits are
discretionary and are not a commitment to long-term benefit payments. The
plans are funded as claims are paid.
The net periodic postretirement medical benefit cost for 1994, 1993 and 1992
was as follows:
(in thousands)
- --------------------------------------------------------------
1994 1993
1992
- --------------------------------------------------------------
Service Cost $ 475 $ 434 $ 486
Interest Cost 851 762 889
Other (66) (93) (25)
- --------------------------------------------------------------
Net Medical Benefit Cost $1,260 $ 1,103 $ 1,350
==============================================================
<PAGE>
The accumulated postretirement medical benefit obligation at
December 31, 1994 and 1993 was as follows:
(in thousands)
- --------------------------------------------------------------
1994
1993
- --------------------------------------------------------------
Retirees $ 3,975 $ 4,129
Fully Eligible Active Plan Participants 1,551 1,138
Other Active Plan Participants 5,604 6,049
- --------------------------------------------------------------
Total Accumulated Medical Obligation $11,130 $11,316
Unrecognized Net Gain 3,599 2,816
- --------------------------------------------------------------
Accrued Medical Benefit Cost $14,729 $14,132
==============================================================
The assumed health care cost trend rate used in the calculation for measuring
the accumulated postretirement medical benefit obligation was 13.1% in 1994
and 15.4% in 1993. This rate was assumed to decrease by 2.3% per year to 8.5%
in 1996 and remain at that level thereafter. The effect on the accumulated
medical benefit obligation at January 1, 1994 of a one-percentage-point
increase for each year in the health care cost trend rate used would result
in an increase of $2,039,000 in the total obligation and a $226,000 increase
in the aggregate service and interest cost components of the 1994 expense.
The weighted average discount rates used to determine the accumulated
postretirement medical benefit obligation as of December 31, 1994 and 1993
were 8% and 7%, respectively.
<PAGE>
8. ACQUISITIONS:
In the first quarter of 1994, Joslyn acquired, for $2.5 million in cash,
the assets of the Poleline Hardware Division of Stanley G. Flagg, a wholly-
owned subsidiary of Amcast Industrial Corporation. Flagg products consist
of fiberglass conductor support systems and malleable and ductile iron
poleline
hardware for use on electrical power and telephone systems. The assets were
relocated to a Joslyn Manufacturing Co. plant in Chicago, Illinois from Stowe,
Pennsylvania. Revenues from the Flagg products in 1994 were approximately
$5.5 million.
In the second quarter of 1993, Joslyn Jennings Corporation purchased a vacuum
capacitor product line from EEV Limited in Chelmsford, England. The product
line was relocated to Joslyn Jennings' facility in San Jose, California. The
purchase price was not material.
In April 1992, Joslyn Corporation purchased, for cash, the stock of Lear
Siegler Jennings Corp., a San Jose, California based manufacturer of high-
voltage vacuum products and telecommunications test instrumentation. A
wholly-
owned subsidiary of Joslyn Corporation also purchased certain real estate,
some of which is being used in the business and some of which was sold in
1993.
The corporation paid $9.9 million for this acquisition.
Each of these acquisitions was accounted for by the purchase method. The
operating results of these acquisitions are included in the corporation's
consolidated financial statements from the date of acquisition.
9. SHAREHOLDERS' RIGHTS:
The corporation has a Shareholders' Right attached to each share of common
stock. Each Right entitles the holder to buy from the corporation one newly
issued share of common stock at an exercise price of $60. The Rights become
exercisable upon the acquisition of a certain percentage of corporation stock
or a tender offer or exchange offer for corporation stock by a person or
group.
The corporation is entitled to redeem the Rights at $.05 per Right at any time
prior to fifteen days after a public announcement that a person or group has
acquired a certain percentage of the corporation's common stock. Depending
on the occurrence of certain specific events, each exercisable Right, other
than Rights held by the acquiring party, either entitles the holder to
purchase
the corporation's common stock at an adjusted per-share price equal to 20% of
the then market price or entitles the holder to purchase a share of the
acquiring company common stock at a 50% discount. The Rights will expire on
March 3, 1998.
10. OTHER EXPENSE, NET:
In the fourth quarter of 1994, the corporation recorded a charge to Other
Expense, Net of $6.2 million before taxes, $4.1 million after taxes, or $.58
per share. The pre-tax charge includes 1) a $4.1 million charge to write down
to estimated net realizable value the net assets of two businesses that are
disposition candidates and 2) a charge of $2.1 million primarily for estimated
losses on subleasing the corporation headquarters and severance costs for
staff
reductions.
Other Expense, Net in 1993 and 1992 includes primarily charges related to
plant
consolidations and to actions to eliminate marginal products as part of
management's continuing effort to simplify the organization, reduce costs and
improve efficiencies. In 1992, the expenses were partially offset by a gain
on the sale of certain property.
<PAGE>
Also included in 1994, 1993 and 1992 are certain post-employment benefit
expenses and other miscellaneous items.
11. DETAILS OF CONSOLIDATED BALANCE SHEET:
(in
thousands)
- ----------------------------------------------------------
1994
1993
- ----------------------------------------------------------
Inventories:
Finished Goods $ 7,703 $ 6,788
Work in Process 13,893 11,407
Raw Materials 13,968 18,165
- ----------------------------------------------------------
$ 35,564
$ 36,360
==========================================================
Deferred Tax and
Other Current Assets:
Deferred Tax Assets $ 11,816 $ 8,693
Other Current Assets 3,988 2,267
- ----------------------------------------------------------
$ 15,804 $
10,960
==========================================================
Net Deferred Tax and
Other Assets:
Net Deferred Tax Assets $ 15,539 $ 1,443
Other Assets 4,385 6,757
- ----------------------------------------------------------
$ 19,924
$ 8,200
==========================================================
Net Property, Plant and Equipment:
Land $ 7,525 $ 7,525
Buildings 24,942 24,510
Machinery and Equipment 49,857 47,768
Construction in Progress 760 486
- ----------------------------------------------------------
$ 83,084
$ 80,289
Less Accumulated Depreciation 45,129 40,305
- ----------------------------------------------------------
$ 37,955
$ 39,984
==========================================================
Accrued Liabilities:
Reserve for Environmental Matters $ 9,876 $ 1,889
Accrued Wages, Bonuses and
Vacation Expenses 3,696 3,616
Accrued Taxes, Other than
Income Taxes 1,435 1,543
Accrued Warranties and
Workers' Compensation 4,427 6,088
Advance Payments 1,430 2,279
Other Accrued Liabilities 9,684 10,039
- ----------------------------------------------------------
$ 30,548 $
25,454
==========================================================
<PAGE>
12. SEGMENT OF BUSINESS REPORTING:
The operations of the corporation are divided into the following business
segments for financial reporting purposes:
Electrical Switches and Controls: Includes power quality protection and
control products and power switches and related controls. Electronic
protection equipment, high-voltage vacuum products, sulfur hexafluoride
switches and switchgear are designed and produced primarily for use by the
electric utility, telecommunications and industrial markets. These products
include electronic transient suppression devices, telecommunications test
instrumentation, monitor systems and control equipment, electric switching
and interrupting systems, vacuum capacitors, relays, starters, contactors,
fire pump controllers, dehydration products and electrical connector
accessories.
Utility Line Products: Includes power and communication line protection and
support products. Construction and maintenance materials and electric power
protection equipment are designed and produced principally for electric power
distribution and for overhead telephone communication lines. These products
are manufactured and assembled from metal, polymers, fiberglass, engineered
materials and porcelain and include hardware, earth anchors, power surge
arresters, cable accessories, electrical terminating devices and other
products. In addition, the corporation sells complementary goods produced by
other manufacturers.
Intersegment sales are not material. Foreign operations of the corporation,
which are not material, are located in Canada and primarily serve markets in
that country. No single customer accounts for 10% or more of the
corporation's
sales. General corporate assets are principally cash and cash equivalents,
land and deferred tax and other assets.
<PAGE>
<TABLE>
<CAPTION>
Financial information by business segments is as follows:
(in thousands)
- ------------------------------------------------------------------------------
- ---------
Net Income
from Identi- Capital
Customer Business
fiable Depreci- Expendi-
Sales
Segments
Assets ation tures
- ------------------------------------------------------------------------------
- ---------
1994
=====================================================================
==================
<S> <C> <C> <C>
<C>
Electrical Switches and Controls $132,776 $14,879 $69,226 $3,278
$2,200
Utility Line Products 83,401 5,467 31,365 1,905
1,112
General Corporate - - 76,913 130
122
- ------------------------------------------------------------------------------
- ---------
Consolidated $216,177 $20,346 $177,504 $5,313
$3,434
=====================================================================
==================
1993
- ------------------------------------------------------------------------------
- ---------
Electrical Switches and Controls $142,677 $22,781 $74,649 $3,134
$2,092
Utility Line Products 75,030 5,012 31,391 1,912
1,305
General Corporate - - 56,242 132
31
- ------------------------------------------------------------------------------
- ---------
Consolidated $217,707 $27,793 $162,282 $5,178
$3,428
=====================================================================
==================
1992
- ------------------------------------------------------------------------------
- ---------
Electrical Switches and Controls $136,217 $21,276 $ 71,648 $2,780
$1,804
Utility Line Products 81,672 6,679 33,614 2,025
898
General Corporate - - 52,897 154
40
- ------------------------------------------------------------------------------
- ---------
Consolidated $217,889 $27,955 $158,159 $4,959
$2,742
=====================================================================
==================
</TABLE>
Export sales from the corporation's United States operations
to unaffiliated customers were as follows:
(in
thousands)
- --------------------------------------------------------------
1994 1993
1992
- --------------------------------------------------------------
Asia $10,173 $11,249 $13,584
Europe 8,391 9,333 7,047
Western Hemisphere 11,310 9,635 8,708
Other 1,645 2,805 3,148
- --------------------------------------------------------------
Total $31,519 $33,022 $32,487
==============================================================
<PAGE>
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
The following table sets forth certain unaudited quarterly financial
information for 1994 and 1993:
(in thousands
except per share
figures)
- ------------------------------------------------------------------------------
- -
1994
- ------------------------------------------------------------------------------
- -
* **
1st Qtr. 2nd Qtr.
3rd Qtr. 4th
Qtr. Total
- ------------------------------------------------------------------------------
- -
Net Sales $53,919 $54,472 $55,803 $51,983 $216,177
Gross Profit 14,768 14,476 15,010 11,999 56,253
Net Income (Loss) 3,746 3,356 (17,000) (1,282)
(11,180)
Net Income (Loss) Per Share .53 .47 (2.39) (.18)
(1.57)
=====================================================================
==========
- ------------------------------------------------------------------------------
- -
1993
- ------------------------------------------------------------------------------
- -
1st Qtr. 2nd Qtr.
3rd Qtr. 4th
Qtr. Total
- ------------------------------------------------------------------------------
- -
Net Sales $57,430 $56,111 $53,689 $50,477
$217,707
Gross Profit 15,736 15,460 14,187 14,092
59,475
Net Income 3,918 3,940 3,832 3,180
14,870
Net Income Per Share .55 .56 .54 .45
2.10
=====================================================================
==========
* Environmental charge discussed in Note 6.
** Special Charge to Other Expense, Net discussed in Note 10.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Joslyn Corporation:
We have audited the accompanying consolidated balance sheets of Joslyn
Corporation (an Illinois corporation) and Subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three fiscal years in the period ended
December 31, 1994. These financial statements are the responsibility of the
Corporation'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 consolidated 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 financial position of Joslyn Corporation and
Subsidiaries as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three fiscal years in the
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 8, 1995<PAGE>
JOSLYN CORPORATION
BALANCE SHEET
JUNE 30, 1995 AND DECEMBER 31, 1994
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
==============================================================================
===========================
JUNE DECEMBER
JUNE DECEMBER
1995 1994 LIABILITIES AND SHARE-
1995 1994
ASSETS (Note 1) HOLDERS' EQUITY
(Note 1)
- ------------------------------------------------------------------------------
- ---------------------------
<C> <S> <S> <S>
<S> <S>
Current Assets: Current Liabilities:
Accounts Payable
$ 10,282 $ 10,674
Cash and Cash Equivalents $ 16,953 $ 39,775 Accrued Liabilities
30,742 30,548
---------- ---------- Income Taxes
1,191 2,444
Receivables, Less Allowance
---------- ----------
for Doubtful Accounts $ 34,948 $ 28,482 Total Current
Liabilities $ 42,215 $ 43,666
---------- ----------
Inventories: Postretirement Medical
Finished Goods $ 8,290 $ 7,703 Liability
14,999 14,712
Work-In-Process 17,650 13,893 Environmental Accrual
37,500 38,500
Raw Materials 15,267 13,968
---------- ----------
---------- ---------- Total Liabilities
$ 94,714 $ 96,878
Total Inventories $ 41,207 $ 35,564
---------- ----------
---------- ----------
Deferred Tax and Other Shareholders' Equity:
Current Assets $ 14,200 $ 15,804 Common Stock $1.25 Par
Value;
---------- ---------- Authorized 20,000,000
shares
Total Current Assets $ 107,308 $ 119,625 Issued 7,165,000
shares in
---------- ---------- 1995 and 7,154,000
Net Deferred Tax, Goodwill in 1994.
$ 8,957 $ 8,943
and Other Assets $ 33,693 $ 19,924
---------- ---------- Retained Earnings
75,960 72,321
Plant and Equipment, at Cost $ 84,965 $ 83,084
Less Accumulated Depreciation (46,923) (45,129) Equity Adjustments
(588) (638)
---------- ----------
------- -------
Net Plant and Equipment $ 38,042 $ 37,955 Total Shareholders'
Equity $ 84,329 $ 80,626
---------- ----------
---------- ----------
Total Liabilities and
Total Assets $ 179,043 $ 177,504 Shareholders' Equity
$ 179,043 $ 177,504
==============================================================================
===========================
</TABLE>
<PAGE>
JOSLYN CORPORATION
CONDENSED INCOME STATEMENT
FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollar Amounts in Thousands Except Per Share Amounts)
Quarter Ended Six Months Ended
June 30, June 30,
-------------------
- ----------------
1995 1994 1995 1994
<TABLE>
<CAPTION>
- ------------------------------------------------ ---------
- ---------------------
Net Sales $ 57,546 $ 54,472 $114,069
$108,391
- ------------------------------------------------ ---------
- ---------------------
<C> <S> <S> <S> <S>
Cost of Goods Sold $ 42,391 $ 39,996 $ 84,751 $
79,147
Selling and General Expenses 9,203 9,198 18,319
18,190
Other Expense, Net 97 544 191
854
Investment Income (715) (322) (1,106)
(702)
- ------------------------------------------------ ---------
- ---------------------
Income before Income Taxes $ 6,570 $ 5,056 $ 11,914 $
10,902
Income Taxes 2,350 1,700 4,200
3,800
- ------------------------------------------------ ---------
- ---------------------
Net Income $ 4,220 $ 3,356 $ 7,714 $
7,102
===========================================================
=====================
Per Share of Common Stock:
Net Income $ .59 $ .47 $ 1.08 $
1.00
- ------------------------------------------------ ---------
- ---------------------
Dividends $ .30 $ .30 $ .60 $
.60
===========================================================
=====================
Average Number of Shares Outstanding 7,165,000 7,112,000 7,162,000
7,109,000
===========================================================
=====================
</TABLE>
<PAGE>
JOSLYN CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Dollar Amounts in Thousands)
1995 1994
--------- ---------
Cash Flows from Operating Activities:
Net Income from Operations $ 7,714 $ 7,102
Adjustments to Reconcile Net Income to Net
Cash Flows from Operating Activities:
Depreciation and Amortization 2,536 2,674
Deferred Income Taxes (824) 39
Change in Assets and Liabilities:
(Increase) in Receivables (3,867) (5,729)
(Increase) Decrease in Inventories (2,068) 916
(Decrease) in Accounts Payable (1,253) (3,113)
(Decrease) in Current and Long-term
Environmental Accruals (1,523) (917)
Other, Net 659 (2,059)
--------- ---------
Net Cash Flows from Operating Activities $ 1,374 $ (1,087)
--------- ---------
Cash Flows from Investing Activities:
Capital Expenditures $ (2,543) $ (1,621)
Acquisition of Businesses (18,360) (2,500)
Other, Net 768 369
--------- ---------
Net Cash Flows from Investing Activities $(20,135) $ (3,752)
--------- ---------
Cash Flows from Financing Activities:
Dividends Paid $ (4,300) $ (4,266)
Other, Net 239 266
--------- ---------
Net Cash Flows from Financing Activities $ (4,061) $ (4,000)
--------- ---------
Net (Decrease) in Cash and Cash Equivalents $(22,822) $ (8,839)
========= =========
Supplemental Disclosures:
Income Taxes Paid $ 2,940 4,249
Interest Paid 56 77
========= ========
<PAGE>
JOSLYN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1:
On June 28, 1995 Joslyn Corporation acquired all of the issued and
outstanding common shares of Cyberex, Inc., a closely held corporation.
The total purchase price of $22 million was paid from Joslyn's available
cash on hand. Included in the assets purchased from Cyberex was $3.6
million of cash, which resulted in a net cash expenditure of $18.4
million. Cyberex had sales of almost $16 million for the latest fiscal
year. Cyberex is a recognized leading manufacturer of uninterruptable
power systems and static transfer switches.
The acquisition has been accounted for using the purchase method and the
Cyberex net assets have been included in the June 30, 1995 Balance Sheet.
The Condensed Income Statement for June 30, 1995 does not include
Cyberex's results of operations. The excess of cost over the net tangible
assets acquired is initially estimated to be approximately $13.3 million
and is recorded as goodwill, which is being amortized over 40 years on a
straight-line basis. The purchase accounting adjustments are not complete.
The unaudited pro forma amounts presented in the following table show the
results for the quarter and six months ended June 30, 1995 and 1994,
assuming Joslyn's acquisition of Cyberex occurred at the beginning of the
periods presented. Permitted pro forma adjustments include only the
effects of events directly attributable to a tranaction expected to have a
continuing impact. These pro forma results do not purport to be indicative
of what would have occurred had the acquisition actually been consummated
on the assumed dates or of results that may occur for any subsequent
period.
Quarter Ended Six Months Ended
June 30, June 30,
----------------- -----------------
1995 1994 1995 1994
------- ------- -------- --------
Revenues $61,482 $57,623 $121,121 $114,231
Net Income 4,314 3,343 7,855 7,201
Net Income Per Share 0.60 0.47 1.10 1.01
The pro forma adjustments are for amortization of an initial estimate for
goodwill and for investment income that would not have been earned by
Joslyn had the cash been dispursed at the beginning of the periods
presented. Pro forma adjustments were also made to restate Cyberex's
earnings for certain non-recurring expenses recorded due to the
acquisition which were for the termination of Cyberex stock options and to
conform Cyberex's accounting policies to Joslyn's accounting policies.
Note 2:
On July 21, 1995, Joslyn Corporation signed a definitive agreement to
sell all the shares of ADK Pressure Equipment Corporation (ADK) for
approximately net book value. Joslyn does not expect to realize a loss as
a result of this transaction and may realize certain tax benefits not
previously recorded. The divestiture should ultimately have a positive
cash flow impact of over $3 million.
Note 3:
On July 24, 1995, Danaher Corporation commenced a cash tender offer for
all the outstanding shares of common stock of Joslyn Corporation at a
price of $32 per share.<PAGE>
ATTACHMENT 2
Pro Forma Income Statement
Year Ended December 31, 1994
(amounts in thousands)
Danaher Joslyn Adjustments Combined
Net revenues $1,288,684 $216,177 $1,504,861
Cost of sales 934,332 201,841 (2,000)(f) 1,134,173
Selling, general and
administrative expenses 208,516 36,321 3,500 (g) 248,337
Other - - -
Total operating expenses 1,142,848 238,162 1,382,510
Operating profit 145,836 (21,985) 122,351
Interest (income) expense, 9,313 (5,249) 16,100 (h) 20,164
Earnings before income taxe 136,523 (16,736) 102,187
Income taxes 54,873 9,250 (23,248)(i) 40,875
Net earnings $81,650 ($25,986) $61,312
Pro Forma Income Statement
Six Months Ended June 30, 1995
Unaudited
(amounts in thousands)
Danaher Joslyn Adjustments Combined
Net revenues $767,996 $114,069 $882,065
Cost of sales 552,137 84,751 (1,000)(f) 635,888
Selling, general and
administrative expenses 127,748 18,319 1,750 (g) 147,817
Total operating expenses 679,885 103,070 783,705
Operating profit 88,111 10,999 98,360
Interest (income) expense, 6,416 (915) 8,500 (h) 14,001
Earnings before income taxe 81,695 11,914 84,359
Income taxes 32,627 4,200 (3,083)(i) 33,744
Net earnings $49,068 $7,714 $50,615
<PAGE>
Pro Forma Balance Sheet
As of June 30, 1995
Unaudited
(amounts in thousands)
Danaher Joslyn Adjustments Combined
ASSETS
Current Assets:
Cash and cash equivalents $20,574 $16,953 $37,527
Accounts receivable, net 231,543 34,948 266,491
Total inventories 178,686 41,207 10,000 (a) 229,893
Prepaid expenses and other
current assets 46,322 14,200 (15,000)(b) 45,522
Total current assets 477,125 107,308 579,433
Property, plant and equipme 278,859 38,042 316,901
Other assets 30,991 33,693 64,684
Excess of cost over net assets
of acquired companies, ne 434,319 - 144,504 (c) 578,823
Total assets $1,221,294 $179,043 $1,539,841
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term de $87,914 - $87,914
Accounts payable 104,650 10,282 114,932
Accrued expenses 240,607 31,933 272,540
Total current liabili 433,171 42,215 475,386
Other liabilities 142,891 52,499 195,390
Long-term debt 116,547 - 230,000 (d) 346,547
Stockholders' equity:
Common stock 634 8,957 (8,957)(e) 634
Additional paid-in capita 314,564 - 314,564
Retained earnings 247,453 75,960 (82,127)(e) 241,286
Cumulative foreign
translation adjustment 3,523 (588) 588 (e) 3,523
Treasury stock (37,489) - (37,489)
Total stockholders' equity 528,685 84,329 522,518
Total liabilities and
stockholders' equit$1,221,294 $179,043 $1,539,841<PAGE>
EXPLANATORY NOTES TO PRO-FORMA FINANCIAL STATEMENTS
(a) Represents an increase in inventory amounts to fair value, principally
the elimination of LIFO valuation allowances.
(b) Represents elimination of Joslyn common stock reflected in the Danaher
balance sheet as securities available for sale.
(c) Represents the excess of cost over net assets of Joslyn Corporation.
(d) Represents borrowings necessary to complete the transaction subsequent
to June 30, 1995.
(e) Represents elimination of historical equity balances for Joslyn.
(f) Represents the effects of the inventory adjustments discussed in item
(A) above and the change in depreciation associated with establishing
new values and useful lives for the acquired fixed assets.
(g) Represents amortization of the excess of cost over net assets of Joslyn.
(h) Represents interest associated with the additional borrowings discussed
in item (D) above.
(i) Represents an adjustment to reflect an appropriate effective tax rate.
