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Previous: UNITED HIGH INCOME FUND INC, 497, 1996-07-03 |
Next: DANAHER CORP /DE/, SC 14D1/A, 1996-07-03 |
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) July 2, 1996
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 July 2, 1996, Danaher Corporation acquired controlling
interest (100% ownership will be completed in 1996) of Acme-
Cleveland Corporation. The total cost of acquisition will be
approximately $210 million, inclusive of acquisition costs. The
acquisition will be accounted for as a purchase.
Acme-Cleveland is an Ohio corporation with its principal
executive offices located at 30100 Chagrin Blvd., Suite 100,
Pepper Pike, OH 44124-5705. The following description of the
Company's business has been taken from Acme-Cleveland's 1995 10-K.
Acme-Cleveland has two major business segments: (i)
Telecommunication and Electronic Products and (ii) Precision
Products.
The Telecommunication and Electronic Products business
segment is comprised of product businesses that are based largely
on applied electronic technology. Products in this segment are
used in the construction, maintenance, and operation of
telecommunication networks, and in industrial process
applications to collect and transmit information regarding the
presence, location, and physical attributes of various objects or
materials.
The Precision Products business segment is comprised of
product businesses that are based on, or relate to, precision
measurement and analysis and other technologies having precision
needs and requirements. This segment includes quality assurance
products and system, motion and positioning components and
systems, precision gauges, metal and punch form tooling, and
specialty gears. Purchases of quality assurance products and
systems and certain motion and positioning components are
typically made as part of capital expenditure programs and can be
deferred; the other products in this segment are usually purchased
used in the course of day-to-day operations, and the purchase of
such items cannot ordinarily be deferred.
Item 7. Exhibits
(a) Attachment 1 contains financial statements of Acme-
Cleveland as specified under Rule 3.05(b)
1. Years ended September 30, 1995, 1994, 1993
2. Three Months Ended March 31, 1996
(b) Attachment 2 contains pro-forma financial statements
and explanatory notes as per Article 11.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DANAHER CORPORATION
By: /s/ C. Scott Brannan
C. Scott Brannan
Vice President and Controller
ATTACHMENT 1
Financial Highlights 06/20/96 10:11 AM YE\AR#WONA95.doc
Acme-Cleveland Corporation and Subsidiaries
In thousands, except per share data and statistical information
Year Ended September 30
1995
1994 1993
Operating highlights
Net sales. . . . . . $120,716
$77,200 $81,510
Earnings from continuing operations before extraordinary
item and cumulative effect of accounting changes
3,791
2,511 . . 4,792
Per common share . . . . . .56 .35
.71 . . . . .
Discontinued operations before extraordinary item and
cumulative effect of accounting changes. . 38,712 3,989
438 .
Per common share . . . . . 5.74 .63
.06 . . . . .
Extraordinary item . -0- -0-
1,900 . . . . .
Per common share . . -0- -0- .30
Cumulative effect of accounting changes. . . -0-
(29,921). . -0-
Per common share . -0- (4.75)
-0-
Net earnings (loss) . . . . . 42,503
(23,421). 7,130
Per common share . 6.30
(3.77). .1.07
Balance sheet highlights
Cash and securities. . . . . . 44,658
38,563. .37,808
Total assets . . . . 140,253
105,647 123,889
Total debt . . . . . 1,056 1,926
3,423 . . . . .
Shareholders' equity . . . . . 84,901
33,713. .64,823
Percentage of debt to capital. . . 1.2% 5.4%
5.0%. . . . .
Other information - continuing operations
Customer orders booked . . . . 124,053
77,947. .78,637
Customer order backlog . . . . 13,469 8,740
8,497 . . . . .
Capital additions. . 5,050 2,152
1,514 . . . . .
Depreciation . . . . 2,881 2,625
2,212 . . . . .
Dividends paid . . . 3,257 3,060
2,870 . . . . .
Dividends per common share . .47 .44
.41 . . . . .
The information in this summary should be read in conjunction with
the financial statements beginning on page 18.
<PAGE>
Consolidated Balance Sheets
Acme-Cleveland Corporation and Subsidiaries
In thousands, except share data
September 30
Assets
1995
1994
Current assets
Cash
and
cash
equiva
lents $
44,658
$
38,35
5
Market
able
securi
ties -
0- 208
Trade
receiv
ables
less
allowa
nce of
$602
($1,06
3 in
1994)
18,633
14,74
5
Invent
ories:
Finish
ed
goods
5,231
7,550
Work
in
proces
s 8,430
4,581
Raw
materi
als
11,855
6,992
Total
invent
ories
25,516
19,12
3
Other
curren
t
asset
s 814
892
Deferr
ed
income
taxes
6,377
3,613
Net
assets
of
discon
tinued
operat
ions
-
0-
3,324
Total current
assets
95,998
80,260
Property, plant, and equipment at cost
Land
1,622
2,224
Buildi
ngs
13,917
18,72
8
Machin
ery
and
equipm
ent
28,500
40,073
44,039
61,02
5
Less
accumu
lated
deprec
iation
28,044
45,256
Net property, plant, and
equipment
15,995
15,769
Goodwill and intangibles. . . . . .
. . . . . . . . . . . . . . .24,456
. . . . . . . . . . . . . . . 2,059
Minority equity investments . . . .
. . . . . . . . . . . . . . . . -0-
. . . . . . . . . . . . . . . . . .
505 . . . . . . . . . . . . . . . .
Other assets. . . . . . . . . . . .
. . . . . . . . . . . . . . . 3,534
. . . . . . . . . . . . . 2,834
Deferred income taxes . . . . . . .
. . . . . . . . . . . . . . .
270 . . . . . . . . . . . . . .
4,220 . . . . . . . . . . . . . . .
Total
assets
$140,253
$105,647
<PAGE>
September 30
Liabilities and Shareholders'
Equity
1995
1994
Current liabilities
Payabl
e to
banks $
1,620 $
1,634
Curren
t
portio
n of
long-
term
debt
306
630
Accoun
ts
payabl
e
5,995 3
,918
Other
accrue
d
expens
es
8,857
6,200
Advanc
e
paymen
ts
from
custom
ers
238 1,5
22
Accrue
d
compen
satio
n
9,593 9
,610
Postem
ployme
nt
benefi
ts
other
than
pensio
ns 401
3,567
Other
accrue
d
taxes
1,665
1,686
Income
taxes
payabl
e
4,470
1,896
Net
liabil
ities
of
discon
tinued
operat
ions
13,140
-0-
Total current
liabilities
46,285
30,663
Long-term debt. . . . . . . . . . .
. . . . . . . . . . . . . . . . 687
. . . . . . . . . . . . . . . . . .
1,219 . . . . . . . . . . . . . . .
Postemployment benefits other than pensions .
. . . . . . . . . . . . . . . 3,431
. . . . . . . . . . . . . . . . . .
28,138. . . . . . . . . . . . . . .
Unfunded pension costs. . . . . . .
. . . . . . . . . . . . . . . 3,857
. . . . . . . . . . . . . . . . . .
10,965. . . . . . . . . . . . . . .
Other long-term liabilities . . . .
. . . . . . . . . . . . . . . . 808
. . . . . . . . . . . . . . . . . .
754 . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . .
. . . . . . . . . . . . . . . . 284
. . . . . . . . . . . . . . . . . .
195 . . . . . . . . . . . . . . . .
Shareholders' equity
Serial
Prefer
red
Shares
,
withou
t par
value:
Authorized - 936,285 shares; issued
and outstanding Series A, $1.80
cumulative, convertible 161,374 shares .
3,631. . .
3,631 . . . . . . . . . . . . . . .
Common
Shares
, par
value
$1 per
share:
Authorized - 10,000,000 shares; issued
and outstanding, excluding
115,056 held in treasury . . .
6,405. . .
6,300 . . . . . . . . . . . . . . .
Other
capita
l
55,148
53,71
7
Pensio
n
adjust
ment
(3,736
)
(11,43
9)
Foreig
n
curren
cy
transl
ation
adjust
ments
1,848
(855)
Retain
ed
earnin
gs
21,605
(17,64
1)
Total shareholders'
equity
84,901
33,713
Total liabilities and shareholders'
equity
$140,253
$105,647
See notes to consolidated financial statements.
<PAGE>
Statement of Consolidated Operations
Acme-Cleveland Corporation and Subsidiaries
In thousands, except per share data
Year Ended September 30
1995 1994
1993
Net sales . . . . . . . .
$120,716. . . . . $77,200
$81,510 . . . . . . . . .
Cost of products sold . .
71,352. . . . . . 49,921
52,692. . . . . . . . . .
Gross profit
49,364 27,279
28,818
Selling, general, and administrative expense. . . . . .
30,282. . . . . . .21,281 19,152
Research and development expense. .
3,949 . . . . . . . 1,945 1,306
Amortization of goodwill and intangibles. . .
1,210 . . . . . . 259 225
35,441 23,485 20,683
Earnings from operations
13,923 3,794
8,135
Other income (expense):
Interest income
1,743 986 684
Interest expense
(144) (166) (205)
Other income 618
901 1,496
Other expense
(563) (899)
(1,993)
Purchased research
and development
write-off
(5,693) -0-
-0-
(4,039) 822
(18)
Earnings from continuing operations before income taxes,
minority interest, extraordinary item, and cumulative
effect of accounting changes
9,884 4,616
8,117
Income taxes. . . . . . .
6,245 . . . . . . . 1,989
3,325 . . . . . . . . . .
Minority interest . . . .
152 . . . . . . . (116) -0-
. . . . . . . . . . . . .
Earnings from continuing operations
before extraordinary item and
cumulative effect of accounting changes
3,791 2,511
4,792
Discontinued operations before extraordinary item and
cumulative effect of accounting changes:
Earnings from operations, net of income taxes . . . .
13,985. . . . . . . 3,989
438 . . . . . . . . . . .
Net gain on sale (less income taxes of $1,500)
. . . . . . . . . 24,727 -0-
. . . . . . . . . -0-
38,712 3,989 438
Extraordinary item utilization of tax benefit
carryforwards . . . . . . -0-
. . . . . . . . . . . -0-
1,900 . . . . . . . . . .
Cumulative effect of accounting changes:
From continuing operations. . . -0-
. . . . . . . . . . 3,389 -0-
. . . . . . . . . . . . .
From discontinued operations. . -0-
. . . . . . . . (33,310) -0-
. . . . . . . . . . . . .
-0-
(29,921) -0-
Net earnings (loss) $
42,503 $(23,421) $
7,130
Earnings (loss) per common share:
Continuing
operations before
extraordinary item
and
cumulative
effect of
accounting
changes $
.56 $ .35 $
.71
Discontinued
operations before
extraordinary item
and
cumulative
effect of
accounting
changes:
Earnings from
operations, net of
income taxes 2.07
.63 .06
Net gain on
sale
3.67 -0-
-0-
5.74
.63 .06
Extraordinary
item
-0- -0-
.30
Cumulative effect
of accounting
changes:
From continuing
operations -0- .54
-0-
From
discontinued
operations
-0- (5.29)
-0-
-0- (4.75)
-0-
Net earnings (loss) per common share $
6.30 $ (3.77) $ 1.07
See notes to consolidated financial statements.
<PAGE>
Statement of Consolidated Shareholders' Equity
Acme-Cleveland Corporation and Subsidiaries
In thousands, except per share data
Foreign
Currency
Preferred Common Other
Pension Translation Retained
Shares Shares Capital
Adjustment Adjustments Earnings
Balance at October 1, 1992. . . . $ 3,631 $ 6,291
$53,651. .$(3,952) $ 343 $ 4,580
Net earnings. . .
. . . . . 7,130
Cash dividends:
Series A preferred shares, $1.80
(290)
Common shares, $.41 (2,580)
Foreign currency translation adjustments
. . . . . (1,416)
Pension adjustment . . .
. . . . . (2,565) _
Balance at September 30, 1993. . 3,631 6,291
53,651 . .(6,517) (1,073) 8,840
Net loss .
. . . . . (23,421)
Common shares issued under stock
option plan . . 9 66
Cash dividends:
Series A preferred shares, $1.80
(290)
Common shares, $.44 (2,770)
Foreign currency translation adjustments
. . . . . 218
Pension adjustment . . .
. . . . . (4,922) _
Balance at September 30, 1994. . 3,631 6,300
53,717 . .(11,439) (855)(17,641)
Net earnings. . .
. . . . . 42,503
Common shares issued under stock
option plan . . 105 879
Tax benefit from exercise of stock
options. 552
Cash dividends:
Series A preferred shares, $1.80
(290)
Common shares, $.47 (2,967)
Foreign currency translation adjustments
. . . . . 2,703
Pension adjustment . . .
. . . . . 7,703 _
. . . . .
Balance at September 30, 1995. . $ 3,631 $ 6,405
$55,148. .$(3,736) $ 1,848 $21,605
See notes to consolidated financial statements.
<PAGE>
Statement of Consolidated Cash Flows
Acme-Cleveland Corporation and Subsidiaries
In thousands
Year Ended September 30
1995 1994
1993
Operating activities
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Changes in
operating assets and liabilities excluding the effects of
acquisitions and divestitures:
(Increase)
decrease in
trade
receivables
(5,035) (80)
(353)
(Increase)
decrease in
inventories
(4,619)(3,132)
3,794
(Increase)
decrease in
other
current
assets
242 (350)
489
Increase
(decrease)
in payable
to banks
(232) (492)
425
Increase
(decrease)
in accounts
payable
1,943(1,112)
(41)
Increase
(decrease)
in other
accrued
liabilities
(1,294)1,559
(1,691)
Increase
(decrease)
in accrued
compensatio
n
2,067(1,091)
1,949
Increase
(decrease)
in income
taxes
payable
2,044 284
(301)
Increase
(decrease)
in
postemploym
ent
benefits
other than
pensions
(1,515) 54
-0-
Increase
(decrease)
in unfunded
pension
costs
503 (284)
(554)
Other, net
(1,196) (548)
(686)
Net cash provided by operating activities
10,556 8,192
17,255
Investing activities
C
a
p
i
t
a
l
e
x
p
e
n
d
i
t
u
r
e
s
(
4
,
2
3
3
)
(
2
,
6
5
7
)
(
1
,
8
7
3
)
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s
(
2
8
7
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(
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,
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4
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(
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,
3
6
1
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Net cash used by investing activities
(473) (3,191)
(4,768)
Financing activities
P
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r
m
d
e
b
t
a
n
d
n
o
t
e
s
p
a
y
a
b
l
e
(
1
,
6
1
1
)
(
2
8
2
)
(
2
5
0
)
P
r
i
n
c
i
p
a
l
b
o
r
r
o
w
i
n
g
s
o
n
l
o
n
g
-
t
e
r
m
d
e
b
t
a
n
d
n
o
t
e
s
p
a
y
a
b
l
e
9
5
9
7
9
2
E
x
e
r
c
i
s
e
o
f
s
t
o
c
k
o
p
t
i
o
n
s
1
,
5
3
6
7
5
-
0
-
D
i
v
i
d
e
n
d
s
p
a
i
d
(
3
,
2
5
7
)
(
3
,
0
6
0
)
(
2
,
8
7
0
)
C
a
s
h
u
s
e
d
f
o
r
d
i
s
c
o
n
t
i
n
u
e
d
o
p
e
r
a
t
i
o
n
s
(
8
5
8
)
(
7
5
9
)
(
8
6
9
)
Net cash used by financing activities
(4,095) (3,929)
(3,897)
Effect of exchange rate changes on cash . . . .
315 . . . . . . . . . 98
(12). . . . . . . . . . . . .
Increase in cash and cash equivalents
6,303 1,170
8,578
Cash and cash equivalents at beginning of year.
38,355. . . . . . . . 37,185
28,607. . . . . . . . . . . .
Cash and cash equivalents at end of year
$44,658 $38,355
$37,185
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Acme-Cleveland
Corporation and Subsidiaries
Note A Accounting Policies
Acme-Cleveland Corporation and its
subsidiaries' accounting and reporting
policies conform to generally accepted
accounting principles and to industry
practices. Significant accounting
policies and practices are described
below:
Consolidation The consolidated financial
statements include the accounts of the
Company and its majority owned
subsidiaries. In addition, minority
equity investments in other companies are
stated at cost plus the Company's equity
in undistributed earnings. Upon
consolidation, all significant
intercompany items are eliminated.
Foreign Currency Translation - Financial
statements for the Company's subsidiaries
outside the United States are translated
into U.S. dollars at year-end exchange
rates for assets and liabilities and
weighted average exchange rates for income
and expenses. The resulting translation
adjustments are recorded as a separate
component of shareholders' equity.
Fair Values of Financial Instruments -
The carrying amount reported in the
balance sheets for cash and cash
equivalents approximates their fair value.
All highly liquid investments with a
maturity of three months or less when
purchased are considered to be cash
equivalents.
Cash Flow Information Payments for
interest and income taxes were (in
thousands):
<PAGE>
<PAGE>
1995
1994
1993
Interest. . . .
$
194
$
332
$
430
Income taxes. .
8,120
1,960
2,980
Inventories Inventories are priced at
the lower of cost or market. Inventories
are principally valued on the first-in,
first-out (FIFO) method. Inventories not
valued by the FIFO method are valued using
the last-in, first-out (LIFO) method which
comprised 9% and 46% of consolidated
inventories at September 30, 1995 and
1994, respectively.
Goodwill and Intangibles Goodwill is the
difference between the purchase price and
the fair market value of net assets
acquired in business combinations treated
as purchases. Goodwill is amortized on a
straight-line basis over the periods
benefited, principally 10 to 40 years.
The carrying value of goodwill is assessed
for impairment on an ongoing quarterly
basis and adjusted when appropriate.
Other acquired intangible assets, to which
acquisition cost has been allocated based
on fair market value, include research and
development, customer lists, trade names,
assembled workforce, drawings and manuals,
and patents. All other intangibles are
amortized on a straight-line basis over
the periods benefited, generally 5 to 20
years. The accumulated amortization of
goodwill and intangibles at September 30,
1995 and 1994 was $2,378,000 and
$1,168,000, respectively.
Other Income Other income included a
litigation settlement of $1,225,000 in
1993 and gains from sales of assets of
$131,000 in 1995 and $202,000 in 1993.
Depreciation Depreciation is generally
computed using the straight-line method
over the estimated useful lives of assets.
Research and Development Expense
Research and development expenditures are
charged to continuing operations as
incurred. Amounts expensed, portions of
which were included in cost of products
sold, were $5,343,000, $3,201,000, and
$2,553,000, in 1995, 1994, and 1993,
respectively.
Provision for Warranty Claims Estimated
warranty costs are provided at the time of
sale of the warranted products.
Income Taxes The Company adopted
Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for
Income Taxes," effective October 1, 1993.
The Company has elected not to restate the
financial statements of years prior to
1994. This accounting statement requires
the use of the liability method for income
taxes rather than the previously used
deferred method. Under the liability
method, deferred tax assets and
liabilities are determined by the
differences between the financial
statement amounts of existing assets and
liabilities and their respective tax
bases. These differences are measured
using the current enacted tax rates.
Under the deferred method, deferred income
taxes are provided on items recognized in
different periods for financial reporting
purposes than for income tax purposes.
These differences were measured at the
effective tax rate in the year of
origination.
The Company's subsidiaries outside the
U.S. compute taxes at rates in effect in
the various countries in which they
operate. Earnings of these subsidiaries
may also be subject to additional income
and withholding taxes when they are
distributed as dividends. These
additional taxes, net of applicable tax
credits, are accrued currently, except
with respect to earnings which are not
expected to be remitted because they are
permanently reinvested. Undistributed
earnings of non-U.S. subsidiaries deemed
to be permanently reinvested were
approximately $1,800,000 at September 30,
1995.
Net Earnings (Loss) per Common Share Net
earnings per common share are based on the
weighted average number of common shares
outstanding during the period, the
dilutive effect of stock options and other
common stock equivalents, and, if
dilutive, the assumed conversion of the
Series A Preferred Shares. Net loss per
common share is based on the weighted
average number of common shares
outstanding after increasing the amount of
the loss by the dividend requirements on
the Series A Preferred Shares.
Litigation The Company is subject to
legal proceedings and claims which have
arisen in the ordinary course of its
business that have not been finally
adjudicated. These actions, when
ultimately concluded and determined, will
not, in the opinion of management, have a
material adverse effect upon the financial
position or results of operations of the
Company.
Environmental Costs Environmental
expenditures that relate to current
operations are expensed or capitalized as
appropriate. Remediation costs that
relate to an existing condition caused by
past operations are accrued when it is
probable that these costs will be incurred
and can be reasonably estimated.
Reclassifications Certain prior year
amounts have been reclassified to conform
with the current year presentation.
<PAGE>
Note B Discontinued Operations and Sale
of Subsidiary Subsequent to Year-End
On November 1, 1994 the Company sold all
of the common shares of its wholly-owned
subsidiary, The Cleveland Twist Drill
Company (CTD). This sale resulted in a
net gain of $24,727,000, or $3.67 per
common share. Under the terms of the
stock purchase agreement, the Purchaser
paid $45,200,000 in cash and assumed
substantially all liabilities related to
the business. The purchase agreement
provides for the Company to make
contingent payments up to 20% of the
purchase price, less a $750,000
deductible, for costs associated with a
breach of any representation or warranty
contained in the agreement. The
contingency period ranges between 15 and
24 months subsequent to the sale date.
The Company does not anticipate any
material charges related to this
contingency. CTD manufactured cutting
tools used in a wide range of industrial,
specialty aerospace, and special tool
applications. CTD had operations in the
United States, Mexico, and Canada.
On October 23, 1995, subsequent to year-
end, the Company sold all of the common
shares of its wholly-owned second tier
subsidiary, The National Acme Company
(National Acme). This sale will result in
an estimated net gain of $17,000,000, or
$2.50 per common share; year-end
shareholders' equity of $84,901,000
increasing, after recording the gain and
related adjustments, to approximately
$105,000,000; and cash increasing to over
$50,000,000. Under the terms of the stock
purchase agreement, the Purchaser paid
$9,600,000 in cash and assumed all
liabilities related to the business. The
purchase agreement provides for the
Company to make contingent payments up to
$3,000,000, less a $300,000 deductible,
for costs associated with a breach of any
representation or warranty contained in
the agreement. The contingency period
ranges between 18 and 24 months subsequent
to the sale date. The Company does not
anticipate any material charges related to
this contingency. National Acme
manufactures and sells multiple spindle
bar and chucking machines and related
parts and services.
Accounting standards require that the
results of a major line of business sold
be condensed and shown separately as a
discontinued operation in the consolidated
statements of operations for all reported
periods.
The Company's consolidated results prior
to such restatement are as follows (in
thousands):
<PAGE>
1995
1994
1993
Net sales .
$164,117
$176,4
45
$174,9
28
Earnings before income taxes,
minority interest,
extraordinary
item, and
cumulative effect
of accounting
changes . .
$14,85
8
$
10,371
$10,04
5
Income taxes
(credit). .
(2,766
)
3,755
4,815
Minority interest. . .
152
(116)
-0-
Earnings before extraordinary item
and cumulative
effect of
accounting
changes . .
17,776
6,500
5,230
Extraordinary
item. . . .
-0-
- -0-
1,900
Net gain on sale of subsidiary . . . . . . . . . . . . . . .
24,727
- -0-
-0-
Cumulative effect of accounting
changes . .
-0-
(29,92
1)
-0-
Net earnings
(loss) . .
$42,50
3
$(23,4
21)
$
7,130
Earnings (loss)
per
common share. .
$
6.30
$
(3.77)
$
1.07
Operational results of CTD (for one month
in 1995) and National Acme, which are
condensed and shown as discontinued
operations in the accompanying
consolidated statements of operations, are
as follows (in thousands):
CTD
Results _
<PAGE>
1995
1994
1993
Net sales .
$
5,76
4
$68,5
77
$65,7
77
Earnings before
income taxes . .
$
261
$
4,708
$
2,151
Income taxes . .
120
1,615
1,625
Earnings from discontinued
operations
$
141
$
3,093
$
526
Earnings per common
share . . .
$
.02
$
.49
$
.08
National Acme
Results
<PAGE>
1995
1994
1993
Net sales .
$37,6
37
$30,6
68
$27,6
41
Earnings (loss)
before
income taxes . .
$
4,713
$
1,047
$
(223)
Income taxes
(credit) (includes
$10,981 benefit
related to
change in
valuation allowance
in 1995) .
(9,13
1)
151
(135)
Earnings (loss)
from
discontinued
operations.
$13,8
44
$
896
$
(88)
Earnings (loss) per
common share
(includes
$1.63 related to
tax
benefits in
1995) . . .
$
2.05
$
.14
$
(.02)
Net (liabilities) of National Acme at
September 30, 1995 and assets of CTD at
September 30, 1994 were (in thousands):
<PAGE>
1995
1994
Net receivables.
$ 5,594
$ 7,793
Net inventories.
5,093
4,733
Other current assets . .
50
321
Net property, plant, and equipment . . . . . . . . . . . . . .
2,298
17,835
Other assets . .
169
1,174
Current deferred income taxes. . . . . . . . . . . . . . . . .
2,474
(815)
Other current liabilities. . . . . . . . . . . . . . . . . . .
(9,627)
(11,507)
Long-term debt .
-0-
(211)
Postemployment benefits other
than pensions.
(24,247)
(12,004)
Unfunded pension costs .
(6,006)
(3,667)
Deferred income taxes. .
11,062
(328)
Net (liabilities) assets . . . . . . . . . . . . . . . . . .
$(13,140)
$ 3,324
At September 30, 1995, shareholders'
equity includes a debit of $3,557,000 for
the National Acme pension adjustment.
Included in shareholders' equity at
September 30, 1994 is a debit of
$3,433,000 for foreign currency
translation adjustments related to CTD and
debits of $4,486,000 and $6,283,000 for
pension adjustments related to CTD and
National Acme, respectively.
<PAGE>
Note C Acquisitions
On November 1, 1994, the Company acquired
all of the outstanding shares of common
stock of Ball Screws & Actuators Co., Inc.
(BSA) for a cash price of $6,500,000. Two
payments of $750,000 each become payable
if certain sales goals are achieved by BSA
in calendar years 1995 and 1996. BSA,
located in San Jose, California, develops,
manufactures, and distributes motion and
positioning system components including
precision ball screws and nuts, lead
screws, actuators, linear guides, and
associated products.
On November 21, 1994, the Company acquired
for cash all of the outstanding shares of
common stock of TxPort, Inc. (TxPort) for
$26,250,000. TxPort, located near
Huntsville, Alabama, develops,
manufactures, and sells digital data
access products that are used to connect
high speed digital data equipment.
The BSA and TxPort acquisitions were
recorded under the purchase method of
accounting; and accordingly, the results
of operations of BSA and TxPort for the
periods from November 1, 1994 and November
21, 1994, respectively, are included in
the accompanying consolidated financial
statements. The purchase prices have been
allocated to assets acquired and
liabilities assumed based on fair market
value at the dates of acquisition. The
fair value of assets acquired and
liabilities assumed, after giving effect
to the write-off of certain purchased
research and development, is summarized as
follows (in thousands):
<PAGE>
BSA
TxPort
Current assets. . . . . .
$1,661
$ 7,511
Property, plant, and
equipment
595
517
Intangibles . . . . . . .
850
3,360
Goodwill. . . . . . . . .
5,475
13,823
Current
liabilities . . . . . . .
(2,018)
(2,594)
Long-term
liabilities . . . . . . .
(63)
(1,200)
$6,500
$21,417
Also on November 21, 1994, the Company
acquired for cash the product lines,
assets, and related rights of Phoenix
Microsystems, Inc. (Phoenix) located in
Huntsville, Alabama, for $3,000,000.
Phoenix manufactures and sells test
instrumentation for the digital
telecommunication and data market,
primarily for the telephone operating
companies.
In connection with the Company's
acquisition of TxPort and Phoenix, certain
research and development projects acquired
were determined to have no alternative
future use. Accordingly, $5,693,000 of
purchased research and development was
expensed in the first quarter of 1995 as
a nonrecurring cost.
BSA is included within the Precision
Products segment; TxPort and Phoenix are
included within the Telecommunication and
Electronic Products segment.
The following unaudited pro forma
financial information for the Company
gives effect to the BSA and TxPort
acquisitions as if they had occurred on
October 1, 1993. These pro forma results
have been prepared for comparative
purposes only and do not purport to be
indicative of the results of operations
which actually would have resulted had the
acquisitions occurred on the date
indicated, or which may result in the
future. The 1995 pro forma information
excludes the write-off of certain
purchased research and development of
$5,383,000, or $.80 per common share, and
includes an additional $181,000, or $.02
per common share, for TxPort (for two
months), and $58,000, or $.01 per common
share, for BSA (for one month). The 1994
pro forma information includes the write-
off of certain purchased research and
development of $5,383,000, or $.85 per
common share, and full year earnings of
$1,087,000, or $.17 per common share, for
TxPort, and $599,000, or $.10 per common
share, for BSA. The 1995 and 1994 pro
forma information includes sales of
$3,358,000 and $16,441,000, respectively,
for TxPort and $715,000 and $7,282,000,
respectively, for BSA. The pro forma
results follow (in thousands, except per
share data):
Year
Ended
September
30,
<PAGE>
1995
1994
Net sales . . . . . . . .
$124,
789
$100,9
23
Earnings from continuing operations
b
e
f
o
r
e
c
u
m
u
l
a
t
i
v
e
e
f
f
e
c
t
o
f
a
c
c
o
u
n
t
i
n
g
c
h
a
n
g
e
s
$
9
,
4
1
3
$
(1,186
)
Net earnings (loss) . . .
$
48,12
5
$(27,1
18)
Per share data:
Earnings from continuing operations
b
e
f
o
r
e
c
u
m
u
l
a
t
i
v
e
e
f
f
e
c
t
o
f
a
c
c
o
u
n
t
i
n
g
c
h
a
n
g
e
s
$
1.39
$
(.23)
Earnings (loss) per
share . . . . . . . . . .
$
7.13
$
(4.35)
<PAGE>
<PAGE>
Note D Income Taxes
As discussed in Note A, the Company
adopted SFAS No. 109, "Accounting for
Income Taxes," as of October 1, 1993. The
cumulative effect from the adoption of
this standard increased 1994 earnings from
continuing operations by $5,631,000, or
$.89 per common share, and earnings from
discontinued operations by $3,369,000, or
$.54 per common share. On October 1,
1993, a valuation allowance of $20,400,000
was recorded due to the uncertainty of
realizing temporary differences,
principally related to deferred
compensation and employee benefits,
foreign and certain state and local net
operating loss carryforwards, capital loss
carryforwards, and foreign tax credit
carryforwards.
The components of earnings from continuing
operations before income taxes and
minority interest are (in thousands):
<PAGE>
1995
1994
1993
Domestic
$9,106
$4,240
$8,908
Foreign
778
376
(791)
$9,884
$4,616
$8,117
Income taxes from continuing operations
before extraordinary item included in the
statements of consolidated operations are
as follows (in thousands):
Deferred
Liability Method Method
<PAGE>
1995
1994
1993
Federal:
C
u
r
r
e
n
t
$7,222
$1,600
$1,233
D
e
f
e
r
r
e
d
(2,061)
67
-0-
5,161
1,667
1,233
Foreign:
C
u
r
r
e
n
t
167
204
(40)
D
e
f
e
r
r
e
d
88
(54)
12
255
150
(28)
State and
local:
Current . . .
881
300
220
Deferred. . .
(52)
(128)
-0-
829
172
220
Charge in lieu
of
i
n
c
o
m
e
t
a
x
e
s
-
0-
-0-
1,900
$6,245
$
1,989
$3,325
The 1993 provision for income taxes
included charges in lieu of federal and
state and local taxes representing taxes
which have been provided in the absence of
net operating loss and tax credit
carryforwards from prior years. Income
tax benefits resulting from the
utilization of carryforwards for financial
reporting purposes in 1993 are presented
as an extraordinary item.
For continuing operations, at September
30, 1995, the Company had available for
federal income tax purposes foreign tax
credit carryforwards of $215,000 which
expire in 1998 through 2000 and $2,250,000
of net operating loss carryforwards
available at certain foreign subsidiaries
of which $306,000 expires in 2000 and
$1,944,000 has no expiration date.
A reconciliation of the statutory federal
income tax rate for continuing operations
and the effective rate follows:
Deferred
Liability Method
Method
<PAGE>
1995
1994
1993
Statutory federal
income
t
a
x
r
a
t
e
34.0%
34.0%
34.0%
Effect of:
F
o
r
e
i
g
n
i
n
c
o
m
e
t
a
x
e
s
2.3
.5
3.0
S
t
a
t
e
i
n
c
o
m
e
t
a
x
e
s
5.9
2.6
2.2
G
o
o
d
w
i
l
l
1.8
1.7
(.4)
Purchased R&D . .
16.6
-0-
-0-
Tax exempt
interest. . . . .
(2.2)
(.4)
-0-
Minority equity
investments . . .
1.7
.1
.8
Change in
valuation
allowance . . . .
(2.4)
-0-
-
0
-
Other items . . .
5.5
_
4.6_
1.4_
63.2%
43.1%
41.0%
For 1993 the provision for deferred income
taxes was based on the tax effects of the
differences in the timing of income and
expense recognition between financial
reporting purposes and tax reporting
purposes. The components of deferred
income tax expense from continuing
operations are summarized as follows (in
thousands):
<PAGE>
Accelerated depreciation for
. . . . . . . . . . . t
a
x
p
u
r
p
o
s
e
s
$(16)
Inventory, employee benefits,
. . . . . . . a
n
d
o
t
h
e
r
r
e
s
e
r
v
e
s
d
e
d
u
c
t
e
d
. . . . . . . f
o
r
t
a
x
r
e
t
u
r
n
s
i
n
p
e
r
i
o
d
s
. . . . . . . d
i
f
f
e
r
e
n
t
t
h
a
n
f
o
r
financial
. . . . . . . reporting purposes . . . . . . . . . .
31
Elimination of deferred items
. . . . . . . d
u
e
t
o
l
o
s
s
c
a
r
y
f
o
r
w
a
r
d
s
(3)
$12
Components of the Company's deferred tax
assets and liabilities for continuing
operations as of September 30, 1995 and
1994 are as follows (in thousands):
<PAGE>
1995
1994
Deferred tax assets:
Postretirement health care benefits. . . . . . . . . . . . .
$ 1,283
$ 906
Pensions . .
927
973
Inventory. .
1,095
974
Compensation and other related accounts. . . . . . . . . . .
2,065
1,508
Tax credits and foreign losses
. . . . . . . . . . . . not currently utilizable
1,265
2,904
State and local temporary differences
. . . . . . . . . and loss carryforwards, net of
. . . . . . . . . . . . . . . . . .federal taxes
633
582
Other. . . .
3,347
1,761
. .Subtotal
10,615
9,608
Deferred tax liabilities:
. . . . . . . . . . . Tax over book depreciation
(1,892)
(836)
Foreign currency translation
(952)
(876)
. . . Other
(124)
(124)
. .Subtotal
(2,968)
(1,836)
Valuation allowance. .
(1,284)
(2,923)
Net deferred tax asset
$ 6,363
$4,849
During 1995, the valuation allowance
decreased by $14,149,000, of which
$1,639,000 relates to continuing
operations. The reduction in the
valuation allowance resulted in an
increase in net earnings from continuing
operations of $235,000, or $.03 per
common share, and $10,981,000, or $1.63
per common share, for discontinued
operations. The remainder of the decrease
in the valuation allowance did not impact
net earnings and was principally related
to expiring foreign tax credit
carryforwards.
<PAGE>
Note E Credit Agreements and Borrowings
Short-Term Borrowings The Company
maintained agreements with several foreign
banks providing lines of credit in the
amounts of $852,000 and $1,201,000 in 1995
and 1994, respectively. These agreements
are renewable annually or upon periodic
review by the lending institutions.
Long-Term Borrowings At September 30,
1995, the Company had a credit agreement
with certain banking institutions which
permitted borrowings up to $12,000,000
through November, 1997. Of such amount,
$2,000,000 was for standby and commercial
letters of credit and $1,000,000 was for
foreign exchange transactions. The
revolving credit notes permit borrowings
at the base lending rate of the agent
bank, or, alternatively at the Company's
option, at 1.75% above an adjusted London
Interbank Offered Rate (LIBOR). Such
adjustment is defined in the agreement as
the published LIBOR rate increased by the
reserve percentage prescribed by the Board
of Governors of the Federal Reserve
System, or any successor. The credit
agreement is secured by a first security
interest in all domestic accounts
receivable, inventory, and equipment. The
agreement requires, among other terms,
minimum amounts, as defined, of working
capital and net worth, and minimum ratios
of current assets to current liabilities
and total indebtedness to net worth.
There were no cash borrowings against the
credit agreement at September 30, 1995 or
1994. At September 30, 1995 standby
letters of credit of $288,000 were
outstanding related to international
shipments.
Long-term debt at September 30 consisted
of the following (in thousands):
<PAGE>
1995
1994
7.125% Industrial Revenue
. . Bonds, annual installments
. . . . . . . . . through 1996
$ -
0-
$
365
7.4% to 8.25% notes and
mortgages, annual installments
. . . . . . . . . through 1999
_687
854
$
687
$1,219
Annual debt installments are $306,000 in
1996, $301,000 in 1997, $254,000 in 1998,
and $132,000 in 1999.
<PAGE>
Note F Pension and Profit Sharing
The Company has non-contributory defined
benefit plans covering certain United
States employees. Plans for salaried
employees typically provide pay-related
benefits based on years of service. Plans
for hourly and certain salaried employees
provide benefits based on flat-dollar
amounts and years of service. The
Company's current policy is to fund these
plans in an amount that falls between the
minimum contribution required by ERISA and
the maximum tax deductible contribution.
Plan assets include equity, fixed income,
and money market funds, and individually
managed fixed income securities.
A summary of the components of net
periodic pension cost are as follows (in
thousands):
<PAGE>
1995
1994
1993
Service cost-
benefits
earned during
the period. . . . . . . .
$
846
$1,588
$1,420
Interest cost on
projected
benefit
obligation. . . . . . . .
3,334
5,191
5,199
Actual return on
plan
assets. . . . . . . . .
(4,89
2)
(743)
(5,993
)
Net amortization
and
deferral. . . . . . . .
2,491
(4,010
)
1,168
Net pension cost
of
defined benefit
plans . . . . . . . . . .
$1,77
9
$2,026
$1,794
Related to
continuing. . . . . . . .
$
511
$
468
$
356
Related to
discontinued. . . . . . .
$1,26
8
$1,558
$1,438
The following table sets forth the funded
status and amounts recognized in the
Company's balance sheet for its defined
benefit plans at September 30 (in
thousands):
<PAGE>
1995
1994
Actuarial present value
of:
Ve
st
ed
ac
cu
mu
la
te
d
be
ne
fi
t
obligation . . . . .
$39,29
4
$63,90
6
No
nv
es
te
d
ac
cu
mu
la
te
d
benefit obligation .
$
1,069
$
3,184
Pr
oj
ec
te
d
be
ne
fi
t
ob
li
ga
ti
on
$41,45
0
$69,15
2
Fair value of plan
assets. . . . . . . . . .
32,702
54,175
Excess of projected
benefit
ob
li
ga
ti
on
ov
er
fa
ir
va
lu
e
of
pl
an
as
se
ts
8,748
14,977
Unrecognized net asset
at
tr
an
si
ti
on
to
SF
AS
No
.
87
,
ne
t
of
am
or
ti
za
ti
on
175
987
Unrecognized net loss . .
(6,348
)
(13,78
3)
Unrecognized prior
service
co
st
(168)
(481)
Additional minimum
liability . . . . . . . .
5,825
11,952
Accrued pension cost. . .
$
8,232
$13,65
2
Related to continuing . .
$
1,169
$
1,241
Related to
discontinued. . . . . . .
$
7,063
$12,41
1
The assumptions used to determine the
projected benefit obligation for all
periods presented follow:
<PAGE>
Discount rate . . . . . .
7.75%
Rate of increase in
future
comp
ensa
tion
leve
ls
4.50%
Long-term rate of
return on
plan
asse
ts
9.00%
The Company's minimum additional pension
liability of $5,825,000 and $11,952,000
consists of intangible assets of $164,000
and $513,000 and reductions of
shareholders' equity of $3,736,000 (net of
tax) and $11,439,000 at September 30, 1995
and 1994, respectively. Included in
unfunded pension costs is the additional
minimum pension liability of $272,000 and
$6,650,000 at September 30, 1995 and 1994,
respectively; the remainder is in net
liabilities and assets of discontinued
operations. Included in other assets is
the intangible asset of $1,000 and
$225,000 at September 30, 1995 and 1994,
respectively; the remainder is in net
liabilities and assets of discontinued
operations.
The Company has defined contribution
retirement plans that cover its eligible
employees. The purpose of these defined
contribution plans is generally to provide
additional financial security during
retirement by providing employees with an
incentive to make regular savings. The
Company matches up to 6% of an employee's
covered compensation in accordance with
the formulas set forth in the plans.
Matching contributions to the plans of
continuing operations were $419,000,
$272,000, and $234,000 in 1995, 1994, and
1993, respectively. Matching
contributions to the plans of discontinued
operations were $131,000, $433,000, and
$398,000 in 1995, 1994, and 1993,
respectively.
<PAGE>
Note G Nonpension Postretirement and
Postemployment Benefits
In addition to providing pension benefits,
the Company provides health care insurance
benefits for certain active eligible and
retired employees.
Effective October 1, 1993, the Company
adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits
Other Than Pensions." Under SFAS No. 106,
the Company is required to accrue the
estimated cost of retiree benefit payments
other than pensions during employees'
active service periods. The Company
previously expensed the cost of these
benefits as claims were paid. Costs
charged to continuing operations were
$273,000 and to discontinued operations
were $3,595,000 in 1993.
The Company elected to recognize this
change in accounting on the immediate
recognition basis. The cumulative effect
of adopting SFAS No. 106 was an increase
in accrued postemployment benefits and a
decrease in 1994 earnings from continuing
operations of $2,050,000, or $.32 per
common share, and from discontinued
operations of $36,364,000, or $5.78 per
common share. In addition to the
cumulative effect, the Company's 1995 and
1994 postretirement health care costs were
accounted for under the new method and
consisted of the following components (in
thousands):
<PAGE>
1995
_
1994_
Service cost. . . . . . . . . . . .
$
40
$ 111
Interest cost . . . . . . . . . . .
1,663
3,296
Net amortization and
deferral. . . . . . . . . . . . . .
(809)
-0-
Net periodic
postretirement benefit
costs .
$
894
$3,407
Related to continuing . . . . . . .
$
217
$ 287
Related to discontinued . . . . . .
$
677
$3,120
The net amortization and deferral is
related to a change in actuarial
assumptions and is amortized over the
remaining lives of retirees using the
corridor approach.
The Company continues to fund these
benefit costs on a pay-as-you-go basis,
with the retiree in most instances paying
a portion of the costs.
Summary information for the Company's
plans is as follows at September 30, 1995
and 1994 (in thousands):
<PAGE>
1995
_
1994_
Accumulated
Postretirement
Benefit Obligation (APBO):
. . . . . . . . . Retirees
. . .
$ 20,121
$39,717
Active participants eligible to
. . . . . . . . . receive
benefits. . . . . . . . .
399
741
. . . . .Other active plan
participants. . . . . . .
1,351
3,082
.APBO
. . .
21,871
43,540
. . . . . . . .Unamortized
gain.
7,944
1,129
. . . . . . . Accrued cost
. . .
$29,815
$44,669
Related to continuing. .
$ 3,485
$ 3,611
Related to discontinued
. . .
$26,330
$41,058
The discount rate used in determining the
APBO was 7.75% in 1995 and 1994. The
assumed health care cost trend rate used
in measuring the APBO was an average of
11.5% in 1995, declining to an ultimate
rate of 6% in 2004 and thereafter. A 1%
annual increase in these assumed cost
trend rates would increase the accumulated
postretirement benefit obligation at
September 30, 1995 by approximately 4%,
and the aggregate of the service and
interest cost components of net periodic
postretirement benefit cost for 1995 by
approximately 4%.
Effective October 1, 1993 the Company
adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits."
This statement establishes financial
accounting and reporting for the cost of
benefits provided to former or inactive
employees after employment but before
retirement. Prior to 1994, the cost of
such benefits was recorded at the time
paid. The adoption resulted in a
cumulative effect charge of $192,000 to
earnings of continuing operations, or $.03
per common share, and $315,000 to earnings
of discontinued operations, or $.05 per
common share. At September 30, 1995 and
1994, accruals for continuing operations
of $347,000 and $311,000, respectively,
were included in postemployment benefits
other than pensions. At September 30,
1995 and 1994, accruals for discontinued
operations of $71,000 and $196,000,
respectively were included in current
(liabilities) assets of discontinued
operations.
<PAGE>
Note H Company Stock Plans
With the adoption in 1994 of the Acme-
Cleveland Corporation Performance and
Equity Incentive Plan (the 1994 Plan)
there will be no additional grants of
stock options or stock appreciation rights
under the Amended 1985 Employees Stock
Option and Stock Appreciation Rights Plan.
The 1994 Plan provides for the granting of
director options, stock options, stock
appreciation rights, stock awards, or cash
awards. The number of common shares
available for grant of awards is 1% of the
number of common shares outstanding as of
the first day of each fiscal year, plus up
to an additional .5%, consisting of shares
available, but not granted, in prior
years. At September 30, 1995, there were
21,860 shares available for grant under
the 1994 Plan.
Stock Options The Company may grant non-
qualified stock options to directors and
non-qualified or incentive stock options
to certain key employees of the Company.
The aggregate number of common shares that
may be issued upon exercise of incentive
stock options is 360,000. Director
options granted during 1995 totaled 8,000
shares. No other options were granted
during 1995. Summarized transactions are
as follows (in thousands, except per share
data):
<PAGE>
Number
of
Options
Exercise
Price
Range Per
Share
Outstanding at
. . . Oct. 1, 1993
436
$5.00 to
$17.25
Granted . . . .
8
$10.3125
Exercised . . .
(9)
$5.00 to
$10.625
Canceled or
expired . . . .
(8)
$12.875
Outstanding at
S
e
p
t
.
3
0
,
1
9
9
4
427
$5.00 to
$17.25
Granted . . . .
8
$15.25
Exercised . . .
(105)
$5.00 to
$14.125
Canceled or
expired . . . .
(14)
$5.00 to
$17.25
Outstanding at
Sept. 30,
1995. . . . . .
316
$5.00 to
$15.25
Exercisable at
Sept. 30,
1995. . . . . .
298
Stock Awards The Company may grant
stock awards to certain key employees.
Such awards may be made in common shares,
restricted stock, or stock equivalent
units, and may be subject to certain
conditions, restrictions, and risks of
forfeiture, as established by the Board of
Directors. Such performance stock awards
will vest 3 years from the date of grant
and will be considered earned upon the
achievement of predetermined financial
objectives at the end of the designated
three-year period. The value of these
awards is charged to expense over the
designated performance period. In 1995,
49,500 performance stock awards were
granted relating to the three-year
performance period ending September 30,
1997. Of the 42,500 performance stock
awards issued in 1994, 4,000 were canceled
in 1995, leaving 38,500 to cover the
performance period ending September 30,
1996.
<PAGE>
Note I Capital Stock
Preferred Shares The Series A Preferred
Shares have voting rights on a share-for-
share basis with the common shares, and
the right to convert the shares on a
share-for-share basis into common shares
at any time. Liquidation preference is
$26 per share. The Company has the right
to redeem the shares at a price of $26 per
share.
Reserved Shares 631,208 common shares
are reserved for issuance under the
Company stock plans and for conversion of
the Series A Preferred Shares.
<PAGE>
Note J Leases
The Company leases certain land,
buildings, and equipment which are used in
manufacturing and warehousing operations.
Net liabilities of discontinued operations
in 1995 and property, plant, and equipment
in 1994 included the following amounts for
capital leases at September 30 (in
thousands):
<PAGE>
1995
1994
Land. . . . . . . . . . .
$ 98
$
98
Buildings . . . . . . . .
1,505
1,505
Machinery and
equipment . . . . . . . .
2,564
2,805
4,167
4,408
Less allowances for
depreciation and
amortization. . . . . . .
3,608
3,725
$ 559
$
683
Future minimum lease payments for
continuing operations non-cancelable
operating leases with initial or remaining
terms of one year or more consisted of
the following at September 30, 1995 (in
thousands):
<PAGE>
1996. . . . . . . . . . .
$1,288
1997. . . . . . . . . . .
669
1998. . . . . . . . . . .
425
1999. . . . . . . . . . .
263
2000. . . . . . . . . . .
182
Thereafter. . . . . . . .
9
T
o
t
a
l
m
i
n
i
m
u
m
l
e
a
s
e
p
a
y
m
e
n
t
s
$2,836
Lease amortization is included in
depreciation expense. Rental expense for
operating leases charged to continuing
operations was $1,793,000, $1,265,000, and
$974,000, in 1995, 1994, and 1993,
respectively. Rental expense for
operating leases charged to discontinued
operations was $116,000, $383,000, and
$478,000, in 1995, 1994, and 1993,
respectively.
<PAGE>
Note K Business and Geographic Segment
Information
The Company has two business segments
under continuing operations:
Telecommunication and Electronic Products
and Precision Products. The businesses in
the Telecommunication and Electronic
Products segment produce and sell products
used by telephone operating companies,
interexchange carriers, Fortune 500 type
firms that operate private communication
networks, and end-user customers in the
automotive, material handling systems,
power generation, and other industries.
Telecommunication products include
automated data transmission analyzers,
single and multi-function test equipment,
computerized cable test and data base
management systems, digital data access
devices, and molded cable closures and
terminals. Electronic products include
electronic and photoelectric sensors,
encoders, intelligent laser scanners, and
electromechanical limit switches. The
businesses in the Precision Products
segment produce and sell products used in
a broad spectrum of industries including
aerospace, air compression, automotive,
off road vehicles, power transmission
components, electronics, and medical
industries. Such products include quality
assurance products and systems, motion and
positioning components and systems,
precision gauges, metal and punch form
tooling, and specialty gears.
Identifiable assets are those assets used
exclusively in the operation of each
business segment or geographic area.
Corporate assets consist primarily of cash
and other investments. Financial
information by business segment and
geographic area follows (in thousands):
Notes to Consolidated Financial Statements
Acme-Cleveland Corporation and
Subsidiaries
BusinessYear Ended September
30
1995 1994 1993_
Net sales
Telecommunication and
electronic products $ 82,940 $ 56,055 $
58,533.
Precision products
37,776 21,145 22,977
$120,716 $ 77,200 $
81,510
Earnings (loss) from continuing
operations
Telecommunication and
electronic products $ 11,752 $ 4,787 $
8,348 .
Precision products
5,440 2,717 2,596
Corporate (3,269)
(3,710) (2,809)
13,923 3,794
8,135
Net interest 1,599
820 479
Net other 55
2 (497)
Purchased R&D writeoff
(5,693) -0- -0-
Earnings from continuing
operations before income
taxes, minority interest,
extraordinary item, and
cumulative effect of
accounting changes $ 9,884$ 4,616 $
8,117 .
Identifiable assets
Telecommunication and
electronic products $ 66,374 $ 30,352 $
23,160.
Precision products
26,48014,771 15,205
Corporate 47,399
32,864 33,278
Discontinued operations
- 0- (1) 27,660
(2) 52,246
$140,253 $105,647
$123,889
Depreciation
Telecommunication and
electronic products $ 1,901$ 1,807 $
1,162 .
Precision products
949 788 998
Corporate. . 31 30 52
Discontinued operations
560 3,187 4,027
$ 3,441 $ 5,812 $
6,239
Capital additions
Telecommunication and
electronic products $ 3,866 $ 1,716
$
1,128 .
Precision products
1,144 430 356
Corporate 40
6 30
Discontinued operations
297 2,431 4,187
$ 5,347 $ 4,583 $
5,701
Notes:
(1)Net liabilities of discontinued operations are net of assets of $26,740
at September 30, 1995.
(2)Amounts are net of liabilities of $28,532 at September 30, 1994.
<PAGE>
GeographicYear Ended September 30
1995 1994 1993_
Net sales
United States
Sales to unaffiliated
customers. . $106,263 $ 63,705 $ 69,719
Interarea sales 2,093 1,967
1,267
108,356 65,672
70,986
International
Sales to unaffiliated
customers. . 14,453 13,495 11,791
Interarea sales 2,512 1,816
2,293.
16,965 15,311
14,084
Eliminations
Interarea sales (4,605) (3,783)
(3,560) . . . . . . . . . . . . . . .
$120,716 $ 77,200 $
81,510
Earnings from continuing
operations before income
taxes, minority
interest,
extraordinary item, and
cumulative effect of
accounting changes
United States $ 9,106
$ 4,240 $ 8,908
International 778
376 (791)
$ 9,884 $ 4,616 $
8,117
Identifiable assets
United States $130,522
$ 89,996 $106,337
International 9,731
15,651 17,552
$140,253 $105,647
$123,889
<PAGE>
Quarterly Data
Acme-Cleveland Corporation and Subsidiaries
For Fiscal Years 1995 and 1994
In thousands, except per share data (Unaudited)
1995 December 31 March
31 June 30September 30 Total Year
Net sales . . . .$24,691
. . . . . $32,113$31,458
$32,454 .$120,716
Gross profit. . . 9,700
. . . . . .13,51812,881
13,265. . .49,364
Earnings from continuing operations . (3,595)(2) 2,268
. . . . . . 2,489 2,629 3,791
Discontinued operations:
Earnings from operations, net of taxes 11,281 (3)
387 . . . . . . . 6081,709 13,985
Gain on sale (less income taxes of $1,500) 24,727
. . . . . . -0- -0-
-0- . . .24,727
Net earnings. . . 32,413 2,655
. . . . . . 3,097 4,338 42,503
Net earnings per common share(1):
Continuing operations . .(.54) (2)
.34 . . . . . . . .37 .39.56 (2)
Discontinued operations:
Earnings from operations, net of taxes 1.70 (3)
. . . . . . . .06 .09 .25 2.07(3)
Gain on sale 3.75 -
0- -0- -0- 3.67
4.91 .40 .46
.64 6.30
Share prices (NYSE):
High 14 16 7/8
28 28 3/4
Low 9 7/8 10 1/4
16 1/223 1/4
Dividends per common share. . . . .11
. . . . . . . .12 .12 .12
1994 December 31 March
31 June 30 September 30 Total Year
Net sales . . . .$18,834
. . . . . $17,893$20,888
$19,585 . $77,200
Gross profit. . . 6,952
. . . . . . 5,576 7,354
7,397 . . .27,279
Earnings from continuing operations before
cumulative effect of accounting changes 1,008
. . . . . . . .54 1,540
. . . . . . .(91) 2,511
Discontinued operations before cumulative effect
of accounting changes . . . . . 148
785 . . . . . . . 882
2,174 . . . 3,989
Cumulative effect of accounting changes (29,921)
-
0-. . . . . . . . -0- -0-
(29,921)
Net (loss) earnings . . (28,765) 839
. . . . . . 2,422 2,083 (23,421)
Net (loss) earnings per common share(1):
Continuing operations
before cumulative effect
of accounting changes
.15 -0-
.23 (.02)
.35
Discontinued operations before cumulative effect
of accounting changes .02
.12 .13 .33 .63
Cumulative effect of
accounting changes (4.75)
-0- -0- -0- (4.75)
(4.58)
.12 .36 .31 (3.77)
Share prices (NYSE):
High 10 3/4 10 5/8
15 1/214 3/8
Low 9 1/8 9 9 1/4
10 1/2
Dividends per common share. . . . .11
. . . . . . . .11 .11 .11
(1)Due to the use of the weighted shares outstanding method of calculating
earnings
per share, the sum of the quarterly results pe
r share amounts does
not equal the results per share for the year.
(2)The first quarter of 1995 included a charge of $5,383, or $.81 per common
share,
for the write-off of certain purchased research and
development;
for the full year this computes to $.80 pe
r common share.
(3)The first quarter of 1995 included a credit to income tax expense of
$10,981, or
$1.66 per common share, for a decrease in the deferred tax
valuation allowance; for the full year this computes to $1.63 per
common share.
<PAGE>
Five-Year Summary
Acme-Cleveland Corporation and Subsidiaries
In thousands, except per share data and statistical information
1995 1994
1993 1992 1991
Results of operations
Net sales $120,716
$77,200 $81,510 $85,240 $80,291
Gross profit 49,364
27,27928,818 28,142 23,307
% of net sales 41%
35% 35% 33% 29%
Earnings from operations
13,923 3,794 8,135 6,983
1,364
% of net sales 12%
5% 10% 8% 2%
Earnings from continuing
operations before
extraordinary item and
cumulative effect of
accounting changes
3,791 2,511 4,792 4,568
1,390
% of net sales 3%
3% 6% 5% 2%
Per common share
.56 .35 .71
.68 .17
Discontinued operations before
extraordinary
item and cumulative effect of
accounting changes
38,712 3,989 438 (949)
(4,353)
Per common share
5.74 .63 .06
(.15) (.69)
Extraordinary item -0-
-0- 1,900 1,700 -0-
Per common share . . . . -0- -0-
.30 . . ..26 -0-
Cumulative effect of accounting
changes -0-
(29,921) -0- -0- -
0-
Per common share -
0- (4.75) -0- -0- -
0-
Net earnings (loss)
42,503 (23,421) 7,130 5,319
(2,963)
Per common share . . . . 6.30 (3.77)
1.07. ..79 (.52)
Financial position
Cash and securities
. . . .44,658 38,563 37,808
29,645.19,488
Total assets
140,253 . . .105,647 123,889 122,248
123,327 . . .
Working capital
49,713.49,597 41,000 37,921
34,747. . . .
Current ratio
2.1x 2.6x 2.0x
2.0x 1.8x
Total long-term debt
. . . . . 687 1,219 2,286
3,396 . 4,683
Total debt 1,056
1,926 3,423 4,536 8,146
Debt to capital ratio
1.2% 5.4% 5.0%
6.6% 11.4 %
Shareholders' equity
. . . .84,901 33,713 64,823
64,544.63,411
Shareholders' equity per common
share . . . . 12.69 4.77
9.73. . .9.68 9.50
Return on shareholders' equity
126.1% (36.1)%
11.1% 8.4% (4.4)%
Other information - continuing operations
Customer orders booked
124,053 77,947 78,637 90,178
79,449
Customer order backlog
13,469 8,740 8,497 12,035
7,928
Capital additions 5,050
2,152 1,514 2,552 1,574
Depreciation 2,881
2,625 2,212 2,188 2,193
Dividends paid(1) 3,257
3,060 2,870 2,807 2,807
Cash dividend paid per common
share .47
.44 .41 .40
.40
Common shares outstanding at
year-end 6,405
6,300 6,291 6,291 6,291
Shares used in computing per
share
amounts 6,747
6,295 6,373 6,334 6,312
Redeemable preferred shares
161 161 161 161
161
Number of shareholders at year-
end 2,094 2,320
2,187 1,940 2,059
Number of employees at year-end
928 776 738 768
804
(1) Includes dividend requirement for Series A Preferred Shares
issued June 1, 1980 of $290 in each of the years presented.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Board of Directors and Shareholders Acme-Cleveland
Corporation
We have audited the accompanying consolidated balance
sheets of Acme-Cleveland Corporation and Subsidiaries as of
September 30, 1995 and 1994, and the related statements of
consolidated operations, shareholders' equity, and cash flows for
each of the three years in the period ended September 30, 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 Acme-Cleveland Corporation and Subsidiaries
at September 30, 1995 and 1994, and the consolidated results of
their operations and cash flows for each of the three years in the
period ended September 30, 1995 in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Cleveland, Ohio
October 30, 1995
FORM 10-Q
PART I - FINANCIAL INFORMATION
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
(In thousands, except per share data)
Six Months Ended Three Months
Ended
March 31 March 31
1996 1995 1996
1995
Net sales $65,744 $56,804 $35,169
$32,113
Cost of products sold 38,859 33,586 20,740
18,595
Gross profit 26,885 23,218 14,429
13,518
Selling, general, and administ 17,295 14,441 8,398
8,439
Research and development expen 2,421 1,777 1,320
1,052
Amortization of goodwill and i 826 521 469
344
Operating profit 6,343 6,479 4,242
3,683
Other income (expense):
Interest income 950 1,033 389
545
Interest expense (65) (87) (26)
(37)
Other income 512 421 442
188
Other expense (345) (670) (28)
(401)
Purchased research and devel -0- (5,693) -0-
-0-
Unsolicited tender offer exp (1,250) -0- (1,250)
-0-
(198) (4,996) (473)
295
Earnings from continuing operations
before income taxes 6,145 1,483 3,769
3,978
Income taxes 2,385 2,810 1,450
1,710
Earnings (loss) from cont 3,760 (1,327) 2,319
2,268
Discontinued operations:
Earnings from operations, net of tax
benefit of $10,981 for the six months
ended March 31, 1995 -0- 11,668 -0-
387
Gain on sale (less income taxes of $13,140
and $1,500 for the six months ended
March 31, 1996 and 1995, 17,025 24,727 -0-
-0-
17,025 36,395 -0-
387
Net earnings $20,785 $35,068 $2,319
$2,655
Earnings (loss) per common share:
Continuing operations $0.55 ($0.20) $0.34
$0.34
Discontinued operations:
Earnings from operations, -0- 1.75 -0-
0.06
Gain on sale 2.49 3.71 -0-
-0-
2.49 5.46 -0-
0.06
Net earnings per common s $3.04 $5.26 $0.34
$0.40
Number of shares used in computation of net
earnings per common share 6,827 6,666 6,663
6,508
Dividends per share $0.25 $0.23 $0.13
$0.12
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31 September 30
1996 1995
Assets
Current assets
Cash and cash equivalents, inclu $25,877 $44,658
Trade receivables, less allowances of $753
and $602, respectively 23,802 18,633
Inventories:
Finished goods 8,276 5,231
Work in process 9,734 8,430
Raw materials 15,550 11,855
Total inventories 33,560 25,516
Other current assets 1,044 814
Deferred income taxes 6,600 6,377
Total current assets 90,883 95,998
Property, plant, and equipment - at c 47,543 44,039
Less accumulated depreciation 29,388 28,044
Net property, plant, and equ 18,155 15,995
Goodwill and intangibles 35,376 24,456
Other assets 4,078 3,534
Deferred income taxes 250 270
Total assets $148,742 $140,253
March 31 September 30
1996 1995
Liabilities and Shareholders' Equity
Current liabilities
Payable to banks $1,545 $1,620
Current portion of long-term deb 296 306
Accounts payable 7,550 5,995
Other accrued expenses 11,512 10,760
Accrued compensation 7,509 9,994
Income taxes payable 3,397 4,470
Net liabilities of discontinued -0- 13,140
Total current liabilities 31,809 46,285
Long-term debt 524 687
Postemployment benefits other than pe 3,374 3,431
Unfunded pension costs 3,770 3,857
Other long-term liabilities 1,437 1,092
Shareholders' equity
Serial Preferred Shares, without par value:
Authorized - 936,285 shares; issued and
outstanding Series A, $1.80 cumulative,
convertible 161,374 shares, liquidation
preference $26 per sha 3,631 3,631
Common Shares, par value $1 per share:
Authorized - 10,000,000 shares; issued
and outstanding, excluding 115,056
treasury shares 6,425 6,405
Other capital 55,543 55,148
Pension adjustment (179) (3,736)
Foreign currency translation adj 1,764 1,848
Retained earnings 40,644 21,605
Total shareholders' equity 107,828 84,901
Total liabilities and shareholder $148,742 $140,253
ACME-CLEVELAND CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(In thousands)
Six Months Ended
March 31
1996 1995
Operating activities
Earnings (loss) from operations:
Continuing $3,760
($1,327)
Discontinued 17,025
36,395
Adjustments to reconcile earnings (loss) to net cash provided by
operating activities:
Depreciation and amortization 2,550
1,963
Gain on sale of property, plant, and equip (7)
(6)
Purchased research and development write-o -0-
5,693
Undistributed earnings of minority equity -0-
12
Deferred income tax 87
(10,774)
Gain on sale of subsidiaries (17,025)
(24,727)
Cash (used) provided by discontinued opera (100)
416
Changes in current assets and liabilities excluding the effects
of
acquisitions and divestitures:
(Increase) decrease in trade receivables (3,188)
(2,481)
(Increase) decrease in inventories (6,234)
(2,759)
(Increase) decrease in other current asset (213)
(86)
Increase (decrease) in payable to banks (51)
190
Increase (decrease) in accounts payable 1,610
1,338
Increase (decrease) in other accrued liabi (735)
437
Increase (decrease) in accrued compensatio (2,487)
580
Increase (decrease) in income taxes payabl (1,314)
(385)
Increase (decrease) in postemployment benefits
other than pensions (97)
2
Increase (decrease) in unfunded pension co 342
79
Other, net (888)
(387)
Net cash (used) provided by oper (6,965)
4,173
Six Months Ended
March 31
1996 1995
Investing activities
Capital expenditures ($1,436)
($2,947)
Proceeds from sale of property, plant, and 8
9
Purchase of marketable securities, net -0-
(46)
Net proceeds from sale of subsidiaries 7,981
41,718
Acquisitions - net of cash acquired (15,719)
(35,816)
Cash used for discontinued operations -0-
(124)
Net cash (used) provided by inve (9,166)
2,794
Financing activities
Principal payments on long-term debt and no (1,378)
(1,434)
Principal borrowings on long-term debt and -0-
28
Exercise of stock options 260
102
Issuance of common stock 155
-0-
Dividends paid (1,746)
(1,596)
Cash used for discontinued operations -0-
(518)
Net cash used by financing activ (2,709)
(3,418)
Effect of exchange rate changes on cash 59
(272)
(Decrease) increase in cash and (18,781)
3,277
Cash and cash equivalents at beginning of peri 44,658
38,355
Cash and cash equivalents at end $25,877
$41,632
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and consistent with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes that would be required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair
presentation have been included and are of a normal and recurring
nature. Certain 1995 amounts were reclassified to conform to the
1996 presentation. Operating results for the quarter and six
months ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended September 30,
1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended September
30, 1995.
Note B - Restricted Cash
Cash and cash equivalents at March 31, 1996 includes $11.4 million
held in a revocable benefits protection trust; in the event of a
change of control, the trust becomes irrevocable. Trust assets
fund certain supplemental pension benefits to certain employees
and provide benefits pursuant to certain other deferred
compensation and executive compensation arrangements.
Note C - Goodwill and Intangibles
Goodwill is the excess of the purchase price over the fair market
value of net assets acquired in business combinations treated as
purchases. Goodwill is amortized on a straight-line basis over
the periods benefited, principally 10 to 40 years.
Other acquired intangible assets, to which acquisition cost has
been allocated based on fair market value, include research and
development, customer lists, trade names, assembled workforce,
drawings and manuals, and patents. These intangibles are
amortized on a straight-line basis over the periods benefited,
generally 5 to 20 years.
The carrying value of goodwill and intangibles is assessed for
impairment on an ongoing basis and adjusted when appropriate.
Note D - Acquisitions
On January 24, 1996, the Company acquired all of the common stock
of Dolan-Jenner Industries, Inc., through the purchase of the
common stock of its parent holding company, Dolan-Clarkson
Acquisition Corporation (collectively, Dolan-Jenner) for a cash
price of $13.0 million. In a separate transaction, on January 29,
1996, the Company purchased land and a building from a realty
trust for $2.0 million. Dolan-Jenner, located in Lawrence,
Massachusetts, is a manufacturer of fiber optic photoelectric
sensors and controls, measuring and machine safety devices, as
well as fiber optic cable and fiber optic illumination systems.
On November 21, 1994, the Company acquired all of the common stock
of TxPort, Inc. for a cash price of $26.25 million. TxPort
develops, manufactures, and sells digital data access products
that are used to connect high speed digital data equipment.
Also on November 21, 1994, the Company acquired the product lines,
assets, and related rights of Phoenix Microsystems, Inc., for a
cash price of $3.0 million. Phoenix manufactures and sells test
instrumentation for the digital telecommunication and data market,
primarily for the telephone operating companies.
On November 1, 1994, the Company acquired all of the common stock
of Ball Screws & Actuators Co., Inc. (BSA) for a cash price of
$6.5 million. Two contingent payments of $.75 million each become
payable if certain sales goals are achieved by BSA in calendar
years 1995 and 1996. The goal for 1995 was achieved, and the
payment for that year was made during the second quarter of 1996.
BSA develops, manufactures, and distributes motion and positioning
system components including precision ball screws and nuts, lead
screws, actuators, linear guides, and associated products.
These acquisitions were recorded under the purchase method of
accounting; and accordingly, the results of operations, subsequent
to the respective acquisition dates, were included in the
accompanying consolidated financial statements. The purchase
prices have been allocated to assets acquired and liabilities
assumed based on fair market value at the dates of acquisition.
Dolan-Jenner, TxPort, and Phoenix are included within the
telecommunication and electronic products segment; BSA is included
within the precision products segment.
The following unaudited pro forma financial information gives
effect to the acquisitions as if they had occurred on October 1,
1994 for Dolan-Jenner and October 1, 1993 for TxPort (at which
date the write-off of certain purchased research and development
is given effect) and BSA. These pro forma results have been
prepared for comparative purposes only and do not purport to be
indicative of the results of operations which actually would have
resulted had the acquisitions occurred on the date indicated, or
which may result in the future (in thousands, except per share
data).
Six Months
Ended
March
31,
1996
1995
Net sales
$69,573 $67,951
Earnings from continuing operations
before unusual items $
4,276 $ 4,301
Net earnings
$20,501 $40,696
Per share data:
Earnings from continuing
operations before unusual items
$ .63 $ .65
Net earnings
$ 3.00 $ 6.11
Note E - Write-Off of Certain Purchased Research and Development
In connection with the Company's acquisition of TxPort and
Phoenix, certain research and development projects acquired were
determined to have no alternative future use. Accordingly, $5.7
million was expensed in the first quarter of 1995 ($5.4 million,
or $.81 per common share, on an after tax basis).
Note F - Unsolicited Tender Offer Expenses
During 1996, the Company recorded charges of $1.25 million ($.8
million after taxes, or $.12 per common share) for costs incurred
to date associated with an unsolicited tender offer to acquire the
Company. These costs include investment banking fees, legal fees,
and public disclosure expenses. The Company expects to disburse
this amount within 1996. While other costs are anticipated in the
future, the timing and amounts are currently indeterminable.
If no transaction is consummated, the maximum investment banking
fee consists of a retainer, which has been incurred, plus
quarterly financial advisory fees. If a transaction is
consummated, the maximum amount of fees payable would be derived
by a formula set forth in the contract between the Company and the
investment banking firm. Components of this formula, which
incorporates certain incentives, include the number of shares
outstanding and the stock price at the time such fees become
payable in full.
Note G - Shareholder Rights Plan
On March 11, 1996, the Board of Directors of the Company declared
a dividend consisting of one Right for each outstanding common
share of the Company. The distribution was credited March 23,
1996 to the shareholders of record on that date. Following the
date on which a public announcement is given that a person or
group of affiliated or associated persons (Acquiring Person) has
acquired, or obtained the right to acquire, beneficial ownership
of 15% or more of the common shares then outstanding (Share
Acquisition Date), each Right entitles the registered holder
(other than an Acquiring Person) to purchase from the Company one
one-hundredth of a Series B Preferred Share at a price of $81.00,
subject to adjustment, or to acquire one common share for an
exercise price of $1.00 per share subject to antidilution
adjustments.
The Rights will expire at the close of business on March 23, 2006,
unless earlier redeemed by the Company, at a price of $.05 per
Right prior to the Share Acquisition Date. The description and
terms of the Rights are set forth in a Rights Agreement between
the Company and Society National Bank, as Rights Agent, adopted by
the Company on March 11, 1996, and amended by a First Amendment to
Rights Agreement, dated as of March 20, 1996, between the Company
and the Rights Agent.
Note H - Discontinued Operations
On October 23, 1995, the Company sold all of the common shares of
its wholly-owned second tier subsidiary, The National Acme
Company, resulting in a gain on the sale of $17.0 million, or
$2.49 per common share. The purchase agreement provides for the
Company to make contingent payments up to $3.0 million, less a $.3
million deductible, for costs associated with a breach of any
representation or warranty contained in the agreement. The
contingency period ranges between 18 and 24 months subsequent to
the sale date. The Company does not anticipate any material
charges related to this contingency.
On November 1, 1994, the Company sold all of the common shares of
its wholly-owned subsidiary, The Cleveland Twist Drill Company,
resulting in a gain on the sale of $24.7 million, or $3.75 per
common share. The purchase agreement provides for the Company to
make contingent payments up to 20% of the purchase price, less a
$.75 million deductible, for costs associated with a breach of any
representation or warranty contained in the agreement. The
contingency period ranges between 15 and 24 months subsequent to
the sale date. The Company does not anticipate any material
charges related to this contingency.
Note I - Subsequent Event - Acquisition
On April 1, 1996, the Company acquired product lines, assets, and
related rights of Phoenix Data Communication Corporation (Phoenix
DataCom) for a cash price of $2.7 million plus a future
contingency payment which is based on 1998 net sales. Phoenix
DataCom products directly serve the wide area networking segment
of the telecommunication industry using frame relay service.
ATTACHMENT 2
Pro Forma Income Statement
Year Ended December 31, 1995
(amounts in thousands)
Adjust-
Danaher Acme ments
Combined
Net revenues $1,486,769 $0
$1,486,769
Cost of sales 1,039,622 $0 (600)(f)
1,039,022
Selling, general and
administrative expenses 266,890 $0 2,700 (g)
269,590
Other - $0
-
Total operating expenses 1,306,512 0
1,308,612
Operating profit 180,257 0
178,157
Interest (income) expense, n 7,198 (5,249) 12,600 (h)
14,549
Earnings before income taxes 173,059 5,249
163,608
Income taxes 67,293 9,250 (7,700)(i)
68,843
Net earnings $105,766 ($4,001)
$94,765
Pro Forma Income Statement
Three Months Ended March 31, 1996
Unaudited
(amounts in thousands)
Adjust-
Danaher Acme ments
Combined
Net revenues $409,557 $35,169
$444,726
Cost of sales 285,264 20,740 (150)(f)
305,854
Selling, general and (1,250)(J)
administrative expenses 77,165 11,023 670 (g)
87,608
Total operating expenses 362,429 31,763
393,462
Operating profit 47,128 3,406
51,264
Interest (income) expense, n 2,983 (363) 3,150 (h)
5,770
Earnings before income taxes 44,145 3,769
45,494
Income taxes 17,217 1,450 (900)(i)
17,767
Net earnings $26,928 $2,319
$27,727
Pro Forma Balance Sheet
As of March 31, 1996
Unaudited
(amounts in thousands)
Adjust-
Danaher Acme ments
Combined
ASSETS
Current Assets:
Cash and cash equivalents $15,867 $25,877
$41,744
Accounts receivable, net 250,398 23,802
274,200
Total inventories 206,773 33,560 1,000 (a)
241,333
Prepaid expenses and other
current assets 36,981 7,644 (5,605)(b)
39,020
Total current assets 510,019 90,883
596,297
Property, plant and equipmen 293,438 18,155
311,593
Other assets 83,594 4,328
87,922
Excess of cost over net assets
of acquired companies, ne 616,429 35,376 106,777 (c)
758,582
Total assets $1,503,480 $148,742
$1,754,394
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term de $50,065 1,841
$51,906
Accounts payable 96,757 7,550
104,307
Accrued expenses 347,931 22,418
370,349
Total current liabili 494,753 31,809
526,562
Other liabilities 227,269 8,581
235,850
Long-term debt 101,680 524 210,000 (d)
312,204
Stockholders' equity:
Common stock 634 6,425 (6,425)(e)
634
Additional paid-in capita 315,931 58,995 (58,995)
315,931
Retained earnings 409,939 40,644 (40,644)(e)
409,939
Cumulative foreign
translation adjustment 2,873 1,764 (1,764)(e)
2,873
Treasury stock (49,599) -
(49,599)
Total stockholders' equity 679,778 107,828
679,778
Total liabilities and
stockholders' equit$1,503,480 $148,742
$1,754,394
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 Acme-Cleveland common stock reflected
in the Danaher balance sheet as securities available for sale.
(C)Represents the excess of cost over net assets of Acme-
Cleveland Corporation.
(D)Represents borrowings necessary to complete the transaction
subsequent to March 31, 1996.
(E)Represents elimination of historical equity balances for
Acme-Cleveland.
(F)Represents the effects to 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 Acme-Cleveland.
(H)Represents interest associated with the additional borrowings
discussed in item (D) above.
(I)Represents an adjustment to reflect an appropriate effective
tax rate.
(J)Represents elimination of costs of tender offer included in
Acme-Cleveland's income statement.
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