<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended April 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period _________________ to _________________.
Commission file number 0-3947
HACH COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 42-0704420
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(State or Other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
5600 Lindbergh Drive
Loveland, Colorado 80537
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (970) 669-3050
Securities registered pursuant to Section 12 (b) of the Act: None.
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, $1.00 Par Value
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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As of June 30, 1995, 11,363,818 shares of Common Stock were outstanding. The
aggregate value of 5,724,053 shares of Common Stock held by non-affiliates
(based upon the last sales price of $13.50 for the Registrant's Common Stock
listed in The WALL STREET JOURNAL in the NASDAQ National Market System section
on June 30, 1995) was approximately $77,274,715.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Hach Company Annual Report to Stockholders for the year ended
April 30, 1995 (the "1995 Annual Report") are incorporated by reference into
Parts I, II and IV.
Portions of the Hach Company Proxy Statement for the Annual Meeting of
Stockholders scheduled to be held August 29, 1995 (the "1995 Proxy Statement")
are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
The Registrant was incorporated in Iowa in 1951 and reincorporated in
Delaware on April 3, 1968.
Additional information required by this item appears under the heading
"Description of Business" on pages 17 and 18 of the 1995 Annual Report and as
Note 6 of the Notes to Consolidated Financial Statements, "Segment Information",
on pages 26 and 27 of the 1995 Annual Report, all of which is incorporated
herein by reference.
ITEM 2. PROPERTIES
The principal physical properties of the Registrant are as follows:
The Registrant owns a 150,000 square foot steel frame, concrete building
situated on 50 acres adjacent to the Loveland, Colorado airport at 5600
Lindbergh Drive in Loveland, Colorado. This building contains the Registrant's
executive and administrative offices and its research, development, engineering
and instrument manufacturing operations.
The Registrant also owns a 169,000 square foot building complex situated on
45 acres at 100 Dayton Avenue in Ames, Iowa. These facilities contain chemical
manufacturing operations, a chemical research laboratory, the home office
service function and the shipping department and warehouse for all of the
products manufactured and sold by the Registrant.
The Registrant also owns two buildings totaling 45,000 square feet located
in Loveland, Colorado. These buildings contain the Registrant's plastic
component manufacturing operation, part of the Registrant's component assembly
operation, and an employee training center.
The Registrant's wholly-owned subsidiary, Hach Europe, S.A., owns a
distribution and manufacturing plant containing approximately 44,000 square feet
in Namur, Belgium.
All of the Registrant's principal physical properties are modern and were
designed and constructed to the Registrant's specifications specifically for use
in its business.
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ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders in the fourth
quarter of the year ended April 30, 1995.
EXECUTIVE OFFICERS OF REGISTRANT
<TABLE>
<CAPTION>
Name Age
---- ---
<S> <C> <C>
Kathryn Hach-Darrow 72 Chairman of the Board, Chief Executive Officer,
Chairman of the Executive Committee and Director
Bruce J. Hach 49 President and Chief Operating Officer and Director
Robert O. Case 73 Secretary, and General Counsel
Gary R. Dreher 42 Vice President and Chief Financial Officer and Director
Loel J. Sirovy 56 Senior Vice President, Operations
Jerry M. Churchill 55 Vice President, Domestic Sales and Director
Randall A. Petersen 43 Vice President, Human Resources
John C. Privette 40 Vice President, Sales and Marketing
Larry Thompson 51 Vice President, Ames Operation
</TABLE>
Kathryn Hach-Darrow has been active in the business of the Registrant since
its inception. She has served on the Board of Directors and was responsible,
prior to May 6, 1977, as Executive Vice President for certain of the
Registrant's administrative and marketing matters. On May 5, 1977, the Board of
Directors elected Mrs. Hach-Darrow President and Chief Operating Officer. On
April 28, 1983, she was elected Vice Chairman of the Board of Directors and on
February 28, 1986 she was elected Chairman of the
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Board, Chief Executive Officer and Chairman of the Executive Committee and
Director, and has served in these capacities since that date.
Bruce J. Hach, son of Kathryn Hach-Darrow, joined the Registrant November
1, 1970 and served the Company in various capacities. From August 27, 1985 to
February 28, 1986, he was an Assistant Vice President in charge of Human
Relations. He was elected Senior Vice President on February 28, 1986. On April
30, 1987, he was elected a Director of the Registrant, and he was elected
Executive Vice President of the Registrant on August 27, 1987. In August, 1988,
he was elected President and Chief Operating Officer of the Registrant, and has
served in these capacities since that date.
Robert O. Case has been Secretary of the Registrant since May 29, 1968. He
was named General Counsel to the Company on August 29, 1989. From September,
1989 to February, 1991, he was a shareholder of the Chicago, Illinois law firm
of Schuyler, Roche & Zwirner, and a member of its management committee. From
February 1, 1991, to April 30, 1993, he was of counsel to Schuyler, Roche &
Zwirner. Mr. Case was a senior member of the law firm of Walsh, Case & Brown
for more than the previous two years prior to joining Schuyler, Roche &
Zwirner. Since May 1, 1993, Mr. Case has been of counsel to McBride Baker &
Coles, a Chicago, Illinois law firm. Mr. Case was a director of the Company
from May 29, 1968 until his retirement as a Director of the Company
effective at the August 30, 1994 Annual Meeting of Shareholders.
Jerry M. Churchill joined the Registrant on December 1, 1977 as Marketing
Manager of Carle Instruments, Inc., which was a wholly-owned subsidiary of the
Registrant engaged in the manufacturing and sale of gas chromatographs. On
April 2, 1981, he was elected Vice President of Operations of Carle Instruments,
Inc. After Carle Instruments, Inc. was merged into Hach Company, Mr. Churchill
was made Assistant Vice President of Chromatography Operations on September 18,
1983. On February 28, 1986, he was elected Vice President of Domestic Sales and
Marketing. On February 27, 1990, he was elected Senior Vice President of
Marketing and Sales, and on August 28, 1990 he was elected a Director of the
Registrant. On August 25, 1992, he was elected Senior Vice President, Domestic
Sales of the Registrant. On August 24, 1993 he was elected Vice President,
Sales of the Registrant. On November 22, 1994 he was named Vice President,
Domestic Sales of the Registrant and has served in that capacity since that
date. Mr. Churchill's current term as a Director of the Registrant will expire
effective at the Company's 1995 Annual Meeting of Shareholders, and he will not
stand for re-election at that meeting, but will continue as an officer of the
Registrant.
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Loel J. Sirovy joined the Registrant on October 19, 1972. He has held a
number of management positions in Production and Human Relations. On September
1, 1985, he was elected Vice President-Instrument Operations. On April 28,
1989, he was elected Senior Vice President, Manufacturing. On August 25, 1992,
he was elected Senior Vice President, Operations of the Registrant, and has
served in that capacity since that date.
Gary R. Dreher joined the Registrant on January 17, 1977. He has held a
variety of positions since then. In September, 1985 he was named Controller for
the Company. In August, 1990, he was elected Vice President and Controller. In
August, 1991, he was elected Vice President and Treasurer of the Registrant. He
was named Vice President and Chief Financial Officer on November 22, 1994 and
has served in that capacity since that date. He was elected a Director of the
Company at the Company's Annual Meeting of Shareholders on August 30, 1994.
Randall A. Petersen joined the Registrant October 14, 1974. He has held a
number of management positions in Manufacturing and Human Resources. On April
28, 1989, he was elected Vice President, Human Resources of the Registrant, and
has served in that capacity since that date.
John C. Privette joined the Registrant December 1, 1986. He has held a
number of positions in Marketing. In October, 1989 he was named Director of
Domestic Marketing. On August 25, 1992 he was elected Vice President, Marketing
of the Registrant. On November 22, 1994 he was elected Vice President, Sales
and Marketing of the Registrant and has served in that capacity since that date.
Larry Thompson joined the Registrant on April 6, 1964. He has held a
variety of positions in Chemical Operations since then. In April, 1991 he was
named Plant Manager of the Ames, Iowa facility. On August 25, 1992, he was
elected Vice President, Ames Operations of the Registrant, and has served in
that capacity since that date.
Richard D. Vanous, 42, joined the Registrant on February 16, 1976 as an
Analytical Chemist. Subsequently, he has held a number of management positions
in Marketing and Chemical Operations. On February 28, 1986 he was elected
Senior Vice President, Research and Development and Chemical Operations. On
August 25, 1992, he was elected Executive Vice President, Research &
Development, Marketing and Sales and Director of the Registrant. On August 24,
1993, he was elected Senior Vice President, Research & Development, Marketing
and Sales, of the Registrant. His title was changed to Vice President, Research
and Development on November 22, 1994 and he served in that capacity until he
resigned from all positions with the Company as of May 5, 1995.
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The officers of the Company serve at the pleasure of the Board of
Directors.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item appears under the heading "Common
Stock Price Range and Dividends" on page 18 of the 1995 Annual Report, and is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item appears under the heading the
"Comparative Financial Data - 10-Year Summary" on pages 14 and 15 of the 1995
Annual Report, and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The information required by this item appears in the Chairman's and
President's letter "To Our Fellow Shareholders" on pages 2, 3, and 4 of the 1995
Annual Report, and under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 16 and 17 of the 1995
Annual Report, all of which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item appears in the Consolidated Financial
Statements and the Notes thereto on pages 19 through 27 of the 1995 Annual
Report, and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item appears under the heading "Election
of Directors" on pages 3 through 8 in the 1995 Proxy Statement and under the
caption "Executive Officers of the Registrant" at pages 4 through 7 at the end
of Part I of this Report, and is incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item appears under the heading "Executive
Compensation" on pages 11 through 15 in the 1995 Proxy Statement, and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item appears under the headings "Security
Ownership of Certain Beneficial Owners and Management" at pages 2 and 3 and
"Election of Directors" on pages 3 through 8 in the 1995 Proxy Statement, and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item appears under the headings "Certain
Relationships and Related Transactions" on page 8 of the 1995 Proxy Statement,
"Executive Employment Agreements" on pages 14 and 15, and "Compensation
Committee Interlocks and Insider Participation" on page 18 of the 1995 Proxy
Statement, and each is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report on Form 10-K:
1. FINANCIAL STATEMENTS: The information required by this item
appears on the pages listed below in the 1995 Annual Report, and is incorporated
by reference in response to Item 14(a)1.
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Page No. in
1995 Annual Report
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Report of Independent Accountants. . . . . . . . . . . . . . . . 19
Financial Statements:
Consolidated statements of income for the
years ended April 30, 1995, 1994 and 1993. . . . . . 20
Consolidated balance sheets, April 30, 1995
and 1994 . . . . . . . . . . . . . . . . . . . . . . 21
Consolidated statements of stockholders' equity
for the years ended April 30, 1995, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . 22
Consolidated statements of cash flows
for the years ended April 30, 1995, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . 23
Notes to consolidated financial statements . . . . . . 24
2. FINANCIAL STATEMENT SCHEDULES: None.
3. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K: The following
exhibits are included in this Annual Report on Form 10-K. The items identified
below as Exhibits (10)c - (10)k are management contracts or compensatory plans
required to be filed as an Exhibit to this Annual Report on Form 10-K pursuant
to Item 14(c) of Form 10-K.
No. assigned in
Exhibit Table on Page No. in
Item 601 of Reg. S-K Exhibit this Report
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(3) a. Certificate of Incorporation of the
Registrant (as amended to date) --
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hereby incorporated by reference to
Exhibit (3)a. to the Registrant's Annual
Report on Form 10-K for the year ended
April 30, 1993, Commission File No. 0-3947
(3) b. By-laws of the Registrant, as amended
through July 27, 1995 18
(10) c. Hach Company 1993 Stock Option Plan
incorporated by reference to Exhibit (10)c.
to the Registrant's Annual Report on Form
10-K for the year ended April 30, 1994,
Commission File No. 0-3947
(10) d. Form of Stock Option Agreement under 1993
Stock Option Plan incorporated by reference
to Exhibit (10)d. to the Registrant's
Annual Report on Form 10-K for the year
ended April 30, 1994, Commission File No. 0-3947
(10) e. Hach Company Restated 1983 Stock Option
Plan -- hereby incorporated by reference to
Exhibit (10)d. to the Registrant's Annual
Report on Form 10-K for the year ended
April 30, 1993, Commission File No. 0-3947
(10) f. Form of Stock Option Agreements for 1983
Stock Option Plan -- as filed herewith and
hereby incorporated by reference to Exhibit
(10)e. of the Registrant's Annual Report on
Form 10-K for the fiscal year ended
April 30, 1991, Commission File No. 0-3947
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(10) g. Hach Company Restated Directors' Bonus
Compensation Plan -- hereby incorporated by
reference to Exhibit (10) f. of the
Registrant's Annual Report on Form 10-K for
the fiscal year ended April 30, 1991,
Commission File No. 0-3947
(10) h. Executive Employment Agreements between the
Company and each of Bruce J. Hach, Richard
D. Vanous, Loel J. Sirovy, Jerry M.
Churchill, Gary R. Dreher, Randall A.
Petersen, Larry Thompson and John C.
Privette -- incorporated by reference to
Exhibit 10(h.) to the Registrant's Annual
Report on Form 10-K for the year ended
April 30, 1994, Commission File No. 0-3947
(10) i. Hach Company 1995 Employee Stock Purchase
Plan 29
(10) j. Hach Company Deferred Compensation Plan
(as amended through March 1, 1995) 37
(10) k. Trust Under Hach Company Deferred Compensation
Plan dated as of April 10, 1995 between the
Company and the Dauphin Deposit Bank and Trust
Company, as trustee 67
(13) l. Pages 2, 3, 4 and 14 through 27 of the
Registrant's Annual Report to Stockholders
for the year ended April 30, 1995 77
(21) m. Subsidiaries of the Registrant 98
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(23) n. Consent of Coopers & Lybrand L.L.P. 99
(27) o. Financial Data Schedule (electronic filing only) 100
(b) No reports on Form 8-K were filed during the quarter ended April 30,
1995.
(c) and (d) The exhibits and financial statement schedules required to be
filed by this item are attached to or incorporated by reference in this report.
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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.
HACH COMPANY
By:/s/ Kathryn Hach-Darrow
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Kathryn Hach-Darrow, Chairman of the
Board of Directors and Chief
Executive Officer
Date: July 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Kathryn Hach-Darrow
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Kathryn Hach-Darrow, Chairman of the Board,
Chief Executive Officer and Director
(principal executive officer)
Date: July 27, 1995
/s/ Gary R. Dreher
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Gary R. Dreher, Vice President and
Chief Financial Officer, and Director
(principal financial and accounting officer)
Date: July 27, 1995
<PAGE>
/s/ Bruce J. Hach /s/ Fred W. Wenninger
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Bruce J. Hach, Director Fred W. Wenninger, Director
Date: July 27, 1995 Date: July 27, 1995
/s/ Joseph V. Schwan /s/ John N. McConnell
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Joseph V. Schwan, Director John N. McConnell, Director
Date: July 27, 1995 Date: July 27, 1995
/s/ Linda O. Doty /s/ Jerry M. Churchill
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Linda O. Doty, Director Jerry M. Churchill, Director
Date: July 27, 1995 Date: July 27, 1995
<PAGE>
INDEX TO EXHIBITS
No. assigned in
Exhibit Table on Page No. in
Item 601 of Reg. S-K Exhibit this Report
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(3) a. Certificate of Incorporation of the
Registrant (as amended to date) --
hereby incorporated by reference to
Exhibit (3)a. to the Registrant's Annual
Report on Form 10-K for the year ended
April 30, 1993, Commission File No. 0-3947
(3) b. By-laws of the Registrant, as amended
through July 27, 1995
(10) c. Hach Company 1993 Stock Option Plan
incorporated by reference to Exhibit (10)c.
to the Registrant's Annual Report on Form
10-K for the year ended April 30, 1994,
Commission File No. 0-3947
(10) d. Form of Stock Option Agreement under 1993
Stock Option Plan incorporated by reference
to Exhibit (10)d. to the Registrant's
Annual Report on Form 10-K for the year
ended April 30, 1994, Commission File No. 0-3947
(10) e. Hach Company Restated 1983 Stock Option
Plan -- hereby incorporated by reference to
Exhibit (10)d. to the Registrant's Annual
Report on Form 10-K for the year ended
April 30, 1993, Commission File No. 0-3947
(10) f. Form of Stock Option Agreements for 1983
Stock Option Plan -- as filed herewith and
hereby incorporated by
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reference to Exhibit (10)e. of the Registrant's
Annual Report on Form 10-K for the fiscal year
ended April 30, 1991, Commission File No. 0-3947
(10) g. Hach Company Restated Directors' Bonus
Compensation Plan -- hereby incorporated by
reference to Exhibit (10) f. of the
Registrant's Annual Report on Form 10-K for
the fiscal year ended April 30, 1991,
Commission File No. 0-3947
(10) h. Executive Employment Agreements between the
Company and each of Bruce J. Hach, Richard
D. Vanous, Loel J. Sirovy, Jerry M.
Churchill, Gary R. Dreher, Randall A.
Petersen, Larry Thompson and John C.
Privette -- incorporated by reference to
Exhibit 10(h.) to the Registrant's Annual
Report on Form 10-K for the year ended
April 30, 1994, Commission File No. 0-3947
(10) i. Hach Company 1995 Employee Stock Purchase
Plan 29
(10) j. Hach Company Deferred Compensation Plan
(as amended through March 1, 1995) 37
(10) k. Trust Under Hach Company Deferred Compensation
Plan dated as of April 10, 1995 between the
Company and the Dauphin Deposit Bank and Trust
Company, as trustee 67
<PAGE>
(13) l. Pages 2, 3, 4 and 14 through 27 of the
Registrant's Annual Report to Stockholders
for the year ended April 30, 1995 77
(21) m. Subsidiaries of the Registrant 98
(23) n. Consent of Coopers & Lybrand L.L.P. 99
(27) o. Financial Data Schedule (electronic filing only) 100
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EXHIBIT (3)b.
B Y - L A W S
OF
HACH CHEMICAL COMPANY
(Restated as of April 30, 1987
and as amended through July 27, 1995)
____________
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office shall be established
and maintained at the office of the United States Corporation Company, in the
City of Dover, in the County of Kent, in the State of Delaware, and said
corporation shall be the registered agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES. The corporation may have other offices, either
within or without the State of Delaware at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the principal place of
business of the corporation in Ames, Iowa, on the fourth Tuesday in September at
2:00 o'clock P.M.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next preceding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other
than the election of directors may be held at such
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time and place, within or without the State of Delaware, as shall be stated in
the notice of the meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and in accordance with the provisions
of these By-Laws shall be entitled to one vote, in person or by proxy, for each
share of stock entitled to vote held by such stockholder, but no proxy shall be
voted after three years from its date unless such proxy provides for a longer
period. Upon the demand of any stockholder, the vote for directors and the vote
upon any question before the meeting, shall be by ballot. All elections for
directors shall be decided by plurality vote; all other questions shall be
decided by majority vote except as otherwise provided by the Certificate of
Incorporation or the laws of the State of Delaware. A complete list of the
stockholders entitled to vote at the ensuing election, arranged in alphabetical
order, with the address of each, and the number of shares held by each, shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 4. QUORUM. Except as otherwise required by law, by the Certificate
of Incorporation or by these By-Laws, the presence, in person or by proxy, of
stockholders holding a majority of the stock of the corporation entitled to vote
shall constitute a quorum at all meetings of the stockholders. In case a quorum
shall not be present at any meeting, a majority in interest of the stockholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite amount of stock
entitled to vote shall be represented, any business may be transacted which
might have been transacted at the meeting as originally noticed; but only those
stockholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board, the President or
the Secretary or by resolution of the Board of Directors.
SECTION 6. NOTICE OF MEETING. Written notice, stating the place, date and
time of the meeting, and the general nature of the
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business to be considered, shall be given to each stockholder entitled to vote
thereat at his address as it appears on the records of the corporation, not less
than ten nor more than fifty days before the date of the meeting. No business
other than that stated in the notice shall be transacted at any meeting without
the unanimous consent of all the stockholders entitled to vote thereat.
SECTION 7. ACTION WITHOUT MEETING. Except as otherwise provided by the by
the Certificate of Incorporation, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provisions of the statutes or of the Certificate of Incorporation
or of these By-Laws, the meeting and vote of stockholders may be dispensed with,
if all the stockholders who would have been entitled to vote upon the action if
such meeting were held, shall consent in writing to such corporate action being
taken.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. The business, property and affairs of the
corporation shall be managed and controlled by a board of nine (9) directors;
provided, however, that the board, by resolution adopted by vote of a majority
of the then authorized number of directors, may increase or decrease the number
of directors. The directors shall be elected at the annual meeting of
stockholders, and serve (subject to the provisions of this Article) until the
next succeeding annual meeting of stockholders and until the election and
qualification of their respective successors.
SECTION 2. RESIGNATIONS. Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. Any vacancy in the office of any director through
death, resignation, removal, disqualification or other cause and any additional
directorship resulting from increase in the number of directors may be filled at
any time by a majority of the directors then in office (even though less than a
quorum remains) or by the stockholders, and subject to the provisions of this
Article, the person so chosen shall hold office until his successor shall have
been chosen and shall have qualified; or if
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* Pursuant to a resolution dated June 22, 1995, the Board of Directors
amended the By-laws of the Company effective August 29, 1995 to provide for a
board of seven (7) directors.
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the person so chosen is a director elected to fill a vacancy he shall hold
office for the unexpired term of his predecessor.
SECTION 4. REMOVAL. Any director or directors may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose and the vacancies thus
created may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 5. POWERS. The Board of Directors shall exercise all of the powers
of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation or by these By-Laws conferred upon or reserved
to the stockholders.
SECTION 6. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Any such committee, to the extent
provided in the resolution or in the By-Laws of the corporation, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; provided, however,
the By-Laws may provide that in the absence or disqualification of any member of
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
SECTION 7. MEETINGS. The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent in writing of all the
directors.
Regular meetings of the directors may be held without notice at such places
and times as shall be determined from time to time by resolution of the
directors.
Special meetings of the Board may be called by the Chairman of the Board or
the President, or by the Secretary on the written request of any two directors,
on at least two days' notice to each director and shall be held at such place or
places as may be
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determined by the directors, or as shall be stated in the call of the meeting.
SECTION 8. QUORUM. A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.
SECTION 9. COMPENSATION. Directors shall not receive any stated salary for
their services as directors or as members of committees, but by resolution of
the board a fixed fee and expenses for attendance at meetings may be paid to
directors. Directors may also receive compensation in stock of this corporation
or otherwise pursuant to any bonus compensation plan or other plan approved by
the stockholders. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer, agent
or otherwise, and receiving compensation therefor.
SECTION 10. ACTION WITHOUT MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting, if a written consent thereto is signed by all
members of the board, or of such committee as the case may be, and such written
consent is filed with the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be a Chairman
of the Board, a President, a Treasurer, and a Secretary, all of whom shall be
elected by the Board of Directors and who shall hold office until their
successors are elected and qualified. In addition, the Board of Directors may
elect one or more Vice Presidents and such Assistant Secretaries and Assistant
Treasurers as it may deem proper. None of the officers of the corporation need
be directors. The officers shall be elected at the first meeting of the Board
of Directors after each annual meeting. More than two offices may be held by
the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint
such other officers and agents as it may deem advisable who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
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SECTION 3. CHAIRMAN. The Chairman of the Board of Directors shall be the
chief executive officer of the corporation and shall have the general powers and
duties of supervision and management usually vested in the chief executive
officer of a corporation. He shall preside at all meetings of the stockholders
and of the Board of Directors, and shall have general supervision, direction and
control of the business of the corporation. Except as the Board of Directors
shall authorize the execution thereof in some other manner, the Chairman of the
Board shall execute bonds, mortgages and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 4. PRESIDENT. The President shall be the chief operating officer
of the corporation and shall have the general powers and duties of supervision
and management usually vested in the chief operating officer of a corporation.
The President shall have the same authority as the Chairman of the Board in
regard to the execution of bonds, mortgages and other contracts in behalf of the
corporation and the affixation of the seal to any instrument requiring it. In
the absence of the Chairman of the Board, the President shall have all of the
other duties, powers and authority of the Chairman of the Board. In addition,
the President shall have such powers and shall perform such duties as shall be
assigned to the President by the Board of Directors.
SECTION 5. VICE PRESIDENT. Each Vice President shall have such powers and
shall perform such duties as shall be assigned to him by the Board of Directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositaries as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be ordered
by the Board of Directors, the Chairman of the Board or the President, taking
proper vouchers for such disbursements. He shall render to the Chairman of the
Board and Board of Directors at the regular meetings of the Board of Directors,
or whenever they may request it, an account of all his transactions as Treasurer
and of the financial condition of the corporation. If required by the Board of
Directors, he shall give the corporation a bond for the faithful discharge of
his duties in such amount and with such surety as the board shall prescribe.
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SECTION 7. SECRETARY. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the Chairman of the Board or the President, or by the directors, or
stockholders, upon whose requisition the meeting is called as provided in these
By-Laws. He shall record all the proceedings of the meetings of the corporation
and of the directors in a book to be kept for that purpose, and shall perform
such other duties as may be assigned to him by the directors, the Chairman of
the Board or the President. He shall have the custody of the seal of the
corporation and shall affix the same to all instruments requiring it when
authorized by the directors, the Chairman of the Board or the President, and
attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. A Certificate of Stock signed by the
Chairman of the Board, President or Vice President and by the Treasurer,
Secretary or an Assistant Secretary shall be issued to each stockholder
certifying the number of shares owned by him in the corporation. Any of or all
of the signatures on the certificate, including, that of any transfer agent or
registrar, may be a facsimile.
SECTION 2. LOST CERTIFICATE. A new certificate of stock may be issued in
the place of any certificate theretofore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate, or his legal representatives, to
give the corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against any claim
that may be made against it on account of the alleged loss of any such
certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other person as the directors may designate, by whom
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they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by
these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall
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be deemed to be sufficient if given by depositing the same in the United States
mail, postage prepaid, addressed to the person entitled thereto at his address
as it appears on the records of the corporation, and such notice shall be deemed
to have been given on the day of such mailing. Stockholders not entitled to
vote shall not be entitled to receive notice of any meetings except as otherwise
provided by Statute.
Whenever any notice whatever is required to be given under the provisions
of any law, or under the provisions of the Certificate of Incorporation of the
corporation or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
SECTION 10. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
The corporation to the extent permitted by Delaware law from time to time in
effect and subject to the following provisions, shall indemnify any person who,
by reason of the fact that he is or was an officer, director, employee or agent
of the corporation or is or was serving at the request of the corporation as an
officer, director, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, was or is a party or is threatened to be
made a party to any threatened, pending or completed
(a) action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. (The termination of any
action, suit, or processing by judgment, order, settlement, conviction or upon a
plea of nolo contendere, or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful); or
(b) action or suit by or in the right of the corporation to procure a
judgment in its favor, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation (except that no
indemnification shall be made in respect of any claim,
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issue or matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper).
To the extent that an officer, director, employee or agent of the corporation
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subparagraphs (a) and (b), or in the defense of any
claim, issue or matter therein, he shall be indemnified by the corporation
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
Any indemnification provided for under subparagraphs (a) and (b) (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the officer,
director, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subparagraphs (a) and (b). Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
manner provided above upon receipt of an undertaking by or on behalf of the
officer, director, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as provided above.
The indemnification provided by this Section shall not be deemed exclusive
of any other rights to which any person (including persons who are not officers,
directors, employees or agents of the corporation), may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in an official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be an officer, director, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
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The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was an officer, director, employee or agent of
the corporation, or is or was serving at the request of the corporation as an
officer, director, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be made at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal or By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, if notice of the proposed alteration or
repeal, or By-Law or By-Laws to be made, be contained in the notice of such
special meeting.
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EXHIBIT (10)i
HACH COMPANY
1995 EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide employees a continued
opportunity to purchase Hach stock through semi-annual offerings
to be made during the five-year period commencing July 1, 1995.
Five hundred thousand (500,000) shares of Hach stock in the
aggregate have been approved for this purpose. The shares of
common stock to be sold to participants under this Plan may be
treasury shares, authorized unissued shares of the Corporation's
$1.00 par value common stock or Plan Purchase shares as provided
in Section 20 below.
1. ADMINISTRATION. The Plan shall be administered by a
Committee appointed by the Board of Directors from its members or
members of senior management, consisting of at least three
members. Members of the Committee shall not be eligible to
participate in the Plan.
2. ELIGIBILITY. Except as provided below, all employees
of the Corporation or its domestic subsidiaries who shall have
been employed for a period of 180 days preceding an offering
period and whose customary employment exceeds twenty (20) hours
per week shall be eligible to participate in the Plan in
accordance with such rule as may be prescribed by the Committee
from time to time, which rules, however, shall neither permit nor
deny participation in the Plan contrary to the requirements of
the Internal Revenue Code (including, but not limited to, Section
423(b)(3), (4), (5) and (8) thereof) and the regulations
promulgated thereunder. No employee may be granted an option if
such employee, immediately after the option is granted, owns 5%
or more of the total combined voting power or value of the stock
of the Corporation or any subsidiary. For purposes of the
preceding sentence, the rules of Section 424(d) of the Internal
Revenue Code shall apply in determining the stock ownership of an
employee, and stock that the employee may purchase under
outstanding options shall be treated as stock owned by the
employee.
3. OFFERINGS. The Corporation shall make one or more six-
month offerings to employees to purchase Hach stock under this
Plan. Each offering period shall be six (6) months in duration,
commencing on January 1 and July 1 of each year. During such
offering periods (or during such portion thereof as an employee
may elect to participate) the amounts received as compensation by
an employee shall constitute the measure of such of the
employee's participation in the offering as is based on
compensation.
<PAGE>
4. PARTICIPATION. An employee eligible on the effective
date of any offering may participate in such offering at any time
by completing and forwarding a payroll deduction authorization to
the employee's appropriate payroll location. The form will
authorize a regular payroll deduction from the employee's
compensation, and must specify the date on which such deduction
is to commence, which may not be retroactive. Such authorization
shall be applicable to subsequent offering periods unless the
employer increases or decreases the employee's payroll deduction
as provided in Section 6 or withdraws from participation as
provided in Section 7 below.
5. DEDUCTIONS. The Corporation shall maintain payroll
deduction accounts for all participating employees. With respect
to any offering made under this Plan, an employee may authorize a
payroll deduction of a whole percentage (up to a maximum of 10 %)
of the compensation the employee receives during the offering
period (or during such portion thereof in which the employee may
elect to participate).
No employee may be granted an option that permits his or her
rights to purchase stock under this Plan, and any other stock
purchase plan of the Corporation and its subsidiaries, to accrue
at a rate that exceeds $25,000 of the fair market value of such
stock (determined at the effective date of the applicable
offering) for each calendar year in which the option is
outstanding at any time.
6. DEDUCTION CHANGES. An employee may increase or
decrease the employee's payroll deduction by filing a new payroll
deduction authorization at any time. The change may not become
effective sooner than the next offering period after receipt of
the authorization.
7. WITHDRAWAL.
(a) A participating employee may withdraw payroll
deductions credited to such employee's account under the Plan at
any time by giving written notice to a designated representative
of the Corporation no later than 7 days prior to the last day of
any offering period. All of the payroll deductions credited to
the employee's account will be paid to the employee promptly
after receipt of such notice of withdrawal, and no further
deductions will be made from such employee's pay during that
Offering Period.
(b) An employee's withdrawal will not have any effect
upon such employee's eligibility to participate in any similar
plan which may hereafter be adopted
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by the Corporation or in any subsequent Offering Period under this Plan.
8. PURCHASE OF SHARES. Each employee participating in any
offering under this Plan shall be granted an option, upon the
effective date of such offering, for as many full and fractional
shares of Hach stock as the participating employee may elect to
purchase with up to 10% of the compensation received during the
specified offering period (or during such portion thereof as the
employee may elect to participate), to be paid by payroll
deductions during such period.
Notwithstanding the foregoing, in no event shall the
number of shares purchased by an employee during an offering
period exceed 2,000 shares.
The purchase price for each share purchased shall be
the lower of 85% of the fair market price of a share of Hach
stock on the commencement date of the offering period or 85% of
the fair market price of a share of Hach stock on the last day of
the offering period. As of the last day of any offering period,
the account of each participating employee shall be totaled, and
the employee shall be deemed to have exercised an option to
purchase one or more full or fractional shares at the then-
applicable price; the employee's account shall be charged for the
amount of the purchase; and the ownership of such share or shares
shall be appropriately evidenced on the books of the Corporation.
Additional shares covered by the employee's option shall be
purchased in the same manner, as of the last day of each
subsequent offering period. A participating employee may not
purchase a share under any offering period beyond 6 months from
the effective date thereof. Any balance remaining in an
employee's payroll deduction account at the end of an offering
period will be carried forward to the next offering period.
9. EMPLOYEE ACCOUNTS AND CERTIFICATES. Upon purchase of
one or more full or fractional shares by a Plan participant
pursuant to Section 8 hereof, the Corporation shall establish a
book entry account in the name of the employee to reflect the
share(s) purchased at that time. Certificates shall be issued
only on request for full shares. In the event a participant
terminates his or her account, any fractional share held in the
account will be paid to the participant in cash.
10. REGISTRATION OF SHARES. Shares may be registered only
in the name of the employee, or, if the employee so indicates on
the employee's payroll deduction authorization form, in the
employee's name jointly with a member of the employee's family,
with right of survivorship. An employee who is a resident of a
jurisdiction that
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does not recognize such a joint tenancy may have shares registered
in the employee's name as tenant in common or as community property
with a member of the employee's family, without right of survivorship.
11. DEFINITIONS.
(a) The term "Corporation" or "Hach" means Hach Company, a
Delaware corporation.
(b) The term "Hach stock" means the common stock of Hach.
(c) The phrase "fair market price" per share on any
given date shall mean the closing price of the Hach stock as
reported on the NASDAQ National Market System, or if on any such
date the Hach stock is not quoted by any such organization, the
average of the closing bid and asked prices with respect to the
Hach stock as furnished by a professional market maker making a
market in the Hach stock selected by the Board of Directors and
if not available, the fair market value of the Hach stock as of
such day as determined in good faith by the Board of Directors.
(d) The term "subsidiary" means a subsidiary of the
Corporation within the meaning of Section 424(f) of the Internal
Revenue Code and the regulations promulgated thereunder.
12. RIGHTS AS A STOCKHOLDER. None of the rights or
privileges of a stockholder of the Corporation shall exist with
respect to shares purchased under this Plan unless and until such
shares shall have been appropriately evidenced on the books of
the Corporation.
13. RIGHTS ON RETIREMENT, DEATH OR TERMINATION OF
EMPLOYMENT. In the event of a participating employee's
retirement, death, or termination of employment, the employee
shall be ineligible to continue to participate in the Plan, and
no payroll deduction shall be taken from any pay due and owing
to the employee after the pay period during which the employee
became ineligible.
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14. RIGHTS NOT TRANSFERABLE. Rights under this Plan are
not transferable by a participating employee other than by will
or the laws of descent and distribution, and are exercisable
during the employee's lifetime only by the employee.
15. APPLICATION OF FUNDS AND ADMINISTRATIVE FEES. All
funds received or held by the Corporation under this Plan may be
used for any corporate purpose. The Committee may impose
reasonable administrative fees on participating employees to
defray the administrative costs of the Plan, which shall in no
event exceed the actual administrative costs of the Plan.
Initially, the fee shall be $10 per participating employee. An
employee who withdraws from participation shall pay an additional
administration fee should such employee elect to again
participate in a subsequent offering under this Plan.
16. ADJUSTMENTS IN CASE OF CHANGES AFFECTING HACH STOCK.
In the event of a subdivision of outstanding shares, or the
payment of a stock dividend, the number of shares approved for
this Plan, and the share limitation set forth in Section 8
hereof, shall be increased proportionately, and such other
adjustments shall be made as may be deemed equitable by the Board
of Directors. In the event of any other change affecting Hach
stock, such adjustments shall be made as may be deemed equitable
by the Board of Directors to give proper effect to such event.
17. AMENDMENT OF THE PLAN. The Board of Directors may
at any time, or from time to time, amend this Plan in any
respect, except that, without the approval of a majority of the
shares of stock of the Corporation then issued and outstanding
and entitled to vote, no amendment shall be made (i) increasing
the number of shares approved for this Plan (other than as
provided in Section 16 hereof), (ii) decreasing the purchase
price per share, (iii) withdrawing the administration of this
Plan from a Committee consisting of persons not eligible to
participate in the Plan, or (iv) changing the designation of
subsidiaries eligible to participate in the Plan.
18. TERMINATION OF THE PLAN. This Plan and all rights
of employees under any offering hereunder shall terminate:
(a) On the day that participating employees become entitled
to purchase a number of shares equal to or greater than the
number of shares remaining available for purchase. If the number
of shares so purchasable is greater than the shares remaining
available, the available shares shall be allocated by the
Committee among such participating employees in such manner as it
deems fair; or
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(b) At any time, at the discretion of the Board of
Directors.
No offering hereunder shall be made which shall extend beyond
June 30, 2000.
19. GOVERNMENTAL REGULATIONS. The Corporation's
obligation to sell and deliver Hach stock under this Plan is
subject to the approval of any governmental authority required in
connection with the authorization, issuance, or sale of such
stock.
20. PLAN SHARES PURCHASES. Purchases of outstanding shares
may be made pursuant to and on behalf of this Plan, upon such
terms as the Corporation may approve, for delivery under this
Plan.
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EXHIBIT (10)j
HACH COMPANY
DEFERRED COMPENSATION PLAN
<PAGE>
TABLE OF CONTENTS
Article Title Page No.
- ------- ----- --------
1 History and Name 1
2 Purpose 2
3 Definitions 3
4 Operation and Administration 6
5 Eligibility for Participation 9
6 Participant Allocations 11
7 Company Allocations 13
8 Establishment of Accounts 14
9 Maintenance of Accounts and Valuation
of Plan 15
10 Funding Limitations 17
11 Vesting 18
12 Regulations Governing Distribution of
Benefits after Termination of Employment 19
13 Beneficiary Designation 25
14 Amendment and Termination 26
15 General Provisions 27
<PAGE>
HACH COMPANY
DEFERRED COMPENSATION PLAN
ARTICLE 1
HISTORY AND NAME
Effective September 1, 1988, Hach Company established the
Supplemental Executive Benefit Program of Hach Company in order to
provide certain key employees with benefits upon retirement, death,
disability or other termination of employment, for the purpose of
promoting in its key employees the strongest interest in the
successful operation of the Company and to induce such employees to
remain in the employ of the Company.
The plan set forth herein shall be known as the Hach Company
Deferred Compensation Plan and, effective March 1, 1995,
constitutes an amendment in its entirety to the Supplemental
Executive Benefit Program of Hach Company for the benefit of
eligible key employees and their beneficiaries in the manner and to
the extent set forth in such plan.
1
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ARTICLE 2
PURPOSE
The plan is intended to constitute a nonqualified deferred
retirement plan which, in accordance with ERISA -Section
Symbols- 201(2), 301(a)(3) and 401(a)(1), is "unfunded and
maintained by an employer primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees."
The purpose of the Plan is to acknowledge and reward certain key
employees of the Company for their efforts on behalf of the Company
by maximizing their ability to save on a tax-deferred basis and
providing such key employees with benefits that shall not be
restricted by any qualified plan limitations and/or requirements.
Such limitations and requirements shall include, but not be limited
to, the following:
2.1 ELECTIVE DEFERRAL CONTRIBUTION LIMITATION
The $9,240 (1994 limit) limitation placed on elective
employee contributions in accordance with Sections
402(g) of the Internal Revenue Code (the "Code"),
which limitation shall be adjusted annually for
increases in the cost-of-living in accordance with
Article 415(d) of the Code.
2.2 COMPENSATION LIMITATION
The $150,000 (1994 limit) maximum on compensation
taken into account for all purposes under a qualified
plan in accordance with Section 401(a)(17) of the
Code, which limitation shall be adjusted for increases
in the cost-of-living in accordance with Section
401(a)(17)(B) of the Code.
2.3 LIMITATION ON ANNUAL ADDITIONS
The limitation on annual additions to qualified
retirement plans in accordance with Section 415(c) of
the Code, which limitation shall be adjusted annually
for increases in the cost-of-living in accordance with
Article 415(d) of the Code.
2.4 MINIMUM PARTICIPATION REQUIREMENT
The participation requirements under Article
401(a)(26) of the Code.
2.5 NONDISCRIMINATION REQUIREMENTS
The nondiscrimination testing requirements under
Articles 401(k) and (m) of the Code.
2
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ARTICLE 3
DEFINITIONS
For purposes of the Plan, the following words and phrases shall
have the following meanings unless a different meaning is plainly
required by the context. Wherever used, the masculine pronoun
shall include the feminine pronoun and the feminine pronoun shall
include the masculine and the singular shall include the plural and
the plural shall include the singular.
3.1 "Account" shall mean a recordkeeping source from which Plan
benefits are provided. The specific Accounts under this
Plan are listed in Section 8.1 and described more fully in
Section 12.
3.2 "Beneficiary" shall mean the person or persons designated
in accordance with Article 13 to receive any benefits under
the Plan in the event of a Participant's death.
3.3 "Board of Directors" shall mean the full Board of Directors
of the Company.
3.4 "Bonus Compensation" shall mean any cash remuneration paid
to a Participant, excluding Regular Compensation and
Quarterly Cash Profit Sharing Compensation, as a specific
incentive bonus or award, including Voluntary Deferral
Allocations made hereunder, the source of which is Bonus
Compensation.
3.5 "Committee" shall mean the Board of Directors or the person
or persons appointed by the Board of Directors to
administer the Plan.
3.6 "Company" shall mean Hach Company, or any affiliate,
subsidiary or associate company which shall adopt the Plan
for its employees with the approval of Hach Company,
including any successor to the Company as a result of a
statutory merger, purchase of assets or any other form of
reorganization of the business of the Company.
3.7 "Deferred Retirement Date" shall mean the first day of any
month subsequent to the Participant's Normal Retirement
Date.
3.8 "Determination Date" shall mean the Valuation Date next
subsequent to the date on which the Participant's
termination of employment occurs.
3.9 "Disability" or "Disabled" shall mean any physical or
mental condition which may which meets the definition and
provisions described in the Company's group long-term
disability contract covering the Participants of this Plan.
3
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3.10 "Disability Termination Date" shall mean one year following
the date on which a Participant is Disabled.
3.11 "Effective Date" shall mean September 1, 1988, the date as
of which the Plan was established.
"Supplemental Effective Date" shall mean March 1, 1995,
the last date as of which the Plan was amended in its
entirety.
3.12 "Employee" shall mean a person who is employed by the
Company and falls under the usual common law rules
applicable in determining the employer-employee
relationship.
3.13 "Key Employee" shall mean an Employee who is designated for
eligibility in the Plan by the Committee in accordance with
Section 4.2.
3.14 "Participant" shall mean any Employee who is participating
in the Plan in accordance with the provisions herein set
forth.
3.15 "Normal Retirement Date" shall mean the date on which a
Participant attains age 62.
3.16 "Plan" shall mean the Hach Company Deferred Compensation
Retirement Plan as it may be amended from time to time.
3.17 "Plan Year" shall mean a period of 11 consecutive
months commencing on the Effective Date and ending on
December 31, 1995. Thereafter, "Plan Year" shall mean a
period of 12 consecutive months commencing on January 1,
1996 and each January 1 thereafter.
3.18 "Quarterly Cash Profit Sharing Compensation" shall mean
cash incentive remuneration, excluding Bonus Compensation
and Regular Compensation made to a Participant, including
Voluntary Deferral Allocations made hereunder, the source
of which is Quarterly Cash Profit Sharing Compensation.
3.19 "Regular Compensation" shall mean the Participant's wages
for the Plan Year paid by the Company of the type reported
in box 1 of Form W-2 (1993). Such wages shall include
amounts within the meaning of Section 3401(a) of the Code
plus any other amounts paid to the Participant by the
Company for which the Company is required to furnish a
written statement under Section 6041(d), 6051(a)(3) and
6052 of the Code, determined without regard to any rules
that limit the amount required to be reported based on the
nature or location of the employment or services performed,
(i) exclusive of
(A) Bonus Compensation;
(B) Quarterly Cash Profit Sharing Compensation;
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<PAGE>
(C) severance pay on a non payroll basis;
(D) nonqualified plan payments; and
(E) welfare benefits, fringe benefits (cash and
non-cash), reimbursements of other expense
allowances and moving expenses.
(ii) inclusive of
(A) any amounts deferred under any nonqualified
plan, including the Plan; and
(B) the amount of any contributions made by
the Company under any salary reduction or
similar arrangement to a qualified deferred
compensation, pension or cafeteria plan,
contributions to a simplified employee
pension plan described in Section 408(k) of
the Code.
3.20 "Retirement" shall mean the termination of employment of a
Participant on his Normal or Deferred Retirement Date.
3.21 "Trust Agreement" shall mean the instrument executed by the
Company and the Trustee fixing the rights and liabilities
of each with respect to holding and administering the Trust
Fund.
3.22 "Trustee" shall mean the Trustee or any successor Trustee,
appointed by the Board of Directors, acting in accordance
with the terms of the Trust Agreement.
3.23 "Trust Fund" shall mean all assets held by the Trustee for
the purposes of the Plan in accordance with the terms of
the Trust Agreement. The Board of Directors shall, subject
to the provisions of Article 10, establish such a Trust
Fund (known as a "rabbi trust") for the purpose of
accumulating funds to satisfy the obligations incurred by
the Company under the Plan.
3.24 "Valuation Date" shall mean the last day of each March,
June, September and December and such other dates as the
Committee may determine from time to time.
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ARTICLE 4
OPERATION AND ADMINISTRATION OF THE PLAN
4.1 ORGANIZATION OF THE COMMITTEE
(a) The Board of Directors shall serve as the Committee
to administer the Plan or shall appoint a Committee
to administer the Plan, who, upon acceptance
of such appointment, shall serve at the pleasure
of the Board of Directors. Any member may resign by
delivering his written resignation to the Board of
Directors and to the Committee. Vacancies in the
Committee arising from resignation, death, or removal
shall be filled by the Board of Directors.
(b) The Committee shall act by a majority of its members
unless unanimous consent is required by the Plan or
by unanimous approval of its members if there are two
or less members in office at the time. In the event
of a Committee deadlock, the Committee shall determine
the method for resolving such deadlock. No Committee
member shall act upon any question pertaining solely
to himself, and the other member or members shall
make any determination required by the Plan in respect
to such member.
(c) The Committee may, by unanimous consent, delegate
specific authority and responsibilities to one or more
of its members. The member or members so designated
shall be solely liable, jointly and severally, for
their acts or omissions with respect to such delegated
authority and responsibilities. Committee members not
so designated shall be relieved from liability for any
act or omission resulting from such delegation.
4.2 COMMITTEE DISCRETION
The Committee shall, by written action prior to the first
day of each Plan Year, designate those Employees, if any,
who are to be Key Employees for purposes of Article 5.
6
<PAGE>
4.3 AUTHORITY AND RESPONSIBILITY
The Committee shall have full authority and responsibility
to interpret and construe the Plan and determine all
questions of the status and rights of the Participants
and the amounts of their allocations. Its interpretation,
construction or determination, as the case may be, shall
be final and conclusive on both the Company and the
Participants and their respective successors, assigns,
personal representatives and Beneficiaries. Such authority
and responsibility shall include, but shall not be limited
to, the following:
(a) appointment of qualified accountants, consultants,
administrators, counsel, appraisers, or other persons
it deems necessary or advisable, who shall serve
the Committee as advisors only and shall not exercise
any discretionary authority, responsibility or control
with respect to the management or administration of
the Plan;
(b) determination of all benefits, and resolution
of all questions arising from the administration,
interpretation and application of the Plan;
(c) adoption of forms and regulations for the
administration of the Plan;
(d) remedy of all inequity resulting from incorrect
information received or communicated, or of
administrative error;
(e) settlement or compromise of any claims or debts
arising from the operation of the Plan and the
commencement of any legal actions or administrative
proceeding.
4.4 RECORDS AND REPORTS
The Committee shall keep a record of its proceedings
and acts and shall keep books of account, records and other
data necessary for the proper administration of the Plan.
Following each Valuation Date, the Committee shall
provide each Participant with a detailed statement of his
Account, including all transactions affecting his Account
during the calendar quarter of reference, and reflecting
the most recent valuation of his Account.
4.5 REQUIRED INFORMATION
The Company, Participants or Beneficiaries entitled to
benefits shall furnish forms and any information or
evidence as requested by the Committee for the proper
administration of the Plan. Failure on the part of any
Participant or Beneficiary to comply with such request
within a reasonable
7
<PAGE>
period of time shall be sufficient grounds for delay in
the payment of benefits until the information or evidence
requested is received.
4.6 PAYMENT OF EXPENSES OF PLAN
The expenses of the Committee in connection with the
administration of the Plan shall be the responsibility of
the Company.
4.7 INDEMNIFICATION
The Company shall indemnify and hold the members of
the Committee harmless against liability incurred in the
administration of the Plan, except for the gross negligence
or willful misconduct of any member.
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<PAGE>
ARTICLE 5
ELIGIBILITY FOR PARTICIPATION
5.1 INITIAL ELIGIBILITY
(a) Each Key Employee on the Effective Date will be
eligible to participate in the Plan as of such date.
(b) Each other Key Employee will be eligible to
participate in the Plan as of the January 1 following
the attainment of his status as a Key Employee in
accordance with Section 4.2.
5.2 VOLUNTARY PARTICIPATION
Participation in the Plan by Key Employees is entirely
voluntary. As further specified in Section 6.2, a Key
Employee must sign an election form and submit the signed
form to the Committee before the date he elects to become a
Participant of the Plan.
5.3 COMMITTEE RULES AND REGULATIONS
The Committee shall, through the adoption of a set of
rules and regulations, provide for methods used in advising
a Key Employee of his eligibility in the Plan, and all
forms necessary for the Key Employee to elect to
participate.
5.4 CESSATION OF PARTICIPATION
(a) For purposes of Articles 6, 7 and 11, an individual
shall cease to be a Participant on the earliest of:
(i) the date on which he ceases to be a Key Employee;
(ii) the date on which he terminates employment with
the Company; and
(iii) the date on which the Plan terminates.
(b) For all other plan purposes, an individual shall cease
to be a Participant on the date the total vested value
of his Account has been paid.
(c) Notwithstanding the foregoing Subsections (a) and (b),
in the event that the Department of Labor (DOL) issues
regulations or other official notice specifically
defining the group of employees that may participate
in a plan of this type and any current Participants
do not meet the criteria set forth in the DOL
regulations or notice, such Participants shall be
deemed to be
9
<PAGE>
individuals described under Subsection (a)(i) as of
the later of the effective date or publication date
of the notice or regulations, provided such notice or
regulations include a grandfather provision for such
participants with respect to their account balances on
such date. In the event no such grandfather provision
is provided, the accounts of such participants shall
be distributed in accordance with the last paragraph
of Subsection 12.1(a).
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<PAGE>
ARTICLE 6
PARTICIPANT ALLOCATIONS
6.1 VOLUNTARY DEFERRAL ALLOCATIONS
(a) Until the date of his cessation of participation
in accordance with Subsection 5.4(a), a Participant
may, as of the Effective Date or, if later, when
first eligible or any January 1 thereafter elect
to reduce his
1. Base Compensation by any fixed percentage
("Regular Deferral Rate") for a current Plan
Year up to a maximum of 25% of such Regular
Compensation, or
2. Bonus Compensation by any fixed percentage
("Bonus Deferral Rate") for a current Plan Year up
to a maximum of 100% of such Bonus Compensation,
and to have a corresponding amount credited to his
Accounts, in accordance with Section 4.2, by
filing a the applicable forms in accordance with
Section 6.2.
The deferral shall be made from Regular or Bonus
Compensation as the Participant shall specify;
however, to the extent the deferral is to be made
from Bonus Compensation and no or insufficient Bonus
or Quarterly Cash Profit Sharing is paid, the
deferral shall be reduced.
(b) A Participant's Voluntary Deferral Allocations
made in accordance with Subsection (a) shall take
the form of before tax deferrals to the Participant's
Voluntary Deferral Allocation Account. In the event
that a Participant's Compensation should increase or
decrease during the Plan Year, his allocations
shall automatically be adjusted to reflect such
change.
(c) Notwithstanding the foregoing, a Participant may not
make contributions to this Plan during any period for
which contributions must be suspended in accordance
with regulation section 1.401(k)-1(d)(2)(iii)(B)(3)
of the Code, as a condition of the Participant's
receipt of a hardship withdrawal from any plan of
the Company which includes a qualified cash or
deferred arrangement under section 401(k) of the Code.
(d) The amount of Compensation that a Participant elects
to defer shall be credited to the Participant's
Accounts as soon as practicable, but no longer than
30 days following the date on which the Participant
is paid the nondeferred portion of the compensation
which is the source of the deferral.
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<PAGE>
(e) The minimum amount a Participant may defer for any
Plan Year with respect to
(i) his Regular Deferral Rate is $1,000.
(ii) his Bonus Deferral Rate is $1,000.
There shall be no minimum amount with respect to the
Participant's Profit Sharing Deferral Rate
6.2 FORMS REQUIRED
A Participant shall elect to contribute on forms and
in the manner prescribed by the Committee. A new election
must be made prior to each Plan Year for which the
Participant is eligible to participate in the Plan, even if
the Participant does not elect to contribute for such Plan
Year.
6.3 IRREVOCABLE ELECTION
A Participant may not modify or discontinue his
allocations for a Plan Year after the first day thereof.
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<PAGE>
ARTICLE 7
COMPANY ALLOCATIONS
7.1 DISCRETIONARY ALLOCATIONS
(a) The Company intends to allocate, for each Plan Year,
such amounts as it shall determine.
(b) The Company's allocation, if made, shall be allocated
to each Participant in an amount to be determined
by the Company.
Notwithstanding the foregoing provision, a Participant
shall be entitled to a share of the Company's
allocation, if any, for the Plan Year of (i) his
Retirement, Disability or death, (ii) the commencement
or end of a leave of absence authorized by the Company
or (iii) his transfer to another business entity
to which such Participant had been transferred by
the Company, even if the Participant is not in the
employ of the Company on the last business day of
such Plan Year.
7.2 SUPPLEMENTAL EXECUTIVE BENEFIT PROGRAM ALLOCATION
For Participants who were Participants of the Plan on
January 31, 1995, the Company shall allocate an amount
equal to the actuarial present lump sum value as of the
Supplemental Effective Date of the Participant's "Benefit
Account" as such term is defined in accordance with the
terms and provisions of the Plan prior to this restatement.
Such amount shall be accounted for separately from the
Participant's Voluntary Deferral Allocations and the
Company's Discretionary Allocations.
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<PAGE>
ARTICLE 8
ESTABLISHMENT OF ACCOUNTS
8.1 ESTABLISHMENT OF ACCOUNTS
The following Accounts shall be established with
respect to each Participant:
(a) Retirement Account,
(b) Education Account, and
(c) Fixed Period Account.
8.2 ACCOUNT AND SUBACCOUNT ALLOCATION
(a) Each Participant shall submit to the Committee
before the beginning of the Plan Year of reference
a written statement specifying the respective
percentages of the Participant's Voluntary Deferral
Allocations and Company's Discretionary Allocations
which are to be allocated to the Accounts listed in
Subsection 8.1 and described more fully in Article 11.
Notwithstanding the foregoing, the Company's
Supplemental Executive Benefit Program Allocation
shall automatically be allocated to the Retirement
Account and shall remain so invested until
distributed in accordance with Article 12.
(b) The minimum amount which may be allocated to each
Account and, if applicable, to each subaccount,
is $1,000.
8.3 IRREVOCABLE ALLOCATION
An Eligible Employee may not amend or revoke an allocation
made for or during a Plan Year.
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<PAGE>
ARTICLE 9
MAINTENANCE, INVESTMENT AND VALUATION OF ACCOUNTS
9.1 MAINTENANCE OF ACCOUNTS
The Committee shall establish and maintain a separate
accounting in the name of each Participant, to which it
shall credit all amounts allocated in accordance with
Articles 6 and 7 and all earnings as determined in
accordance with Section 9.2 and 9.3.
9.2 DEEMED INVESTMENT FUND ELECTION
(a) Initial Election - Each Participant shall designate,
in multiples of 10%, one or more of the funds
referenced in Section 9.3 for the purpose of
attributing earnings to his Account.
If the Participant fails to designate such funds,
the entire Account shall be deemed to be invested
under the most conservative of the funds selected
by the Committee in accordance with Section 9.3 (e.g.
a money market fund or a fixed income fund).
(b) Subsequent Election - A Participant may, by written
election at least 10 days prior to the January,
April, July or October 1 as of which an election
is to be effective, change his fund election with
respect to subsequent allocations but, until changed,
a fund election shall remain in effect for all
subsequent Plan Years.
(c) Transfer Election - A Participant may, by written
election change his fund election with respect
to his then existing Account, provided such change
(i) results in multiples of 10% in any one fund
and (ii) is applied to the ending balance
determined as of the applicable Valuation Date. Such
change shall become effective as soon as
administratively possible.
(d) Such elections shall be the basis for the valuation
of a Participant's Account in accordance with Section
9.4 but shall not require the Company to actually
place assets in such funds or purchase any specific
assets for purposes of the Plan.
9.3 FUNDS
The Committee shall choose investment vehicles on which
to base the imputed earnings of Participant Accounts.
15
<PAGE>
Prior to the beginning of each Plan Year, the
Committee, in its sole discretion, shall determine the
general fund categories and the specific investment
vehicles to be offered to Participants and shall notify the
Participants of its decisions.
Each Participant's Accounts shall be valued based upon
the performance of the deemed investment fund ("fund")
selected by the Participant. Such valuation shall reflect
the net asset value expressed per share of the designated
fund(s). The fair market value of a fund shall be
determined by the Plan Administrator. It shall represent
the fair market value of all securities or other property
held for the respective fund, plus cash and accrued
earnings, less accrued expenses and proper charges against
the fund to the extent that they are not otherwise paid by
the Company in accordance with Subsection 9.4. A valuation
summary shall be prepared as of each Determination Date.
9.4 ALLOCATION OF EARNINGS AND EXPENSES
(a) On the basis of the valuation as of a Valuation
Date, the Accounts of all Participant's shall be
(i) proportionately adjusted to reflect the deemed
investment earnings such as interest, dividends,
realized and unrealized investment profits and losses
and (ii) directly adjusted to reflect all other
applicable transactions during the Plan Year
attributable to such Accounts including, but not
limited to, any allocations or distributions.
(b) In addition to its allocations, the Company may pay all
the administrative expenses of the Plan and all fees
and retainers of the Plan's accountants, counsel,
consultant, administrator or other specialist so
long as the Plan remains in effect.
16
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ARTICLE 10
FUNDING LIMITATIONS
10 .1 BENEFIT STATUS
(a) All benefits under the Plan are unfunded obligations
of the Company.
(b) At no time shall a Participant or the Participant's
Beneficiary have any right, title or interest in or
to any specific fund or assets of the Company.
(c) As to any claim for benefits under the Plan, the
Participant or the Participant's Beneficiary shall
be a creditor of the Company in the same manner as
any other creditor having a general claim for unpaid
compensation.
10 .2 INVESTMENT AND BENEFIT PAYMENT OBLIGATION OF THE COMPANY
(a) Nothing contained herein shall require the Company
to set aside or earmark any monies or other assets
specifically for payments under the Plan.
(b) Neither the Company nor any Trustee shall be
obligated to purchase or maintain any asset, and
any reference to investments is solely for the
purpose of computing the value of benefits.
(c) Neither this Plan nor any action taken pursuant
to the terms of this Plan shall be considered
to create a fiduciary relationship between the Company
and the Plan Participants or any other persons, or to
establish a trust in which the assets are beyond the
claims of any unsecured creditor of the Company.
(d) Benefits are payable as they become due irrespective
of any actual investments the Company may make to
meet its obligations.
17
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ARTICLE 11
VESTING
11.1 UPON RETIREMENT
Upon eligibility for Retirement, a Participant shall have
a 100% vested interest in his Account.
11.2 UPON DEATH OR DISABILITY TERMINATION
Upon the death of a Participant, such Participant's
Beneficiary shall be entitled to a 100% vested interest in
the Participant's Account.
11.3 UPON OTHER TERMINATION OF EMPLOYMENT
Upon termination of a Participant's employment prior
to his Retirement or death, the vested interest to which he
shall be entitled with respect to
(a) his Voluntary Deferral Allocations and any deemed
investment experience attributable thereto shall
be 100%;
(b) his Company Allocations and any deemed investment
experience attributable thereto shall be determined
in accordance with the vesting schedule for Company
contributions and any related provisions under the
terms of the Company's qualified Profit Sharing Plan.
Notwithstanding the foregoing, that portion of his
Company Allocations attributable to the Company's
Supplemental Executive Benefit Program Allocation
shall be 100% vested at all times.
18
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ARTICLE 12
REGULATIONS GOVERNING DISTRIBUTION OF BENEFITS
12.1 RETIREMENT ACCOUNT.
(a) COMMENCEMENT OF BENEFIT.
If a Participant terminates employment for any reason,
including death, the Company shall pay such
Participant or his Beneficiary, if applicable, a
benefit in the form determined under Subsection (b),
based on the value of his Retirement Account as of
the Participant's Determination Date as soon as
administratively practicable following such
Determination Date.
Notwithstanding the foregoing paragraph, if an
individual ceases to be a Participant in accordance
with Subsection 5.4(c) and the circumstances
described in the last sentence of such Subsection
apply, the total value of his Retirement Account
shall be distributed as soon as administratively
practicable following the later of the effective date
or publication date of the DOL notice or regulations.
(b) METHOD OF DISTRIBUTION
(i) UPON NORMAL OR DEFERRED RETIREMENT
Distribution of the Participant's Retirement
Account as a result of the Participant's
Retirement shall be in one of the following
forms at the Participant's election, subject to
the rules set forth in Subsection (d).
(A) a single lump sum.
(B) substantially equal annual installments over
a period of not less than two nor more than
ten full years.
Notwithstanding the foregoing, if the
Participant's Retirement Account has a
value less than $10,000 at the time benefits
are to commence, then the Participant's
benefit shall be paid as a lump sum as soon as
administratively feasible following the
Participant's Determination Date.
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(ii) UPON DEATH, DISABILITY TERMINATION OR OTHER
TERMINATION OF EMPLOYMENT (EXCLUDING NORMAL OR
DEFERRED RETIREMENT)
Distribution of the Participant's Retirement
Account as a result of the Participant's
death, Disability Termination Date or other
termination of employment (excluding Normal
or Deferred Retirement) shall be in a single
lump sum.
(c) DETERMINATION OF BENEFITS
(i) In the event that the Participant elects to
have his benefits distributed in accordance
with Subsection (b)(i)(A), he shall receive a
single lump sum equal to the total vested
value of his Account determined as of his
Determination Date.
(ii) In the event that the Participant elects to
have his benefits distributed in accordance
with Subsection (b)(i)(B), the
(A) amount of the first payment shall be
determined by multiplying the vested
value of the Participant's Account as
of his Determination Date by a fraction,
(1) the denominator of which equals the
number of years over which the
benefits are to be paid; and
(2) the numerator of which is one.
(B) amounts of the payments for each
succeeding year shall be determined by
multiplying the vested value of the
Participant's Account as of the
applicable anniversary of his
Determination Date by a fraction,
(1) the denominator of which equals the
number of remaining years over which
the benefits are to be paid; and
(2) the numerator of which is one.
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(d) ELECTION OF FORM OF BENEFIT PAYMENT.
(i) A Participant shall elect the form in which
his benefits are payable in accordance
with Subsection (b).
Such elections must be made when the
Participant makes his initial election to
participate in the Plan in accordance with
Article 5.
(ii) Notwithstanding the foregoing, the Participant
may elect to change the form(s) elected in
accordance with Paragraph (i), provided
such new election is made at least one full
calendar year prior to the Participant's
Normal or Deferred Retirement.
(iii) Any election made pursuant to this Article
shall be made on forms and in the manner
prescribed by the Committee and shall be
irrevocable, except as provided in Paragraph
(ii).
12.2 EDUCATION ACCOUNT.
(a) If a Participant remains continuously employed by the
Company until January 1 of the calendar year in which
an Eligible Dependent attains age 18, the Company shall
pay to the Participant a benefit, as soon after such
January 1st and each of the next three anniversaries
thereof as administratively practicable, determined
as of the Valuation Date immediately preceding or
coinciding with each such January 1st as follows:
<TABLE>
<CAPTION>
January 1st Percentage of Eligible
Year Dependent's Subaccount
----------- ----------------------
<S> <C>
1 25%
2 33-1/3%
3 50%
4 100%
</TABLE>
(b) Subject to the requirements of Section 7.2, a
Participant may establish subaccounts under his
Education Account by designating Eligible Dependents.
A Participant may have a maximum of five such
subaccounts at any time. A Participant's election
pursuant to Section 8.2 shall apply uniformly to each
subaccount.
(c) If a Participant terminates his employment for any
reason with a balance in his Education Account, the
21
<PAGE>
balance shall be transferred to his Retirement Account
and distributed in accordance with Subsections 12.1(a)
and (b); but no later than he would have received his
benefit as provided in Subsection 12.2(a) above.
(d) Notwithstanding any provision to the contrary, if on
the January 1 of the calendar year in which an
Eligible Dependent of a Participant attains age 18,
the Eligible Dependent's subaccount has a balance of
less than $10,000, then the Plan Administrator shall
direct that the balance be paid to the Participant in
one lump sum.
(e) If an Eligible Dependent dies prior to the payment of
the full amount credited to his subaccount, the
balance shall be paid to the Participant as soon as
administratively practicable following the Valuation
Date coinciding with or immediately following the
Eligible Dependent's death.
(f) For purposes of this Section, "Eligible Dependent"
means an individual who is a child, stepchild,
grandchild, niece or nephew, or who is otherwise
identified as a dependent of a Member for purposes of
the Code who is living at any time throughout the
Enrollment Period and who is either younger than
age 14 or younger than age 18 but for whom a
subaccount was initially established pursuant to
Subsection (b) prior to his attaining age 14.
12.3 FIXED PERIOD ACCOUNT.
(a) A benefit equal to the lump sum value of the
Participant's Fixed Period Account determined as of
the Valuation Date coinciding with or immediately
preceding the January 1 of the payment year specified
by the Participant shall be paid to him as soon as
administratively practicable thereafter.
(b) A Participant shall designate the payment year in
the written statement by which the Fixed Period
Account is established. The minimum deferral period
for such account shall be four Plan Years.
Subject to the requirements of Section 7.2, a
Participant may establish subaccounts under his Fixed
Period Account, with separate payment years for each.
A Participant may have a maximum of two such
subaccounts at any time.
A Participant's election pursuant to Section 8.2
shall apply uniformly to each subaccount.
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(c) If a Participant's employment terminates for any
reason and the Participant has a balance in his Fixed
Period Account, the balance shall be transferred to
his Retirement Account and be distributed in
accordance with Subsections 12.1(a) and (b); but no
later than he would have received his benefit as
provided in Subsection 12.3(a) above.
12.4 CLAIM PROCEDURE FOR BENEFITS
(a) Any request for specific information with respect
to benefits under the Plan must be made to the
Committee in writing by a Participant or his
Beneficiary. Oral communications will not be
recognized as a formal request or claim for benefits.
(b) The Committee shall provide adequate notice in
writing to any Participant or Beneficiary whose claim
for benefits under the Plan has been denied, (i)
setting forth the specific reasons for such denial;
specific references to pertinent plan provisions; a
description of any material and information which had
been requested but not received by the Committee; and,
(ii) advising such Participant or Beneficiary that any
appeal of such adverse determination must be in
writing to the Committee, within such period of time
designated by the Committee but, until changed, not
more than 60 days after receipt of such notification,
and must include a full description of the pertinent
issues and basis of such claim.
(c) If the Participant or Beneficiary fails to appeal
such action to the Committee in writing within the
prescribed period of time, the Committee's adverse
determination shall be final.
(d) If an appeal is filed with the Committee, the
Participant or Beneficiary shall submit such issues he
feels are pertinent and the Committee shall reexamine
all facts, make a final determination as to whether
the denial of benefits is justified under the
circumstances, and advise the Participant or
Beneficiary in writing of its decision and the
specific reasons on which such decision was based,
within 60 days of receipt of such written request,
unless special circumstances require a reasonable
extension of such 60-day period.
12.5 SUBSTITUTE PAYEE
If a Participant or Beneficiary entitled to receive any
benefits hereunder is in his minority, or is, in the
judgment of the Committee, legally, physically, or mentally
incapable of personally receiving and receipting any
distribution, the
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Committee may make distributions to a legally appointed
guardian or to such other person or institution as, in
the judgment of the Committee, is then maintaining or has
custody of the payee.
12.6 SATISFACTION OF LIABILITY
After all benefits have been distributed in full to a
Participant or to his Beneficiary, all liability to such
Participant or to his Beneficiary shall cease.
12.7 NONASSIGNABILITY
No benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any such action shall be
void for all purposes of the Plan. No benefit shall in any
manner be subject to the debts, contracts, liabilities,
engagements or torts of any person, nor shall it be subject
to attachments or other legal process for or against any
person, except to such extent as may be required by law.
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ARTICLE 13
BENEFICIARY DESIGNATION
13.1 Each Participant, upon becoming eligible for participation
in the Plan, may designate a Beneficiary to receive the
benefits payable in the event of his death, and designate a
successor Beneficiary to receive any benefits payable in the
event of the death of any other Beneficiary.
13.2 A Participant may change his Beneficiary at any time. All
Beneficiary designations and changes shall be made on an
appropriate form as designated by the Committee and filed
with the Committee.
13.3 If no person shall be designated by the Participant, or if
the designated Beneficiary shall not survive the
Participant, payment of his interest shall be made to the
Participant's estate.
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ARTICLE 14
AMENDMENT AND TERMINATION
14.1 AMENDMENT
The Company may amend or otherwise modified the Plan by
resolution of its Board of Directors, in whole or in part,
either retroactively or prospectively, provided that no
amendment or modification shall, with respect to allocations
already credited, change the amount of allocations under
Article 6 or Article 7 or increase the vesting requirements
under Article 10.
14.2 TERMINATION
The Plan may be terminated at any time at the discretion of
the Company by resolution of its Board of Directors.
Written notification of such action shall be given to each
Participant, the Trustee and the Committee. Thereafter, no
further allocations or credits shall be made to the Plan.
As soon as administratively feasible following termination
of the Plan, the Committee shall distribute the amount in
each Account to or on behalf of the Participant or
Beneficiary entitled thereto.
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ARTICLE 15
GENERAL PROVISIONS
15.1 LIMITATION OF RIGHTS
Neither the establishment of the Plan or the Trust
Agreement, nor any modification thereof, nor the creation of
an account, nor the payment of any benefits shall be
construed as giving any Participant, Beneficiary, or any
other person whomsoever, any legal or equitable right
against the Company, the Trustee or the Committee unless
such right shall be specifically provided for in the Plan or
the Trust Agreement or conferred by affirmative action of
the Committee in accordance with the terms and provisions of
the Plan; or as giving any Participant the right to be
retained in the service of the Company, and all Participants
and other employees shall remain subject to discharge to the
same extent as if the Plan had never been adopted.
15.2 CONSTRUCTION OF AGREEMENT
The Plan shall be construed according to the laws of the
State of Ohio, and all provisions hereof shall be
administered according to, and its validity shall be
determined under, the laws of Ohio where preempted by
Federal law.
15.3 SEVERABILITY
Should any provision of the Plan or any regulations adopted
thereunder be deemed or held to be unlawful or invalid for
any reason, such fact shall not adversely affect the other
provisions or regulations unless such invalidity shall
render impossible or impractical the functioning of the Plan
and, in such case, the appropriate parties shall immediately
adopt a new provision or regulation to take the place of the
one held illegal or invalid.
15.4 TITLES AND HEADINGS
The titles and headings of the Articles in this instrument
are for convenience of reference only and, in the event of
any conflict, the text rather than such titles or headings
shall control.
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15.5 BINDING UPON SUCCESSORS
The liabilities under the Plan shall be binding upon any
successor or assign of the Company and any purchaser of the
Company or substantially all of the assets of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Plan to be
duly executed this 1st day of March, 1995.
ATTEST: By: /s/ Bruce J. Hach
------------------------------
President
/s/ Mary A. McCray
- --------------------------------
Asst. Secretary
<PAGE>
EXHIBIT (10)k
TRUST UNDER HACH COMPANY
DEFERRED COMPENSATION PLAN
(a) This Agreement made this 10th day of April by
and between Hach Company (Company) and Dauphin Deposit Bank
and Trust Company (Trustee);
(b) WHEREAS, Company has adopted a nonqualified plan, the Hach
Company Deferred Compensation Plan (Plan);
(c) WHEREAS, Company has incurred or expects to incur liability
under the terms of such Plan with respect to the individuals
participating in such Plan;
(d) WHEREAS, Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the Trust assets that
shall be held therein, subject to the claims of Company's
Insolvency, as herein defined, until paid to Plan
participants and their beneficiaries in such manner and at
such times as specified in the Plan;
(e) WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not
affect the status of the Plan as an unfunded plan maintained
for the purpose of providing deferred compensation for a
select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income
Security Act of 1974;
(f) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source
of funds to assist it in the meeting of its liabilities
under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and
agree that the Trust shall be comprised, held and disposed of as
follows:
SECTION 1.
ESTABLISHMENT OF TRUST.
(a) Company hereby deposits with Trustee in trust $1.00, which
shall become the principal of the Trust to be held,
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administered and disposed of by Trustee as provided in this
Trust Agreement.
(b) The Trust shall become irrevocable upon approval by the
Board of Directors.
(c) The Trust is intended to be a grantor trust, of which
Company is the grantor, within the meaning of subpart E,
part I, subchapter J, chapter 1, subtitle A of the Internal
Revenue Code of 1986, as amended, and shall be construed
accordingly.
(d) The principal of the Trust, and any earnings thereon shall
be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Plan
participants and general creditors as herein set forth.
Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficiary ownership interest
in, any assets of the Trust. Any rights created under the
Plan and this Trust Agreement shall be mere unsecured
contractual rights of Plan participants and their
beneficiaries against Company. Any assets held by the Trust
will be subject to the claims of Company's general creditors
under federal and state law in the event of Insolvency, as
defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from
time to time, make additional deposits of cash or other
property in trust with Trustee to augment the principal to
be held, administered and disposed of by Trustee as provided
in this Trust Agreement. Neither Trustee nor any Plan
participant or beneficiary shall have any right to compel
such additional deposits.
SECTION 2.
PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect of
each Plan participant (and his or her beneficiaries), that
provides a formula or other instructions acceptable to
Trustee for determining the amounts so payable, the form in
which such amount is to be paid (as provided for or
available under the Plan), and the time of commencement for
payment of such amounts. Except as otherwise provided
herein, Trustee shall make payments to the Plan participants
and their beneficiaries in accordance with such Payment
Schedule. The Trustee shall
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<PAGE>
make provision for the reporting and withholding of any
federal taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of
the Plan and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amounts have been
reported, withheld and paid by Company. The Plan
participants or their beneficiaries, if applicable, shall be
responsible for the reporting and payment of any state or
local taxes that may be due to the appropriate taxing
authorities with respect to the payment of benefits pursuant
to the terms of the Plan.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan shall be determined
by Company or such party as it shall designate under the
Plan, and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under
the terms of the Plan. Company shall notify Trustee of its
decision to make payments of benefits directly prior to the
time amounts are payable to participants or their
beneficiaries. In addition, if the principal of the Trust,
and any earnings thereon, are not sufficient to make
payments of benefits in accordance with the terms of the
Plan, Company shall make the balance of each such payment as
it falls due. Trustee shall notify Company where principal
and earnings are not sufficient.
SECTION 3.
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants
and their beneficiaries if the Company is Insolvent.
Company shall be considered "Insolvent" for purposes of this
Trust Agreement if
(i) Company is unable to pay its debts as they become
due, or
(ii) Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as
provided in Section 1(d) hereof, the principal and income of
the Trust shall be subject to claims of general creditors of
Company under federal and state law as set forth below:
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<PAGE>
(i) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform
Trustee in writing of Company's Insolvency. If a
person claiming to be a creditor of Company
alleges in writing to Trustee that Company has
become Insolvent, Trustee shall determine
whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment
of benefits to Plan participants or their
beneficiaries.
(ii) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company
or a person claiming to be a creditor alleging
that Company is Insolvent, Trustee shall have
no duty to inquire whether Company is Insolvent.
Trustee may in all events rely on such evidence
concerning Company's solvency as may be furnished
to Trustee and that provides Trustee with a
reasonable basis for making a determination
concerning Company's solvency.
(iii) If at any time Trustee has determined that
Company is Insolvent, Trustee shall discontinue
payments to Plan participants or their
beneficiaries and shall hold the assets of the
Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of such
general creditors with respect to benefits due
under the Plan or otherwise.
(iv) Trustee shall resume the payment of benefits
to Plan participants or their beneficiaries in
accordance with Section 2 of this Trust Agreement
only after Trustee has determined that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant
to Section 3(b) hereof and subsequently resumes such
payments, the first payment following such discontinuance
shall include the aggregate amount of all payments due to
Plan participants or their beneficiaries under the terms of
the Plan for the period of such discontinuance, less the
aggregate amount of any payments made to Plan participants
or their beneficiaries by Company in lieu of the payments
provided for hereunder during any such period of
discontinuance.
4
<PAGE>
SECTION 4.
PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after the Trust has
become irrevocable, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any of
the Trust assets before all payment of benefits have been made to
Plan participants and their beneficiaries pursuant to the terms
of the Plan.
SECTION 5.
INVESTMENT AUTHORITY.
(a) The Trustees shall invest the principal of the Trust and any
earnings thereon in accordance with written directions from
Company. Such directions shall provide Trustee with the
investment discretion to invest the above-referenced amounts
within broad guidelines established by Trustee and Company
and set forth therein.
(b) Subject to Subsection (a), the Trustee may
(i) invest and reinvest the amounts described in
Subsection (a) in any form of property not
prohibited by law, including, without limitation
on the amount which may be invested therein,
any mutual funds, money market funds,
certificates of deposit, life insurance policies,
annuity contracts, and other deposits yielding
a reasonable rate of interest; and
(ii) hold cash uninvested in an amount considered
necessary and prudent for proper administration
of the Trust, or deposit the same with any
banking, savings or similar financial institution
supervised by the United States or any state,
including the Trustee's own banking department.
(c) Notwithstanding the foregoing, in no event may Trustee
invest in securities (including stock or rights to acquire
stock) or obligations issued by Company, other than a de
minimis amount held in common investment vehicles in which
Trustee invests. All rights associated with assets of the
Trust shall be exercised by Trustee or the person designated
by Trustee, and shall in no event be exercisable by or rest
with Plan participants.
5
<PAGE>
Subject to the limitation described in the preceding
paragraph, Company shall have the right, at anytime, and
from time to time in its sole discretion, to substitute
assets of equal fair market value for any asset held by the
Trust, provided such substitute assets are acceptable to the
Trustee.
SECTION 6.
DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust,
net of expenses and taxes, shall be accumulated and reinvested.
SECTION 7.
ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within 90
days following the close of each calendar year and within 90 days
after the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the
Trust during such year or during the period from the close of the
last preceding year to the date of such removal or resignation,
setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all
securities and investments purchased and sold with the cost or
net proceeds of such purchases or sales (accrued interest paid or
receivable being shown separately), and showing all cash,
securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as
the case may be.
SECTION 8.
RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a
prudent person acting in like capacity and familiar with
such matters would use in the conduct of an enterprise of a
like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any
action taken pursuant to a direction, request or approval
given by Company which is contemplated by, and in conformity
with, the terms of the Plan or this Trust and is given in
writing by Company. In the
6
<PAGE>
event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the
dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify
Trustee against Trustee's cost, expenses and liabilities
(including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for
such payments. If Company does not pay such costs, expenses
and liabilities in a reasonably timely manner, Trustee may
obtain payment from the Trust.
(c) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its
duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to
assist it in performing any of its duties or obligations
hereunder.
(e) Trustee shall have, without exclusion, all powers conferred
on Trustees by applicable law, unless expressly provided
otherwise herein, provided, however, that if an insurance
policy is held as an asset of the Trust, Trustee shall have
no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of
the policy to a different form) other than to a successor
Trustee, or to loan to any person the proceeds of any
borrowing against such policy.
(f) However, notwithstanding the provisions of Section 8(e)
above, Trustee may loan to Company the proceeds of any
borrowing against an insurance policy held as an asset of
the Trust.
(g) Notwithstanding any powers granted to Trustee pursuant to
this Trust Agreement or to applicable law, Trustee shall not
have any power that could give this Trust the objective of
carrying on a business and dividing the gains therefrom,
within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the
Internal Revenue Code.
7
<PAGE>
SECTION 9.
COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid
from the Trust.
SECTION 10.
RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company,
which shall be effective 90 days after receipt of such
notice unless Company and Trustee agree otherwise.
(b) Trustee may be removed by Company on 90 days notice or upon
shorter notice accepted by Trustee.
(c) Upon a Change of Control, as defined herein, Trustee may not
be removed by Company for one year.
(d) If Trustee resigns within one year after a Change of
Control, as defined herein, Company shall apply to a court
of competent jurisdiction for the appointment of successor
Trustee or for instructions.
(e) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be
completed within 90 days after receipt of notice of
resignation, removal or transfer, unless Company extends the
time limit.
(g) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with section 11 hereof, by the
effective date of resignation or removal under paragraphs
(a) or (b) of this section. If no such appointment has been
made, Trustee may apply to a court of competent jurisdiction
for appointment of a successor or for instructions. All
expenses of Trustee in connection with the proceeding shall
be allowed as administrative expenses of the Trust.
8
<PAGE>
SECTION 11.
APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section
10(a) or (b) hereof, Company may appoint any third party,
such as a bank trust department or other party that may be
granted corporate trustee powers under state law, as a
successor to replace Trustee upon resignation or removal.
The appointment shall be effective when accepted in writing
by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership rights in
the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or
the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts
of any prior Trustee and may retain or dispose of existing
Trust assets, subject to Sections 7 and 8 hereof. The
successor Trustee shall not be responsible for and Company
shall indemnify and defend the successor Trustee from any
claim or liability resulting from any action or inaction of
any prior Trustee or from any other past event, or any
condition existing at the time it becomes successor Trustee.
SECTION 12.
AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company.
Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan or shall make the Trust
revocable after it has become irrevocable in accordance with
Section 1(b) hereof.
(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled
to benefits pursuant to the terms of the Plan. Upon
termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of participants or beneficiaries
entitled to payment of benefits pursuant to the terms of the
Plan. Company may terminate this Trust prior to the time
all benefit payments under the Plan have been made. All
assets in the Trust at termination shall be returned to
Company.
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<PAGE>
(d) This Trust Agreement may not be amended by Company for one
year following a Change of Control, as defined herein.
SECTION 13.
MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Plan participants and their
beneficiaries under this Trust Agreement may not be
anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable
process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of
Pennsylvania.
(d) For purposes of this Trust, "Change of Control" shall mean a
change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Act of 1934.
SECTION 14.
EFFECTIVE DATE.
The effective date of this Trust Agreement shall be
March 1, 1995.
IN WITNESS WHEREOF, Company and Trustee have executed this
Agreement as of the date first above written.
HACH COMPANY
By: /s/ Bruce J. Hach
______________________________
President
ATTEST:
/s/ Mary A. McCray
_______________________________
Asst. Secretary
DAUPHIN DEPOSIT BANK
AND TRUST COMPANY
By: /s/ Robin Lake Becker
______________________________
Asst. Vice President
ATTEST:
/s/ Bernard Kelly, Jr.
_______________________________
Assistant Secretary
<PAGE>
Exhibit (13)1.
(Item 601(13))
TO OUR FELLOW SHAREHOLDERS
Fiscal year 1995, a successful period for Hach Company, reflected both
challenge and change. Water analysis, the industry we serve, remained in a
relatively slow growth mode. Many of our customers, faced with reduced budgets
and cost control programs, either eliminated or delayed major spending programs.
Thus, sales of our more expensive instruments were sluggish. We believe this is
a temporary situation. With worldwide demand for quality water continuing to
grow, future emphasis on efficiency in water analysis and water management is
certain. We feel confident we can serve these needs and capitalize on the many
opportunities before us.
During the year we announced our intent to discontinue the design and
manufacture of our electrochemical product line, the reason being the line no
longer fits with our long-term strategic intent. To continue to serve our
customers' needs for electrochemical products, we have entered into a
private-label agreement with a well-known manufacturer. This manufacturer will
provide us with a wider range of electrochemical products than we could
reasonably develop ourselves. In addition, this company will manufacture the
Hach One-TM- Electrode, thus assuring continuation of this unique Hach
technology.
The decision to discontinue the design and manufacture of electrochemical
products resulted in a one-time pretax charge of $775,000, related to the
write-down of certain assets associated with this product line. Over the years
we have tried consistently to maintain a high level of expertise throughout our
broad product offerings. Now it is clear to us we can no longer afford to be
experts in all areas. Our plan will be to place greater emphasis on our core
technologies and form alliances with well-established companies in areas where
we are not strong.
FINANCIAL POSITION
Figures for both net sales and net income before the cumulative effect of an
accounting change were all-time record highs for fiscal year 1995. Net sales
increased 5% while net income before the cumulative effect of an accounting
change increased 2%. Had it not been for the electrochemical write-off, net
income before the cumulative effect of an accounting change would have increased
8% and, as a percent of sales, net income would have been 9.3%. While we were
not satisfied with our overall sales increase, we were pleased with the chemical
sales increase of 11% and the international sales increase of 13%. These
increases were due primarily to volume increases. In recognition of the
international theme of this year's Annual Report, we are pleased to announce
fiscal year 1995 sales to customers outside the United States increased to 34%
of total sales.
[GRAPH]
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During fiscal year 1995 we continued to concentrate on controlling costs
throughout the organization. We have done this by making investments that help
our employees become more efficient. By the end of the fiscal year, through
normal attrition, our work force had decreased by 2%. This decrease is
noteworthy given our increase in sales volume. Sales per employee increased to
$120,000 for the year, compared to $111,800 for the previous year.
To further reduce costs, we have closed chemical operations in Casper, Wyoming.
All chemical manufacturing is now confined to our Ames plant where a new
chemical pre-treatment waste facility has been constructed. The construction of
this plant demonstrates our ongoing commitment to and concern for the
environment.
In September 1994, the Board of Directors authorized the Company to repurchase
up to $2,000,000 in value of Hach Company common stock. At the end of fiscal
year 1995, we had repurchased approximately 31,000 shares at an average cost of
$14.40 per share. We continue to believe the repurchase of our own shares is
one of the best investments we can make.
In February 1995, the Board of Directors approved a 25% increase in the
Company's regular quarterly cash dividend. This is the 14th consecutive year
dividends have increased.
[PHOTOGRAPH]
[GRAPH]
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MEASURING PERFORMANCE
We are committed to maximizing the market value of the capital contributed by
our shareholders. We believe two performance measurement tools -- Economic
Profit and Economic Value Added -- will provide an accurate determination of the
value we are creating. Economic Profit is defined as net operating profit after
taxes in excess of a computed capital charge for average operating capital
employed. Economic Value Added represents the growth in Economic Profit from
year to year. We plan to use both during fiscal 1996. We believe focusing our
efforts on the components of Economic Profit will translate into increased
shareholder value.
FUTURE OUTLOOK
We are not satisfied with our sales growth rate for this past year. Given our
strengths, the potential in the markets we serve and the expectations we have
placed upon ourselves, we believe our growth rate should be higher. To help us
plan this future growth, we have engaged the services of a nationally known
strategic analysis firm. Every area of the Hach organization is involved in
this all-encompassing effort. When the study is completed in the latter part of
calendar year 1995, we expect some changes will be made in order to place a
stronger emphasis on our greatest areas of opportunity.
IN APPRECIATION
Your Company is grateful for the dedicated service of the Board of Directors.
Special recognition should be given to two members, Richard D. Vanous and Jerry
M. Churchill, who will not be standing for re-election. They have served as
Board members for approximately five years. Both were elected to the Board at a
difficult time following the death of the Company founder, the late Clifford C.
Hach. Rick and Jerry are chemists by background. Their contributions to the
work of the Board are greatly appreciated.
We salute the hard-working, dedicated employees of Hach Company. The success we
have experienced would not have been possible without their support and
cooperation. We are confident their continued efforts will bring increased
value to our loyal shareholders.
Sincerely,
/s/ Kathryn Hach-Darrow
Kathryn Hach-Darrow
Chairman of the Board
and Chief Executive Officer
/s/ Bruce J. Hach
Bruce J. Hach
President
and Chief Operating Officer
Hach One is a Hach Company trademark.
4
<PAGE>
HACH COMPANY AND SUBSIDIARIES
COMPARATIVE FINANCIAL DATA--10-YEAR SUMMARY
(THOUSANDS OF DOLLARS EXCEPT RATIO AND SHARE DATA)
<TABLE>
<CAPTION>
SUMMARY OF OPERATIONS YEARS ENDED APRIL 30, 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales:
United States . . . . . . . . . . . . . . . . . . . . . . . . $ 69,867 $ 69,100 $ 62,497 $ 57,148
International . . . . . . . . . . . . . . . . . . . . . . . . 35,402 31,269 31,504 27,591
- -----------------------------------------------------------------------------------------------------------------------------------
Worldwide . . . . . . . . . . . . . . . . . . . . . . . . . . 105,269 100,369 94,001 84,739
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . 51,994 49,534 46,623 41,938
Selling, general and administrative expense. . . . . . . . . . 32,240 30,802 28,685 25,936
Research and development expense . . . . . . . . . . . . . . . 6,875 6,586 5,752 --
Provision to reduce carrying value of electrochemical assets . 775 -- -- 4,951
Interest income. . . . . . . . . . . . . . . . . . . . . . . . 661 467 427 312
Interest expense . . . . . . . . . . . . . . . . . . . . . . . 1 12 48 119
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 4,775 4,842 4,700 4,357
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 9,270* 9,508+ 8,620 7,750
Per share data:++
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . 0.81* 0.84+ 0.76 0.68
Cash dividends. . . . . . . . . . . . . . . . . . . . . . . . 0.170 0.136 0.128 0.106
OTHER DATA
Current ratio. . . . . . . . . . . . . . . . . . . . . . . . . 4.55 4.14 3.49 2.72
Working capital. . . . . . . . . . . . . . . . . . . . . . . . $ 38,596 $ 30,699 $ 25,124 $ 20,977
Property, plant and equipment, net . . . . . . . . . . . . . . 29,128 28,903 29,270 28,094
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . 84,258 74,358 66,971 61,619
Long-term liabilities. . . . . . . . . . . . . . . . . . . . . 2,070 2,081 2,246 2,104
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . 71,328 62,497 54,651 47,301
Equity per share at year end++ . . . . . . . . . . . . . . . . 6.27 5.49 4.81 4.17
Sales per employee . . . . . . . . . . . . . . . . . . . . . . 120 112 105 98
Weighted average shares outstanding++. . . . . . . . . . . . . 11,385,355 11,385,793 11,361,958 11,348,444
<FN>
*Net income for 1995 includes a one-time pretax charge of $775,000 or $.05 per
share after tax for the provision to reduce carrying value of electrochemical
assets.
+Net income for 1994 includes a benefit of $448,000 or $.04 per share for the
cumulative effect of a change in accounting for income taxes.
++All share and per share amounts have been restated to give effect to the
five-for-four stock split in April 1994, the three-for-two stock split in June
1992, the five-for-four stock splits in fiscal 1991, 1990 and 1989, and the
two-for-one stock split in fiscal 1986. (See Note 4 to the consolidated
financial statements.)
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
SUMMARY OF OPERATIONS Years ended
April 30, 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales:
United States . . . . . . . . . . . . . . . $ 50,476 $ 45,645 $ 40,598 $ 36,056 $ 32,046 $ 28,812
International . . . . . . . . . . . . . . . 21,844 17,456 15,253 11,579 9,860 8,566
- ------------------------------------------------------------------------------------------------------------------------------------
Worldwide . . . . . . . . . . . . . . . . . 72,320 63,101 55,851 47,635 41,906 37,378
Cost of sales. . . . . . . . . . . . . . . . 36,094 32,193 27,392 23,698 21,444 19,444
Selling, general and administrative expenses 22,360 18,912 17,619 15,564 13,848 12,583
Research and development expense . . . . . . -- -- -- -- -- --
Provision to reduce carrying value of
electrochemical assets . . . . . . . . . . 4,372 3,991 3,519 2,984 2,648 2,333
Interest income. . . . . . . . . . . . . . . 296 311 332 313 250 258
Interest expense . . . . . . . . . . . . . . 177 244 283 322 367 404
Income taxes . . . . . . . . . . . . . . . . 3,648 3,007 2,815 2,250 1,799 1,092
Net income . . . . . . . . . . . . . . . . . 5,965 5,065 4,555 3,130 2,050 1,780
Per share data:++
Net income. . . . . . . . . . . . . . . . . 0.53 0.45 0.40 0.28 0.18 0.16
Cash dividends. . . . . . . . . . . . . . . 0.090 0.077 0.065 0.052 0.044 0.038
OTHER DATA
Current ratio. . . . . . . . . . . . . . . . 2.79 2.89 2.76 3.57 3.19 3.26
Working capital. . . . . . . . . . . . . . . $ 17,631 $ 16,546 $ 14,555 $ 15,293 $ 12,773 $ 11,748
Property, plant and equipment, net . . . . . 25,024 21,678 18,221 14,493 13,698 13,142
Total assets . . . . . . . . . . . . . . . . 52,849 47,217 42,530 37,201 33,826 31,635
Long-term liabilities. . . . . . . . . . . . 2,593 3,131 3,629 4,259 4,078 4,599
Stockholders' equity . . . . . . . . . . . . 40,401 35,328 30,610 27,001 23,922 21,833
Equity per share at year end++ . . . . . . . 3.56 3.12 2.71 2.40 2.13 1.93
Sales per employee . . . . . . . . . . . . . 90 85 82 78 71 64
Weighted average shares outstanding++. . . . 11,319,723 11,311,315 11,304,776 11,259,349 11,215,338 11,286,458
</TABLE>
15
<PAGE>
HACH COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
1995 COMPARED TO 1994
Net sales were a record $105,269,000, an increase of 4.9% over 1994 net sales of
$100,369,000. The Company's domestic net sales increased 1.1% while
international net sales increased 13.2%. The domestic sales increase, due to
strong demand for the Company's chemical products, was offset by weak demand for
the Company's more expensive process instruments. The international sales
increase was due primarily to unit volume increases in most of the Company's
major product lines and, to a lesser degree, a weak U.S. dollar.
Cost of sales increased 5.0% to $51,994,000 from $49,534,000. This cost item,
composed of material, labor and product overhead, increased because of unit
volume increases. The gross margin was 50.6% of net sales for both 1995 and
1994.
Selling, general and administrative expense increased 4.7% to $32,240,000
from $30,802,000. Selling, general and administration expense for fiscal year
1994 included a one-time charge of approximately $500,000 for costs associated
with the terminated merger with Lawter International, Inc. Without these costs,
selling, general and administrative expense increased 6.4% from the prior year.
The increase was due primarily to normal wage and salary increases, costs
associated with the increased sales volume, and foreign exchange losses of
$401,000 in fiscal year 1995, compared to losses of $13,000 in fiscal year 1994.
The foreign exchange loss in 1995 was due to a weaker U.S. dollar.
Research and development expense increased 4.4% to $6,875,000 from $6,586,000.
The increase was due primarily to normal wage and salary increases.
During the fourth quarter of fiscal year 1995, the Company's management decided
to begin out-sourcing the design and manufacture of the Company's
electrochemical products. Accordingly, the Company recorded a one-time pretax
charge of $775,000 for the provision to reduce carrying value of electrochemical
assets.
Interest income increased to $661,000 from $467,000. The increase was the result
of higher average investments and higher interest rates in the current period,
along with interest received on federal income tax refunds. The refunds were
attributable to research and experimentation tax credits.
The effective income tax rate was 34.0%, compared to 34.8% in 1994. The
decrease in the effective income tax rate was due primarily to an increase in
the research and experimentation tax credit.
Net dollar sales for the Company's European subsidiary increased 6.5% to
$14,989,000 from $14,078,000, due primarily to a weaker U.S. dollar. The actual
unit sales volume was approximately the same as that of the prior year. The
operating income increased 70% to $1,619,000 from $952,000. The increase was due
primarily to lower costs for U.S. goods, brought about by the weaker U.S.
dollar.
RESULTS OF OPERATIONS:
1994 COMPARED TO 1993
Net sales were a record $100,369,000, an increase of 6.8% over 1993 net sales of
$94,001,000. The Company's domestic net sales increased 10.6% due primarily to
unit volume increases in most of the Company's major product lines.
International net sales decreased 0.8%. The decrease was due primarily to
adverse foreign exchange rate changes. Actual international unit sales volume
increased 3.3% from the prior year.
Cost of sales increased 6.2% to $49,534,000 from $46,623,000. This cost item,
composed of material, labor and product overhead, increased primarily because of
unit volume increases. The gross margin was 50.6% of net sales in 1994, compared
to 50.4% of net sales in 1993.
Selling, general and administrative expense increased 7.4% to $30,802,000 from
$28,685,000. The primary reasons for the increase were higher payroll and
payroll-related costs due to normal salary and wage increases, the recognition
of approximately $500,000 in costs associated with the previously planned merger
with Lawter International, Inc., and costs associated with the increased sales
volume. Selling, general and administrative expense as a percent of net sales
was 30.7% in 1994 compared to 30.5% in 1993. Without the merger-related costs,
selling, general and administrative expense as a percent of net sales for 1994
would have been 30.2%.
Research and development expense increased 14.5% to $6,586,000 from $5,752,000.
The increase was due to the Company's ongoing commitment to increase the number
of new products it has to offer.
Interest income increased to $467,000 from $427,000. The increase was the result
of higher average investments in the current period. Interest expense decreased
to $12,000 from $48,000. The decrease was due to the payoff of the debt. The
effective income tax rate was 34.8%, compared to 35.3% in 1993. The decrease in
the effective income tax rate was due primarily to an increase in the research
and experimentation tax credit.
Net dollar sales for the Company's European subsidiary decreased 7% to
$14,078,000 from $15,099,000 due primarily to adverse foreign exchange rate
changes. Actual unit sales volume increased 2% from the prior year. Operating
income fell 55% to $952,000 from $2,139,000. The decrease was primarily due to
higher costs for U.S. goods brought about by the stronger U.S. dollar.
CAPITAL RESOURCES AND LIQUIDITY
The Company's liquidity showed continued improvement as reflected by an increase
of $7,897,000 or 26% in working capital. Capital resources were strengthened
further as reflected by an increase of $8,831,000 or 14% in stockholders'
equity. The Company expects to continue to pay cash dividends in the future.
Company cash dividends paid in 1995, 1994 and 1993 were $1,935,000, $1,548,000,
and $1,454,000, respectively. The Company intends to continue to increase cash
dividend payments, provided long-term growth is not jeopardized.
The Company monitors cash flow and capital expenditures in great detail as part
of its total budgeting process. During fiscal year 1995 the Company spent
approximately $6,450,000 on capital equipment. During fiscal year 1996, the
Company expects to spend approximately $6,500,000 on capital equipment--
consisting primarily of production equipment and computer and peripheral
equipment to support production, research and development, and administration.
Throughout most of the world, the Company transacts business in U.S. dollars.
In Europe, the Company's foreign subsidiary, Hach Europe, transacts business
primarily in Belgium Francs. The change in the cumulative currency translation
adjustment in 1995 was due primarily to the weakening of the U.S. dollar against
the Belgium Franc.
During the year the Company's Board of Directors authorized the Company to
repurchase up to $2,000,000 in value of the Company's common stock. As of April
30, 1995, the Company has repurchased approximately 31,000 shares at an average
cost of $14.40 per share. The Company intends to finance its capital projects,
working capital needs and stock buy-back through existing cash and cash
equivalents, short-term investments and projected cash flow from operations.
16
<PAGE>
HACH COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
EFFECTS OF INFLATION ON THE COMPANY
The Company is affected by inflation to about the same degree as other American
companies. The Company sells a great variety of products and has a relatively
small order size and short production runs. This causes a higher ratio of
support or overhead personnel in the factory, research and selling functions.
Thus, the impact of wage increases is somewhat greater than what would be
typical. As the rate of inflation has declined in recent years, the impact of
inflation on the Company has lessened. However, inflation continues to increase
costs to the Company, including the costs of material, labor and overhead.
HACH COMPANY AND SUBSIDIARIES
DESCRIPTION OF BUSINESS
GENERAL NATURE AND SCOPE OF BUSINESS
Hach Company is engaged predominantly in a single industry segment encompassing
laboratory instruments, process analyzers and test kits which are used to
analyze the chemical content and other properties of water and other aqueous
solutions. This segment encompasses the analytical reagents and chemicals
manufactured and sold by the Company. The Company manufactures and sells a small
amount of chemicals for uses not associated with the Company's analytical
systems for water analysis.
<TABLE>
<CAPTION>
Sales by Principal Product Group
(PERCENT OF NET SALES) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Analytical Reagents and Chemicals 31.3% 30.5% 30.4%
Laboratory and Portable Instruments 29.1% 28.9% 29.6%
Continuous Reading Process Analyzers 16.6% 19.3% 17.8%
Portable Test Kits and Replacements 13.7% 12.2% 12.2%
Other 9.3% 9.1% 10.0%
- --------------------------------------------------------------------------------
Total 100% 100% 100%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Analytical reagents and chemicals are manufactured and sold to support the Hach
testing systems of laboratory and portable instruments, process analyzers and
portable test kits. More stringent water quality standards and a worldwide
direction toward better control of processes--exhibited by ISO (International
Organization for Standardization) 9000 registration of many industrial
companies--drive the demand for the Company's products and their continued use.
Laboratory and portable instruments consist of Hach-manufactured analytical
instruments in the following categories: spectrophotometers and colorimeters,
turbidimeters, pH and ISE meters, pH electrodes, Ion Selective Electrodes, DO
(dissolved oxygen) meters, COD (chemical oxygen demand) apparatus, digestion
apparatus, conductivity meters, and precision reagent-dispensing devices. These
products are sold to municipal water and wastewater utilities, chemical
manufacturers, industrial water conditioning firms and organizations, power
utilities, commercial analytical laboratories, and government agencies for the
testing and monitoring of controlled impurities in water systems.
Continuous-reading process analyzers consist of Hach-manufactured products in
the following categories: colorimetric analyzers, process turbidimeters, pH
controllers, and analyzer accessories. These products are sold to municipalities
for monitoring and controlling drinking water quality and to ensure that
wastewater treatment procedures comply with government regulations.
Steam-generating plants, including operations at electrical utilities,
petrochemical processors, heavy industry installations, and pulp and paper
factories, use the Company's continuous-reading process analyzers for on-line
monitoring of cooling-tower and boiler-feedwater quality. The micro-electronics
industry uses the Company's trace silica analyzers to monitor ultrapure water
systems used in processing electronic components.
Hach offers more than 200 different test kits for 12 different application areas
ranging from agriculture to water quality. These portable test kits are
recognized worldwide for ease of use, innovative chemistry, field-oriented
design and rugged construction. Test kits are sold to municipalities for use in
monitoring drinking water distribution systems; to conservation groups to
monitor for influences impacting the environment; to educators for use in
teaching environmental awareness; to customers monitoring industrial processes;
to the water-conditioning industry to use in testing water quality; and to
environmental regulatory authorities for use in checking compliance
requirements.
No material part of the business of the Company is dependent upon a single
product or any customer or a small group of customers.
DISTRIBUTION
Hach Company sells its analytical systems throughout the United States by direct
marketing. The Company has Regional Sales Managers located across the country
and responsive telemarketing Customer Service Representatives in the Loveland
facility selling its products. The Company directly distributes products to
customers in the United States through a modern distribution facility in Ames,
Iowa.
Independent distributors and sales representatives, who frequently handle
complementary and/or competitive product lines, are used to sell and distribute
the Company's products to international customers. Customers in Canada are
supported directly by a sales and service office in Winnipeg, Manitoba.
Hach Company operates a facility in Namur, Belgium, for marketing and the
distribution of its products to the European market. The Namur facility
primarily services the Company's European independent distributors and, to a
lesser extent, distributors and sales agents in Mediterranean Africa, and the
Middle East.
AVAILABILITY OF MATERIALS
The Company has developed close working relationships with many of its key
vendors to assure an adequate and continuous supply of materials for the
Company's products. There are some unique components that would cause temporary
stoppage of specific products if these components were not available. However,
since the Company could obtain alternate sources of supply after a reasonable
period of time, the temporary stoppage would not have a material adverse effect
on the Company.
17
<PAGE>
HACH COMPANY AND SUBSIDIARIES
DESCRIPTION OF BUSINESS (CONTINUED)
COMPETITION
The Company competes domestically with a fairly large number of companies. These
companies range in size from a few which are larger than Hach and sell,
primarily, laboratory and portable instruments, to numerous smaller companies
which sell products competitive with only a few of Hach's products. The Company
is not aware of any company which competes with it across the full range of
products sold by it or which competes with it in all major product lines.
Different competitive factors are of greater or lesser importance with respect
to each of the Company's product lines although, overall, technical
sophistication, reliability, quality, relative ease of operation and price
probably are most important. The Company believes that it has no competitive
disadvantages with respect to any of these factors. In many instances the
Company has a competitive advantage due to the relative ease with which
individuals without technical backgrounds can use the Company's products to
perform analyses. Hach Company's competition in international markets is
comparable to its competition in domestic markets. However, the international
competition, particularly from Europe, appears to be growing more aggressive and
competes across a broader range of products.
RESEARCH
During fiscal 1995, 1994 and 1993, the Company spent $6,875,000, $6,586,000 and
$5,752,000, respectively, on Company-sponsored research and development
activities.
PATENTS
The Company owns a number of patents. While the company regards its patents as
valuable, it does not consider any of its business materially dependent upon any
single patent.
BACKLOG
The dollar amounts of backlogged orders at May 26, 1995 and May 27, 1994 were
$4,134,000 and $3,454,000, respectively. During the current fiscal year the
Company expects to fill all of the orders which were backlogged at May 26, 1995.
EMPLOYEES
At April 30, 1995, the Company employed approximately 880 people. The Company is
not a party to any collective bargaining agreements.
HACH COMPANY AND SUBSIDIARIES
COMMON STOCK PRICE RANGE AND DIVIDENDS
<TABLE>
<CAPTION>
CASH
FISCAL SALE DIVIDENDS
YEAR QUARTER HIGH LOW PER SHARE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 Fourth . . . . . . . . . . 16 14 1/2 .05
Third. . . . . . . . . . . 15 3/4 12 3/4 .04
Second . . . . . . . . . . 16 13 1/4 .04
First. . . . . . . . . . . 16 1/4 13 5/8 .04
1994* Fourth . . . . . . . . . . 17 14 1/2 .04
Third. . . . . . . . . . . 17 1/4 13 1/2 .032
Second . . . . . . . . . . 18 16 1/2 .032
First. . . . . . . . . . . 21 1/4 14 3/4 .032
<FN>
*All share and per-share amounts have been restated to give effect to the
five-for-four stock split in April 1994.
</TABLE>
The Company's Common Stock is traded in the over-the-counter market and is
quoted on the National Association of Securities Dealers Automated Quotation
System (NASDAQ) under the symbol HACH. The preceding table sets forth the daily
high and low last sales prices for the Company's Common Stock for the periods
indicated, as reported in the WALL STREET JOURNAL, together with the amounts of
dividends paid for the fiscal years ended April 30, 1995 and 1994. These prices
represent quotations between dealers in securities, do not include retail
markdowns or commissions, and do not necessarily represent "actual
transactions." The current quoted price of the stock is listed daily in the WALL
STREET JOURNAL in the NASDAQ National Market System section. On April 30, 1995,
there were 865 holders of record of the Company's Common Stock.
18
<PAGE>
HACH COMPANY AND SUBSIDIARIES
MANAGEMENT'S REPORT AND REPORT OF INDEPENDENT ACCOUNTANTS
Stockholders of Hach Company:
The information presented in this Annual Report was prepared by your Company's
management. The financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis. These principles
require choices among alternatives and numerous estimates of financial matters.
We believe that the accounting principles chosen are appropriate in the
circumstances and the estimates and judgments involved in Hach's financial
reporting are reasonable and conservative. All other financial and operating
data included in this Annual Report are presented to provide information we
believe useful to investors.
Management recognizes its responsibility for the integrity and objectivity of
the information presented. To meet this responsibility, management maintains a
system of internal accounting controls designed to provide reasonable assurance
that the financial reports are fairly presented and that our employees comply
with our stated policies and procedures, including policies on the ethical
conduct of business.
The Audit Committee recommended and the Board of Directors approved the
appointment of Coopers & Lybrand L.L.P. as independent auditor for the Company.
The Coopers & Lybrand L.L.P. report on the financial statements is presented in
this Annual Report.
Audit and related activities of Coopers & Lybrand L.L.P. are conducted
throughout the year for the purposes of the annual audit and limited reviews of
interim financial statements. The audit of the financial statements is conducted
in accordance with generally accepted auditing standards and includes tests of
internal controls and accounting records as deemed necessary.
The Audit Committee of the Board of Directors, which is composed solely of
outside directors, performs an oversight role relating to Hach's public
financial reporting. The Audit Committee meets at least two times a year with
management and Coopers & Lybrand L.L.P., both privately and collectively, to
discuss internal accounting control and financial reporting matters. Coopers &
Lybrand L.L.P. has access to the Audit Committee to discuss any matter.
KATHRYN HACH-DARROW
Chairman of the Board
GARY R. DREHER
Vice President and
Chief Financial Officer
To the Stockholders and Board of Directors of Hach Company:
We have audited the accompanying consolidated balance sheets of Hach Company and
Subsidiaries as of April 30, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended April 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Hach
Company and Subsidiaries as of April 30, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended April 30, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1994.
COOPERS & LYBRAND L.L.P.
Denver, Colorado
June 8, 1995
19
<PAGE>
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $105,269 $100,369 $94,001
Cost of sales 51,994 49,534 46,623
- ------------------------------------------------------------------------------------------------------------------------------------
Gross profit 53,275 50,835 47,378
Selling, general and administrative expense 32,240 30,802 28,685
Research and development expense 6,875 6,586 5,752
Provision to reduce carrying value of electrochemical assets 775 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations 13,385 13,447 12,941
Interest income 661 467 427
Interest expense (1) (12) (48)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effect of accounting change 14,045 13,902 13,320
Income tax expense 4,775 4,842 4,700
- ------------------------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of accounting change 9,270 9,060 8,620
Cumulative effect of change in accounting for income taxes -- 448 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $9,270 $9,508 $8,620
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per common share:
Before cumulative effect of accounting change $0.81 $0.80 $0.76
Cumulative effect of change in accounting for income taxes -- 0.04 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $0.81 $0.84 $0.76
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding 11,385,355 11,385,793 11,361,958
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
20
<PAGE>
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1995 AND 1994
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $13,050 $ 9,037
Marketable securities, held to maturity 3,925 1,568
Accounts receivable, less reserves of $247 and $167, respectively 16,336 15,943
Inventories, net 11,731 11,574
Deferred tax assets and other current assets 4,414 2,357
- -------------------------------------------------------------------------------------------------------------------
Total current assets 49,456 40,479
- -------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost:
Buildings and improvements 23,387 21,513
Machinery and equipment 42,305 38,861
- -------------------------------------------------------------------------------------------------------------------
65,692 60,374
Less: allowance for depreciation and amortization 37,586 32,478
- -------------------------------------------------------------------------------------------------------------------
28,106 27,896
Land 1,022 1,007
- -------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 29,128 28,903
- -------------------------------------------------------------------------------------------------------------------
Marketable securities, held to maturity 4,385 4,260
Other assets 1,289 716
- -------------------------------------------------------------------------------------------------------------------
Total assets $84,258 $74,358
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
Current liabilities:
Accounts payable $ 2,835 $ 2,450
Accrued liabilities:
Compensation 381 347
Compensated absences 3,487 3,303
Profit sharing 2,435 2,547
Property taxes 485 270
Other 1,237 863
- -------------------------------------------------------------------------------------------------------------------
Total current liabilities 10,860 9,780
- -------------------------------------------------------------------------------------------------------------------
Deferred income taxes 2,070 2,081
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 12,930 11,861
- -------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Note 5)
STOCKHOLDERS' EQUITY
Common stock, $1 par value; authorized 40,000,000 shares; issued 11,622,953 shares 11,623 11,623
Capital contributed in excess of par value of common stock 148 31
Retained earnings 58,425 51,090
Cumulative currency translation adjustment 2,405 497
- -------------------------------------------------------------------------------------------------------------------
72,601 63,241
Less: shares held in treasury, at cost (246,479 in 1995 and 227,687 in 1994) (1,273) (744)
- -------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 71,328 62,497
- -------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $84,258 $74,358
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
21
<PAGE>
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Common Capital Retained Cumulative Shares held Total
stock, $1 contributed in earnings currency in treasury, stockholders'
par value excess of par translation at cost equity
value of adjustment
common stock
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance April 30, 1992 $ 9,298 $ 0 $38,021 $692 $(710) $47,301
Net income -- -- 8,620 -- -- 8,620
Cash dividends, $.128 per share -- -- (1,454) -- -- (1,454)
Stock options exercised, net -- 143 -- -- (39) 104
Foreign currency
translation adjustment -- -- -- 80 -- 80
- ------------------------------------------------------------------------------------------------------------------------------------
Balance April 30, 1993 $ 9,298 $ 143 $45,187 $772 $(749) $54,651
Net income -- -- 9,508 -- -- 9,508
Cash dividends, $.136 per share -- -- (1,548) -- -- (1,548)
Five-for-four stock split 2,325 (268) (2,057) -- -- --
Purchase of treasury
stock (339 shares), net -- -- -- -- (6) (6)
Stock options exercised, net -- 156 -- -- 11 167
Foreign currency
translation adjustment -- -- -- (275) -- (275)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance April 30, 1994 $11,623 $ 31 $51,090 $497 $(744) $62,497
Net income -- -- 9,270 -- -- 9,270
Cash dividends, $.17 per share -- -- (1,935) -- -- (1,935)
Purchase of treasury
stock (30,922 shares), net -- -- -- -- (445) (445)
Stock options exercised, net -- 117 -- -- (84) 33
Foreign currency
translation adjustment -- -- -- 1,908 -- 1,908
- ------------------------------------------------------------------------------------------------------------------------------------
Balance April 30, 1995 $11,623 $ 148 $58,425 $2,405 $(1,273) $71,328
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
22
<PAGE>
HACH COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 9,270 $ 9,508 $ 8,620
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,769 5,704 5,279
Provision (benefit) for deferred income taxes (559) (165) 253
Loss on disposal of equipment 177 112 90
Provision to reduce carrying value of electrochemical assets 775 -- --
(Increase) in accounts receivable (393) (1,198) (1,476)
(Increase) decrease in inventories (362) (841) 371
(Increase) decrease in deferred tax assets
and other current assets (1,509) 877 (509)
Increase (decrease) in accounts payable 385 (707) (960)
Increase (decrease) in accrued liabilities 695 509 (720)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 14,248 13,799 10,948
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of equipment 62 61 65
Capital expenditures (6,445) (5,553) (6,591)
Purchases of investments held-to-maturity (4,723) (4,514) (2,780)
Proceeds from maturities of short-term investments 2,241 1,517 1,892
(Increase) in other assets (573) (92) (57)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (9,438) (8,581) (7,471)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Payments on long-term debt -- (100) (450)
Payments on capital lease obligations (6) (14) (121)
Dividends paid (1,935) (1,548) (1,454)
Purchases of treasury stock (445) -- --
Exercise of stock options 33 167 104
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (2,353) (1,495) (1,921)
Effects of exchange rate changes 1,556 (220) 61
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 4,013 3,503 1,617
Cash and cash equivalents at the beginning of the year 9,037 5,534 3,917
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $13,050 $ 9,037 $ 5,534
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $ 6,422 $ 4,283 $ 5,133
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
23
<PAGE>
HACH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany transactions and
account balances have been eliminated in consolidation.
Certain amounts in the financial statements for prior years have been
reclassified to conform with the current year's presentation.
CASH EQUIVALENTS AND CONCENTRATIONS OF CREDIT RISK
Cash and cash equivalents include currency on hand, demand deposits with banks
or other financial institutions, and other highly liquid securities purchased
with a maturity of three months or less. Financial instruments which
potentially subject the Company to concentrations of credit risk consist
principally of cash and cash equivalents. The Company places its cash
equivalents with high-credit-quality financial institutions.
The Company's concentration of credit risk with respect to accounts receivable
is limited due to a large customer base and its geographic dispersion.
INVESTMENTS
The Company uses the amortized cost method of accounting for investments in
held-to-maturity debt securities for which it has the positive intent and
ability to hold to maturity. Of these securities, $3,925,000 have contracted
maturities within one year, and $4,385,000 within one to five years.
INVENTORIES
Inventories are valued at the lower of cost or market. The cost of United States
inventories is based on the last-in, first-out (LIFO) method; all other
inventories are based on the average cost method.
PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment are stated at cost. Depreciation and
amortization are computed by using the straight-line method based on estimated
useful lives of the related assets or the lease term. Estimated useful lives
range from three to 30 years.
Maintenance and repairs are charged to expense as incurred while major renewals
and improvements are capitalized.
The cost and related allowances for depreciation of assets sold or otherwise
disposed of are deducted from the related accounts and resulting gains or losses
are reflected in operations.
INCOME TAXES
Effective May 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 (FAS 109) Accounting for Income Taxes. The adoption of FAS 109
changed the Company's method of accounting for income taxes from the deferred
method (APB 11) to an asset and liability approach. Previously the Company
deferred the past tax effects of timing differences between financial reporting
and taxable income. The asset and liability approach requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of those
assets and liabilities.
FOREIGN CURRENCY TRANSLATION
Foreign asset and liability accounts are converted into U.S. dollars using the
exchange rate in effect at the end of the year, and revenue and expense accounts
are converted at the average exchange rate in effect during the year.
Unrealized gains and losses are recognized as an adjustment of stockholders'
equity; realized gains and losses are recognized in the statement of income.
The Company's European subsidiary enters into foreign exchange forward contracts
in an attempt to mitigate risk of currency fluctuations on a portion of the
anticipated inventory purchases to be made from Hach Company. As of April 30,
1995, the Company had several forward contracts to sell Belgium Francs in
exchange for $3.5 million, maturing up through November 1995. Gains and losses
on these contracts are included in the determination of net income.
REVENUE RECOGNITION
The Company sells a large number of different tangible products and the average
size of a customer order is relatively small. Revenue is recognized upon
shipment of products to customers. Customers purchasing products from the
Company may return the products within a 30-day period if they are not
satisfied. Estimated returns are charged against earnings in the period the
original sale occurred.
The Company does not warrant products for an extended period of time. Warranty
claims historically have been minor. Known warranty claims are accrued in the
period they become known.
EARNINGS PER SHARE
Earnings per share are computed using the weighted average number of shares
outstanding during each year. Stock options outstanding do not have a material
dilutive effect on earnings per share. Shares used in computing per share
amounts give a retroactive effect in all periods to the stock splits described
in Note 4.
2. INVENTORIES
Components of inventory at April 30 were:
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and purchased parts $ 2,832 $ 2,846
Work in process 1,785 1,492
Finished goods 6,635 6,851
Resale 479 385
- -------------------------------------------------------------------------------
Inventories, net $11,731 $11,574
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
Inventory valuation allowances at April 30, 1995, 1994 and 1993 were $505,000,
$203,000 and $329,000, respectively.
Management believes the LIFO method, which results in better matching of current
costs with current revenues, minimizes inflation-induced inventory profits and
thus more clearly reflects the results of operations. The cost of United States
inventories stated under the LIFO method for 1995 and 1994 was approximately 80%
of the value of total inventories.
For purposes of comparison to companies not utilizing the LIFO method, the
following information is presented. If all inventories had been determined using
the current replacement cost at April 30, 1995 and 1994, reported inventories
would have been $2,667,000 and $2,342,000 higher, respectively. Reported net
income would have been $208,000 ($.02 per common share) higher for fiscal 1995,
$113,000 ($.01 per common share) lower for fiscal 1994, and $247,000 ($.02 per
common share) higher for fiscal year 1993. The impact on reported net income
utilizing LIFO, as opposed to the current replacement cost method, has been
computed by taking the change from year to year in the difference between the
inventory valuation under LIFO and the inventory valuation under current
replacement costs and tax affecting such difference by 36% in 1995, 1994 and
1993, the approximate incremental tax rate for each year.
24
<PAGE>
3. INCOME TAXES
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS 109), as of the beginning
of fiscal year 1994. The Company previously accounted for income taxes under APB
No. 11. As permitted under the new rules, the Company elected to report the
cumulative effect of the change in the method of accounting for its income taxes
as of the beginning of the 1994 fiscal year in the consolidated statements of
income in lieu of restating prior year financial statements. The cumulative
effect of the change was a benefit of $448,000, or $.04 per share.
Income before income tax expense consisted of the following:
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes:
Domestic $12,352 $12,836 $11,108
Foreign 1,693 1,066 2,212
- --------------------------------------------------------------------------------
$14,045 $13,902 $13,320
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Income tax expense:
Current:
Federal $ 4,045 $ 3,819 $ 2,961
State 606 553 448
Foreign 683 406 857
- --------------------------------------------------------------------------------
5,334 4,778 4,266
Deferred:
Federal $ (496) 27 434
State (69) 7 --
Foreign 6 30 --
- --------------------------------------------------------------------------------
(559) 64 434
Total $ 4,775 $ 4,842 $ 4,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Components of the 1995 net deferred tax asset and the 1994 net deferred tax
liability resulting from differences in book and tax accounting methods are as
follows:
<TABLE>
<CAPTION>
Net Deferred Tax Asset and Liability (THOUSANDS OF DOLLARS)
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Vacation pay 1,055 1,016
Inventory capitalization 484 462
Write-off of electrochemical assets 233 --
Deferred compensation 208 152
Intercompany profits 117 141
Marketable securities 75 --
Inventory reserves 61 9
Employee benefit plans 53 --
Other 114 93
- --------------------------------------------------------------------------------
Total deferred tax assets 2,400 1,873
Deferred tax liabilities:
Accelerated depreciation $ 1,998 $ 2,015
Foreign deferrals 95 89
Employee benefit plans -- 22
- --------------------------------------------------------------------------------
Total deferred tax liabilities 2,093 2,126
Net deferred tax asset (liability) $ 307 $ (253)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Current deferred income tax asset 2,377 1,828
Noncurrent deferred income tax liability $ 2,070 $ 2,081
- --------------------------------------------------------------------------------
Net deferred tax asset (liability) $ 307 $ (253)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
The Company believes, based upon past earnings and the forecast of future
earnings, that as of April 30, 1995 all of the deferred tax assets will be
realized. Accordingly, no valuation allowance has been provided.
Components of the provision for deferred income taxes for 1993 (a disclosure
required under APB No.11 tax accounting but not under SFAS No. 109 tax
accounting) are as follows:
<TABLE>
<CAPTION>
DEFERRED TAX EXPENSE (THOUSANDS OF DOLLARS)
1993
- --------------------------------------------------------------------------------
<S> <C>
Accelerated depreciation $ 206
Employee benefit plans 100
Inventory reserves 72
Intercompany profits 29
Vacation pay (95)
Other 122
- --------------------------------------------------------------------------------
$ 434
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Effective tax rates on income before income taxes for the years ended April 30,
1995, 1994 and 1993 were 34%, 35% and 35%, respectively. Differences from
applying the statutory Federal corporate income tax rate to income before income
taxes are due to the following:
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed statutory expense $4,775 $4,727 $4,529
State income tax, net 386 361 296
Prior year's tax accrual adjustment 284 -- --
Difference between U.S.
statutory rates and foreign
effective rates 114 74 105
Foreign sales corporation (95) (90) (102)
Current year's tax credits, net (185) (158) (6)
Prior year's amended tax
credits, net (418) -- --
Other, net (86) (72) (122)
- --------------------------------------------------------------------------------
$4,775 $4,842 $4,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Undistributed earnings intended to be reinvested indefinitely by the foreign
subsidiaries totaled $6,500,000 at April 30, 1995. These earnings would become
taxable upon the sale or liquidation of the foreign subsidiaries or upon the
remittance of dividends. The determination of the deferred tax liability
related to these undistributed earnings is not practicable and, accordingly, no
U.S. deferred income tax has been recorded.
4. COMMON STOCK
In April 1994, the Company effected a five-for-four stock split in the form of a
25% stock dividend. Capital contributed in excess of par value of common stock
and retained earnings has been charged and common stock has been credited for
the par value of the 2,324,591 shares issued in connection with the split based
upon those outstanding shares at March 18, 1994.
In June 1992, the Company effected a three-for-two stock split in the form of a
50% stock dividend. As of April 30, 1992, capital contributed in excess of par
value of common stock and retained earnings has been charged and common stock
has been credited for the par value of the 3,099,454 shares issued in connection
with the split based upon those outstanding shares at May 14, 1992.
All per-share figures and common stock amounts in the consolidated financial
statements and notes to consolidated financial statements have been restated to
give effect to these stock splits.
25
<PAGE>
5. EMPLOYEE BENEFITS
The Company has an employee profit-sharing plan covering substantially all
regular employees of the Company with the maximum contribution limited to the
amount allowable for federal tax purposes. Each year the Company's Board of
Directors approves an amount the Company will contribute to the plan. The
Company's annual contributions under the Plan were $1,967,000 in 1995;
$1,941,000 in 1994 and $1,489,000 in 1993.
The Company has an Employee Stock Ownership Plan (ESOP) which is a
noncontributory plan established to acquire shares of the Company's common stock
for the benefit of all eligible employees. The Company accounts for the ESOP
under Employers' Accounting for Employee Stock Ownership Plans (SOP 93-6). Each
year the Company's Board of Directors approves an amount the Company will
contribute to the plan. The Company contributions to the Plan were $650,000 in
1995, $649,000 in 1994 and $993,000 in 1993. ESOP stock purchases are made
from the open market. As of April 30, 1995, all shares in the ESOP plan were
allocated to participants.
The Company periodically grants certain officers and key employees incentive
stock options to purchase common stock. Under the 1993 Plan, 625,000 shares of
the Company's common stock have been reserved for option at a price not less
than the market price on the date of grant. Options granted under the plan may
not be exercised until one year after the date of grant. Options are exercisable
in installments on a cumulative basis beginning in the second year after grant
and expiring not later than ten years from the date of grant. At April 30, 1995,
a total of 493,750 shares was available for future grants under the 1993 plan.
Options outstanding at April 30, 1995 include options granted under the
Company's previous stock option plan.
A summary of stock option information follows:
<TABLE>
<CAPTION>
Number of Price per Shares
shares share exercisable
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
April 30, 1992 110,988 $8.96 23,487
Granted 118,125 21.80
Exercised (23,003) 8.96
Cancelled -- --
- --------------------------------------------------------------------------------
April 30, 1993 206,110 8.96--21.80 44,235
Granted 131,250 16.20
Exercised (26,713) 8.96
Cancelled (7,344) 8.96
- --------------------------------------------------------------------------------
April 30, 1994 303,303 8.96--21.80 96,632
Granted -- -- --
Exercised (25,101) 8.96
Cancelled -- -- --
- --------------------------------------------------------------------------------
April 30, 1995 278,202 $8.96 - 21.80 152,992
- --------------------------------------------------------------------------------
</TABLE>
The Company has employment agreements with seven of its officers which come into
effect only upon a change in control of the Company (as defined), and thereafter
provide for continued employment of such individuals for a three-year term at an
annual compensation rate (aggregate of approximately $2,250,000), and with such
employment benefits as in effect at the time of the commencement of the
employment period.
On April 24, 1995, the Board of Directors, subject to stockholders' approval at
the August 29, 1995 annual meeting, approved the Hach Company Employee Stock
Purchase Plan. Under the plan, the Company has reserved and may issue up to an
aggregate of 500,000 shares of common stock in semi-annual offerings over a
five-year period. Stock will be sold at 85% of fair market value, as defined in
the plan.
6. SEGMENT INFORMATION
The Company operates primarily in a single industry segment encompassing
laboratory instruments, process analyzers and test kits which analyze the
chemical content and other properties of water and other aqueous solutions.
This segment also encompasses the chemicals manufactured and sold by the
Company, most of which are used with the instruments and test kits manufactured
by the Company.
Sales for the Company's European subsidiary are made to European dealers and to
customers in the Middle East and Mediterranean Africa in Belgium francs and U.S.
dollars, respectively. Payments from the European subsidiary to the U.S. parent
are made in U.S. dollars and are subject to the exchange rate in effect at the
time of payment. Export transactions made to all other parts of the world by
the international staff based in Loveland, Colorado, are conducted primarily in
U.S. dollars.
The amount of sales made into the international marketplace is influenced to
some degree by the strength of the U.S. dollar against other currencies. Other
conditions which to some extent affect the sales of the Company's products in
international markets include restrictive tariff and trade policies imposed by
foreign countries, and domestic and foreign tax and economic policies.
The following table summarizes certain financial information by geographic
segments:
26
<PAGE>
HACH COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
GEOGRAPHIC SEGMENT INFORMATION
(thousands of dollars) 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales to Unaffiliated Customers:
United States:
Domestic $ 69,867 $ 69,100 $ 62,497
- --------------------------------------------------------------------------------
Export:
Canada 3,951 3,724 3,678
Asia 7,414 6,077 5,874
Australia/Oceania 1,212 1,134 828
Mexico/Central America/Caribbean 2,924 2,804 2,885
South America 3,023 2,133 1,809
Other 1,889 1,319 1,331
- --------------------------------------------------------------------------------
20,413 17,191 16,405
- --------------------------------------------------------------------------------
90,280 86,291 78,902
Europe 14,989 14,078 15,099
- --------------------------------------------------------------------------------
105,269 100,369 94,001
- --------------------------------------------------------------------------------
Net Sales to European Subsidiaries:
United States 8,310 9,868 8,497
Eliminations (8,310) (9,868) (8,497)
- --------------------------------------------------------------------------------
$ 105,269 $ 100,369 $ 94,001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Income from Operations:
United States $ 11,766 $ 12,495 $ 10,802
Europe 1,619 952 2,139
- --------------------------------------------------------------------------------
$ 13,385 $ 13,447 $ 12,941
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Identifiable Assets:
United States $ 48,795 $ 48,383 $ 47,276
Europe 8,401 8,036 7,472
- --------------------------------------------------------------------------------
57,196 56,419 54,748
Corporate Assets 27,062 17,939 12,223
- --------------------------------------------------------------------------------
$ 84,258 $ 74,358 $ 66,971
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
7. UNAUDITED SUMMARY OF QUARTERLY FINANCIAL INFORMATION
(THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal Year 1995:
Net sales $25,072 $26,082 $25,953 $28,162
Gross profit 12,761 13,265 13,177 14,072
Net income 2,250 2,425 2,285 2,310*
Net income per common share 0.20 0.21 0.20 0.20*
Fiscal Year 1994:
Net sales $24,847 $24,773 $23,290 $27,459
Gross profit 12,488 12,854 11,831 13,662
Net income 2,793+ 2,095 1,825 2,795
Net income per common share 0.25+ 0.18 0.16 0.25
<FN>
*Includes a one-time pretax charge of $775,000 or $.05 per share after tax for
provision to reduce the carrying value of electrochemical assets.
+Includes income of $448,000 or $.04 per share for the cumulative effect of a
change in accounting for income taxes.
</TABLE>
27
<PAGE>
EXHIBIT (21)m.
(ITEM 601(21))
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Jurisdiction
of
Subsidiary Incorporation
- ---------- -------------
<S> <C>
Hach Europe, S.A./N.V. Belgium
Hach (Barbados) FSC, Inc. Barbados
Hach Sales & Service Canada Ltd. Canada
</TABLE>
<PAGE>
Exhibit (23)n.
(Item 601 (23))
[Coopers & Lybrand L.L.P. Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Hach Company and Subsidiaries on Form S-8 (File No. 33-39019) and Form S-8 (File
No. 33-90584) of our report dated June 8, 1995 on our audits of the consolidated
financial statements of Hach Company and Subsidiaries as of April 30, 1995 and
1994, and for the years ended April 30, 1995, 1994, and 1993, which report is
incorporated by reference in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
Denver, Colorado
July 27, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1995
ANNUAL REPORT FOR THE YEAR ENDED APRIL 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1995
<PERIOD-START> MAY-01-1994
<PERIOD-END> APR-30-1995
<CASH> 13,050
<SECURITIES> 8,310
<RECEIVABLES> 16,583
<ALLOWANCES> 247
<INVENTORY> 11,731
<CURRENT-ASSETS> 49,456
<PP&E> 66,714
<DEPRECIATION> 37,586
<TOTAL-ASSETS> 84,258
<CURRENT-LIABILITIES> 10,860
<BONDS> 0
<COMMON> 11,623
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 84,258
<SALES> 105,269
<TOTAL-REVENUES> 105,269
<CGS> 51,994
<TOTAL-COSTS> 51,994
<OTHER-EXPENSES> 39,830
<LOSS-PROVISION> 60
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,045
<INCOME-TAX> 4,775
<INCOME-CONTINUING> 9,270
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,270
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
