<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-K/A
AMENDMENT NO. 1 TO ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
-----------------------
Commission File No. 0-2648
HON INDUSTRIES INC.
AN IOWA CORPORATION IRS EMPLOYER NO. 42-0617510
414 East Third Street
P.O. Box 1109
Muscatine, Iowa 52761-7109
319/264-7400
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, with Par Value of $1.00 Per Share.
Name of each exchange on which registered: The Nasdaq Stock Market.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K/A or any amendment to
this Form 10-K/A.
---
The aggregate market value of the voting stock held by nonaffiliates of the
registrant, as of March 15, 1996, was: $391,628,151, assuming all 5% holders are
affiliates.
The numbers of shares outstanding of the registrant's common stock, as of March
15, 1996, was 30,290,764.
Documents Incorporated by Reference
None.
Index of Exhibits is located on Page 18.
Page 1 of 20
<PAGE>
HON INDUSTRIES INC.
AMENDMENT NO. 1 TO ANNUAL REPORT
ON FORM 10-K/A
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part II
Item 8. Financial Statements and Supplementary Data.................... 3
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 4
Signatures............................................................... 6
Financial Statements..................................................... 8
Index of Exhibits........................................................ 18
</TABLE>
2
<PAGE>
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements listed under Item 14(a)(1) and (2) are filed
as part of this report.
The Summary of Unaudited Quarterly Results of Operations is presented
in the "Investor Information" section which follows the "Notes to the
Consolidated Financial Statements" material filed as part of this report.
3
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) ................................................. Financial Statements.
The following consolidated financial statements of HON INDUSTRIES Inc. and
Subsidiaries included in the Company's 1994 Annual Report to Shareholders are
filed as a part of this report pursuant to Item 8:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors..................................... 8
Consolidated Statements of Income for the Years Ended
December 31, 1994; January 1, 1994; and January 2, 1993............ 9
Consolidated Balance Sheets -- December 31, 1994; January 1, 1994;
and January 2, 1993................................................ 10
Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1994; January 1, 1994; and January 2, 1993............ 11
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994; January 1, 1994; and January 2, 1993............ 12
Notes to Consolidated Financial Statements......................... 13
Investor Information (including Summary of Unaudited Quarterly
Results of Operations)............................................. 17
</TABLE>
(2) Financial Statement Schedules.
The following consolidated financial statement schedule of the Company
and subsidiaries was previously filed with the Company's Annual Report on Form
10-K for the year ended December 31, 1994 pursuant to Item 14(d) and is
incorporated herein by reference:
Schedule II Valuation and Qualifying Accounts for the Years Ended December 31,
1994; January 1, 1994; and January 2, 1993
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have been
omitted.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the last quarter of the
period covered by this report.
4
<PAGE>
(c) Exhibits.
The following exhibits were previously filed with the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 pursuant to Item 601 of
Regulation S-K and are incorporated herein by reference:
Exhibits
--------
(10) Change in Control Agreement of the Registrant
(22) Subsidiaries of the Registrant
(24) Consent of Independent Auditors
(27) Financial Data Schedule
(28A) Executive Bonus Plan of the Registrant
(28B) Executive Long-Term Incentive Compensation Plan of the Registrant
The following exhibit is filed pursuant to Item 601 of Regulation S-K:
Page in
Exhibit Form 10-K
------- ---------
(23) Powers of Attorney 19
(d) Financial Statement Schedules.
See Item 14(a)(2).
5
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Annual Report on Form 10-K/A to be signed on its behalf by the undersigned,
thereunto duly authorized.
HON INDUSTRIES Inc.
Date: March 27, 1996 By /s/ Stanley M. Howe
----------------------------
Stanley M. Howe
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities indicated on March 27, 1996.
Signature Title Date
- --------- ----- ----
/s/ Stanley M. Howe Chairman of the Board and 3/27/96
- ------------------------ Director
Stanley M. Howe
* President and CEO, 3/27/96
- ------------------------ Principal Executive Officer,
Jack D. Michaels and Director
* Controller and 3/27/96
- ------------------------ Principal Accounting Officer
Melvin L. McMains
* Vice President and 3/27/96
- ------------------------ Chief Financial Officer
David C. Stuebe
6
<PAGE>
Signature Title Date
- --------- ----- ----
* Director 3/27/96
- ------------------------
Robert W. Cox
* Director 3/27/96
- ------------------------
W. James Farrell
* Director 3/27/96
- ------------------------
Robert L. Katz
* Director 3/27/96
- ------------------------
Lee Liu
* Director 3/27/96
- ------------------------
Celeste C. Michalski
* Director 3/27/96
- ------------------------
Michael S. Plunkett
* Director 3/27/96
- ------------------------
Herman J. Schmidt
* Director 3/27/96
- ------------------------
Richard H. Stanley
* Director 3/27/96
- ------------------------
Jan K. Ver Hagen
* Director 3/27/96
- ------------------------
Lorne R. Waxlax
* The undersigned by signing his name hereunto has hereby signed this
report on behalf of the undersigned in the capacities mentioned and the above-
named officers and directors, on March 27, 1996, pursuant to a power of attorney
executed on behalf of each such director and officer and filed with the
Securities and Exchange Commission as Exhibit 23 to this report
By: /s/ Stanley M. Howe
-------------------------------------------------
Stanley M. Howe
Chairman of the Board and Director
7
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
HON INDUSTRIES Inc.
We have audited the accompanying balance sheets of HON INDUSTRIES Inc. and
subsidiaries as of December 31, 1994, January 1, 1994, and January 2, 1993, and
the related consolidated statements of income, shareholders' equity, and cash
flows for the years then ended. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule 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 HON
INDUSTRIES Inc. and subsidiaries as of December 31, 1994, January 1, 1994, and
January 2, 1993, and the consolidated results of their operations and their cash
flows for the years then ended, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
As discussed in the Notes to Consolidated Financial Statements, the Company
changed its method of accounting for postemployment benefits in 1994 and its
method of accounting for income taxes and postretirement benefits other than
pensions in 1993.
Ernst & Young LLP
Chicago, Illinois
February 1, 1995
8
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Consolidated Statements of Income
<TABLE>
<CAPTION>
==================================================================================================================================
FOR THE YEARS 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales.............................................................................. $845,998,000 $780,326,000 $706,550,000
Cost of products sold.................................................................. 573,392,000 537,828,000 479,179,000
- ----------------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 272,606,000 242,498,000 227,371,000
Selling and administrative expenses.................................................... 185,490,000 171,048,000 165,075,000
- ----------------------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 87,116,000 71,450,000 62,296,000
- ----------------------------------------------------------------------------------------------------------------------------------
Interest income........................................................................ 2,470,000 2,524,000 3,038,000
Interest expense....................................................................... 3,248,000 3,120,000 3,441,000
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES.......................................................... 86,338,000 70,854,000 61,893,000
Income taxes........................................................................... 31,945,000 26,216,000 23,210,000
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES............................... 54,393,000 44,638,000 38,683,000
Cumulative effect of accounting changes................................................ (237,000) 489,000 --
NET INCOME.......................................................................... $ 54,156,000 $ 45,127,000 $ 38,683,000
==================================================================================================================================
NET INCOME PER COMMON SHARE:
Income before cumulative effect of accounting changes.................................. $ 1.74 $ 1.39 $1.18
Cumulative effect of accounting changes................................................ (.01) .02 --
NET INCOME.......................................................................... $ 1.73 $ 1.41 $1.18
==================================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
9
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
===================================================================================================================================
AS OF YEAR-END 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents........................................................... $ 27,659,000 $ 32,778,000 $ 40,069,000
Short-term investments.............................................................. 3,083,000 11,598,000 5,872,000
Receivables......................................................................... 94,269,000 83,650,000 78,857,000
Inventories......................................................................... 43,259,000 38,630,000 30,262,000
Deferred income taxes............................................................... 11,565,000 11,304,000 11,439,000
Prepaid expenses and other current assets........................................... 8,975,000 10,459,000 4,810,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 188,810,000 188,419,000 171,309,000
PROPERTY, PLANT, AND EQUIPMENT......................................................... 177,844,000 157,770,000 145,849,000
OTHER ASSETS........................................................................... 5,914,000 6,216,000 5,588,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $372,568,000 $ 352,405,000 $322,746,000
===================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses............................................... $ 99,898,000 $ 97,205,000 $ 78,904,000
Income taxes........................................................................ 4,949,000 6,936,000 5,750,000
Note payable and current maturities of long-term obligations........................ 6,246,000 6,618,000 7,126,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 111,093,000 110,759,000 91,780,000
LONG-TERM DEBT AND OTHER LIABILITIES................................................... 46,080,000 45,260,000 46,519,000
CAPITAL LEASE OBLIGATIONS.............................................................. 8,661,000 5,854,000 7,721,000
DEFERRED INCOME TAXES.................................................................. 12,094,000 10,979,000 13,717,000
SHAREHOLDERS' EQUITY
Common stock........................................................................ 30,675,000 31,676,000 32,369,000
Paid-in capital..................................................................... 434,000 281,000 2,580,000
Retained earnings................................................................... 174,642,000 161,079,000 143,741,000
Receivable from HON Members Company Ownership Plan.................................. (11,111,000) (13,483,000) (15,681,000)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 194,640,000 179,553,000 163,009,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $372,568,000 $ 352,405,000 $322,746,000
===================================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
10
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
===================================================================================================================
FOR THE YEARS 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
Balance, beginning of year......................................... $ 31,676,000 $ 32,369,000 $ 32,209,000
Purchase of shares................................................. (1,078,000) (751,000) (818,000)
Shares issued under Members Stock Purchase Plan
and restricted stock awards....................................... 77,000 58,000 62,000
Shares issued under HON Members Company
Ownership Plan.................................................... -- -- 916,000
- -------------------------------------------------------------------------------------------------------------------
Balance, end of year............................................ $ 30,675,000 $ 31,676,000 $ 32,369,000
- -------------------------------------------------------------------------------------------------------------------
PAID-IN CAPITAL
Balance, beginning of year......................................... $ 281,000 $ 2,580,000 $ 194,000
Purchase of shares................................................. (1,567,000) (3,615,000) (15,229,000)
Shares issued under Members Stock Purchase Plan
and restricted stock awards....................................... 1,720,000 1,316,000 1,031,000
Shares issued under HON Members Company
Ownership Plan.................................................... -- -- 16,584,000
- -------------------------------------------------------------------------------------------------------------------
Balance, end of year............................................ $ 434,000 $ 281,000 $ 2,580,000
- -------------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of year......................................... $161,079,000 $143,741,000 $117,172,000
Net income......................................................... 54,156,000 45,127,000 38,683,000
Purchase of shares................................................. (26,992,000) (15,202,000) --
Cash dividends declared, common.................................... (13,601,000) (12,587,000) (12,114,000)
- -------------------------------------------------------------------------------------------------------------------
Balance, end of year............................................ $174,642,000 $161,079,000 $143,741,000
- -------------------------------------------------------------------------------------------------------------------
RECEIVABLE FROM HON MEMBERS COMPANY OWNERSHIP PLAN
Balance, beginning of year......................................... $(13,483,000) $(15,681,000) $ --
Principal loaned to HON Members Company
Ownership Plan.................................................... -- -- (17,500,000)
Principal repaid by HON Members Company
Ownership Plan.................................................... 2,372,000 2,198,000 1,819,000
- -------------------------------------------------------------------------------------------------------------------
Balance, end of year............................................ $(11,111,000) $(13,483,000) $(15,681,000)
- -------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Balance, end of year............................................ $194,640,000 $179,553,000 $163,009,000
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
11
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income.......................................................................... $ 54,156,000 $ 45,127,000 $ 38,683,000
Noncash items included in net income:
Depreciation and amortization..................................................... 19,042,000 16,631,000 15,478,000
Other postretirement and postemployment benefits.................................. 2,104,000 1,750,000 --
Deferred income taxes............................................................. 854,000 (2,113,000) (175,000)
Cumulative effect of accounting changes........................................... 237,000 (489,000) --
Other -- net...................................................................... 54,000 58,000 (109,000)
Changes in working capital:
Receivables....................................................................... (10,619,000) (4,468,000) (12,962,000)
Inventories....................................................................... (4,629,000) (7,909,000) 6,567,000
Prepaid expenses.................................................................. 1,484,000 (5,428,000) (677,000)
Accounts payable and accrued expenses............................................. 4,619,000 16,434,000 8,847,000
Accrued facilities closing and reorganization expenses............................ (1,885,000) 1,867,000 --
Income taxes payable.............................................................. (1,847,000) 1,186,000 (350,000)
Increase in other liabilities....................................................... 1,077,000 1,334,000 452,000
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash flows from (to) operating activities.................................... 64,647,000 63,980,000 55,754,000
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
Capital expenditures -- net......................................................... (35,005,000) (27,541,000) (26,626,000)
Acquisition spending................................................................ -- (1,265,000) (2,393,000)
Receivable from HON Members Company
Ownership Plan..................................................................... 2,372,000 2,198,000 (15,681,000)
Short-term investments -- net....................................................... 8,515,000 (5,726,000) (1,444,000)
Other -- net........................................................................ (291,000) (1,901,000) (134,000)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash flows from (to) investing activities.................................... (24,409,000) (34,235,000) (46,278,000)
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
Purchase of HON INDUSTRIES common stock............................................. (29,637,000) (19,568,000) (16,047,000)
Proceeds from long-term debt........................................................ -- -- 17,500,000
Payments of note and long-term debt................................................. (3,916,000) (6,025,000) (7,375,000)
Proceeds from sale of HON INDUSTRIES common stock
to HON Members Company Ownership Plan.............................................. -- -- 17,500,000
Proceeds from sale of HON INDUSTRIES
common stock to members............................................................ 1,797,000 1,144,000 944,000
Dividends paid...................................................................... (13,601,000) (12,587,000) (12,114,000)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash flows from (to) financing activities................................... (45,357,000) (37,036,000) 408,000
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................................... (5,119,000) (7,291,000) 9,884,000
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR......................................... 32,778,000 40,069,000 30,185,000
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR............................................... $ 27,659,000 $ 32,778,000 $ 40,069,000
===================================================================================================================================
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
12
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Notes to Consolidated Financial Statements
PRINCIPAL BUSINESS AND SIGNIFICANT CUSTOMER INFORMATION
The Company operates in one principal business segment, the manufacture of
office furniture and accessories, including file cabinets, desks, chairs,
credenzas, and panel systems. The Company also manufactures factory-built
fireplaces, fireplace inserts, and stoves; however, this business is not of
sufficient size to be a reportable segment.
One customer accounted for approximately 10%, 13%, and 12% of consolidated net
sales in 1994, 1993, and 1992, respectively.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation and Fiscal Year-End
- -----------------------------------------------
The consolidated financial statements include the accounts and transactions of
the Company and its subsidiaries. Intercompany accounts and transactions have
been eliminated in consolidation.
The Company's fiscal year ends on the Saturday nearest December 31. Fiscal year
1994 ended on December 31, 1994; 1993 ended on January 1, 1994; and 1992 ended
on January 2, 1993.
Cash and Cash Equivalents
- -------------------------
The Company considers all investments with a maturity of three months or less
when purchased to be cash equivalents.
Short-Term Investments
- ----------------------
Short-term investments are stated at cost, which approximates market value.
Receivables
- -----------
Accounts receivable are presented net of an allowance for doubtful accounts of
$1,654,000; $1,917,000; and $1,964,000 for 1994, 1993, and 1992, respectively.
Inventories
- -----------
Inventories are valued at the lower of cost or market, determined principally by
the last-in, first-out (LIFO) method.
Property, Plant, and Equipment
- ------------------------------
Property, plant, and equipment are carried at cost. Depreciation has been
computed by the straight-line method over estimated useful lives: land
improvements, 10-20 years; buildings, 10-40 years; and machinery and equipment,
4-12 years.
CHANGES IN BUSINESS
On October 8, 1993, the Company announced the closing of its CorryHiebert
Corporation furniture plant located in Corry, Pennsylvania, which closed on
December 17, 1993. The closure resulted in a pretax charge of $3,980,000 (after-
tax effect of $2,507,000, or $.08 per share) recorded in the fiscal quarter
ended October 2, 1993.
SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------
(In thousands)
<S> <C> <C> <C>
Interest paid during the year....................... $ 3,234 $ 3,219 $ 3,447
Income taxes paid during the year................... 32,534 27,144 23,734
</TABLE>
The Company incurred capital lease obligations of $8,561,000 in 1992 in
connection with lease agreements to acquire information technology equipment.
INVENTORIES
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------
(In thousands)
<S> <C> <C> <C>
Finished products................................. $13,554 $10,731 $ 8,252
Materials and work in process..................... 29,705 27,899 22,010
---------------------------
$43,259 $38,630 $30,262
===========================
</TABLE>
Current replacement cost exceeded the amount stated for inventories valued by
the LIFO method by approximately $12,983,000; $11,705,000; and $12,666,000 as of
year-end 1994, 1993, and 1992, respectively.
PROPERTY, PLANT, AND EQUIPMENT
<TABLE>
<CAPTION>
1994 1993 1992
------------------------------
(In thousands)
<S> <C> <C> <C>
Land and land improvements..................... $ 8,832 $ 8,779 $ 8,767
Buildings...................................... 84,801 81,409 79,819
Machinery and equipment........................ 185,421 158,386 142,528
Construction and equipment
installation in progress..................... 17,915 18,085 17,048
------------------------------
296,969 266,659 248,162
Less allowances for depreciation............... 119,125 108,889 102,313
------------------------------
$177,844 $157,770 $145,849
==============================
</TABLE>
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------
<S> <C> <C> <C>
(In thousands)
Trade accounts payable............................ $40,939 $36,873 $28,638
Compensation...................................... 3,343 2,843 2,658
Profit sharing and retirement expense............. 11,066 10,913 10,009
Vacation pay...................................... 8,579 8,083 7,957
Marketing expenses................................ 17,443 20,995 12,370
Workers' compensation, general, and
product liability expenses...................... 5,492 6,925 7,359
Other accrued expenses............................ 13,036 10,573 9,913
---------------------------
$99,898 $97,205 $78,904
===========================
</TABLE>
13
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Notes to Consolidated Financial Statements
LONG-TERM DEBT AND OTHER LIABILITIES
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------
(In thousands)
<S> <C> <C> <C>
Industrial development revenue bonds, various
issues, payable through 2013 with interest at
5.85 - 8.13% per annum............................ $24,928 $25,396 $26,040
Note payable to bank, payable quarterly through 1996
with interest at a variable rate (6.69% at year-
end 1994)......................................... 9,700 12,100 14,100
Other notes and amounts............................. 11,452 7,764 6,379
-------------------------
$46,080 $45,260 $46,519
=========================
</TABLE>
Aggregate maturities of long-term debt and other liabilities are as follows (in
thousands):
<TABLE>
<S> <C>
1995 $ 5,468
1996 12,150
1997 1,391
1998 1,541
1999 976
Thereafter 30,022
</TABLE>
Certain of the above borrowing arrangements include covenants which require the
maintenance of a minimum level of working capital, place restrictions on the
payment of cash dividends, and limit the assumption of additional debt and lease
obligations. Approximately $146,489,000 of retained earnings were unrestricted
at the end of 1994.
The fair value of the Company's outstanding long-term debt obligations at year-
end 1994 approximates the recorded aggregate amount.
Property, plant and equipment, with net carrying values of approximately
$28,406,000 at the end of 1994, are mortgaged.
INCOME TAXES
Effective January 3, 1993, the Company changed its method of accounting for
income taxes as required by Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (FAS No. 109). Financial statements for years
prior to 1993 were not restated. The cumulative effect of adopting FAS No. 109
at January 3, 1993, was to increase net income by $489,000, or $.02 a share.
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Deferred
Liability Method Method
1994 1993 1992
----------------------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal........................................ $27,504 $26,084 $20,499
State.......................................... 3,587 2,734 2,886
----------------------------
31,091 28,818 23,385
Deferred......................................... 854 (2,602) (175)
----------------------------
$31,945 $26,216 $23,210
============================
</TABLE>
The components of the provision for deferred income taxes for the year ended
January 2, 1993, are as follows:
<TABLE>
<CAPTION>
1992
--------------
(In thousands)
<S> <C>
Provision for closing facilities and
reorganization expenses....................................... $(164)
Other, net..................................................... (11)
------
$(175)
======
</TABLE>
A reconciliation of the statutory federal income tax rate to the Company's
effective income tax rate is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------
<S> <C> <C> <C>
Federal statutory tax rate.............................. 35.0% 35.0% 34.0%
State taxes, net of federal tax effect.................. 2.8 2.4 3.1
Other, net.............................................. (.8) (.4) .4
Effective tax rate...................................... 37.0% 37.0% 37.5%
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
Dec. 31, Jan. 1,
1994 1994
--------------------
(In thousands)
<S> <C> <C>
Net long-term deferred tax liabilities:
Tax over book depreciation............................. $(13,630) $(11,620)
Other, net............................................. 1,536 641
--------------------
Total net long-term deferred tax liabilities......... (12,094) (10,979)
--------------------
Net current deferred tax assets:
Workers' compensation, general, and product liability
accruals.............................................. 2,029 2,610
Vacation accrual....................................... 3,180 2,988
Other, net............................................. 6,356 5,706
--------------------
Total net current deferred tax assets................ 11,565 11,304
--------------------
Net deferred tax (liabilities) assets................ $ (529) $ 325
====================
</TABLE>
14
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Notes to Consolidated Financial Statements
SHAREHOLDERS' EQUITY AND EARNINGS PER SHARE
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------
<S> <C> <C> <C>
Common Stock, $1 Par Value
Authorized............................ 100,000,000 100,000,000 100,000,000
Issued and outstanding................ 30,674,603 31,675,846 32,368,956
Preferred Stock
Authorized............................ 1,000,000 1,000,000 1,000,000
Issued and outstanding................ -- -- --
</TABLE>
The Company purchased 1,078,835; 751,399; and 819,687 shares of its common stock
during 1994, 1993, and 1992, respectively.
Cash dividends declared and paid per share for each year are:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------
<S> <C> <C> <C>
Common shares............................................ $.44 $.40 $.37
</TABLE>
Net income per common share is based on the weighted average number of shares of
common stock outstanding during each year including allocated and unallocated
ESOP shares.
Shares of common stock were issued in 1994, 1993, and 1992 pursuant to a
members' stock purchase plan as follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------
<S> <C> <C> <C>
Shares issued...................................... 77,302 49,816 54,207
Average price per share............................ $23.25 $22.96 $17.42
</TABLE>
During 1994, shareholders approved the 1994 Members' Stock Purchase Plan. Under
the new plan, 500,000 shares of common stock were registered for issuance to
participating members. Beginning on July 3, 1994, rights to purchase stock are
granted on a quarterly basis to all members who have one year of employment
eligibility and work a minimum of 20 hours per week. The price of the stock
purchased under the plan is 85% of the closing price on the applicable purchase
date. No member may purchase stock under the plan in an amount which exceeds the
lesser of 20% of his or her gross earnings or 2,000 shares, with a maximum fair
market value of $25,000 in any calendar year. During 1994, 77,302 shares of
common stock were issued under the plan at an average price of $23.25. An
additional 422,698 shares were available for issuance under the plan at December
31, 1994.
The Company has granted restricted stock awards aggregating 75,500 shares of
common stock to officers. Vesting of such shares, which is generally dependent
on continued employment, occurs in 25% increments annually. The officers are
entitled to dividends and have voting rights on all shares awarded. Unearned
compensation expense, representing the fair market value of the shares at the
date of grant, is charged to income over the vesting period. Approximately
$37,000; $223,000; and $356,000 were charged to income as a result of the awards
for the years 1994, 1993, and 1992, respectively. At year-end 1994, 1,875 of the
awarded shares were not vested.
Pursuant to the Company's Shareholder Rights Plan, each share of common stock
carries with it one Right. Each Right entitles a shareholder to buy one two-
hundredth of a share of a new series of preferred stock at an exercise price of
$75.00. Each one two-hundredth of a share of the new preferred stock has terms
designed to make it the economic equivalent of one share of common stock. Rights
will be exercisable only if a person or group acquires 20% or more of the
Company's common stock or announces a tender offer, the consummation of which
would result in ownership by a person or group of 20% or more of the common
stock. If the Company is acquired in a merger or other business combination
transaction, each Right will entitle its holder to purchase, at the then current
exercise price of the Right, a number of the acquiring company's common shares
having a market value at that time of twice the exercise price of the Right.
The Company has entered into change in control employment agreements with
corporate officers and certain other key employees. According to the agreements,
a change in control occurs when a third person or entity becomes the beneficial
owner of 20% or more of the Company's common stock or when more than one-third
of the Company's Board of Directors is composed of persons not recommended by at
least three-fourths of the incumbent Board of Directors. Upon a change in
control, a key employee is deemed to have a two-year employment with the
Company, and all his or her benefits are vested under Company plans. If, at any
time within two years of the change in control, his or her position, salary,
bonus, place of work, or Company-provided benefits are modified, or employment
is terminated by the Company for any reason other than cause or by the key
employee for good reason, as such terms are defined in the agreement, then the
key employee is entitled to receive a severance payment equal to two times
salary and the average of the prior two years' bonuses.
RETIREMENT BENEFITS
The Company has defined contribution profit-sharing plans covering substantially
all employees who are not participants in certain defined benefit plans. The
Company's annual contribution to the defined contribution plans is based on
employee eligible earnings and results of operations and amounted to
$10,849,000; $10,092,000; and $9,472,000 in 1994, 1993, and 1992, respectively.
The Company sponsors defined benefit plans which include a limited number of
salaried and hourly employees at certain subsidiaries. The Company's funding
policy is generally to contribute annually the minimum actuarially computed
amount. Net pension costs relating to these plans were $228,000; $172,000; and
$151,000 for 1994, 1993, and 1992, respectively. The actuarial present value of
benefit obligations, less related plan assets at fair value, is not significant.
In 1992, the Company established a trust to administer a newly adopted leveraged
employee stock ownership plan (ESOP), the HON Members Company Ownership Plan.
Company contributions based on employee eligible earnings and dividends on the
shares are used to make loan interest and principal payments. As the loan is
repaid, shares are
15
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Notes to Consolidated Financial Statements
distributed to the ESOP trust for allocation to participants. Selected financial
data pertaining to the ESOP is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------------------------------
(In thousands, except share data)
<S> <C> <C> <C>
Company contribution to ESOP............... $ 2,977 $ 2,962 $ 2,742
Dividend income of ESOP.................... 403 366 339
Company interest expense on ESOP loan...... 656 605 802
Shares of common stock allocated to ESOP
participant accounts...................... 133,945 133,666 122,198
Shares held in suspense (unallocated) by
ESOP as of year-end....................... 526,421 660,366 794,032
Fair value of shares held in suspense by
ESOP as of year-end....................... $ 14,082 $ 18,490 $ 18,660
Closing market price of common stock as of
year-end.................................. $ 26.75 $ 28.00 $ 23.50
</TABLE>
In 1994, the Company adopted Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits," which required accrual
accounting for nonaccumulating postemployment benefits. The cumulative effect of
adoption was to reduce net income by $237,000, after tax, or $.01 a share.
POSTRETIREMENT HEALTH CARE
The Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," as of
January 3, 1993, and recorded the cumulative effect of the accounting change on
the deferred recognition basis. The cost of providing these benefits was
previously recognized in the period in which the benefits were paid.
The following table sets forth the funded status of the plan, reconciled to the
accrued postretirement benefits cost recognized in the Company's balance sheet
at:
<TABLE>
<CAPTION>
Dec. 31, Jan. 1,
1994 1994
-------------------
(In thousands)
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees................................................ $ 6,947 $ 7,192
Fully eligible active plan participants................. 3,816 3,374
Other active plan participants.......................... 6,397 6,368
Unrecognized net loss..................................... (713) (1,659)
Unrecognized transition obligation........................ (12,932) (13,650)
-------------------
Accrued postretirement benefit cost....................... $ 3,515 $ 1,625
===================
Net periodic postretirement benefit costs include:
Service cost.............................................. $ 687 $ 603
Interest cost............................................. 1,242 1,134
Amortization of transition obligation over 20 years....... 718 718
-------------------
Net periodic postretirement benefit cost.................. $ 2,647 $ 2,455
===================
</TABLE>
The discount rates at December 31, 1994, and January 1, 1994, were 8.0% and
7.5%, respectively. The 1995 trend rates begin at 8.6% for the post-65 medical
coverage and 12.2% for the prescription drug coverage. These rates decrease
until their respective caps are reached in the year 2002 for post-65 medical
coverage and 2001 for prescription drug coverage. Thereafter, the medical trend
rates applicable to the Company subsidy are assumed to be zero percent. Since
the pre-65 benefit is currently capped, medical trend rates are assumed to be
zero percent for all years. If the medical trend rates were increased by 1.0%
for each year, the APBO as of December 31, 1994, would increase by $98,000, and
the sum of the service and interest cost components of the net periodic
postretirement benefit cost for fiscal year 1994 would increase by $8,000. The
1992 cost for these postretirement benefits on a pay-as-you-go basis was
$1,023,000.
LEASES
The Company leases certain warehouse and plant facilities and equipment.
Commitments for minimum rentals under noncancellable leases at the end of 1994
are as follows:
<TABLE>
<CAPTION>
Capitalized Operating
Leases Leases
----------------------
(In thousands)
<S> <C> <C>
1995.................................................... $ 1,696 $3,335
1996.................................................... 2,024 2,440
1997.................................................... 2,024 1,274
1998.................................................... 2,024 877
1999.................................................... 2,024 244
Thereafter.............................................. 5,210 511
------- ------
Total minimum lease payments............................ 15,002 $8,681
======
Less amount representing interest....................... 5,563
-------
Present value of net minimum lease payments, including
current maturities of $778,000......................... $ 9,439
=======
</TABLE>
Property, plant, and equipment at year-end include the following amounts for
capitalized leases:
<TABLE>
<CAPTION>
1994 1993 1992
---------------------------
(In thousands)
<S> <C> <C> <C>
Buildings......................................... $ 3,709 $ 3,709 $ 3,709
Machinery and equipment........................... 8,419 8,286 8,286
---------------------------
12,128 11,995 11,995
Less allowances for
depreciation..................................... 2,507 4,376 2,682
---------------------------
$ 9,621 $ 7,619 $ 9,313
===========================
</TABLE>
Rent expense for the years 1994, 1993, and 1992 amounted to approximately
$6,572,000; $4,854,000; and $5,031,000, respectively. Contingent rent expense
under both operating and capitalized leases (generally based on mileage of
transportation equipment) amounted to $525,000; $490,000; and $674,000 for the
years 1994, 1993, and 1992, respectively.
CONTINGENCIES
In connection with laws and regulations pertaining to the protection of the
environment, the Company is a party to a few remediation investigations and
clean-ups and, along with other companies, has been named a "potentially
responsible party" for certain waste disposal sites. Because each of these
matters is subject to various uncertainties (such as the extent of
contamination, the type of remediation, or other action that may be required),
the Company cannot predict the actual costs it will ultimately incur with
respect to these matters. However, based on the existence of other "potentially
responsible parties" to share in such costs, the volume and type of waste the
Company is believed to have contributed to each site and the period of time over
which environmental costs may be paid, the Company does not believe that
potential liability at these sites will have a material effect on the Company's
liquidity, financial position, or results of operations taken as a whole.
16
<PAGE>
HON INDUSTRIES Inc. and Subsidiaries
Investor Information
SUMMARY OF UNAUDITED QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
First Second Third Fourth Total
Quarter Quarter Quarter* Quarter Year
-------------------------------------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Year-End 1994:
Net sales............................................ $200,693 $193,045 $222,112 $230,148 $845,998
Gross profit......................................... 63,374 59,713 71,005 78,514 272,606
Income before income taxes........................... 18,458 14,637 24,659 28,584 86,338
Income taxes......................................... 6,830 5,415 9,124 10,576 31,945
Income before cumulative effect
of accounting changes............................... 11,628 9,222 15,535 18,008 54,393
Cumulative effect of accounting changes.............. (237) -- -- -- (237)
Net income........................................... 11,391 9,222 15,535 18,008 54,156
Net income per common share:
Income before cumulative effect of
accounting changes.................................. .37 .30 .49 .58 1.74
Cumulative effect of accounting changes.............. (.01) -- -- -- (.01)
Net income per common share.......................... .36 .30 .49 .58 1.73
Year-End 1993:
Net sales............................................ $186,111 $177,537 $203,070 $213,608 $780,326
Gross profit......................................... 55,457 53,643 64,024 69,374 242,498
Income before income taxes........................... 12,807 12,946 18,628 26,473 70,854
Income taxes......................................... 4,675 4,725 7,021 9,795 26,216
Income before cumulative effect
of accounting changes............................... 8,132 8,221 11,607 16,678 44,638
Cumulative effect of accounting changes.............. 489 -- -- -- 489
Net income........................................... 8,621 8,221 11,607 16,678 45,127
Net income per common share:
Income before cumulative effect of
accounting changes.................................. .25 .25 .36 .53 1.39
Cumulative effect of accounting changes.............. .02 -- -- -- .02
Net income per common share.......................... .27 .25 .36 .53 1.41
Year-End 1992:
Net sales............................................ $158,575 $163,806 $195,968 $188,201 $706,550
Gross profit......................................... 50,100 53,243 65,043 58,985 227,371
Income before income taxes........................... 11,470 14,025 19,632 16,766 61,893
Income taxes......................................... 4,301 5,260 7,361 6,288 23,210
Net income........................................... 7,169 8,765 12,271 10,478 38,683
Net income per common share.......................... .22 .26 .38 .32 1.18
*In 1993, includes a pretax charge of $3,980,000 (after-tax effect of $2,507,000, or $.08 per share) for
discontinuing the operations of a subsidiary.
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
COMMON STOCK MARKET PRICE AND PRICE/
EARNINGS RATIO (UNAUDITED)
ANNUAL 1994 -- 1984
Price/
Market Earnings
Price* Earnings Ratio
------------------- per ----------------
Year High Low Share* High Low
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 $34 $24 $1.73 20 14
1993 29 1/4 21 1/2 1.41 21 15
1992 23 1/2 16 1/2 1.18 20 14
1991 20 1/2 13 1/4 1.02 20 13
1990 23 13 1/2 1.30 18 10
1989 19 7/8 8 3/4 .79 25 11
1988 10 1/4 7 7/8 .94 11 8
1987 11 1/2 8 1/8 .62 19 13
1986 9 7/8 7 .71 14 10
1985 7 3/4 4 1/8 .61 13 7
1984 5 3/4 3 3/4 .38 15 10
----------------
Eleven-Year Average 18 11
================
*Adjusted for the effect of stock splits
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK MARKET PRICES AND DIVIDENDS
(UNAUDITED)
QUARTERLY 1994 -- 1993
1994 by Dividends
Quarters High Low per Share
- -----------------------------------------------------------------------
<S> <C> <C> <C>
1st $34 $24 1/2 $.11
2nd 34 26 1/4 .11
3rd 27 3/8 24 .11
4th 28 1/2 25 1/4 .11
----
Total Dividends Paid $.44
====
1993 by Dividends
Quarters High Low per Share
- -----------------------------------------------------------------------
1st $29 1/4 $22 3/4 $.10
2nd 29 1/4 21 1/2 .10
3rd 28 1/2 25 .10
4th 29 26 1/2 .10
----
Total Dividends Paid $.40
====
- ---------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Document Number
- ------- ----------------------- ------
<S> <C> <C>
(10) Change in Control Agreement of the Registrant/(1)/
(22) Subsidiaries of the Registrant/(1)/
(23) Powers of Attorney 19
(24) Consent of Independent Auditors/(1)/
(27) Financial Data Schedule/(1)/
(28A) Executive Bonus Plan of the Registrant/(1)/
(28B) Executive Long-Term Incentive Compensation Plan of the
Registrant/(1)/
</TABLE>
/(1)/ Incorporated by reference to the same numbered exhibit filed with the
registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1994 (Commission File No. 0-2648).
18
<PAGE>
EXHIBIT 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
HON INDUSTRIES Inc.
Date: February 13, 1995 By /s/ Stanley M. Howe
------------------ -----------------------------------
Stanley M. Howe
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated. Each Director whose signature
appears below authorizes and appoints Stanley M. Howe as his or her attorney-in-
fact to sign and file on his or her behalf any and all amendments and post-
effective amendments to this report.
Signature Title Date
- --------- ----- ----
/s/ Stanley M. Howe Chairman of the Board and 2/13/95
- -------------------------------- Director
Stanley M. Howe
/s/ Jack D. Michaels President and CEO, 2/13/95
- -------------------------------- Principal Executive Officer,
Jack D. Michaels and Director
/s/ Melvin L. McMains Controller and 2/13/95
- -------------------------------- Principal Accounting Officer
Melvin L. McMains
/s/ David C. Stuebe Vice President and 2/13/95
- -------------------------------- Chief Financial Officer
David C. Stuebe
19
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Robert W. Cox Director 2/13/95
- --------------------------------
Robert W. Cox
/s/ W. James Farrell Director 2/13/95
- --------------------------------
W. James Farrell
/s/ Lee Liu Director 2/13/95
- --------------------------------
Lee Liu
/s/ Celeste C. Michalski Director 2/13/95
- --------------------------------
Celeste C. Michalski
/s/ Michael S. Plunkett Director 2/13/95
- --------------------------------
Michael S. Plunkett
/s/ Herman J. Schmidt Director 2/13/95
- --------------------------------
Herman J. Schmidt
/s/ Richard H. Stanley Director 2/13/95
- --------------------------------
Richard H. Stanley
/s/ Jan K. Ver Hagen Director 2/13/95
- --------------------------------
Jan K. Ver Hagen
/s/ Lorne R. Waxlax Director 2/13/95
- --------------------------------
Lorne R. Waxlax
20
