SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/ X / Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
Commission file number 0-7163
AMERICAN FILTRONA CORPORATION
(Registrant)
VIRGINIA 54-0574583
(State of (I.R.S. Employer
Incorporation) Identification No.)
3951 WESTERRE PARKWAY, SUITE 300
RICHMOND, VIRGINIA 23233
(Executive Offices) (Zip Code)
Registrant's telephone number - (804) 346-2400
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $1 per share
(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 at least the past 90 days. Yes. X No.____
-----
Indicate by check mark if disclosure of delinquent filings 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 for any amendment to
this Form 10-K. ____
Aggregate market value of the Common Stock held by non-affiliates of the
registrant as of January 29, 1996: $65,300,945*
Number of shares of Common Stock outstanding as of January 29, 1996: 3,736,292
- ------------------------
*In determining this figure, an aggregate of 1,843,511 shares of Common
Stock reported in the registrant's proxy statement for the 1996 annual meeting
of stockholders as beneficially owned on January 29, 1996 by Rudolph H. Bunzl,
Frances B. Bunzl, and the co-trustees of certain trusts for the benefit of the
wife of Rudolph H. Bunzl and others and the children of Rudolph H. Bunzl and of
Walter H. Bunzl have been excluded as held by affiliates. Such exclusions shall
not constitute an admission that any of such persons is an affiliate. The
aggregate market value has been computed based on the closing price in the
NASDAQ Over-The-Counter National Market as reported by The Wall Street Journal
for Monday, January 29, 1996.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of American Filtrona Corporation's Annual Report to
Shareholders for the year ended December 31, 1995 (the "Annual
Report") are incorporated by reference into Parts I and II of
this Form 10-K.
2. Portions of American Filtrona Corporation's definitive Proxy
Statement for its 1996 Annual Meeting of Shareholders filed
with the Securities and Exchange Commission pursuant to
Regulation 14A under the Securities Exchange Act of 1934 (the
"Proxy Statement") are incorporated by reference into Part III
of this Form 10-K.
PART I
Note: Unless the context otherwise indicates, the term
"Company", as used hereafter, refers to American Filtrona
Corporation and its subsidiaries.
ITEM 1. BUSINESS
GENERAL
American Filtrona Corporation was incorporated in New York in 1954 and
in 1971 moved its domicile from New York to Virginia, where it is now
incorporated. The Company develops and manufactures various fiber products in
the United States and various plastic products in the United States and Canada.
The Company's principal products are: fiber filters for cigarettes and cigars;
fiber ink reservoirs and tips for writing instruments and other bonded fiber
specialties; and a variety of plastic products, converted from plastic
resins and films and used in food packaging, lighting fixtures, signs and
displays and many other applications. In 1995, bonded fiber products
represented 35% of the Company's consolidated net sales and plastic products
represented 65% of consolidated net sales. The Company employs approximately
1,150 persons.
<PAGE>
The Company's business is described more fully below.
BONDED FIBER PRODUCTS
TOBACCO FILTERS
At its Richmond, Virginia plants the Company manufactures from fibers a
variety of tobacco filters for cigarettes and cigars. The Company sells these
filters primarily to major cigarette manufacturers that either produce or are
capable of producing their own filters and have far greater financial resources.
Therefore, to retain its relative position in the industry the Company depends
upon its research to develop specialty or patented filters and upon its customer
service.
The Company believes that it is presently one of three independent
manufacturers of tobacco filters in the United States. The vast majority of
filters are manufactured by the cigarette companies themselves. In 1995, the
Company's cigarette filters were used on only about 2% of all cigarettes sold in
the United States and only about 3% of cigarettes manufactured in the United
States.
<PAGE>
The Company's patented FILTRONA(R) SCS filter has had good acceptance
since its introduction in mid-1970 and accounted for about 13% of the Company's
1995 bonded fibers sales. FILTRONA(R) SCS IV, the latest generation of filters
resulting from specialized production equipment designed by the Company, is used
by R. J. Reynolds Tobacco Company ("Reynolds"), a subsidiary of RJR Nabisco
Inc., on its "Vantage" brand cigarettes. The "Vantage" cigarette, which is the
main brand on which this filter is used, is one of the leading cigarette brands
in the United States.
The Company produces filters for "Merit Ultima" brand cigarettes for
subsidiaries of Philip Morris Companies Inc. (collectively, "Philip Morris"),
using Philip Morris' concept and design and utilizing the Company's process
capabilities and technology. The Company also produces filters for "Next" and
"Philip Morris One" brand cigarettes that are sold by Philip Morris in Japan.
FILTRONA(R) TWA specialty filters continue to be supplied and are used by Brown
& Williamson Tobacco Corporation on "Barclay", "Kool Ultra" and "Capri" brand
cigarettes. FILTRONA(R) cigarette filters are also used on some smaller U.S. and
foreign cigarette and cigar brands. Charcoal dual filters are sold to domestic
cigarette manufacturers for export sales to the Far East, particularly Japan.
During 1995, the Company had approximately 26 tobacco filter customers,
the largest of which was Philip Morris, with approximately 12% of the Company's
net sales and approximately 35% of the Company's bonded fibers sales. Any
significant loss of the Philip Morris business could have a materially
adverse effect on the Company's sales and income.
Reports and speculation with respect to the alleged harmful physical
effect of cigarette smoking have been published since the early 1950's. In the
United States, cigarette advertising has been restricted, various warning
statements have been required to be placed on cigarette packaging and in
advertising, prohibitions against smoking in public and certain non-public areas
have been enacted and various other official and unofficial steps have been
taken to discourage cigarette smoking. In addition, litigation is pending
against leading U.S. manufacturers of consumer tobacco products seeking damages
for health problems alleged to have resulted from the use of tobacco in various
forms. Also, sales and other taxes affecting cigarettes, levied by the federal
government and various states and municipalities, have been increasing in recent
years. In 1995, the Food and Drug Administration sought to assert jurisdiction
over the advertising and marketing of cigarettes. A number of foreign countries
have also increased taxes and taken steps to restrict cigarette advertising and
to discourage cigarette smoking. The Company believes, however, that its
emphasis on tobacco filters with high filtration efficiency or other special
properties might reduce to some degree any adverse effect that these
developments might have on the Company's sales and earnings. Moreover, any
increase in the Company's U.S. cigarette filter market share could further
counteract such adverse effects.
<PAGE>
WRITING INSTRUMENT PRODUCTS
The Company manufactures ink reservoirs, writing tips and wicks from
fibers at its primary Richmond, Virginia plant, utilizing the same types of raw
materials and machinery as are used for the manufacture of tobacco filters. Ink
reservoirs for marking pens, markers and highlighters are sold under the trade
name TRANSORB(R). Virtually all of the major domestic handwriting reservoir
customers using ink reservoirs have converted to the TRANSORB(R) XPE reservoir
and the range of applications has been expanded to include highlighters and
"pocket" markers. The Company's market share with the Japanese handwriting
instrument manufacturers has grown based on acceptance of this product. The
Company has also introduced the TRANSORB(R) XPT reservoir, a large diameter ink
reservoir. Writing tips for porous point pens and markers are sold under the
trade name TRANSTIP(R). Wicks for ink transfer to the ball tip in roller ball
pens are sold under the trade name TRANSWICK(R).
Approximately 77 writing instrument manufacturers purchase these
products from the Company, generally under purchase orders and not under
long-term contracts. During 1995, the largest such customer accounted for about
4.1% of the Company's net sales.
No published data or statistics are available on domestic or foreign
competitors in supplying ink reservoirs and writing tips to the writing
instrument industry in the United States. However, the Company believes it
has about 16 such competitors and is the leading United States supplier of
ink reservoirs to the felt tip and fine line pen market. The Company relies on
customer service and know-how to maintain its relative position in this
business.
<PAGE>
OTHER BONDED FIBER PRODUCTS
The Company produces miscellaneous other fiber elements that can be
used in liquid reservoirs and applicators and various filtration applications in
the health care, personal care and household products industries, including
wicks for diagnostic test devices and pipette tip filters. Sales of these other
fiber products in 1995 were about 3.2% of the Company's net sales.
DISTRIBUTION AND PROMOTION
All of the Company's domestic sales of tobacco filters and
substantially all of its domestic and export sales of ink reservoirs and writing
tips are made to industrial customers from the Richmond, Virginia plants.
Approximately 92% of the Company's 1995 sales of bonded fiber products were made
to domestic customers.
The Company relies on personal contact with its customers for the
promotion of its bonded fiber products. Advertising is used only occasionally in
the development of new markets for certain specialty products.
<PAGE>
PLASTIC PRODUCTS
The Company's plastic products business is conducted by eight
subsidiaries: Southern Plastics Company ("Southern Plastics"), an extruder
located in Columbia, South Carolina; Porth Plastic Company ("Porth"), an
extruder located in Des Plaines, Illinois; A&B Plastics, Inc. ("A&B"), an
extruder located in Yakima, Washington; Duall Plastics, Inc. ("Duall"), an
extruder located in Athol, Massachusetts; A&B Plastics-Southwest, Inc. ("A&B
Southwest"), an extruder located in Phoenix, Arizona; Tri-Lite Plastics, Inc.,
an extruder located in Fallsington, Pennsylvania ("Tri-Lite"); Tri-Lite
Plastics-South, Inc., an extruder located in Pell City, Alabama ("Tri-Lite
South"); and Filpac Inc. ("Filpac"), a custom converter of flexible packaging
materials located in Terrebonne, Quebec, Canada near Montreal.
Custom extruded profiles, conforming to rigid standards, are sold to
original equipment manufacturers ("OEM's") in the lighting fixture, sign and
display, commercial refrigeration, recreational equipment, transportation
equipment, fencing, health care, office products, marine and electronics
industries. Extruded flat sheets are sold to OEM's in the lighting fixture, sign
and display, glazing and marine industries, and to vacuum formers, fabricators
and distributors. The Company's plastic extrusions are sold through sales
engineers and through manufacturers' representatives. Personal contact rather
than advertising is relied upon to promote these products.
Filpac sells flexible packaging materials, primarily for the Canadian
snack food industry. Filpac purchases a variety of plastic films that are then
printed, laminated, coated, slit and sold in rolls for further conversion by
customers. The primary converting operations are flexographic printing of up to
eight colors, backside-patterned adhesive coating and/or adhesive thin film
lamination of a variety of packaging films. Rolls are sold directly to food
processors, supermarkets, bakeries and others who use these products to package
a variety of snack foods such as potato chips, peanuts and candies. These
products are sold directly by Filpac to about 100 customers located in Quebec
and Ontario, Canada and the United States. Promotion of these products is by
personal contact rather than advertising.
About 24% of plastic product sales for 1995 were made to the food
packaging industry, 20% to the lighting fixture industry and 11% to the sign and
display industry. The remaining sales were spread among a variety of
applications discussed above. The largest customer accounted for about 8.6% of
the Company's 1995 net sales.
The plastic products business is highly competitive, and there are
plastic extruders and flexible packaging converters with greater resources than
the Company. The Company has a number of major competitors in its plastic
products market areas but believes that it is a significant supplier of flexible
packaging materials in eastern Canada and of plastic profile extrusions in the
United States.
<PAGE>
SOURCES OF SUPPLY
The Company's diverse raw material requirements are widely available
from many different suppliers. The Company has no long-term contracts with its
suppliers; however, the Company believes its sources of supply to be adequate at
present sales levels. The Company's energy requirements are relatively low.
RESEARCH AND DEVELOPMENT
Patented tobacco filters have been introduced by the Company
periodically since 1958. The Company's writing instrument product line and its
bonded fiber lines for other industries were derived from its basic technology
in the area of tobacco filters. See BONDED FIBER PRODUCTS above.
The Company conducts its bonded fiber products research, development
and engineering program at its Richmond facilities and is constantly engaged in
new product and process development. During 1995, the Company spent
approximately $2,558,000 on research activities relating to development and
engineering of new products or improvements of existing products and processes,
all of which was Company sponsored. During 1994 and 1993, about $2,377,000 and
$2,263,000, respectively, was spent on such activities, all of which were
Company sponsored.
The Company owns 36 U.S. patents in the fiber products area. The
Company considers 7 of its patents to be material with respect to its present
bonded fibers business and these patents expire between 1996 and 2007. The
Company has no knowledge of any infringement questions with respect to these
patents and believes its patent position to be generally adequate for the
conduct of its business.
<PAGE>
In addition, the Company conducts product development and engineering
activities in the plastics segment. In 1995, approximately $703,000 was spent on
these activities in the plastics segment. Approximately $713,000 and $628,000
was spent on these activities in 1994 and 1993, respectively. The Company owns 1
additional United States patent and 7 registered trademarks with respect to this
business, none of which the Company considers to be material.
ENVIRONMENTAL MATTERS
The Company does not believe that compliance with federal, state and
local provisions that have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, will have any material effect on its financial position, results of
operations or competitive position.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information with respect to the Company's operations in different
industry segments and geographic areas is presented on page 20 of the Annual
Report in Note 8 of Notes to Consolidated Financial Statements, and is
incorporated herein by reference thereto.
FINANCIAL INFORMATION ABOUT FOREIGN
AND DOMESTIC OPERATIONS AND EXPORT SALES
Financial information about the Company's foreign and domestic
operations is presented on page 20 of the Annual Report in Note 8 of Notes to
Consolidated Financial Statements, and is incorporated herein by reference
thereto. See also PLASTIC PRODUCTS above.
<PAGE>
ITEM 2. PROPERTIES
The following is a brief description of the principal properties of the
Company, all of which are owned except as stated below.
LOCATION PRINCIPAL OPERATIONS
BONDED FIBERS FACILITIES
Richmond,Virginia Production of tobacco
filters, ink reservoirs,
writing tips and wicks,
and other fiber products.
Richmond, Virginia Production of conventional
(lease expiring 1996) tobacco filters
PLASTIC PRODUCTS FACILITIES
Athol, Massachusetts Production of custom plastic
extruded profiles
Columbia, South Carolina Production of custom plastic
extruded profiles and
plastic sheet
Des Plaines, Illinois Production of custom plastic
extruded profiles
Pell City, Alabama Production of custom plastic
extruded profiles
Terrebonne, Quebec, Canada Production of flexible
packaging materials
Yakima, Washington Production of custom plastic
extruded profiles
Fallsington, Pennsylvania Production of custom plastic
(lease expiring 1998) extruded profiles
Phoenix, Arizona Production of custom plastic
(lease expiring 2001) extruded profiles and
plastic sheet
CORPORATE OFFICES
Richmond, Virginia
(lease expiring 1998)
<PAGE>
The property owned by the Company in Richmond, Virginia also includes
research and development facilities, land and buildings leased by an unrelated
corporation, and land available for future expansion.
Management believes that the Company's facilities are generally well
maintained and adequate for its business at present and foreseeable sales
levels.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
ADDITIONAL INFORMATION - EXECUTIVE OFFICERS OF THE COMPANY
The names and ages of all executive officers of the Company, as
of March 10, 1996, are set forth below. The term of office of each such
officer is until the next annual meeting of the Board of Directors (April 23,
1996). All of such officers have been employed by the Company for at least the
last five years.
NAME AGE OFFICES
John L. Morgan 61 Chairman (since January
1995) and Chief Executive
Officer, having previously
served as President and
Chief Executive Officer,
Director and Member of
Executive Committee
Leo C. Drozeski, Jr. 56 President (since January
1995), Chief Operating
Officer (since January
1993), having previously
served as Executive Vice
President and Chief
Operating Officer (since
January 1993), Executive
Vice President (since 1992)
and prior thereto, Vice
President - Plastic Products
and Director
John D. Barlow, Jr. 61 Vice President - Finance and
Director
Randall L. Hagan 50 Vice President - Bonded
Fiber Products and President
of American Filtrona
Company, a division of the
Company
Anthony M. Vincent 49 Vice President (since April
1994) and prior thereto Vice
President - Industrial
Filtration Products and
President of Dollinger
Corporation, a former
subsidiary of the Company
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information contained on page 24 of the Annual Report under the
captions "Common Stock Information" and "Dividend Information" and, with respect
to dividends and market prices under the caption "Quarterly Financial and Common
Stock Data," is incorporated herein by reference thereto. The Company has about
1,200 shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information for the five years ended December 31, 1995, contained
on page 22 of the Annual Report under the caption "Historical Financial Review"
is incorporated herein by reference thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information contained on page 12 of the Annual Report under the
caption "Management's Discussion and Analysis of Financial Statements" is
incorporated herein by reference thereto.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements contained on pages 14 to 20, and
the information with respect to Sales and Earnings under the caption
"Quarterly Financial and Common Stock Data" on page 24 of the Annual Report are
incorporated herein by reference thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Inapplicable.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained on pages 1 through 6 of the Proxy Statement
under the caption "Election of Directors" concerning Directors of the Company is
incorporated herein by reference thereto. See "Additional Information -
Executive Officers of the Company" at the end of Part I above for information
about the executive officers of the Company.
ITEM 11. EXECUTIVE COMPENSATION
The information contained on pages 10 through 15 of the Proxy Statement
under the caption "Compensation of Executive Officers and Directors" is
incorporated herein by reference thereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained on pages 7 through 10 of the Proxy Statement
under the caption "Stock Ownership" is incorporated herein by reference thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Inapplicable.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) and (2) The response to this portion of Item 14 is submitted as
a separate section of this report.
(a)(3) Exhibits
The following documents are filed as exhibits to this Form
10-K pursuant to Item 601 of Regulation S-K:
3.1 Restated Articles of Incorporation of the
registrant (filed as Exhibit 3.1 to the
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and
incorporated herein by reference thereto)
3.2 By-laws of the registrant (filed herewith)
10.1(a) Incentive Stock Option Plan (filed as Exhibit 10.1(a)
to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, and
incorporated herein by reference thereto)*
10.1(b) Amendment to Incentive Stock Option Plan (filed as
Exhibit 10.1(b) to the registrant's Annual Report on
Form 10-K for the fiscal year ended December 31,
1994, and incorporated herein by reference thereto)*
10.2 1988 Performance Shares Plan (filed as Exhibit 10.2
to the registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, and
incorporated herein by reference thereto)*
10.3 1988 Stock Option Plan (filed as Exhibit 10.3 to the
registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and incorporated
herein by reference thereto)*
10.4 American Filtrona Corporation Supplemental Benefit
Plan (filed herewith)*
10.5 1995 Stock Incentive Plan (filed as Exhibit A to
the registrant's Proxy Statement, dated March 10,
1995, for the 1995 annual shareholder meeting and
incorporated herein by reference thereto)*
13 The registrant's Annual Report to Shareholders for
the year ended December 31, 1995 (filed herewith)
(Note 1)
22 List of subsidiaries of the registrant (filed
herewith)
23.1 Consent of Independent Accountants (filed herewith)
(b) No reports on Form 8-K have been filed during the last quarter of
the registrant's 1995 fiscal year.
NOTE 1. With the exception of the information incorporated in this Form
10-K by reference thereto, the Annual Report shall not be deemed "filed" as part
of this Form 10-K.
* The marked items are compensatory plans or arrangements required to be filed
as an exhibit to this form pursuant to Item 14(c) of this Form 10-K.
<PAGE>
FORM 10-K--ITEM 14(a)(1) AND (2) AND ITEM 14(d)
AMERICAN FILTRONA CORPORATION AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of American Filtrona
Corporation and subsidiaries, included in the Annual Report of the
registrant to its shareholders for the year ended December 31, 1995, are
incorporated by reference in Item 8:
Consolidated Balance Sheet - December 31, 1995 and 1994
Consolidated Statement of Income - Years ended December 31,
1995, 1994 and 1993
Consolidated Statement of Shareholders' Equity - Years ended
December 31, 1995, 1994 and 1993
Consolidated Statement of Cash Flows - Years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
All 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.
<PAGE>
REPORT OF COOPERS & LYBRAND L.L.P.
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
American Filtrona Corporation
We have audited the accompanying consolidated balance sheets of
American Filtrona Corporation and Subsidiaries as of December 31, 1995 and
1994, and for each of the three years in the period ended December 31, 1995,
which financial statements are included on pages 14 through 20 of the 1995
Annual Report to Shareholders of American Filtrona Corporation and
incorporated by reference herein. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of American
Filtrona Corporation and Subsidiaries at December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
January 23, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMERICAN FILTRONA CORPORATION
(Registrant)
Dated: March 20, 1996 By:
John L. Morgan, Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of March 20, 1996.
SIGNATURE TITLE
Director
Rudolph H. Bunzl
Vice President - Finance
John D. Barlow, Jr. and Director (Principal
Financial and Accounting
Officer)
Chairman and Director
John L. Morgan (Principal Executive
Officer)
President and Director
Leo C. Drozeski, Jr. (Principal Operating
Officer)
Director
Bennett L. Kight
Director
Stanley F. Pauley
Director
Gilbert M. Rosenthal
Director
Wallace Stettinius
Director
Bernard C. Wampler
Director
Harry H. Warner
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER AND NAME OF EXHIBIT PAGE NUMBER
<S> <C>
3.1 Restated Articles of Incorporated by reference - see page 17
Incorporation
3.2 By-laws Pages 26 through 41
10.1(a) Incentive Stock Option Incorporated by reference - see page 17
Plan
10.1(b) Amendment to Incentive Incorporated by reference - see page 17
Stock Option Plan
10.2 1988 Performance Incorporated by reference - see page 17
Shares Plan
10.3 1988 Stock Option Incorporated by reference - see page 17
Plan
10.4 Supplemental Benefit Plan Pages 42 through 63
10.5 1995 Stock Incentive Plan Incorporated by reference - see page 17
13 Annual Report Pages 64 through 90
22 List of Subsidiaries Page 91
23.1 Consent of Independent
Accountants Page 92
</TABLE>
BY-LAWS
OF
AMERICAN FILTRONA CORPORATION
(As amended through January 24, 1996)
ARTICLE I
Directors
Section 1. There shall be eleven directors of the Corporation, none of
whom need be shareholders. They shall be elected annually at the annual
shareholders' meeting and shall serve for a term of one year and until their
successors are duly elected. No person who shall have attained the age of 70
years shall be eligible for election as a Director of the Corporation, except
that each person serving as a Director who on January 24, 1996, is 70 years of
age or older shall be eligible for election.
Section 2. Any vacancy in the Board of Directors, no matter how caused,
including a vacancy created by an increase by not more than two in the
authorized number of directors, shall be filled until the next annual
shareholders' meeting by the directors at any regular Board meeting or special
meeting called for that purpose.
Section 3. The Board of Directors shall annually, as soon as
practicable after the annual election of directors, elect a Chairman of the
Board (who shall be one of the directors) and the following officers: President,
one or more Vice Presidents, a Secretary and a Treasurer, and may elect an
Assistant Secretary, an Assistant Treasurer, and such other officers as they
deem advisable from time to time. The Chairman of the Board and the officers so
<PAGE>
elected shall hold office until the next annual meeting of the Board of
Directors or until their successors are elected.
Section 4. Meetings of the Board of Directors shall be held at places
within or without the State of Virginia and at times fixed by resolution of the
Board, or upon call of the Chairman of the Board or, in the event of the
incapacity of the Chairman of the Board, by the President, and the Secretary or
officer performing the Secretary's duties shall give not less than twenty-four
(24) hours' notice by letter, telegraph or telephone of all meetings of the
directors, provided that notice need not be given of regular meetings held at
times and places fixed by resolution of the Board. Meetings may be held at any
time without notice if all of the directors are present, or if those not present
waive notice in writing either before or after the meeting. Directors may be
allowed by resolution of the Board a reasonable fee and expenses for attendance
at all meetings.
Section 5. The presence of a majority of the Board of Directors shall
be required to constitute a quorum for the transaction of business at all
meetings of the Board.
Section 6. The directors may be removed with or without cause at any
regular or special meeting of shareholders and the shareholders shall thereupon
have the right to elect directors to take the place of those removed at the said
meeting without any further notice.
Section 7. Subject to the rights of holders of any class or
series of stock having a preference over the common stock as to
- 2 -
<PAGE>
dividends or upon liquidation, nominations for the election of directors shall
be made by the Board of Directors or a committee appointed by the Board of
Directors or by any shareholder entitled to vote in the election of directors
generally. However, any shareholder entitled to vote in the election of
directors generally may nominate one or more persons for election as directors
at a meeting only if written notice of such shareholder's intent to make such
nomination or nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the Secretary of the Corporation not
later than (i) with respect to an election to be held at an annual meeting of
shareholders, 60 days in advance of such meeting, and (ii) with respect to an
election to be held at a special meeting of shareholders for the election of
directors, the close of business on the seventh day following the date on which
notice of such meeting is first given to shareholders. Each such notice shall
set forth: (a) the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the shareholder is a holder of record of stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by such
- 3 -
<PAGE>
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (e) the consent of each nominee to serve as a director of the Corporation if
so elected. The chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
ARTICLE II
Committees of the Board
Section 1. The Board of Directors shall elect from among its own
members an Executive Committee which shall consist of three or more members, as
designated from time to time by the Board. The Executive Committee, when the
Board of Directors is not in session, shall have all power vested in the Board
of Directors by law, by the Articles of Incorporation, or by these Bylaws,
provided that the Executive Committee shall not have power to approve or
recommend to shareholders action that requires shareholder approval; to approve
amendments to the Articles of Incorporation or plans of merger; to amend these
Bylaws; to fill vacancies in the Board of Directors or in any Committee of the
Board; to authorize or approve a distribution, except according to a general
formula or method prescribed by the Board of Directors; or to authorize or
approve the issuance or sale or contract for sale of shares, or to
- 4 -
<PAGE>
determine the designation and relative rights, preferences and limitations of a
class or series of shares, except as authorized within specific limits by the
Board of Directors. Except as hereinafter provided, the Executive Committee may
make rules for the conduct of its meetings. The Executive Committee shall report
at the next regular or special meeting of the Board of Directors all action
which the Executive Committee may have taken on behalf of the Board since the
last regular or special meeting of the Board of Directors.
Section 2. The Executive Committee shall serve at the pleasure of the
Board of Directors.
Section 3. The presence of a majority of the members of the Executive
Committee then serving shall be required to constitute a quorum for the
transaction of business at all meetings.
Section 4. Meetings of the Executive Committee shall be held at such
places and at such times fixed by resolution of the Committee, or upon call of
its chairman or the President. Not less than twelve (12) hours' notice shall be
given by letter, telegraph or telephone of all meetings of the Executive
Committee, provided that notice need not be given of regular meetings held at
times and places fixed by resolution of the Committee and that meetings may be
held at any time without notice if all of the members of the Committee are
present or if those not present waive notice in writing either before or after
the meeting.
Section 5. The Board of Directors shall elect from among its own
members an Audit Committee which shall consist of three or more
- 5 -
<PAGE>
directors, none of whom shall be an officer or employee of the Company. The
Audit Committee may make rules for the holding and conduct of its meetings and
the keeping of the records thereof. The Audit Committee shall have and may
exercise the power and authority of the Board with respect to (a) the continued
direction and review of the Corporation's internal audit functions, and (b)
review of the scope and results of the audit performed by the Corporation's
outside independent accountants and matters relating thereto. The Committee
shall meet no less than semi-annually with the Corporation's internal
accountants and no less than annually with the Corporation's independent
accountants. It shall report periodically to the Board all action which it may
have taken.
Section 6. The Board of Directors shall elect from among its own
members an Executive Compensation Committee which shall consist of three or more
directors. The Executive Compensation Committee may make rules for the holding
and conduct of its meetings and the keeping of the records thereof. The
Executive Compensation Committee is authorized to review and determine the
compensation of the Corporation's key executives. In addition, the Executive
Compensation Committee is authorized to administer all stock option and
executive compensation plans of the Corporation.
Section 7. The Board of Directors shall select from its own
members a Nominating Committee which shall consist of three
directors, none of whom shall be an officer or employee of the
Corporation. The Nominating Committee: (a) may make rules for the
holding and conduct of its meetings and the keeping of the records
- 6 -
<PAGE>
thereof; and (b) shall be responsible for and is authorized to make
recommendations to the Board (i) on candidates for election as new members of
the Board, (ii) on the qualifications of existing Directors to continue to serve
on the Board, (iii) on retirement policies of the Board, (iv) on the
compensation of Directors, and (v) for consideration of such other matters as
may be referred to it by the Board from time to time. The Nominating Committee
shall meet at least annually and shall report promptly thereafter to the Board
all action that such committee has taken.
ARTICLE III
Shareholders' Meetings
Section 1. The annual meeting of the shareholders shall be held on the
fourth Tuesday in April of each year or at such other date and at such time as
the Board of Directors of the Corporation may designate from time to time, and
shall be called by the President, who shall cause a notice of such meeting to be
mailed to each shareholder at the shareholder's address as it appears on the
share records of the Corporation, or the President may cause such notice to be
delivered to such shareholder personally, not less than ten days nor more than
sixty days before the meeting.
Section 2. Special meetings of the shareholders may be called by the
President, by the Chairman of the Board or by the holders of not less than
one-tenth of all shares issued and outstanding, at any time, except as herein
otherwise provided.
- 7 -
<PAGE>
Section 3. At all shareholders' meetings there shall be present in
person or by proxy the holders of a majority of the shares of the Corporation in
order to constitute a quorum for the transaction of business. If less than a
quorum shall be in attendance at the time for which a meeting shall have been
called, the meeting may be adjourned from time to time by a majority of the
shareholders present or represented by proxy without notice other than
announcement at the meeting.
Section 4. The officer or agent having charge of the stock transfer
books for shares of the Corporation shall make, at least ten (10) days before
each meeting of shareholders, a complete list of the shareholders entitled to
vote at such meeting or any adjournment thereof, with the address of and the
number of shares held by each. Such list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the Corporation
or at its principal place of business or at the office of its transfer agent or
registrar and shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original stock transfer
books shall be prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of shareholders.
If the requirements of this section have not been substantially complied with,
the meeting
- 8 -
<PAGE>
shall, on the demand of any shareholder in person or by proxy, be adjourned
until the requirements are complied with.
Section 5. To be properly brought before the annual meeting, business
must be either (i) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, or (ii)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) otherwise properly brought before the meeting by a
shareholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be given, either by
personal delivery or by United States mail, postage prepaid, to the Secretary of
the Corporation not later than sixty (60) days in advance of the meeting. A
shareholder's notice to the Secretary shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of the shareholder proposing such business, (iii) the class and number
of shares of the Corporation that are beneficially owned by the shareholder, and
(iv) any material interest of the shareholder in such business.
No business shall be conducted at the annual meeting except in
accordance with the procedures set forth in this Section 5, provided, however,
that nothing in this Section 5 shall be deemed
- 9 -
<PAGE>
to preclude discussion by any shareholder of any business properly
brought before the annual meeting.
The chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the foregoing procedures, and if the
chairman should so determine, the chairman shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
ARTICLE IV
Capital Stock
Section 1. The shares of capital stock of the Corporation shall be
evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
the stock of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing stock of such class or
classes. In the event that any officer whose signature or facsimile thereof
shall have been used on a stock certificate shall for any reason cease to be an
officer of the Corporation and such certificate shall not then have been
delivered by the Corporation, the Board of Directors may nevertheless adopt such
certificate and it may then be issued and delivered as though such person had
not ceased to be an officer of the Corporation.
- 10 -
<PAGE>
Section 2. Holders of the stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of the certificate
therefor, and the Board of Directors may in its discretion cause one or more new
certificates for the same number of shares in the aggregate to be issued to such
shareholder upon the surrender of the mutilated certificate or upon satisfactory
proof of such loss or destruction, and the deposit of a bond in such form and
amount and with such surety as the Board of Directors may require.
Section 3. The stock of the Corporation shall be transferable or
assignable only on the books of the Corporation by the holders in person or by
attorney on surrender of the certificate for such shares duly endorsed and, if
sought to be transferred by attorney, accompanied by a written power of attorney
to have the same transferred on the books of the Corporation. The Corporation
will recognize, however, the exclusive rights of the person registered on its
books as the owner of shares to receive dividends and to vote as such owner.
Section 4. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
(70) days prior to the date on which the particular action,
- 11 -
<PAGE>
requiring such determination of shareholders, is to be taken. If no record date
is fixed for the determination of shareholders entitled to notice of or to vote
at a meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
ARTICLE V
Officers
Section 1. The officers of the Corporation shall consist of a
President, one or more Vice Presidents, a Secretary, a Treasurer, and such other
officers who may be elected under Article I, Section 3. Any officer may hold
more than one office except that the same person shall not be President and
Secretary.
Section 2. Duties of the President. The President shall be the chief
executive officer of the Corporation. Such officer shall be responsible for the
execution of the policies of the Board of Directors and shall have general
direction and supervision over the business of the Corporation, subject to the
Board of Directors. In addition, such officer shall perform all duties incident
to the
- 12 -
<PAGE>
office of President and such other duties as from time to time may be assigned
by the Board of Directors.
Section 3. Duties of the Vice Presidents. The Vice President shall
perform such duties and acts as may be prescribed or directed by the Board of
Directors or President from time to time.
Section 4. Duties of the Secretary. The Secretary shall keep a record
in proper books provided for that purpose of all meetings and proceedings of the
Board of Directors. Such officer shall also keep the minutes of shareholders'
meetings. Such officer shall serve notices of the Corporation and affix the seal
of the Corporation to all share certificates when duly signed. Such officer
shall also perform such other duties and acts as may be directed or prescribed
by the Board of Directors, the Chairman of the Board or President from time to
time.
Section 5. Duties of the Treasurer. The Treasurer shall have the
custody of and be responsible for all papers, books and accounts of the
Corporation, except such books, papers and records as are required to be kept by
the Secretary, subject always to the control of the Board of Directors. Such
officer shall at all reasonable times exhibit the books and accounts in such
officer's custody to any director of the Corporation upon application at the
offices of the Corporation during business hours. Such officer shall also
perform such other duties and acts as may be directed or prescribed by the Board
of Directors or President from time to time.
- 13 -
<PAGE>
Section 6. The Board of Directors shall from time to time designate one
or more officers of the Corporation to sign checks, drafts, notes and orders for
the payment of money in the name of the Corporation, and to execute all
contracts, deeds, bonds, mortgages, leases and other instruments in the name of
the Corporation, such signature to be singly or jointly as the Board of
Directors may from time to time order.
Section 7. The officers, including the President, may be removed with
or without cause at any regular or special meeting of directors, and the
directors shall thereupon have the right to elect officers to take the place of
those removed at the said meeting without any further notice.
Section 8. Divisional presidents may be designated from time to time by
the Board of Directors and shall serve at the pleasure of the Board and have
such duties as may be assigned by the Board. Other divisional officers may be
designated from time to time by the President of the Corporation, shall serve at
his pleasure and shall have such duties as may be assigned by him. All officers
so designated shall be officers of the respective divisions, but shall not be
deemed in such capacities to be officers of the Corporation.
ARTICLE VI
Chairman of the Board
Section 1. The Chairman of the Board shall preside at all
meetings of the Board of Directors and at all meetings of the
- 14 -
<PAGE>
shareholders. The Chairman of the Board shall do and perform all such other
duties and acts as may be directed or prescribed by the Board of Directors from
time to time.
Section 2. The Chairman of the Board may be removed with or without
cause at any regular or special meeting of directors, and the directors shall
thereupon have the right to elect a Chairman of the Board to take the place of
the person removed at the said meeting without any further notice.
ARTICLE VII
Miscellaneous
Section 1. Voting of Stock Held. Unless otherwise provided by vote of
the Board of Directors or the Executive Committee, the President may from time
to time appoint an attorney or attorneys or agent or agents of this Corporation,
in the name and on behalf of this Corporation, to cast the votes which this
Corporation may be entitled to cast as a stockholder or otherwise in any other
corporation, any of whose stock or securities may be held by this Corporation,
at meetings of the holders of the stock or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed on behalf of this Corporation and under its corporate seal, or
otherwise, such written proxies, consents, waivers or
- 15 -
<PAGE>
other instruments as the President may deem necessary or proper in the premises;
or the President may attend in person any meeting of the holders of stock or
other securities of any such other corporation and thereat vote or exercise any
or all other powers of this Corporation as the holder of such stock or other
securities of such other corporation.
Section 2. Seal. The seal of the Corporation shall consist of a
flat-faced circular die, of which there may be any number of counterparts, and
between two concentric circles around the margin of which there shall be
engraved the words "American Filtrona Corporation".
ARTICLE VIII
Amendments
These Bylaws may be changed, amended, added to or repealed on the
affirmative vote of the majority of the Board of Directors or on the affirmative
vote of the holders of a majority of the shares of the Corporation then issued
and outstanding.
- 16 -
AMERICAN FILTRONA CORPORATION
SUPPLEMENTAL BENEFIT PLAN
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1994
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
TABLE OF CONTENTS
Page
INTRODUCTION........................................... 1
ARTICLE I DEFINITIONS
1.01. Actuarial Equivalent........................ 2
1.02. Affiliate................................... 2
1.03. Beneficiary................................. 2
1.04. Board....................................... 2
1.05. Change in Control........................... 2
1.06. Code........................................ 3
1.07. Committee................................... 3
1.08. Control Change Date......................... 3
1.09. Corporation................................. 3
1.10. Disability or Disabled...................... 3
1.11. Eligible Employee........................... 3
1.12. Participant................................. 3
1.13. Plan........................................ 3
1.14. Qualified Preretirement Survivor Annuity.... 3
1.15. Retirement and Retire....................... 4
1.16. Retirement Plan............................. 4
1.17. Surviving Spouse or Spouse.................. 4
ARTICLE II PARTICIPATION.............................. 5
ARTICLE III BENEFITS
3.01. Amount of Benefit.................... 6
3.02. Timing and Form of Payment........... 7
3.03. Disability........................... 7
3.04. Death Benefits....................... 7
ARTICLE IV GUARANTEES................................. 8
-i-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
TABLE OF CONTENTS
Page
ARTICLE V TERMINATION OF EMPLOYMENT
5.01. No Guarantee of Employment........... 9
5.02. Termination of Employment............ 9
5.03. Change in Control.................... 9
5.04. Reemployment.........................10
ARTICLE VI TERMINATION, AMENDMENT OR
MODIFICATION OF PLAN
6.01. Amendment or Termination.............11
6.02. Notice Requirement...................11
6.03. Limitation on Amendment,
Termination, etc................. 11
6.04. Effect of Plan Termination.......... 12
ARTICLE VII OTHER BENEFITS AND AGREEMENTS........... 13
ARTICLE VIII RESTRICTIONS ON TRANSFER OF BENEFITS... 14
ARTICLE IX ADMINISTRATION OF THE PLAN
9.01. The Committee...................... 15
9.02. Indemnification of the Committee... 15
9.03. Powers of the Committee............ 15
9.04. Information........................ 15
ARTICLE X MISCELLANEOUS
10.01. Binding Nature....................... 16
10.02. Governing Law........................ 16
10.03. Use of Masculine and Feminine;
Singular and Plural............. 16
-ii-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
TABLE OF CONTENTS
Page
ARTICLE XI ADOPTION.............................. 17
EXHIBIT I PARTICIPATION LIST.......................18
-iii-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
INTRODUCTION
The Board of Directors of American Filtrona Corporation adopted the
Supplemental Benefit Plan effective January 1, 1991. The Board determined that
the adoption of the Plan would assist it in attracting and retaining those
employees whose judgment, abilities and experience will contribute to its
continued progress. The purpose of the Plan is to supplement the retirement
benefits payable under the Corporation's tax-qualified plans to those key
employees selected to participate. Effective January 1, 1994, the Plan is
amended to provide a benefit for those employees whose benefits under the
Corporation's Retirement Plan are limited by the application of section
401(a)(17) of the Code and who are selected by the Committee to participate in
the Plan.
The Plan is intended to be unfunded and maintained primarily for
the purpose of providing deferred compensation for a "select group of management
or highly compensated employees" (as such phrase is used in the Employee
Retirement Income Security Act of 1974). The Plan must be administered and
construed in a manner that is consistent with that intent.
-1-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE I
DEFINITIONS
The following phrases or terms have the indicated meanings:
1.01. ACTUARIAL EQUIVALENT means a benefit of equivalent value based on the
factors and assumptions employed in determining actuarial equivalencies to the
normal form of benefit under the Retirement Plan.
1.02. AFFILIATE means (i) any entity that is a member of a controlled group of
corporations as defined in Code section 1563(a), determined without regard to
Code sections 1563(a)(4) and 1563(e)(3)(c), of which the Corporation is a member
according to Code section 414(b); (ii) an unincorporated trade or business that
is under common control with the Corporation as determined according to Code
section 414(c); or (iii) a member of an affiliated service group of which the
Corporation is a member according to Code section 414(m).
1.03. BENEFICIARY means the person, persons, entity, entities or the estate of a
Participant, which in accordance with the provisions of the Retirement Plan, is
entitled to receive benefits under the Retirement Plan on account of the
Participant's death.
1.04. BOARD means the Board of Directors of American Filtrona Corporation.
1.05. CHANGE IN CONTROL means the occurrence of any of the following events: (i)
any person, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934 becomes the record or beneficial owner of Corporation
securities having 20% or more of the combined voting power of the then
outstanding Corporation securities that may be cast for the election of the
Corporation's directors (other than as a result of an issuance of securities
initiated by the Corporation, or open market purchases approved by the Board, as
long as the majority of the Board approving the purchases is also the majority
at the time the purchases are made); (ii) as the direct or indirect result of,
or in connection with, a cash tender or exchange offer, a merger or other
business combination, a sale of assets, a contested election, or any combination
of these transactions, the persons who were directors of the Corporation before
such transactions cease to constitute a majority of the Board, or any
successor's board, within two years of the last of such transactions; or (iii)
with
-2-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
respect to a particular Participant, an event occurs with respect to the
employer that employs that Participant such that, after the event, the employer
is no longer an Affiliate of the Corporation.
1.06. CODE means the Internal Revenue Code of 1986, as amended.
1.07. COMMITTEE means the Executive Compensation Committee of the Board which
shall, in accordance with the provisions of Article IX hereof, be responsible
for the management and administration of the Plan.
1.08. CONTROL CHANGE DATE means the date on which a Change in Control event
occurs. If a Change in Control occurs on account of a series of transactions,
the Control Change Date is the date of the last of such transactions.
1.09. CORPORATION means American Filtrona Corporation.
1.10. DISABILITY or DISABLED shall have the same meanings such terms have under
the Retirement Plan.
1.11. ELIGIBLE EMPLOYEE means an individual who (i) is employed by the
Corporation or an Affiliate; (ii) is a member of management or is a highly
compensated employee; and (iii) with respect to eligibility for benefits under
Plan section 3.01(b), whose Retirement Plan benefits are limited by Code section
401(a)(17).
1.12. PARTICIPANT means an Eligible Employee who is designated by the Committee
to participate in the Plan in accordance with Article II. An individual shall
remain a Participant only so long as the individual remains an Eligible Employee
and his designation as a Participant has not been revoked or rescinded.
1.13. PLAN means the American Filtrona Corporation Supplemental Benefit Plan.
1.14. QUALIFIED PRERETIREMENT SURVIVOR ANNUITY means the monthly benefit
payable to the Surviving Spouse, if any, on the death of a Participant
prior to the first day of the first month for which a benefit is payable under
the Plan and in the form described in the Retirement Plan.
-3-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
1.15. RETIREMENT and RETIRE mean severance from employment with the Corporation
or an Affiliate on or after becoming eligible for early, normal or postponed
retirement under the Retirement Plan; except as provided in Article V of the
Plan.
1.16. RETIREMENT PLAN means the American Filtrona Corporation Retirement Plan.
1.17. SURVIVING SPOUSE or SPOUSE means the person to whom the Participant was
legally married on his Retirement or death, if earlier.
-4-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE II
PARTICIPATION
An Eligible Employee who is designated to participate in the Plan
by the Committee shall become a Participant in the Plan as of the date specified
by the Committee. At the time an Eligible Employee is designated to participate
in the Plan, the Committee also will determine the amount payable to such
Participant pursuant to Plan section 3.01(a) as reflected on Exhibit I to the
Plan, if applicable. A Participant shall continue to participate until such date
as the Committee may declare he is no longer a Participant or until the date
that he is no longer an Eligible Employee.
-5-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE III
BENEFITS
3.01. AMOUNT OF BENEFIT
(a) Upon Retirement, any Participant who is listed on Exhibit I
shall be entitled to a monthly Retirement benefit equal to one-twelfth of the
amount set forth on the attached Exhibit I, payable as an annuity for the
Participant's lifetime with a guarantee of 120 monthly payments to the
Participant or his Beneficiary.
(b) In addition to the amount described in subsection (a), a
Participant shall be entitled upon Retirement to a monthly Retirement benefit
payable as an annuity for the Participant's lifetime with a guarantee of 120
monthly payments to the Participant or his Beneficiary and which is equal to the
difference between (i) and (ii) below where:
(i) equals the benefit that would have been payable to the
Participant under the Retirement Plan, but for the limits set forth
in Code section 401(a)(17) and 415, if applicable, and
(ii) equals the benefit that the Participant is entitled
to receive under the Retirement Plan.
(c) For a Participant who Retires with less than twenty years of
credited service, the amount specified in Exhibit I shall be multiplied by a
fraction, the numerator of which is his years of credited service as of his
Retirement date and the denominator of which is the greater of twenty or the
years of credited service he would have completed had he remained in the employ
of the Corporation or an Affiliate until his normal retirement date (as that
term is defined in the Retirement Plan). For a Participant who was employed by
the Corporation or an Affiliate on December 31, 1988, and who retires with less
than fifteen years of credited service, the fraction in the previous sentence
shall be determined by substituting "fifteen" for "twenty" in the denominator.
(d) For purposes of this Article III, a Participant's "credited
service" shall be determined in the same manner as such service is determined
under the Retirement Plan.
-6-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
3.02. TIMING AND FORM OF PAYMENT
The payment of any benefit under this Article shall begin as of the
same date that the Participant's retirement benefit under the Retirement Plan is
scheduled to commence. The benefit payable under this Article shall be computed
and paid in the same form as the Participant's retirement benefit under the
Retirement Plan. Benefits not payable in the normal form of benefit specified in
Plan section 3.01(a) or (b) or commencing prior to what would have been the
Participant's normal retirement date under the Retirement Plan, must be the
Actuarial Equivalent of the normal form of benefit and reduced to reflect early
commencement based on the factors and assumptions employed under the Retirement
Plan. Benefits payable upon postponed retirement will be increased on an
Actuarially Equivalent basis, using the factors employed under the Retirement
Plan.
3.03. DISABILITY
If a Participant becomes Disabled prior to his Retirement and
during his employment with the Corporation or an Affiliate, he shall be entitled
to receive a benefit calculated and paid in the same manner as set forth in Plan
sections 3.01 and 3.02. Such benefit shall be payable at what would have been
the Participant's normal retirement date under the Retirement Plan.
3.04. DEATH BENEFITS
(a) If a Participant dies prior to Retirement, and if he has
attained a vested or nonforfeitable interest in his Retirement Plan benefit, the
Participant's Surviving Spouse will be entitled to receive a Qualified
Preretirement Survivor Annuity commencing on what would have been the
Participant's earliest retirement age under the Retirement Plan. The amount of
the Qualified Preretirement Survivor Annuity will be calculated as set forth in
Plan section 3.01 and 3.02 and based on the years of credited service earned by
the Participant as of his death. At its discretion, the Committee may pay to the
Surviving Spouse, in a single lump sum payment, the Actuarial Equivalent value
(based on the appropriate factors specified in the Retirement Plan for lump sum
payments) of the Participant's Plan benefit.
(b) If a Participant dies after benefit payments begin under the
Plan, benefits will be paid in accordance with the form of payment elected by
the Participant under the terms of the Retirement Plan.
-7-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE IV
GUARANTEES
American Filtrona Corporation and any Affiliate participating in
the Plan have only a contractual obligation to pay the benefits described in
Article III. All benefits are to be satisfied solely out of the general
corporate assets of the Corporation or the appropriate Affiliate which shall
remain subject to the claims of its creditors. No assets of the Corporation or a
participating Affiliate will be segregated or committed to the satisfaction of
its obligations to any Participant or Beneficiary under this Plan. If the
Corporation, in its sole discretion, elects to purchase life insurance on the
life of a Participant in connection with the Plan, the Participant must submit
to a physical examination, if required by the insurer, and otherwise cooperate
in the issuance of such policy or his rights under the Plan will be forfeited.
-8-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE V
TERMINATION OF EMPLOYMENT
5.01. NO GUARANTEE OF EMPLOYMENT
The Plan does not in any way limit the right of the Corporation or
an Affiliate at any time and for any reason to terminate the Participant's
employment or such Participant's status as an Eligible Employee. In no event
shall the Plan, by its terms or by implication, constitute an employment
contract of any nature whatsoever between the Corporation or an Affiliate and a
Participant.
5.02. TERMINATION OF EMPLOYMENT
A Participant who ceases to be an Eligible Employee or whose
employment with the Corporation and its Affiliates is terminated either with or
without cause, for reasons other than death, Retirement or Disability shall
immediately cease to be a Participant under this Plan and shall forfeit all
rights under this Plan. Further, in no event shall an individual who was a
Participant but is not a Participant at the time of such individual's death,
Retirement or Disability, be entitled to any benefit under the Plan. A
Participant on authorized leave of absence from the Corporation shall not be
deemed to have terminated employment or lost his status as an Eligible Employee
for the duration of such leave of absence.
5.03. CHANGE IN CONTROL
Notwithstanding any contrary Plan provision, in the event the
employment of a Participant who is in the employ of the Corporation on a Control
Change Date is terminated (for reasons other than death, Retirement, Disability,
or as a result of acts of dishonesty, embezzlement from the Corporation, fraud,
or conviction of pleading guilty to a felony) before the end of the period
commencing on the Control Change Date and ending on the third anniversary of
such date, and whether or not he is a Participant at such time, he shall be
fully vested in a benefit payable under Article III as of the date his
employment is terminated.
-9-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
5.04. REEMPLOYMENT
A Participant who ceases to be an employee of the Corporation and
who is subsequently reemployed by the Corporation shall not accrue any
additional benefits on account of such later service for periods in which he is
not a Participant.
-10-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE VI
TERMINATION, AMENDMENT OR MODIFICATION OF PLAN
6.01. AMENDMENT OR TERMINATION
Except as otherwise specifically provided, the Corporation reserves
the right to terminate, amend or modify this Plan, wholly or partially, at any
time and from time to time. Such right to terminate, amend or modify the Plan
shall be exercised by the Board. The Board may delegate to the Executive
Compensation Committee all or part of its authority to amend or terminate the
Plan. Notwithstanding the preceding, with respect to an affected Participant,
the Plan and Plan section 5.03 may not be amended, modified or terminated after
a Control Change Date before the end of the period specified in that section
unless the affected Participant agrees to such amendment, modification or
termination in writing.
6.02. NOTICE REQUIREMENT
(a) Plan section 6.01 notwithstanding, no action to terminate the
Plan shall be taken except upon written notice to each Participant to be
affected thereby, which notice shall be given not less than thirty (30) days
prior to such action.
(b) Any notice which shall be or may be given under the Plan shall
be in writing and shall be mailed by United States mail, postage prepaid. If
notice is to be given to the Corporation such notice shall be addressed to it at
Post Office Box 31640, Richmond, Virginia 23294; addressed to the attention of
the Corporate Secretary. If notice is to be given to a Participant, such notice
shall be addressed to the Participant's last known address.
6.03. LIMITATION ON AMENDMENT, TERMINATION, ETC.
The rights of the Corporation set forth in Plan section 6.01 are
subject to the condition that the Board or its delegate shall take no action to
terminate the Plan or decrease the benefit that would become payable or is
payable, as the case may be, with respect to a Participant who has become
eligible for early, normal or postponed retirement under the Retirement Plan.
Until such time, however, the Committee shall have the right to amend Exhibit I
to decrease the benefit that would become payable or is payable under Exhibit I.
-11-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
6.04. EFFECT OF PLAN TERMINATION
Except as provided in Plan sections 5.03, 6.01 and 6.03, upon the
termination of this Plan by the Board, the Plan shall no longer be of any
further force or effect, and neither the Corporation, any Affiliate nor any
Participant shall have any further obligation or right under this Plan.
Likewise, the rights of any individual who was a Participant and whose
designation as a Participant is revoked or rescinded by the Committee shall
cease upon such action.
-12-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE VII
OTHER BENEFITS AND AGREEMENTS
The benefits provided for a Participant and his Beneficiary under
the Plan are in addition to any other benefits available to such Participant
under any other plan or program of the Corporation for its employees, and,
except as may otherwise be expressly provided for, the Plan shall supplement and
shall not supersede, modify or amend any other plan or program of the
Corporation in which a Participant is participating.
-13-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE VIII
RESTRICTIONS ON TRANSFER OF BENEFITS
No right or benefit under the Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and
any attempt to do so shall be void. No right or benefit hereunder shall in any
manner be liable for or subject to the debts, contracts, liabilities, or torts
of the person entitled to such benefit. If any Participant or Beneficiary under
the Plan should become bankrupt or attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge any right to a benefit hereunder, then such
right or benefit, in the discretion of the Committee, shall cease and terminate,
and, in such event, the Committee may hold or apply the same or any part thereof
for the benefit of such Participant or Beneficiary, his or her spouse, children,
or other dependents, or any of them, in such manner and in such portion as the
Committee may deem proper.
-14-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.01. THE COMMITTEE
The Plan shall be administered by the Committee. Subject to the
provisions of the Plan, the Committee may adopt such rules and regulations as
may be necessary to carry out the purposes hereof. The Committee's
interpretation and construction of any provision of the Plan shall be final and
conclusive.
9.02. INDEMNIFICATION OF THE COMMITTEE
The Corporation shall indemnify and save harmless each member of
the Committee against any and all expenses and liabilities arising out of
membership on the Committee, excepting only expenses and liabilities arising out
of a member's own willful misconduct. Expenses against which a member of the
Committee shall be indemnified hereunder shall include without limitation, the
amount of any settlement or judgment, costs, counsel fees, and related charges
reasonably incurred in connection with a claim asserted, or a proceeding brought
or settlement thereof. The foregoing right of indemnification shall be in
addition to any other rights to which any such member may be entitled.
9.03. POWERS OF THE COMMITTEE
In addition to the powers hereinabove specified, the Committee
shall have the power to compute and certify the amount and kind of benefits from
time to time payable to Participants and their Beneficiaries under the Plan, to
authorize all disbursements for such purposes, and to determine whether a
Participant is entitled to a benefit under Plan section 3.02.
9.04. INFORMATION
To enable the Committee to perform its functions, the Corporation
shall supply full and timely information to the Committee on all matters
relating to the compensation of all Participants, their retirement, death or
other cause for termination of employment, and such other pertinent facts as the
Committee may require.
-15-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE X
MISCELLANEOUS
10.01. BINDING NATURE
The Plan shall be binding upon the Corporation, any participating
Affiliates and its successors and assigns; subject to the powers set forth in
Article VI, and upon a Participant, his or her Beneficiary, and either of their
assigns, heirs, executors and administrators.
10.02. GOVERNING LAW
To the extent not preempted by federal law, the Plan shall be
governed and construed under the laws of the Commonwealth of Virginia (including
its choice of law rules, except to the extent those rules would require the
application of the law of a state other than Virginia) as in effect at the time
of their adoption and execution, respectively.
10.03. USE OF MASCULINE AND FEMININE; SINGULAR AND PLURAL
Masculine pronouns wherever used shall include feminine pronouns
and the use of the singular shall include the plural.
-16-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
ARTICLE XI
ADOPTION
The Corporation has adopted this Plan pursuant action taken by the
Board.
As evidence of its adoption of the Plan, American Filtrona
Corporation has caused this document to be signed by its Vice President-Finance,
this 26th day of April, 1994, as amended and restated effective January 1, 1994.
AMERICAN FILTRONA CORPORATION
By: /s/ JOHN D. BARLOW, JR.
-17-
<PAGE>
American Filtrona Corporation
Supplemental Benefit Plan
As Amended and Restated Effective January 1, 1994
EXHIBIT I
PARTICIPATION LIST
NAME OF PARTICIPANT Amount of Benefit
John D. Barlow, Jr. $ 5,000
John L. Morgan $12,000
-18-
<PAGE>
Management's Discussion and Analysis of Financial Statements
Balance Sheet
The Company's strong financial condition and liquidity continue as
reflected in the accompanying consolidated financial statements. Historically,
internally generated funds have met cash flow requirements for capital
expenditures and working capital, acquisitions and start-ups, and increased cash
dividends and are expected to be sufficient to meet the Company's operating cash
requirements in the foreseeable future. The Company believes that, if
appropriate, it is capable of raising substantial amounts of short-term and
long-term debt. High liquidity, strong cash flows from its operations, and
financing flexibility enable the Company to respond quickly to opportunities and
support its growth plans.
At December 31, 1995 cash and equivalents represented 32% of total
assets (1994 - 30%) and the ratio of current assets to current liabilities was
3.6 (1994 - 3.5). The changes in the various components of working capital arose
from the higher level of business activity and from year-end raw material
purchases in anticipation of price increases.
Income Statement
1995 - Net sales increased 18% to a record level. Bonded fibers segment
sales (35% of total) increased 12% reflecting higher volume in tobacco filters
and diagnostic test devices offsetting slightly lower sales of writing
instrument components. Plastic products segment sales (65% of total) increased
22% reflecting substantial gains in flexible packaging and continuing strong
increases by the plastic extrusion operations aided by the inclusion of the
Tri-Lite Plastics companies for the full year. Investment income increased 29%
primarily as a result of higher yields.
Cost of products sold increased 19% which was in line with the sales
increase. Selling, research, administrative and general expenses were held to an
11% increase. Performance improved in the bonded fibers segment as a result of
the sales increase and operating efficiencies. The plastic products segment had
record earnings and exceeded those of bonded fibers for the third consecutive
year because of the strong results in the plastic extrusion companies and
improvement at the Canadian flexible packaging company. Although the first half
loss by the flexible packaging company more than offset earnings generated from
operations in the second half, a third quarter one-time recovery of costs from
settling litigation of approximately $1,200,000 produced income for the year.
The combination of changes in revenues and total costs and expenses provided a
27% increase in income before income taxes.
Income taxes increased 23% reflecting the higher level of income and a
slightly lower effective tax rate. Income from continuing operations and related
earnings per share increased by 29% and 30% to record levels.
1994 - Net sales increased 14%. Bonded fibers segment sales increased
10% reflecting higher sales in each of its product lines. Plastic products
segment sales increased 17% reflecting a continuing strong performance by the
plastic extrusion companies aided by the mid-year addition of the Tri-Lite
Plastics companies, and modest gains in packaging materials. Investment income
increased 70% primarily as a result of the higher level of investments enhanced
by higher yields.
Cost of products sold and selling, research, administrative and general
expenses both increased 14%. Performance improved for the year in the bonded
fibers segment despite approximately $1,100,000 of cost associated with a
manufacturing defect that occurred and was corrected in the second quarter. The
plastic products segment had record earnings and exceeded those of bonded fibers
for the second year in a row. Higher earnings of the five established plastic
extrusion companies were boosted by the Tri-Lite Plastics companies and more
than offset a loss by the Canadian flexible packaging company caused by the
major capacity expansion, inefficiencies caused by film shortages, and an
inability to pass on rapidly escalating raw material prices on a timely basis.
The combination of changes in revenues and total costs and expenses produced an
increase of 17% in income before income taxes.
Income taxes increased 17% reflecting the higher level of income.
Therefore, income from continuing operations and related earnings per share
increased by 17% and 16%.
The discontinued industrial filtration segment was sold in April, 1994
effective as of March 31, 1994 (see Note 3 of Notes to Consolidated Financial
Statements).
General Comments
The Company continues its efforts to balance the effect of general
business conditions in a number of ways. Many different industries are served
through a variety of sales and marketing approaches in order to develop market
niches where customers are provided services, solutions to problems, and
innovative products. Emphasis on research and development relating to products
and processes, improved productivity, and cost control has developed customer
loyalty and goodwill.
The Company's largest customer accounted for approximately 12% of
consolidated net sales in 1995 (1994 - 11%) and approximately 35% of bonded
fibers net sales (1994 - 30%). The Company concentrates its efforts on retaining
its business with major customers as well as with other customers through
improving the quality and cost-effectiveness of its products and through
service. In addition, it intends to continue its diversification and growth in
sales to other customers.
Consolidated Statement of Income
<TABLE>
<CAPTION>
Years Ended December 31 1995 1994 1993
<S> <C> <C> <C>
Revenues
Net sales $176,508,490 $149,152,162 $130,920,010
Investment income 1,339,491 1,039,064 611,713
177,847,981 150,191,226 131,531,723
Costs and expenses
Cost of products sold 142,528,056 120,200,735 105,419,581
Selling, research, administrative and general 19,765,724 17,759,728 15,631,849
162,293,780 137,960,463 121,051,430
Income before income taxes 15,554,201 12,230,763 10,480,293
Income taxes 5,450,000 4,425,000 3,775,000
Income from continuing operations 10,104,201 7,805,763 6,705,293
Discontinued operations, net of income taxes
(1994 - gain on disposal of $3,835,000) - 3,954,859 611,288
Net income $ 10,104,201 $ 11,760,622 $ 7,316,581
Average shares outstanding 3,734,528 3,749,054 3,728,237
Earnings per share
Continuing operations $2.70 $2.08 $1.80
Discontinued operations - 1.05 .16
Net income $2.70 $3.13 $1.96
</TABLE>
See accompanying notes
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31 1995 1994
<S> <C> <C>
Assets
Current assets
Cash and equivalents $ 34,965,864 $29,738,046
Accounts receivable, less allowance for doubtful accounts
of $311,000 (1994 - $304,000) 19,003,632 17,349,786
Inventories 19,666,392 17,106,615
Prepaid expenses 1,498,975 1,347,460
Total current assets 75,134,863 65,541,907
Property, plant and equipment
Land 960,954 560,636
Buildings 13,701,775 13,435,226
Machinery and equipment 47,257,205 44,171,602
61,919,934 58,167,464
Less accumulated depreciation 36,603,627 32,170,920
25,316,307 25,996,544
Other assets
Excess cost over net assets of businesses acquired, less
accumulated amortization of $2,888,000 (1994 - $2,457,000) 5,096,827 5,433,259
Notes receivable 2,434,843 2,350,455
Other assets 282,767 386,995
7,814,437 8,170,709
$108,265,607 $99,709,160
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 14,905,395 $14,333,933
Accrued expenses 4,929,522 3,811,432
Income taxes 1,054,216 380,889
Total current liabilities 20,889,133 18,526,254
Other liabilities
Notes payable 650,000 1,300,000
Deferred income taxes 159,147 151,328
Other liabilities 1,742,599 1,366,634
2,551,746 2,817,962
Shareholders' equity
Common stock, $1 par value, 10,000,000 shares authorized,
3,735,392 shares issued and outstanding (1994 - 3,736,042) 3,735,392 3,736,042
Additional capital 758,190 812,452
Retained earnings 81,342,934 75,085,671
Cumulative translation adjustment (1,011,788) (1,269,221)
84,824,728 78,364,944
$108,265,607 $99,709,160
</TABLE>
See accompanying notes
Consolidated Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Cumulative
Common Additional Retained Translation
Stock Capital Earnings Adjustment
<S> <C> <C> <C> <C>
Balance, January 1, 1993 $3,717,922 $ 689,675 $63,224,137 $ (589,953)
Net income 7,316,581
Dividends - $.95 per share (3,541,691)
Employee stock plans 20,700 327,012
Translation (loss) (198,639)
Balance, December 31, 1993 3,738,622 1,016,687 66,999,027 (788,592)
Net income 11,760,622
Dividends - $.98 per share (3,673,978)
Employee stock plans 15,420 262,265
Stock repurchase (18,000) (466,500)
Translation (loss) (480,629)
Balance, December 31, 1994 3,736,042 812,452 75,085,671 (1,269,221)
Net income 10,104,201
Dividends - $1.03 per share (3,846,938)
Employee stock plans 4,350 78,863
Stock repurchase (5,000) (133,125)
Translation gain 257,433
Balance, December 31, 1995 $3,735,392 $ 758,190 $81,342,934 $(1,011,788)
</TABLE>
See accompanying notes
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31 1995 1994 1993
<S> <C> <C> <C>
Operating
Income from continuing operations $10,104,201 $ 7,805,763 $ 6,705,293
Reconciling items
Depreciation and amortization 5,462,977 4,681,259 3,910,018
Deferred income taxes 7,819 (374,073) (215,887)
Increase (decrease) from
Accounts receivable (1,653,846) (1,724,977) (3,309,908)
Inventories (2,559,777) (4,968,214) 120,900
Prepaid expenses (151,515) (41,146) 196,274
Accounts payable and accrued expenses 1,689,552 4,799,771 2,547,784
Income taxes (amounts paid:
1995 - $4,770,000; 1994 - $5,640,000;
1993 - $2,880,000) 673,327 (844,439) 1,114,304
Other - net 414,301 (788,337) (36,643)
13,987,039 8,545,607 11,032,135
Investing
Acquisitions of property, plant and equipment (4,122,983) (10,100,890) (3,475,348)
Business acquisitions, net of cash - (2,472,166) -
Increase in notes receivable (84,388) - -
(4,207,371) (12,573,056) (3,475,348)
Financing
Decrease in notes payable (650,000) - -
Issuance of common stock 83,213 277,685 347,712
Repurchase of common stock (138,125) (484,500) -
Dividends paid (3,846,938) (3,673,978) (3,541,691)
(4,551,850) (3,880,793) (3,193,979)
Net cash provided (used) by
continuing operations 5,227,818 (7,908,242) 4,362,808
Net cash provided by discontinued
operations (includes proceeds from sale
of $15,875,000 in 1994) - 13,792,966 2,443,593
Net increase in cash and equivalents 5,227,818 5,884,724 6,806,401
Cash and equivalents, beginning of year 29,738,046 23,853,322 17,046,921
Cash and equivalents, end of year $34,965,864 $29,738,046 $23,853,322
</TABLE>
See accompanying notes
Notes to Consolidated Financial Statements
Note 1. Significant Accounting Policies
Business - The Company develops, manufactures, and markets from plants in the
U.S. and Canada a broad line of bonded fiber and plastic products for domestic
and international customers in numerous industries (see Note 8).
Estimates - Financial statements prepared in conformity with generally accepted
accounting principles require management to make estimates and assumptions that
affect amounts reported therein. Actual results could differ from those
estimates.
Consolidation - The consolidated financial statements include the accounts of
the Company and its subsidiaries, after elimination of material intercompany
accounts and transactions. Discontinued operations (see Note 3) have been
separated and prior year financial statements have been restated accordingly.
Cash and equivalents - Equivalents are highly liquid and readily convertible
into cash.
Inventories - Inventories are stated at the lower of cost (last-in, first-out
method generally for domestic inventories and the first-in, first-out method for
other inventories) or market.
Property, plant and equipment - These assets are stated at cost and are
depreciated principally on the declining-balance method over their estimated
useful lives.
Excess cost over net assets acquired - This asset arises from purchased
businesses and is amortized on the straight-line method over periods of 15, 20
and 40 years.
Income taxes - Deferred income taxes are provided on the undistributed net
income of a foreign subsidiary and other material temporary differences.
Note 2. Inventories
Inventories consisted of (in thousands):
1995 1994
FIFO
Finished products $ 8,886 $ 7,813
Work in process 1,408 1,546
Raw material 11,622 9,242
21,916 18,601
Less excess of FIFO over
LIFO inventory value 2,250 1,494
$19,666 $17,107
Inventories stated at LIFO approximated $10,559 (1994 - $8,135).
Note 3. Discontinued Operations
In April, 1994 the Company completed the sale of its industrial filtration
segment effective as of March 31, 1994 for a cash sales price of $15,875,000.
For 1994 the gain on disposal of the segment of $3,835,000 after income tax
credits, or $1.02 per share ($2,999,000 pretax), includes other income and costs
incurred in connection with the disposal. For 1994 net sales were $4,788,000
(1993 - $23,432,000) and income from operations was $120,000 net of applicable
income taxes of $100,000 (1993 - $611,000 net of $425,000).
Note 4. Stock Plans
The 1995 Stock Incentive Plan (1995 Plan) authorizes the grant of incentive
options at fair market value or nonqualified options at not less than 85% of
fair market value until January 24, 2005 to selected employees for up to 300,000
common shares of which 60,000 may be performance share awards. No options or
awards have been granted under the 1995 Plan.
Option transactions under prior plans during 1995, 1994 and 1993 follow:
1995 1994 1993
Outstanding at
beginning of year 193,800 210,900 172,700
Granted 73,750 - 54,000
Exercised (4,350) (15,420) (15,800)
Cancelled (2,000) (1,680) -
Outstanding at
end of year 261,200 193,800 210,900
Exercisable at
end of year 145,760 126,020 116,510
Reserved for
future grant - 92,655 90,975
Price range of
options
exercised $17.75 to $27.25 $15.25 to $27.25 $13.06 to $18.00
Price range of
options
outstanding $17.75 to $27.50 $17.75 to $27.50 $15.25 to $27.50
Performance share awards under the prior plan for 10,000 and 38,000 common
shares granted in 1995 and 1994 are dependent upon continued employment and
attainment of certain performance objectives over the three-year period ending
December 31, 1996. Compensation expense under the plan approximated $651,000
(1994 - $203,000; 1993 - $95,000).
Note 5. Retirement Plans
The Company has several pension, savings, and profit sharing plans covering
substantially all employees, and its general policy is to fund amounts
deductible for federal income tax purposes. Benefits generally are based on the
employee's years of service and compensation. Plan assets consist primarily of
listed stocks and bonds. Pension expense for all plans approximated $2,403,000
(1994 - $2,128,000; 1993 - $1,913,000).
Pension cost and funded status for the Company's defined benefit pension plans
follow (in thousands):
1995 1994 1993
Pension cost
Service cost $ 1,162 $ 1,156 $ 923
Interest cost 1,595 1,494 1,207
Actual return on assets (1,666) 549 (1,257)
Net amortization and deferral 58 (2,058) 134
$ 1,149 $ 1,141 $ 1,007
1995 1994
Funded status
Plan assets at fair value $25,432 $20,112
Projected benefit obligation 24,993 20,912
Excess 439 (800)
Unrecognized (gain) loss (105) 865
Unrecognized transition net (asset) (366) (397)
Accrued pension cost $ (32) $ (332)
Accumulated benefits $21,744 $17,930
Vested benefits $21,074 $17,112
Assumptions used to determine funded status and pension cost were: return on
assets - 8.0%; salary scale - 5.0%; discount rate - 7.0% (1994 - 8.0%, 5.5% and
7.5%; 1993 - 8.0%, 5.5% and 7.0%).
The Company has an Employee Stock Ownership Plan for substantially all domestic
employees. Contributions to the plan, which are at the sole discretion of the
Board of Directors, may be in cash or common stock of the Company and
approximated $197,000 (1994 - $190,000; 1993 - $149,000).
Note 6. Research and Development
Research, development and engineering expenses approximated $3,261,000 (1994 -
$3,090,000; 1993 - $2,891,000).
Note 7. Income Taxes
(in thousands)
1995 1994 1993
Income before income taxes consisted of:
Domestic $14,405 $12,631 $ 9,823
Foreign 1,149 (400) 657
$15,554 $12,231 $10,480
Income taxes consisted of:
Current
Federal $ 4,674 $ 4,296 $ 3,366
State 597 561 429
Foreign 181 5 204
5,452 4,862 3,999
Deferred
Federal (91) (174) (177)
State (27) (7) (31)
Foreign 116 (256) (16)
(2) (437) (224)
$ 5,450 $ 4,425 $ 3,775
The difference between income tax expense and the amount computed by applying
the statutory rate consisted of:
Federal statutory rate - 34.36%
(1994 - 34.18%; 1993 - 34.05%) $ 5,344 $ 4,180 $ 3,569
State income taxes,
net of federal tax benefit 392 369 282
Tax-exempt interest (433) (338) (187)
Other 147 214 111
$ 5,450 $ 4,425 $ 3,775
Deferred tax assets and liabilities consisted of:
Deferred compensation $ 427 $ 181
Special charges 167 270
Vacation accrual 185 143
Accumulated depreciation (1,118) (946)
Undistributed net income of
foreign subsidiary (168) (131)
Other 348 332
$ (159) $ (151)
Notes to Consolidated Financial Statements continued
Note 8. Industry Segments, Foreign
Operations and Major Customer
Information on industry segments and foreign operations is presented for 1995,
1994 and 1993 in the following table (in thousands). Corporate assets consist
primarily of those cash equivalents not directly identified with industry
segments. At December 31, 1995 foreign liabilities approximated $4,438,000 (1994
- - $4,101,000; 1993 - $2,755,000).
The Company's largest customer accounted for approximately 12% of consolidated
net sales (1994 - 11%; 1993 - less than 10%) and approximately 35% of bonded
fibers net sales (1994 - 30%; 1993 - 24%).
<TABLE>
<CAPTION>
Segments Geographic Areas
Bonded Plastic
Fibers Products Corporate Total USA Canada
<S> <C> <C> <C> <C> <C> <C>
Revenues
1995 62,921 114,337 590 177,848 150,097 27,751
1994 56,078 93,610 503 150,191 129,050 21,141
1993 51,021 80,223 287 131,531 111,326 20,205
Income (loss) before income taxes
1995 7,618 10,689 (2,753) 15,554 14,405 1,149
1994 6,064 8,692 (2,525) 12,231 12,631 (400)
1993 5,649 7,372 (2,541) 10,480 9,823 657
Identifiable assets
1995 28,549 61,566 18,151 108,266 93,196 15,070
1994 22,863 60,591 16,255 99,709 85,333 14,376
1993 20,446 41,378 15,029 76,853 68,192 8,661
Capital expenditures
1995 1,394 2,738 21 4,153
1994 525 9,684 26 10,235
1993 708 2,735 37 3,480
Depreciation and amortization
1995 982 4,451 30 5,463
1994 1,003 3,645 33 4,681
1993 961 2,910 39 3,910
</TABLE>
Bonded fibers net sales in 1995, 1994 and 1993 include tobacco filters $40,500,
$34,100 and $31,000; writing instrument products $16,500, $17,100 and $15,300.
Plastic products net sales in 1995, 1994 and 1993 include food packaging
products $26,800, $20,000 and $19,300; lighting fixtures $22,800, $16,600 and
$12,400; sign and display products $12,900, $11,400 and $12,000.
<PAGE>
Report of Independent Accountants
The Shareholders and Board of Directors
American Filtrona Corporation
We have audited the accompanying consolidated balance sheets of American
Filtrona Corporation and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Filtrona Corporation and Subsidiaries at December 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Richmond, Virginia
January 23, 1996
Financial Information Responsibility
The Company's management is responsible for the accompanying financial
statements and related information contained in this Annual Report. These
statements were prepared in conformity with generally accepted accounting
principles and, necessarily, include amounts based on judgments and estimates
which we believe have been applied in a reasonable manner.
Independent accountants are engaged to audit our financial statements
and express an opinion thereon. Their opinion appears above.
The Company maintains internal accounting controls and procedures
designed to provide reasonable, but not absolute, assurance at appropriate cost
that assets are safeguarded, policies and procedures are followed, and
transactions are properly executed and reported. Internal controls are supported
by the selection and training of personnel, by organization arrangements for the
appropriate division of responsibilities, and by the conduct of internal audits.
In addition, the Company's statement on standards of business conduct is
reviewed and signed annually by key employees.
The Audit Committee of the Board of Directors is composed solely of
outside Directors. In fulfilling its oversight role the Committee meets
periodically with the Company's financial officers, internal audit department,
and independent accountants, both separately and together, to discuss auditing
and financial reporting matters.
John D. Barlow, Jr.
January 23, 1996 Vice President - Finance
Historical Financial Review
<TABLE>
<CAPTION>
(in thousands, except ratio and per share amounts) 1995 1994 1993 1992
<S> <C> <C> <C> <C>
Summary of Operations
Net sales $176,508 $149,152 $130,920 $122,267
Total revenues 177,848 150,191 131,531 122,868
Cost of products sold 142,528 120,201 105,420 97,485
Income before income taxes 15,554 12,231 10,480 9,720
Income taxes 5,450 4,425 3,775 3,300
Effective tax rate (%) 35.0 36.2 36.0 34.0
Income from continuing operations 10,104 7,806 6,705 6,420
Income (loss) from discontinued operations - 3,955(a) 611 (5,208)(c)
Net income 10,104 11,761 7,316 1,212
Earnings (loss) per share
Continuing operations 2.70 2.08 1.80 1.73
Discontinued operations - 1.05(a) .16 (1.40)(c)
Net income 2.70 3.13 1.96 .33
Dividends per share 1.03 .98 .95 .94
Payout ratio (%) 38.1 31.2 48.4 288.1
Balance Sheet Data
Current assets $ 75,135 $ 65,542 $ 61,401(b) $ 41,479
Current liabilities 20,889 18,526 13,182 9,638
Working capital 54,246 47,016 48,219 31,841
Current ratio 3.6 3.5 4.7 4.3
Property, plant and equipment 25,316 25,996 18,520 18,688
Other assets 7,815 8,171 7,173 7,599
Net assets of discontinued operations - - - 12,776
Total assets 108,266 99,709 87,094 80,542
Shareholders' equity 84,825 78,365 70,966 67,042
Return on average equity (%)(d) 12.4 10.5 9.7 9.4
Miscellaneous
Capital expenditures $ 4,153 $ 10,235 $ 3,480 $ 3,705
Depreciation and amortization 5,463 4,681 3,910 3,603
Average shares outstanding 3,735 3,749 3,728 3,716
Book value per share 22.71 20.98 18.98 18.03
Price per share
High 40.75 31.50 28.50 28.00
Low 26.00 25.50 25.00 21.00
</TABLE>
(a) Includes gain on disposal of $3,835 after tax credits, or $1.02 per share
in 1994
(b) Includes net assets of discontinued operations of $10,241 in 1993
(c) Includes special charges of $4,600 after taxes, or $1.24 per share in 1992
(d) Excludes income (loss) from discontinued operations
Historical Financial Review (continued)
<TABLE>
<CAPTION>
(in thousands, except ratio and per share amounts) 1991 1990 1989 1988
<S> <C> <C> <C> <C>
Summary of Operations
Net sales $118,968 $116,993 $117,487 $104,166
Total revenues 119,844 117,671 118,417 104,835
Cost of products sold 93,672 93,175 93,360 82,349
Income before income taxes 11,593 11,378 13,396 12,349
Income taxes 4,100 4,175 4,775 4,325
Effective tax rate (%) 35.4 36.7 35.6 35.0
Income from continuing operations 7,493 7,203 8,621 8,024
Income (loss) from discontinued operations (187) (254) (924) (1,897)
Net income 7,306 6,949 7,697 6,127
Earnings (loss) per share
Continuing operations 2.01 1.94 2.33 2.19
Discontinued operations (.05) (.07) (.25) (.51)
Net income 1.96 1.87 2.08 1.68
Dividends per share .92 .88 .83 .78
Payout ratio (%) 46.9 47.1 39.9 46.6
Balance Sheet Data
Current assets $ 41,766 $ 37,978 $ 33,373 $ 34,883
Current liabilities 10,653 11,805 12,547 10,754
Working capital 31,113 26,173 20,826 24,129
Current ratio 3.9 3.2 2.7 3.2
Property, plant and equipment 18,525 17,845 19,546 12,125
Other assets 8,046 8,422 10,249 4,366
Net assets of discontinued operations 14,657 15,743 14,520 18,976
Total assets 82,994 79,988 77,688 70,350
Shareholders' equity 69,601 65,864 62,195 56,885
Return on average equity (%)(d) 11.1 11.2 14.5 14.6
Miscellaneous
Capital expenditures $ 3,501 $ 1,400 $ 5,481 $ 4,150
Depreciation and amortization 3,133 3,419 2,640 2,195
Average shares outstanding 3,719 3,716 3,695 3,658
Book value per share 18.77 17.73 16.77 15.50
Price per share
High 24.00 27.25 27.50 27.50
Low 18.00 16.00 22.25 17.50
</TABLE>
Historical Financial Review (continued)
<TABLE>
<CAPTION>
(in thousands, except ratio and per share amounts) 1987 1986 1985 1980
<S> <C> <C> <C> <C>
Summary of Operations
Net sales $93,577 $83,334 $69,690 $75,749
Total revenues 94,501 84,696 71,152 78,659
Cost of products sold 74,300 65,016 55,307 61,591
Income before income taxes 12,210 11,986 9,202 11,765
Income taxes 4,775 4,975 4,100 5,725
Effective tax rate (%) 39.1 41.5 44.6 48.7
Income from continuing operations 7,435 7,011 5,102 6,040
Income (loss) from discontinued operations (1,918) (577) 1,173 81
Net income 5,517 6,434 6,275 6,121
Earnings (loss) per share
Continuing operations 2.02 1.85 1.36 1.30
Discontinued operations (.52) (.15) .31 .02
Net income 1.50 1.70 1.67 1.32
Dividends per share .74 .71 .68 .4875
Payout ratio (%) 49.4 41.8 40.8 36.9
Balance Sheet Data
Current assets $32,476 $28,888 $32,995 $29,821
Current liabilities 8,086 6,008 10,724 9,679
Working capital 24,390 22,880 22,271 20,142
Current ratio 4.0 4.8 3.1 3.1
Property, plant and equipment 8,432 8,848 8,966 6,176
Other assets 2,335 7,020 4,835 9,165
Net assets of discontinued operations 18,827 13,117 14,241 2,021
Total assets 62,070 57,873 61,037 47,183
Shareholders' equity 52,848 50,456 48,853 31,936
Return on average equity (%)(d) 14.4 14.1 10.9 20.0
Miscellaneous
Capital expenditures $ 1,207 $ 1,477 $ 994 $ 3,427
Depreciation and amortization 1,772 1,580 1,138 973
Average shares outstanding 3,680 3,778 3,760 4,630
Book value per share 14.48 13.71 12.95 6.90
Price per share
High 24.50 22.50 17.75 9.00
Low 15.75 15.00 12.50 5.50
</TABLE>
Compound Annual Growth Rates (% Per Year)
<TABLE>
<CAPTION>
5 Years 10 Years 15 Years
1991 - 95 1986 - 95 1981 - 95
<S> <C> <C> <C>
Net sales 8.6 9.7 5.8
Income from continuing operations 7.0 7.1 3.5
Income per share from continuing operations 6.8 7.1 5.0
Dividends paid per share 3.2 4.2 5.1
</TABLE>
Other Information
Quarterly Financial and Common Stock Data (Unaudited)
(thousands of dollars except per share amounts)
<TABLE>
<CAPTION>
1995 1994
First Second Third Fourth First Second Third Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales 44,633 44,960 43,481 43,434 36,199 35,913 38,487 38,553
Gross profit 8,824 7,830 8,627 8,699 7,045 6,727 7,074 8,105
Income
Continuing operations 2,446 2,237 2,730 2,691 1,737 1,595 1,851 2,623
Discontinued operations - - - - 1,620 2,335 - -
Net income 2,446 2,237 2,730 2,691 3,357 3,930 1,851 2,623
Earnings per share
Continuing operations .65 .60 .73 .72 .46 .43 .49 .70
Discontinued operations - - - - .43 .62 - -
Net income .65 .60 .73 .72 .89 1.05 .49 .70
Dividends paid per share .25 .25 .265 .265 .24 .24 .25 .25
Price range
High 29 31 32 1\4 40 3\4 31 1\2 30 1\2 30 28 1\2
Low 26 27 1\4 29 1\2 30 3\4 25 1\2 28 26 1\2 26
</TABLE>
Common Stock Information
The Company's common stock trades on The Nasdaq Stock Market under the symbol:
AFIL.
Dividend Information
The Company expects to continue its policy of paying regular cash dividends
dependent upon future earnings, capital requirements, and the financial
condition of the Company. Dividends are paid on approximately the 25th of
February, May, August, and November.
Dividend Reinvestment Service
Automatic Dividend Reinvestment and Shareholder Savings Service offers
shareholders a convenient way to increase investments in the Company. Dividends
can be reinvested automatically in additional shares or shareholders may make
voluntary cash deposits to purchase additional shares. For further information,
contact Wachovia Bank of North Carolina, N.A., Corporate Trust Department, Post
Office Box 3001, Winston-Salem, NC 27102-3001.
General Counsel
Hunton & Williams
Riverfront Plaza
951 E. Byrd Street
Richmond, VA 23219
Transfer Agent, Registrar, and Dividend Paying Agent
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
P. O. Box 3001
Winston-Salem, NC 27102-3001
Phone: (800) 633-4236
Independent Accountants
Coopers & Lybrand L.L.P.
Riverfront Plaza
901 E. Byrd Street, Suite 1200
Richmond, VA 23219
EXHIBIT 22
LIST OF SUBSIDIARIES
The following is a list of subsidiaries of the registrant. All such
subsidiaries do business under their corporate name.
JURISDICTION OF
SUBSIDIARY INCORPORATION
A&B Plastics, Inc. Virginia
A&B Plastics-Southwest, Inc. Virginia
Duall Plastics, Inc. Virginia
Filpac Inc. Canada
Porth Plastic Company Virginia
Southern Plastics Company Virginia
Tri-Lite Plastics, Inc. Virginia
Tri-Lite Plastics-South, Inc. Virginia
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference of our report dated January 23,
1996 on our audits of the consolidated financial statements of American
Filtrona Corporation and Subsidiaries as of December 31, 1995 and 1994, and
for each of the three years in the period ended December 31, 1995, which
report is included in this Annual Report on Form 10-K, in the registration
statements on Form S-8, pertaining to the American Filtrona Corporation 1988
Stock Option Plan and American Filtrona Corporation Incentive Stock Option
Plan, and to the American Filtrona Corporation 1988 Performance Shares Plan.
COOPERS & LYBRAND L.L.P.
Richmond, Virginia
March 25, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 34,966
<SECURITIES> 0
<RECEIVABLES> 19,315
<ALLOWANCES> 311
<INVENTORY> 19,666
<CURRENT-ASSETS> 75,135
<PP&E> 61,920
<DEPRECIATION> 36,604
<TOTAL-ASSETS> 108,266
<CURRENT-LIABILITIES> 20,889
<BONDS> 650
0
0
<COMMON> 3,735
<OTHER-SE> 81,090
<TOTAL-LIABILITY-AND-EQUITY> 108,266
<SALES> 176,508
<TOTAL-REVENUES> 177,848
<CGS> 142,528
<TOTAL-COSTS> 162,294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,554
<INCOME-TAX> 5,450
<INCOME-CONTINUING> 10,104
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,104
<EPS-PRIMARY> 2.70
<EPS-DILUTED> 2.70
</TABLE>
