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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/ 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]
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER 1-5641
INSTRON CORPORATION
(Exact name of registrant as specified in its Charter)
MASSACHUSETTS 04-2057203
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 ROYALL STREET
CANTON, MASSACHUSETTS 02021
(Address of Principal executive offices) (Zip Code)
(617) 828-2500
(Registrant's telephone number, including area code)
COMMON STOCK, $1 PAR VALUE AMERICAN STOCK EXCHANGE
TITAL OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K
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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No
The aggregate market value of the Registrant's common stock held by
nonaffiliates of the Registrant as of March 15, 1996 was $72,749,936.
The number of shares outstanding of each of the issuer's classes of common
stock as of March 15, 1996 was 6,364,947.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the definitive proxy statement for the 1996 Annual Meeting
of Stockholders are incorporated by reference in Part III.
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PART I
ITEM 1. BUSINESS
THE COMPANY
Instron Corporation ("Instron" or the "Company") designs, develops,
manufactures, markets, and services materials testing systems, software, and
accessories for evaluating the mechanical properties of materials, components
and structures. The Company's products are used principally in research and
development, and quality control applications to test the strength, elasticity,
hardness and other properties of various materials including metals, plastics,
textiles, composites, ceramics and rubber.
Instron offers a comprehensive range of microprocessor and computer based
materials testing systems. In the worldwide market for these systems, Instron is
a leading producer of static (electromechanical), dynamic (servohydraulic) and
hardness testing systems.
Instron's products typically are assembled from a number of company-
designed standard hardware and software modules and accessories, selected and
configured for the customer's specific application. Additional hardware,
software and accessories may be added to the system at a later date. The systems
have the ability to interface with microcomputers and personal computers which
enhance control of the testing process, data collection and analysis.
The Company has sales and service offices in 12 United States cities and 16
foreign countries. Approximately 60% of the Company's revenues are derived from
sales outside the United States. Principal manufacturing facilities are located
in the United States and the United Kingdom.
PRINCIPAL MARKET
The Company's principal market is comprised of industry, educational
institutions and governments who need to understand the characterization and
properties of materials as they perform research and development, and quality
control applications.
Most major industries use some form of materials testing for research and
development and/or quality control. Industrial research focuses upon the
development of new materials, substitute materials, or new uses of existing
materials, to reduce manufacturing or operating costs and to improve product
quality and durability. Industrial quality control applications involve the
testing of finished products as well as materials purchased for the
manufacturing process.
Educational institutions use Instron products in basic research as well as
for instruction in materials science. The Company places particular emphasis on
educational institutions because scientists and engineers trained on Instron
equipment may influence additional sales of the Company's products later in
their careers.
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Government and government agency use principally involves the testing of
products to support defense and space programs, to ascertain compliance with
safety and other legal requirements and to conduct research on new materials and
emerging technologies.
PRINCIPAL PRODUCTS
Instron offers a comprehensive range of general purpose materials testing
systems, application software, and accessories within two principal product
lines; static systems and dynamic systems. Static and dynamic systems use
different drive systems to push, pull or twist the material being tested. Static
systems typically elongate or compress the material sample at selected speeds or
rates of strain. Dynamic systems allow repeated deformation of the sample to
simulate in-use conditions of the product over an extended period of time. The
type of test determines which product line is appropriate to the needs of a
customer.
STATIC: Static (electromechanical) systems and related accessories
accounted for approximately 69%, 71%, and 68% of the Company's revenue in 1995,
1994 and 1993, respectively. These systems consist of a frame, a moving
crosshead, a load cell, grips, and electronic modules to control the test and
analyze the test data. Static systems typically elongate or compress the
material being tested at a user selected, constant speed which ranges from
fractional microns per minute to one meter per minute. These systems
continuously measure the precise force being applied and the resulting
deformation of the material at various time intervals. They also analyze the
results of the test, and either print, graph or electronically display them.
Instron's static product offerings include hardness testing machines, the
cost effective Series 4400 product line, and the high-performance Series 5500
product line. The Series 5500 systems are usually used for research and
development and are equipped with software and many accessories. Quality Control
applications usually require fewer accessories and less breadth of application
capability. The prices of electromechanical systems generally range from $15,000
to $150,000, and prices of hardness testing machines range from $2,000 to
$20,000.
DYNAMIC: Dynamic (servohydraulic) systems and related accessories accounted
for approximately 31%, 29% and 32% of the Company's sales in 1995, 1994 and
1993, respectively. These systems utilize a servo-controlled hydraulic actuator,
a load cell, grips, and electronic modules to control the test and analyze the
test data. Many of the elements have the same function, and in some cases are
the same actual elements, as those of static test machines. The major
distinction between a dynamic system and a static system is the means used to
apply force to the test specimen. The former uses a
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servo-controlled, hydraulic actuator and the latter a screw-driven, moving
crosshead. Many tests can be carried out equally well with either a static or
dynamic test machine. However, if the test requires extremely rapid rates of
loading, or if it is a test of endurance in which the material is subjected to
rapidly fluctuating loads, then the dynamic (servohydraulic) test machine is
appropriate.
Software, computer control and data analysis are features routinely added
to basic dynamic systems. The computer is often used to command actuator motion
to simulate real-life loading conditions. It is also used to record, analyze and
display parameters of performance and endurance for test material or test
components. Machines can be configured not only to elongate or compress the
material being tested, but to simultaneously twist it or subject it to other
forms of complex loading.
The dynamic product line includes structural testing systems which are used
to test products and assemblies. They typically consist of several actuators
which push and pull the product at different points, and sensors which collect
data and transmit it to a central measuring device. Utilizing the Company's
engineering expertise, dynamic systems are often customized to fit the need of a
customer's particular test application.
Instron's dynamic product offerings vary with the force capacity of the
machines, the complexity of the actuator system, the sophistication of the
control electronics, and the computer system and software. The prices of
servohydraulic systems generally range from $40,000 to $400,000 with very
complex structures systems ranging as high as several million dollars.
SERVICE
In recent years, the Company has invested in new service offerings,
including calibration, extended warranties, software support, upgrade contracts
and telephone support. The service business accounted for approximately 15%,
15%, and 14% of the Company's total revenue in 1995, 1994, and 1993,
respectively. The service revenue is included in the percentage amounts for
static and dynamic systems set forth above.
OTHER PRODUCTS AND ACCESSORIES
The Company develops and sells Laboratory Information Management Systems
(LIMS) for PC-based networks, through its U.S. subsidiary, Laboratory
MicroSystems, Inc. The LIMS software manages the flow of information in a
laboratory so that resources can be optimally employed in achieving the
laboratory's primary goals of high quality analysis and fast turnaround.
The Company has license agreements with third parties for the exclusive
sale of certain products, including software, in the material testing industry.
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Accessories can be included with the initial purchase or subsequently
purchased in order to expand the capability of the original machine. Typical
accessories include application software, grips, fixtures, optical/video
extensometers which measure precisely the deformation of material being tested
without actually contacting it and robotic devices which automatically feed test
specimens to the systems. The Company also manufactures and sells environmental
control accessories. Other products and accessories for static and dynamic
equipment purchased separately from the original sale of equipment are included
in the percentage amounts for static and dynamic systems set forth above.
NEW PRODUCTS
During 1995, Instron expanded the Series 4400 and Series 5500
electromechanical product lines. These new machines have been redesigned using
the latest electronics technology and sharing common parts, making them easier
and less costly to build and to service. The new machines are easier to operate,
with easy to understand control panels and software interfaces, and ergonomic
design features that minimize operator fatigue, reduce errors and increase
productivity. Servohydraulic dynamic test software was enhanced with new Fast
Track and Wavemaker for Windows products. The Fast Track software includes
LabView drivers that make it possible for users to write their own applications
and Wavemaker allows greater flexibility for sophisticated fatigue test
requirements.
RESEARCH AND DEVELOPMENT
The Company maintains research and development staffs at their U.S. and
U.K. manufacturing facilities, as well as the Wolpert operation in Germany.
These development staffs often work directly with industrial and government
researchers and the materials science departments of universities to create
leading edge solutions to materials testing applications.
Instron is a pioneer in the development and application of electronic
measurement and drive systems techniques in materials testing systems. The
Company has continuously designed, developed, and marketed state-of-the-art
testing systems, software, and accessories, including digitally controlled
static and dynamic systems, low-cost static systems for the quality control
market, software, and microprocessor-based system controllers to be used in
conjunction with its entire product line.
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In 1995, the Company expensed $8,782,000 on research and development
activities, compared with $8,062,000 in 1994, and $7,248,000 in 1993. In
addition, the Company has capitalized certain software development costs of
$1,315,000, $792,000, and $1,882,000 during 1995, 1994 and 1993, respectively.
Had these costs been included as expenses during such periods, research and
development expenses would have increased by 14% in 1995, decreased by 3% in
1994 and increased by 4% in 1993, respectively. The Company, in recent years,
has focused its research and development expenditures on revitalizing the
electromechanical and servohydraulic product lines, developing new hardness
testing machines, developing new software and enhancements, and redesigning
products to reduce manufacturing costs. These new products and enhancements do
not, in the Company's opinion, present a significant risk that on-hand
inventory, which supports existing models, will be made obsolete because of the
interchangability of parts and the lead time available before the introduction
of new products. In addition, the Company allocated funds, in 1995, for
development projects that show potential for new applications and market
opportunities utilizing the Company's core technological competencies. Two
projects were identified as having product potential for 1996; applications in
asphalt testing and a motion base system to be used in the new market of
motion-based simulation games for the entertainment and training industries.
COMPETITIVE CONDITIONS
The Company competes with a number of other manufacturers, some of whom
have greater financial, technical and marketing resources than the Company. The
intensity of the competition varies by product line and by geographic area.
Competition in the United States is greatest in the dynamic line where the
Company has one major domestic competitor, MTS Systems Corporation. Competition
in foreign markets is greatest in Germany and Japan, where there are major local
manufacturers. The principal competitive factors are engineering excellence, the
quality and technical capability of the equipment, responsiveness to customer
needs, quality of service, and price performance.
BACKLOG
At December 31, 1995, the Company's backlog of orders was approximately
$36,136,000 compared with $32,687,000 at December 31, 1994. The Company
anticipates that essentially the entire backlog at December 31, 1995 will be
shipped during 1996.
RAW MATERIALS
The Company orders most of its purchased component parts from vendors who
either manufacture them or supply them as off-the-shelf items. While the Company
is dependent upon a limited number of suppliers for certain components, it has
not experienced significant problems in procurement or delivery of any essential
materials, parts or components. Substantially all purchasing is accomplished on
a competitive basis while maintaining a level of inventory sufficient to provide
support of customer servicing requirements and meet scheduled delivery dates.
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PATENTS AND TRADEMARKS
The Company has several patents in the United States and in foreign
countries. The Company relies basically on engineering and technological
capability rather than on these patents to maintain its position in the
industry. The trademark "Rockwell" and "Instron" and the device mark are
registered trademarks of the Company. Under current law, these trademarks may be
renewed indefinitely as long as they are maintained in use.
ENVIRONMENTAL CONSIDERATIONS
Compliance with federal, state and local provisions relating to protection
of the environment has not had, and is not expected to have, any material
adverse effects upon the production, capital expenditures, earnings, and
competitive position of the Company and its subsidiaries.
NUMBER OF EMPLOYEES
At December 31, 1995, the Company employed 1,145 people worldwide.
SEASONALITY
Historically, the Company's sales are highest in the fourth quarter of each
year due to the ordering pattern of its customers, which favors fourth quarter
deliveries before budget authorizations expire. This is particularly true
overseas where the order mix usually consists of larger systems than domestic
orders. Sales in the first quarter are usually low as it takes time to rebuild
in-process inventory levels after the heavy fourth quarter delivery requirements
have been satisfied. Also, third quarter sales are generally low due to vacation
patterns of both Company production workers and customer technical personnel
needed for acceptance testing. The seasonal factors affecting sales are usually
reflected in quarterly net income.
FOREIGN OPERATIONS
Foreign operations represent a significant portion of the Company's
business. The Company's branches and subsidiaries outside of the United States
accounted for 60% of the Company's total revenue in 1995, 60% in 1994 and 59% in
1993. The Company believes that the business and political risk of operating in
its current foreign markets is not, in the aggregate, materially greater than
the risk undertaken by the Company in the United States. The Company's principal
foreign assets are located in the United Kingdom.
Foreign exchange fluctuations can have a significant impact on the
Company's consolidated net assets and results of operations as reported in U.S.
dollars. However, the Company believes that these fluctuations generally have
not had, and it does not expect them to have, a significant economic effect on
the Company's business since foreign operations are generally
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financed, and revenues and expenses are, for the most part, paid in local
currencies, except for intercompany purchases which are closely monitored.
Financial information concerning domestic and foreign operations appears in
Notes 1 and 2 in the "Notes to Consolidated Financial Statements" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations ", included as part of this report.
ITEM 2. PROPERTIES
The Company's corporate headquarters and principal United States
manufacturing facility is located on 66 acres of Company-owned land at the
junction of Routes 128 and 138 in Canton, Massachusetts, approximately 15 miles
from Boston. This facility provides 140,500 square feet of office and
manufacturing space.
The Company's principal foreign facility provides 120,000 square feet of
office and manufacturing space located on seven acres of Company-owned land in
High Wycombe, England, approximately 30 miles west of London.
The Company has 32 sales offices and demonstration centers which are
located throughout the United States and in 16 foreign countries. The Company
believes that all properties are adequate and suitable for its present needs.
ITEM 3. LEGAL PROCEEDINGS
The registrant and its subsidiaries are not involved in any material
pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the year ended December 31, 1995.
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EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
The names, ages and positions of the executive officers of the Company are
listed below along with their business experience during the past five years.
<CAPTION>
Name, Age Business Experience
and Position During Past 5 Years
- ------------ -------------------
<S> <C>
James M. McConnell, 55 Mr. McConnell joined Instron Corporation
President and Chief in April of 1990 as President and Chief
Executive Officer Executive Officer. From 1987 to 1990, Mr.
McConnell was President and Chief
Executive Officer of Automatic Switch
Company, and from 1986 to 1987, he was
President of Rosemont, Inc. (both are
wholly-owned subsidiaries of Emerson
Electric Co.).
Joseph E. Amaral, 48 Mr. Amaral joined Instron Corporation
Vice President, General Manager in 1978. Since 1985, Mr. Amaral has held
of North America Operations positions as Corporate Technical Staff
Engineer, Corporate Technology Manager,
Corporate Product Planning Manager, and
Vice President, Corporate Technical
Director. In March of 1995, he was elected
Vice President, General Manager of North
America Operations.
Kenneth L. Andersen, 54 Mr. Andersen joined Instron Corporation
Vice President, Sales in June of 1983. Since 1983, Mr. Andersen
North America has held positions as Director of Software
Business Group, Director of Structures
Business Group, and Corporate Marketing
Director. In February of 1993, he was
elected Vice President of Sales, North
America.
John R. Barrett, 41 Mr. Barrett joined Instron Corporation in
Treasurer 1988 as Assistant Treasurer. From 1979 to
1988, Mr. Barrett has held various financial
management positions with Computervision
Corporation. In February of 1993, he was
elected Treasurer of the Corporation.
Jonathan L. Burr, 48 Mr. Burr joined Instron Corporation in 1979. He
Vice President, Corporate has held positions as Personnel Administrator,
Director of Human Resources Director of Personnel, and Corporate Director
of Human Resources. In February of 1993,
he was elected Vice President, Corporate
Director of Human Resources. Mr. Burr is the
son of George S. Burr, Vice Chairman of the
Board of Directors.
Yahya Gharagozlou, 40 Mr. Gharagozlou joined Instron Corporation
Vice President, Corporate in 1981. He has held positions as Application
Technical Director Engineer, Assistant Product Manager, Corporate
Product Manager for Software, Marketing
Manager, Product Planning Manager and
Director of Engineering. In February of
1996, he was elected Vice President,
Corporate Technical Director.
</TABLE>
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<TABLE>
EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
<CAPTION>
Name, Age Business Experience
and Position During Past 5 Years
- ------------ -------------------
<S> <C>
Arthur D. Hindman, 52 Mr. Hindman joined Instron Corporation
Vice President and General in 1979. Since 1979, Mr. Hindman has held
Manager, Asia Pacific/ positions as Manager, Marketing Administration;
Latin America International Sales Manager, and General
Manager, Asia/Latin America. In February of
1993, he was elected Vice President and General
Manager, Asia Pacific/Latin America. Mr.
Hindman is the son of Harold Hindman, Chairman
of the Board of Directors.
Ian M. MacGregor, 58 Mr. MacGregor joined Instron Limited in 1970 as
Vice President and Managing a Sales Engineer and was promoted to Marketing
Director of Instron Limited Director in 1977. He assumed the position of
Managing Director of Instron Limited in
October of 1982 and was elected Vice
President of the Corporation in January
of 1983.
Linton A. Moulding, 42 Mr. Moulding joined Instron Corporation in 1985.
Chief Financial Officer He has held positions as Corporate Controller,
Director of U.S. Operations, Corporate Vice
President of Manufacturing, and Vice
President of Finance and Treasurer. In
February of 1993, he was elected Chief
Financial Officer of the Corporation.
</TABLE>
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
<TABLE>
The Company's Common Stock is listed on the American Stock Exchange under
the symbol ISN. The table below sets forth the high and low sales prices of the
Common Stock and the dividends declared during the two most recent fiscal years.
<CAPTION>
1995 1994
----------------------------- ----------------------------
Market Price Cash Market Price Cash
------------------- Dividends ------------------ Dividends
High Low Declared High Low Declared
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First quarter $13.625 $11.125 $.07 $12.000 $ 9.500 $.03
Second quarter 13.000 11.250 .00 11.500 9.500 .03
Third quarter 13.625 11.375 .04 13.125 9.500 .03
Fourth quarter 14.500 11.625 .04 12.875 10.500 .03
---- ----
Total year $.15 $.12
==== ====
</TABLE>
The number of holders of record of the Company's Common Stock at December 31,
1995 was 542. This number does not include shareholders for whom shares are held
in a "nominee" or "street" name.
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<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
<CAPTION>
In thousands, except per share data 1995 1994 1993(1) 1992 1991(2)
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<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
- -----------------
Bookings of new orders $155,092 $138,947 $124,998 $112,369 $121,577
Total revenue 150,571 136,192 122,827 116,268 126,354
Income from operations 8,921 8,082 5,034 6,123 9,645
Income before taxes 7,684 6,979 3,883 5,659 7,865
Provision for income taxes 2,689 2,442 1,398 1,954 2,914
Net Income 4,995 4,537 2,485 3,705 4,951
Backlog 36,136 32,687 29,063 22,988 28,872
Research & development 8,782 8,062 7,248 8,097 7,872
FINANCIAL POSITION
- ------------------
Working capital $ 38,259 $ 33,849 $ 31,070 $ 28,058 $ 29,342
Total assets 113,334 102,294 99,153 79,165 93,563
Total debt 19,875 17,818 21,718 7,646 13,064
Stockholders' equity 56,102 51,926 46,897 45,847 47,635
Capital expenditures 4,510 4,286 4,323 3,478 3,993
PER SHARE OF COMMON STOCK
- -------------------------
Net income $ .78 $ .72 $ .39 $ .59 $ .78
Dividends declared .15 .12 .12 .12 .12
Book value 8.85 8.26 7.46 7.29 7.60
PERFORMANCE MEASUREMENT
- -----------------------
Pre-tax income as a % of
total revenue 5.1% 5.1% 3.2% 4.9% 6.2%
Net income as a % of
total revenue 3.3 3.3 2.0 3.2 3.9
Return on average
stockholders' equity 9.2 9.2 5.4 7.9 10.8
Revenue growth 10.6 10.9 5.6 (8.0) 4.2
Total debt as a % of debt
plus equity 26.2 25.5 31.7 14.3 21.5
Working capital ratio 1.9:1 1.9:1 1.8:1 2.1:1 1.8:1
<FN>
(1) Effective January 1, 1993, the Company acquired certain assets of Wilson
Instruments, Inc. (Wilson). The operating results of Wilson are included in
the Company's Consolidated results of operations from the date of
acquisition. In the third quarter of fiscal 1993, the Company acquired
Amsler Otto Wolpert-Werke GmbH (Wolpert). The Company's results include the
results of operations of Wolpert since August 24, 1993, the date of the
acquisition.
(2) During 1993, the Company adopted Financial Accounting Standards No. 109,
Accounting for Income Taxes (FAS109) and elected to apply the provisions of
FAS109 retroactively to January 1, 1991. The cumulative effect of adopting
FAS109 was a reduction in net income of $240,000 or $.04 per share.
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Instron reported net income of $5.0 million, or 78 cents per share, for the
year ended December 31, 1995, an increase of 10% over 1994. The improvement in
net income was principally due to the growth of 1995 revenues.
Total revenue of $150,571,000 in fiscal 1995 increased by 11% from total
revenue of $136,192,000 in fiscal 1994. This revenue growth was attributable to
increases in structural and custom material testing systems, hardness testing
equipment, which included the operations of Shore Instruments acquired January
5, 1995, and higher revenues of the Company's service business. Total revenue in
fiscal 1994 increased by 11% over fiscal 1993 on the strength of the Company's
new electromechanical line of products, increased service business and a full
year of revenue from the Wolpert operation, which was acquired in August of
1993. Total foreign revenue accounted for approximately 60% of total 1995
revenue, compared with 60% in 1994 and 59% in 1993.
Total bookings of new orders increased by 12% to $155,092,000 in fiscal
1995 due to significant growth in the Asia/Latin America market, including
Japan, and increases in the Company's European operation. In 1994, total
bookings increased by 11% due principally to strong North America bookings and
the inclusion of the Wolpert operation.
The Company's backlog was $36,136,000 at December 31, 1995, an increase of
11% from the 1994 year-end backlog. Strong fourth quarter bookings in the
Company's European and Asian markets contributed to the higher backlog. Order
backlog at December 31, 1994, increased by 12% over the 1993 year-end backlog
due to strong Domestic and European bookings during the latter part of 1994.
The 1995 gross profit margin decreased to 41.5% from 43.4% in 1994 and
43.6% in 1993. The decrease in gross margin was due to higher than expected
costs at the LMS software division, a mix of lower margin products and
competitive pricing pressures partially offset by improved service
profitability. As anticipated, the Company shipped several large structural and
material testing systems with lower gross margins than traditional systems
business, which had the effect of reducing gross margin during 1995. In
contrast, service margins improved to 29% in 1995 compared to 25% in 1994 and
19% in 1993. The Company's service business has realized efficiencies by fully
integrating the Wilson and Wolpert service organizations and has leveraged the
increase in service revenues into higher profit margins.
Selling and administrative expense growth was held to 4% in fiscal year
1995 and 1994. Selling and administrative expenses continued to decline as a
percentage of revenue to 29.7% in 1995 compared to 31.5% in 1994 and 33.6% in
1993. In 1995, the increase in selling and administrative expenses was primarily
related to the inclusion of Shore's operations and costs associated
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with the implementation of new information systems. In 1994, the increase in
selling and administrative expenses resulted from the inclusion of a full year
of expenses of Wolpert and higher incentive compensation expenses.
Research and development expenses increased by 9% in 1995, compared to an
11% increase in 1994. During the three years ended December 31, 1995, the
Company has capitalized certain software development costs (see Note 1 of Notes
to Consolidated Financial Statements). Had these costs been included as period
expenses, research and development expenses would have increased by 14% in 1995,
decreased by 3% in 1994 and increased by 4% in 1993. As a percentage of total
revenue, research and development expenditures (including capitalized software
costs) represented 6.7%, 6.5% and 7.4% in 1995, 1994 and 1993, respectively. The
Company, in recent years, has focused its research and development expenditures
on revitalizing the electromechanical and servohydraulic product lines,
developing new hardness testing machines, developing new software and
enhancements, and redesigning products to reduce manufacturing costs. These new
products and enhancements do not, in the Company's opinion, present a
significant risk that on-hand inventory, which supports existing models, will be
made obsolete because of the interchangability of parts and the lead time
available before the introduction of new products. In addition, the Company
allocated funds, in 1995, for development projects that show potential for new
applications and market opportunities utilizing the Company's core technological
competencies. Two projects were identified as having product potential for 1996;
applications in asphalt testing and a motion base system to be used in the new
market of motion-based simulation games for the entertainment and training
industries.
Operating income increased from $8,082,000 in 1994 to $8,921,000 in 1995,
representing 5.9% of total revenue in both years. Operating income was
$5,034,000 or 4.1% of total revenue in 1993.
Net interest expense increased by 34% in 1995 and by 35% in 1994. In both
years, the increase was due to higher interest rates and higher average
borrowings. The foreign exchange gains of $186,000 in 1995 were mainly
attributable to the stronger Japanese yen versus the U.S. dollar and British
pound and to the strengthening of certain European currencies against the
British pound. In 1993, the foreign exchange losses of $367,000 were due to the
weakening of certain European currencies versus the British pound. The effect of
changes in foreign currency translation rates did not have a significant impact
on the components of net income for each of the three years in the period ended
December 31, 1995.
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Income before taxes was 5.1% of total revenue in 1995 and 1994, and 3.2% in
1993. The consolidated effective tax rate was 35.0% in 1995 compared to 35.0% in
1994 and 36.0% in 1993. A detailed reconciliation of the Company's effective tax
rate and the United States statutory tax rate appears in Note 8 of Notes to the
Consolidated Financial Statements.
FINANCIAL CONDITION
The Company's primary source of funds in 1995 and 1994 was net cash
generated by operations. The net cash generated by operations in 1995 consisted
primarily of net income, as adjusted for the noncash effect of depreciation and
amortization expense, and an increase in accounts payable and accrued expenses
partially reduced by an increase in accounts receivable and inventories. The
operating cash flows of $6.4 million and additional bank borrowings of $2.2
million were largely used to fund capital expenditures.
Accounts receivable of $47.5 million at year-end 1995 increased 15% from
$41.4 million at year-end 1994. This increase reflects the higher fourth quarter
revenues in 1995 of which a significant amount of revenue was recognized in the
last month of the quarter.
Inventories rose $2.5 million or 11% over 1994 to $24.3 million at the end
of 1995. The inventory turnover ratio increased to 2.90 from 2.77 at the end of
1994.
The Company's principal investment activities during 1995 included capital
expenditures of $4.5 million consisting mainly of machinery and equipment and
building improvements; the purchase of Shore Instruments for $2.7 million and
the development of software products of $1.3 million. The Company currently
plans to make capital expenditures of approximately $6.0 million in fiscal 1996.
In addition, the Company plans to continue to develop and enhance its software
products and pursue its strategy of acquisitions.
The Company's total debt outstanding at year-end 1995 was $19.9 million
compared to $17.8 million at the end of 1994. The ratio of total debt to debt
plus equity, at year-end 1995 increased to 26.2% from 25.5% in 1994.
The Company maintains a multicurrency revolving credit and term loan
facility that provides for borrowings of up to $25.0 million through April 1998.
At December 31, 1995 and 1994, respectively, the Company had outstanding
borrowings of $11.2 million and $11.0 million under this facility which were
classified as long-term. The Company has additional overdraft and borrowing
facilities for allowing advances of approximately $27.0 million of which $8.7
million and $6.8 million were outstanding and classified as short-term
borrowings at December 31, 1995 and 1994, respectively. The Company believes its
present capital resources and anticipated operating cash flows are
15
<PAGE> 16
sufficient to meet its current and future cash requirements to finance
operations, capital expenditures and acquisitions.
On March 8, 1995, the Board of Directors of Instron Corporation voted to
increase the regular quarterly dividend from three cents per share to four cents
per share. As a result, the total cash dividends declared were fifteen cents per
share compared to twelve cents per share in 1994.
As previously announced, the Company continues to explore the opportunities
for disposing of its real estate assets in Canton, Massachusetts.
In January of 1996, the Company signed a non-binding Letter of Intent with
Carl Schenck AG of Darmstadt, Germany, to enter into negotiations concerning the
formation of a joint venture in the area of structures testing and the
acquisition by Instron of Schenck's materials testing business. No assurances
can be made that an agreement will be reached.
The Company's future success is dependent upon a number of factors
including business conditions within the materials testing market, the ability
of the Company to maintain acceptable price levels and its ability to continue
to develop, manufacture, market and service the high quality products demanded
by its customers.
16
<PAGE> 17
INSTRON CORPORATION
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 1995
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
17
<PAGE> 18
<TABLE>
INSTRON CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<CAPTION>
Consolidated Financial Statements included in Item 8: PAGE
----
<S> <C>
Report of Independent Accountants..................................... 19
Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993..................................... 20
Consolidated Balance Sheets as of December 31, 1995 and 1994.......... 21
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993.................................................. 22
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993..................................... 23
Notes to Consolidated Financial Statements............................ 24-30
Supplementary Financial Information
(Quarterly Financial Information/1995 and 1994 - (Unaudited)......... 31
</TABLE>
18
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF INSTRON CORPORATION:
We have audited the accompanying consolidated balance sheets of Instron
Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended 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 Instron
Corporation as of December 31, 1995 and 1994, and the consolidated results of
its operations and cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 22, 1996
19
<PAGE> 20
<TABLE>
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
In thousands, except per share data
(Years Ended December 31) 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Sales $128,018 $115,737 $105,837
Service 22,553 20,455 16,990
-------- -------- --------
Total revenue 150,571 136,192 122,827
-------- -------- --------
Cost of revenue:
Sales 72,155 61,854 55,398
Service 15,971 15,253 13,820
-------- -------- --------
Total cost of revenue 88,126 77,107 69,218
-------- -------- --------
Gross profit 62,445 59,085 53,609
-------- -------- --------
Operating expenses:
Selling and administrative 44,742 42,941 41,327
Research and development 8,782 8,062 7,248
-------- -------- --------
Total operating expenses 53,524 51,003 48,575
-------- -------- --------
Income from operations 8,921 8,082 5,034
-------- -------- --------
Other (income) expense:
Interest expense 1,490 1,300 1,102
Interest income (67) (239) (318)
Foreign exchange (gains) losses (186) 42 367
-------- -------- --------
Total other expenses 1,237 1,103 1,151
-------- -------- --------
Income before income taxes 7,684 6,979 3,883
Provision for income taxes 2,689 2,442 1,398
-------- -------- --------
Net income $ 4,995 $ 4,537 $ 2,485
======== ======== ========
Net income per common share $ .78 $ .72 $ .39
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
20
<PAGE> 21
<TABLE>
CONSOLIDATED BALANCE SHEET
<CAPTION>
In thousands, except share data (December 31) 1995 1994
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,644 $ 1,877
Accounts receivable, net of allowance for doubtful
accounts of $1,040 in 1995 and $943 in 1994 47,504 41,401
Inventories 24,337 21,859
Deferred income taxes 3,544 2,949
Prepaid expenses and other current assets 2,835 1,625
-------- --------
Total current assets 79,864 69,711
Property, plant and equipment, net 21,809 22,266
Deferred income taxes 1,476 398
Other assets 10,185 9,919
-------- --------
Total assets $113,334 $102,294
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term borrowings $ 8,650 $ 6,800
Accounts payable 9,746 8,271
Accrued liabilities 12,704 12,553
Accrued employee compensation and benefits 6,135 6,051
Accrued income taxes 2,496 0
Advance payments received on contracts 1,874 2,187
-------- --------
Total current liabilities 41,605 35,862
Long-term debt 11,225 11,018
Other long-term liabilities 4,402 3,488
-------- --------
Total liabilities 57,232 50,368
-------- --------
Stockholders' equity:
Preferred stock, $1 par value; 1,000,000 shares authorized;
none issued
Common stock, $1 par value; 10,000,000 shares authorized;
6,415,321 and 6,363,059 shares issued, respectively 6,415 6,363
Additional paid in capital 2,538 2,113
Retained earnings 52,439 48,393
Cumulative translation adjustment (4,576) (4,229)
-------- --------
56,816 52,640
Less: Treasury stock of 74,952 shares, at cost 714 714
-------- --------
Total stockholders' equity 56,102 51,926
-------- --------
Total liabilities and stockholders' equity $113,334 $102,294
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE> 22
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
In thousands (Years Ended December 31) 1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income $ 4,995 $ 4,537 $ 2,485
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,784 5,815 4,416
Provision for losses on accounts receivable 163 156 92
Increase (decrease) in deferred income taxes (1,635) (161) 11
Changes in assets and liabilities, excluding
the effects from purchase of businesses:
(Increase) in accounts receivable (6,282) (896) (2,822)
(Increase) decrease in inventories (2,210) 121 70
(Increase) decrease in prepaid expenses and
other current assets (976) (8) 527
Increase (decrease) in accounts payable and
accrued expenses 3,920 411 (3,595)
Increase (decrease) in other long-term
liabilities 995 (76) (732)
Other 607 (756) (926)
------- ------- -------
Net cash provided (used) by operating
activities 6,361 9,143 (474)
------- ------- -------
Cash Flows From Investing Activities
Capital expenditures (4,510) (4,286) (4,323)
Purchase of businesses, net of cash acquired (2,660) 0 (3,662)
Capitalized software costs (1,315) (792) (1,882)
Proceeds from the sale of property, plant &
equipment 219 80 57
Other (59) (31) 91
------- ------- -------
Net cash used by investing activities (8,325) (5,029) (9,719)
------- ------- -------
Cash Flows From Financing Activities
Net borrowings under revolving credit and term
loan facility 208 (1,171) 7,747
Net short-term borrowings 2,007 (828) 3,792
Proceeds from notes payable 0 0 2,333
Principal payments on notes payable (18) (2,524) (2,157)
Cash dividends paid (884) (755) (754)
Other 477 0 6
------- ------- -------
Net cash provided (used) by financing
activities 1,790 (5,278) 10,967
------- ------- -------
Effect of exchange rate changes on cash (59) 143 30
------- ------- -------
Net increase (decrease) in cash and cash
equivalents (233) (1,021) 804
Cash and cash equivalents at beginning of year 1,877 2,898 2,094
------- ------- -------
Cash and cash equivalents at end of year $ 1,644 $ 1,877 $ 2,898
======= ======= =======
Supplemental Disclosures Of Cash Flow Information
Cash paid during the year for:
Interest $ 1,614 $ 1,404 $ 1,191
Income taxes 2,063 3,039 1,164
Supplemental Disclosures Of Noncash Investing
And Financing Activities:
Fair value of assets acquired $ 3,005 $ 0 $15,376
Cash paid 2,660 0 3,974
------- ------- -------
Liabilities incurred or assumed in
business acquisitions $ 345 $ 0 $11,402
======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE> 23
<TABLE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
Common Addi- Total
stock tional Cumulative stock-
$1 par paid in Retained translation Treasury holders'
In thousands, except share data value capital earnings adjustment stock equity
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $6,360 $2,093 $42,880 $(4,772) $(714) $45,847
Net income 2,485 2,485
Translation adjustments
arising during the year (704) (704)
Cash dividends declared
($.12 per share) (754) (754)
2,680 shares issued, net, under
employee stock option plans 3 20 23
- ----------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 6,363 2,113 44,611 (5,476) (714) 46,897
Net income 4,537 4,537
Translation adjustments
arising during the year 1,247 1,247
Cash dividends declared
($.12 per share) (755) (755)
- ----------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 6,363 2,113 48,393 (4,229) (714) 51,926
Net income 4,995 4,995
Translation adjustments
arising during the year (347) (347)
Cash dividends declared
($.15 per share) (949) (949)
52,262 shares issued, net, under
employee stock option plans 52 425 477
- ----------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $6,415 $2,538 $52,439 $(4,576) $(714) $56,102
====== ====== ======= ======= ===== =======
</TABLE>
See accompanying notes to consolidated financial statements.
23
<PAGE> 24
1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of all domestic and foreign subsidiaries. Significant intercompany
transactions and balances are eliminated. Certain reclassifications were made to
prior years' amounts to conform with the 1995 presentation.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that effect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reported periods. Actual results could differ
from those estimates.
FOREIGN CURRENCY TRANSLATION Assets and liabilities of the Company's principal
foreign operations are translated at exchange rates prevailing at the end of the
period. Income statement items are translated using average quarterly exchange
rates. Translation adjustments are recorded directly in stockholders' equity and
are included in income only if the underlying foreign investment is sold or
liquidated.
CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments
purchased with a maturity of three months or less to be cash equivalents.
CONCENTRATION OF CREDIT RISK Financial instruments which potentially subject
the Company to a concentration of credit risk principally consist of cash, cash
equivalents and trade receivables. The Company places its temporary cash
investments with major banks throughout the world, in high quality, liquid
instruments. The Company sells to a broad range of customers throughout the
world and performs ongoing credit evaluations to minimize the risk of loss. The
Company makes use of various devices such as letters of credit to protect its
interests, principally on sales to foreign customers.
INVENTORIES Inventories are valued at the lower of cost or market (net
realizable value). The last-in, first-out (LIFO) method of determining cost is
used for inventories in the United States and the Asian branches. The Company
uses the first-in, first-out (FIFO) method for all other locations.
PROPERTY, PLANT AND EQUIPMENT Depreciation is computed principally using the
straight-line method over the estimated useful lives of 10 to 25 years for land
improvements, 10 to 40 years for buildings and improvements and 3 to 15 years
for machinery and equipment. Maintenance and repairs are expensed as incurred.
Depreciation expense was $4,719,000, $4,108,000 and $3,698,000 for the years
ended December 31, 1995, 1994 and 1993, respectively.
SOFTWARE DEVELOPMENT COSTS Certain software development costs and purchased
software are capitalized and then amortized over future periods. Amortization of
capitalized software costs, for both internally developed and purchased software
products, is computed on a product-by-product basis over the estimated economic
life of the product, generally three years. Unamortized software costs included
in other assets were $2,679,000, $2,580,000 and $2,880,000 at December 31, 1995,
1994 and 1993, respectively. Software development costs of $1,315,000, $792,000,
and $1,882,000 were capitalized during 1995, 1994 and 1993, respectively. The
amounts amortized and charged to expense in 1995, 1994 and 1993 were $1,216,000,
$1,092,000, and $481,000, respectively.
24
<PAGE> 25
REVENUE RECOGNITION Revenue from product sales are recognized at time of
shipment. Revenue from services are recognized as services are performed and
ratably over the contract period for service maintenance contracts.
INCOME TAXES Deferred income taxes are provided using the liability method,
which estimates future tax effects of differences between financial statement
carrying amounts and the tax basis of existing assets and liabilities.
Provisions are made for the U.S. income tax liability on earnings of foreign
subsidiaries except for locations where the Company has designated earnings to
be permanently invested. Such earnings amounted to approximately $22,006,000 at
year-end 1995.
NET INCOME PER SHARE Net income per share is based on the weighted average
number of common shares and common share equivalents outstanding. The number of
outstanding shares and equivalents utilized in the per share computations were
6,431,882, 6,339,547 and 6,345,431 in 1995, 1994 and 1993, respectively.
2. INDUSTRY SEGMENT AND FOREIGN OPERATIONS
The Company operates in one industry segment, that being the design, production,
marketing and servicing of precision systems, software and accessories, for
evaluating the mechanical properties and performance of various materials,
components and structures.
<TABLE>
The following table summarizes the Company's operations by significant
geographic location for the years ended December 31:
<CAPTION>
In thousands 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE, INCLUDING INTERAREA SALES
United States $ 70,181 $ 66,822 $ 62,686
European operations 61,899 54,079 50,391
Asia/Latin America 38,034 33,039 27,730
Other international 3,345 3,072 1,959
Eliminations (22,888) (20,820) (19,939)
-------- -------- --------
Total revenue $150,571 $136,192 $122,827
======== ======== ========
OPERATING PROFIT
United States $ 7,052 $ 7,568 $ 5,124
European operations 3,612 2,673 3,907
Asia/Latin America 2,800 1,261 (129)
Other international 394 586 62
Eliminations 162 22 (282)
-------- -------- --------
Total operating profit 14,020 12,110 8,682
Corporate expenses (5,099) (4,028) (3,648)
Other expenses (1,237) (1,103) (1,151)
-------- -------- --------
Income before income taxes $ 7,684 $ 6,979 $ 3,883
======== ======== ========
IDENTIFIABLE ASSETS AT YEAR-END
United States $ 40,496 $ 36,734 $ 40,551
European operations 44,759 43,121 40,761
Asia/Latin America 18,057 12,980 12,152
Other international 2,188 2,222 1,401
Corporate 8,692 8,627 5,438
Eliminations (858) (1,390) (1,150)
-------- -------- --------
Total assets $113,334 $102,294 $ 99,153
======== ======== ========
</TABLE>
25
<PAGE> 26
2. INDUSTRY SEGMENT AND FOREIGN OPERATIONS (continued)
Sales between geographic areas in 1995, 1994 and 1993, respectively, consisted
primarily of $10,534,000, $10,755,000 and $10,386,000 from the United States and
$11,998,000, $8,921,000 and $8,472,000 from European operations. Transfers
between geographic areas are at manufacturing cost plus a markup factor.
3. INVENTORIES
<TABLE>
Inventories at December 31 were as follows:
<CAPTION>
In thousands 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $11,269 $ 9,913
Work in process 5,257 4,279
Finished goods 7,811 7,667
------- -------
Total inventory $24,337 $21,859
======= =======
</TABLE>
Inventories valued at LIFO amounted to $9,721,000 and $8,913,000 at December 31,
1995 and 1994, respectively. The excess of current cost over stated LIFO value
was $4,535,000 at December 31, 1995 and $4,339,000 at December 31, 1994. During
1994, certain inventories were reduced, resulting in the liquidation of LIFO
inventory layers carried at lower costs prevailing in prior years as compared
with the current cost of inventory. The effect of this inventory liquidation was
to reduce cost of revenue by $184,000 in 1994.
4. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
Property, plant and equipment balances at December 31 were as follows:
<CAPTION>
In thousands 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
At cost:
Land and land improvements $ 2,064 $ 2,060
Buildings and building improvements 17,029 16,257
Machinery and equipment 37,233 37,912
------- -------
56,326 56,229
Less: Accumulated depreciation and
amortization 34,517 33,963
------- -------
Net property, plant and equipment $21,809 $22,266
======= =======
</TABLE>
5. BORROWING ARRANGEMENTS
The Company maintains a multicurrency revolving credit and term loan facility
that provides for borrowings of up to $25,000,000 through April 1998. Borrowings
outstanding as of April 1998 convert to a term loan payable in sixteen equal
quarterly installments. Interest on borrowings under the agreement is based upon
either base rates, LIBOR, or other short-term borrowing rates.
Commitment fees under this agreement are 3/8 of 1% per annum on the unused
portion. The Company has met the various covenants in the agreement, the most
restrictive of which requires a minimum level of tangible net worth. At December
31, 1995 and 1994, respectively, outstanding domestic borrowings of $9,900,000
and $9,500,000 with a weighted average interest rate of 6.13% and 6.56%, and
outstanding European borrowings of $1,325,000 and $1,518,000 with a weighted
average interest rate of 6.44% and 7.69%, were classified as long-term debt.
Long-term debt maturing under the credit agreement in each of
26
<PAGE> 27
5. BORROWING ARRANGEMENTS (continued)
the five years subsequent to December 31, 1995, assuming outstanding borrowings
at December 31, 1995 are unchanged at April 1998, is $2,104,688 in 1998 and
$2,806,250 in 1999 and 2000.
The Company's subsidiaries have other overdraft and borrowing facilities
allowing advances up to approximately $27,000,000. At December 31, 1995, the
outstanding portion of these facilities was $8,650,000, due currently. Bank
guarantees outstanding at December 31, 1995, for which the Company is
contingently liable, amounted to $5,159,000 and relate principally to
performance contracts.
6. OPERATING LEASE COMMITMENTS
<TABLE>
Rental expense amounted to $3,745,000, $3,382,000 and $3,132,000 for the years
ended December 31, 1995, 1994 and 1993, respectively. As of December 31, 1995,
minimum annual commitments under noncancellable operating leases with terms of
more than one year are:
<CAPTION>
Later
In thousands 1996 1997 1998 1999 2000 Years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$2,100 $1,025 $888 $550 $410 $1,106
</TABLE>
7. EMPLOYEE PENSION AND RETIREMENT PLANS
The Company maintains qualified noncontributory defined benefit pension plans
covering United States employees and employees of Instron's United Kingdom
subsidiary. The benefits are based on years of service and final average
compensation at the date of retirement. The Company's general policy is to fund
the pension plans to the extent such contributions are deductible under
standards established by the Internal Revenue Service in the U.S. and the Inland
Revenue in the U.K. Plan assets in the U.S. consist of mutual funds which invest
primarily in common stocks, corporate bonds, U.S. government notes and temporary
cash investments. In the U.K., plan assets are invested in funds whose assets
consist primarily of common stocks, bonds and other securities. Employees of the
Japan subsidiary receive lump sum payments as a multiple of annual salary at
retirement or termination, based on years of service. These Japanese benefits
are unfunded.
<TABLE>
Net periodic pension costs include the following components:
<CAPTION>
1995 1994 1993
-------------------------- -------------------------- --------------------------
In thousands U.S. U.K. Japan U.S. U.K. Japan U.S. U.K. Japan
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service cost $ 900 $ 1,167 $267 $ 793 $ 1,136 $220 $ 800 $ 1,054 $204
Interest cost 1,496 1,678 210 1,362 1,353 176 1,325 1,179 176
Actual return on plan assets (5,284) (3,754) 0 335 2,146 0 (1,733) (5,257) 0
Net amortization and deferral 3,802 1,769 25 (1,679) (4,123) 24 488 3,805 22
------- ------- ---- ------- ------- ---- ------- ------- ----
Net periodic pension cost $ 914 $ 860 $502 $ 811 $ 512 $420 $ 880 $ 781 $402
======= ======= ==== ======= ======= ==== ======= ======= ====
</TABLE>
27
<PAGE> 28
7. EMPLOYEE PENSION AND RETIREMENT PLANS (continued)
<TABLE>
The funded status of the Company's U.S., U.K. and Japan plans and amounts
recognized in the Consolidated Balance Sheet at December 31 were:
<CAPTION>
1995 1994 1993
------------------------- ------------------------- ------------------------
In thousands U.S. U.K. Japan U.S. U.K. Japan U.S. U.K. Japan
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefits $15,021 $18,448 $1,873 $13,760 $15,052 $1,761 $12,594 $12,981 $1,231
Non-vested benefits 185 0 0 182 0 0 129 0 0
------- ------- ------ ------- ------- ------ ------- ------- ------
Accumulated benefit obligation $15,206 $18,448 $1,873 $13,942 $15,052 $1,761 $12,723 $12,981 $1,231
======= ======= ====== ======= ======= ====== ======= ======= ======
Projected benefit obligation $21,134 $22,966 $3,327 $19,223 $18,739 $3,086 $18,014 $16,085 $2,422
Plan assets at fair value 21,556 24,466 0 16,547 20,935 0 16,225 20,421 0
------- ------- ------ ------- ------- ------ ------- ------- ------
Projected benefit obligation
in excess of (less than)
plan assets (422) (1,500) 3,327 2,676 (2,196) 3,086 1,789 (4,336) 2,422
Unrecognized net gain(loss) 3,265 3,794 92 (380) 4,296 48 1,101 6,399 25
Unrecognized prior service cost (593) (1,256) 0 (638) (1,380) 0 (811) (1,413) 0
Unrecognized net asset (liability)
at transition 75 649 (335) 83 726 (371) 92 755 (352)
------- ------- ------ ------- ------- ------ ------- ------- ------
Pension liability included
in Consolidated Balance Sheet $ 2,325 $ 1,687 $3,084 $ 1,741 $ 1,446 $2,763 $ 2,171 $ 1,405 $2,095
======= ======= ====== ======= ======= ====== ======= ======= ======
</TABLE>
<TABLE>
Assumptions used in the accounting for the Company's U.S., U.K., and Japan plans
at December 31 were:
<CAPTION>
1995 1994 1993
----------------------- ---------------------- -----------------------
U.S. U.K. Japan U.S. U.K. Japan U.S. U.K. Japan
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Weighted average discount rate 7.5% 8.0% 6.0% 7.5% 8.5% 6.0% 7.5% 7.5% 6.0%
Rates of increase in
compensation levels 5.0 5.5 5.0 5.0 6.0 5.0 5.0 5.5 5.0
Expected long-term rate of
return on assets 9.0 8.5 0 9.0 9.0 0 9.0 8.0 0
</TABLE>
The expense of all pension plans for 1995, 1994 and 1993 was $2,276,000,
$1,743,000, and $2,063,000, respectively. The Company also sponsors a Savings
and Security Plan for all U.S. employees. The plan (in accordance with section
401(k) of the Internal Revenue Code) offers participating employees a program of
regular savings and investment, funded by their own contributions and those of
the Company. The amount charged to operating expense for this plan was $535,000,
$498,000 and $447,000 in 1995, 1994 and 1993, respectively.
8. INCOME TAXES
<TABLE>
The significant components of the Company's deferred tax assets and liabilities
at December 31, are as follows:
<CAPTION>
In thousands 1995 1994
- ---------------------------- -------- --------
<S> <C> <C>
Employee benefits $ 4,188 $ 2,835
Inventories 2,109 1,016
Accrued expenses 1,436 2,514
------- -------
Total deferred assets 7,733 6,365
------- -------
Accrued expenses (65) (360)
Depreciation (1,425) (1,519)
Capitalized software costs (811) (558)
------- -------
Total deferred liabilities (2,301) (2,437)
------- -------
Valuation reserve (490) (600)
------- -------
Total net deferred assets $ 4,942 $ 3,328
======= =======
</TABLE>
A valuation reserve has been established where, based upon available evidence,
it is more likely than not that some or all of the deferred tax assets will not
be realized. The net change in the valuation allowance in 1995 was a decrease of
$110,000 relative to foreign tax benefits now realized. The valuation allowance
as of December 31, 1995 related primarily to foreign tax benefits.
28
<PAGE> 29
8. INCOME TAXES (continued)
<TABLE>
The components of income before income taxes consisted of the following:
<CAPTION>
In thousands 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $3,602 $4,667 $3,711
Foreign 4,082 2,312 172
------ ------ ------
Total $7,684 $6,979 $3,883
====== ====== ======
</TABLE>
<TABLE>
Income tax provisions (credits) were as follows:
<CAPTION>
In thousands 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal $ 2,525 $1,538 $ 955
Foreign 1,671 625 310
State 238 281 224
------- ------ ------
4,434 2,444 1,489
------- ------ ------
Deferred, net:
Federal & State (1,261) 192 (47)
Foreign (484) (194) (44)
------- ------ ------
(1,745) (2) (91)
------- ------ ------
Total provision for income taxes $ 2,689 $2,442 $1,398
======= ====== ======
</TABLE>
<TABLE>
The provisions for income taxes varied from the United States statutory rate of
34% for 1995, 1994 and 1993 principally because of the tax effect of the
following:
<CAPTION>
In thousands 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax provision at United States
statutory rate $2,612 $2,372 $1,320
Effect of earnings of foreign
operations subject to
different tax rates (200) (138) 34
State taxes, net of federal
income tax benefit 157 185 66
Benefit of Foreign Sales Corporation (115) (91) (182)
Amortization of software costs and goodwill 114 114 114
All other, net 121 0 46
------ ------ ------
Total tax provision $2,689 $2,442 $1,398
====== ====== ======
</TABLE>
At December 31, 1995 there were no foreign tax credit carryforwards for
financial reporting purposes or for tax reporting purposes.
29
<PAGE> 30
9. STOCK OPTION PLANS
<TABLE>
The Company has four Stock Option Plans - 1979 Non-Qualified Plan, 1992 Stock
Incentive Plan, the discontinued 1984 UK Share Option Scheme and the
discontinued 1982 Incentive Stock Option Plan. Option prices are generally equal
to the market price at the date of grant. During the three years ended December
31, 1995, the following activity occurred in these Plans:
<CAPTION>
Number Option
of Shares Price
- --------------------------------------------------------------------------------
<S> <C> <C>
Outstanding at
December 31, 1992 529,916 $ 6.23-13.75
Granted, 1993 239,750 10.50-11.38
Exercised, 1993 (5,800) 6.23- 7.88
Terminated, 1993 (5,000) 13.75
-------
Outstanding at
December 31, 1993 758,866 7.88-13.75
Granted, 1994 36,500 11.38-11.63
Terminated, 1994 (36,642) 8.25-13.13
-------
Outstanding at
December 31, 1994 758,724 7.88-13.75
Granted, 1995 206,000 11.63-12.13
Exercised, 1995 (55,962) 8.00-12.00
Terminated, 1995 (27,312) 10.75-13.75
-------
Outstanding at
December 31, 1995 881,450 $ 7.88-13.13
-------
</TABLE>
At December 31, 1995, 510,781 shares were exercisable at $7.88 to $13.13 per
share and 105,490 shares were available for future options.
In 1995, the Financial Accounting Standards Board issued the Statement of
Financial Accounting Standards ("SFAS") 123, Accounting for Stock Based
Compensation. SFAS 123 provides the alternative of either accounting for stock
based compensation at fair market value determined by an option pricing or other
appropriate model ("market value method") or retaining the existing method of
accounting, but disclosing the pro-forma effect of the market value method in a
footnote ("disclosure alternative"). The company plans to adopt the disclosure
alternative which is effective for fiscal 1996.
30
<PAGE> 31
<TABLE>
SUPPLEMENTARY FINANCIAL INFORMATION
QUARTERLY FINANCIAL DATA
(quarterly data unaudited)
<CAPTION>
Quarter Quarter Quarter Quarter
In thousands, except per share data 1 2 3 4 Year
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995:
Total revenue $34,165 $38,058 $33,929 $44,419 $150,571
Gross profit 14,408 15,765 14,598 17,674 62,445
Income before income taxes 991 2,076 1,272 3,345 7,684
Net income 614 1,288 788 2,305 4,995
Earnings per share 0.10 0.20 0.12 0.36 0.78
- ---------------------------------------------------------------------------------------------
1994:
Total revenue $31,593 $32,568 $31,920 $40,111 $136,192
Gross profit 14,096 14,472 13,092 17,425 59,085
Income before income taxes 1,442 1,269 845 3,423 6,979
Net income 908 854 549 2,226 4,537
Earnings per share 0.14 0.14 0.09 0.35 0.72
- ---------------------------------------------------------------------------------------------
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------ ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------- -------------------------------------------------
The response to this item is contained in part under the caption,
"Executive Officers of the Registrant", in Part I hereof, and the remainder is
contained under the captions, "Information Regarding the Board of Directors'
Nominees and Directors" and "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" in the Registrant's definitive proxy statement relating to
its 1996 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
- ------- ----------------------
The information contained under the caption "Election of a Class of
Directors" in the Registrant's definitive proxy statement relating to its 1996
Annual Meeting of Stockholders is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------- --------------------------------------------------------------
The information contained under the caption "Information Regarding the
Board of Directors' Nominees and Directors" in the Registrant's definitive proxy
statement relating to its 1996 Annual Meeting of Stockholders is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
The information contained under the caption "Information Regarding the
Board of Directors' Nominees and Directors" in the Registrant's definitive proxy
statement relating to its 1996 Annual Meeting of Stockholders is incorporated
herein by reference.
31
<PAGE> 32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
- ------- --------------------------------------------------------------
(a)1. Financial Statements
The following consolidated financial statements are included in Item 8:
Consolidated statements of income for the
years ended December 31, 1995, 1994 and 1993
Consolidated balance sheet at
December 31, 1995 and 1994
Consolidated statements of cash flows for the
years ended December 31, 1995, 1994 and 1993
Consolidated statements of stockholders' equity
for the years ended December 31, 1995, 1994 and 1993
Notes to consolidated financial statements
<TABLE>
(a)2. Financial Statement Schedule
----------------------------
<CAPTION>
Schedule
Page Number
---- --------
<S> <C> <C>
Report of Independent Accountants on
financial statement schedule 35
Consolidated valuation accounts 36 II
</TABLE>
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements, including the accompanying notes.
<TABLE>
(a)3. Exhibits
--------
<CAPTION>
Exhibit No. Description of Exhibits
- ---------- -----------------------
<S> <C>
3(a) Restated Articles of Organization of the Registrant and all amendments
incorporated by reference to Exhibit 3(a) of the Registrant's Form 10-K
for the year ended December 31, 1981, Exhibit 4 of the Registrant's Form
10-Q for the quarter ended March 31, 1984, Exhibit 4 of the Registrant's
Form 10-Q for the quarter ended June 28, 1986, and Exhibit 4 of the
Registrant's Form 10-Q for the quarter ended June 27, 1987.
3(b) By-Laws of the Registrant, as amended, incorporated by reference to the
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on October 5, 1990.
10(a) 1979 Non-Qualified Stock Option and Stock Appreciation Rights Plan, as
amended, incorporated by reference to Exhibit 10(a) of Form 10-K for the
year ended December 31, 1991.
10(b) 1982 Incentive Stock Option Plan, as amended, incorporated by reference to
Exhibit 10(b) of Form 10-K for the year ended December 31, 1987 and to
Exhibit 19(b) of Form 10-Q for the quarter ended September 29, 1990.
10(c) 1984 United Kingdom Share Option Scheme, as amended, incorporated by
reference to Exhibit 10(c) of Form 10-K for the year ended December 31,
1991.
10(d) 1992 Stock Incentive Plan, incorporated by reference to Exhibit 10(b) of
Form 10-K for the year ended December 31, 1991.
10(e) Executive Severance Agreement, dated as of December 8, 1993, between the
Company and James M. McConnell, incorporated by reference to Exhibit 10(e)
on Form 10-K for the year ended December 31, 1993.
</TABLE>
32
<PAGE> 33
<TABLE>
<S> <C>
10(f) Form of Executive Severance Agreement, dated as of December 8, 1993,
between the Company and each of Joseph E. Amaral, three other executive
officers and two key employees, incorporated by reference to Exhibit 10(f)
on Form 10-K for the year ended December 31, 1993.
10(g) Form of Executive Severance Agreement, dated as of December 8, 1993,
between the Company and Kenneth L. Andersen, incorporated by reference to
Exhibit 10(g) on Form 10-K for the year ended December 31, 1993.
10(h) Form of Executive Severance Agreement, dated as of December 8, 1993,
between Instron Limited, the Company and each of Ian M. MacGregor and five
key employees, incorporated by reference to Exhibit 10(h) on Form 10-K for
the year ended December 31, 1993.
10(i) Executive Severance Agreement, dated as of December 8, 1993, the Company
and an executive officer, incorporated by reference to Exhibit 10(i) on
Form 10-K for the year ended December 31, 1993.
10(j) Executive Severance Agreement, dated as of August 8, 1995, between the
Company and a key employee, incorporated by reference to Exhibit 10 on
Form 10-Q for the quarter ended September 30, 1995.
11 Computation of primary and fully diluted earnings per share.
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
27 Financial Data Schedule
</TABLE>
(b) Report on Form 8-K
None.
33
<PAGE> 34
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.
INSTRON CORPORATION
(Registrant)
By /s/ James M. McConnell By /s/ Linton A. Moulding
----------------------------------- -------------------------------
James M. McConnell Linton A. Moulding
President and Chief Executive Officer Chief Financial Officer
(Principal Executive Officer) (Principal Financial and
Accounting Officer)
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<S> <C> <C>
/s/ Harold Hindman Chairman of the Board March 25, 1996
- ------------------------
Harold Hindman
/s/ George S. Burr Vice Chairman of the Board March 25, 1996
- ------------------------
George S. Burr
President, Chief Executive Officer
/s/ James M. McConnell and Director March 25, 1996
- ------------------------
James M. McConnell
Director
- ------------------------
Nicholas J. Grant
Director
- ------------------------
John W. Lacey
/s/ Dennis J. Moore Director March 25, 1996
- ------------------------
Dennis J. Moore
/s/ Sheldon Rutstein Director March 25, 1996
- ------------------------
Sheldon Rutstein
/s/ John F. Smith Director March 25, 1996
- ------------------------
John F. Smith
/s/ Richard W. Young Director March 25, 1996
- ------------------------
Richard W. Young
</TABLE>
34
<PAGE> 35
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
OF INSTRON CORPORATION
Our report on the consolidated financial statements of Instron Corporation as of
and for each of the three years in the period ended December 31, 1995 has been
included in this Annual Report on Form 10-K. In connection with our audit of
such financial statements, we have also audited the related financial statement
schedule listed in Item 14(a) of this Form 10-K.
In our opinion, this financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/ COOPERS & LYBRAND L.L.P
---------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 22, 1996
35
<PAGE> 36
SCHEDULE II
<TABLE>
INSTRON CORPORATION
CONSOLIDATED VALUATION ACCOUNTS
<CAPTION>
(A) Effect of
Balance at Additions Foreign
Beginning Charged to Currency (B) Balance at
Description of Year Operations Translation Deductions End of Year
- ---------------------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts:
Year ended
December 31, 1995 $943,000 $163,000 $ (4,000) $ 62,000 $1,040,000
-------- -------- -------- -------- ----------
Year ended
December 31, 1994 $777,000 $356,000 $ 62,000 $252,000 $ 943,000
-------- -------- -------- -------- ----------
Year ended
December 31, 1993 $837,000 $407,000 $(10,000) $457,000 $ 777,000
-------- -------- -------- -------- ----------
<FN>
(A) Included in "Additions Charged to Operations" for the years ended December
31, 1994 and 1993, respectively, are $200,000 and $315,000 for allowance
for doubtful accounts recorded in conjunction with the Company's
acquisitions of Wilson and Wolpert.
(B) Uncollected receivables written off, net of recoveries.
</TABLE>
36
<PAGE> 1
EXHIBIT 11
<TABLE>
INSTRON CORPORATION
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
<CAPTION>
Year Ended December 31 1995 1994 1993
- ------------------------------------------------ ---- ---- ----
<S> <C> <C> <C>
Net Income $4,995,000 $4,537,000 $2,485,000
========== ========== ==========
Primary earnings per share:
Weighted average number of common shares
outstanding 6,324,540 6,288,107 6,286,472
Add: Shares arising from the assumed
exercise of stock options (as
determined under the Treasury Stock
Method) 107,342 51,440 58,959
---------- ---------- ----------
Weighted average of common and equivalent
shares outstanding 6,431,882 6,339,547 6,345,431
========== ========== ==========
Primary earnings per share $ .78 $ .72 $ .39
========== ========== ==========
Fully diluted earnings per share (1):
Weighted average of common and equivalent
shares outstanding (as determined for the
Primary earnings per share calculation
above) 6,431,882 6,339,547 6,345,431
Add: Additional shares arising from the
assumed exercise of stock options (as
determined under the Treasury Stock
Method) 68,842 62,527 8,657
---------- ---------- ----------
Weighted average of common and equivalent
shares outstanding, as adjusted 6,500,724 6,402,074 6,354,088
========== ========== ==========
Fully diluted earnings per share $ .77 $ .71 $ .39
========== ========== ==========
<FN>
Note 1: This calculation is submitted in accordance with the Securities Act
of 1933 Release No. 5,133, although not required by footnote 2 to
paragraph 14 of APB Opinion No.15 because it results in dilution of less
than 3%.
</TABLE>
37
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
All of the subsidiaries listed below are included in the consolidated financial
statements.
<CAPTION>
Percentage of Organized
Voting Securities Under the
Incorporated Owned by Registrant Laws of
- ----------------------------------------------------------------------------
<S> <C> <C>
Instron Realty Trust 100% Massachusetts (1)
Instron Japan Company, Ltd. 100% Massachusetts (1)
Instron Asia, Ltd. 100% Massachusetts (1)
Instron Canada Inc. 100% Canada (1)
Instron Export Corporation 100% Massachusetts (1)
Instron Foreign Sales Corporation 100% Jamaica (1)
Instron Lawrence Corporation 100% Pennsylvania (1)
Equipamentos Cientificos Instron, Ltda. 100% Brazil (1)
Instron Limited 100% United Kingdom (2)
Instron S.A. 100% France (2)
Instron Proprietary, Ltd. 100% Australia (2)
Instron Environmental, Ltd. 100% United Kingdom (2)
Instron International, Ltd. 100% United Kingdom (2)
Severn Furnaces, Ltd. 100% United Kingdom (2)
Instron Singapore Pte Limited 100% Singapore (1)
Instron Holdings, Ltd. 100% United Kingdom (1)
Laboratory MicroSystems, Inc. 100% Massachusetts (1)
Instron Wolpert GmbH 100% Germany (2)
Instron Korea Co. Ltd. 100% Korea (1)
<FN>
(1) Subsidiaries of Instron Corporation (a Massachusetts corporation).
(2) Subsidiaries of Instron Holdings Limited (United Kingdom).
</TABLE>
38
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements on
Form S-3 (File No. 2-77062), and Forms S-8 (File Nos. 2-77060, 2-91694, 33-43955
and 33-48287) of our reports dated February 22, 1996, on our audit of the
consolidated financial statements and related financial statement schedule of
Instron Corporation as of December 31, 1995, and 1994, and for each of the three
years in the period ended December 31, 1995 which reports are included in this
Annual Report on Form 10-K.
/S/ COOPERS & LYBRAND L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 28, 1996
39
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMTION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME, CONSOLIDATED BALANCE SHEET AND CONSOLIDATED
STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,644
<SECURITIES> 0
<RECEIVABLES> 47,504
<ALLOWANCES> 1,040
<INVENTORY> 24,337
<CURRENT-ASSETS> 79,864
<PP&E> 56,326
<DEPRECIATION> 34,517
<TOTAL-ASSETS> 113,334
<CURRENT-LIABILITIES> 41,605
<BONDS> 0
<COMMON> 6,415
0
0
<OTHER-SE> 49,687
<TOTAL-LIABILITY-AND-EQUITY> 113,334
<SALES> 128,018
<TOTAL-REVENUES> 150,571
<CGS> 72,155
<TOTAL-COSTS> 88,126
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 163
<INTEREST-EXPENSE> 1,423
<INCOME-PRETAX> 7,684
<INCOME-TAX> 2,689
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,995
<EPS-PRIMARY> .78
<EPS-DILUTED> .77
</TABLE>
