_______________________________________________________________________________
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, 1993
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: 0-1252
JOSLYN CORPORATION
______________________________________________________________________________
(Exact name of Registrant as specified in its charter)
Illinois 36-3560095
________________________________________ ____________________________________
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
30 South Wacker Drive - Chicago, Illinois 60606
_________________________________________ _________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 454-2900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.25 par value
Common Stock Purchase Rights
______________________________
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X
Yes ______ No _______
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 1, 1994 (based upon the closing price on that day)
was $144,863,280.
As of March 1, 1994, 7,108,141 shares of the Registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders report for the year ended
December 31, 1993, ("Annual Report") are incorporated by
reference into Parts I and II.
Portions of the definitive proxy statement dated March 25, 1994
("Proxy Statement") are incorporated by reference into Part III.
Page 1 of 56 Exhibit Index on Page 20
<PAGE>
PART I
Item 1. BUSINESS
1(a) GENERAL DEVELOPMENT OF BUSINESS
Joslyn Corporation, an Illinois corporation (together with its
subsidiaries, the "Registrant") is a holding company formed in 1988 in
connection with a share exchange with its principal operating subsidiary,
Joslyn Manufacturing Co. Joslyn Manufacturing Co., founded by Marcellus L.
Joslyn, was incorporated in Illinois on December 6, 1902 as the Independent
Arm and Pin Co.
The Registrant is a holding company for a number of subsidiaries which
are engaged primarily in the manufacturing and supplying of electrical
hardware, apparatus, protective equipment, air pressurization and dehydration
products and services used in the construction and maintenance of transmission
and distribution facilities to electric power and telephone companies. The
Registrant's subsidiaries also manufacture and supply vacuum switchgear and
electrical controls to commercial and industrial markets as well as protective
equipment, connector backshells, and air and gas dehydration systems to
aerospace and defense companies.
The Registrant has eleven wholly owned operating subsidiaries:
* JOSLYN MANUFACTURING CO., a Delaware corporation, manufactures and supplies
electrical hardware, apparatus, and protective equipment used in the
construction and maintenance of electric power transmission and distribution
facilities and telephone and cable television communication lines.
* JOSLYN CLARK CONTROLS, INC., a Delaware corporation, manufactures electrical
controls, fire pump controllers, general purpose contactors and starters for
industrial and commercial markets.
* JOSLYN CANADA INC., organized under the laws of the Province of Ontario,
Canada, supplies electrical apparatus and protective equipment, high-voltage
vacuum and sulfur hexaflouride (SF-6) switching equipment for commercial,
heavy industrial and electrical utility markets within Canada.
* JOSLYN HI-VOLTAGE CORPORATION, a Delaware corporation, manufactures and
supplies high-voltage vacuum and air switching equipment for commercial, heavy
industrial and electrical utility markets.
* JOSLYN ELECTRONIC SYSTEMS CORPORATION, a Delaware corporation, manufactures
and supplies electric power equipment, electronic protection equipment, and
field test equipment designed and produced primarily for the
telecommunications, industrial, aerospace and defense industries.
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* JOSLYN POWER PRODUCTS CORPORATION, a Delaware corporation, manufactures and
supplies sulfur hexaflouride (SF-6) fuses and medium voltage switchgear for
commercial, industrial and electrical utility markets.
* JOSLYN JENNINGS CORPORATION, a Delaware corporation, manufacturers and
supplies vacuum capacitors for aerospace and defense markets and vacuum
interrupters for industrial, commercial and electrical utility markets.
* JOSLYN RESEARCH AND DEVELOPMENT CORPORATION, a Delaware corporation,
conducts research and product development jointly with other Joslyn
subsidiaries.
* ADK PRESSURE EQUIPMENT CORPORATION, a Delaware corporation, manufactures
and distributes air dehydrators and associated equipment to provide and
monitor pressurized dry air. Most products are used to prevent moisture
intrusion in telephone cables, antenna lines and wave guides and are sold to
telephone markets worldwide.
* The SUNBANK FAMILY OF COMPANIES,INC., a California holding corporation, and
its two subsidiaries, SUNBANK ELECTRONICS,INC., and AIR-DRY CORPORATION OF
AMERICA, Delaware corporations, supply custom designed electrical connector
accessories and flexible conduits, multi-conductor cable and air and gas
dehydration systems for aerospace and defense markets.
* JOSLYN FOREIGN SALES CORPORATION, organized under the laws of the Virgin
Islands of the United States, exports the Registrant's products throughout the
world.
1(b) FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
Note 12, Segment of Business Reporting, on page 22 of the Annual Report
is incorporated herein by reference.
1(c) NARRATIVE DESCRIPTION OF BUSINESS
The Registrant's business is composed of two business segments: Utility
Systems and Electrical Technologies. The products and services of
Registrant's subsidiaries have been grouped as business segments based upon
and in a manner consistent with the types of markets existing for the products
and services.
UTILITY SYSTEMS SEGMENT
(a) PRINCIPAL PRODUCTS AND SERVICES
The Registrant designs and manufactures construction, maintenance
materials and electric power protection equipment principally for electric
power distribution and overhead telephone and cable television
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communication lines. These products are manufactured from metal, rubber and
porcelain and include pole line hardware, earth anchors, power surge
arresters, power distribution cut-outs, cable termination devices and other
products. Sales of these materials and products by Registrant's subsidiaries
are made directly to ultimate users, distributors for resale to ultimate
users, contractors, and to original equipment manufacturers by a direct sales
force of approximately twenty people. Distribution is made directly from
manufacturing plants or through a network of distribution centers operated by
Registrant's subsidiaries.
(b) RAW MATERIALS
Materials used in the manufacture of the products of this segment are
basic commodities, primarily various types of steel, rubber, porcelain, zinc,
zinc oxide powder and components which are readily available and are purchased
by Registrant's subsidiaries from numerous sources, none of which is material
to the business of this segment as a whole.
(c) PATENTS, LICENSES AND TRADEMARKS
The Registrant does not consider that the business of the Utility Systems
segment is dependent to a material extent upon patent and trademark
protection, although certain features of the products of this segment are
protected by patents and trademarks. Licensing of these products to others
plays no material role in the Registrant's earnings.
(d) SEASONAL ASPECTS OF BUSINESS
Although the level of business of the Utility Systems segment varies
modestly throughout the year, the business of this segment is not seasonal.
(e) CUSTOMERS
The business of this segment is not dependent upon any single customer or
a few customers, the loss of which would have a material adverse effect on
this segment as a whole.
(f) BACKLOG ORDERS
The Registrant does not believe information related to backlog orders to
be material to the understanding of the business of this segment.
(g) RENEGOTIATION OF PROFITS
The business of the Utility Systems segment is not subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
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<PAGE>
(h) COMPETITION
There are several competitors in every product line of this segment
resulting in strong competition. Because of the range of products
manufactured by Registrant's subsidiaries, it is difficult to determine
accurately its overall competitive position in these lines. The Registrant
believes, however, that it is one of the principal suppliers of transmission,
distribution and communication hardware, electric power surge arresters,
electric power distribution cutouts and terminating devices in the United
States and Canada.
Some of the products manufactured by this segment, however, are commodity
products with respect to which the Registrant experiences competition with
directly competing products. The Registrant competes on the basis of its
service, product quality, marketing technique and price and believes that its
ability in these areas permits it to compete effectively.
ELECTRICAL TECHNOLOGIES SEGMENT
(a) PRINCIPAL PRODUCTS AND SERVICES
Electric power and electronic protection equipment and switchgear are
designed and produced primarily for use by the telecommunications, industrial,
aerospace, defense, electric utility and petrochemical industries. These
products include communication transient voltage suppression devices,
communication test equipment, vacuum interrupters for power switching,
starters and contactors, air dryers, and sulfur hexaflouride switches. The
Registrant's defense products include electrical flexible conduits, vacuum
capacitors, air and gas dehydration systems, electromagnetic pulse protection
applications, and specialty products. Such products are primarily sold by
Registrant's subsidiaries own sales force or through sales representatives
directly to end users or to original equipment manufacturers, although some
sales are made to distributors for resale.
(b) RAW MATERIALS
Materials used in the manufacture of the products of the Electrical
Technologies segment are basic commodities and components which are readily
available and are purchased by Registrant's subsidiaries from numerous
sources, none of which is material to the business of this segment as a whole.
(c) PATENTS, LICENSES AND TRADEMARKS
The Registrant does not consider that the business of the Electrical
Technologies segment is dependent to a material extent upon patent and
trademark protection, although certain features of the
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products of the segment are protected by patents and trademarks. Licensing
of these products to others is not material to the Registrant's earnings.
The Registrant has obtained licenses to utilize various patents in some
of the lines of business of this segment. However, no product manufactured by
the Electrical Technologies segment under licenses from others makes a
material contribution to sales or earnings.
(d) SEASONAL ASPECTS OF BUSINESS
Although the level of the business of the Electrical Technologies segment
varies modestly throughout the year, the business of this segment is not
seasonal.
(e) CUSTOMER
The business of this segment is not dependent upon any single customer or
a few customers, the loss of which would have a material adverse effect on the
segment as a whole.
(f) BACKLOG ORDERS
The Registrant does not believe information related to backlog orders to
be material to the understanding of the business of this segment.
(g) RENEGOTIATION OF PROFITS
The business of the Electrical Technologies segment is not subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
(h) COMPETITION
There are several competitors in most product lines of this segment
resulting in competition. Because of the range of products manufactured by
the Registrant's subsidiaries, it is difficult to determine accurately its
overall competitive position in these lines. The Registrant believes,
however, that it is one of the principal U.S. suppliers of electrical power
switching systems using vacuum and SF-6 technologies.
Some of the electrical products manufactured by this segment are high
technology products with respect to which Registrant's subsidiaries experience
competition with products utilizing competing technology. The Registrant
competes on the basis of its advanced technology, services, product quality,
marketing technique and price and believes that its ability in these areas
permits it to compete effectively.
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EFFECT OF ENVIRONMENTAL PROTECTION
Compliance with federal, state and local provisions which have been
enacted or adopted regulating the discharge of materials into the environment,
or otherwise relating to the protection of the environment, has had no
material adverse impact upon capital expenditures, earnings and the
competitive position of the Registrant and its subsidiaries, except to the
extent as described in Item 3, "Legal Proceedings." The Registrant regularly
makes provision in its budgeted capital expenditures for environmental control
facilities; however, for the current fiscal year ending December 31, 1993, and
for future periods, the Registrant has not planned any capital expenditures
for environmental control facilities which are expected to be material to
current operations. See also Item 3, "Legal Proceedings."
NUMBER OF EMPLOYEES
As of March 1, 1994, the Registrant had approximately 2,025 employees.
1(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES
Note 12, Segment of Business Reporting, on page 22 of the Annual Report
is incorporated herein by reference.
Item 2. PROPERTIES
EXPIRATION
OF TERM
PLANT OR FACILITY AND LOCATION GENERAL CHARACTER IF LEASED
______________________________ _________________ __________
(a) CORPORATE HEADQUARTERS
Allen County, Indiana Undeveloped Property
Bonner County, Idaho Undeveloped Property
Chicago, Illinois Office 4/30/05
Goleta, California Undeveloped Property
Santa Maria, California Undeveloped Property
(b) UTILITY SYSTEMS
Birmingham, Alabama Distribution Center and
Undeveloped Property
Brooklyn Center, Minnesota Undeveloped Property
Chicago, Illinois Manufacturing Plant and
Distribution Center
Chicago, Illinois Manufacturing Plant
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<PAGE>
Franklin Park, Illinois Office, Manufacturing Plant
Franklin Park, Illinois Undeveloped Property
Richmond, Virginia Distribution Center and 9/1/96
Sales Office
Vernon, California Distribution Center 10/30/94
(c) ELECTRICAL TECHNOLOGIES
Alsip, Illinois Manufacturing Plant
Cleveland, Ohio (116th Street) Manufacturing Plant
Cleveland, Ohio (Harvard Avenue) Manufacturing Plant
Goleta, California Manufacturing Plant
Lachine, Quebec Manufacturing Plant
and Office 12/31/96
Lancaster, South Carolina Manufacturing Plant
Maui, Hawaii Investment Property
Moorpark, California Manufacturing Plant 1/31/98
Paso Robles, California Manufacturing Plant 1/31/98
San Dimas, California Service Center Month to Month
San Jose, California Manufacturing Plant
Spokane, Washington Manufacturing Plant 9/30/94
Somerset, New Jersey Distribution Center
and Sales Office Month to Month
Woodstock, Illinois Office, Manufacturing
Plant and Test
Facility
The Registrant believes that its properties are in good condition and are
adequate to meet its current and reasonably anticipated needs.
Item 3. LEGAL PROCEEDINGS
Registrant's subsidiary, Joslyn Manufacturing Co. (the "Company")
previously operated wood treating facilities that chemically preserved utility
poles, pilings and railroad ties. An environmental reserve for estimated
additional, future remedial actions and clean-up costs for known sites
currently under investigation pursuant to environmental laws and regulations
has been made. Note 6, Environmental Matters, on page 19 of the Annual
Report is incorporated herein by reference.
Joslyn Manufacturing Co. executed a Consent Order effective May 30, 1985,
with the Minnesota Pollution Control Agency pertaining to a former wood
treating facility owned by the Company located in Brooklyn Center, Minnesota.
The Consent Order requires the Company to undertake soil and groundwater
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investigation and clean-up of the site. The Company is currently performing
its obligations under the Consent Order and is continuing the clean-up of the
site. Registrant has completed a significant portion of the clean-up at the
site.
The Louisiana Department of Environmental Quality issued administrative
orders against potentially responsible parties, including Joslyn Manufacturing
Co., to perform a clean-up at a former wood treating facility located in
Bossier City, Louisiana. The Company is complying with the administrative
order and has unilaterally implemented a remedial action plan for remediating
the site. Additional offsite soil remediation may be required. The Company
has begun preliminary investigation of offsite areas. The site has recently
been proposed for listing on the National Priorities List by the U.S.
Environmental Protection Agency. The Company is opposing the proposed
listing. The Company is currently appealing adverse decisions against other
potentially responsible parties as well as its insurance carrier for
allocation, contribution and indemnification for remediation efforts which
have been or will be performed by the Company.
The Company is a defendant in a purported class action lawsuit entitled,
JOHNSON ET AL. V. LINCOLN CREOSOTE CO., INC., filed with the 26th Judicial
Court for Bossier Parish, Louisiana, No. 70481 on February 23, 1987, .
Plaintiffs are seeking damages allegedly sustained from the disposal of
materials on the former wood treating site previously owned and operated by
the Company prior to 1970 and located in Bossier City, Louisiana. The damages
sought are unspecified. The Court held a hearing for the purpose of
determining class certification but no decision has yet been made by the
judge. The Company has tendered the defense of the suit to its insurance
carrier.
On November 20, 1986, the Illinois Environmental Protection Agency issued
an Immediate Removal Order for the Company's former wood treating facility in
Franklin Park, Illinois. In compliance with that Order, Registrant has
completed a significant portion of the clean-up at the site.
In 1990, the Company entered into a Consent Order with the current
property owner and the Oregon Department of Environmental Quality pertaining
to a former wood treating facility located in Portland, Oregon. The Consent
Order requires an investigation of the site which is continuing. It is
anticipated that a feasibility study for remediating the site will be
completed in 1994.
The Company has been named as a third party defendant in a suit filed on
September 11, 1992 entitled UNITED STATES OF AMERICA, ET AL. VS. SCA SERVICES
OF INDIANA V. OMNISOURCE CORP., F89-29, U.S. District Court Northern District
Indiana (Ft. Wayne Division). The suit seeks contribution for the remediation
of the Ft. Wayne Reduction Superfund Site. The Company is one of over 65
potentially
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responsible parties. The Company is defending the suit.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Listed below are the names, titles, offices, positions and ages of all
executive officers of the Registrant. There are no family relationships
between them. The officers' terms in office expire on April 27, 1994, the
date of the meeting of the Board of Directors, which is held immediately
before the 1994 Annual Meeting of Shareholders.
DONALD B. HAMISTER Chairman of the Board - Age 73
Experience
1992 Retired as Chief Executive Officer
1991 Re-elected Chief Executive Officer
1987 Retired as Chief Executive Officer
RAYMOND E. MICHELETTI President, Chief Executive Officer and a
Director - Age 68
Experience
1992 Elected President, Chief Executive Officer and Director
1991 Elected President, Chief Operating Officer and Director
1988 Elected Senior Vice President; Elected President,
Joslyn Hi-Voltage Corporation
LAWRENCE G. WOLSKI Director, Executive Vice President, Chief
Financial Officer, and Utility Systems Group
Director - Age 49
Experience
1993 Elected Executive Vice President
1987 Elected Senior Vice President
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GEORGE W. DIEHL Vice President, Power Switching and Controls
Group Director and a Director - Age 54
Experience
1991 Appointed Vice President; Elected President and Chief
Operating Officer, Joslyn Hi-Voltage Corporation
1988 General Manager, Joslyn Hi-Voltage Corporation
DANIEL DUMONT Vice President - Age 46
Experience
1990 Appointed Vice President; Elected President and
Chief Operating Officer, Joslyn Canada Inc.
1987 General Manager, Joslyn Canada Inc.
WAYNE M. KOPROWSKI Vice President, General Counsel and Secretary -
Age 47
Experience
1990 Elected Vice President
1986 Elected General Counsel and Secretary, Joslyn Corporation
STEVEN L. THUNANDER Vice President - Age 43
Experience
1988 Appointed Vice President; Elected President and
Chief Operating Officer, Joslyn Manufacturing Co.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Information regarding the price of Registrant's common stock, dividend
payments and numbers of shareholders is included in Common Stock Prices and
Dividends on page 10 of the Annual Report which is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
Selected financial data, which is included in the Five-Year Comparative
Financial Data on page 10 of the Annual Report, is incorporated herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Management's Discussion and Analysis of Financial Condition and Results
of Operations on pages 4 through 9 of the Annual Report is incorporated
herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and its
subsidiaries, included in the Annual Report, are incorporated herein by
reference:
ANNUAL REPORT
PAGE NO.
_____________
Consolidated Statement of Income for the Years Ended
December 31, 1993, 1992 and 1991 11
Consolidated Balance Sheet -- December 31, 1993 and 1992 12
Consolidated Statement of Shareholders' Equity for the
Years Ended December 31, 1993, 1992 and 1991 13
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991 14
Notes to Consolidated Financial Statements 15-23
Report of Independent Public Accountants 23
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information regarding directors of the Registrant required by this
Item 10 is contained under the caption "Nominees For Election As
Director" on pages 2 and 3 of the Proxy Statement, and is
incorporated herein by reference.
(b) Information regarding executive officers of the Registrant required
by this Item 10 is included on pages 10 and 11 in Part I of this
Report pursuant to General Instruction G of Form 10-K.
Item 11. EXECUTIVE COMPENSATION
Information concerning executive compensation required by this Item 11
is contained under the following captions in the Proxy Statement, and is
incorporated herein by reference:
PROXY
Statement
Page No.
_________
Compensation of Directors 5
Summary Compensation Table 6
Stock Option/SAR Grants in 1993 7
Defined Benefit Pension Plan 7
Employment Agreements 8
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is contained in the Proxy
Statement under the captions "Principal Holders of Voting Securities" on page
4 and "Security Ownership of Management on March 3, 1994" on page 3 and is
incorporated herein by reference.
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PART IV
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)1. Financial Statements
Included in Part II of this report:
Consolidated Statement of Income for the years ended December 31,
1993, 1992 and 1991
Consolidated Balance Sheet as of December 31, 1993 and 1992
Consolidated Statement of Shareholders' Equity for the years ended
December 31, 1993, 1992 and 1991
Consolidated Statement of Cash Flows for the years ended December
31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
Included in Part IV of this Report: PAGE
Report of Independent Public Accountants on
Consolidated Financial Statement Schedules 16
Schedule II - Amounts Receivable From Related
Parties And Underwriters, Promoters and Employees 17
Schedule V - Property, Plant and Equipment 18
Schedule VI - Accumulated Depreciation of Property,
Plant and Equipment 19
Other schedules are omitted because of the absence of
conditions under which they are required or because the
required information is given in the financial statements
or notes thereto.
3. Exhibits
The exhibits filed in response to Item 601 of Regulation S-K and
Item 14(c) of Form 10-K are listed in the Exhibit Index on page 20.
Management contracts or compensatory plans or arrangements are
identified in the Exhibit Index by a "+".
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the
period ended December 31, 1993.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
March 30, 1994
JOSLYN CORPORATION
By:/s/ Raymond E. Micheletti
________________________________
Raymond E. Micheletti
President 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 and on the dates indicated.
Signature Title Date
/s/Donald B. Hamister Chairman of the Board March 30, 1994
________________________
Donald B. Hamister
/s/Raymond E. Micheletti President, Chief Executive
________________________ Officer, Director March 30, 1994
Raymond E. Micheletti
/s/Lawrence G. Wolski Executive Vice President, March 30, 1994
________________________ Chief Financial Officer, Chief
Lawrence G. Wolski Accounting Officer, Director
/s/William E. Bendix Director March 30, 1994
________________________
William E. Bendix
/s/John H. Deininger Director March 30, 1994
________________________
John H. Deininger
/s/Richard C. Osborne Director March 30, 1994
________________________
Richard C. Osborne
/s/Walter W. Schoenholz Director March 30, 1994
________________________
Walter W. Schoenholz
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
___________________________________________
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in Joslyn Corporation's annual
report incorporated by reference in this Form 10-K, and have issued our report
thereon dated February 9, 1994. Our audit was made for the purpose of forming
an opinion on those statements taken as a whole. The schedules listed in Item
14(a)(2) are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic consolidated
financial statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly state in all material respects the consolidated
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
February 9, 1994.
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SCHEDULE II
AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS AND EMPLOYEES
_________________________________________
Balance at
End of Period
_____________
Balance at
Name of Beginning Amounts Amounts Not
Debtor of Period Additions Collected Written Off Current Current
______________________________________________________________________________
Year Ended December 31, 1993
A.R. Gray(1)$175,000 $0 $5,000 $0 $0 $170,000
Year Ended December 31, 1992
A. R. Gray $185,000 $0 $10,000 $0 $0 $175,000
Year Ended December 31, 1991
A. R. Gray $195,000 $0 $10,000 $0 $0 $185,000
____________________________
(1) Mr. Gray is Vice President and a Director of Joslyn Electronic Systems
Corporation. The above debt relates to his relocation to California from
Spokane, Washington, and is a second mortgage on his primary residence of 0%
interest, payable in annual installments of the lesser of $10,000 or his
annual bonus. The Balance at the end of the period for the current portion
is not determinable until annual bonus payments are granted. A balloon payment
equal to the unpaid balance of the loan is due March 1, 1997.
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<TABLE>
<CAPTION>
SCHEDULE V
JOSLYN CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
-----------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
-----------------------------------------------------------------------------------------------
Balance At Balance At
Beginning Additions End Of
Classification Of Year At Cost Retirements Other Year
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993: (a)
Land $ 6,920 $ - $ - $ 605 $ 7,525
Buildings 24,317 412 50 (169) 24,510
Machinery and Equipment 45,566 3,170 1,153 185 47,768
Construction In Progress 635 (154) 5 486
-----------------------------------------------------------------------------------------------
$77,438 $ 3,428 $1,203 $ 626 $80,289
-----------------------------------------------------------------------------------------------
1992: (b)
Land $ 4,213 $ 2,940 $ 233 $ - $ 6,920
Buildings 22,293 2,774 746 (4) 24,317
Machinery and Equipment 43,926 4,670 2,971 (59) 45,566
Construction In Progress 259 376 - - 635
-----------------------------------------------------------------------------------------------
$70,691 $10,760 $3,950 $ (63) $77,438
-----------------------------------------------------------------------------------------------
1991:
Land $ 4,208 $ 5 $ - $ - $ 4,213
Buildings 21,865 552 124 - 22,293
Machinery and Equipment 42,415 3,310 1,799 - 43,926
Construction In Progress 490 (223) - - 259
-----------------------------------------------------------------------------------------------
$68,978 $ 3,644 $1,923 $ (8) $70,691
-----------------------------------------------------------------------------------------------
</TABLE>
(a) 1993 includes the transfer of $438 of long-term assets, previously held
for resale, to land and buildings, $280 of a tax agents reclassification
within fixed asset categories and $193 of equipment to the acquisition
for cash of the EEV vacuum capacitor product line.
(b) 1992 includes $8,018 of property, plant and equipment relating to
the acquisition for cash of Lear Siegler Jennings Corp.
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<TABLE>
<CAPTION>
SCHEDULE VI
JOSLYN CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(IN THOUSANDS)
--------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
--------------------------------------------------------------------------------------------------
Additions
Balance At Charged To Balance At
Beginning Costs And End Of
Classification Of Year Expenses Retirements Other Year
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993:
Buildings $13,054 $1,031 $ 35 $ 6 $14,056
Machinery and Equipment 22,834 4,147 730 (2) 26,249
--------------------------------------------------------------------------------------------------
$35,888 $5,178 $ 765 $ 4 $40,305
--------------------------------------------------------------------------------------------------
1992:
Buildings $12,396 $1,047 $ 387 $ (2) $13,054
Machinery and Equipment 21,406 3,912 2,446 (38) 22,834
--------------------------------------------------------------------------------------------------
$33,802 $4,959 $2,833 $(40) $35,888
--------------------------------------------------------------------------------------------------
1991:
Buildings $11,341 $1,072 $ 17 $ - $12,396
Machinery and Equipment 19,318 3,798 1,710 - 21,406
--------------------------------------------------------------------------------------------------
$30,659 $4,870 $1,727 $ - $33,802
--------------------------------------------------------------------------------------------------
</TABLE>
Depreciation is computed using the straight-line method for financial
statement purposes. Generally the rates of depreciation range from 2.5%
to 4% for buildings and 6.67% to 20% for machinery and equipment.
Page 19
<PAGE>
EXHIBIT INDEX
Page
3(i) Articles of Incorporation (Exhibit D to Registrant's Form S-4
Registration Statement filed March 17, 1988)*
3(ii) By-Laws (Exhibit D to Registrant's Form S-4 Registration
Statement filed March 17, 1988)*
4 Rights Agreement with the First National Bank of Chicago dated
February 10, 1988 (Exhibit 4 to Registrant's 1987 Form 10-K)*
10 (a) Form of Employment Agreement with Mr. Micheletti
(Exhibit 10(c) to Registrant's 1991 Form 10-K)*+
(b) Form of Employment Agreement with Mr. Wolski
(Exhibit 10(c) to Registrant's 1991 Form 10-K)*+
(c) Joslyn Corporation Long Term Incentive Compensation Plan
(Exhibit 10(c) to Registrant's 1989 Form 10-K)*+
(d) Joslyn Corporation Parity Compensation Plan
(Exhibit 10(c) to Registrant's 1989 Form 10-K)*+
(e) Joslyn Mfg. and Supply Co. Employee Stock Benefit Plan,
as amended (Exhibit A to Registrant's Proxy Statement dated
March 25, 1983)*+
(f) Joslyn Corporation Stock Option Plan (Exhibit A to
Registrant's Proxy Statement dated March 28, 1989)*+
13 Portions of the Annual Report for the year ended
December 31, 1993 incorporated by reference 21
21 Subsidiaries of the Registrant 41
23 Consent of Independent Public Accountants 42
99 Proxy Statement dated March 25, 1994 43
* Incorporated by reference.
+ Management contract or compensatory plan or arrangement.
Page 20
<PAGE>
EXHIBIT 13
PORTIONS OF THE ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1993
INCORPORATED BY REFERENCE
Management's Discussion and Analysis of
Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The financial condition of the Corporation remains strong with a
working capital ratio of 2.8 to 1 at December 31, 1993 compared to a
restated 2.5 to 1 at December 31, 1992. Net deferred tax assets and
retained earnings were reduced and restated by $3.1 million due to the
adoption of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes", as discussed in Note 4 of the Notes to
Consolidated Financial Statements.
Joslyn Corporation has no long-term debt. The $41.1 million of cash and
cash equivalents, together with internally generated funds and unused
lines of credit with a bank, should provide adequate liquidity and
financial flexibility for 1994 and beyond to fund planned operations,
environmental remedial expenditures, normal capital expansion and
acquisitions. The sources and uses of cash flows are summarized in the
Consolidated Statement of Cash Flows.
The Balance Sheet was comparable from December 31, 1992 to December 31,
1993. Inventories increased $3.7 million or 11.5% from the prior year
end, reflecting increased inventory levels at several subsidiaries to
provide more
Page 21 4
<PAGE>
responsiveness to customer demand and because of new
products. Despite the higher year-end inventory levels, the average
monthly inventory turnover during 1993 improved compared to 1992.
Also, Accounts Payable increased $1.2 million, or 10.8%, due to the
timing of payments while Accrued Liabilities decreased $3.0 million, or
10.4%, due to 1) a decreased current accrual for environmental matters,
2) payments made for the relocation or discontinuance of product lines
and 3) a reduction in advance payments. Environmental accruals are
discussed more fully in Note 6 of the Notes to Consolidated Financial
Statements.
Expenditures for environmental clean-up activities were $2.7 million in
1993 compared to $15.0 million in 1992. The 1992 expenditures were
partially offset by cash recoveries from an insurance carrier and other
third parties which resulted in approximately $9.6 million being
credited to the environmental accruals. The Corporation anticipates
that it may spend up to approximately $2.0 million in 1994. The
expenditures are expected to continue to decrease in the future years.
Although inflation has not been a significant factor in the last
several years, the Corporation continually seeks to minimize its
effects by controlling costs and improving productivity. Costs are
passed on by increasing selling prices when competitive conditions
permit.
Page 22 5
<PAGE>
RESULTS OF OPERATIONS 1993
Net income of $14.9 million was 4% higher than in 1992 and was $2.10
per share, a new Joslyn record. In 1993, sales of $217.7 million and
income from business segments of $27.8 million were flat compared to
1992. Increases in the Electrical Technologies segment of business
offset decreases in the Utility Systems segment.
The Electrical Technologies business segment sales of $142.7 million
were $6.5 million or 4.7% greater than in 1992 and operating income
of $22.8 million was $1.5 million or 7.1% greater than in 1992.
Joslyn Jennings, acquired during the second quarter of 1992, made a
significant contribution not only because it was included for the
entire year in 1993, but also because its operating results improved.
Joslyn Electronic Systems had an excellent year by increasing sales
more than 14% and improving profit margins. New products helped these
increases. Joslyn Hi-Voltage, Joslyn Clark Controls and Joslyn Sunbank
had increased sales and earnings. Joslyn Power Products' sales and
earnings were lower due to changes in product mix, decreased volume
related to significant competition and because of delays in obtaining
new orders. The integration of the Air-Dry and ADK Pressure Equipment
operations resulted in lower combined sales and earnings because of
distractions associated with this merger, as well as continued softness
in defense and some areas of the telecommunications markets.
The Utility Systems business segment had a difficult year with sales
down $6.6 million from $81.7 million in 1992 and operating income down
$1.7 million from $6.7 million in the prior
Page 23 6
<PAGE>
year. The segment's markets were weak, which led to reduced sales and
increased competition. In addition, operating inefficiencies and start-up
problems were encountered due to closing the Birmingham, Alabama
hardware plant and relocating the production to the Chicago, Illinois
hardware plant.
The gross profit margin improved to 27.3% in 1993 from 26.3% in 1992 by
selling higher margin products and reducing certain production costs.
Selling, distribution and administrative expense of $29.5 million
increased $2.8 million over 1992 primarily because of the inclusion of
Joslyn Jennings and Sierra for the entire year in 1993 versus a partial
year in 1992 and increased research and development expense.
Other expense, net in 1993 includes charges related to plant
consolidations and certain postemployment costs, as well as other
miscellaneous charges of a non-operating nature.
In the third quarter of 1993, Congress enacted the Revenue
Reconciliation Act of 1993 (RRA) which, among other things, increased
the federal statutory tax rate to 35% retroactive to January 1, 1993.
Statement of Financial Accounting Standards No. 109 requires companies
to recompute their tax assets if there are changes in tax laws or tax
rates and to record the effects of the change in net income. In the
third quarter of 1993, the Corporation recorded the effects of the RRA
which increased net income and earnings per share by approximately two
cents ($.02) per share because the Corporation has significant net
deferred tax assets. The related tax benefit contributed to a portion
of the improvement in the Corporation's effective income tax rate from
36.2% in 1992 to 34.7% in 1993.
Page 24 7
<PAGE>
RESULTS OF OPERATIONS 1992
Sales of $217.9 million were $14.2 million or 7.0% greater and
income from business segments of $28.0 million was $3.1 million or
12.3% greater in 1992 than in 1991.
The Electrical Technologies business segment sales of $136.2
million in 1992 increased 13.8% over 1991. The 1992 sales include
approximately $14 million by Joslyn Jennings Corporation since its
acquisition in April 1992. All business units within this segment
had increased sales except for the defense businesses which
decreased 3%. Increased sales of the SF-6 Switch products and ADK
Pressure Equipment's dryers and Adam-720 monitor system were
particularly strong. Operating income from this segment of $21.3
million in 1992 increased 10.6% compared to 1991. Increased income
from the SF-6 Switches, Joslyn Clark Controls and ADK Pressure
Equipment, along with continued strong performance by Joslyn Hi-
Voltage Corporation and contributions from Joslyn Jennings, more
than offset decreased income from Joslyn Electronic Systems and the
defense businesses.
The Utility Systems business segment sales of $81.7 million in
1992 decreased 2.8% from 1991, but operating income of $6.7 million in
Page 25 8
<PAGE>
1992 was 17.9% higher than in 1991. Operating income improved
due to product mix, including the divestiture of a marginally
profitable product line, and reduced operating costs related to
actions taken in the last half of 1991. The Utility Systems
segment had inventory reductions that also contributed to improved
earnings performance.
The gross profit margins improved to 26.3% for 1992 from 25.6%
in 1991 due to changes in product mix, cost reductions and new
products, combined with the ongoing process of reviewing and
pruning marginal product lines.
Selling, distribution and administrative expense of $26.7
million increased $1.6 million or 6.2% in 1992 compared to 1991
primarily because 1) the inclusion of Joslyn Jennings expenses,
2) increased direct costs related to higher sales and 3) greater
spending for research and development, more than offset other
expense reductions.
Investment income of $1.2 million decreased 7.2% compared to
1991 because lower interest rates more than offset the increased
average amount of funds invested.
Other expense, net in 1992 includes primarily charges for
plant consolidations, as well as miscellaneous other non-operating
expenses and gains.
Page 26 9
<PAGE>
FIVE-YEAR COMPARATIVE DATA
Joslyn Corporation and Subsidiaries
<TABLE>
<CAPTION>
(dollar amounts in thousands
except per share figures) 1993 * 1992 1991 1990 1989
===============================================================================================
<S> <C> <C> <C> <C> <C>
Summary of Operations:
Net Sales $217,707 $217,889 $203,736 $197,006 $211,974
Income (Loss) before Income Taxes
and Cumulative Effect of
Change in Accounting 22,770 22,408 20,480 (6,990)*** 20,120 ****
Cumulative Effect of Change
in Accounting -- -- (6,268)** (3,067)* --
Net Income (Loss) 14,870 14,308 6,937 (14,057)* 12,370
Cash Dividends 8,224 7,965 7,521 7,554 7,587
-----------------------------------------------------------------------------------------------
Per Share Amounts:
Income (Loss) before Cumulative
Effect of Change in Accounting $2.10 $2.03 $1.87 $(1.55) $1.74
Cumulative Effect of Change
in Accounting -- -- (.89)** (.43)* --
Net Income (Loss) 2.10 2.03 .98 (1.98)* 1.74
Cash Dividends 1.16 1.13 1.06 2/3 1.06 2/3 1.06 2/3
Book Value at End of Year 13.97 13.03 12.26 12.35 15.43
-----------------------------------------------------------------------------------------------
Balance Sheet Data:
Current Assets $114,098 $107,761 $105,953 $ 91,656 $ 95,309
Current Liabilities 41,057 42,833 44,289 32,187 35,128
Working Capital 73,041 64,928 61,664 59,469 60,181
Net Property, Plant and Equipment 39,984 41,550 36,889 38,319 40,872
Total Assets 162,282 158,159 149,607 136,842 164,418
Non-current Liabilities:
Postretirement Medical Liability 13,990 13,229 10,831 -- --
Environmental Accrual 8,000 10,000 8,000 17,500 20,000
Shareholders' Equity 99,235 92,097 86,487 87,155 109,290
-----------------------------------------------------------------------------------------------
Other Statistics:
Number of Employees 2,025 2,000 1,900 1,950 2,100
Number of Shareholders 3,225 3,425 3,025 3,125 3,150
Average Shares Outstanding 7,086,000 7,045,000 7,047,000 7,083,000 7,113,000
===============================================================================================
</TABLE>
*The Corporation adopted SFAS No. 109, "Accounting for Income Taxes",
(See Note 4) in 1993 and elected to apply it retroactively to 1990.
Accordingly, income and per share amounts in 1990 and certain balance
sheet amounts for 1990, 1991 and 1992 were restated.
**Relates to accounting change for postretirement medical benefits in
1991. See Note 7.
***Includes non-recurring charges of $23.5 million before taxes and
$21.5 million after taxes primarily related to a write-down of
goodwill and other intangibles.
****Includes non-operating items that net to $8.0 million pretax income.
COMMON STOCK PRICES AND DIVIDENDS
Shares Traded on the NASDAQ National Market System
<TABLE>
<CAPTION>
(in dollars per share)
======================================================================================================
1993 1992
- ----------------------------------------------------------------------------------------------------
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
- ------------------------------------------------------------------------------------------------------
<C> <S> <S> <S> <S> <S> <S> <S> <S>
Common Stock Prices:
High Bid 27 28 27 1/2 25 22 3/4 22 3/4 23 7/8 27
Low Bid 23 1/4 22 1/2 24 3/4 23 1/2 20 7/8 20 1/4 22 3/8 23 3/4
Cash Dividends .29 .29 .29 .29 .28 .28 .28 .29
======================================================================================================
</TABLE>
The bid market price quotations were obtained from the NASDAQ National Market
System. The bid prices represent prices between broker-dealers, do not
include retail markups and markdowns or any commission to the broker-dealers
and may not reflect prices in actual transactions. The approximate number
of holders of the Corporation's common stock at March 1, 1994 was 3,200
(including employee shareholders under the Employees' Savings and Profit
Sharing Plan, but excluding the number of shareholders of record whose
shares are held in "nominee" or "street" name).
Page 27 10
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
Joslyn Corporation and Subsidiaries
<TABLE>
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
==============================================================================================================
<S> <C> <C> <C>
Net Sales $217,707,000 $217,889,000 $203,736,000
--------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of Goods Sold $158,232,000 $160,614,000 $151,650,000
Selling, Distribution and Administrative Expense 29,491,000 26,724,000 25,160,000
Profit Sharing Expense 2,191,000 2,596,000 2,023,000
--------------------------------------------------------------------------------------------------------------
Income from Business Segments $ 27,793,000 $ 27,955,000 $ 24,903,000
--------------------------------------------------------------------------------------------------------------
General Corporate Expense $ 4,351,000 $ 4,151,000 $ 4,221,000
Interest Expense 135,000 213,000 195,000
Investment (Income) (1,293,000) (1,246,000) (1,343,000)
Other Expense, Net 1,830,000 2,429,000 1,350,000
--------------------------------------------------------------------------------------------------------------
Income before Income Taxes and Cumulative Effect
of Change in Accounting $ 22,770,000 $ 22,408,000 $ 20,480,000
Income Taxes (7,900,000) (8,100,000) (7,275,000)
--------------------------------------------------------------------------------------------------------------
Income before Cumulative Effect of Change in Accounting $ 14,870,000 $ 14,308,000 $ 13,205,000
Cumulative Effect to January 1, 1991 of Change
in Accounting for Postretirement Medical Benefits -- -- (6,268,000)
--------------------------------------------------------------------------------------------------------------
Net Income $ 14,870,000 $ 14,308,000 $ 6,937,000
--------------------------------------------------------------------------------------------------------------
Per Share Amounts:
Income before Cumulative Effect of Change in Accounting $2.10 $2.03 $1.87
Cumulative Effect of Change in Accounting -- -- (.89)
--------------------------------------------------------------------------------------------------------------
Net Income Per Share $2.10 $2.03 $ .98
==============================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of this statement.
Page 28 11
<PAGE>
CONSOLIDATED BALANCE SHEET
Joslyn Corporation and Subsidiaries
<TABLE>
<CAPTION>
December 31, 1993 1992 *
===============================================================================
ASSETS
-------------------------------------------------------------------------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 41,102,000 $ 38,228,000
Receivables, Less Allowance ($1,116,000 in 1993
and $1,213,000 in 1992) for Doubtful Accounts 25,676,000 26,264,000
Inventories 36,360,000 32,624,000
Prepaid Income Taxes and Other Current Assets 10,960,000 10,645,000
-------------------------------------------------------------------------------
Total Current Assets $114,098,000 $107,761,000
-------------------------------------------------------------------------------
Other Assets 8,200,000 8,848,000
Net Property, Plant and Equipment 39,984,000 41,550,000
-------------------------------------------------------------------------------
Total Assets $162,282,000 $158,159,000
===============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------------------------------------------
Current Liabilities:
Accounts Payable $ 12,308,000 $ 11,112,000
Accrued Liabilities 25,454,000 28,420,000
Income Taxes 3,295,000 3,301,000
-------------------------------------------------------------------------------
Total Current Liabilities $ 41,057,000 $ 42,833,000
-------------------------------------------------------------------------------
Postretirement Medical Liability $ 13,990,000 $ 13,229,000
-------------------------------------------------------------------------------
Environmental Accrual $ 8,000,000 $ 10,000,000
-------------------------------------------------------------------------------
Shareholders' Equity:
Common Stock, $1.25 Par Value;
Authorized 20,000,000 Shares, Issued 7,104,000
Shares in 1993 and 7,068,000 Shares in 1992 $ 8,880,000 $ 8,835,000
Retained Earnings 91,124,000 83,838,000
Equity Adjustments (769,000) (576,000)
-------------------------------------------------------------------------------
Total Shareholders' Equity $ 99,235,000 $ 92,097,000
-------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $162,282,000 $158,159,000
===============================================================================
</TABLE>
*Restated to reflect Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". See Note 4 in the Notes to Consolidated
Financial Statements.
The accompanying Notes to Consolidated Financial Statements are an
integral part of this balance sheet.
Page 29 12
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Joslyn Corporation and Subsidiaries
<TABLE>
<CAPTION>
Common Stock Equity Retained
For the Three Years Ended December 31, 1993 Shares Dollars Adjustments Earnings
===========================================================================================================
<S> <C> <C> <C> <C>
Balance, December 31, 1990, as Previously Reported 7,055,000 $8,818,000 $ 109,000 $81,295,000
Restatement for the Cumulative Effect on Prior Years
for Change in Accounting Principle for Income Taxes -- -- -- (3,067,000)
- -----------------------------------------------------------------------------------------------------------
Balance, December 31, 1990, as Restated 7,055,000 $8,818,000 $ 109,000 $78,228,000
1991 Net Income -- -- -- 6,937,000
1991 Cash Dividends ($1.06 2/3 Per Share) -- -- -- (7,521,000)
Exercise of Stock Options 60,000 75,000 -- 976,000
Purchase of Common Stock (90,000) (113,000) -- (1,611,000)
Common Stock Transferred to Profit Sharing Plans 30,000 38,000 -- 506,000
Cumulative Translation Adjustment -- -- 45,000 --
- -----------------------------------------------------------------------------------------------------------
Balance, December 31, 1991 7,055,000 $8,818,000 $ 154,000 $77,515,000
1992 Net Income -- -- -- 14,308,000
1992 Cash Dividends ($1.13 Per Share) -- -- -- (7,965,000)
Exercise of Stock Options 84,000 105,000 -- 1,398,000
Purchase of Common Stock (92,000) (115,000) -- (1,817,000)
Common Stock Transferred to Profit Sharing Plans 21,000 27,000 -- 399,000
Pension Liability Adjustment -- -- (445,000) --
Cumulative Translation Adjustment -- -- (285,000) --
===========================================================================================================
Balance, December 31, 1992 7,068,000 $8,835,000 $(576,000) $83,838,000
1993 Net Income -- -- -- 14,870,000
1993 Cash Dividends ($1.16 Per Share) -- -- -- (8,224,000)
Exercise of Stock Options 43,000 54,000 -- 794,000
Purchase of Common Stock (17,000) (21,000) -- (392,000)
Common Stock Transferred to Profit Sharing Plans 10,000 12,000 -- 238,000
Pension Liability Adjustment -- -- (64,000) --
Cumulative Translation Adjustment -- -- (129,000) --
===========================================================================================================
Balance, December 31, 1993 7,104,000 $8,880,000 $(769,000) $91,124,000
===========================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of this statement.
Page 30 13
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Joslyn Corporation and Subsidiaries
<TABLE>
<CAPTION>
For the Years Ended December 31, 1993 1992 1991
================================================================================================
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 14,870,000 $ 14,308,000 $ 6,937,000
Adjustments to Reconcile Net Income to
Net Cash Flows from Operating Activities:
Depreciation and Amortization 5,230,000 5,057,000 4,968,000
Deferred Income Tax Provision (Benefit) 7,000 1,045,000 (4,258,000)
Change in Assets and Liabilities, Net of
Effects of Acquisitions and Dispositions:
Decrease(Increase) in Receivables 588,000 (468,000) 2,089,000
(Increase)Decrease in Inventories (3,506,000) 3,154,000 4,464,000
(Increase)Decrease in Prepaid Income
Taxes and Other Current Assets (51,000) 104,000 588,000
(Decrease)Increase in Current Liabilities
except Current Environmental Accrual (1,725,000) 1,582,000 6,075,000
(Decrease) in Current and Long-term
Environmental Accruals, Net (2,671,000) (5,377,000) (2,868,000)
Increase in Postretirement Medical
Liability 761,000 899,000 10,831,000
Other, Net 74,000 (2,621,000) (433,000)
------------------------------------------------------------------------------------------------
Net Cash Flows from Operating Activities $ 13,577,000 $ 17,683,000 $ 28,393,000
================================================================================================
Cash Flows from Investing Activities:
Capital Expenditures $ (3,428,000) $ (2,742,000) $ (3,579,000)
Acquisitions of Businesses (429,000) (9,851,000) (735,000)
Proceeds from Sales of Property, Plant and
Equipment and Dispositions 693,000 2,786,000 441,000
------------------------------------------------------------------------------------------------
Net Cash Flows from Investing Activities $ (3,164,000) $ (9,807,000) $ (3,873,000)
================================================================================================
Cash Flows from Financing Activities:
Cash Dividends $ (8,224,000) $ (7,965,000) $ (7,521,000)
Purchase of Joslyn Common Stock (413,000) (1,932,000) (1,724,000)
Transfer of Joslyn Common Stock to Profit
Sharing Plans 250,000 426,000 544,000
Exercise of Stock Options 848,000 1,503,000 1,051,000
------------------------------------------------------------------------------------------------
Net Cash Flows from Financing Activities $ (7,539,000) $ (7,968,000) $ (7,650,000)
================================================================================================
Net Increase(Decrease) in Cash and Cash Equivalents $ 2,874,000 $ (92,000) $ 16,870,000
Cash and Cash Equivalents at Beginning of Year 38,228,000 38,320,000 21,450,000
------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 41,102,000 $ 38,228,000 $ 38,320,000
================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of this statement.
Page 31 14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Joslyn Corporation and Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation: The Consolidated Financial Statements
include the accounts of the Corporation and all subsidiaries, after
elimination of intercompany accounts and transactions.
Cash and Cash Equivalents: Cash and cash equivalents of $41,102,000
and $38,228,000 at December 31, 1993 and 1992, respectively, include
cash equivalents which are highly liquid investments with original
maturities or put dates of three months or less. They are recorded at
cost which approximates market. Also included in this balance sheet
caption are equity securities having an aggregate cost of $4,089,000
and $4,199,000 on December 31, 1993 and 1992 and an aggregate
market value of $4,704,000 and $4,671,000, respectively. At
December 31, 1993, gross unrealized gains were $633,000 and there were
immaterial gross unrealized losses. At December 31, 1992, gross
unrealized gains were $504,000 and there were immaterial unrealized
losses. There were $124,000 net realized gains on the sale of equity
securities in 1993, immaterial net realized gains on the sale of equity
securities in 1992 and no realized gains or losses on equity securities
in 1991. At December 31, 1993, cash and cash equivalents also included
$608,000 of restricted funds used to guarantee a self-insurance program
with an insurance company.
Inventories: At December 31, 1993 and 1992, inventories of
$18,424,000 and $17,646,000, respectively, are valued using the
last-in, first-out (LIFO) method. The remaining inventories are valued
at the lower of first-in, first-out (FIFO) cost or market. If FIFO
inventory methods had been used for all inventories, the December 31,
1993 and 1992 inventories would have been $9,069,000 and $9,068,000
higher, respectively. During 1993, 1992 and 1991, certain inventories
were reduced, which resulted in a liquidation of some LIFO inventories
valued at lower costs prevailing in prior years. These liquidations
resulted in increasing income before taxes by an immaterial amount in
1993, $875,000 in 1992 and $903,000 in 1991.
Property, Plant and Equipment: Property, plant and equipment are
stated at cost. Depreciation is computed using the straight-line
method for financial statement purposes and accelerated methods for
income tax purposes. When properties are retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the
respective accounts and any gain or loss from disposition is
recognized. Maintenance and repair costs are expensed when incurred
and were $4,261,000, $3,650,000 and $3,403,000 in 1993, 1992 and 1991,
respectively.
Research and Development: Costs related to research and development
activities are charged against income as incurred. These costs were
approximately $6,200,000 in 1993, $5,000,000 in 1992 and $4,100,000
in 1991.
Cash Flow Information: Cash paid for interest was $135,000 in 1993,
$212,000 in 1992 and $199,000 in 1991. Cash paid for income taxes
was $7,999,000 in 1993, $5,737,000 in 1992 and $6,626,000 in 1991.
Equity Adjustments: Included in Equity Adjustments are Cumulative
Currency Translation Adjustments with debit balances of $260,000 and
$131,000 at December 31,1993 and 1992, respectively, and Pension
Liability Adjustments with debit balances of $509,000 and $445,000 at
December 31, 1993 and 1992, respectively.
Net Income Per Share: Net income per share of common stock was
computed based on weighted average shares of 7,086,000 in 1993,
7,045,000 in 1992 and 7,047,000 in 1991.
2. FINANCING ARRANGEMENTS:
At December 31, 1993, 1992 and 1991, the Corporation had unused lines
of credit established with banks of $15.0 million, $17.5 million and
$24.0 million, respectively, that may be drawn as needed. The lines of
credit were not used during 1993, 1992 or 1991. In connection with the
line of credit agreements, the Corporation was not required to maintain
compensating cash balances in 1993. In 1992 and 1991, the Corporation
maintained cash balances of 5% on certain unused credit lines and paid
fees on certain other unused credit lines. At December 31, 1992, cash
in the consolidated balance sheet included $125,000 used for
compensating cash balances. The Corporation has complied with the
compensating cash balance requirements of all credit agreements with
banks.
Page 32 15
<PAGE>
3. PROFIT SHARING AND PENSION BENEFITS:
Most domestic subsidiaries of Joslyn participate in one of two
Profit Sharing Plans. The plans distribute Unit Contributions
primarily in relationship to covered compensation and years of
service. For both plans, Company Unit Contributions are at the
discretion of the Board of Directors of each participating
Corporation and are related to profit sharing income, as defined,
for each Company Unit. Company Unit Contributions are made partly
in cash and partly in common stock of Joslyn Corporation. The
plans have similar provisions requiring one year of service for
eligibility and five years of service for vesting. Each member of
the Profit Sharing Plans is entitled to vote the number of Joslyn
Corporation shares allocated to that member's account.
Additionally, a 401(k) savings feature is part of the plans which
provides proportionate, fully-vested, Company matching
contributions. Profit Sharing Expense for both plans was
$2,191,000 in 1993, $2,596,000 in 1992 and $2,023,000 in 1991.
Additional retirement benefits are provided through a frozen
non-contributory, defined benefit pension plan for eligible
domestic, salaried employees of participating units. Benefits are
based on years of service and an average of the five highest
consecutive years of defined compensation, both before the plan
freeze date. Effective December 31, 1988, this plan was frozen and
no employees may qualify for participation in the plan thereafter.
No amounts were contributed in 1993, 1992 and 1991 because of the
full funding limitation in the 1974 Employee Retirement Income
Security Act (ERISA). If a qualified defined benefit pension plan
is terminated and all accrued liabilities to employees and their
beneficiaries are satisfied, in general, all remaining assets in
the plan's trust may revert to the employer as income, subject to
significant excise and income taxes.
Joslyn Clark Controls, Inc. and Joslyn Jennings Corporation
each also has a non-contributory, defined benefit pension plan for
eligible hourly employees. The benefits are based on negotiated
amounts per year of service. The Corporation's funding policy is
to make the contribution required by ERISA.
The three pension plans include provisions limiting benefits
in accordance with the Internal Revenue Code and ERISA. The assets
of the three pension plans consist primarily of stocks and bonds in
a Master Trust account which is managed by an independent
investment manager.
Following is a schedule reconciling the aggregate funded
status of the pension plans with the amounts included in the
applicable consolidated balance sheet:
<TABLE>
<CAPTION>
(in thousands)
- ------------------------------------------------------------------------------------------------
As of As of
October 1, 1993 October 1, 1992
- ------------------------------------------------------------------------------------------------
Overfunded Underfunded Overfunded Underfunded
Plan Plans Plan Plans
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets and Obligations:
Plan Assets at Fair Value $ 41,391 $ 3,385 $ 40,774 $ 3,137
Accumulated Benefit Obligation* (32,740) (4,258) (33,470) (3,967)
- ------------------------------------------------------------------------------------------------
Plan Assets in Excess of (Less than)
Benefit Obligation $ 8,651 $ (873) $ 7,304 $ (830)
================================================================================================
Vested Benefit Obligation* $(31,866) $(3,981) $(32,298) $(3,767)
================================================================================================
Funded Status:
Plan Assets at Fair Value $ 41,391 $ 3,385 $ 40,774 $ 3,137
Projected Benefit Obligation* (32,740) (4,258) (33,470) (3,967)
Items Not Yet Recognized
in Earnings:
Unrecognized Net Asset at
January 1, 1985 being
Recognized over 14 Years (1,813) (141) (2,158) (169)
Unrecognized Net (Gain) Loss (3,385) 1,053 (1,790) 894
Unrecognized Prior Service Cost - 173 - 190
Adjustment to Recognize Minimum
Liability - (1,042) - (915)
- -----------------------------------------------------------------------------------------------
Prepaid (Accrued) Pension Cost $ 3,453 $ (830) $ 3,356 $ (830)
===============================================================================================
</TABLE>
*Actuarial present values
Page 33 16
<PAGE>
The discount rate used in determining the actuarial present value of the
projected benefit obligation as of October 1, 1993 and 1992 was 6.25% and, as
of October 1, 1991 was 7.25%. The expected long-term rate of return on assets
for 1993, 1992 and 1991 was 8.0%.
The components of net pension income (cost) in 1993, 1992 and 1991 are as
follows:
(in thousands)
- -----------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------
Service Costs-Benefits
Earned During the Period $ (218) $ (314) $ (124)
Interest Cost on Projected
Benefit Obligation (2,231) (2,187) (1,736)
Actual Return on Plan Assets 3,004 4,189 4,918
Net Amortization and Deferrals (549) (1,664) (3,081)
- -----------------------------------------------------------------
Net Pension Income (Cost) $ 6 $ 24 $ (23)
=================================================================
4. INCOME TAXES:
The Corporation adopted Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes", in the first quarter
of 1993 and elected to apply the provisions retroactively to the
calendar year ended December 31, 1990. SFAS No. 109 requires the
adjustment of deferred taxes for changes in tax rates and tax laws
using the liability method. The adoption of SFAS No. 109 resulted
in a $3.1 million, or $.43 per share, "Cumulative Effect of Change
in Accounting" charge against 1990 net income and 1990 retained
earnings. Net deferred tax assets also were reduced by $3.1
million. There was no effect on income or earnings per share for
1991, 1992 or for the first two quarters of 1993.
In the third quarter of 1993, Congress enacted the Revenue
Reconciliation Act of 1993 (RRA) which, among other things,
increased the federal statutory rate from 34% to 35% retroactively
to January 1, 1993. In the third quarter, the Corporation recorded
the tax effects of the RRA which increased net income and earnings
per share by approximately two cents ($.02) per share. The increase
reflects the benefits related to the Corporation's significant net
deferred tax assets.
Income before income taxes consists of the following:
(in thousands)
- ---------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------
Domestic $20,409 $20,467 $19,540
Foreign 2,361 1,941 940
- ---------------------------------------------------------------
$22,770 $22,408 $20,480
===============================================================
The provision for income taxes consists of the following:
(in thousands)
- ---------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------
Current:
U.S. Federal $ 5,801 $ 5,318 $ 5,918
Foreign 787 594 322
State and Local 1,305 1,143 1,393
- ---------------------------------------------------------------
$ 7,893 $ 7,055 $ 7,633
- ---------------------------------------------------------------
Deferred:
U.S. Federal $ (6) $ 822 $ (283)
Foreign 15 46 (12)
State and Local (2) 177 (63)
- ---------------------------------------------------------------
$ 7 $ 1,045 $ (358)
- ---------------------------------------------------------------
Total Income Tax Provision $ 7,900 $ 8,100 $ 7,275
===============================================================
Page 34 17
<PAGE>
A reconciliation of the statutory U.S. federal income tax
rates to the Corporation's effective income tax rates is as
follows:
- -----------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------
Expected Tax Rates 35.0% 34.0% 34.0%
State Income Taxes, Net of
Federal Income Tax 3.9 4.1 4.3
Tax Reductions Related to:
Foreign Sales Corporation (1.5) (1.4) (1.4)
U.S. Tax-exempt Interest (1.2) (1.2) (1.4)
Research and Development
Credit (0.5) (0.4) (0.7)
U.S. Taxes on Foreign Operations 0.2 0.1 0.2
All Other, Net (1.2) 1.0 0.5
- ----------------------------------------------------------------
Effective Tax Rates 34.7% 36.2% 35.5%
================================================================
Deferred tax assets and liabilities arise from the tax effects
of timing differences in the recognition of income and expenses for
financial statement and tax purposes. Significant deferred tax
assets and liabilities as of December 31, 1993 and 1992 are as
follows:
(in thousands)
- ----------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------
Assets:
Postretirement Medical $ 5,077 $ 4,650
Environmental Matters 3,705 4,034
Other Employee Benefits 1,868 1,604
Warranties 1,421 1,545
All Other 4,063 4,008
- ----------------------------------------------------------------
Gross Deferred Tax Assets $16,134 $15,841
Valuation Allowance (200) (200)
- ----------------------------------------------------------------
$15,934 $15,641
================================================================
Liabilities:
Depreciation $ 4,552 $ 4,476
Pension 1,246 1,113
Other - 43
- ----------------------------------------------------------------
Gross Deferred Tax Liabilities $ 5,798 $ 5,632
================================================================
The Corporation's policy is to provide deferred U.S. federal
income taxes on the undistributed cumulative income of its foreign
operating subsidiaries, to the extent that foreign tax credits are
not available.
The Corporation's tax credit carry-forwards are not significant.
In 1991, the Corporation recorded a pretax charge of $10.2
million for the cumulative effect to January 1, 1991 of a change in
accounting for postretirement medical benefits. This charge
resulted in related deferred federal and state income taxes of $3.2
million and $0.7 million, respectively.
5. STOCK OPTIONS:
The shareholders have approved two stock option plans for key
employees which include Incentive Stock Options (ISOs), non-
qualified stock options and non-qualified stock options with tandem
stock appreciation rights. Stock options granted after 1991 and
ISOs do not have tandem stock appreciation rights. These plans
provided for a maximum of 2,081,250 shares that could be delivered
upon exercise of stock options and stock appreciation rights
(SARs). Stock options and SARs are granted at the market value of
the Corporation's stock on the date of grant. Options granted
prior to 1990 are exercisable not less than six months nor more
than ten years after the date of the grant. Options granted
subsequent to 1989 are exercisable not less than six months nor
more than five years after the date of the grant.
An SAR entitles an option holder to elect to receive, in lieu
of the exercise of an option and without payment to the
Corporation, an amount equal to the difference between the option
price and the market value of the common stock on the date the
right is exercised. This amount may be paid in cash, in common
shares, or in a combination thereof, subject to approval of a
committee of non-participants. An immaterial expense in 1993 and
expenses of $282,000 in 1992, $208,000 in 1991 are included in
Other Expense, Net with respect to SARs. The Corporation made
payments or issued stock related to the exercise of SARs as
follows:
- ------------------------------------------------------------------
Year Number of Rights Option Price
- ------------------------------------------------------------------
1993 12,435 $15.29 to 21.17
1992 45,764 14.92 to 21.17
1991 28,748 15.29 to 18.25
==================================================================
Page 35 18
<PAGE>
A summary of activity in the plans is presented below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Stock Options and
Stock Appreciation Rights
- --------------------------------------------------------------------------------------------
Shares Option Price
============================================================================================
<S> <C> <C>
Options Outstanding, December 31,1990 337,790 $13.09 to 21.17
Granted in 1991 82,455 14.92 & 17.67
Exercised in 1991 (86,415) 14.92 to 21.17
Cancelled in 1991 (11,738) 15.29 to 21.17
- --------------------------------------------------------------------------------------------
Options Outstanding, December 31, 1991 322,092 $13.09 to 21.17
Granted in 1992 134,431 21.17 & 27.00
Exercised in 1992 (129,308) 14.92 to 21.17
Cancelled in 1992 (7,812) 19.50 to 21.17
- --------------------------------------------------------------------------------------------
Options Outstanding, December 31, 1992 319,403 $13.09 to 27.00
Granted in 1993 77,808 24.75
Exercised in 1993 (56,067) 14.92 to 21.17
Cancelled in 1993 (3,054) 13.09 & 18.63
- --------------------------------------------------------------------------------------------
Options Outstanding, December 31, 1993 338,090 $14.92 to 27.00
============================================================================================
Options Exercisable at:
December 31, 1993 260,282 $14.92 to 27.00
December 31, 1992 257,023 13.09 to 27.00
============================================================================================
</TABLE>
6. ENVIRONMENTAL AND LEGAL MATTERS:
The Corporation previously operated wood treating facilities that
chemically preserved utility poles, pilings and railroad ties. All
such treating operations were discontinued or sold prior to 1982.
These facilities used wood preservatives that included creosote,
pentachlorophenol and chromium-arsenic-copper. While preservatives
were handled in accordance with all appropriate procedures called
for at the time, subsequent changes in environmental laws now
require the generators of these spent preservatives to be
responsible for the cost of remedial actions at the sites where
spent preservatives have been deposited.
The Corporation has environmental accruals of approximately
$10 million as of December 31, 1993. It is anticipated that
approximately $2 million may be spent in 1994 on clean-up and
related activities. Consequently, approximately $2 million is
classified as a current liability and the remaining $8 million of
the reserve is classified as a long-term liability at December 31,
1993.
Net expenditures of $2.7 million, $5.4 million and $2.9
million were made during 1993, 1992 and 1991, respectively, on
environmental clean-up and related activities, of former wood
treating sites. The expenditures for 1992 are net of $9.6 million
proceeds received from an insurance settlement and from other
parties. No charges to expense were recorded in 1993, 1992 and
1991 related to the environmental accruals.
While it is difficult to estimate the timing or amount of
expenditures, the Corporation believes that this reserve is
adequate for clean-up of known sites currently under investigation
by various state and federal environmental agencies. The reserve
is based on facts known at the current time; however, changes in
EPA standards, possible future listing on the National Priorities
List, improvements in clean-up technology and discovery of
additional information concerning these sites and other sites could
affect the estimated costs in the future. The Corporation has
notified its insurance carrier of the sites being investigated and
has submitted claims against it for the cost of clean-up at several
sites. Recoveries, if any, from the carrier are uncertain at this
time. Additionally, there are other potentially responsible
parties who also operated certain of the sites. The reserve
reflects an estimate of the allocation of remediation costs between
the various parties.
Page 36 19
<PAGE>
Joslyn Manufacturing Co., a subsidiary of the Corporation, is
a defendant in a purported class action tort suit. The suit
alleges exposure to chemicals and property devaluation resulting
from wood treating operations previously conducted at a Louisiana
site. Both the size of the class and the damages are unspecified.
The Corporation has tendered the defense of the suit to its
insurance carrier. The Corporation believes that it may have
adequate insurance coverage for the litigation, however, because of
the above uncertainties, the Corporation is unable to determine at
this time the potential liability, if any.
The Corporation is involved in various other claims, legal
actions and complaints arising in the normal course of business.
It is the opinion of Management that such actions and claims will
not have a material adverse effect on the results of operations or
financial condition of the Corporation.
7. POSTRETIREMENT MEDICAL BENEFITS:
The Corporation and its participating domestic subsidiaries provide
optional health care benefits for retired employees under a frozen
contributory plan. Employees may become eligible for these
benefits if they were employed by the Corporation at the defined
retirement age, were employed at least ten years and were hired
prior to January 1, 1989. The benefits are subject to deductibles,
co-payment provisions and other limitations, which are amended
periodically. Also, the Corporation assumed a frozen retiree
medical coverage plan as a result of its acquisition of the
Jennings business in 1992. The following data is for these
coverages in aggregate. These benefits are discretionary and are
not a commitment to long-term benefit payments. The plans are
funded as claims are paid.
In 1991, Joslyn Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", on the immediate
recognition basis. As a result of the adoption of SFAS No. 106,
the Corporation recorded charges of $10,963,000 for optional
postretirement medical benefits. The after-tax charge of
$6,763,000, or $.95 per share, had two components: $6,268,000, or
$.89 per share, was a one-time cumulative non-operating adjustment
to January 1, 1991 and $495,000, or $.06 per share, was a charge
for 1991, in addition to normal claims paid.
The net periodic postretirement medical benefit cost for 1993,
1992 and 1991 was as follows:
(in thousands)
- ----------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------
Service Cost $ 434 $ 486 $ 514
Interest Cost 762 889 868
Other (93) (25) -
- ----------------------------------------------------------------
Net Medical Benefit Cost $1,103 $ 1,350 $ 1,382
================================================================
The accumulated postretirement medical benefit obligation at
December 31, 1993 and 1992 was as follows:
(in thousands)
- ----------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------
Retirees $ 4,129 $ 3,651
Fully Eligible Active Plan Participants 1,138 1,308
Other Active Plan Participants 6,049 7,103
- ----------------------------------------------------------------
Total Accumulated Medical Obligation $11,316 $12,062
Unrecognized Net Gain 2,816 1,334
- ----------------------------------------------------------------
Accrued Medical Benefit Cost $14,132 $13,396
================================================================
The assumed health care cost trend rate used in the
calculation for measuring the accumulated postretirement medical
benefit obligation was 15.4% in 1993 and 17.7% in 1992. This rate
was assumed to decrease by 2.3% per year to 8.5% in 1996 and remain
at that level thereafter. The effect on the accumulated medical
benefit obligation at January 1, 1993 of a one-percentage-point
increase for each year in the health care cost trend rate used
would result in an increase of $2,114,000 in the total obligation
and a $211,000 increase in the aggregate service and interest cost
components of the 1993 expense. The weighted average discount
rates used to determine the accumulated postretirement medical
benefit obligation as of December 31, 1993 and 1992 were 7% and 8%,
respectively.
Page 37 20
<PAGE>
8. ACQUISITIONS:
In the second quarter of 1993, Joslyn Jennings Corporation purchased a
vacuum capacitor product line from EEV Limited in Chelmsford, England.
The product line was relocated to Joslyn Jennings' facility in San
Jose, California. The purchase price was not material.
In April 1992, Joslyn Corporation purchased, for cash, the stock of
Lear Siegler Jennings Corp., a San Jose, California based manufacturer
of high-voltage vacuum products and telecommunications test
instrumentation. A wholly-owned subsidiary of Joslyn Corporation also
purchased certain real estate, some of which is being used in the
business and some of which was sold in 1993. The Corporation paid $9.9
million for this acquisition, which was accounted for by the purchase
method. The operating results of this acquisition are included in the
Corporation's consolidated financial statements from the date of
acquisition.
In March 1991, Joslyn Clark Controls, Inc. acquired a product line of
photoelectric sensing and control devices that was relocated to Joslyn
Clark Controls' plant in Lancaster, South Carolina. The purchase price
was not material.
9. SHAREHOLDERS' RIGHTS:
The Corporation has a Shareholders' Right attached to each share of
common stock. Each Right entitles the holder to buy from the
Corporation one newly issued share of common stock at an exercise
price of $60. The Rights become exercisable upon the acquisition
of a certain percentage of Corporation stock or a tender offer or
exchange offer for Corporation stock by a person or group. The
Corporation is entitled to redeem the Rights at $.05 per Right at
any time prior to fifteen days after a public announcement that a
person or group has acquired a certain percentage of the
Corporation's common stock. Depending on the occurrence of
certain specific events, each exercisable Right, other than Rights
held by the acquiring party, either entitles the holder to purchase
the Corporation's common stock at an adjusted per-share price equal
to 20% of the then market price or entitles the holder to purchase
a share of the acquiring company common stock at a 50% discount.
The Rights will expire on March 3, 1998.
10. OTHER EXPENSE, NET:
Other Expense, Net in 1993, 1992 and 1991 includes primarily
charges related to plant consolidations and to actions to eliminate
marginal products as part of Management's continuing effort to
simplify the organization, reduce costs and improve efficiencies.
Also included are certain post-employment benefit expenses and
other miscellaneous non-operating items. In 1992 and 1991,
respectively, the expenses were partially offset by a gain on the
sale of certain property and a $4 million gain from the settlement
of a patent infringement lawsuit.
11. DETAILS OF CONSOLIDATED BALANCE SHEET:
(in thousands)
- ------------------------------------------------------------
1993 1992
- ------------------------------------------------------------
Inventories:
Finished Goods $ 6,788 $ 6,826
Work in Process 11,407 9,685
Raw Materials 18,165 16,113
- ------------------------------------------------------------
$36,360 $32,624
============================================================
Prepaid Income Taxes and
Other Current Assets:
Prepaid Income Taxes $ 8,693 $ 8,308 *
Other 2,267 2,337
- ------------------------------------------------------------
$10,960 $10,645
============================================================
Net Property, Plant and Equipment:
Land $ 7,525 $ 6,920
Buildings 24,510 24,317
Machinery and Equipment 47,768 45,566
Construction in Progress 486 635
- ------------------------------------------------------------
$80,289 $77,438
Less Accumulated Depreciation 40,305 35,888
- ------------------------------------------------------------
$39,984 $41,550
============================================================
Accrued Liabilities:
Reserve for Environmental Matters $ 1,889 $ 2,560
Accrued Wages, Bonuses and
Vacation Expenses 3,616 3,486
Accrued Taxes, Other than
Income Taxes 1,543 1,425
Accrued Warranties and
Workers' Compensation 6,088 5,694
Advance Payments 2,279 3,065
Reserve for Relocation or
Discontinuance of Product Lines 1,007 2,488
Other Accrued Liabilities 9,032 9,702
- ------------------------------------------------------------
$25,454 $28,420
============================================================
* Restated. See Note 4.
Page 38 21
<PAGE>
12. SEGMENT OF BUSINESS REPORTING:
The operations of the Corporation are divided into the following
business segments for financial reporting purposes:
Electrical Technologies: Electronic protection equipment, high voltage
vacuum products, connector accessories and switchgear are designed and
produced for use by the telecommunications, industrial, aerospace,
defense, electric utility and petrochemical industries. These products
include communication electronic transient suppression devices,
telecommunications test instrumentation, electric switching and interrupting
systems, capacitors, relays, starters, contactors, fire pump controllers,
sulfur hexafluoride switches and air pressurization and dehydration products
for insulated cables, antenna lines and waveguides and similar systems.
Utility Systems: Construction and maintenance materials and electric
power protection equipment are designed and produced principally for electric
power distribution and for overhead telephone communication lines. These
products are manufactured and assembled from metal, rubber and porcelain and
include hardware, earth anchors, power surge arresters, cable accessories,
electrical terminating devices and other products. In addition, the
Corporation sells complementary goods produced by other manufacturers.
Inter-segment sales are not material. Foreign operations of the
Corporation, which are not material, are located in Canada and primarily
serve markets in that country. No single customer accounts for 10% or
more of the Corporation's sales. General Corporate assets are principally
cash and cash equivalents, prepaid expenses and land.
<TABLE>
<CAPTION>
Financial information by business segments is as follows:
(in thousands)
-------------------------------------------------------------------------------------
Net Income from Identi- Capital
Customer Business fiable Depre- Expendi-
Sales Segments Assets ciation tures
1993
=====================================================================================
<S> <C> <C> <C> <C> <C>
Electrical Technologies $142,677 $22,781 $ 74,649 $3,134 $2,092
Utility Systems 75,030 5,012 31,391 1,912 1,305
General Corporate - - 56,242 132 31
-------------------------------------------------------------------------------------
Consolidated $217,707 $27,793 $162,282 $5,178 $3,428
=====================================================================================
1992
Electrical Technologies $136,217 $21,276 $ 71,648 $2,780 $1,804
Utility Systems 81,672 6,679 33,614 2,025 898
General Corporate - - 52,897 154 40
-------------------------------------------------------------------------------------
Consolidated $217,889 $27,955 $158,159 $4,959 $2,742
=====================================================================================
1991
Electrical Technologies $119,680 $19,236 $ 60,815 $2,638 $2,590
Utility Systems 84,056 5,667 35,513 2,104 1,008
General Corporate - - 53,279 128 46
-------------------------------------------------------------------------------------
Consolidated $203,736 $24,903 $149,607 $4,870 $3,644
=====================================================================================
</TABLE>
Export sales from the Corporation's United States operations to unaffiliated
customers were as follows:
<TABLE>
<CAPTION>
(in thousands)
- -----------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Asia $11,249 $13,584 $11,560
Europe 9,333 7,047 5,906
Western Hemisphere 9,635 8,708 6,351
Other 2,805 3,148 1,187
- -----------------------------------------------------------------------------------------
Total $33,022 $32,487 $25,004
=========================================================================================
</TABLE>
Page 39 22
<PAGE>
13. QUARTERLY FINACIAL INFORMATION (Unaudited):
The following table sets forth certain unaudited quarterly financial
information for 1993 and 1992:
<TABLE>
<CAPTION>
(In thousands except per share figures)
- -------------------------------------------------------------------------------------------------------
1993
- -------------------------------------------------------------------------------------------------------
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $57,430 $56,111 $53,689 $50,477 $217,707
Gross Profit 15,736 15,460 14,187 14,092 59,475
Net Income 3,918 3,940 3,832 3,180 14,870
Net Income Per Share .55 .56 .54 .45 2.10
=======================================================================================================
- -------------------------------------------------------------------------------------------------------
1992
- -------------------------------------------------------------------------------------------------------
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
- -------------------------------------------------------------------------------------------------------
Net Sales $52,198 $55,388 $56,234 $54,069 $217,889
Gross Profit 13,862 14,720 14,467 14,226 57,275
Net Income 3,581 3,793 3,830 3,104 14,308
Net Income Per Share .51 .54 .54 .44 2.03
=======================================================================================================
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Joslyn Corporation:
We have audited the accompanying consolidated balance sheets of
Joslyn Corporation (an Illinois corporation) and Subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements
of income, shareholders' equity and cash flows for each of the
three fiscal years in the period ended December 31, 1993. These
financial statements are the responsibility of the Corporation'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 consolidated 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 financial position of
Joslyn Corporation and Subsidiaries as of December 31, 1993 and
1992, and the results of its operations and its cash flows for each
of the three fiscal years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
As explained in Note 7 to the consolidated financial statements,
effective January 1, 1991, the Corporation changed its method of
accounting for postretirement benefits other than pensions.
As explained in Note 4 to the consolidated financial
statements, the Corporation has given retroactive effect to the
change in accounting for the method of calculating the provision
for income taxes.
Chicago, Illinois ARTHUR ANDERSEN & CO.
February 9, 1994
Page 40 23
<PAGE>
EXHIBIT 21
Subsidiaries of the Registrant
* JOSLYN MANUFACTURING CO., a Delaware corporation
* JOSLYN CLARK CONTROLS, INC., a Delaware corporation
* JOSLYN CANADA, INC., organized under the laws of the Province of Ontario,
Canada
* JOSLYN HI-VOLTAGE CORPORATION, a Delaware corporation
* JOSLYN ELECTRONIC SYSTEMS CORPORATION, a Delaware corporation
* JOSLYN JENNINGS CORPORATION, a Delaware corporation
* JOSLYN RESEARCH AND DEVELOPMENT CORPORATION, a Delaware corporation
* THE SUNBANK FAMILY OF COMPANIES, INC., a California holding corporation,
and its two subsidiaries, SUNBANK ELECTRONICS, INC., and AIR-DRY
CORPORATION OF AMERICA, Delaware corporations
* JOSLYN FOREIGN SALES CORPORATION, organized under the laws of the Virgin
Islands of the United States.
Page 41
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
_________________________________________
As independent public accountants, we hereby consent to the incorporation
by reference in Registration Statement File No. 33-50686 of our report dated
February 9, 1994, included or incorporated by reference in the Joslyn
Corporation and subsidiaries Form 10-K and to all references to our firm
included in that Registration Statement.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
March 23, 1994.
Page 42
<PAGE>
EXHIBIT 99
PROXY STATEMENT DATED MARCH 25, 1994
JOSLYN Joslyn Corporation
CORPORATION 30 South Wacker Drive
Chicago, Illinois 60606
Telephone: (312) 454-2900
Telecopier: (312) 454-2930
Notice of Annual Meeting of Shareholders
To Be Held April 27, 1994
______________________________________________________________________________
The Secretary of Joslyn Corporation hereby gives notice that the Annual
Meeting of Shareholders of Joslyn Corporation will be held in the Assembly
Room, 6th Floor, The Northern Trust Company Building, 50 South LaSalle Street,
Chicago, Illinois 60675 on Wednesday, April 27, 1994, at 10:00 o'clock a.m.,
for the following purposes:
(1) the election of six Directors;
(2) the ratification of the appointment of Arthur Andersen & Co. as
independent public accountants for the year 1994;
(3) the amendment of the Joslyn Corporation Articles of Incorporation
to limit the personal liability of the Corporation's directors;
and
(4) the transaction of such other business as may properly come
before the meeting or any adjournment thereof.
Only Shareholders of record at the close of business on March 1, 1994
will be entitled to vote at the meeting.
The Annual Report of the Corporation for the year 1993, including
financial statements, accompanies this Proxy Statement.
Each Shareholder, whether or not he or she expects to be present at the
meeting, is requested to sign, date and return the enclosed Proxy in the
envelope which is supplied with this Notice.
By order of the Board of Directors,
Joslyn Corporation
Wayne M. Koprowski
Secretary
______________________________________________________________________________
Page 43
<PAGE>
JOSLYN
CORPORATION
30 South Wacker Drive
Chicago, Illinois 60606
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Joslyn Corporation (the
"Corporation") for the Annual Meeting of Shareholders to be held in the
Assembly Room, 6th Floor, The Northern Trust Company Building, 50 South
LaSalle Street, Chicago, Illinois 60675 on Wednesday, April 27, 1994, at 10:00
o'clock a.m., or any adjournment thereof. On or before March 25, 1994, this
Proxy Statement and the enclosed Proxy were first sent or given to the
Corporation's Shareholders. The 1993 Annual Report to Shareholders, including
financial statements for the fiscal year ended December 31, 1993, accompanies
this Proxy Statement.
The executive offices of the Corporation are located at 30 South Wacker
Drive, Chicago, Illinois 60606.
The only voting securities of the Corporation are its Common Shares, of
which there were 7,108,141 shares outstanding on March 1, 1994, the record
date. A majority of such shares will constitute a quorum for the transaction
of business at the Annual Meeting. Shareholders are entitled to one vote for
each Common Share of the Corporation held. The Board of Directors is
soliciting discretionary authority to accumulate votes. In the election of the
Board of Directors, shareholders have the right to vote the number of shares
owned by them for each of the six nominees, or they may cumulate their votes
and give six votes to one nominee for each share owned, or they may distribute
their votes on the same principle among as many nominees as they choose. No
act need be done or notice given prior to the exercise of such cumulative
voting rights. An affirmative vote of the shareholders of at least two-thirds
of the outstanding shares entitled to vote is required to approve the
amendment to the Articles of Incorporation. For the purpose of counting votes,
abstentions, broker non-votes and other shares not voted have the same effect
as a vote against the proposal.
Each proxy received by the Board of Directors of the Corporation will be
voted as specified by the Shareholder thereon. Any Shareholder may revoke
their proxy at any time prior to the voting thereof by (1) giving written
notice of such revocation to the Secretary of the Corporation, (2) properly
submitting to the Corporation a duly executed proxy bearing a later date or
(3) appearing in person at the 1994 Annual Meeting and voting in person.
The cost of preparation of proxy solicitation materials and solicitation
of proxies will be paid by the Corporation. In addition to use of the mails,
proxies may be solicited by any Director, Officer, or employee of the
Corporation either personally or by such other means as he may choose, and
any such solicitation shall be made without additional compensation.
The Corporation may reimburse brokers and others for their expenses in
forwarding proxy solicitation materials to beneficial owners. The Corporation
has retained Morrow & Co., Inc. to assist in the solicitation of proxies at an
estimated fee of less than $10,000, plus reasonable expenses.
Page 44 1
<PAGE>
NOMINEES FOR ELECTION AS DIRECTOR
The Board of Directors has designated the six persons hereinafter listed
to be nominees for election as Directors of the Corporation at the Annual
Meeting. Proxies solicited by the Board of Directors will be voted as
directed therein with respect to the election of Directors; but if no choice
is specified in any proxy, then such proxies will be voted for such nominees.
The entire Board of Directors is elected annually and each Director is elected
to serve until his successor is duly elected and qualified unless the
Directorship is eliminated, in which case the Directorship will expire at the
next Annual Meeting.
Each of the nominees has consented to serve as a Director if he is
elected. If for any reason any such nominee for election should become
unavailable for election, a circumstance the Board of Directors does not
anticipate, discretionary authority may be exercised for a substitute nominee.
The persons named in proxies hereby solicited reserve the right, exercisable
in their sole discretion, to vote proxies cumulatively so as to elect all or
as many as possible of such nominees depending upon circumstances at the
meeting.
NOMINEES FOR REELECTION AS DIRECTOR:
William E. Bendix
Mr. Bendix is President, Chief Executive Officer and a Director of Mark
Controls Corporation, a NASDAQ listed company, and has held this position
since 1987. Mark Controls Corporation is a manufacturer of industrial valves,
liquid temperature control devices and electronic controllers. Prior to that,
Mr. Bendix was Group Vice President and a Director and was responsible for
five of the company's business units. Mr. Bendix joined Mark Controls as Vice
President of Manufacturing in 1969, was subsequently named Vice President of
Operations and was elected a Director in 1973. Prior to joining Mark
Controls, Mr. Bendix was a principal at Theodore Barry and Associates, a
management consulting firm with a practice emphasizing operations management.
Mr. Bendix is a Director of DEP Corporation, the former Chairman of the Valve
Manufacturers Association of America, and a former Director of Sargent-Welch
Scientific Company. Mr. Bendix is 59 years of age.
John H. Deininger
Mr. Deininger is Chief Executive Officer and President of Union City Body
Company, L.P., a manufacturer of truck bodies. He is a retired Executive
Vice President of Illinois Tool Works, Inc., a manufacturer of engineered
components and industrial systems. He was formerly President, Chief Operating
Officer and a Director of Signode Industries, Inc., now a wholly-owned
subsidiary of Illinois Tool Works, Inc. Mr. Deininger is currently a Director
of Eljer Industries, a New York Stock Exchange listed company which
manufactures and markets plumbing and heating ventilation products.
Mr. Deininger is also a Director of Life Fitness, Inc., a maker of exercise
and fitness equipment and a Director of Wayn-Tex, Inc., a manufacturer of
plastic woven for the carpet and food packaging industries. He formerly was
a Director for Allied Tube & Conduit, a manufacturer of metal tubing for
plumbing and electrical use. He is also a part-time consultant on industrial
business operations. Mr. Deininger is 62 years of age.
Page 45 2
<PAGE>
Donald B. Hamister
Mr. Hamister is Chairman of Joslyn Corporation's Board of Directors. Mr.
Hamister joined Joslyn in 1939. He became an Operating Manager of the
Corporation in 1958 and was elected a Vice President and Director of the
Corporation in 1973. He was elected President and Chief Executive Officer in
1978 and Chairman of the Board in 1979. He retired as President and Chief
Executive Officer of the Corporation in 1985, was reelected to the position of
Chief Executive Officer in 1986, and held that position until 1987. He was
reelected as Chief Executive Officer in 1991 and held that position through
December, 1992. Mr. Hamister served in the United States Navy from 1942 to
1946 attaining the rank of lieutenant. He is a member of the Institute of
Electrical and Electronics Engineers and the Airline Avionics Institute. He
served as Chairman of the Airline Avionics Institute from 1972 to 1974. Mr.
Hamister is 73 years of age.
Raymond E. Micheletti
Mr. Micheletti is President and Chief Executive Officer of Joslyn
Corporation. He joined Joslyn in 1966, became General Manager of the Joslyn
Hi-Voltage Equipment Division in 1972, was named Vice President of the
Corporation in 1976, and assumed the additional responsibility of Joslyn's
Wood Products Group. In 1984, he led the acquisition of a new business unit,
Joslyn Clark Controls, Inc. He was named a Senior Vice President of the
Corporation in 1988 with responsibility for the Industrial Controls business
segment. In 1991, Mr. Micheletti was elected President and a Director of the
Corporation. He led the acquisition of a new business unit, Joslyn Jennings
Corporation, in 1992 and later that year was elected to his current position
with the Company. He is a graduate electrical engineer and a member of the
Institute of Electrical and Electronics Engineers. Mr. Micheletti is 68 years
of age.
Richard C. Osborne
Mr. Osborne is President, Chief Executive Officer and Chairman of the
Board of Scotsman Industries, Inc., a New York Stock Exchange listed company.
Scotsman is a leading manufacturer of refrigeration products primarily
serving the foodservice, hospitality, beverage, bakery and healthcare
industries, with a secondary focus on luxury appliances for the consumer
market. Mr. Osborne previously held the position of Executive Vice President
of Household Manufacturing, Inc. from 1982 to 1989, and from 1979 to 1982 was
President of Structo and Halsey Taylor, a division of Household Manufacturing,
Inc. Mr. Osborne was the Director of Manufacturing of Pillsbury Company from
1967 to 1979, and began his career as an Engineer with the Chevrolet Division
of General Motors. Mr. Osborne is 50 years of age.
Lawrence G. Wolski
Mr. Wolski is Executive Vice President, Chief Financial Officer, and
Director of the Utility Systems Group. He joined Joslyn in 1974 as Controller,
having been employed previously by Arthur Andersen & Co. for eight years, his
last position being that of Audit Manager. In 1976, he was elected Vice
President, Finance, of the Corporation. He was elected Chief Financial
Officer of the Corporation in 1980, Senior Vice President in 1987, and
Executive Vice President in 1993. Mr. Wolski was elected a Director of the
Corporation in 1981. Mr. Wolski is 49 years of age.
SECURITY OWNERSHIP OF MANAGEMENT ON MARCH 3, 1994
The following table sets forth information about the beneficial ownership
of Common Stock for each Director and nominees for Director, each Executive
Officer named in the Summary Compensation Table in this Proxy Statement, and
all Directors and Executive Officers of the Corporation as a group as of March
3, 1994.
Page 46 3
<PAGE>
Directors and Number
Nominees of Shares(a)
______________ _____________
William E. Bendix . . . . . . . . . . . . . . . . . . 2,000
John H. Deininger . . . . . . . . . . . . . . . . . . 900
Donald B. Hamister . . . . . . . . . . . . . . . . . 12,000
Raymond E. Micheletti . . . . . . . . . . . . . . . . 25,937
Richard C. Osborne . . . . . . . . . . . . . . . . . 750
Lawrence G. Wolski . . . . . . . . . . . . . . . . . 36,664
Certain Executive
Officers
_________________
Wayne M. Koprowski . . . . . . . . . . . . . . . . . 20,044
Steven L. Thunander . . . . . . . . . . . . . . . . . 21,645
A. Russell Gray . . . . . . . . . . . . . . . . . . 11,541
Directors and Officers as a Group . . . . . . . . . . 155,897
____________
(a) Includes shares Executive Officers have the right to acquire pursuant
to the Corporation's Employee Stock Benefit and Stock Option Plans. The
number of shares which each of the above individuals have the right to
acquire are: Mr. Micheletti 12,253 shares; Mr. Wolski 22,664 shares; Mr.
Koprowski 15,044 shares; Mr. Thunander 18,356 shares; and Mr. Gray 6,136
shares.
In addition to the shares shown as owned by the nominees in the preceding
table, the following approximate number of shares are held by the Profit
Sharing Plan in which the individuals named have shared voting power as to
those shares: Mr. Micheletti 1,698 shares; Mr. Wolski 1,451 shares; Mr.
Koprowski 800 shares; Mr. Thunander 1,125 shares; and Mr. Gray 539 shares.
None of the Director nominees or Executive Officers hold 1.0% or more of the
outstanding shares of the Corporation.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information regarding the
beneficial ownership of the Corporation's Common Shares on December 31, 1993,
by each person known by management to be the beneficial owner of more than 5%
of the outstanding shares of the Corporation:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
____________________ ____________________ _________
Robert D. MacDonald, James H. Ingersoll & . . . . . 659,438(a) 9.3%
David L. Everhart, Trustees
150 N. Michigan Avenue, Suite 2500
Chicago, Illinois 60601
Joslyn Retirement Plans' Company Stock Trust . . . . 454,472(b) 6.4%
30 South Wacker Drive
Chicago, Illinois 60606
Pioneering Management Corporation . . . . . . . . . 430,337(c) 6.1%
60 State Street
Boston, Massachusetts 02109
Page 47 4
<PAGE>
___________________
(a) Includes 515,645 shares held by Messrs. MacDonald, Ingersoll and
Everhart as co-trustees of the Alice Newell Joslyn Trust and the Marcellus
Lindsey Joslyn Trust. These trusts have sole voting and dispositive power
with respect to the shares in each trust. In addition to the 515,645 shares
held with co-trustees Messrs. Ingersoll and Everhart, Mr. MacDonald holds
143,793 shares as a trustee of four other trusts.
(b) Joslyn Retirement Plans' Company Stock Trust ("Trust") has sole
voting and investment power for 43,173 of such shares and shared voting and
investment power for 411,299 of such shares. The Trust beneficially owns
certain of the above shares for the Corporation's Employees' Savings and
Profit Sharing Plan ("Profit Sharing Plan") and the Trustee has power to
dispose of such shares; provided, however, that in the event of a tender or
exchange offer, the participants generally have the right to direct the
Trustee on how to respond to the tender or exchange offer.
(c) Pioneering Management Corporation has reported in its Form 13G that
it has sole voting power as to 430,337 shares and shared dispositive power as
to 430,337 shares.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has standing Audit, Compensation and Nominating
Committees. Messrs. William E. Bendix, Donald B. Hamister, Richard C. Osborne
and Walter W. Schoenholz were the members of the Audit Committee during 1993.
Messrs. John H. Deininger, Hamister, Osborne and Schoenholz were members of
the Compensation Committee during 1993. Messrs. Raymond E. Micheletti,
Bendix, Deininger, and Hamister were members of the Nominating Committee
during 1993. In addition, the Board of Directors formed an ad hoc Succession
Committee for the purpose of identifying candidates for the position of
President and Chief Executive Officer to succeed Mr. Micheletti upon his
retirement. Messrs. Bendix, Deininger, Hamister, Osborne and Schoenholz were
members of the Succession Committee in 1993.
Among other responsibilities, the Audit Committee recommends the
selection of the independent public accountants, reviews the scope and
procedures of the planned audit activities and reviews the results of the
audits. The Audit Committee considers and approves in advance non-audit
services performed by the independent public accountants to determine that
such services do not compromise their independence. The Compensation
Committee recommends the compensation to be paid for the services of the
Directors and Executive Officers of the Corporation. The Nominating Committee
develops criteria for Directors, evaluates the qualifications of and
interviews prospective candidates for the Board of Directors of the
Corporation and makes recommendations to the Directors of nominees for
election to the Board of Directors of the Corporation.
During 1993, there were two meetings for each of the Audit and
Compensation Committees and one meeting of the Succession Committee. There
were five meetings of the Board of Directors in 1993. All members of the
Board attended all of the meetings of the Board, and all members of the
Committees attended all meetings of the Committees of the Board.
COMPENSATION OF DIRECTORS
Directors of the Corporation who are employees serve without additional
compensation. Directors of the Corporation who are not employees of the
Corporation each receive an annual compensation payment of $19,000. These
Directors also receive $700 for each meeting of the Board of Directors or a
Committee thereof attended and $700 for each day or fraction thereof spent in
the conduct of the Corporation's business other than Board or Board Committee
meetings. The Chairman of the Board of Directors receives an additional
$10,000 per year to serve in that capacity.
Page 48 5
<PAGE>
Directors who are not employees may elect to become participants in the
Deferred Compensation Plan in order to defer all or a portion of their fees.
Deferred fees otherwise payable are credited to a participant's Deferred Fee
Account bearing an annual interest rate. Upon termination of their services,
payment from the Deferred Fee Account will be paid to the former Directors in
installments.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid or to be paid for
the fiscal year 1993 to the Chief Executive Officer and to the four most
highly compensated Executive Officers of the Corporation. A more detailed
explanation follows the table.
Name and Principal Fiscal All Other
Position Year Salary(1) Bonus Compensation(2)
____________________ _______ _________ _______ _______________
Raymond E. Micheletti 1993 $299,224 $91,125 $15,485
President and Chief 1992 250,557 107,800 16,078
Executive Officer 1991 219,657 76,223 14,812
Lawrence G. Wolski 1993 $237,548 $73,552 $15,485
Exec. Vice President, 1992 233,001 82,854 16,078
Chief Financial Officer 1991 220,534 71,320 14,812
Wayne M. Koprowski 1993 $148,610 $32,400 $10,716
Vice President 1992 145,157 40,625 13,845
1991 136,718 36,963 9,849
Steven L. Thunander 1993 $164,882 $25,000 $5,839
Vice President 1992 163,800 28,529 7,997
1991 163,132 10,000 4,796
A. Russell Gray 1993 $134,000 $25,746 $10,727
Dir., Communications 1992 130,000 7,450 8,536
& Defense Group 1991 125,000 18,237 10,751
______________________
1) Salary includes base compensation and contributions made under the
Joslyn Corporation Retirement Parity Compensation Plan ("Parity Plan").
Certain Executive Officers of Joslyn Corporation are participants in the
Parity Plan. The Parity Plan provides annual payments to eligible employees
who may elect to deposit their payments in an individual trust. Each trust
provides for distribution upon: (1) retirement after attaining age 60, (2)
disability or death, (3) attaining age 65, or (4) termination of employment
prior to age 60. The 1993 Parity Plan amount for eligible individuals listed
in the Summary Compensation Table were: Mr. Micheletti $29,224; Mr. Wolski
$23,548; Mr. Koprowski $13,610; and Mr. Thunander $14,882.
2) "All Other Compensation" is comprised of contributions on behalf of
the Executive Officers to the Corporation's Profit Sharing Plan, a
defined plan, except that it also includes a $1,000 director fee for Messrs.
Gray and Thunander for being subsidiary company board members.
Page 49 6
<PAGE>
STOCK OPTION/SAR GRANTS IN 1993
The following tables show, as to the Chief Executive Officer and the
four most highly compensated Executive Officers of the Corporation,
information with respect to grants of non-qualified stock options and stock
exercises for the period January 1, 1993 to December 31, 1993.
Non-Qualified Option grants awarded December 31, 1993
<TABLE>
<CAPTION>
Securities % of Total Potential Realizable Value at
Underlying Granted to Assumed Annual Rates of Stock Price
Options Employees Base Price Expiration Appreciation for Option Term
Name Granted(1) in 1993 ($/share)(2) Date at 0% at 5% at 10%
_____________________ __________ _______ ____________ ___________ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond E. Micheletti 9,273 11.9% $24.75 6/29/99 $0 $70,731 $158,568
Lawrence G. Wolski 6,053 7.8% $24.75 6/29/99 0 46,184 103,506
Wayne M. Koprowski 3,394 4.4% $24.75 6/29/99 0 25,896 58,037
Steven L. Thunander 3,636 4.7% $24.75 6/29/99 0 27,743 62,176
A. Russell Gray 2,545 3.3% $24.75 6/29/99 0 19,418 43,520
</TABLE>
_______________________
(1) All options were granted on December 31, 1993, and first become
exercisable on June 29, 1994.
(2) The Base Price equals the average of the last reported high and low
transactions of Common Shares on the NASDAQ National Market System on
the date of the grant of options.
Aggregated Option/SAR Exercises in 1993 and Fiscal Year-end Option/SAR
Values
This table provides the number of shares acquired by stock option
exercise during 1993. The value realized is the difference between the market
price on the date of exercise and the base price multiplied by the number of
shares exercised. The table also provides the year-end value of all stock
options and Stock Appreciation Rights ("SARs") granted to but not yet
exercised by each executive. The value represents the difference of the
market price on December 31, 1993 and the base price multiplied by the number
of outstanding options. This value may go up or down as the stock price
fluctuates and is not realized until exercised.
<TABLE>
<CAPTION>
Securities Value
Underlying of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
1993 Fiscal Year-end: 1993 Fiscal Year-end:
Shared Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
_________________________ ___________ ______________ _____________ _____________
<S> <C> <C> <C> <C>
Raymond E. Micheletti 16,066 $76,289 12,253/9,413 $22,543/0
Lawrence G. Wolski 0 0 22,664/6,144 96,860/0
Wayne M. Koprowski 2,200 21,574 15,044/3,445 58,054/0
Steven L. Thunander 0 0 18,356/3,691 84,380/0
A. Russell Gray 557 5,503 6,136/2,584 22,615/0
</TABLE>
DEFINED BENEFIT PENSION PLAN
Salaried employees participated in the Employees' Supplemental
Retirement Plan of Joslyn Corporation ("Pension Plan") until December 31, 1988
when the Pension Plan was frozen. Therefore, no additional benefit accruals
for either additional employment service or compensation increases will be
incurred. The estimated annual benefits payable upon retirement at age 65 for
each of the individuals named in the Summary Compensation Table are as
follows: Mr. Micheletti $40,158; Mr.Wolski $76,068; Mr. Koprowski $13,687; Mr.
Thunander $34,976 and Mr. Gray $0.
Page 50 7
<PAGE>
EMPLOYMENT AGREEMENTS
The Corporation has entered into separate employment agreements with the
following individuals: Messrs. Raymond E. Micheletti (President, Chief
Executive Officer and a Director) and Lawrence G. Wolski (Executive Vice
President, Chief Financial Officer and a Director). Each agreement provides
for an annual salary to be paid to the employee at least equal to that being
received at the date of the agreement.
The agreements expire on March 31, 1994 as to Mr. Micheletti, and on
December 31, 1996 as to Mr. Wolski. These agreements may be earlier
terminated by Joslyn upon 180 days written notice. Messrs. Micheletti and
Wolski each are entitled to receive salary at the rate in effect at the date
of notice for a period of 18 months following termination of employment
conditioned upon their rendition of consulting services to Joslyn for the
remaining term of their Agreement. However, Joslyn may terminate an agreement
within such period if the employee accepts other employment prior to the
expiration of the period, and Joslyn reasonably determines the new employment
to be in conflict or competition with Joslyn. Upon the death of any such
employee, his legal representative is entitled to receive his salary payable
to the end of the month following the month in which death occurs, plus
incentive compensation for the fiscal year extended to the last day of the
month following date of death, plus an amount equal to the monthly base salary
in effect at the time of death multiplied by three. Mr. Micheletti has
announced his intention to retire at the end of 1994 from his position of
President and Chief Executive Officer and therefore his agreement will not be
extended.
JOSLYN CORPORATION STOCK PERFORMANCE GRAPH
The graph provided below compares Joslyn Corporation's cumulative
shareholder total return with that of the NASDAQ Composite Index and the Dow
Jones Electrical Equipment Group. The comparison is made by calculating the
difference in share price from December 31, 1988, and December 31, 1993 and
including the cumulative amount of dividends, assuming reinvestment, during
this five year period. An initial investment of $100.00 has been used as a
common point of reference.
Comparative Five Year Cumulative Total Return
- GRAPH -
Page 51 8
<PAGE>
For ease of comparison, the table below provides the data utilized in the
graph. The table assumes an investment of $100.00 on December 31, 1988 and
indicates the appreciation or depreciation of each investment over a five year
period.
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
_______ _______ ______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C>
Joslyn Corporation $100.00 $108.63 $88.92 $133.08 $182.13 $178.12
NASDAQ Market Index 100.00 112.89 91.57 117.56 118.71 142.40
Dow Jones Electrical 100.00 107.47 90.28 99.41 95.96 117.52
Equipment Group
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
reviewing and approving to the Board compensation for the Executive Officers
of the Corporation, including the Chief Executive Officer and the four most
highly compensated Executive Officers. The Committee reviews base salaries
and corporate and individual bonus goals of the Chief Executive Officer and of
the Executive Officers as recommended by the Chief Executive Officer. The
Committee also approves all grants of stock options under the Corporation's
Stock Option Plan. All Committee members are non-employee, outside directors
of the Corporation.
Compensation Philosophy
The Corporation seeks to link Executive Officer compensation to
profitability resulting in enhanced shareholder value. The compensation
philosophy has the following objectives:
- to attract and retain quality management
- to encourage and reward performance on an individual,
business unit and corporate basis
- to reward both short term and long term performance
- to tie executive compensation to long term growth of
shareholder value
The Corporation's executive compensation program is comprised of a base
salary, an annual incentive bonus program and a long term incentive
compensation plan in the form of stock options. In addition, Executive
Officers are eligible to participate in various benefit plans, including
medical insurance coverage and profit sharing, which are available to all
employees.
Base Salary
Base salaries for Executive Officers are determined in consideration of
each Executive Officer's position, responsibilities, experience and
performance. In setting compensation, the Committee takes into account the
national marketplace for a group of companies consisting of
Page 52 9
<PAGE>
electrical and electronics manufacturing companies of similar size (annual
sales between $100 and $600 million) in the Corporation's labor market
("Labor Market Group"). The Committee decided against using the companies in
the industry peer group as reflected in the Performance Graph because the
Committee believes that the comparatively large size of many of the peer
group companies distorts compensation levels for similar positions. Each
Executive Officer's base salary is initially set at the median for similar
positions within the Labor Market Group.
The Committee annually reviews and may adjust individual salaries of all
Executive Officers including the Chief Executive Officer and the four highest
compensated Executive Officers taking into account compensation guidelines
(utilizing executive compensation surveys, outside compensation specialists,
or both), business performance and individual performance. Business
performance is evaluated in reference to both actual corporate earnings
results and comparative results of the companies in the Corporation's industry
peer group as reflected in the Performance Graph. The factors impacting base
salary are not independently assigned specific weights. Rather, the Committee
reviews all the factors and makes salary recommendations which reflect the
Committee's analysis of the aggregate impact of these factors.
Mr. Micheletti's 1992 base salary of $220,000 was increased to $270,000
in 1993 in recognition of his promotion to Chief Executive Officer, the
additional responsibilities that would be imposed on him in that capacity, and
the Corporation's record earnings performance in 1992. The Committee used
market comparisons obtained from compensation surveys for comparably sized
manufacturing companies in setting his 1993 base salary. Mr. Micheletti's base
salary places him about 20% below the median for chief executive officers in
the Labor Market Group.
Annual Incentive Bonus Program
In addition to base salary, each Executive Officer is eligible for an
annual incentive cash bonus award under the Executive Management Incentive
Plan. The Compensation Committee believes that the plan provides an additional
short term incentive to those executives who have a greater potential impact
on business performance by having a larger portion of their total compensation
in variable bonus opportunities. Annual cash bonuses are paid based on
formulas which take into consideration attainment of corporate and business
unit earnings goals and individual goals designed to improve the
Corporation's overall performance. Individual performance goals are taylored
to each Executive Officer's position and vary from person to person. For
Executive Officers, excluding the Chief Executive Officer, potential bonus
payments range from 0% to a maximum of 50% of base salary depending on the
Executive Officer's position with half of the bonus potential based upon
corporate or business unit earnings performance and the other half based upon
individual performance. However, since actual payouts are dependent on
achieving pre-determined performance goals, failure to attain those goals
could result in no bonus. During 1993, the Corporation achieved its business
plan earnings goals for the year and the Executive Officers, including the
Chief Executive Officer and the four highest compensated Executive Officers,
received cash bonuses for achieving the business plan earnings goal.
For 1993, Mr. Micheletti's potential bonus ranges from 0% to 70% of base
salary with a target payment of 35% of base salary. Over 70% of his annual
potential bonus was based upon the attainment targeted net income goals for
the plan year, with the remaining bonus based upon the achievement of
individual goals. For 1993, Mr. Micheletti was awarded a bonus of $91,125,
which is 33.8% of base salary based in part upon the Committee's achievement
of its 1993 business plan earnings goal.
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Long Term Incentive Compensation Plan (Stock Option Plan)
The Compensation Committee believes that by providing key employees,
including the Chief Executive Officer and the four highest compensated
Executive Officers, who have substantial responsibility over the management
and growth of the Corporation, with an opportunity to increase their ownership
of the Corporation's stock, the interests of the shareholders and key
employees, including Executive Officers, will be more closely aligned. The
Stock Option Plan meets this objective by permitting the Corporation through
the Compensation Committee to make annual grants of non-qualified stock
options to key employees, including the Chief Executive Officer and the four
highest paid Executive Officers. Stock options are granted with an exercise
price equal to the fair market value of the Corporation's common stock on the
date of grant and typically may be exercised over a period of five years.
This approach is intended to motivate the key employees to contribute to the
creation and growth of shareholder value over the long term. Value to the
optionee is dependent upon an increase in the stock price above the exercise
price. The size of each person's stock option grant is based upon a formula,
originally recommended by an outside compensation consultant, which provides a
range of possible grants utilizing a multiple of the optionee's base salary.
The formula for determining the number of stock option grants is the base
salary times a multiplier (ranging from 0.3 to 1.0), divided by the then
market price of the Corporation's stock. Currently, the stock option grants
awarded by the Committee place optionees approximately 66% below the median
compared to optionees in the Labor Market Group. The Compensation Committee
also considers previous options granted but unexercised as well as actual
ownership in the Corporation's stock in making additional grants of options.
In 1993, Mr. Micheletti was granted 9,273 options at an exercise price of
$24.75. The option grant was below the median compared to grants typically
made to chief executive officers in the Labor Market Group.
Richard C. Osborne, Chairman
John H. Deininger
Donald B. Hamister
Walter W. Schoenholz
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO LIMIT DIRECTOR LIABILITY
The proposed amendment would limit the personal liability of the
Directors to the Corporation or its shareholders for monetary damages arising
from breach of fiduciary duty. The proposed amendment is authorized by a
change to the Illinois Business Corporation Act of 1983 that became effective
January 1, 1994 and will assist the Corporation in attracting and retaining
qualified individuals to serve as Directors of the Corporation.
Background
Until the amendment of the Illinois Business Corporation Act in July
1993, Illinois was one of the few states that had not taken action to protect
corporate directors who acted in good faith but were nevertheless threatened
with substantial liability from negligence claims. As a result of the change
in the law, an Illinois corporation is now able to provide its directors with
liability protection similar to that available to companies incorporated in a
vast majority of other states, including Delaware. Liability is not limited
under Illinois law if the acts or omissions of directors are in bad faith,
involve intentional wrongdoing, violate certain statutory provisions, or
result in profit or other advantage to which the director is not legally
entitled.
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Text of Proposed Amendment
The text of the proposed amendment to be added to the Corporation's
Articles of Incorporation as Article Nine is as follows:
The Directors of the Corporation shall not be liable to the Corporation
or to its shareholders for monetary damages for breach of fiduciary
duties as a Director, provided that this provision shall not eliminate or
limit the liability of a Director (i) for any breach of the Director's
duty of loyalty to the Corporation or its shareholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a
knowing violation of the law, (iii) under Section 8.65 of the Illinois
Business Corporation Act or (iv) for any transaction from which the
Director derived an improper personal benefit.
Reasons for the Proposed Amendment
Directors of Illinois corporations are required, under Illinois law, to
perform their duties in good faith and with that degree of care that an
ordinarily prudent person in a like position would use under similar
circumstances. A director may rely upon information, opinions and reports
prepared by certain officers or employees, professional advisors, or
committees of the Board. Decisions made on that basis are protected by the
"business judgment rule" and should not be questioned by a court in the event
of a lawsuit challenging such decisions. However, the expense of defending
such lawsuits and the inevitable uncertainties of applying the business
judgment rule to particular facts and circumstances mean, as a practical
matter, that directors are not relieved of the threat of monetary damage
awards. The Board of Directors of the Corporation, therefore, believes that
the proposed amendment should be adopted in order to ensure that the
Corporation will continue to be able to attract and retain competent,
qualified and talented persons to serve as directors.
Effect of the Proposed Amendment
The proposed amendment would protect the Corporation's Directors against
personal liability to the Corporation or its shareholders for any breach of
duty unless a judgment or other final adjudication adverse to them establishes
(i) a breach of the duty of loyalty to the Corporation, (ii) acts or omissions
in bad faith or involving intentional misconduct or a knowing violation of the
law, (iii) acts violating the prohibitions contained in Section 8.65 of the
Illinois Business Corporation Act against certain improper distributions of
assets, or (iv) an improper personal benefit to a Director to which he or she
was not legally entitled. No claim of the type which would be affected by the
proposed amendment is presently pending or, to the knowledge of management of
the Corporation, threatened.
The amendment as proposed would not reduce the fiduciary duty of a
Director, it merely limits monetary damage awards to the Corporation and its
shareholders arising from certain breaches of that duty. It does not affect
the availability of equitable remedies, such as the right to enjoin or rescind
a transaction, based upon a Director's breach of fiduciary duty. The
amendment also does not affect a Director's liability for acts taken or
omitted prior to the time it becomes effective (after shareholder approval and
upon filing with the Illinois Secretary of State). The limitation of
liability afforded by the proposed amendment affects only actions brought by
the Corporation or its shareholders, and does not preclude or limit recovery
of damages by third parties.
With respect to this proposal, shareholders may direct that their votes
be cast for or against such proposal, or may abstain, by marking the proper
box on the Proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT.
Proxies solicited by management will be so voted unless shareholders specify
a contrary choice in their proxies. For approval, the proposed requires the
affirmative vote of at least two-thirds of the outstanding shares of Common
Stock of the Corporation. Abstentions and broker non-votes will have the
effect of a vote against the proposal.
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RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Shareholders will be asked to ratify the appointment by the Board of
Directors of Arthur Andersen & Co. as independent public accountants for the
Corporation and its subsidiary companies for the year 1994. Arthur Andersen
& Co. served in this capacity in 1993, and has been retained by the
Corporation in this capacity since 1933. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT BY THE BOARD OF
DIRECTORS OF ARTHUR ANDERSEN & CO. AS INDEPENDENT ACCOUNTANTS FOR THE YEAR
1994.
Representatives of Arthur Andersen & Co. are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they
wish and will be available to respond to any questions at the Annual Meeting.
The Chairman of the Meeting will refer appropriate questions from Shareholders
to the representatives of Arthur Andersen & Co. for response.
SHAREHOLDER PROPOSAL FOR 1995 ANNUAL MEETING
The 1995 Annual Meeting of the Shareholders of the Corporation is
expected to be held on April 26, 1995. If any Shareholder wishes a proposal
to be considered for presentation at the 1995 Annual Meeting, such proposal
must be received by the Corporation at its offices at 30 South Wacker Drive,
Chicago, Illinois 60606 not later than November 29, 1994.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at
the meeting other than those mentioned in the Notice of Annual Meeting of
Shareholders. However, if other matters come before the meeting, it is the
intention of each person named in the accompanying Proxy to vote said Proxy in
accordance with his judgment of such matters.
The Notice of Annual Meeting of Shareholders and Proxy Statement are
hereby sent by order of the Board of Directors.
Chicago, Illinois
March 25, 1994
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