SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/x/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 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 for the transition period from ________ to _______.
Commission File Number 1-5562
KOLLMORGEN CORPORATION
(Exact name of registrant as specified in its charter)
New York 04-2151861
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Reservoir Place, 1601 Trapelo Road, Waltham, MA 02154-7333
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 890-5655
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock - $2.50 par value New York Stock Exchange, Inc.
Preferred Stock Purchase Rights New York Stock Exchange, Inc.
8 3/4% Convertible Subordinated
Debentures Due 2009 New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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 the 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 /
State the aggregate market value of the voting stock held by non-
affiliates of the registrant. $72,897,858 as of February 25, 1994.
Indicate the number of outstanding shares of the registrant's Common
Stock. 9,636,822 shares as of February 25, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of 1994 Definitive Proxy Statement to be filed for the 1994
Annual Meeting of Shareholders are incorporated by reference into Part III.
<PAGE>
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PART I
Item 1. Business.
(a) General. Kollmorgen Corporation, incorporated in the State of New
York in 1916, has operations in two industry segments: the motion
technologies group and electro-optical instruments. The term the "Company"
as used herein refers to Kollmorgen Corporation and its subsidiaries.
(b) Financial Information about Industry Segments. The following table
includes certain financial information relating to each of the Company's
industry segments in each of its last three fiscal years:
<TABLE>
SEGMENTS OF BUSINESS INFORMATION
(in thousands)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Motion Technologies Group
Sales $ 112,767 $ 116,575 $ 120,562
Operating profit (loss) 9,207 (2,522) 49
Assets 63,203 66,904 73,135
Capital additions 3,347 3,181 2,336
Depreciation 3,426 3,486 4,276
Backlog 52,231 49,941 57,000
Electro-Optical
Instruments
Sales $ 72,771 $ 78,284 $ 79,895
Operating profit (loss) 3,078 4,080 (13,373)
Assets 32,740 43,788 64,540
Capital additions 2,093 1,783 3,893
Depreciation 2,356 3,162 4,278
Backlog 58,266 48,138 44,000
Corporate
Operating expenses $ (8,381) $ (11,055) $ (24,214)
Assets 38,065 38,876 16,768
Capital additions 30 78 195
Depreciation 207 407 731
Consolidated
Sales $ 185,538 $ 194,859 $ 200,457
Operating profit (loss) 3,904 (9,497) (37,538)
Assets 134,008 149,568 154,443
Capital additions 5,470 5,042 6,424
Depreciation 5,989 7,055 9,285
Backlog 110,497 98,079 101,000
</TABLE>
<PAGE>
<PAGE>3
The operating profit and loss in the above table is defined as total
revenue less operating expense and represents operating segment income before
general corporate expense and income taxes. Identifiable assets by segment
are those assets used exclusively in the operation of that industry segment.
Corporate expenses, which include interest (net of investment income)
and general and administrative expenses, are not allocated to respective
segments. Corporate assets consist principally of cash and investments, as
well as net assets held for disposition.
The loss from operations in 1992 includes a restructuring charge of
$10.0 million taken primarily to consolidate several motor operations. The
charge is allocated as follows:
Motion Technologies Group $ 8,000
Corporate $ 2,000
The loss from operations in 1991 includes restructuring and other
charges of $26.3 million consisting primarily of employee severance costs,
additional costs estimated to complete several large long-term military
development contracts, and the write-off of certain inventories and non-
performing long-term receivables, as follows:
Motion Technologies Group $ 5,800
Electro-Optical Instruments $11,100
Corporate $ 9,400
(c) Narrative Description of Business
Motion Technologies Group.
The Company believes that it is one of the major worldwide manufacturers
of specialty direct current ("d.c.") permanent magnet motors with associated
electronic servo amplifiers and servo feedback components. These products
are manufactured in the United States by the Company's Inland Motor and
Industrial Drives/PMI Divisions. In addition, the Company's foreign
subsidiary, Kollmorgen Artus in France, serves the European markets. The
Inland Motor Division designs and manufactures specialty d.c. torque motors,
servo motors, tachometer generators, electromechanical actuators and
associated high technology drive electronics used worldwide in aerospace,
defense, process control, medical, machine tool, and computer peripheral
applications. The Industrial Drives/PMI Division manufactures a line of
specialty drive motors and related electronic amplifiers which are used in a
variety of industrial applications including industrial automation, process
control, machine tools, underwater equipment, and robotics. This Division
also designs, manufactures and distributes a line of low inertia, high speed
of response, d.c. motors and associated electronics plus feedback devices
under the U.S. registered trademark "PMI" used primarily in industrial
automation and medical applications. In addition, Industrial Drives/PMI
sells a line of stepper motors used for office and factory automation,
instrumentation and medical applications. Kollmorgen Artus manufactures and
sells d.c. servo and torque motors, electromechanical actuators and drive
electronics, synchros, and resolvers, which are sold primarily into the
<PAGE>
<PAGE>4
European avionics and aerospace market. This subsidiary also manufactures
and sells a line of fault detection instruments for the electric utility
industry as well as calibration equipment for air traffic control navigation
aids.
In the specialty motor and drive business, competitive advantage is
gained by the ability of the Company to design new or adapt existing motors
and drive systems to meet relatively stringent packaging and performance
requirements of customers, most of whom are original equipment manufacturers
purchasing the motors and drives for inclusion in their end product. While
meeting these stringent technical specifications, the motors and drives must
also be price competitive. The number and identity of the competitors in
this segment varies depending upon the particular industry and product
application. In recent years, a number of large European and Japanese
manufacturers, either directly or through joint ventures with American
companies, have been able to compete successfully in the United States
machine tool and industrial automation marketplaces, including the market for
industrial motors of the type that the Company's Industrial Drives/PMI
Division manufactures. In other markets, there are relatively few
competitors for each marketplace or application, and generally they are
specialized domestic or foreign motor manufacturers.
In the United States, the industrial/commercial products manufactured in
this segment are marketed and sold by the Company's Industrial and Commercial
Products Group, and the defense and aerospace products are marketed by the
Aerospace and Defense Products Group. Depending upon the particular motor
product or control system in question, the products of the Company's motion
technologies group are marketed and sold directly through qualified technical
personnel employed by the Company, or through manufacturer's representatives
or distributors, or by a combination of the foregoing.
The backlog of the motion technologies group at the end of 1993 was
$52.2 million of which approximately 80% is expected to be shipped in 1994.
Electro-Optical Instruments.
The Company's electro-optical business is conducted principally by one
domestic division and two subsidiaries: the Electro-Optical Division,
Kollmorgen Instruments Corporation, and Proto-Power Corporation. The
products of this industry segment serve two broad customer groups: military
and industrial/commercial. The Company serves the military market primarily
through the Electro-Optical Division located in Northampton, Massachusetts.
This Division has been the primary designer and major supplier of submarine
periscopes and related spare parts to the United States Navy since 1916. The
only other supplier of submarine periscopes to the United States Navy is
Sperry Marine, Inc. In addition, the Electro-Optical Division markets and
sells submarine periscopes to navies throughout the world.
In January 1993, the Company received a contract for $24.7 million from
the U.S. Navy to produce 16 optronic sights for the DDG-51 Arleigh-Burke
class of guided-missile destroyers. In July 1993, the Company was also
awarded a $10 million contract from the U.S. Navy for 19 submarine periscopes
systems. Both contract awards have delivery schedules through 1996. This
Division also has been an important supplier of other electro-optical
<PAGE>
<PAGE>5
instruments for various weapon systems, including sights for the U.S. Army's
Abrams tank. These instruments often possess highly advanced servo-driven
optical systems and may use lasers, infrared detectors, or low-light level
television imaging systems for night vision. This Division also manufactures
and sells diamond-machined optical components and air bearing assemblies.
The Company serves the industrial/commercial marketplace for electro-
optical instruments through a wholly-owned subsidiary, Kollmorgen Instruments
Corporation, which operates through its Macbeth and Photo Research Divisions.
The Macbeth Division, located in New Windsor, New York, designs, manufactures
and sells worldwide specialized instruments and materials used for the
measurement of color and light. This Division also manufactures and sells a
line of spectrophotometers which measure color and are used in the textile,
paint, paper, plastics and many other industries where the measurement of
color is important. It is also a manufacturer of densitometers, which are
instruments that are used to control photographic and printing processes by
measuring the opacity or density of materials, such as films, inks, and dyes.
In addition, this Division manufactures specialized lighting devices for the
inspection and comparision of transparencies and prints in the photographic
and printing industries. The Macbeth Division also manufactures standard
lighting sources used in evaluating color and produces a line of color
standards sold under the U.S. registered trademark "Munsell". The on-line
version of the spectrophotometers manufactured by this Division permits the
measurement of spectral characteristics on a production line in a broad range
of industrial processes without interrupting production flow. Kollmorgen
Instruments GmbH, a German subsidiary of Kollmorgen Instruments Corporation,
designs and manufactures a product line of transportable spectrophotometers.
The Photo Research Division located in Chatsworth, California,
manufactures and sells specialized photometers and spectroradiometers,
instruments which make very precise color and brightness measurements of
displays (such as CRTs and lighted panels) and are used in both industrial
and military applications. This Division also manufactures and sells on-line
inspection and alignment systems for CRT displays used in the computer and
medical industries.
The Company believes that its businesses which manufacture industrial/
commercial electro-optical instruments are highly regarded in their
respective markets. This position has been built upon high quality products
which provide uniform results and meet specialized needs and standards, upon
proprietary software, and upon superior after-sales service. The Company's
competition in this field consists of a number of domestic and foreign
privately held companies and divisions or subsidiaries of publicly held
corporations. Depending upon the product and customers in question, the
Company's industrial products are sold through dealers and independent sales
representatives, distributors or systems houses and directly through the
divisions' own sales forces. In Europe, these products are distributed
through Kollmorgen Instruments GmbH, Kollmorgen (U.K.) Limited, the Company's
wholly-owned English subsidiary, and through independent representatives and
dealers.
Proto-Power Corporation, a wholly-owned subsidiary of the Company, is an
applications engineering company that primarily provides services for the
modification and upgrade of nuclear and fossil energy plants of domestic
electric utility companies.
<PAGE>
<PAGE>6
Within this segment, military products represented 47% of sales in 1993,
45% of sales in 1992, and 47% of sales in 1991. Generally speaking, the
Company's military business is characterized by long-term contracts which
call for the delivery of products over more than one year and progress
payments during the manufacture of the product. Competition is generally
limited to divisions of large multinational companies which specialize in
military contracting. To date, the Company has been able to compete
effectively against these larger companies because of the Company's
experience and expertise in the specialized areas which it serves.
The backlog of the electro-optical instruments segment at the end of
1993 was $58.3 million of which approximately 50% is expected to be shipped
in 1994.
Customer Base.
Except to the extent that sales to the U.S. government under numerous
prime and sub-contracts may be considered as sales to a single customer, the
Company's business is not characterized by dependence upon one customer or a
few customers, the loss of any of which would have a materially adverse
effect on its total business. Typical of all engineered or custom-made
component businesses, the Company's motion technologies group is
characterized by a customer base founded upon a number of large key accounts,
the importance of any one of which can vary from year to year. During 1993,
no customer accounted for 10% or more of the Company's consolidated revenues.
Government Sales.
In 1993, sales to the U.S. Government or for U.S. Government end-use
represented approximately 21% of revenues, of which 14% were generated from
the electro-optical instruments segment and 7% was from the motion
technologies group.
Patents.
The Company has either applied for or been granted a number of domestic
and foreign patents pertaining to the motion technologies group and electro-
optical instruments segments. The Company believes that these patents are
and will be important to the Company's continued leadership position in these
business segments and, when necessary, has and will continue to enforce its
legal rights against alleged infringements of its patent estate.
Raw Materials.
The raw materials essential to the Company's business are generally
available in the open market, and neither segment of the Company's business
experienced any significant shortages in such materials during the past three
years. The Company believes that it has adequate sources of raw materials
available for use and does not anticipate any significant shortages.
In the past, the Company has occasionally encountered rapid increases of
the prices of certain isolated materials used in parts of its business, but
such increases have not materially affected its ability to procure such
materials or to pass on the consequent cost increases to its customers.
<PAGE>
<PAGE>7
However, in some circumstances, there is generally a slight lag between the
time these higher costs are incurred and the time they can be reflected in
price increases to customers. During 1993, the Company did not encounter
such rapid price increases in raw materials.
Research and Development.
During 1993, the Company spent $9.3 million or approximately 5.0% of its
consolidated sales on research activities related to the development of new
products. This compares to $10.6 million or 5.5% in 1992 and $10.3 million
or 5.2% in 1991. Substantially all of this amount was sponsored by the
Company.
Environmental Regulations.
The Company's operations are subject to a variety of federal
environmental laws and regulations. The most significant of these laws are
the Clean Air Act, the Clean Water Act and the Resource Conservation and
Recovery Act, all of which are administered by the United States
Environmental Protection Agency. These statutes and the regulations impose
certain controls on atmospheric emissions, discharges into sewers and
domestic waters, and the handling and disposal of hazardous wastes. In
addition, certain state and local jurisdictions have adopted environmental
laws and regulations that are more stringent than federal regulations.
Compliance with these federal and state laws and regulations has resulted in
expenditures by the Company to improve or replace pollution control
equipment. The Company's estimated capital expenditures for environmental
control facilities are not expected to be material.
Employees.
As of December 31, 1993, the Company employed approximately 1,660
employees. The Company is a party to two collective bargaining agreements.
In August 1993, the Company's Electro-Optical Division entered into a three-
year agreement with the International Association of Machinists and Aerospace
Workers currently covering 38 employees. On March 4, 1994, the Macbeth
Division of Kollmorgen Instruments Corporation entered into a three-year
contract with the International Brotherhood of Electrical Workers currently
covering 24 employees at that Division. The Company believes that it enjoys
good relations with its employees, including those covered by collective
bargaining agreements.
Financial Information About Foreign and Domestic Operations and Export
Sales.
Financial information on the Company's foreign and domestic operations
and export sales is contained in the response to Item 14(a) of this Report.
Item 2. Properties.
The Company's corporate office is located in Waltham, Massachusetts.
The table which follows sets forth a current summary of the locations of the
Company's principal operating plants and facilities, and other pertinent
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<PAGE>8
facts concerning them. The Company's facilities are substantially utilized,
well maintained and suitable for its products and services. In addition, the
Company maintains approximately 150,000 sq.ft. of unutilized space due to
prior business segment dispositions and consolidations of facilities.
<TABLE>
<CAPTION>
Size of Leased
Industry Segment Location Facility or owned
<S> <C> <C> <C>
Motion Technologies Group Commack, NY 100,000 sq.ft. Leased
Radford, VA 267,000 sq.ft. Owned
Angers, France 102,000 sq.ft. Owned
Besancon, France 7,000 sq.ft. Owned
Morangis, France 20,000 sq.ft. Leased
Pont Andemer, France 7,500 sq.ft. Leased
Electro-Optical Instruments Chatsworth, CA 36,000 sq.ft. Leased
Groton, CT 11,500 sq.ft. Owned
New Windsor, NY 83,000 sq.ft. Owned
Northampton, MA 154,000 sq.ft. Owned
Brattleboro, VT 24,000 sq.ft. Leased
Corporate Waltham, MA 5,250 sq.ft. Leased
Nashua, NH 70,000 sq.ft. Owned
</TABLE>
The building in Nashua, New Hampshire, is an asset remaining from the
Company's disposition of a business segment in 1989. This facility is
currently being leased and is approximately 80% occupied.
Item 3. Legal Proceedings.
The Company has various legal proceedings arising from the ordinary
conduct of its business; however, they are not expected to have a material
adverse effect on the consolidated financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Company.
The following is a list of the Company's executive officers, their ages
and their positions as of February 25, 1994:
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<PAGE>9
Present Business Experience During
Name Age Office Past Five Years
Gideon Argov 37 President President and Chief Executive
and Officer since November 1991;
Chief Director since May 1991. From
Executive March 1988 to May 1991,
Officer President and Chief Executive
Officer and Director of High
Voltage Engineering Company.
Prior to that date, for five
years a manager and senior
consultant with Bain & Company.
Robert J. Cobuzzi 52 Senior Senior Vice President (since
Vice February 1993), Treasurer and
President, Chief Financial Officer since
Treasurer July 1991. From April 1989 to
and July 1991, Vice President and
Chief Treasurer of High Voltage
Financial Engineering Company. Prior to
Officer April 1989, Vice President and
Chief Financial Officer of
Ausimont N.V.
James A. Eder 48 Vice Vice President since January
President, 1990; General Counsel since
Secretary December 1991, and Secretary
and since 1983. Previously he had
General been Assistant Corporate Counsel
Counsel from 1977 to 1982.
Robert W. Woodbury, Jr. 37 Vice Vice President since May 1993;
President, Controller and Chief Accounting
Controller Officer of the Company since
and Chief February 1992. From May 1990 to
Accounting February 1992, he was the Chief
Officer Financial Officer of Kidde-
Fenwal, a Division of Williams
Holdings, PLC. Prior to that,
from 1988 to 1990 he was the
Controller of Unitrode
Corporation.
All officers are elected annually for one-year terms at the
organizational meeting of the Board of Directors held immediately following
the annual meeting of shareholders.
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<PAGE>10
PART II
Item 5. Market for the Company's Common Equity and Related Shareholder
Matters.
The Company's Common Stock is traded on the New York Stock Exchange.
There were approximately 2,300 registered holders of the Company's Common
Stock on February 25, 1994. The following table sets forth the high and low
sales price for shares of the Company's Common Stock within the last two
fiscal years and the dividends paid during each quarterly period.
<TABLE>
SELECTED QUARTERLY STOCK DATA
(in thousands, except per share amounts)
<CAPTION>
1 Q 93 2 Q 93 3 Q 93 4 Q 93 1 Q 92 2 Q 92 3 Q 92 4 Q 92
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market price per
common share:
High: 7 5/8 6 3/8 7 1/2 8 5/8 8 3/4 7 1/2 5 5/8 6 5/8
Low: 5 3/4 5 3/8 5 5/8 6 5/8 5 1/4 5 1/2 4 1/8 4 1/2
Shares of common
stock traded: 955 536 754 1,149 1,804 723 774 885
Dividends per
common share $.02 $.02 $.02 $.02 $.02 $.02 $.02 $.02
Average outstanding
common shares and
common share
equivalents 9,630 9,631 9,633 9,634 9,627 9,627 9,629 9,630
</TABLE>
Item 6. Selected Financial Data.
The following table sets forth selected consolidated financial data
for the Company for each of the five fiscal years 1989 through 1993. All
dollar amounts are in thousands except per share data.
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<PAGE>11
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net sales $ 185,538 $ 194,859 $ 200,457 $ 238,531 $ 227,804
Net income (loss) from
continuing operations 4,752 (8,725) (35,938) 3,936 (18,898)
Income (loss) from
discontinued operations - - - 14,540 (12,915)
Net income (loss) 4,752 (8,725) (35,938) 18,476 (31,813)
Total assets 134,008 149,568 154,443 203,272 200,632
Total debt 53,524 56,170 58,339 62,941 85,979
Redeemable preferred stock 22,407 22,282 22,156 22,032 -
Common share data:
Number of average
outstanding shares
and equivalents 9,632,232 9,627,228 9,628,122 10,439,313 10,625,088
Income (loss) from
continuing operations $ .25 $(1.14) $(3.97) $ .21 $(1.78)
Income (loss) from
discontinued operations $ - $ - $ - $ 1.39 $(1.21)
Net income (loss) $ .25 $(1.14) $(3.97) $ 1.60 $(2.99)
Cash dividends $ .08 $ .08 $ .26 $ .32 $ .32
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
For the year ended December 31, 1993, the Company had sales of $185.5
million and net income of $4.8 million or $.25 per share. These results
compare with 1992 sales of $194.9 million and a net loss of $8.7 million or a
loss of $1.14 per share, and 1991 sales of $200.5 million and a net loss of
$35.9 million or a loss of $3.97 per share. Earnings (loss) per share are
calculated after payment of preferred dividends.
The Company's 1993 sales decrease of 5% from the prior period is
attributable to both business segments. The decrease in sales of 3% in the
motion technologies group was primarily caused by a decline in spending in
the military/aerospace portion of the business and changes in foreign
exchange rates. Increased sales of 4% in the commercial portion of the
segment offset some of the 1993 revenue decline. In the Company's electro-
optical instruments segment sales were down 7% from the prior year primarily
as a result of a decline in sales in the Company's commercial light and color
instrumentation businesses as the markets for these products were impacted by
the worldwide recession.
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Operating results for 1992 included a $10 million charge primarily for
the consolidation of the Company's French motor facilities and the
consolidation of several redundant functions in the domestic motion
technologies businesses. Operating results for 1991 included a restructuring
charge of $16.7 million primarily for employee severance costs and to write-
off non-performing assets. In addition, $9.6 million was charged to
operations in 1991 for estimates to complete long-term military contracts.
By the end of 1993 the Company had completed most of its restructuring
activities which began in 1991 and the actual requirements were consistent
with the original reserve amounts. As a result, the Company's work force was
reduced by approximately 850 people and a substantial portion of the
facilities consolidation was complete by the end of 1993. The Company had a
reserve balance of approximately $6.4 million at December 31, 1993,
principally for the completion of its facilities consolidation.
Research and development expense was $9.3 million in 1993 or 5.0% of
sales as compared to $10.6 million in 1992 (5.5% of sales) and $10.3 million
in 1991 (5.2% of sales). The reduction between 1993 and 1992 is primarily a
result of decreased spending at the Company's French motor business due to
the consolidation of its facilities.
In 1993, interest expense, net, decreased to $4.1 million compared to
$5.2 million in 1992 and $6.0 million in 1991. The decrease in both periods
is due to lower average outstanding borrowings in the Company's French
facilities, higher interest income from cash investments due to larger cash
balances, and a lower outstanding balance on long-term debt. The use of
funds is more fully discussed under "Liquidity and Capital Resources."
The Company recognized tax benefits on income of $.8 million, $.8
million and $1.6 million in 1993, 1992 and 1991, respectively. In 1993, the
recognition of the income tax benefit resulted from resolutions of certain
prior year tax assessments. The Company also recognized the income tax
benefits of applicable net operating losses and tax credits in 1992 and 1991
as a reduction in the provision for income taxes. The benefit of unutilized
net operating losses and tax credits will be carried over to future periods
to reduce income taxes otherwise payable.
Liquidity and Capital Resources
The Company's consolidated cash, restricted cash and short-term
investments decreased by $4.8 million during 1993. Operations provided $10.9
million, while $9.7 million was used for capital expenditures and investing
activities other than short-term investments. Financing activities used $6.9
million.
The most significant changes in working capital included a decrease of
recoverable amounts on long-term contracts of $6.2 million as several
contracts were completed during the course of the year. Inventories were
reduced by $1.2 million and accounts and notes receivable reduced by $2.1
million as result of increased efforts towards reducing working capital
requirements. Accounts payable and accrued liabilities decreased by $8.5
million primarily as a result of expenses related to the Company's
restructurings which were paid during the year consisting primarily of
severance payouts.
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<PAGE>13
The Company's investing activities included expenditures of $5.5 million
for property, plant and equipment. In addition, the Company purchased an
unutilized leased facility for $4.3 million in cash as consideration for the
termination of a 20-year lease having 13 years remaining. In addition, the
Company assumed a $2.0 million mortgage for the property and the net
realizable value of the property of $3.0 million is included in assets held
for sale. The estimated loss in value of the property was recorded in the
1992 restructuring.
The Company's financing activities used $6.9 million of cash during the
year of which dividends, both common and preferred, accounted for $3.0
million while repayments under existing credit lines and long-term debt
accounted for $3.9 million.
Under the terms of the current bank agreement, the Company maintains a
cash balance equal to approximately 50% of the outstanding standby letters of
credit. The cash is held in custody by the issuing bank in an interest-
bearing account and is restricted to withdrawal or use. Accordingly, the
Company has classified these funds as restricted cash of $6.7 million. At
December 31, 1993, the Company was contingently liable for $9.4 million for
outstanding standby letters of credit issued principally to secure advance
payments received from customers on long-term military contracts.
In accordance with the terms of the Company's two convertible
subordinated debentures, the Company is required to pay $3.8 million in
sinking fund payments during 1994 and additional amounts in future years.
Capital spending in 1994 is expected to be at similar levels to 1993.
The Company believes that with the cash generated from operations and with
its current borrowing capacity it will be able to finance 1994 capital
expenditures and contribute the mandatory sinking fund payments.
In January 1993, the Company adopted Financial Accounting Standards
Board (FASB) Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The Company
elected to amortize the transition obligation over 20 years. The financial
statements include an expense of $.8 million in 1993.
In February 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("FAS 109"). The adoption
of FAS 109 did not have a material effect on results of operations or
financial position.
The Company will adopt Statement of Financial Accounting Standards No.
112 "Employers' Accounting for Post-Employment Benefits" ("FAS 112") in 1994.
FAS 112 requires that benefits to be paid to former or inactive employees
after employment but prior to retirement must be accrued if certain criteria
are not met. The adoption of FAS 112 is not expected to have a material
financial impact on the Company.
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<PAGE>14
Motion Technologies Group
Revenues in the motion technologies group decreased to $112.8 million,
down 3% from $116.6 million in 1992 and down 7% from $120.6 million in 1991.
The effect of foreign exchange rates accounted for 2% of the decrease in
sales in 1993. Reduced sales in the military/aerospace portion of the
business were offset by an increase in volume in the domestic commercial
motors businesses. The operating income was $9.2 million for 1993, compared
to a loss in 1992 of $2.5 million which included an $8 million restructuring
charge. The increase in operating income is a result of improved gross
margins in the commercial and industrial businesses, reduced administrative
and research and development expenses as a result of the consolidation of
various domestic and French facilities. These spending reductions were
slightly offset by increased spending in sales and marketing expenses in our
commercial motors businesses as the Company expanded its sales organization
by opening regional sales offices during the year in order to increase its
direct sales efforts under the reorganized structure. Operating income was
$.1 million in 1991 which included a restructuring charge of $5.8 million.
New orders for this segment were up 3% in 1993 over 1992 as orders for
commercial and industrial motors increased. New orders for military and
aerospace products were essentially unchanged compared to 1992 results.
Backlog at the end of 1993 was $52.2 million compared to $49.9 million in
1992.
Capital expenditures in 1993 and 1992 for this segment was $3.3 million
and $3.1 million, respectively, most of which was for replacement of existing
equipment and investments in new equipment to improve efficiency and quality
of products.
Electro-Optical Instruments
Revenues in the electro-optical instruments segment decreased to $72.8
million, down 7% from $78.3 million in 1992, and down 9% from $79.9 million
in 1991. The decrease in 1993 was principally due to reduced sales in the
commercial light and color instrumentation businesses. The decrease in 1992
over 1991 was due primarily to reduced sales in the Company's Electro-Optical
Division as receipts of long-term orders were delayed, but were partially
offset by increased revenues at our Proto-Power subsidiary. Operating income
in this segment was $3.1 million, compared to a $4.1 million in 1992 and a
$13.4 million loss in 1991, including an $11.1 million restructuring charge.
The decrease in operating profit in 1993 is due to lower margins on reduced
sales in the commercial color and light measurement products businesses and
lower gross margins on military contracts at the Electro-Optical Division.
Reductions in operating expenses of $1 million between 1993 and 1992 helped
offset the decline in margins.
The backlog for the electro-optical instruments segment was $58.3
million at the end of 1993 up 21% from $48.1 million at the end of the
previous year. The backlog increase is due to long-term orders at the
Electro-Optical Division for periscopes and optronic sights received during
the year.
<PAGE>
<PAGE>15
During 1993 the electro-optical instruments segment spent $2.1 million
on capital equipment primarily for replacement and maintenance of existing
equipment.
The Company's leased facility in Chatsworth, California, which
manufactures high-end light measurement products, was damaged during the
earthquake on January 17, 1994. The damage caused portions of the operations
to be temporarily interrupted. Due to this disruption the Company
anticipates a lower sales volume at this facility during the first quarter of
1994. The Company maintains an adequate amount of property and business
interruption insurance to cover all assessed damages and, therefore, does not
anticipate the impact on earnings in the first quarter of 1994 to be
material.
General corporate expenses included interest expense (net of investment
income), and general and administrative expenses. In addition, the general
corporate amounts include restructuring and other non-recurring costs of $2
million in 1992, $9.4 million in 1991. General corporate assets consist
principally of cash and investments, as well as net assets held for
disposition.
Item 8. Financial Statements and Supplementary Data.
The information required by this Item 8 is included in Item 14(a) of
this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
As previously reported by the Company on a Form 8-K dated September 11,
1992, upon the recommendation of the Audit Committee, the Board of Directors
in September 1992 appointed Coopers & Lybrand, One International Place,
Boston, Massachusetts, as independent accountants to examine the
Corporation's financial statements for the fiscal year ended December 31,
1992 and thereafter. Coopers & Lybrand was appointed the Corporation's
independent accountants by the Board of Directors after the Board had
terminated the engagement of the accounting firm of KPMG Peat Marwick.
During the fiscal year ending December 31, 1991, and the interim period
preceding the termination of the engagement of KPMG Peat Marwick, the
Corporation had no disagreements with such accountants on any matter of
accounting principles or practices, financial statement disclosure or
auditing scope or procedure or any reportable events which disagreements, if
not resolved to the satisfaction of KPMG Peat Marwick, would have caused it
to make reference to the subject matter of such disagreements in connection
with its reports. Furthermore, the KPMG Peat Marwick report on the
Corporation's financial statements for the year ended December 31, 1991,
presented in Item 14(a) of this report, contained no adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles.
<PAGE>
<PAGE>16
PART III
Item 10. Directors and Executive Officers of the Company.
The information required by this Item 10 of Form 10-K relating to
directors who are nominees, and to directors continuing in office after the
Company's Annual Meeting of Shareholders to be held on May 11, 1994, is
contained in the definitive proxy statement to be filed with the Securities
and Exchange Commission (the "Commission") on or before April 5, 1994, under
the headings "Nominees", and "Continuing Directors", and such information is
incorporated herein by reference in response to this item.
The information required by this Item 10 of Form 10-K with respect to
executive officers is set forth in Part I of this Form 10-K under the heading
"Executive Officers of the Company".
Item 11. Executive Compensation.
The information required by this Item 11 of Form 10-K is contained in
the Company's definitive proxy statement to be filed with the Commission on
or before April 5, 1994, under the heading "Executive Compensation" and such
information is incorporated herein by reference in response to this item.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this Item 12 of Form 10-K is contained in
the definitive proxy statement to be filed with the Commission on or before
April 5, 1994, under the headings "Security Ownership of Certain Beneficial
Owners" and "Security Ownership of Management" and such information is
incorporated herein by reference in response to this item.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item 13 of Form 10-K is contained in
the Company's definitive proxy statement to be filed with the Commission on
or before April 5, 1994, under the heading "Certain Relationships and Related
Transactions" and such information is incorporated herein by reference in
response to this item.
PART IV
Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(1) Financial Statements. See Index to Financial Statements
on page 18.
(2) Financial Statements Schedules. See Index to Financial
Statements Schedules on page 42.
(3) Exhibits. See Exhibit Index on page 46.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed by
the Company.
<PAGE>
<PAGE>17
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, Kollmorgen Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
KOLLMORGEN CORPORATION
/s/ Robert J. Cobuzzi
Robert J. Cobuzzi
Its: Senior Vice President, Treasurer
and Chief Financial Officer
March 3, 1994
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
Company and in the capacities and on the dates indicated:
/s/ Gideon Argov
Gideon Argov March 3, 1994
President and
Chief Executive Officer/Director
/s/ Robert J. Cobuzzi
Robert J. Cobuzzi March 3, 1994
Senior Vice President, Treasurer and
Chief Financial Officer
/s/ Robert W. Woodbury, Jr.
Robert W. Woodbury, Jr. March 3, 1994
Vice President, Controller and
Chief Accounting Officer
/s/ James A. Eder
James A. Eder March 3, 1994
Vice President and Secretary and
Attorney-in-Fact For:
Allan M. Doyle, Jr., Director Robert N. Parker, Director
James H. Kasschau, Director Eric M. Ruttenberg, Director
J. Douglas Maxwell, Jr., Director George P. Stephan, Director
<PAGE>
<PAGE>18
INDEX TO FINANCIAL STATEMENTS
The following consolidated financial statements of the Company and its
subsidiaries are included in response to Item 8.
Page(s) in
Form 10-K
-----------
Report of Independent Accountants - Coopers & Lybrand 19
Independent Auditors' Report - KPMG Peat Marwick 20
Consolidated Balance Sheets as of
December 31, 1993 and 1992. 21-22
Consolidated Statements of Operations for the years
ended December 31, 1993, 1992 and 1991. 23
Consolidated Statements of Shareholders' Equity for
the years ended December 31, 1993, 1992 and 1991. 24
Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991. 25-26
Notes to Consolidated Financial Statements. 27-41
Index to Financial Statements Schedules 42
<PAGE>
<PAGE>19
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
Kollmorgen Corporation:
We have audited the accompanying consolidated balance sheets of
Kollmorgen Corporation as of December 31, 1993 and 1992, and the related
consolidated statements of operations, shareholders' equity and cash flows
for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
The consolidated financial statements of Kollmorgen Corporation for the year
ended December 31, 1991, were audited by other independent accountants whose
report dated February 19, 1992, expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Kollmorgen Corporation as of December 31, 1993 and 1992, and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Boston, Massachusetts
January 31, 1994
<PAGE>
<PAGE>20
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Kollmorgen Corporation:
We have audited the accompanying consolidated statements of operations,
shareholders' equity, and cash flows of Kollmorgen Corporation and
subsidiaries for the year ended December 31, 1991. In connection with our
audit of the consolidated financial statements, we also have audited the 1991
financial statement schedules as listed in the accompanying index. These
consolidated financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements and financial statement
schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of Kollmorgen Corporation and subsidiaries for the year ended
December 31, 1991, in conformity with generally accepted accounting
principles. Also in our opinion, the related 1991 financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
/s/ KPMG Peat Marwick
KPMG PEAT MARWICK
Short Hills, New Jersey
February 19, 1992
<PAGE>
<PAGE>21
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1993 and 1992
(Dollars in thousands)
<CAPTION>
ASSETS 1993 1992
- ------ -------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1) $ 17,682 $ 23,463
Restricted cash (Note 2) 6,720 5,758
Accounts receivable (net of
allowance for doubtful accounts of
$2,336 in 1993 and $2,312 in 1992) 33,744 37,310
Recoverable amounts on long-term
contracts 5,834 12,043
Inventories (Note 3) 22,018 24,333
Prepaid expenses 3,564 2,472
--------- ---------
Total current assets 89,562 105,379
--------- ---------
Property, plant and equipment, net (Note 4) 30,461 31,758
Net assets held for sale 3,000 -
Other assets 10,985 12,431
--------- ---------
$ 134,008 $ 149,568
======== ========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE>22
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
1993 1992
--------- ---------
Current liabilities:
Notes payable to banks (Note 6) $ 5,532 $ 5,450
Current portion of long-term debt (Note 7) 3,872 2,452
Accounts payable 16,341 18,340
Accrued liabilities (Note 5) 32,561 43,046
--------- ---------
Total current liabilities 58,306 69,288
--------- ---------
Long-term debt (Note 7) 44,120 48,268
Deferred income taxes - 101
Other liabilities 1,590 1,555
Commitments and contingencies (Note 14)
Redeemable Preferred stock, Series D,
par value $1.00 and liquidation
value $1,000 per share
--authorized, issued and outstanding
shares, 23,187.5 (Note 9) 22,407 22,282
Shareholders' equity (Notes 9 and 10):
Common stock, par value $2.50 per share
--authorized 25,000,000 shares
--outstanding 10,750,030 shares in
1993 and 10,744,542 in 1992 26,875 26,861
Additional paid-in capital 23,447 26,521
Accumulated deficit (30,166) (34,918)
Cumulative translation adjustments (2,624) (443)
Less common stock in treasury, at cost
--1,114,408 shares in 1993 and 1992 (9,947) (9,947)
--------- ---------
Total shareholders' equity 7,585 8,074
--------- ---------
$ 134,008 $ 149,568
========= =========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<PAGE>23
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended December 31, 1993, 1992, and 1991
(Dollars in thousands, except per share amounts)
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Net sales $185,538 $194,859 $200,457
Cost of sales 121,286 129,151 149,892
-------- -------- --------
Gross profit 64,252 65,708 50,565
-------- -------- --------
Selling and marketing expense 24,708 25,471 26,680
General and administrative expense 21,973 23,425 29,384
Research and development expense 9,338 10,645 10,328
Restructuring and other costs (Note 12) - 10,000 16,700
--------- --------- ---------
Income (loss) before interest
and taxes 8,233 (3,833) (32,527)
--------- --------- ---------
Other income (expense):
Interest expense, net (4,149) (5,221) (5,985)
Other, net (180) (443) 974
--------- --------- ---------
Income (loss) before income taxes 3,904 (9,497) (37,538)
Income tax benefit (Note 11) (848) (772) (1,600)
-------- -------- --------
Net income (loss) $ 4,752 $ (8,725) $(35,938)
======== ======== ========
Earnings (loss) per common share $ .25 $(1.14) $(3.97)
====== ====== ======
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>24
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
December 31, 1993, 1992 and 1991 (dollars in thousands)
<CAPTION>
Common Stock Add'l Accum- Cumulative Treasury Stock Total
-------------- Paid-in ulated Translation -------------- -------------
Shares Amount Capital Deficit Adjustment Shares Amount Shares Amount
---------- ------- ------- -------- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1990 10,741,147 $26,853 $30,387 $ 13,800 $ 758 1,093,808 $ 9,795 9,647,339 $62,003
Net loss (35,938) (35,938)
Dividends paid on common
and preferred stock (775) (3,962) (4,737)
Common stock reacquired 20,600 152 (20,600) (152)
Accretion of preferred
stock discount (93) (93)
Translation adjustments (3,185) (3,185)
---------- ------- -------- -------- -------- --------- ------- --------- --------
Balance, December 31, 1991 10,741,147 26,853 29,612 (26,193) (2,427) 1,114,408 9,947 9,626,739 17,898
Net loss (8,725) (8,725)
Common stock issuances 3,395 8 9 3,395 17
Dividends paid on common
and preferred stock (2,973) (2,973)
Accretion of preferred
stock discount (127) (127)
Translation adjustments 1,984 1,984
---------- ------- -------- -------- -------- --------- ------- --------- --------
Balance, December 31, 1992 10,744,542 26,861 26,521 (34,918) (443) 1,114,408 9,947 9,630,134 8,074
Net income 4,752 4,752
Common stock issuances 5,488 14 24 5,488 38
Dividends paid on common
and preferred stock (2,973) (2,973)
Accretion of preferred
stock discount (125) (125)
Translation adjustments (2,181) (2,181)
---------- ------- -------- -------- -------- --------- ------- --------- --------
Balance, December 31, 1993 10,750,030 $26,875 $23,447 $(30,166) $(2,624) 1,114,408 $ 9,947 9,635,622 $ 7,585
========== ======= ======== ========= ======== ========= ======= ========= ========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>25
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1993, 1992, and 1991
(Dollars in thousands)
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Income (loss) from operations $ 4,752 $ (8,725) $(35,938)
Adjustments to reconcile income (loss) to net cash
provided by operating activities:
Depreciation 5,989 7,055 8,304
Amortization 755 642 981
Provision for loss on other assets - - 2,450
Changes in operating assets and liabilities:
Restricted cash (962) (955) -
Accounts and notes receivable 2,105 5,545 14,286
Recoverable amounts on long-term contracts 6,209 12,029 1,683
Inventories 1,264 2,886 13,995
Prepaid expenses (1,145) (1,152) 204
Accounts payable and accrued liabilities (8,502) 5,139 279
Federal and foreign income taxes 50 (427) (235)
Deferred income taxes and other expenses 25 145 (290)
Other 325 (1,391) (1,763)
-------- -------- --------
Net cash provided by operations 10,865 20,791 3,956
-------- -------- --------
Cash flows from investing activities:
Proceeds from sale of product line - 3,000 -
Capital expenditures (5,470) (5,042) (6,424)
Purchase of property held for sale (4,263) - -
Repayment of long-term note receivable - - 2,022
Changes in short-term investments - - 2,254
Other - - 502
-------- -------- --------
Net cash used in investing activities (9,733) (2,042) (1,646)
-------- -------- --------
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
<PAGE>26
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash flows from financing activities:
Net repayments under credit lines (1,322) (2,046) (1,271)
Issuances (purchases) of common stock 38 17 (152)
Principal payments under capital lease obligations - (327) (778)
Retirement of long-term debt (2,656) (12) (2,553)
Dividends paid on common and preferred stock (2,973) (2,973) (4,706)
-------- -------- --------
Net cash used in financing activities (6,913) (5,341) (9,460)
-------- -------- --------
Net increase (decrease) in cash (5,781) 13,408 (7,150)
Cash and cash equivalents at beginning of year 23,463 10,055 17,205
-------- -------- --------
Cash and cash equivalents at end of year $ 17,682 $ 23,463 $ 10,055
======== ======== ========
Supplemental cash flow information
Cash paid during the period for:
Interest 5,130 5,814 5,975
Income taxes (net of refunds) (646) 1,166 1,045
Non-cash financing activities:
Mortgage assumed 1,987 - -
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<PAGE>27
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1993, 1992, and 1991
(Dollars in thousands, except per share amounts)
_________________________________________________________________
Note 1. Summary of significant accounting policies
A summary of the significant accounting policies followed by Kollmorgen
Corporation is presented below. Certain reclassifications have been made to
the prior years' financial statements to conform to 1993 classifications.
For purposes of the Notes to Consolidated Financial Statements, the term the
"Company" refers to Kollmorgen Corporation and its subsidiaries.
Principles of Consolidation The consolidated financial statements
include the accounts of the Company and all of its majority-owned
subsidiaries.
In 1993, the Company's wholly-owned subsidiary, Kollmorgen Artus,
prospectively changed its financial reporting year from a fiscal year ending
on October 31 to December 31. The consolidated statements of income are
presented for the year ended December 31, 1993, excluding the results of
operations for November and December, 1992, which were immaterial.
Cash and Cash Equivalents Cash equivalents are stated at cost which
approximates fair value. The Company considers all highly liquid investments
purchased within an original maturity of three months or less to be cash
equivalents.
Recoverables Recoverable amounts on long-term contracts represent
revenues recognized on a percentage-of-completion basis less progress
billings.
Inventories Inventories are stated at the lower of cost or market,
principally using the first-in, first-out method. Progress payments received
on contracts other than major long-term contracts are deducted from
inventories.
Property, Plant and Equipment and Accumulated Depreciation Property,
plant and equipment are carried at cost and include expenditures for major
improvements which substantially increase their useful life. Repairs and
maintenance are expensed as incurred. When assets are retired or otherwise
disposed of, the assets and related allowances for depreciation and
amortization are eliminated from the accounts and any resulting gain or loss
is recognized.
For financial reporting purposes, depreciation is provided generally on
a straight-line basis over the estimated useful lives of the buildings (10 to
50 years) and the machinery and equipment (3 to 12 years). Leasehold
improvements are depreciated over the remaining period of the existing
leases. For income tax purposes, depreciation is computed by using various
accelerated methods and, in some cases, different useful lives than those
used for financial reporting.
<PAGE>
<PAGE>28
Notes to Consolidated Financial Statements - continued
Goodwill and Intangibles Goodwill consists of amounts by which the
cost of acquisitions exceeded the values assigned to net tangible assets.
Intangible assets consist principally of patents. All of the intangible
assets are being amortized on a straight-line basis over periods of up to 40
years.
Cumulative Translation Adjustments Assets and liabilities of foreign
subsidiaries are translated at year-end exchange rates. The effects of these
translation adjustments are reported in a separate component of shareholders'
equity. The effect of exchange rates on cash flows is not material.
Sales Sales, other than revenues from major long-term contracts, are
recorded as products are shipped. Major programs that are performed under
long-term contracts are accounted for using the percentage-of-completion
method. Revenues recognized under this method were $24.5 million, $29.3
million, and $29.1 million in 1993, 1992, and 1991, respectively. In most
cases the contracts also provide for progress billings over the life of the
program.
Earnings (Loss) Per Common Share Earnings (loss) per common share is
based on net income less the dividends and interest accretion on redeemable
preferred stock divided by the average number of common shares outstanding.
Fully diluted net income assumes full conversion of all convertible
securities into common stock which include the convertible subordinated
debentures and redeemable preferred stock. The fully diluted calculation
does not result in dilution of net income per common share and, accordingly,
is not presented.
Income Taxes Effective January 1, 1993 the Company adopted Statement
of Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109").
The adoption of FAS 109 had no material effect on results of operations or
financial position.
Postretirement Benefits Other Than Pensions Effective January 1, 1993,
the Company adopted Statement of Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("FAS 106").
Under FAS 106, the Company is required to accrue the expected benefit
obligation for postretirement benefits during the employees' active service
periods. The Company previously expensed the cost of these benefits, which
are principally health care, as claims were incurred.
The Company has elected the delayed recognition method in which the cost
for employees hired prior to January 1, 1992, is being amortized over 20
years. The Company paid approximately $.8 million in 1993 for post-
retirement benefits to current retirees.
Note 2. Restricted cash
The restricted cash balance of $6.7 million in 1993 serves as collateral
for an irrevocable standby and documentary letter of credit facility at the
Company's lead bank.
<PAGE>
<PAGE>29
Notes to Consolidated Financial Statements - continued
Pursuant to the terms of this agreement, the cash is held in custody by the
issuing bank and is restricted as to withdrawal or use, and is currently
being invested in short-term money market instruments for the benefit of the
Company.
Note 3. Inventories
Inventories at December 31 consist of the following:
1993 1992
--------- ---------
Raw materials $ 11,530 $ 11,431
Work in process 7,847 9,634
Finished goods 2,641 3,268
--------- ---------
$ 22,018 $ 24,333
========= =========
Note 4. Property, Plant and Equipment
Property, plant and equipment at December 31 consists of the following:
1993 1992
--------- ---------
Land $ 1,459 $ 1,474
Leasehold improvements 669 988
Buildings 34,650 34,877
Machinery and equipment 70,369 70,470
--------- ---------
107,147 107,809
Less accumulated depreciation
and amortization 76,686 76,051
--------- ---------
$ 30,461 $ 31,758
========= =========
Note 5. Accrued Liabilities
Accrued liabilities at December 31 consist of the following:
1993 1992
--------- ---------
Restructuring and related costs $ 6,390 $ 19,938
Salaries, wages, commissions 5,100 4,728
Pension/supplemental retirements 3,912 2,736
Insurance 3,169 1,898
Other accrued liabilities 13,990 13,746
--------- ---------
$ 32,561 $ 43,046
========= =========
<PAGE>
<PAGE>30
Notes to Consolidated Financial Statements - continued
Note 6. Lines of credit and notes payable
At December 31 the Company had approximately $2.9 million or
approximately 17 million French francs of unused lines of credit.
Notes payable consist of the following at December 31:
1993 1992
-------- --------
Foreign $ 3,545 $ 5,450
Domestic 1,987 -
-------- --------
$ 5,532 $ 5,450
======== ========
In July 1993, the Company amended its existing agreement with its lead bank
which provides for a one-year $18 million domestic standby letter of credit
facility and extended the terms of the existing 21 million French franc
revolving credit facility (approximately $4 million). Under the terms of the
agreement, the Company maintains a cash collateral balance equal to
approximately 50% of the outstanding letters of credit in an interest-bearing
account. At December 31, 1993, the Company had $9.4 million of standby
letters of credit outstanding at this bank. The agreement also requires the
Company to maintain, among other things, certain financial ratios, the most
restrictive of which is net worth, and contains other affirmative and
negative covenants. The Company was in compliance with all covenants at
December 31, 1993.
Note 7. Long-term debt
Long-term debt consists of the following:
1993 1992
-------- --------
8 3/4% Convertible subordinated
debentures due 2009 $ 39,840 $ 39,840
10 1/2% Convertible subordinated
debentures due 1997 8,000 10,000
Term loans, 10.5% due through 1997 152 686
Capital lease obligations - 149
Other - 45
-------- --------
47,992 50,720
Less current maturities 3,872 2,452
-------- --------
$ 44,120 $ 48,268
======== ========
The 8 3/4% Convertible Subordinated Debentures are convertible at any
time prior to maturity, unless previously redeemed, into 1,159,825 shares of
common stock of the Company at a conversion price of $34.35 per share,
<PAGE>
<PAGE>31
subject to adjustment in certain events. The Company is required to make
annual sinking fund payments sufficient to retire $1.75 million principal
amount of debentures commencing in 1994 through 2008. The debentures are
currently redeemable at the option of the Company at certain premiums through
April, 1994, and at face value thereafter, with accrued interest to the
redemption date.
The 10-1/2% Convertible Subordinated Debentures issued in a private
placement, are convertible into 320,000 shares of the Company's common stock
at a price of $25 per share at any time prior to maturity, unless previously
redeemed. The debentures are subject to mandatory sinking fund payments
which commenced on August 1, 1993, and each year thereafter including
August 1, 1997, in the amount of $2 million of principal reduction together
with interest accrued and unpaid thereon to the date fixed for redemption.
The Company incurred $5.1 million, $5.8 million, and $6.0 million of
interest expenses on debt in 1993, 1992, and 1991, respectively.
Long-term debt at December 31, 1993, matures as follows:
Date Maturities
---- ----------
1994 $ 3,872
1995 3,764
1996 3,764
1997 3,752
1998 1,750
Thereafter 31,090
--------
$47,992
========
Note 8. Preferred Stock
The Company's Restated Certificate of Incorporation provides that the
Corporation is authorized to issue 500,000 shares of preferred stock, $1.00
par value, in series. Currently, there are 23,187.5 shares of preferred
stock issued and outstanding.
In March, 1990, the Company sold 23,187.5 shares of a new issue of
Series D convertible preferred stock (the "Series D Stock") for $1,000 per
share, or an aggregate of approximately $23.2 million, to a group of
investors led by Tinicum Enterprises, Inc. ("Tinicum Group"). The stock has
a cumulative dividend rate of 9.5 percent per year and is convertible into an
aggregate of 1,717,591 shares of Kollmorgen common stock, subject to
antidilution provisions. Under the agreement between the Company and the
Tinicum Group, two representatives of the Tinicum Group were elected to the
Company's Board of Directors. The Series D Stock is entitled to vote
together with the Company's common stock based on the number of shares of the
Company's common stock into which the Series D Stock is convertible. While
the Series D Stock is outstanding, the Company has agreed, among other
things, not to issue any capital stock of the Company other than the
Company's common stock and securities issuable under the Company's
Shareholder Rights Plan without first obtaining the consent of a majority of
the outstanding Series D Stock. The Company is required to redeem all
<PAGE>
<PAGE>32
Notes to Consolidated Financial Statements - continued
outstanding Series D Stock on April 1, 2000, at $1,000 per share, in each
case plus accrued and unpaid dividends. The Series D Stock purchase
agreement also includes certain financial covenants applicable to the
Company, and certain restrictions applicable to the purchasers on the
disposition, acquisition or the taking of other specified actions with
respect to the voting securities of the Company.
The balance of the preferred stock is shown net of the unamortized
preferred stock discount. The unamortized amount in 1993 and 1992 is $781
and $906, respectively.
Note 9. Common Stock, Additional Paid-in Capital and Treasury Stock
Pursuant to the By-Laws of the Corporation, directors who are not
employees of the Corporation receive an annual retainer of $12,000. Under
the terms of the 1992 Stock Ownership Plan for Non-Employee Directors, each
non-employee director receives at least 50% of his annual retainer in shares
of common stock. The number of shares of common stock is based on the fair
market value of such shares at the end of each quarterly period. Also, each
non-employee director automatically receives an option to purchase an
additional 2,000 shares of common stock every other year. At the
implementaion of the Plan, 150,000 shares were reserved for issuance.
The Company maintains a Shareholder Rights Plan which provides one
Preferred Stock Purchase Right (Right) for each outstanding share of Common
Stock of the Company. Each Right entitles the registered holder, subject to
the terms of a Rights Agreement, to purchase one one-thousandth of a share
(Unit) of Series B Preferred Stock, par value $1.00 per share (Preferred
Stock), at a purchase price of $50 per Unit. The units of preferred stock
are non-redeemable, voting, and are entitled to certain preferential dividend
rights. The exercise price and the number of units issuable are subject to
adjustment to prevent dilution.
The Rights are not exercisable until the earlier to occur of (i) 10 days
following a public announcement (the date of such announcement being the
"Stock Acquisition Date") that a person or group has acquired beneficial
ownership of 20% or more of the then outstanding shares of capital stock of
the Company entitled to vote ("Acquiring Party") or (ii) a date determined by
the Board of Directors following the commencement of a tender or exchange
offer which would result in a party beneficially owning 30% or more of the
shares of voting stock of the Company.
The Board of Directors of the Company may redeem the Rights at any time
on or prior to the tenth day following the Stock Acquisition Date at a price
of $0.01 per Right. Unless earlier redeemed, the Rights will expire on
December 20, 1998.
Common stock reserved for issuance at December 31, 1993 and 1992, were
as follows: conversion of debentures and redeemable preferred stock --
3,197,416 and 3,277,416, respectively; and stock options and other awards --
1,236,111 and 1,394,628, respectively.
<PAGE>
<PAGE>33
Notes to Consolidated Financial Statements - continued
As a result of the Company's losses in previous years, there was not a
sufficient amount of retained earnings from which to pay dividends and,
accordingly, dividends paid on common and preferred stock were charged to
"Additional Paid-in Capital."
Note 10. Employee stock option and purchase plans
The Company maintains two stock option plans under which grants have
been made to officers and key employees. Options are generally first
exercisable after one year but before ten years from date of grant.
A summary of changes during 1993, 1992, and 1991 in shares of common
stock authorized for grant to officers and key employees under the stock
option plans are as follows:
Number of Shares
1993 1992 1991
-------- -------- --------
Shares under option at January 1 892,337 1,044,189 551,239
Options granted 185,000 115,000 537,000
Options canceled (204,517) (266,852) (44,050)
---------- ---------- ----------
Shares under option at December 31 872,820 892,337 1,044,189
========== ========== ==========
Options exercisable at December 31 300,220 347,887 418,854
Price per share of options granted $ 6.00 to $ 4.50 to $ 5.38 to
$ 7.75 $ 8.50 $ 8.38
Option prices at December 31, 1993, ranged from $4.50 to $20.00 per
share.
Options available for grant at December 31, 1993, 1992 and 1991 were
213,291, 352,291 and 815,102, respectively.
Note 11. Taxes on income
The components of income (loss) before income taxes were as follows:
1993 1992 1991
-------- -------- --------
Domestic $ 5,819 $ (3,526) $(34,554)
Foreign (1,915) (5,971) (2,984)
-------- -------- --------
Total $ 3,904 $ (9,497) $(37,538)
======== ======== ========
FAS 109 requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
<PAGE>
<PAGE>34
Notes to Consolidated Financial Statements - continued
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to
reverse.
The provision (benefit) for income taxes consists of the following (in
thousands):
1993 1992 1991
-------- -------- --------
Current provision (benefit):
U.S. federal $ (703) $ 20 $ (1,444)
Foreign - (196) (191)
State - 50 35
-------- -------- --------
(703) (126) (1,600)
-------- -------- --------
Deferred provision (benefit):
U.S. federal - 20 -
Foreign (145) (746) -
State - 80 -
-------- -------- --------
(145) (646) -
-------- -------- --------
Total $ (848) $ (772) $ (1,600)
======== ======== ========
Deferred tax provisions (benefits) result from differences in the years
in which certain elements of income or expense are included in financial
statements and income tax returns. Deferred taxes related to the following
temporary differences:
1993 1992 1991
-------- -------- --------
Unrecognized future tax benefits $ 7,304 $ 1,891 $ 3,745
Gross margins on long-term contracts 245 309 (1,163)
Depreciation expense 864 (350) (411)
Provision for costs not currently
deductible (8,079) (1,457) (2,089)
Cash basis accounting - - (250)
Installment sale (364) (793) 8
Other items (115) (246) 160
-------- -------- --------
$ (145) $ (646) $ -
======== ======== ========
The U.S. effective income tax rate from operations is different from the
U.S. federal statutory rate for the following reasons:
<PAGE>
<PAGE>35
Notes to Consolidated Financial Statements - continued
1993 1992 1991
-------- -------- --------
Income tax provision (benefit) if
computed at U.S. federal rates $ 1,378 $ (3,229) $(12,776)
Benefit of net operating loss
carryforwards (1,534) - -
Unutilized net operating losses
and tax credits - 2,249 7,837
Carryback of net operating losses at
less than statutory rates - - 2,695
State income taxes net of
federal benefit - 86 23
Foreign tax rate variances - 9 822
Recognition of deferred tax asset
due to carryback (703) - -
Other 11 113 (201)
-------- -------- --------
$ (848) $ (772) $ (1,600)
======== ======== ========
The deferred tax assets and liabilities are comprised of the following:
12/31/93 12/31/92
---------- ----------
Restructuring reserve $ 483 $ 1,011
Bad debt reserve 300 454
Other 2,430 3,549
Employee benefit reserves 2,376 2,095
Allowance for doubtful accounts 1,090 1,680
Reserve for net realizable value
of real estate 2,564 2,581
Other 1,093 1,371
Net operating losses and credits 17,024 13,920
Property, plant and equipment (2,526) (2,526)
Other (195) -
--------- ---------
24,639 24,135
--------- ---------
Valuation allowance (24,639) (24,135)
--------- ---------
Net deferred tax asset $ - $ -
========= =========
For Federal income tax purposes,the Company has domestic regular tax net
operating loss carryforwards of approximately $20 million and alternative
minimum tax net operating loss carryforwards of $17.0 million as of
December 31, 1993, which may be used to offset future taxable income. The
<PAGE>
<PAGE>36
Notes to consolidated Financial Statements - continued
Company also has foreign net operating losses of approximately $5.0 million.
These net operating losses expire beginning in 2002. Additionally, the
Company has available $5.7 million of investment tax credit carryforwards
which will expire beginning in 2002.
Note 12. Restructuring costs and asset disposition
In 1992 the Company recorded a $10 million restructuring charge
principally for the consolidation of facilities in France and the elimination
of redundant functions in the Company's motion technologies group. In 1991,
the Company implemented a restructuring resulting in a charge of $16.7
million to, among other things, reduce the Company's domestic and foreign
work force. In addition, the Company charged $9.6 million in 1991 to
operations primarily to provide for unanticipated costs in completing several
large, fixed-price military contracts.
In November 1992 the Company sold certain assets of its proprietary
MICRO-FLIR(R) thermal imaging products business to the Electronic Systems
Group of Westinghouse Electric Corporation located in Baltimore, Maryland.
Note 13. Leases
The Company leases certain of its facilities and equipment under various
operating lease arrangements. Such arrangements generally include fair
market value renewal and/or purchase options.
Rent expense for operating leases amounted to $3.0 million in 1993
(excluding $.9 million which was provided for in the prior restructuring
provisions), $5.2 million in 1992, and $4.9 million in 1991. Future minimum
rental payments required under non-cancellable operating leases having a
lease term in excess of one year, together with the present value of the net
minimum lease payments at December 31, 1993, are as follows:
1994 $ 2,606
1995 2,292
1996 1,794
1997 1,194
1998 1,029
Thereafter 7,871
--------
Total minimum lease payments $ 16,786
========
Note 14. Contingencies
The Company has various lawsuits, claims, commitments and contingent
liabilities arising from the ordinary conduct of its business; however, they
are not expected to have a material adverse effect on its consolidated
financial position.
<PAGE>
<PAGE>37
Notes to Consolidated Financial Statements - continued
In doing business with the U.S. Government, the Company is subject to
routine audits and, in certain circumstances, to inquiry, review, or
investigation by the U.S. Government Agencies relating to the Company's
compliance with Government Procurement policies and practices. The Company's
policy has been and continues to be to conduct its activities in compliance
with all applicable rules and regulations. Management believes that any such
potential audits or investigations, individually and in the aggregate, will
not have any material adverse effect upon the financial condition of the
Company.
The Company is engaged primarily in the manufacture and sale of highly
diversified lines of commercial, industrial, and military products into both
domestic and international markets. The Company generally does not require
collateral from its customers on the basis of ongoing reviews and evaluations
of their credit and financial condition.
Note 15. Retirement plans
The Company maintains three non-conributory qualified defined benefit
pension plans covering substantially all domestic employees. Plans covering
most employees provide pension benefits based generally on the employee's
years of service and final five-year or career average compensation. Due to
full funding, the Plans currently have no required contribution by the
Company.
The net periodic pension cost for the years 1993, 1992 and 1991,
including amounts related to discontinued operations, included the following
components:
1993 1992 1991
-------- -------- --------
Service cost $ 2,146 $ 2,235 $ 2,609
Interest cost 3,058 3,289 3,030
Actual return on plan assets (6,376) (4,280) (10,389)
Net amortization and deferral (65) (2,419) 4,748
-------- -------- --------
Net periodic pension cost (credit) $ (1,237) $ (1,175) $ (2)
======== ======== ========
The assumptions used in determining the end of year benefit obligations
included a discount rate of 7.25% and 7.75% in 1993 and 1992, respectively,
an expected investment return of 10% and compensation increases of 5%.
During 1993 and 1992, the Company had pension curtailments resulting from the
larger than expected reductions in the number of employees who would
otherwise be eligible to participate in a defined benefit pension plan.
Accordingly, the net amortization and deferral component of the credit
includes a curtailment gain of $1.3 million for 1993 and $1.0 million for
1992. The Plan assets consist principally of cash, common stocks, and bonds.
<PAGE>
<PAGE>38
Notes to Consolidated Financial Statements - continued
The Plans' funded status together with the amounts recognized in the
Company's Balance Sheet at December 31 are as follows:
1993 1992
-------- --------
Actuarial present value of
benefit obligations:
Vested $ 29,991 $ 28,770
======== ========
Accumulated 30,885 29,726
======== ========
Projected 44,333 40,925
Plan assets at fair value 49,625 47,610
-------- --------
Plan assets in excess of
projected benefit obligation 5,292 6,685
Unrecognized net (gain) loss 1,661 (839)
Unrecognized net asset at January 1 (6,421) (6,993)
Unrecognized prior service cost 2,081 2,523
-------- --------
Prepaid pension cost $ 2,613 $ 1,376
======== ========
The Salaried Employees' Retirement Plan provides that in the event of a
termination of that Plan following a change in control of the Company, any
assets of the Plan remaining after provision is made for all benefits
thereunder will be employed to supplement such benefits.
The Company also maintains a Supplemental Retirement Income Plan
("SERP") for key employees. Eligibility is restricted to individuals
designated by the Personnel and Compensation Committee of the Board who, in
its sole discretion, have made outstanding long-term contributions to the
Company. The SERP is designed to provide each designated participant with an
increased level of retirement income commencing the month following his 65th
birthday. Under the SERP, a supplemental amount is paid to each participant
so that, together with any amounts payable under the Company's qualified
retirement plans, any long-term disability insurance payments and any social
security benefits, the participant receives a monthly benefit equal to 60% of
his salary at the date of inclusion in the plan. Amounts payable under the
SERP are subject to adjustment for inflation. The Company has accrued an
actuarially determined liability of $2.8 million at December 31, 1993 ($2.3
million at December 31, 1992), in anticipation of the payment of such
benefits in the future to seven former employees who were designated as
eligible by the Personnel and Compensation Committee for participation in the
SERP program. No one of these former employees is receiving benefits
currently. The Company incurred a pension expense of $.3 million and $.2
million in 1993 and 1992, respectively, in additional funding for the SERP.
<PAGE>
<PAGE>39
Notes to Consolidated Financial Statements - continued
Note 16. Postretirement medical insurance benefits
The Company maintains a postretirement medical benefits plan covering
substantially all domestic employees hired prior to January 1, 1992. The
plan is contributory, retiree contributions are based on the difference
between total cost and the employer contribution and are adjusted annually.
The Company's contribution towards retiree medical benefits for employees
retiring after January 1, 1992, are capped at 1991 levels. FAS 106 was
implemented on a delayed recognition basis, resulting in amortization of the
transition obligation amount over 20 years. The Company currently funds the
plan as claims are paid.
Net periodic postretirement benefit cost for 1993 included the following
components:
Service cost $ 125
Interest cost 412
Actual return on plan assets -
Amortization of obligation at transition 278
-------
Net periodic postretirement benefit cost $ 815
=======
For measurement purposes, a 12% annual rate of increase in the per
capital cost of covered medical benefits was assumed for 1993; the rate was
assumed to decrease gradually to 6% for 1999 and remain at that level
thereafter. Increasing the assumed health care cost trend rates by 1% in
each year would increase the accumulated postretirement benefit obligation as
of January 1, 1993, by $246 thousand and the aggregate of the service cost
and interest cost components of net periodic postretirement benefit cost by
$20 thousand.
The plan's funded status together with the amounts recognized in the
Company's Balance Sheet at December 31, 1993, are as follows:
Accumulated postretirement benefit obligation:
Retirees $ 4,166
Fully eligible plan participants 368
Other active plan participants 1,953
-------
Total 6,487
Plan assets at fair value -
-------
Accumulated postretirement benefit obligation
in excess of plan assets (6,487)
Unrecognized net (gain) loss 805
Unrecognized prior service cost -
Unrecognized transition obligation 5,282
-------
Accrued postretirement benefit cost $ (400)
=======
<PAGE>
<PAGE>40
Notes to Consolidated Financial Statements - continued
The Company's postretirement benefit plans are unfunded. As of January
1, 1993, the accumulated postretirement benefit obligation was $5.6 million
and the value of the plan assets was $0.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation are 7.25% and 7.75% as of December 31, 1993
and 1992, respectively.
Note 17. Foreign Operations and Geographic Segments, and Export Sales
The impact of the Company's foreign operations upon the consolidated
financial statements are summarized as follows (in thousands):
Foreign
1993 Consolidated Eliminations Domestic Operations
- ---- ------------ ------------ --------- ----------
Net sales $185,538 $ (4,113) $150,260 $ 39,391
======== ======== ======== ========
Net income (loss) from
continuing operations $ 4,752 $ 325 $ 6,938 $ (2,511)
======== ======== ======== ========
Identifiable assets $ 95,943 $ (72) $ 66,814 $ 29,201
Corporate assets 38,065 - 38,065 -
-------- -------- -------- --------
Total assets $134,008 $ (72) $104,879 29,201
======== ======== ========
Liabilities 21,635
--------
Equity in foreign
subsidiaries $ 7,566
========
Foreign
1992 Consolidated Eliminations Domestic Operations
- ---- ------------ ------------ --------- ----------
Net sales $194,859 $ (3,693) $150,914 $ 47,638
======== ======== ======== ========
Net income (loss) from
continuing operations $ (8,725) $ 316 $ (4,064) $ (4,977)
======== ======== ======== ========
Identifiable assets $110,691 $ (683) $ 77,372 $ 34,002
Corporate assets 38,877 - 38,877 -
-------- -------- -------- --------
Total assets $149,568 $ (683) $116,249 34,002
======== ======== ========
Liabilities 26,725
--------
Equity in foreign
subsidiaries $ 7,277
========
<PAGE>
<PAGE>41
Notes to Consolidated Financial Statements - continued
Foreign
1991 Consolidated Eliminations Domestic Operations
- ---- ------------ ------------ --------- ----------
Net sales $200,457 $ (2,968) $153,946 $ 49,479
======== ======== ======== ========
Net income (loss) from
continuing operations $(35,938) $ - $(33,082) $ (2,856)
======== ======== ======== ========
Identifiable assets $137,675 $ (7,901) $104,599 $ 40,977
Corporate assets 16,768 (3,495) 15,474 4,789
-------- -------- -------- --------
Total assets $154,443 $(11,396) $120,073 45,766
======== ======== ========
Liabilities 32,097
--------
Equity in foreign
subsidiaries $ 13,669
========
The Company's principal foreign operations include a d.c. motor
manufacturing facility in France, together with sales subsidiaries in England
and Germany. The sales eliminations are transfers at prevailing wholesale
selling prices, principally from the domestic electro-optical instruments
segment to a sales subsidiary in England.
In addition to foreign operations, export sales amounted to $27.6 in
1993, $54.0 million in 1992, and $34.9 million in 1991.
Sales to the U.S. Government or for U.S. Government end-use amounted to
$39.4 in 1993, $38.9 million in 1992, and $40.9 million in 1991.
Note 18. Other Financial Statement Data
The following sections should be considered integral parts of the Notes
to Consolidated Financial Statements:
Page
Lines of Credit (see Liquidity and Capital Resources) 12
Segments of Business Information 2
<PAGE>
<PAGE>42
INDEX TO FINANCIAL STATEMENTS SCHEDULES
Page in
Schedule Form 10-K
IX Short Term Borrowings at December 31, 1993,
1992 and 1991. 43
X Supplementary Income Statement Information -
Years Ended December 31, 1993, 1992 and 1991. 44
Report of Independent Accountants on Financial
Statement Schedules - Coopers & Lybrand 45
Schedules and Statements other than those enumerated above have been
omitted because they are not required or are not applicable, or because the
required information is set forth in the financial statements and notes
thereto.
<PAGE>
<PAGE>43
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
SCHEDULE IX
SHORT TERM BORROWINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
Weighted Maximum amount Average amount Weighted average
Category of aggregate Balance at average outstanding outstanding interest rate
short-term borrowings end of period interest rate during the period during the period during the period
<S> <C> <C> <C> <C> <C>
1993
Notes payable to
banks $ 5,532,000 9.5% $ 6,959,000 $ 5,177,000 9.7%
1992
Notes payable to
banks $ 5,450,000 11.0% $ 7,790,000 $ 6,192,000 11.2%
1991
Notes payable to
banks $ 4,987,000 10.0% $ 6,886,000 $ 6,526,000 10.1%
</TABLE>
<PAGE>
<PAGE>44
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<CAPTION>
Charged to Costs and expenses
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $ 1,974,000 $ 1,655,000 $ 1,784,028
Advertising costs 2,735,000 1,579,000 2,246,197
</TABLE>
<PAGE>
<PAGE>45
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Shareholders
Kollmorgen Corporation:
Our report on the consolidated financial statements of Kollmorgen
Corporation is included on page 19 of this Form 10-K. In connection with our
audit of such financial statements, we have also audited the related
financial statement schedules for 1993 and 1992 listed in the index on page
42 of this Form 10-K.
In our opinion, the financial statement schedules referred to above,
when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information required to
be included therein.
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Boston, Massachusetts
January 31, 1994
<PAGE>
<PAGE>46
EXHIBIT INDEX
Page in this
Exhibit No. Description of Exhibit Form 10-K
3(a) Restated Certificate of Incorporation, as N/A
amended, incorporated by reference to
Exhibit 3(a) of the Form SE filed on
April 2, 1990.
3(b) By-Laws, as amended. 50
4(a) Debenture Purchase Agreement dated as of N/A
July 30, 1982, with respect to 10-1/2%
Convertible Subordinated Debentures Due 1997
incorporated by reference to Exhibit 4 to the
Quarterly Report on Form 10-Q of the Company
for the quarter ended June 30, 1982.
4(b) Indenture dated as of May 1, 1984, with respect N/A
to 8-3/4% Convertible Subordinated Debentures
Due 2009 incorporated by reference to Exhibit 4
to Registration Statement on Form S-3 (2-90655)
4(c) Rights Agreement dated as of December 20, 1988, N/A
as amended and restated as of March 27, 1990,
between the Company and the First National Bank
of Boston, as Rights Agent, incorporated by
reference to Exhibit 4(d) of the Form SE filed
on April 2, 1990.
4(d) Stock purchase agreement dated March 27, 1990, N/A
with Annex II, Registration Rights, with respect
to the issue of Series D Convertible Preferred
Stock, par value $1.00, of the Company,
incorporated by reference to Exhibit 4(e) of the
Form SE filed on April 2, 1990.
10(a) Letter of Credit Facility Agreement dated N/A
July 24, 1992, among Kollmorgen Corporation, The
First National Bank of Boston, Certain Other
Financial Institutions Listed on Schedule 1, and
The First National Bank of Boston, as Agent,
incorporated by reference to Ex-10 of the Form SE
to Form 10-Q filed on August 11, 1992.
10(b) Fourth Amendment to Exhibit 10(a), incorporated N/A
by reference to Ex-10 of the Form SE to Form 10-Q
filed on November 10, 1993.
<PAGE>
<PAGE>47
Page in this
Exhibit No. Description of Exhibit Form 10-K
10(c) Kollmorgen Stock Option Plan, as amended, N/A
incorporated by reference to Exhibit A of the
Company's Proxy Statement dated March 24, 1987,
for the Annual Meeting of Shareholders held on
April 22, 1987.
10(d) Kollmorgen 1991 Long Term Incentive Plan, N/A
incorporated by reference to Exhibit A of the
Company's Proxy Statement dated April 29, 1991,
for the Annual Meeting of Shareholders held on
May 23, 1991.
10(e) Form of 1983 Incentive Stock Option Agreement N/A
for James A. Eder. Said agreement is
incorporated by reference to Exhibit 10(e) to
the Annual Report on Form 10-K of the Company
for the year ended December 31, 1987.
10(f) Form of 1988 Non-Qualified Stock Option N/A
Agreement for James A. Eder. Said agreement
is incorporated by reference to Exhibit 10(g)
to the Annual Report on Form 10-K of the
Company for the year ended December 31, 1988.
10(g) Form of 1990 Non-Qualified Stock Option N/A
Agreement for James A. Eder. Said agreement
is incorporated by reference to Exhibit 10(h)
to the Annual Report on Form 10-K of the
Company for the year ended December 31, 1991.
10(h) Form of 1991, 1992, and 1993 Non-Qualified Stock N/A
Option Agreement under the Long-Term Incentive
Plan and/or Kollmorgen Stock Option Plan for
Gideon Argov, Robert J. Cobuzzi, James A. Eder
and Robert W. Woodbury, Jr. Each agreement is
identical except for the number of shares and the
date of grant. Said agreement is incorporated by
reference to Exhibit 10(j) to the Annual Report
on Form 10-K of the Company for the year ended
December 31, 1991.
10(i) Kollmorgen 1992 Stock Ownership Plan for N/A
Non-Employee Directors incorporated by
reference to Exhibit A of the Company's Proxy
Statement dated April 6, 1992, for the Annual
Meeting of Shareholders held on May 13, 1992.
10(j) Form of 1992 Non-Qualified Stock Option N/A
Agreement between each non-employee director
and the Company pursuant to the Kollmorgen
1992 Stock Ownership Plan for Non-Employee
Directors.
<PAGE>
<PAGE>48
Page in this
Exhibit No. Description of Exhibit Form 10-K
10(k) Bonus Plan for Corporate Officers and other N/A
key corporate employees.
10(l) Employment Agreement dated May 10, 1991, as N/A
amended, for James A. Eder. Said Agreement is
incorporated by reference to Exhibit 10(c) to
the Annual Report on Form 10-K of the Company
for the year ended December 31, 1991.
10(m) Letter employment agreement dated May 21, N/A
1991, for Gideon Argov. Said Agreement is
incorporated by reference to Exhibit 10(c) to
the Annual Report on Form 10-K of the Company
for the year ended December 31, 1991.
10(n) Letter employment agreement dated July 1, N/A
1991, for Robert J. Cobuzzi. Said Agreement is
incorporated by reference to Exhibit 10(c) to
the Annual Report on Form 10-K of the Company
for the year ended December 31, 1991.
10(o) Form of severance agreement for each of the N/A
following persons: Allan M. Doyle, Jr. and
George P. Stephan. Said agreement is
incorporated by reference to Exhibit 10(i)
to the Annual Report on Form 10-K of the
Company for the year ended December 31, 1989.
10(p) Form of Indemnification Agreement for each of the N/A
Company's executive officers, directors and
director emeritus. Each agreement is identical
to this exhibit except for the name and title of
each individual. Said agreement is incorporated
by reference to Exhibit 10(f) to the Annual
Report on Form 10-K of the Company for the year
ended December 31, 1987.
10(q) Description of Post-Retirement Arrangement for N/A
Non-Employee Directors. Said agreement is
incorporated by reference to Exhibit 10(i) to the
Annual Report on Form 10-K of the Company for the
year ended December 31, 1988.
10(r) Participation Agreement between Allan M. Doyle, Jr. N/A
and the Corporation with respect to Mr. Doyle's
service as a director of Millitech Corporation.
10(s) Supplemental Retirement Income Plan for key N/A
executives. Said plan is incorporated by
reference to Exhibit 10(n) to the Annual Report
on Form 10-K of the Company for the year ended
December 31, 1990.
<PAGE>
<PAGE>49
Page in this
Exhibit No. Description of Exhibit Form 10-K
11 Calculations of Earnings Per Share. 62
16 Copy of the letter dated September 15, 1992, N/A
from KPMG Peat Marwick. Said letter is
incorporated by reference to Exhibit 16 of
Form 8-K dated September 11, 1992.
21 Subsidiaries of the Company. 63
23(a) Consent of Independent Accountants - 64
Coopers & Lybrand
23(b) Independent Auditors' Consent - 65
KPMG Peat Marwick
24 Powers of Attorney 66
EXHIBIT 3(b)
KOLLMORGEN CORPORATION
BY-LAWS
ARTICLE I
Meeting of Shareholders
Section 1. Annual Meetings. The annual meeting of shareholders for
the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held at the principal office of
the Corporation, or at such other place within or without the State of New
York as shall be designated by the Board of Directors, on the second
Wednesday in May of each year at 10 o'clock in the forenoon of that day. If
the day so designated falls on a legal holiday, the meeting shall be held on
the first secular day thereafter. If the election of directors shall not be
held as prescribed above, such election may be held at a special meeting of
shareholders called in accordance with the provisions of these By-Laws or in
the manner provided by law.
Section 2. Special Meetings. Special meetings of the shareholders
may be called at any time by the Chairman of the Board of Directors or the
chief executive officer or by resolution of the Board of Directors, and shall
be called by the Secretary or any other officer when directed by the Chairman
of the Board of Directors or the chief executive officer or requested in
writing by shareholders representing not less than one-half of the
outstanding shares of stock of the Corporation entitled to vote at such
meeting, stating the purposes of the meeting so requested. No business other
than that specified in the notice of the meeting shall be presented to any
such special meeting, unless otherwise prescribed by law.
Special meetings may also be called and held in such cases and in such
manner as may be specifically provided by law.
Section 3. Notice. Notice of every meeting of shareholders shall
be in writing, shall state the place, date and hour of the meeting and,
unless it is the annual meeting, shall indicate that it is being issued by or
at the direction of the person or persons calling the meeting. It shall also
state the purpose or purposes for which the meeting is called. A copy of
such notice shall be served personally or by mail upon each shareholder of
record entitled to vote at such meeting, not less than ten (l0) or more than
fifty (50) days before such meeting. If mailed, such notice shall be
directed to each shareholder at his address as it appears on the stock book
of the Corporation, unless he shall have filed with the Secretary a written
request that notices intended for him be mailed to some other address, in
which case it shall be mailed to the place designated in such request.
Notice of the time or place of any adjourned meeting need not be given
if the time and place to which the meeting is adjourned are announced at the
meeting at which the adjournment is taken. At the adjourned meeting any
business may be transacted that might have been transacted on the original
date of the meeting.
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Notice of any meeting shall be deemed to have been given to any
shareholder who submits a signed waiver of notice, in person or by proxy,
whether before or after the meeting.
Section 4. Quorum. At all meetings of shareholders the presence in
person or by proxy of the holders of a majority of the votes entitled to vote
thereat shall be necessary to constitute a quorum except where otherwise
provided by the Certificate of Incorporation, by these By-Laws or by law.
Section 5. Adjournment in Absence of Quorum. Any meeting duly
called and noticed, at which shareholders constituting a quorum shall not be
present in person or by proxy, may be adjourned by a vote of the holders of a
majority of the votes present.
Section 6. Voting. At all meetings of the shareholders, a quorum
being present, all matters, except as otherwise provided by the Certificate
of Incorporation or by law, shall be decided by a majority of the votes cast
by the shareholders present in person or by proxy and entitled to vote.
Section 7. Proxies. Every shareholder entitled to vote at any
meeting of shareholders may vote by proxy. Every proxy must be executed in
writing by the shareholder or his duly authorized attorney. No proxy shall
be valid after the expiration of eleven months from the date of its
execution, unless the shareholder shall have specified therein its duration.
Every proxy shall be revocable at the pleasure of the person executing it or
his personal representatives or assigns except as otherwise provided by law.
ARTICLE II
Directors
Section 1. Qualifications and General Powers. The business and
affairs of the Corporation, except as otherwise herein provided, shall be
managed under the direction of its Board of Directors. Directors shall be
shareholders. All directors shall be of full age.
The Board of Directors shall in all cases act as a Board, regularly
convened, and in the transaction of business the act of a majority present at
a meeting at which a quorum is present shall be the act of the Board of
Directors, except as otherwise provided by the Certificate of Incorporation,
by these By-Laws or by law. At all meetings of the Board of Directors each
director shall have one vote.
The Board of Directors may adopt such rules and regulations for the
conduct of its meetings, meetings of committees, if any, and the management
of the Corporation as it may deem proper. Such rules and regulations may not
be inconsistent with the Certificate of Incorporation, these By-Laws or law.
The Board of Directors may elect from among its members a Chairman of
the Board. The Chairman of the Board shall act as chairman of, and preside
at, all meetings of shareholders and the Board of Directors. In the
Chairman's absence, any director (or in the case of meetings of shareholders,
any director or officer) appointed by resolution of the Board shall preside
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at meetings of shareholders and of the Board. The Chairman of the Board
shall inform himself as to the progress of the Corporation's management in
meeting goals established by the Board and shall be generally responsible for
organizing and leading the Board in performing its role as set forth in the
By-Laws. He shall be a member ex-officio of all committees of the Board.
The Chairman shall perform such other duties and have such additional powers
as the Board may, from time to time, confer on him by resolution of the
Board. The Chairman of the Board shall not, solely by reason of his title
and position, be deemed to be an officer of the Corporation.
Section 2. Number, Election and Term of Office of Directors. The
Board of Directors shall consist of not less than three (3) nor more than
fifteen (l5) directors, as the Board may from time to time determine. Any
action by the Board to increase or decrease the number of directors shall
require the affirmative vote of a majority of the entire Board. No decrease
in the number of directors shall have the effect of shortening the term of
any incumbent director.
The directors shall be divided into two (2) classes, each class to
consist of not less than three (3) nor more than four (4) directors. All
classes shall be as nearly equal in number as possible. At each annual
meeting of shareholders, directors shall be elected for a term of two years
to replace those directors whose terms shall then expire.
Any newly-created directorships or any decrease in directorships shall
be so apportioned among the classes of directors as to make all classes as
nearly equal in number as possible.
If the number of directors is increased by the Board of Directors and
any newly-created directorships are filled by the Board, there shall be no
classification of the additional directors until the next annual meeting of
shareholders.
Except as may otherwise be required by the Certificate of Incorporation
or by law, directors shall be elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election.
Each director shall continue in office until his term shall have expired
and until his successor shall have been elected and qualified or until his
prior death, removal or resignation.
Section 3. Resignation. Any director may resign at any time by
giving written notice to the chief executive officer or to the Secretary.
Such resignation shall take effect at the time specified therein. Unless
otherwise specified therein, the acceptance of a resignation shall not be
necessary to make it effective.
Section 4. Vacancies. Vacancies on the Board of Directors, whether
caused by death, resignation, or otherwise, may be filled by the affirmative
vote of the majority of the remaining directors or by the remaining director
if there be only one. Each successor director shall hold office for the
unexpired portion of the term of his predecessor, and until the election and
qualification of his successor.
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<PAGE>4
Section 5. Regular Meetings. The Board of Directors shall meet for
the purpose of organization, election of officers and the transaction of such
other business as may be deemed necessary, as soon as practicable after the
adjournment of the annual meeting of shareholders. Other regular meetings of
the Board of Directors shall be held at such times as may be fixed from time
to time by resolution of the Board. Notice of regular meetings need not be
given.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be held whenever called by the Chairman of the Board or by any
two directors. Notice of the time and place of such special meeting shall be
mailed to each director, addressed to him at his residence or regular place
of business, or communicated to him at such place by telegraph, cable or
telex, or delivered to him personally, or by telephone not later than two
days prior to the date fixed for the meeting.
Section 7. Waiver of Notice. Notice of any meeting shall be deemed
to have been given to any director who submits a signed waiver of notice
whether before or after the meeting. At any meeting at which all of the
directors are present, although such meeting is held without notice, any
business may be transacted which might have been transacted if the meeting
had been duly called.
Section 8. Quorum and Voting By The Directors. If all of the
directors consent in writing to the adoption of a resolution authorizing any
action required or permitted to be taken by the Board of Directors, such
action may be taken without a meeting of the Board of Directors.
At all meetings of the Board of Directors the presence of at least one-
third of the entire Board shall be necessary to constitute a quorum. If at
any meeting a quorum shall not be present, a majority of those directors
present may adjourn the same until a quorum is present. Notice of the time
and place of any adjourned meeting need not be given other than by
announcement at the meeting at which the adjournment is taken.
The participation by any director in a meeting of the Board of Directors
by means of a conference telephone or similar communications equipment,
allowing all persons participating in the meeting to hear each other at the
same time, shall constitute presence in person at such meeting for all
purposes.
Section 9. Place of Meetings. Meetings of the Board of Directors
shall be held at such place or places within or without the State of New York
as may be fixed by the Board, any executive committee, or designated in the
notice of meeting.
Section 10. Committees. At the organization meeting of the Board in
each year, the Board of Directors, by resolution adopted by a majority of the
entire Board, shall appoint from its members an Executive Committee, a
Personnel and Compensation Committee, a Retirement Plans Committee and an
Audit Committee. At the organization meeting or at any other meeting of the
Board of Directors, the Board may appoint, by resolution adopted by a
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<PAGE>5
majority of the entire Board, such other committees as it may deem advisable
for the management of the Corporation's affairs. Each such committee shall
consist of three or more directors. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent
member or members at any meeting of such committee. The committees shall be
comprised of such members of the Board as the Board deems appropriate,
provided that the membership of the Executive Committee shall include the
Chairman of the Board, and the Personnel and Compensation Committee shall be
comprised of directors who are not employees of the Corporation. The
Executive Committee shall have and may exercise all the powers of the Board
of Directors in the direction of the management of the Corporation between
meetings of the Board, except as otherwise provided by the Certificate of
Incorporation, by these By-Laws or by law. The Personnel and Compensation
Committee generally shall be responsible for reviewing all of the
Corporation's compensation policies and practices company-wide, and
specifically for (i) reviewing and recommending to the Board of Directors the
total compensation programs and benefit plans (including base salaries and
long- and short-term incentive plans) applicable to the Corporation's key
decision makers, other than retirement plans; and (ii) administering the
Corporation's stock option plans. In addition, this Committee reviews and
makes recommendations on the policies and programs for the development of
management personnel throughout the Corporation. The Retirement Plans
Committee shall be responsible for reviewing and advising the Board and
recommending action with respect to management's selection of trustees under
the Corporation's retirement trusts, reviewing and recommending to the Board
action with respect to management's selection of managers of the Retirement
Plan Administration Committee and Retirement Plan Investment Committee,
reviewing and advising the Board and recommending action with respect to
activities of the named fiduciaries of the Corporation's retirement plans and
of trustees of the Corporation's retirement trust and, where appropriate,
recommending termination of their appointments and reviewing and advising the
Board and recommending action with respect to establishment and amendment of
retirement plans and trusts. The Audit Committee shall be responsible for
overseeing and reviewing the internal and external audit of the Corporation's
books and accounts, for reviewing the audited financial statements of the
Corporation, for reviewing the Corporation's internal control procedures, and
for reviewing and approving the independence of the Corporation's public
accountants. The Personnel and Compensation, Retirement Plans and Audit
Committees shall report to the Board of Directors from time to time, or
whenever called upon to do so, and shall have such powers as may be
reasonably necessary in order to carry out their duties. Each other
committee appointed by the Board shall have such powers and shall perform
such duties as are specified in the resolutions designating it or in
subsequent resolutions adopted by a majority of the entire Board, except as
otherwise provided by the Certificate of Incorporation, by these By-Laws or
by law. Each committee shall serve at the pleasure of the Board. All
committees shall make their own rules of procedures, subject to such rules as
may be made by the Board of Directors, shall keep regular minutes of the
transactions at their meetings, and shall report the same to the Board of
Directors at its next meeting.
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Section 11. Compensation. In consideration for his services as a
director, each member of the Board, as well as each honorary or emeritus
director, who is not a regular employee of the Corporation shall be paid (a)
an annual fee of $12,000 payable quarterly at the beginning of each calendar
quarter, (b) an attendance fee of $800 for each meeting of the Board of
Directors which he attends, and for each meeting of any committee of the
Board of which he is a member and which he attends, (c) $800 for each day
which he attends at the Corporation's annual planning meeting, and (d) $800
for each day he participates in any special assignment requested by the
Corporation. All directors shall be reimbursed for their reasonable out-of-
pocket expenses incurred in connection with their attendance at aforemen-
tioned meetings of the Board of Directors or otherwise in connection with
performance of their duties as directors upon submission of appropriate
expense vouchers.
Nothing herein contained shall be construed to preclude any director
from serving the Corporation in any capacity other than as a director and
receiving compensation therefor.
Section 12. Director Emeritus. The Board of Directors may, from
time to time, appoint any former director of the Corporation who shall have
retired from the Board for reasons of age, health or similar reason, as
Director Emeritus of the Corporation. A Director Emeritus shall be entitled
to attend such meetings of the directors and be compensated therefor as the
Board may determine.
ARTICLE III
Officers
Section 1. Elected and Other Officers. The elected officers of the
Corporation shall be a President, one or more Vice Presidents, a Treasurer, a
Secretary and a Controller. All of such officers shall be elected by the
Board of Directors at its regular meeting following the annual meeting of the
shareholders. Except as otherwise provided by the Certificate of
Incorporation or by these By-Laws, such officers shall hold office until the
regular meeting of the Board of Directors held after the next annual meeting
of the shareholders and until their respective successors have been elected
and qualified.
The Board of Directors may elect or appoint one or more Assistant
Secretaries and such additional officers, and the Board of Directors and the
chief executive officer may appoint such agents, as may be deemed necessary
for the conduct of business of the Corporation. Each of such additional
officers and agents shall have such duties and powers, and shall hold office
for such period as the Board of Directors or the chief executive officer, as
the case may be, may determine.
The same person may hold two or more offices, whether elective or
appointive, except that the President may not hold the office of Secretary.
Section 2. Resignation and Removal. Subject to the provisions of
any contract of employment, any officer may resign at any time by giving
written notice to the Chairman of the Board of Directors or to the Secretary,
and such resignation shall take effect at the time and in the manner
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<PAGE>7
specified therein. Any officer may be removed, with or without cause, and
his successor may be elected, at any meeting of the Board of Directors, by a
majority vote of the entire Board.
Section 3. Vacancies. A vacancy in any office, however caused, may
be filled for the unexpired term of office at any meeting of the Board of
Directors.
Section 4. Compensation. The compensation of all elected officers
of the Corporation shall be fixed by the Personnel and Compensation Committee
of the Board of Directors. The compensation of officers and agents of the
Corporation appointed by the Board of Directors or by the chief executive
officer shall be fixed by the body or person appointing them.
Section 5. Powers and Duties. The officers of the Corporation
shall respectively have such powers and perform such duties in the management
of the property and affairs of the Corporation as may be provided in these
By-Laws or, to the extent not so provided, by the Board of Directors.
Section 6. President. The President shall be the chief executive
officer of the Corporation and shall have the authority and exercise all of
the powers appertaining to a chief executive officer of a Corporation, except
where otherwise provided by law. In the absence or inability of the
President to act, the authority vested in the President shall be exercised
during such absence or inability by the Executive Committee of the Board,
unless otherwise determined by the Board of Directors.
The President shall have general authority to execute and deliver
contracts, deeds, mortgages, bonds and other instruments in the name and on
behalf of the Corporation.
Section 7. Vice Presidents. The several Vice Presidents shall have
authority to execute and deliver contracts, deeds, mortgages, bonds and other
instruments in the name and on behalf of the Corporation and shall perform
such duties and have such powers as may be assigned to them from time to time
by the Board of Directors or the chief executive officer.
Section 8. Treasurer. The Treasurer shall have the care and
custody of all the funds of the Corporation, and shall have active control of
and shall be responsible for all matters pertaining to the accounts of the
Corporation and its subsidiaries. He shall deposit the funds of the
Corporation in such banks or other depositories as the Board of Directors, or
any officer or officers, or any officer and agent jointly, duly authorized by
the Board of Directors, shall, from time to time, direct or approve. He
shall keep a full and accurate account of all moneys received and paid on
account of the Corporation, and shall render a statement of his accounts
whenever the Board of Directors shall require. He shall supervise the
auditing of all payrolls and vouchers of the Corporation and its subsidiaries
and shall direct the manner of certifying the same; shall supervise the
manner of keeping all vouchers for payment by the Corporation and its
subsidiaries and all other documents relating to such payments; shall
receive, audit and consolidate all operating and financial statements of the
Corporation, its various departments, divisions and subsidiaries; shall have
supervision of the books of account of the Corporation and its subsidiaries,
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<PAGE>8
their arrangement and classification, and shall supervise the accounting and
auditing practices of the Corporation and its subsidiaries. He shall perform
all other necessary acts and duties in connection with the administration of
the financial affairs of the Corporation, and shall generally perform all the
duties usually appertaining to the office of treasurer of a Corporation.
When required by the Board of Directors, he shall give bonds for the faithful
discharge of his duties in such sums and with such sureties as the Board of
Directors shall approve. In the absence of the Treasurer, such person as
shall be designated by the Board of Directors shall perform his duties.
Section 9. Secretary. The Secretary shall attend all meetings of
the Board of Directors and the shareholders and shall record all votes and
the minutes of all proceedings in a book to be kept for that purpose and
shall, when requested, perform like duties for all committees of the Board of
Directors. He shall attend to the giving of notice of all meetings of the
shareholders, and special meetings of the Board of Directors and committees
thereof; he shall have custody of the corporate seal and, when authorized by
the Board of Directors, shall have authority to affix the same to any
instrument and, when so affixed, it shall be attested by his signature or by
the signature of the Treasurer or an Assistant Secretary or an Assistant
Treasurer. He shall keep and account for all books, documents, papers and
records of the Corporation, except those for which some other officer or
agent is properly accountable. He shall have authority to sign stock
certificates, and shall generally perform all the duties appertaining to the
office of secretary of a Corporation. In the absence of the Secretary, such
person as shall be designated by the Board of Directors shall perform his
duties.
Section 10. Controller. The Controller shall be responsible for
planning and directing the functions of corporate accounting, internal
auditing, taxes and financial planning and control. He shall also establish
policies with respect to accounting matters and exercise policy direction
over the conduct of accounting throughout the Corporation, and shall perform
such other duties as may be assigned to him by the chief financial officer or
the Board of Directors.
Section 11. Absence or Inability to Act. Except as otherwise
provided in these By-Laws, in the case of the absence or inability of any
officer of the Corporation to act and of any person herein authorized to act
in his place, the Board of Directors may delegate the powers or duties of
such officer to any other officer or to any other person.
Section 12. Security. The Board of Directors may require any
officer to give security for the faithful performance of his duties. Such
security may be in the form of a bond in such sum, with such surety or
sureties, and in such form as the Board may approve.
ARTICLE IV
Stock
Section 1. Certificates of Stock. Certificates for shares of stock
of the Corporation shall be in the form adopted by the Board of Directors,
and shall be issued within each class and series, if any, in numerical order.
Each shareholder shall be entitled to a certificate, signed by the Chairman
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<PAGE>9
of the Board of Directors or the President or a Vice President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, showing the number, class and series, if any, of shares owned by
him, the date of their issue and the par value thereof, and bearing the
corporate seal impressed or reproduced thereon. Where such certificate is
counter signed by a transfer agent or registered by a registrar other than
the Corporation itself or its employee, the signature of any of the above-
named officers on such certificate may be facsimile.
In case any officer who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer before such
certificate is issued, such certificate may nevertheless be issued and
delivered by the Corporation, with the same effect as if he were such officer
at the date of its issue.
Section 2. Transfer of Shares. The Board of Directors may appoint
one or more transfer agents and one or more registrars for any and all
classes of stock and may require all stock certificates to bear the
signatures of any such transfer agent and any such registrar. Transfers of
shares of stock shall be made only on the transfer books of the Corporation
by the holder thereof or by his attorney thereunto duly authorized, and on
the surrender of the certificate or certificates representing such shares
properly endorsed. Such transfer books shall be kept at the main business
office of the Corporation or at the office of any transfer agent. Each
certificate so surrendered shall be marked "Canceled," and the date of
cancellation shall be duly noted thereon.
Section 3. Lost or Destroyed Certificates. The Corporation may
issue a new certificate for shares in place of any certificate theretofore
issued, and alleged to have been lost or destroyed, upon such proof of such
loss or destruction as the Board of Directors may require. The Board may
also require, as a condition for the issuance of such new certificate, that a
bond, in such form and amount as it shall deem sufficient, be given to the
Corporation and/or to the transfer agent and registrar of the stock
represented by such certificate.
Section 4. Closing of Transfer Books or Taking Records of the
Shareholders. The Board of Directors may prescribe a date not exceeding
fifty (50) days prior to the date of any meeting of shareholders, or prior to
the date on which the consent or dissent of shareholders may be expressed for
any purpose without a meeting, or prior to the date of the payment of any
dividend or the allotment of any right, after which no transfer of stock on
the books of the Corporation may be made.
In lieu of prohibiting the transfer of stock, the Board may fix, in
advance, a date prior to the date of any meeting of shareholders, or prior to
the date on which the consent or dissent of shareholders may be expressed for
any purpose without a meeting, or prior to the date of the payment of any
dividend or the allotment of any right, as the date as of which shareholders
entitled to notice of and to vote at such a meeting, or whose consent or
dissent is required or may be expressed, or who may be entitled to such
dividend or right, as the case may be, shall be determined. Such date shall
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<PAGE>10
not be more than fifty (50) days nor less than ten (l0) days prior to the
date of such meeting, nor more than fifty (50) days prior to any other
action.
Section 5. Registered Shareholders. Except as may be otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares and to vote
as such owner, and shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person.
ARTICLE V
Dividends and Finance
Section 1. Dividends. Except as may otherwise be provided by the
Certificate of Incorporation or by law, dividends shall be paid as and when
declared by the Board of Directors out of funds legally available therefor.
Section 2. Deposits. The moneys of the Corporation shall be
deposited in the name of the Corporation in such depositories as the Board of
Directors may designate.
Section 3. Checks, Drafts, etc. All checks, notes, drafts,
acceptances or other demands or orders for the payment of money or evidences
of indebtedness of the Corporation shall be signed by such officer or
officers or person or persons as the Board of Directors may from time to time
determine. All endorsements for deposit shall be made by the Treasurer, or
in his name, or by any executive officer.
ARTICLE VI
Indemnification and Insurance
Section 1. Indemnification. Except to the extent expressly
prohibited by the New York Business Corporation Law, the Corporation shall
indemnify each person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that such person
or such person's testator or intestate is or was a director or officer of the
Corporation, or serves or served at the request of the Corporation any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity, against judgments, fines (including excise
taxes assessed on a person with respect to an employee benefit plan),
penalties, amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with such
action or proceeding, or any appeal therein, provided that no such
indemnification shall be made if a judgment or other final adjudication
adverse to such person establishes that his conduct did not meet the then
applicable statutory standards, and provided further that no such
indemnification shall be required with respect to any settlement or other
nonadjudicated disposition of any threatened or pending action or proceeding
unless the Corporation has given its prior consent to such settlement or
other disposition, which consent shall not be unreasonably withheld.
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The Corporation shall advance or promptly reimburse upon request any
person entitled to indemnification hereunder for all expenses, including
attorneys' fees, reasonably incurred in defending any action or proceeding in
advance of the final disposition thereof upon receipt of an undertaking by or
on behalf of such person to repay such amount if such person is ultimately
found not to be entitled to indemnification or, where indemnification is
granted, to the extent the expenses so advanced or reimbursed exceed the
amount to which such person is entitled, provided, however, that such person
shall cooperate in good faith with any request by the Corporation that common
counsel be utilized by the parties to an action or proceeding who are
similarly situated unless to do so would be inappropriate due to actual or
potential differing interests between or among such parties.
The right to indemnification and advancement of expenses under this By-
Law is intended to be retroactive and shall be available with respect to any
action or proceeding which relates to events prior to the effective date of
this By-Law.
The Corporation is authorized to enter into agreements with any of its
directors or officers extending rights to indemnification and advancement of
expenses to such person to the fullest extent permitted by applicable law,
but the failure to enter into any such agreement shall not affect or limit
the rights of such person pursuant to this By-Law, it being expressly
recognized hereby that all directors and officers of the Corporation, by
serving as such after the adoption hereof, are acting in reliance hereon and
that the Corporation is estopped to contend otherwise.
In case of any provision in this By-Law shall be determined at any time
to be unenforceable in any respect, the other provisions shall not in any way
be affected or impaired thereby, and the affected provision shall be given
the fullest possible enforcement in the circumstances, it being the intention
of the Corporation to afford indemnification and advancement of expenses to
its directors and officers, acting in such capacities or in the other
capacities mentioned herein, to the fullest extent permitted by law.
No amendment or repeal of this By-Law shall apply to or have any effect
on the indemnification of, or advancement of expenses to, any director and
officer of the Corporation for or with respect to acts or omissions of such
director or officer occurring prior to such amendment or appeal.
The foregoing shall not be exclusive of any other rights to which any
director or officer may be entitled as a matter of law and shall not affect
any rights to indemnification to which corporate personnel other than
directors or officers may be entitled by contract or otherwise.
Section 2. Insurance. To the extent permitted by law, the
Corporation shall purchase and maintain insurance:
To indemnify the Corporation for any obligation which it incurs as a
result of the indemnification of directors and officers;
<PAGE>
<PAGE>12
To indemnify directors and officers in instances in which they may be
indemnified by the Corporation; and
To indemnify directors and officers in instances in which they may not
otherwise be indemnified by the Corporation, provided that the contract of
insurance covering such directors and officers provides, in a manner
acceptable to the Superintendent of Insurance of the State of New York, for a
retention amount and for co-insurance.
ARTICLE VII
Miscellaneous
Section 1. Offices. The principal office of the Corporation in the
State of New York shall be located at c/o C T Corporation System, 277 Park
Avenue, New York, New York l00l7. The Corporation shall also have such
offices within or without the State of New York as the Board of Directors may
from time to time appoint or as the business of the Corporation may require.
Section 2. Seal. The corporate seal of the Corporation shall
consist of two concentric circles, between which shall be the name of the
Corporation, and in the center shall be inscribed the year of its
incorporation and the words: "Corporate Seal, New York."
Section 3. Fiscal Year. The fiscal year of the Corporation shall
be the calendar year.
ARTICLE VIII
Amendments
Section 1. Amendments by Shareholders. The By-Laws may be altered,
modified, amended or repealed, and new By-Laws may be adopted, by the
shareholders at any annual or special meeting.
Section 2. Amendments by Directors. The Board of Directors shall
have power to alter, modify, amend or repeal the By-Laws, or to adopt new By-
Laws, at any regular or special meeting of the Board; provided, however, that
if any By-Law regulating an impending election of directors is adopted,
amended or repealed by the Board, there shall be set forth in the notice of
the next meeting of shareholders for the election of directors, the By-Law so
adopted, amended or repealed, together with a concise statement of the
changes made.
<TABLE>
EXHIBIT 11
<CAPTION>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
CALCULATIONS OF EARNINGS PER SHARE
(Dollars in thousands, except per share amounts)
Year Ended December 31
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 4,752 $ (8,725) $ (35,938) $ 18,446 $ (31,813)
Less preferred stock dividends
and accretion of discount (2,328) (2,330) (2,325) (1,773) --
----------- ----------- ----------- ----------- -----------
Earnings applicable to common stock 2,424 (11,055) (38,263) 16,673 (31,813)
----------- ----------- ----------- ----------- -----------
Number of shares:
Weighted average number of
shares outstanding 9,632,232 9,627,228 9,628,122 10,434,429 10,625,088
Shares issuable on assumed
exercise of dilutive options -- -- -- 4,884 --
----------- ------------ ----------- ----------- -----------
Adjusted shares 9,632,232 9,627,228 9,628,122 10,439,313 10,625,088
=========== =========== =========== =========== ===========
Earnings (loss) per share $ .25 $(1.14) $(3.97) $ 1.60 $(2.99)
=========== =========== =========== =========== ===========
</TABLE>
EXHIBIT 21
Subsidiaries of the Company
As of March 4, 1994, the Company owned or controlled the following
percentages of the capital stock of the corporations listed below:
State or Country of
Name of Corporation Incorporation % Owned
Crystal Spectialties, Inc. California 100
Kollmorgen Foreign Sales Corporation U.S. Virgin Islands 100
Kollmorgen Overseas Development Corporation Delaware 100
Proto-Power Corporation Delaware 100
Proto-Technology Corporation Delaware 100
Questec Enterprises, Inc. Delaware 100
31 Sea Cliff Avenue Corporation New York 100
Kollmorgen Instruments Corporation Delaware 100
Kollmorgen Instruments GmbH West Germany 100
Kollmorgen A.G. Switzerland 100
Kollmorgen (U.K.) Limited Great Britain 100
PMI Motion Technologies GmbH West Germany 100
Artus Group France 100
Kollmorgen Artus
Societe Anonyme Cryla
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
Kollmorgen Corporation:
We consent to the incorporation by reference in the Registration
Statements of Kollmorgen Corporation on Form S-3 (No. 2-90655), on Form S-8
(No. 2-64648), on Form S-8 (No. 33-44229) and on Form S-8 (No. 33-48953), of
our reports dated January 31, 1994, on our audits of the consolidated
financial statements and financial statement schedules of Kollmorgen
Corporation and subsidiaries as of December 31, 1993 and 1992, and for the
years ended December 31, 1993 and 1992, which reports are included in this
Annual Report on Form 10-K.
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Boston, Massachusetts
March 8, 1994
EXHIBIT 23(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Kollmorgen Corporation:
We consent to incorporation by reference in the Registration Statements
on Form S-3 (No. 2-90655), on Form S-8 (No. 2-64648), on Form S-8
(No. 33-44229) and on Form S-8 (No. 33-48953), of Kollmorgen Corporation of
our report dated February 19, 1992, relating to the consolidated statements
of operations, shareholders' equity and cash flows and related schedules of
Kollmorgen Corporation and subsidiaries for the year ended December 31, 1991,
which report appears in the December 31, 1993, Annual Report on Form 10-K of
Kollmorgen Corporation.
/s/ KPMG Peat Marwick
KPMG PEAT MARWICK
Short Hills, New Jersey
March 8, 1994
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned:
ALLAN M. DOYLE, JR. does hereby appoint and constitute Gideon Argov,
Robert J. Cobuzzi and James A. Eder and each of them as his agent and
attorney in fact to execute in his name, place and stead as director of
Kollmorgen Corporation an Annual Report on Form 10-K for the year ended
December 31, 1993, and any and all amendments thereto; and to file the same
with the Securities and Exchange Commission. Each of the said attorneys
shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned has executed this form this 15th day
of February , 1994.
/s/ Allan M. Doyle, Jr.
_______________________________
Allan M. Doyle, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned:
JAMES H. KASSCHAU does hereby appoint and constitute Gideon Argov,
Robert J. Cobuzzi and James A. Eder and each of them as his agent and
attorney in fact to execute in his name, place and stead as director of
Kollmorgen Corporation an Annual Report on Form 10-K for the year ended
December 31, 1993, and any and all amendments thereto; and to file the same
with the Securities and Exchange Commission. Each of the said attorneys
shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned has executed this form this 15th day
of February , 1994.
/s/ James H. Kasschau
___________________________________
James H. Kasschau
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned:
J. DOUGLAS MAXWELL, JR. does hereby appoint and constitute Gideon Argov,
Robert J. Cobuzzi and James A. Eder and each of them as his agent and
attorney in fact to execute in his name, place and stead as director of
Kollmorgen Corporation an Annual Report on Form 10-K for the year ended
December 31, 1993, and any and all amendments thereto; and to file the same
with the Securities and Exchange Commission. Each of the said attorneys
shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned has executed this form this 15th day
of February , 1994.
/s/ J. Douglas Maxwell, Jr.
________________________________
J. Douglas Maxwell, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned:
ROBERT N. PARKER does hereby appoint and constitute Gideon Argov,
Robert J. Cobuzzi and James A. Eder and each of them as his agent and
attorney in fact to execute in his name, place and stead as director of
Kollmorgen Corporation an Annual Report on Form 10-K for the year ended
December 31, 1993, and any and all amendments thereto; and to file the same
with the Securities and Exchange Commission. Each of the said attorneys
shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned has executed this form this 15th day
of February , 1994.
/s/ Robert N. Parker
_______________________________
Robert N. Parker
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned:
ERIC M. RUTTENBERG does hereby appoint and constitute Gideon Argov,
Robert J. Cobuzzi and James A. Eder and each of them as his agent and
attorney in fact to execute in his name, place and stead as director of
Kollmorgen Corporation an Annual Report on Form 10-K for the year ended
December 31, 1993, and any and all amendments thereto; and to file the same
with the Securities and Exchange Commission. Each of the said attorneys
shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned has executed this form this 15th day
of February , 1994.
/s/ Eric M. Ruttenberg
_______________________________
Eric M. Ruttenberg
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned:
GEORGE P. STEPHAN does hereby appoint and constitute Gideon Argov,
Robert J. Cobuzzi and James A. Eder and each of them as his agent and
attorney in fact to execute in his name, place and stead as director of
Kollmorgen Corporation an Annual Report on Form 10-K for the year ended
December 31, 1993, and any and all amendments thereto; and to file the same
with the Securities and Exchange Commission. Each of the said attorneys
shall have the power to act hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned has executed this form this 15th day
of February , 1994.
/s/ George P. Stephan
_______________________________
George P. Stephan
