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, 1994, 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. $58,345,423 as of March 15, 1995.
Indicate the number of outstanding shares of the registrant's Common
Stock. 9,649,905 shares as of March 15, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of 1995 Definitive Proxy Statement to be filed for the 1995
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>
1994 1993 1992
<S> <C> <C> <C>
Motion Technologies Group
Sales $ 113,660 $ 112,767 $ 116,575
Income (loss)
before taxes 6,407 9,207 (2,522)
Assets72,126 63,203 66,904
Capital additions 3,178 3,347 3,181
Depreciation 3,414 3,426 3,486
Backlog 64,589 52,231 49,941
Electro-Optical
Instruments
Sales $ 78,111 $ 72,771 $ 78,284
Income before taxes 5,064 3,078 4,080
Assets40,189 32,740 43,788
Capital additions 1,560 2,093 1,783
Depreciation 2,258 2,356 3,162
Backlog 53,981 58,266 48,138
Corporate
Operating expenses $ (8,235) $ (8,381)$ (11,055)
Assets25,886 38,065 38,876
Capital additions 99 30 78
Depreciation 225 207 407
Consolidated
Sales $ 191,771 $ 185,538 $ 194,859
Income (loss)
before taxes 3,236 3,904 (9,497)
Assets 138,201 134,008 149,568
Capital additions 4,837 5,470 5,042
Depreciation 5,897 5,989 7,055
Backlog 118,570 110,497 98,079
</TABLE>
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The income (loss) before taxes 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
(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, and machine tool applications. The
Industrial Drives 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. In addition, this Division sells a line
of stepper motors and brushless motors used for office and factory
automation, instrumentation, and medical applications. The PMI Division
designs, manufactures and distributes a line of low inertia, high speed of
response, d.c. motors and associated electronics plus feedback devices used
primarily in industrial automation 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 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.
Commencing in 1994, the Company's VMG group began designing for
manufacture in Bombay, India, high volume, fractional horsepower motors
primarily for the computer peripheral and electronics markets. In April,
1994, the Company purchased certain assets and liabilities of Hightech
<PAGE>
<PAGE>4
Components, Limited, at a purchase price of $1.5 million. Hightech is a
distributor of motor and control products and is located in Hampshire,
England.
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 Sales Group, and the defense and aerospace products are marketed by
the Aerospace and Defense Products Sales 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 1994 was
$64.6 million of which approximately 88% is expected to be shipped in 1995.
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. In
September, 1994, the Company acquired substantially all of the assets of the
conventional optical periscope business of Sperry Marine, Inc. at a purchase
price of approximately $5 million. The Electro-Optical Division also markets
and sells submarine periscopes to navies throughout the world.
This Division also has been an important supplier of other electro-
optical instruments for various weapon systems. 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
<PAGE>
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vision. During 1994, this operation received awards of approximately $14
million from the Naval Sea Systems Command for optical sights for the DDG-51
Arleigh Burke Class guided missile destroyers.
In February, 1995, the Company received a $35 million contract from the
Naval Sea Systems Command for the design and production of a photonic mast
system which is intended to replace existing optical periscopes.
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 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 comparison 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.
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<PAGE>6
Proto-Power Corporation, a wholly-owned subsidiary of the Company, is a
consulting engineering company that primarily provides services for the
modification and upgrade of nuclear and fossil power plants of domestic
electric utility companies and independent power producers. In recent years,
this subsidiary has licensed its proprietary computer-aided engineering
software to a number of its customers for analyzing the performance of power
plant systems and equipment.
Within this segment, military products represented 51% of sales in 1994,
47% of sales in 1993, and 45% of sales in 1992. 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
1994 was $54 million of which approximately 62% is expected to be shipped in
1995.
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 1994,
no customer accounted for 10% or more of the Company's consolidated revenues.
Government Sales.
In 1994, sales to the U.S. Government or for U.S. Government end-use
represented approximately 20% of revenues, of which 16% were generated from
the electro-optical instruments segment and 4% 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
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<PAGE>7
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.
Research and Development.
During 1994, the Company spent $10.8 million or approximately 5.7% of
its consolidated sales on research activities related to the development of
new products. This compares to $9.3 million or 5.0% in 1993, and $10.6
million or 5.5% in 1992. Substantially all of this amount was sponsored by
the Company.
Environmental Matters.
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.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act and analogous state statutes, certain liabilities are imposed
for the disposal of "hazardous substances" without regard to fault or the
legality of such disposals. The Company has been named, or has been informed
that it may be named, as a potentially responsible party at several waste
disposal sites under these statutes. Based upon the information available to
date, the Company does not believe that its share of any clean-up costs will
have a material impact on the Company's financial condition, cash flows or
results of operations.
Employees.
In February, 1995, the Company received a petition from the
International Union, United Automobile, Aerospace & Agricultural Implement
Workers of America ("UAW") requesting the representation of a group of
approximately 200 production and maintenance employees at the Company's
Inland Motor facility located in Radford, Virginia. The representation
election has been scheduled for March 30, 1995.
The Company is currently 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
<PAGE>
<PAGE>8
and Aerospace Workers currently covering 42 employees. In March, 1994, the
Macbeth Division of Kollmorgen Instruments Corporation entered into a three-
year contract with the International Brotherhood of Electrical Workers
currently covering 27 employees at that Division.
As of December 31, 1994, the Company employed approximately 1,650
employees. The Company believes that it enjoys satisfactory 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
facts concerning them. The Company's facilities are substantially utilized,
well maintained and suitable for its products and services.
<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
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 98,000 sq.ft. Owned
Brattleboro, VT 24,000 sq.ft. Leased
Corporate Waltham, MA 6,250 sq.ft. Leased
</TABLE>
The Company maintains approximately 192,000 sq.ft. of excess space resulting
from prior business segment dispositions and consolidations of facilities.
Currently approximately 81,000 sq.ft of this excess space is being sublet and
111,000 sq.ft. remains unutilized.
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
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<PAGE>9
adverse effect on the consolidated financial position, cash flows, or results
of operations 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 23, 1995:
Present Business Experience During
Name Age Office Past Five Years
Gideon Argov 38 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 53 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 49 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.
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<PAGE>10
Robert W. Woodbury, Jr. 38 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, the Chief
Officer Financial Officer of Kidde-
Fenwal, a Division of Williams
Holdings, PLC. Prior to that,
from 1988 to 1990 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.
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 2,200 registered holders of the Company's Common
Stock on March 10, 1995. 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 94 2 Q 94 3 Q 94 4 Q 94 1 Q 93 2 Q 93 3 Q 93 4 Q 93
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market price per
common share:
High: 9 9 3/4 8 1/8 7 1/2 7 5/8 6 3/8 7 1/2 8 5/8
Low: 7 1/4 7 3/8 6 7/8 5 1/4 5 3/4 5 3/8 5 5/8 6 5/8
Shares of common
stock traded: 839 1,215 440 716 955 536 754 1,149
Dividends per
common share $.02 $.02 $.02 $.02 $.02 $.02 $.02 $.02
Average outstanding
common shares and
common share
equivalents 9,637 9,637 9,640 9,642 9,630 9,631 9,633 9,634
</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 1990 through 1994. All
dollar amounts are in thousands except per share data.
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<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net sales $ 191,771 $ 185,538 $ 194,859 $ 200,457 $ 238,531
Net income (loss) from
continuing operations4,051 4,752 (8,725) (35,938) 3,936
Income from discontinued
operations - - - - 14,540
Net income (loss) 4,051 4,752 (8,725) (35,938) 18,476
Total assets 138,201 134,008 149,568 154,443 203,272
Total debt 53,991 53,524 56,170 58,339 62,941
Redeemable preferred stock 22,532 22,407 22,282 22,156 22,032
Common share data:
Number of average
outstanding shares
and equivalents 9,641,698 9,632,232 9,627,228 9,628,12210,439,313
Income (loss) from
continuing operations $ .18 $ .25 $(1.14) $(3.97) $ .21
Income from discontinued
operations $ - $ - $ - $ - $ 1.39
Net income (loss) $ .18 $ .25 $(1.14) $(3.97) $ 1.60
Cash dividends $ .08 $ .08 $ .08 $ .26 $ .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, 1994, the Company had sales of $191.8
million and net income of $4.1 million, equal to $.18 per common share.
These results compare with 1993 sales of $185.5 million and net income of
$4.8 million, equal to $.25 per common share, and 1992 results of $194.9
million and a net loss of $8.7 million, equal to a loss of ($1.14) per common
share. Earnings (loss) per common share are calculated after payment of
preferred dividends.
The Company's sales increase of 3% in 1994 over 1993 is attributable to
an increased volume in both of the Company's business segments. In 1994,
sales increased by 1% over the prior year in the motion technologies group as
a result of improved revenues at the Company's French operation and domestic
commercial businesses, despite an 11% reduction in sales volume in the
domestic military/aerospace businesses. Sales increased in 1994 over 1993 in
the electro-optical instruments segment as a result of increased revenues for
periscopes and weapons directors at the Company's Electro-Optical Division
from both domestic and international markets.
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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 several
redundant functions in the domestic motor businesses. The Company has
substantially completed its restructuring activities. The remaining reserve
balance of $4 million relates to excess facilities resulting from this
consolidation.
Sales and marketing expense was $27.8 million or 14% of sales for 1994
as compared to $24.7 million or 13% of sales for 1993 and $25.5 million or
13% of sales for 1992. The increase in 1994 over 1993 is partially
attributable to the April, 1994, acquisition of Hightech Components, Limited,
located in Hampshire, England, a distributor of motor and control products
throughout Western Europe. In addition, the Company incurred a full year of
operational expenses for several sales offices which were opened at the end
of 1993. The Electro-Optical Division incurred $1 million of additional
expenses relating to several bid and proposal activities which have resulted
in a contract award in February, 1995, of $35 million from the Naval Sea
Systems Command for the design and construction of the next generation of
periscopes to the U.S. Navy.
Research and development expense was $10.8 million in 1994 or 6% of
sales as compared to $9.3 million in 1993 (5% of sales) and $10.6 million in
1992 (6% of sales). The increased spending was primarily attributable to the
Company's French operation which incurred unanticipated additional expenses
of $1 million to expedite the development of certain new products.
Interest expense, net, was $3.7 million, $4.1 million, and $5.2 million,
in 1994, 1993, and 1992, respectively. The declining interest expense is
related to the Company's annual mandatory sinking fund payment on its two
convertible subordinated debentures.
The Company recognized tax benefits on income of approximately $.8
million for each of the years 1994, 1993, and 1992. In both 1994 and 1993,
the recognition of the income tax benefit resulted from resolution of certain
prior year tax assessments. The Company also recognized the income tax
benefits of applicable net operating losses and tax credits in 1992 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 decreased by $10.5 million during 1994.
Cash provided from operations was $4.1 million, while $8.6 million was used
for investing activities and $6.1 million was used for financing activities.
The most significant changes in operating assets and liabilities
included a $1.3 million transfer of available cash to be used as collateral
for the Company's amended and restated one-year standby letter of credit
facility. The facility requires the Company to maintain a cash collateral
balance of $6 million with the issuing bank which is held in interest bearing
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<PAGE>13
accounts and is restricted as to withdrawal or use. Accordingly, the Company
has classified these funds as restricted cash. At December 31, 1994, the
Company was contingently liable for $18.1 million at the issuing bank for
outstanding standby and documentary letters of credit which are issued
principally to secure advance payments received from foreign customers on
long-term military contracts.
In addition, the Company has a $2 million letter of credit at another
bank which guarantees an obligation for a former business that was sold by
the Company in 1987. This letter of credit is secured by $2 million in cash
at this bank and is classified as restricted cash. The Company anticipates
that it will be required to pay the $2 million in 1995 to satisfy its
obligation. The $2 million was provided for at the time of the sale of this
business and, therefore, will have no impact on the Company's results of
operations. The Company has no further obligation with respect to this
transaction.
Total working capital increased by $6.0 million. Accounts receivable
increased by a $3.2 million as the Company had increased volume of shipments
in the fourth quarter of 1994. Recoverable amounts on long-term contracts
increased by $1.5 million as the amount of percent-complete sales increased
due to achieving certain milestones on military contracts. Accounts payable
and accrued liabilities decreased by $1.3 million as the Company made
severance payments that were provided for in previous years' restructurings.
The Company's investing activities included expenditures of $4.8 million
for property, plant and equipment. In addition, the Company purchased
substantially all of the net assets of Hightech Components, Limited at a
purchase price of $1.5 million, of which $.7 million was paid in cash and $.8
million was financed with a promissory note.
The Company also purchased certain assets of the conventional optical
periscope business of Sperry Marine, Inc. The purchase price of $5 million
was paid with $3 million in cash and $2 million financed with promissory
notes. This acquisition resulted in $4.2 million of goodwill.
Capital spending for 1995 is expected to be at similar levels to 1994.
The Company's financing activities used $6.1 million of cash during the
year of which dividends, both common and preferred, accounted for $3.0
million. The Company also made mandatory sinking fund payments on its two
convertible subordinated debentures totaling $3.8 million. In addition, the
Company purchased on the open market $652 thousand aggregate principal amount
of the Company's 8-3/4% Convertible Subordinated Debentures at market prices
less than par value which resulted in an immaterial gain. The Company is
required, under the terms of the convertible subordinated debenture
agreements, to make certain mandatory sinking fund payments each year through
the year 2009. At the Company's French facility, $1.4 million was borrowed
against existing credit lines.
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<PAGE>14
The Company continues to focus on working capital reductions and
effective cash management in order to maximize the amount of available cash.
The Company believes that with the cash generated from operations and with
its current borrowing capacity it will be able to finance its 1995 capital
expenditures, sinking fund payments, and working capital requirements. As an
integral part of the annual renewal of its letter of credit facility, the
Company negotiates the amount of collateralized cash plus the maximum drawing
amount for letters of credit and the foreign line of credit.
MOTION TECHNOLOGIES GROUP
Sales in the motion technologies group increased to $113.7 million, up
1% from $112.8 million in 1993 and down 3% from $116.6 million in 1992. The
Company's French subsidiary, Kollmorgen Artus, which supplies motors to
foreign aerospace and defense markets, had a 9% increase in sales in 1994
over 1993. Sales in the domestic industrial and commercial group increased
4% in 1994 as the Company began shipping motors under a multi-million dollar,
long-term contract received in 1993 with a major U.S. machine tool
manufacturer. Sales in the domestic aerospace and defense group declined by
11% as a result of the continued weak condition in the defense/aerospace
market as certain contracts anticipated in 1994 were delayed.
Operating income for this segment was $6.4 million and $9.2 million in
1994 and 1993, respectively, and a loss of $2.5 million in 1992. The
decrease in operating income in 1994 over 1993 was partially a result of an
increase of $1 million in research and development expense incurred at the
Company's French subsidiary for issues arising in new product development.
The Company anticipates that these issues will be resolved during the second
quarter of 1995. The Company also incurred increased selling and marketing
expense for full-year operating costs at recently-opened domestic and foreign
sales offices.
New orders for this segment were up 7% in 1994 over 1993, of which 10%
was attributable to the industrial and commercial businesses and 4% was
attributable to the aerospace and defense products group. The bookings
increase in the aerospace and defense products group is primarily
attributable to the acquisition of Hightech Components, Limited. Backlog for
this segment was $64.6 million and $52.2 million at December 31, 1994 and
1993, respectively. The increase is primarily the result of orders booked
through increased marketing and sales activities at our domestic and foreign
sales offices.
Capital expenditures in 1994 and 1993 for this segment were $3.2 million
and $3.3 million, respectively, most of which was for replacement of existing
equipment and investments in new equipment to improve the efficiency of
manufacturing our products.
<PAGE>
<PAGE>15
ELECTRO-OPTICAL INSTRUMENTS
Sales in the electro-optical instruments segment increased to $78.1
million, up 7% from $72.8 million in 1993, and approximately the same as the
sales level of $78.3 million in 1992. The increase in 1994 over 1993 was
primarily due to increased sales at the Company's Electro-Optical Division
which manufactures periscopes and defense-related sighting systems. The
Division also recognized an increase in percent-complete sales over 1993 as
certain milestones were achieved on long-term military contracts. Sales in
the Company's commercial color, light and instrumentation business increased
slightly in 1994 over 1993. New products introduced during 1994 in this
business resulted in an increased sales volume of $2 million. This increase
was offset by a $1 million sales reduction at the Company's Chatsworth,
California, facility as a result of the temporary shutdown of that facility
during the first quarter due to the Northridge earthquake in January, 1994.
The loss realized from this shutdown did not impact earnings because of the
proceeds the Company received under its property and business interruption
insurance. The facility resumed operations on April 1, 1994.
Operating income for this segment was $5.1 million, up 65% from $3.1
million in 1993, and up 24% from $4.1 million in 1992. The increase in 1994
over 1993 is primarily a result of increased sales volume at the Company's
Electro-Optical Division. Operating income in the commercial light and
instrumentation business also improved due to the increased sales volume for
the new products introduced plus overall increased operating efficiency at
the Company's facility in Munich, Germany.
Backlog for this segment was $54 million and $58.3 million at
December 31, 1994 and 1993, respectively.
Capital expenditures in 1994 and 1993 for this segment were $1.6 million
and $2.1 million, respectively, most of which was for replacement of existing
equipment and investment in new equipment to improve the efficiency of
manufacturing our products.
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.
Item 8. Financial Statements and Supplementary Data.
The information required by this Item 8 is included in Item 14(a) of
this Report.
<PAGE>
<PAGE>16
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
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 10, 1995, is
contained in the definitive proxy statement to be filed with the Securities
and Exchange Commission (the "Commission") on or before April 5, 1995, 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, 1995, 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, 1995, 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, 1995, under the heading "Certain Relationships and Related
Transactions" and such information is incorporated herein by reference in
response to this item.
<PAGE>
<PAGE>17
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 19.
(2) Exhibits. See Exhibit Index on page 42.
(b) Reports on Form 8-K. None.
<PAGE>
<PAGE>18
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 20, 1995
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 20, 1995
President and
Chief Executive Officer/Director
/s/ Robert J. Cobuzzi
Robert J. Cobuzzi March 20, 1995
Senior Vice President, Treasurer and
Chief Financial Officer
/s/ Robert W. Woodbury, Jr.
Robert W. Woodbury, Jr. March 20, 1995
Vice President, Controller and
Chief Accounting Officer
/s/ James A. Eder
James A. Eder March 20, 1995
Vice President and Secretary and
Attorney-in-Fact For:
Allan M. Doyle, Jr., Director Robert N. Parker, Director
Jerald G. Fishman, Director Eric M. Ruttenberg, Director
James H. Kasschau, Director George P. Stephan, Director
J. Douglas Maxwell, Jr., Director
<PAGE>
<PAGE>19
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 L.L.P. 20
Consolidated Balance Sheets as of
December 31, 1994 and 1993. 21-22
Consolidated Statements of Operations for the years
ended December 31, 1994, 1993 and 1992. 23
Consolidated Statements of Shareholders' Equity for
the years ended December 31, 1994, 1993 and 1992. 24
Consolidated Statements of Cash Flows for the
years ended December 31, 1994, 1993 and 1992. 25-26
Notes to Consolidated Financial Statements. 27-41
<PAGE>
<PAGE>20
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, 1994 and 1993, and the related
consolidated statements of operations, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1994. 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.
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, 1994 and 1993, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1994, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
January 31, 1995
<PAGE>
<PAGE>21
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1994 and 1993
(Dollars in thousands)
<CAPTION>
ASSETS 1994 1993
- ------ -------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1) $ 7,165 $ 17,682
Restricted cash (Note 2) 8,000 6,720
Accounts receivable (net of
allowance for doubtful accounts of
$1,064 in 1994 and $1,560 in 1993) 38,348 33,744
Recoverable amounts on long-term
contracts 7,380 5,834
Inventories (Note 3) 23,231 22,018
Prepaid expenses 4,176 3,564
--------- ---------
Total current assets 88,300 89,562
--------- ---------
Property, plant and equipment, net (Note 4) 30,789 30,461
Net assets held for sale 3,000 3,000
Goodwill 6,180 1,636
Other assets 9,932 9,349
--------- ---------
$ 138,201 $ 134,008
======== ========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE>22
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
1994 1993
--------- ---------
Current liabilities:
Notes payable (Note 6) $ 10,104 $ 5,532
Current portion of long-term debt (Note 7) 3,220 3,872
Accounts payable 18,722 16,341
Accrued liabilities (Note 5) 31,177 32,561
--------- ---------
Total current liabilities 63,223 58,306
--------- ---------
Long-term debt (Note 7) 40,667 44,120
Other liabilities 1,899 1,590
Commitments and contingencies (Note 15)
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 8) 22,532 22,407
Shareholders' equity (Notes 9 and 10):
Common stock, par value $2.50 per share
-- authorized 25,000,000 shares
-- outstanding 10,756,513 shares in
1994 and 10,750,030 in 199326,891 26,875
Additional paid-in capital 20,353 23,447
Accumulated deficit (26,115) (30,166)
Cumulative translation adjustments (1,371) (2,624)
Less common stock in treasury, at cost
-- 1,106,608 shares in 1994 and
1,114,408 shares in 1993 (9,878) (9,947)
--------- ---------
Total shareholders' equity 9,880 7,585
--------- ---------
$ 138,201 $ 134,008
========= =========
<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, 1994, 1993, and 1992
(Dollars in thousands, except per share amounts)
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net sales $191,771 $185,538 $194,859
Cost of sales 124,627 121,286 129,151
-------- -------- --------
Gross profit 67,144 64,252 65,708
-------- -------- --------
Selling and marketing expense 27,753 24,708 25,471
General and administrative expense 21,491 21,973 23,425
Research and development expense 10,843 9,338 10,645
Restructuring and other costs (Note 13) - - 10,000
--------- --------- ---------
Income (loss) before interest and taxes 7,057 8,233 (3,833)
--------- --------- ---------
Other (income) expense:
Interest expense, net 3,679 4,149 5,221
Other, net 142 180 443
--------- --------- ---------
Income (loss) before income taxes 3,236 3,904 (9,497)
Income tax benefit (Note 11) (815) (848) (772)
-------- -------- --------
Net income (loss) $ 4,051 $ 4,752 $ (8,725)
======== ======== ========
Earnings (loss) per common share $ .18 $ .25 $(1.14)
====== ====== ======
<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, 1994, 1993 and 1992 (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, 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
Net income 4,051 4,051
Dividends paid on common
and preferred stock (2,975) (2,975)
Common stock issuances 6,483 16 30 6,483 46
Common stock issued from
treasury (24) 7,800 69 7,800 45
Accretion of preferred
stock discount (125) (125)
Translation adjustments 1,253 1,253
---------- ------- -------- -------- -------- --------- ------- --------- --------
Balance, December 31, 1994 10,756,513 $26,891 $20,353 $(26,115) $(1,371) (1,106,608) $(9,878) 9,649,905 $ 9,880
========== ======= ======== ========= ======== ========= ======= ========= ========
<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, 1994, 1993, and 1992
(Dollars in thousands)
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Income (loss) from operations $ 4,051 $ 4,752 $ (8,725)
Adjustments to reconcile income (loss) to net cash
provided by operating activities:
Depreciation 5,897 5,989 7,055
Amortization 781 755 642
Changes in operating assets and liabilities (net of
effects from acquisitions):
Restricted cash (1,280) (962) (955)
Accounts and notes receivable (3,154) 2,105 5,545
Recoverable amounts on long-term contracts (1,546) 6,209 12,029
Inventories 512 1,264 2,886
Prepaid expenses (501) (1,145) (1,152)
Accounts payable and accrued liabilities (1,329) (8,452) 4,712
Deferred income taxes and other expenses 249 25 145
Other 460 325 (1,391)
-------- -------- --------
Net cash provided by operations 4,140 10,865 20,791
-------- -------- --------
Cash flows from investing activities:
Proceeds from sale of product line - - 3,000
Capital expenditures (4,837) (5,470) (5,042)
Purchase of property held for sale - (4,263) -
Acquisition of Hightech Components (749) - -
Acquisition of Sperry Marine (3,000) - -
-------- -------- --------
Net cash used in investing activities (8,586) (9,733) (2,042)
-------- -------- --------
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
<PAGE>
<PAGE>26
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash flows from financing activities:
Net borrowings (repayments) under credit lines 1,351 (1,322) (2,046)
Issuances of common stock 16 38 17
Common stock issued from treasury 69 - -
Principal payments under capital lease obligations (33) - (327)
Retirement of long-term debt (4,499) (2,656) (12)
Dividends paid on common and preferred stock(2,975) (2,973) (2,973)
-------- -------- --------
Net cash used in financing activities (6,071) (6,913) (5,341)
-------- -------- --------
Net increase (decrease) in cash (10,517) (5,781) 13,408
Cash and cash equivalents at beginning of year17,682 23,463 10,055
-------- -------- --------
Cash and cash equivalents at end of year 7,165 $ 17,682 $ 23,463
======== ======== ========
Supplemental cash flow information
Cash paid during the period for:
Interest 4,809 5,130 5,814
Income taxes (net of refunds) 101 (646) 1,166
Non-cash financing activities:
Mortgage assumed - 1,987 -
Acquisition of Hightech Components:
Fair value of assets acquired 1,539
Cash paid 749
--------
Note assumed 790
========
Acquisition of assets of Sperry Marine:
Fair value of assets acquired 5,000
Cash paid 3,000
--------
Notes assumed 2,000
========
<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, 1994, 1993, and 1992
(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 1994 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 ranging from
10 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 $34.4 million, $24.5
million, and $29.3 million in 1994, 1993, and 1992, 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 weighted 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 1994 for post-
retirement benefits to current retirees.
Note 2. Restricted cash
The restricted cash balance of $8 million in 1994 and $6.7 million in
1993 serves as collateral for both an irrevocable standby and documentary
letter of credit facility at the Company's lead bank and to secure a specific
<PAGE>
<PAGE>29
Notes to Consolidated Financial Statements - continued
letter of credit at another bank. The cash is held in custody by the issuing
bank and is restricted as to withdrawal or use, and is 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:
1994 1993
--------- ---------
Raw materials $ 12,323 $ 11,530
Work in process 6,888 7,847
Finished goods 4,020 2,641
--------- ---------
$ 23,231 $ 22,018
========= =========
Note 4. Property, Plant and Equipment
Property, plant and equipment at December 31 consists of the following:
1994 1993
--------- ---------
Land $ 1,877 $ 1,459
Leasehold improvements 889 669
Buildings 35,162 34,650
Machinery and equipment 74,146 70,369
Capital leases 450 -
--------- ---------
112,524 107,147
Less accumulated depreciation
and amortization 81,735 76,686
--------- ---------
$ 30,789 $ 30,461
========= =========
Note 5. Accrued Liabilities
Accrued liabilities at December 31 consist of the following:
1994 1993
--------- ---------
Restructuring and related costs $ 4,000 $ 7,346
Salaries, wages, commissions 3,359 5,100
Pension/supplemental retirements3,941 3,912
Insurance 1,954 2,213
Other accrued liabilities 17,923 13,990
--------- ---------
$ 31,177 $ 32,561
========= =========
<PAGE>
<PAGE>30
Notes to Consolidated Financial Statements - continued
Note 6. Lines of credit and notes payable
Notes payable consist of the following at December 31:
1994 1993
-------- --------
Foreign $ 6,152 $ 3,545
Domestic 3,952 1,987
-------- --------
$10,104 $ 5,532
======== ========
In December 1994, the Company amended its existing agreement with its lead
bank which provides for a one-year $21 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 must maintain at all times a cash collateral
balance equal to $6 million. At December 31, 1994, the Company had $18.1
million of standby and documentary 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, 1994.
The Company's French facility, Kollmorgen Artus, also maintains working
capital lines of credit with three French banks. At December 31 the Company
had approximately $2 million or approximately 11 million French francs of
unused lines of credit.
Note 7. Long-term debt
Long-term debt consists of the following:
1994 1993
-------- --------
8 3/4% Convertible subordinated
debentures due 2009 $ 37,438 $ 39,840
10 1/2% Convertible subordinated
debentures due 1997 6,000 8,000
Term loans, 10.5% due through 1997 41 152
Capital lease obligations 408 -
-------- --------
43,887 47,992
Less current maturities 3,220 3,872
-------- --------
$ 40,667 $ 44,120
======== ========
The 8 3/4% Convertible Subordinated Debentures are convertible at any
time prior to maturity, unless previously redeemed, into 1,089,898 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 which commenced on May 1, 1994, and each year thereafter
including May 1, 2009. In addition to the mandatory sinking fund payment,
the Company purchased, on the open market, $652 thousand aggregate principal
amount of bonds at a market price below par value which resulted in an
immaterial gain.
The 10-1/2% Convertible Subordinated Debentures issued in a private
placement, are convertible into 240,000 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.
The Company incurred $4.8 million, $5.1 million, and $5.8 million of
interest expense on debt in 1994, 1993, and 1992, respectively.
Long-term debt at December 31, 1994, matures as follows:
Date Maturities
---- ----------
1995 $ 3,220
1996 3,850
1997 3,841
1998 1,834
1999 1,802
Thereafter 29,340
--------
$43,887
========
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 1994 and 1993 is $656
and $781, 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
implementation 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, 1994 and 1993, were
as follows: conversion of debentures and redeemable preferred stock --
3,066,470 and 3,197,416, respectively; and stock options and other awards --
1,174,991 and 1,236,111, 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 1994, 1993, and 1992 in shares of common
stock authorized for grant to officers and key employees under the stock
option plans are as follows:
Number of Shares
1994 1993 1992
-------- -------- --------
Shares under option at January 1 872,820 892,337 1,044,189
Options granted 132,000 185,000 115,000
Options exercised (6,800) - -
Options canceled (118,320) (204,517) (266,852)
---------- ---------- ----------
Shares under option at December 31 879,700 872,820 892,337
========== ========== ==========
Options exercisable at December 31 369,600 300,220 347,887
Price per share of options granted $ 5.63 to $ 6.00 to $ 4.50 to
$ 8.88 $ 7.75 $ 8.50
Option prices at December 31, 1994, ranged from $4.50 to $20.00 per
share. Prices of options exercised in 1994 ranged from $5.00 to $8.00 per
share.
Options available for grant at December 31, 1994, 1993 and 1992 were
155,291, 213,291, and 352,291, respectively.
Note 11. Taxes on income
The components of income (loss) before income taxes were as follows:
1994 1993 1992
-------- -------- --------
Domestic $ 5,001 $ 5,819 $ (3,526)
Foreign (1,765) (1,915) (5,971)
-------- -------- --------
Total $ 3,236 $ 3,904 $ (9,497)
======== ======== ========
FAS 109 requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
<PAGE>
<PAGE>34
Notes to Consolidated Financial Statements - continued
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
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):
1994 1993 1992
-------- -------- --------
Current provision (benefit):
U.S. federal $ (906) $ (703) $ 20
Foreign 35 - (196)
State 56 - 50
-------- -------- --------
(815) (703) (126)
-------- -------- --------
Deferred provision (benefit):
U.S. federal - - 20
Foreign - (145) (746)
State - - 80
-------- -------- --------
- (145) (646)
-------- -------- --------
Total $ (815) $ (848) $ (772)
======== ======== ========
The U.S. effective income tax rate from operations is different from the
U.S. federal statutory rate for the following reasons:
1994 1993 1992
-------- -------- --------
Income tax provision (benefit) if
computed at U.S. federal rates $ 1,100 $ 1,378 $ (3,229)
Benefit of net operating loss
carryforwards (1,769) (1,534) -
Foreign unutilized net operating
losses and tax credits 646 - 2,249
Foreign tax rate variances (2) - 9
State income taxes net of
federal benefit 37 - 86
Other (827) (692) 113
-------- -------- --------
$ (815) $ (848) $ (772)
======== ======== ========
<PAGE>
<PAGE>35
Notes to Consolidated Financial Statements - continued
The deferred tax assets and liabilities are comprised of the following:
12/31/94 12/31/93
---------- ----------
Restructuring reserve $ - $ 483
Bad debt reserve 260 300
Other 406 2,430
Employee benefit reserves 2,405 2,376
Allowance for doubtful accounts - 1,090
Reserve for net realizable value
of real estate 2,500 2,564
Other - 1,093
Net operating losses and credits17,580 17,024
Property, plant and equipment (2,526) (2,526)
Other 393 (195)
--------- ---------
21,018 24,639
--------- ---------
Valuation allowance (21,018) (24,639)
--------- ---------
Net deferred tax asset $ - $ -
========= =========
For Federal income tax purposes, the Company has domestic regular tax
net operating loss carryforwards of approximately $19 million and alternative
minimum tax net operating loss carryforwards of $17.0 million as of
December 31, 1994, which may be used to offset future taxable income. The
Company also has foreign net operating losses of approximately $6.8 million.
These net operating losses expire beginning in 2002. Additionally, the
Company has available $5.9 million of investment tax credit carryforwards
which will expire beginning in 2002.
Note 12. Asset Acquisitions
On April 8, 1994, certain assets and liabilities of Hightech Components,
Limited were purchased for $1.5 million of which $.7 million was paid in cash
and $.8 million was financed with a promissory note. Hightech is a
distributor of motion technology products and is located in Hampshire,
England.
On September 1, 1994, the Electro-Optical Division in Northampton,
Massachusetts, purchased certain assets of the conventional optical periscope
business of Sperry Marine, Inc. The purchase price was $5 million of which
$3 million was paid in cash and $2 million was financed with promissory
notes. This acquisition resulted in $4.2 million of goodwill.
<PAGE>
<PAGE>36
Notes to consolidated Financial Statements - continued
Note 13. 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 domestic motion technologies group.
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 14. Leases
The Company leases certain of its facilities and equipment under various
operating and capital lease arrangements. Such arrangements generally
include fair market value renewal and/or purchase options.
Rent expense for operating leases amounted to $2.1 million and $3.0
million in 1994 and 1993, respectively, (excluding $.3 million and $.9
million, respectively, which was provided for in the prior restructuring
provisions), and $5.2 million in 1992. Future minimum rental payments
required under non-cancelable operating and capital leases having a lease
term in excess of one year, together with the present value of the net
minimum lease payments at December 31, 1994, are as follows:
Operating Capital
Leases Leases
---------- ----------
1995 $ 2,414 $ 112
1996 2,186 112
1997 1,944 112
1998 1,398 112
1999 1,061 68
Thereafter 7,389 --
-------- --------
Total minimum lease payments$ 16,392 $ 516
========
Less amounts representing interest (108)
--------
Present value of net minimum
lease payments $ 408
========
Note 15. 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.
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 16. Pension and other employee benefit plans
The Company maintains three non-contributory 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 1994, 1993 and 1992,
including amounts related to discontinued operations, included the following
components:
1994 1993 1992
-------- -------- --------
Service cost $ 1,986 $ 2,146 $ 2,235
Interest cost 3,104 3,058 3,289
Actual (return) loss on plan assets 158 (6,376) (4,280)
Net amortization and deferral (5,508) (65) (2,419)
-------- -------- --------
Net periodic pension cost (credit) $ (260) $ (1,237) $ (1,175)
======== ======== ========
The assumptions used in determining the end of year benefit obligations
included a discount rate of 8.25% and 7.25% in 1994 and 1993, respectively,
an expected investment return of 10% and compensation increases of 5%.
During 1993, 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. 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:
1994 1993
-------- --------
Actuarial present value of
benefit obligations:
Vested $ 27,896 $ 29,991
======== ========
Accumulated 28,432 30,885
======== ========
Projected 37,830 44,333
Plan assets at fair value 46,992 49,625
-------- --------
Plan assets in excess of
projected benefit obligation 9,162 5,292
Unrecognized net (gain) loss (2,368) 1,661
Unrecognized net asset at January 1 (5,849) (6,421)
Unrecognized prior service cost 1,928 2,081
-------- --------
Prepaid pension cost $ 2,873 $ 2,613
======== ========
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, 1994 and
1993, 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. The Company
incurred a pension expense of $.3 million in 1994 and in 1993 for the SERP.
The Company has a voluntary 401(k) savings and investment plan designed
to enhance the existing retirement program covering certain eligible domestic
employees. In 1994, the Company matched 1% of each participant's
contributions, up to a maximum of 1% of base salary. Company contributions
to this plan were $225 thousand, $325 thousand, and $298 thousand in 1994,
1993, and 1992, respectively.
<PAGE>
<PAGE>39
Notes to Consolidated Financial Statements - continued
Note 17. 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 1994 included the following
components:
Service cost $ 133
Interest cost 435
Amortization of obligation at transition278
-------
Net periodic postretirement benefit cost$ 846
=======
The Company's postretirement benefit plans are unfunded.
For measurement purposes, a 9% annual rate of increase in the per capita
cost of covered medical benefits was assumed for 1994; the rate was assumed
to decrease gradually to 5.5% 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,
1994, by $211 thousand and the aggregate of the service cost and interest
cost components of net periodic postretirement benefit cost by $17 thousand.
The plan amounts recognized in the Company's Balance Sheet at December
31, 1994, are as follows:
Accumulated postretirement benefit obligation:
Retirees $ 4,053
Fully eligible plan participants 257
Other active plan participants 1,573
-------
Total 5,883
Plan assets at fair value -
-------
Accumulated postretirement benefit obligation
in excess of plan assets (5,883)
Unrecognized net (gain) loss 58
Unrecognized prior service cost -
Unrecognized transition obligation 5,004
-------
Accrued postretirement benefit cost $ (821)
=======
<PAGE>
<PAGE>40
Notes to Consolidated Financial Statements - continued
The weighted average discount rates used in determining the accumulated
postretirement benefit obligation are 8.25% and 7.25% as of December 31, 1994
and 1993, respectively.
Note 18. 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
1994 Consolidated Eliminations Domestic Operations
- ---- ------------ ------------ --------- ----------
Net sales $191,771 $ (5,439) $151,288 $ 45,922
======== ======== ======== ========
Net income from
operations $ 4,051 $ 255 $ 5,199 $ (1,403)
======== ======== ======== ========
Identifiable assets$112,315 $ (834) $ 77,112 $ 36,037
Corporate assets 25,886 - 25,886 -
-------- -------- -------- --------
Total assets $138,201 $ (834) $102,998 36,037
======== ======== ========
Liabilities 27,364
--------
Equity in foreign
subsidiaries $ 8,673
========
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
========
<PAGE>
<PAGE>41
Notes to Consolidated Financial Statements - continued
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
========
The Company's principal foreign manufacturing facilities are in France
and Germany. The sales eliminations are transfers at prevailing wholesale
selling prices.
In addition to foreign operations, export sales amounted to $32.5 in
1994, $27.6 million in 1993, and $54.0 million in 1992.
Sales to the U.S. Government or for U.S. Government end-use amounted to
$39.3 in 1994, $39.4 in 1993, and $38.9 million in 1992.
Note 19. Other Financial Statement Data
The following sections should be considered integral parts of the Notes
to Consolidated Financial Statements:
Page
Segments of Business Information 2
<PAGE>
<PAGE>42
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. N/A
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) Restated and Amended Letter of Credit Facility N/A
Agreement dated December 15, 1994, 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
Exhibit 10 of the Form SE filed on or about
March 20, 1995.
<PAGE>
<PAGE>43
Page in this
Exhibit No. Description of Exhibit Form 10-K
10(b) 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(c) 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(d) 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(e) 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(f) Form of 1991, 1992, and 1993 Non-Qualified N/A
Stock 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(g) 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(h) 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 incorporated by reference to
Exhibit 10(i) to the Annual Report on Form 10-K
of the Company for the year ended
December 31, 1992.
<PAGE>
<PAGE>44
Page in this
Exhibit No. Description of Exhibit Form 10-K
10(i) Bonus Plan for Corporate Officers and other N/A
key corporate employees incorporated by reference
to Exhibit 10(j) to the Annual Report on
Form 10-K of the Company for the year ended
December 31, 1992.
10(j) 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(k) 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(l) 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(m) 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(n) 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(o) 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.
<PAGE>
<PAGE>45
Page in this
Exhibit No. Description of Exhibit Form 10-K
10(p) 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
incorporated by reference to Exhibit 10(q) to the
Annual Report on Form 10-K of the Company for the
year ended December 31, 1992.
10(q) Supplemental Retirement Income Plan for key N/A
executives incorporated by reference to
Exhibit 10(n) to the Annual Reporton Form 10-K of
the Company for the year ended December 31, 1990.
11 Calculations of Earnings Per Share. 46
21 Subsidiaries of the Company. 47
23 Consent of Independent Accountants - 48
Coopers & Lybrand L.L.P.
24 Powers of Attorney 49
27 Financial Data Schedules 56
<PAGE>
<TABLE>
EXHIBIT 11
<CAPTION>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
CALCULATIONS OF EARNINGS PER SHARE
(Dollars in thousands, except per share amounts)
Year Ended December 31
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 4,051 $ 4,752 $ (8,725)$ (35,938) $ 18,446
Less preferred stock dividends
and accretion of discount (2,328) (2,328) (2,330) (2,325) (1,773)
----------- ----------- ----------- ----------- -----------
Earnings applicable to common stock 1,723 2,424 (11,055) (38,263) 16,673
----------- ----------- ----------- ----------- -----------
Number of shares:
Weighted average number of
shares outstanding 9,641,698 9,632,232 9,627,228 9,628,122 10,434,429
Shares issuable on assumed
exercise of dilutive options -- -- -- -- 4,884
----------------------- ----------- ----------- -----------
Adjusted shares 9,641,698 9,632,232 9,627,228 9,628,122 10,439,313
=========== =========== =========== =========== ===========
Earnings (loss) per share $ .18 $ .25 $(1.14) $(3.97) $ 1.60
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
EXHIBIT 21
Subsidiaries of the Company
As of March 10, 1995, 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 Asia Investment Company Delaware 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
<PAGE>
EXHIBIT 23
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 report dated January 31, 1995, on our audits of the consolidated
financial statements and financial statement schedules of Kollmorgen
Corporation and subsidiaries as of December 31, 1994, 1993, and 1992, and for
the years ended December 31, 1994, 1993, and 1992, which report is included
in this Annual Report on Form 10-K.
/s/ Coopers & Lybrand
Boston, Massachusetts
March 20, 1995
<PAGE>
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, 1994, 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 March , 1995.
/s/ Allan M. Doyle, Jr.
_______________________________
Allan M. Doyle, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned:
JERALD G. FISHMAN 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, 1994, 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 March , 1995.
/s/ Jerald G. Fishman
___________________________________
Jerald G. Fishman
<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, 1994, 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 March , 1995.
/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, 1994, 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 March , 1995.
/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, 1994, 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 March , 1995.
/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, 1994, 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 March , 1995.
/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, 1994, 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 March , 1995.
/s/ George P. Stephan
_______________________________
George P. Stephan
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Financial Data Schedules
December 31, 1994, 1993, and 1992
(Dollars in thousands, except per share amounts)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENTS OF OPERATIONS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<CAPTION>
1994 1993 1992
------------------------------
<S> <C> <C> <C>
Cash and cash items $ 7,165 $ 17,682
Notes and accounts receivable - trade 38,348 33,744
Allowance for doubtful accounts 1,064 1,560
Inventory 23,231 22,018
Total current assets 88,300 89,562
Property, plant and equipment 112,524 107,147
Accumulated depreciation 81,735 76,686
Total assets 138,201 134,008
Total current liabilities 63,223 58,306
Bonds, mortgages and similar debt 40,667 44,120
Preferred stock - mandatory redemption 22,532 22,407
Common stock 26,891 26,875
Other stockholders' equity (17,011) (19,290)
Total liabilities and stockholders'
equity 138,201 134,008
Net sales of tangible products $ 184,818 $ 178,334 $ 186,073
Total revenues 191,771 185,538 194,859
Cost of tangible goods sold 120,399 117,164 124,289
Total costs and expenses applicable
to sales and revenues 124,627 121,286 129,151
Other costs and expenses 60,087 56,019 59,541
Interest and amortization of
debt discount 3,717 4,187 5,259
Income before taxes and other items 3,236 3,904 (9,497)
Net income 4,051 4,752 (8,725)
Net income per share - primary 0.18 0.25 (1,14)
Earnings per share - fully diluted 0.18 0.25 (1.14)
</TABLE>
