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________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
Commission File Number 0-8287
LINDBERG CORPORATION
Delaware 36-1391480
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State of Incorporation IRS Identification No.
6133 North River Road, Suite 700
Rosemont, Illinois 60018
(708) 823-2021
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common stock
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 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 [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant on March 10, 1995 was: $19,357,456.
The number of shares of the Registrant's Common Stock outstanding as of
March 10, 1995 was: 4,722,016.
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Documents Incorporated by Reference
Those sections or portions of the Registrant's 1994 Annual Report to
Shareholders (the "Annual Report") and of the Registrant's definitive Proxy
Statement for use in connection with its annual meeting of shareholders to be
held on April 26, 1995 (the "Proxy Statement"), described in the cross
reference sheet and attached hereto, are incorporated into Parts I, II and III
of this report.
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Table of Contents
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Item Number and Caption Page
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PART I
Item 1 Business...................................... Annual Report, pp. 18-19
(Notes 10, 12 and 13);
herein, pp. 4-6
Item 2 Properties................................... 7
Item 3 Legal Proceedings............................ Annual Report, p. 19
(Note14);
herein, p. 8
Item 4 Submission of Matters to a Vote
of Security Holders.......................... 8
PART II
Item 5 Market for the Registrant's Common Annual Report, p. 21
Equity and Related Shareholder "Stock Market Information";
Matters..................................... herein, p. 8
Item 6 Selected Financial Data..................... Annual Report, p. 20
"Six Year Financial Review";
herein, p. 8
Item 7 Management's Discussion and Annual Report, pp. 10-11,
Analysis of Financial Condition herein, p. 8
and Results of Operations....................
Item 8 Financial Statements and Annual Report, pp. 12-19;
Supplementary Data........................... herein, p.8
Item 9 Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure......................... 8
</TABLE>
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<TABLE>
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Item Number and Caption Page
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PART III
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Item 10 Directors and Executive Officers
of the Registrant
(a) Identification of directors........... Proxy Statement, pp. 1-2,
"The Election of Directors";
herein, p. 9
(b) Identification of executive
officers.............................. 9
Item 11 Executive Compensation.................... Proxy Statement, pp. 3-5,
"Executive Compensation,"
and p. 8, "Pension and
Retirement Plans"; herein, p. 9
Item 12 Security Ownership of Certain
Beneficial Owners and
Management................................ Proxy Statement, pp. 14-15,
"Stock Ownership";
herein, p. 9
Item 13 Certain Relationships and Related
Transactions.............................. Proxy Statement, p. 2,
"The Election of Directors"
and p. 6, "Executive
Compensation"; herein, p. 10
PART IV
Item 14 Exhibits, Financial Statement
Schedules and Reports on
Form 8-K.................................... 10-13
Signatures........................................... 14
Exhibit Index........................................ 15-16
</TABLE>
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Part I
Item 1. Business
General development of business
Lindberg Corporation (the "Company") was founded in 1922, and incorporated in
Illinois in 1924. In 1976, the Company changed its state of incorporation from
Illinois to Delaware.
Throughout its history, the Company has maintained a program of internal
growth and outside acquisitions resulting in the 22 domestic plants and one
development center in operation at December 31, 1994.
The business of the Company, which operates in the field of metallurgical
services and products, is comprised of heat treat plants and manufacturing
facilities.
In 1992, the Company sold its interest in Lindberg do Brasil, its
50%-owned international affiliate, for $1,250,000 in cash and a note
receivable.
In March 1993, the Company announced its intent to restructure its
operations within the Heat Treating Services segment and recorded a charge of
$8,261,000 against pre-tax earnings in the first quarter of 1993 to provide
for the estimated costs of subsequent activities. A majority of the planned
restructuring actions took place in 1993 and 1994 and it is anticipated that
related activities will continue during 1995.
In April 1994, the Company purchased all of the outstanding shares of
Rexcorp U.S. Inc. and its wholly-owned subsidiary, Impact Industries Inc.
(Impact). Impact is an aluminum die casting facility, similar to the Company's
operation in Webster City, Iowa. This acquisition tripled the size of the
Company's Precision Products segment, increasing the proportion of business
from that segment from 20% in 1993 to 45% by year-end 1994.
In June 1994, the Company entered into an agreement to form a joint
venture partnership between its Alum-A-Therm division and Aerospace Aluminum
Heat Treating Inc. Both businesses engage in heat treating and metal forming
of aluminum and titanium parts, primarily in southern California.
In November 1994, the Company purchased all of the outstanding shares of
H&H Heat Treating Inc. (H&H). H&H is a heat treating facility near Los
Angeles. The acquisition nearly doubled the size of the Company's steel heat
treating activity in that area.
At December 31, 1994, the Company had 1168 employees. Of these employees,
280 were covered by collective bargaining agreements. Agreements covering 36
employees will expire during 1995.
Financial Information about Industry Segments
The Company's operations may be divided into two industry segments: Heat
Treating Services and Precision Products.
Financial information about the Company's two industry segments as of
December 31, 1994, and for the three years ended on that date, is incorporated
by reference to page 18 - Note 10 to the Consolidated Financial Statements in
the Annual Report.
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Narrative description of business
Heat Treating Services:
The Company's principal industry segment is Heat Treating Services. From 17
plants, this segment provides customers with heat treating of metal, a process
which improves mechanical properties, durability and wear resistance. This
service is provided to customers both with and without their own heat treat
capabilities.
While heat treating is offered through a range of processes, market needs
historically have dictated a degree of specialization for most plants. Among
the many heat treat processes offered are hardening and tempering, carburizing,
nitriding, selective hardening, solution treating and aging, stress relieving,
normalizing, brazing and other specialty processes.
The Company's heat treat plants are each located in a major industrial
area. The market for heat treating services for any plant is largely confined
to its local geographic area. Major industries served by the Company's Heat
Treating Services segment include aerospace, automotive/truck, oilfield
machinery, agricultural and construction equipment, consumer products,
fabricated metal products, production tool and die, defense and precision
machined products. Parts processed for these industries include machined
pieces, fasteners, forgings, castings and stampings made of nearly all types of
ferrous and certain nonferrous metals, including aluminum and titanium.
Because of the wide customer base served, the loss of a single customer or a
few customers would not have a material adverse effect on this segment.
Each plant has competition of varying degrees of intensity. Each competes
in its market area on the basis of quality, reliable delivery and price. Plant
management is largely responsible for its own pricing and cost control, and
thus has the flexibility to respond to local area market conditions. There are
competitors in particular localities larger than the Company's facility located
therein. Some of these firms are divisions or subsidiaries of large companies
and, therefore, have access to substantial resources. Competition also exists
from captive heat treat facilities of manufacturing concerns, although the
Company also considers such concerns as potential customers.
In addition to providing heat treating services from the 17 plants, the
Company also provides heat treating through its Strategic Partnership 2000, or
SP 2000, program. The SP 2000 program allows the Company to provide heat
treating services to its SP 2000 partners using dedicated equipment at either
its own or its partners' facilities.
The Company also provides heat treating consulting services through its
Technical and Management Services (T&MS) Group. The T&MS Group provides its
services to companies with their own in-house heat treat facilities.
The basic raw material for the Company's heat treat services is energy in
the forms of natural gas and electricity. The Company has not experienced any
material restrictions by its suppliers of these sources of energy.
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In conducting its operations, this segment discharges certain materials
into the air and water. The Company has made expenditures for the purpose of
complying with rules and regulations relating to protection of the environment,
including studies, investigations and purchases of equipment. It expects to
have to make further expenditures from time to time to meet existing and future
regulations and requirements covering this matter. See also Item 3. "Legal
Proceedings," herein p. 8 and p. 19 - Note 14 to the Consolidated Financial
Statements.
At December 31, 1994 this segment employed 610 employees as compared to
547 at the prior year-end.
Precision Products:
The Company's Precision Products segment consists of five plants which produce
over 900 products including precision aluminum castings, aluminum and zinc die
castings and wire mesh conveyor belting products. Additionally, one
development center provides support, and performs research and development
activities. Markets served by this segment include the automotive,
construction equipment, consumer products, defense, food processing and
heavy-duty truck industries.
In 1994, the Company purchased Impact. Impact produces finish machined
aluminum die castings and assemblies for the automotive, office equipment and
lawn and garden industries, among others. While the addition of Impact has
increased the Company's business activity related to the automotive market,
this segment is not dependent upon one or a few customers.
The basic raw materials for the Company's manufactured products are
aluminum, zinc and steel wire. The Company has experienced no significant
difficulty in obtaining these materials.
Operations within this segment must also ensure that they comply with
environmental protection laws and regulations. Expenditures for this purpose
have not had, nor are they anticipated to have, a material adverse effect upon
the net earnings or competitive position of this segment.
The Company is a minority shareholder in a consortium of five industrial
partners called Thixomat, Inc. This company was formed to promote and
commercialize a new metal parts casting technology called ThixomoldingTM. This
process is expected to reduce energy and material consumption while yielding
higher production rates and closer tolerances of castings.
The number of employees in the industrial products segment was 538 at
December 31, 1994 compared to 159 at December 31, 1993.
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Item 2. Properties
The principal facilities of the Company are set forth in the following table,
which also indicates the principal product manufactured or service performed at
each location:
Leased
Location or Owned
Heat Treating Services Segment:
Los Angeles, CA Owned
Santa Fe Springs, CA Leased
Berlin, CT Owned
Waterbury, CT Leased
Melrose Park, IL Owned
Wichita, KS Leased
Worcester, MA Owned
Lansing, MI Owned
Minneapolis, MN Leased
St. Louis, MO Owned
Charlotte, NC Leased
Rochester, NY Leased
Solon, OH Owned
Tulsa, OK Owned
Houston, TX Owned
New Berlin, WI Owned
Racine, WI Owned
Precision Products Segment:
Modesto, CA Leased
Webster City, IA Owned
Sandwich, IL Owned
Cookeville, TN Owned
Racine, WI Owned
Corporate Office:
Rosemont, IL Leased
The Company also occupies building space at certain of its customers' locations
related to the Company's SP 2000 program.
The Company's facilities are suitable for their respective uses and are, in
general, adequate for the Company's current needs.
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Item 3. Legal Proceedings
Incorporated by reference to page 19 of the Annual Report - Note 14
to the Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
None
Executive Officers of the Registrant
Information regarding the executive officers of the Registrant is
contained in Part III of this report, Item 10(b), and is
incorporated into Part I of this report in reliance on General
Instruction G(3) to Form 10-K, by reference.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters
Incorporated by reference to page 21 of the Annual Report, section
entitled "Stock Market Information." As of February 10, 1995, the
Company had 611 shareholders of record.
Item 6. Selected Financial Data
Incorporated by reference to page 21 of the Annual Report, section
entitled "Six Year Financial Review."
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Incorporated by reference to pages 10-11 of the Annual Report.
Item 8. Financial Statements and Supplementary Data
Incorporated by reference to pages 12-19 of the Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
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PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors Incorporated by reference to pages
1-2 of the Proxy Statement, section entitled "The Election of
Directors."
(b) Identification of Executive Officers
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N a m e A g e P o s i t i o n
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Leo G. Thompson 54 President (since October 1987) and Chief Executive Officer (since January
1991); formerly Chief Operating Officer (from October 1987 to December 1990).
Stephen S. Penley 45 Chief Financial Officer and Senior Vice President - Finance (since July 1993),
Treasurer (since January 1989), Secretary (since October 1990); formerly Chief
Financial Officer and Vice President - Finance (from January 1989 to July 1993).
Michael W. Nelson 47 Senior Vice President and Manager of Heat Treat Operations (since July 1993);
formerly Vice President - Central Region (from June 1992 to June 1993), Vice
President - Central Region - Heat Treat Operations (from July 1990 to May 1992),
District Manager - Central Region (from December 1986 to June 1990).
</TABLE>
Executive Officers of the Company are elected annually by the Board of
Directors of the Company in April.
Item 11. Executive Compensation
Incorporated by reference to pages 3-5 of the Proxy Statement,
section entitled "Executive Compensation," and to page 8, section
entitled "Pension and Retirement Plans."
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Incorporated by reference to pages 14-15 of the Proxy Statement,
section entitled "Stock Ownership."
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Item 13. Certain Relationships and Related Transactions
Incorporated by reference to page 2 of the Proxy Statement section
entitled "The Election of Directors" and to page 6, section entitled
"Executive Compensation."
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
The following documents are filed as part of this report:
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Page or Reference (1)
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(a) Certain Documents Filed as Part of the Form 10-K
1. Financial Statements
Consolidated Statements of Earnings and
Shareholders' Equity for the years ended
December 31, 1994, 1993 and 1992 ........ Annual Report, p. 12
Consolidated Balance Sheets as of
December 31, 1994 and 1993 .............. Annual Report, p. 13
Consolidated Statements of Cash Flows for
the years ended December 31, 1994, 1993
and 1992 ................................ Annual Report, p. 14
Notes to Consolidated Financial
Statements .............................. Annual Report, pp.15-19
Report of Independent Public
Accountants ............................. Annual Report, p. 20
</TABLE>
(1) Matters incorporated by reference from the Lindberg Corporation 1994
Annual Report.
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<TABLE>
<CAPTION>
2. Financial Statements Schedules (2) Page
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VIII. Valuation and Qualifying Accounts
and Reserves .................. 12
Report of Independent Public Accountants
on Schedules ......................... 13
</TABLE>
(b) Reports on Form 8-K No reports on Form 8-K were filed during the
quarter ended December 31, 1994.
(c) Exhibits Required by Item 601 of Regulation S-K Exhibits required by
Item 601 of Regulation S-K are listed in the Exhibit Index which is
attached hereto at pages 15-16 and which is incorporated herein by
reference.
(2) Schedules other than those listed above are omitted for the reason that
they are not required or are not applicable, or because the required
information is shown in the financial statements or notes thereto.
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LINDBERG CORPORATION AND SUBSIDIARIES
SCHEDULE VIII--VALUATION AND
QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
Allowance for Doubtful Accounts
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1994 1993 1992
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Balance at beginning of year $257,000 $330,000 $366,000
Add: Provision charged to expense
during the year 83,000 109,000 179,000
Deduct: Write-offs during the year,
net of recoveries (76,000) (182,000) (215,000)
-------- --------- ---------
Balance at end of year $264,000 $257,000 $330,000
======== ========= =========
</TABLE>
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REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS ON SCHEDULES
To the Shareholders of
Lindberg Corporation:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in Lindberg
Corporation's annual report to shareholders incorporated by reference in this
Form 10-K and have issued our report thereon dated January 20, 1995. Our audit
was made for the purpose of forming an opinion on those statements taken as a
whole. The schedule listed in the index is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
January 20, 1995.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
LINDBERG CORPORATION
BY ___________________________________
Stephen S. Penley
Senior Vice President and Chief
Financial Officer; Principal
Financial and Accounting Officer
Dated March 24, 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
Registrant in the capacities and on the dates indicated.
______________________________________
Stephen S. Penley
Senior Vice President and Chief
Financial Officer; Principal Financial
and Accounting Officer
______________________________________
Leo G. Thompson
President and Chief Executive
Officer, and a Director
______________________________________
George H. Bodeen
Director
______________________________________
Dr. Raymond F. Decker
Director
______________________________________
John W. Puth
Director
______________________________________
J. Thomas Schanck
Director March 24, 1995
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LINDBERG CORPORATION
Annual Report on Form 10-K
for the Year Ended December 31, 1994
Exhibit Index
<TABLE>
<CAPTION>
Page Number (1)
Number and Description of Exhibit or reference
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1-2. Not applicable
3. Articles of Incorporation and By-Laws
3.1 Certificate of Incorporation (composite) (2)
3.2 1987 Amendment to Certificate of Incorporation (3)
3.3 By-Laws (as amended) Attached
4. Instruments defining the rights of
security holders, including indentures (4)
4.2 Amended and Restated Credit Agreement
Dated as of April 28, 1994. (5)
5-9. Not applicable
10. Material contracts
10.1 Description of Bonus Program (6)
10.2 Consulting Agreement Between the
Registrant and G.H. Bodeen dated
October 25, 1990 (7)
10.3 1991 Stock Option Plan for Key Employees (8)
10.4 1991 Stock Option Plan for Directors (9)
11. Statement re computation of per share earnings Attached
12. Not applicable
13. Information in Annual Report to Stockholders
incorporated herein by reference. Attached
14-21. Not Applicable
22. Subsidiary of the Registrant Attached
23. Not Applicable
24. Consent of Independent Public Accountants Attached
25-26. Not Applicable
27. Financial Data Schedules Attached
28. Not Applicable
</TABLE>
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(1) Shown only in manually signed original, filed with the Securities and
Exchange Commission.
(2) Incorporated by reference to Exhibit 3.1 of the Registrant's Report on
Form 10-K for the year ended December 31, 1980, Commission
file no. 0-8287.
(3) Incorporated by reference to page 6 of the Registrant's 1987 proxy
statement filed with the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1986, Commission file no. 0-8287.
(4) Other instruments defining the rights of the holders of long-term debt
of the Registrant, which is described in Note 5 to the financial
statements incorporated herein, are omitted pursuant to Regulation S-K
Item 601 (b) (4) (iii) (A). The Registrant agrees to furnish copies of
such agreements to the Securities and Exchange Commission upon
request.
(5) Incorporated by reference to Exhibit 4.2 of the Registrant's Report on
Form 8-K dated May 13, 1994, Commission file no. 0-8287.
(6) Incorporated by reference to page 5 of the Registrant's 1991 proxy
statement, Commission file no. 0-8287.
(7) Incorporated by reference to Exhibit 10.5 of the Registrant's Report
on Form 10-K for the year ended December 31, 1990, Commission
file no. 0-8287.
(8) Incorporated by reference to Appendix A of the Registrant's 1991 proxy
statement, Commission file no. 0-8287.
(9) Incorporated by reference to Appendix B of the Registrant's 1991 proxy
statement filed with the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1990, Commission file no. 0-8287.
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EXHIBIT 3.3
BY-LAWS
OF
LINDBERG CORPORATION
ARTICLE I
Offices
Section 1. The registered office of the corporation in Delaware shall
be in the City of Wilmington, County of New Castle.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may
from time to time determine or the business of the corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Chicago, State of Illinois, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders shall be held at 9:00 A.M.
on the last Wednesday in April of each year if not a legal holiday, or if a
legal holiday, then on the next secular day following, or at such other date
and time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. At each annual meeting, stockholders
shall elect by such vote as is required by Article Tenth of the corporation's
certificate of incorporation a board of directors, and transact such other
business as may properly be brought
<PAGE> 2
before the meeting. Elections of directors need not be by written ballot.
Section 3. For business properly to be brought before any meeting of
stockholders by a stockholder, the stockholder must have given timely notice
thereof in proper written form to the secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than 30 days nor
more than 60 days prior to the date of the meeting; provided, however, that in
the event that less than 40 days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, for such notice by the
stockholder to be timely, it must be so received prior to the date of the
meeting and not later than the close of business on the tenth day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made. To be in proper written form, a stockholder's notice to
the secretary shall set forth in writing as to each matter the stockholder
proposes to bring before the meeting: (i) a brief description of the business
desired to be brought before the meeting and the reasons for conducting such
business at the meeting; (ii) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business; (iii) the
number of the shares of capital stock of the corporation which are owned by the
stockholder, beneficially and of record, as of the record date for the meeting;
and (iv) any material interest of the stockholder in such business. The
chairman of the meeting shall have the sole authority to determine whether
business was properly brought before the meeting in accordance with the
provisions of this Section 3 of Article II and, if the chairman of the meeting
should determine that any such business was not so properly brought, he or she
shall so declare to the meeting, and any such business not properly brought
before the meeting shall not be transacted.
Section 4. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to
vote at such meeting not less than ten nor more than 60 days (or in the case a
vote of stockholders on a merger or consolidation is one of the stated purposes
of the annual meeting, not less than 20 or more than 60 days) before the date
of the meeting.
2
<PAGE> 3
Section 5. The officer who has charge of the stock ledger of the
corporation shall prepare, or cause to be prepared, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 6. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the chairman of the board or the president and
shall be called by the president or secretary at the request in writing of a
majority of the board of directors. Such request shall state the purpose or
purposes of the proposed meeting.
Section 7. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten or more than 60 days (or in the case
of a merger or consolidation, not less than 20 or more than 60 days) before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 8. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 9. The holders of a majority of the shares of stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. Abstentions
3
<PAGE> 4
shall be counted as present in person or represented by proxy for purposes
of determining the existence of a quorum. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum shall be present
or represented any business may be transacted which might have been transacted
at the meeting as originally notified. If the adjournment is for more than 30
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 10. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting
(other than the election of directors, which shall be determined by a plurality
vote), unless the question is one upon which, by express provision of statute,
these by-laws or of the certificate of incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question. Abstentions shall not be included in calculating the
number of votes cast on, in favor of, or in opposition to any questions.
Section 11. Unless otherwise provided in the certificate of
incorporation or these by-laws, each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such stockholder, but no proxy
shall be voted or acted upon after eleven months from its date, unless the
proxy expressly provides for a longer period.
ARTICLE III
Directors
Section 1. The number of directors which shall constitute the whole
board of directors shall be a maximum of seven. The number of directors may be
changed from time
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to time, as provided by Article Tenth of the corporation's certificate of
incorporation. Directorships, the terms of which expire as provided in said
Article Tenth, shall be filled at each annual meeting of the stockholders,
except as provided in Section 2 of this Article III, and each director elected
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal. Directors need not be stockholders.
Section 2. Any vacancies occurring in the board of directors and
newly-created directorships resulting from an increase in the authorized number
of directors may be filled by a majority of the remaining directors though less
than a quorum of the board of directors, and any director so chosen shall hold
office until the next election of the class for which he was chosen and until
his successor is duly elected and qualified.
Section 3. Nominations for any election of a director may be made by
the board of directors, a committee appointed by the board of directors, or by
any stockholder entitled to vote generally in the election of directors who
complies with the procedures set forth in this Section 3 of Article III. All
nominations by stockholders must be made pursuant to timely notice in proper
written form to the secretary of the corporation. To be timely, a stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the corporation not less than 30 days nor more than 60 days prior to
the date of the meeting; provided, however that in the event that less than 40
days notice or prior public disclosure of the date of the meeting is given to
stockholders, for such notice by the stockholder to be timely, it must be so
received prior to the date of the meeting and not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. To be in proper
written form, such stockholder's notice shall set forth in writing (a) as to
each person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, including, without limitation,
such person's written consent
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<PAGE> 6
to being named in the proxy statement as a nominee and to serving as a
director if elected; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the corporation's books, of such
stockholder and (ii) the number of shares of capital stock of the corporation
which are owned by such stockholder, beneficially and of record, as of the
record date for the meeting. At the request of the board of directors, any
person nominated by the board of directors, or a committee appointed by the
board of directors, for election as a director shall furnish to the secretary
of the corporation the information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. The chairman of the
meeting shall, if the facts warrant, determine and declare to the meeting that
a nomination was not made in accordance with the procedures prescribed by this
Section 3 of Article III, and the defective nomination shall thereupon be
disregarded.
Section 4. The business of the corporation shall be managed by its
board of directors, which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the certificate
of incorporation or by these by-laws directed or required to be exercised or
done only by the stockholders.
Meetings of the Board of Directors
Section 5. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 6. The first meeting of each newly elected board of directors
shall be held without other notice than this by-laws, immediately after, and at
the same place as, the annual meeting of stockholders, provided a quorum shall
be present. In the event of the failure to hold the first meeting of a newly
elected board at such time and place, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
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Section 7. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
Section 8. Special meetings of the board may be called by the chairman
of the board or the president on two days' notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
president or secretary in like manner and on like notice at the written request
of two directors.
Section 9. At all meetings of the board a majority of the total number
of directors then constituting the whole board shall constitute a quorum for
the transaction of business and the vote of a majority of the directors present
at any meeting at which there is a quorum shall be the act of the board of
directors, except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum shall not be present at any
meeting of the board of directors, a majority of the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee; and any member of the board
of directors or of any committee thereof may participate in a meeting of such
board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such meeting shall constitute present in
person at such meeting.
Committees of Directors
Section 11. The board of directors may have any executive committee,
an audit committee, an executive compensation committee, a finance committee, a
nominating
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committee, an incentive stock option committee, a directors stock option
committee, and such other committees as they may designate by resolution
passed by a majority of the whole board, each committee to consist of one or
more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to
the extent provided in the resolution of the board of directors, when the board
of directors is not in session, shall have and may exercise the powers of the
board of directors in the management of the business and affairs of the
corporation and may authorize the seal of the corporation to be affixed to all
papers which may require it; provided, however, that in the absence or
disqualification of any member of such committee or committees or alternate
members designated by the board, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the board of directors to
act at the meeting in the place of any such absent or disqualified member.
Notwithstanding the foregoing provisions of this Section 10 of this Article
III, no such committee shall have the power or authority in reference to
amending the certificate of incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, recommending
to the stockholders a dissolution of the corporation or a revocation of the
dissolution, or amending the by-laws of the corporation; and, unless the
resolution or the certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 12. Each committee shall have a chairman, appointed by the
board of directors, who shall preside at all meetings of such committee. Each
committee shall keep regular minutes of its meetings and report the same to the
board of directors when required.
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Compensation of Directors
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have authority to
fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a
stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings, and the chairmen of such
committees may be paid an additional fixed sum for their services as chairmen.
ARTICLE IV
Notices
Section 1. Notices to directors and stockholders shall be in writing
and delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram or by electronic facsimile transmission
and shall be deemed to be given at the time of delivery to the telegraph
company or at the time of electronic facsimile transmission.
Section 2. Whenever any notice is required to be given by statute or
by the certificate of incorporation or these by-laws, a waiver thereof in
writing signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
Officers
Section 1. The officers of the corporation shall include a chairman of
the board, a president, one or more vice presidents (the number and designation
thereof to be determined by the board of directors), a secretary, a treasurer,
a controller and such assistant secretaries,
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<PAGE> 10
assistant treasurers or other officers as may be elected or appointed by the
board of directors. Any two or more offices may be held by the same person.
Section 2. The board of directors at its first meeting after each
annual meeting of stockholders shall elect a chairman of the board and
president from among the directors and shall elect one or more vice presidents,
a secretary, a treasurer and such assistant officers or other officers as it
shall deem advisable.
Section 3. The board of directors may from time to time appoint such
other officers and agents as it shall deem advisable, who shall hold their
offices for such terms and shall perform such duties as from time to time may
be prescribed by the board of directors or the president.
Section 4. The salaries of all officers of the corporation shall be
fixed by the board of directors.
Section 5. Each officer of the corporation shall hold office until his
successor is chosen and qualified or until his earlier death, resignation or
removal. Any officers elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Election or appointment as an officer or agent shall not of itself
create contract rights. Any vacancy occurring in any office of the corporation
may be filled by the board of directors.
Chairman of the Board
Section 6. The chairman of the board shall preside at all meetings of
the stockholders and the board of directors. He may sign certificates for
shares of the corporation and any deeds, mortgages, bonds, contracts, or other
instruments which the board of directors has authorized to be executed, whether
or not under the seal of the corporation, except in cases where the signing and
execution thereof shall be expressly delegated by the board of directors or by
these by-laws to some other officer or agent of the corporation, and he shall
perform such other duties and have such other powers as from time to time may
be prescribed by the board of directors.
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President
Section 7. The president shall be the chief executive officer of the
corporation. Subject to the direction of the board of directors, he shall have
general and active management responsibility for the business of the
corporation and general supervision of the other officers, agents and employees
of the corporation and shall see that all orders and resolutions of the board
of directors are carried into effect. In the absence of the chairman of the
board, or in the event of his inability to act, he shall preside at all
meetings of the stockholders and of the board of directors. He may sign
certificates for shares of the corporation, and any deeds, mortgages, bonds,
contracts, or other instruments, whether or not under the seal of the
corporation, except in cases where the signing and execution thereof shall be
expressly delegated by the board of directors or by these by-laws to some other
officer or agent of the corporation, and shall perform such other duties and
have such other powers as from time to time may be prescribed by the board of
directors.
Vice Presidents
Section 8. In the absence of the president, or in the event of his
inability to act, the vice president (or if there be more than one, the
executive vice presidents, senior vice presidents or the vice presidents in the
order designated, or in the absence of any designation then in the order named
in the most recent resolution providing for the annual election of officers)
shall perform the duties of the president and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the president. The
vice presidents shall perform such other duties and have such other powers as
from time to time may be prescribed by the board of directors or the president.
Secretary
Section 9. The secretary shall: (a) keep the minutes of the
stockholders' and the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the
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corporation and see that the seal of the corporation or a facsimile thereof
is affixed to, and attested to, all certificates for shares prior to the issue
thereof and that the seal of the corporation is affixed to, and attested
to, all documents, the execution of which on behalf of the corporation
under its seal is duly authorized in accordance with the provisions of these
by-laws; (d) keep or cause to be kept a register of the mailing address of each
stockholder which shall be furnished to the secretary or any transfer agent of
the corporation by such stockholder; (e) sign, with the chairman of the board,
the president or a vice president, certificates for shares of the corporation,
the issue of which shall have been authorized by resolution of the board of
directors; (f) have general charge of the stock transfer books of the
corporation; and (g) in general perform all duties incident to the office of
the secretary and such other duties as from time to time may be prescribed by
the board of directors or the president.
Treasurer
Section 10. The treasurer shall: (a) be the chief financial officer
and shall have charge and custody of and be responsible for all funds and
securities of the corporation, the receipt and disbursement, subject to the
direction of the board of directors, of all moneys due and payable to or by the
corporation and to deposit funds and securities of the corporation in such
banks, trust companies or other depositaries as shall be selected in accordance
with these by-laws; and (b) in general perform all the duties incident to the
office of treasurer and such other duties as from time to time may be
prescribed by the board of directors or the president. If required by the
board of directors, the treasurer shall give a bond for the faithful discharge
of his duties in such sum and with such surety or sureties as the board of
directors shall determine.
Assistant Treasurers and Assistant Secretaries
Section 11. The assistant secretaries as thereunto authorized by the
board of directors may sign with the chairman of the board, the president or a
vice president certificates for shares of the corporation, the issue of which
shall have been authorized by a resolution of the board of directors. The
assistant treasurers shall, if
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required by the board of directors, give bonds for the faithful discharge
of their duties in such sums and with such sureties as the board of directors
shall determine. The assistant secretaries and assistant treasurers in general
shall perform such duties as from time to time may be prescribed by the
secretary or the treasurer, respectively, or by the board of directors or
the president.
Controller
Section 12. The controller shall: (a) have responsibility to record
the transactions of the corporation in the books of account of the corporation;
(b) report the results of operations and financial condition of the corporation
to stockholders, directors, and officers of the corporation; (c) maintain
proper internal controls over the assets of the corporation, and (d) in general
perform such other duties as from time to time may be prescribed by the chief
financial officer, by the board of directors, or by the president.
ARTICLE VI
Contracts, Loans, Checks, Deposits and Investments
Section 1. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized
by a resolution of the board of directors. Such authority may be general or
confined to specific instances.
Section 3. All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by such officer or officers, agent or agents of the
corporation, and in such manner, as shall from time to time be determined by
resolution of the board of directors.
Section 4. All funds of the corporation not otherwise employed shall
be deposited from time to time to
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the credit of the corporation in such banks, trust companies or other
depositaries as the board of directors may authorize.
ARTICLE VII
Certificates for Shares and Their Transfer
Section 1. Each holder of stock in the corporation shall be entitled
to have a certificate in such form as may be determined by the board of
directors, signed by or in the name of the corporation by the chairman of the
board, the president or a vice president and by the secretary or an assistant
secretary, or the treasurer or an assistant treasurer of the corporation, and
sealed with the seal or a facsimile of the seal of the corporation. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name of the person to who the shares represented thereby are
issued, and with the number of shares and date of issue, shall be entered on
the book of the corporation.
Section 2. Upon surrender to any transfer agent of the corporation of
a certificate for shares of the corporation, duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, the
corporation shall issue a new certificate to the person entitled thereto and
cancel
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the old certificate and record the transaction on the books of the
corporation. The person in whose name shares stand on the books of the
corporation shall be deemed the owner thereof for all purposes as regards the
corporation.
Section 3. The board of directors may appoint one or more transfer
agents and registrars of transfers, and may require all stock certificates to
be countersigned by such transfer agent and registered by such registrar. The
board of directors shall have authority to make or approve rules and
regulations concerning the issue, transfer and registration of certificates for
shares.
Section 4. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if such officer, transfer agent or registrar were still authorized at the
date of issue.
Section 5. The board of directors may authorize the issuance of a new
certificate in lieu of a certificate alleged by the holder thereof to have been
stolen, lost mutilated or destroyed, upon compliance by such holder, or his
legal representatives, with such requirements as the board of directors may
impose or authorize. Such authorization by the board of directors may be
general or confined to specific instances.
ARTICLE VIII
Fixing Record Date
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect to
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the board of directors may fix, in advance, a record date, which
shall be given not less than ten nor more than sixty days (or in the case of a
merger or consolidation, not less than twenty or more than sixty days) before
the date of
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such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for
the adjourned meeting.
ARTICLE IX
Dividends
The board of directors may from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its certificate of incorporation.
ARTICLE X
General Provisions
Seal
Section 1. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Fiscal Year
Section 2. The fiscal year of the corporation shall begin on the first
day of January in each year and end on the thirty-first day of December in each
year.
ARTICLE XI
Amendments
Section 1. Subject to the provisions of Article Tenth of the
corporation's certificate of incorporation, these by-laws may be altered,
amended or repealed and new by-laws may be adopted at any meeting of the board
of directors or at any meeting of stockholders, held pursuant to notice duly
given.
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ARTICLE XII
Emergency Directors
Section 1. The board of directors, by resolution, may provide for
emergency directors and appoint or designate the manner in which emergency
directors shall be determined. To the extent provided in said resolution and
as provided by Section 110 of the Delaware General Corporation Law, such
emergency directors, together with any remaining directors able to perform
their duties, shall have and may exercise the powers of the board of directors
in the management of the business and affairs of the corporation, and shall
thereby be deemed to constitute the board of directors of the corporation,
during any interval commencing when the board of directors shall be unable to
function by reason of vacancies due to death, incapacity, or catastrophe or
other similar emergency conditions, as a result of which a quorum of the board
of directors or a standing committee thereof cannot readily be convened for
action. Such emergency directors, including any remaining directors able to
perform their duties, shall, during the term they are authorized to function as
provided herein, have the power to appoint such temporary officers to fill
existing vacancies as the circumstances may require, to remove officers as the
circumstances may require, to authorize the seal of the corporation to be
affixed to all papers which may require it, and to take any and all other
actions as may be required and permitted in conformity with the provisions of
Section 110 of the Delaware General Corporation Law. The emergency directors
shall consist of any available members of the board of directors and any other
persons in such order as named by the board of directors on any list as it may
compile from time to time for purposes of appointing such emergency directors.
If the board of directors shall have failed to compile any list for purposes of
appointing emergency directors, the emergency directors shall consist of (in
the order specified below) any available members of the board of directors, the
chairman of the board, the president, the vice presidents (in order of
seniority), the secretary, the treasurer, the controller, the assistant
secretaries (in order of seniority), and the assistant treasurers (in order of
seniority) of the corporation. The chairman of the emergency directors shall be
the highest ranking available person on any list compiled by the board
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of directors for purposes of appointing the emergency directors, or, if the
board of directors shall have failed to compile any such list, the highest
ranking available person of the following: the chairman, the most senior
member of the board of directors, the president, the most senior vice
president, the secretary, the treasurer, the controller, the most senior
assistant secretary, and the most senior assistant treasurer.
Section 2. The emergency directors shall meet as promptly as possible
after the occurrence of the event herein described which would activate their
appointment and at such subsequent time or times as it may designate until a
board of directors has been duly elected by the stockholders and qualified. A
meeting of the emergency directors may be called by any emergency director,
notice of which meeting need be given only to such emergency directors as it is
feasible to reach at the time. Such emergency directors shall make their own
rules of procedure except to the extent otherwise provided by resolution of the
board of directors. The emergency directors in attendance at the meeting shall
constitute a quorum.
Section 3. During such times as the emergency directors shall be
required to function pursuant to the provisions hereof, in the absence of the
chief executive officer, the chairman of said emergency directors shall
function as, and have the powers of, the chief executive officer of the
corporation and shall preside at all meetings of the stockholders and the
emergency directors. The
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chief executive officer shall have and exercise, subject to the direction of
the emergency directors, general charge and supervision over the business and
affairs of the corporation.
Section 4. To the extent not inconsistent with the provisions of this
Article XII or Section 110 of the Delaware General Corporation Law, all other
provisions of these bylaws shall remain in effect during the interval in which
the emergency directors shall be required to function pursuant to the
provisions hereof.
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Exhibit 11
COMPUTATION OF NET EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Year Ended December 31
---- ----- -------- --
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
EARNINGS
Earnings (Loss) Before
Cumulative Effect of Change
in Accounting Principle $4,374,374 $(2,817,527) $ 942,270
Cumulative Effect of Change in
Accounting Principle -- 1,500,000 --
---------- ----------- ----------
Net Earnings (Loss) $4,374,374 $(1,317,527) $ 942,270
========== ============ ==========
SHARES
Weighted Average Number of
Common Shares Outstanding 4,710,966 4,701,966 4,691,913
(See Note)
Additional Shares Assuming
Conversion of Stock Options 47,122 -- --
--------- --------- ---------
Weighted Average Common Shares
Outstanding and Equivalents 4,757,867 4,701,966 4,691,913
========= ========= =========
PRIMARY EARNINGS PER COMMON SHARE
Earnings (Loss) Before
Cumulative Effect of Change
in Accounting Principle $ .92 $ (.60) $ .20
Cumulative Effect of Change in
Accounting Principle -- .32 --
--------- ---------- ----------
Net Earnings (Loss) $ .92 $ (.28) $ .20
========= =========== ==========
</TABLE>
Note: All activity during the year has been adjusted for the number
of days in the year that the shares were outstanding.
<PAGE> 1
EXHIBIT 13
MANAGEMENT'S DISCUSSION & ANALYSIS
OF FINANCIAL CONDITION:
During 1994, the company's total borrowings increased $10.4 million to $18.2
million at December 31, 1994 from $7.8 million at year-end 1993.
Correspondingly, the ratio of debt to total capitalization increased to 42% at
year-end 1994 from 27% at the prior year-end.
The primary activity which resulted in the requirement for additional
borrowings was the acquisition of all of the outstanding common shares of
Rexcorp U.S. Inc. and its wholly-owned subsidiary Impact Industries, Inc.
(Impact) on April 29, 1994. The purchase price for the shares acquired and the
repayment of certain Impact bank loans were financed with additional borrowings
by Lindberg totalling approximately $12 million on the date of acquisition.
Additionally, on November 30, 1994, the company acquired all of the
outstanding common shares of H&H Heat Treating, Inc. (H&H) for $500,000, which
was also financed with additional bank debt. H&H had no debt on the date of
acquisition.
These capital requirements were offset by $2.1 million generated
through the results of operations and the collection of notes receivable.
Capital expenditures increased $3.1 million to $6.2 million during 1994
from $3.1 million in the prior year. Approximately $900,000 of the increase
related to Impact since its acquisition.
Investments were made selectively in equipment needed to accommodate
strong gains in base business sales throughout 1994 in both the Heat Treating
Services and Precision Products business segments. Within the Heat Treating
Services segment, the Strategic Partership 2000 (SP 2000) process required
additional capital investment to support its growth. The SP 2000 program
provides heat treating to customers via dedicated equipment, either at their
site or within a Lindberg facility. Approximately 64% of the increase in
capital spending from 1993, excluding Impact's capital expenditures, related to
SP 2000 projects. The company anticipates that the SP 2000 program will
continue the requirement for significant capital investment in 1995.
Also contributing to the requirement for funds during the year was an
increase in working capital - largely as a result of the aforementioned
significant increase in sales. Inventories and accounts receivables increased
at Impact since the acquisition to support its sales growth. Traditional
Lindberg operations also required additional working capital in support of
revenue growth.
The company received repayments on several notes receivable related to
the sale of business units in 1992 and 1993. Specifically, $1.3 million was
received as final payment from the sale of the company's Florida operations in
May 1993, $200,000 of scheduled partial payment was received for the sale of a
Georgia operation in December 1993 and $484,000 was received as final payment
from the sale of the company's shares in Lindberg do Brasil in May 1992.
On the closing date of its acquisition of Impact, the company expanded
its borrowing capacity by entering into new revolving credit and term loan
facilities with its banks. At that time, the maximum borrowing limit was
increased $9.0 million to $27.0 million from $18.0 million. The new borrowing
includes a $7.0 million term loan which amortizes evenly on a quarterly basis
for the five years following inception. The company believes that its
borrowing capacity and funds generated through operations are sufficient to
accommodate foreseeable capital investment and working capital needs.
Restructuring activities did not have a material effect on cash in 1994
and are not expected to require significant cash outlays in 1995.
Finally, during 1994, the company made cash outlays related to certain
environmental related matters. These largely included costs for
consulting/engineering, legal support and, in certain cases, site remediation.
The company believes that these outlays in 1994 had, and in subsequent years
will have, a limited effect on its financial position and liquidity.
OF RESULTS OF OPERATIONS: 1994 VERSUS 1993
Net sales for the company increased $30.3 million, or 43%, to $99.9 million in
1994 from $69.6 million in 1993. Approximately $22 million of the increase
related to Impact since its acquisition. The remaining increase is related to
traditional Lindberg operations, representing a 12% increase in comparison to
the prior year. Sales for the Heat Treating Services business segment,
adjusting for operations sold or closed in 1993, rose 11% in 1994 while sales
in the Precision Products segment - excluding Impact - increased by 34% in
comparison to 1993.
At nearly all Lindberg facilities in 1994, sales gains were recorded
relative to 1993. The sales strengthening which had begun to develop in the
latter part of 1993 accelerated into 1994 and continued for the full year.
Fourth quarter 1994 sales were ahead of the fourth quarter sales in the prior
year by 11%, adjusting for the effect of Impact. The company believes that the
rate of the new orders experienced throughout 1994 will continue into 1995,
with longer term effects contingent on the duration of the currently positive
cycle in the U.S. economy.
The acquisition of Impact resulted in a shift in the percentage of the
company's sales to manufactured products from heat treating services - about
40% for 1994 from 20% in 1993 - and also in a higher concentration of revenue
from automotive related markets. Estimated historically at about 20%, the
percentage of sales from the automotive customer base increased to just over
30% subsequent to the Impact acquisition. The shift in sales mix to automotive
related and other industrial oriented markets in the midwest, which were strong
in 1994, was a prime contributor to the overall sales gains during the year.
10
<PAGE> 2
The company's earnings from operations increased $4.1 million to $8.1
million, or 8.1% of sales, from $4.0 million, or 5.8% of sales, in 1993. The
prior year figure excludes a restructuring charge of $8.3 million recorded
in that year. The improved operating earnings and margin percentage on a
year-to-year basis resulted mainly from the favorable operating leverage
experienced as revenues expanded during 1994. Additionally, the company
realized a full year of financial benefits related to the closure or sale of
facilities in 1993 which had lower than acceptable profitability levels.
The company continued with its ongoing efforts to enhance the
productivity of its operations and to limit the growth in selling, general and
administrative expenses to only the most essential areas. For the year,
productivity improvements were limited as many of the company's plants focused
available resources on effectively accommodating increased customer
requirements.
Selling, general and administrative expenses increased $2.0 million, or
19%, to $13.1 million in 1994 from $11.1 million in the prior year.
Approximately 66% of the increase related to Impact. Total selling, general
and administrative expenses fell to 13% of sales in 1994 from 16% in 1993.
Interest expense rose $482,000 to $891,000 in 1994 from $409,000 in the
prior year. This increase was largely due to the increased level of borrowings
discussed above. However, rising interest rates also contributed to higher
interest expense during 1994 - particularly in the latter half of the year.
For 1994, the average annual interest rate on borrowings was 6.0% as compared
to 4.3% for 1993.
The company's net income increased $5.7 million to $4.4 million, or
$0.92 per share, in 1994 from a net loss of $1.3 million, or $0.28 loss per
share in 1993. The 1993 period included the previously mentioned restructuring
charge and a one time gain of $1.5 million related to the adoption of SFAS 109
on accounting for income taxes - both recorded in the first quarter of that
year.
Although the company cannot accurately determine the exact effect of
inflation on its operations, it does not believe inflation has had a material
effect during either year on sales or results of operations.
1993 VERSUS 1992
Net sales of $69.6 million for 1993 declined 2.0% from $71.0 million in 1992.
However, excluding the effects of the company's Florida operations, sold in May
1993, from both years' figures, sales improved slightly in 1993.
Reflecting the overall improved business environment for the company's
operations, fourth quarter 1993 sales were the highest quarterly results for
the year and were 10% ahead of the same quarter in 1992 - again adjusting for
the sale of the Florida businesses. Normal seasonal business patterns would
not have resulted in such a strong fourth quarter.
Generally, the company's operations with the most improvement in 1993
were those serving customers located in midwestern markets, particularly within
the automotive related industries. Gains in this area offset weakness at
divisions in southern California where significantly reduced commercial
aerospace and defense related order activity adversely affected sales.
For the year, despite the overall year-to-year reduction in sales, the
company's gross margin percent improved to 22% from 21% in the year earlier
period. This resulted mainly from the continued gain in productivity by the
company's associates - 4% ahead of the 1992 productivity level - and the sale
or closure of heat treat facilities with below normal profitability.
Also during 1993, the company continued with efforts aimed at reducing
its selling, general and administrative expenses. As compared to the prior
year, this category of costs fell 14%. Interest expense was also lowered
during 1993 by 20% due to the combined effects of reduced debt levels and a
decrease in the average interest rate on borrowings - to 4.3% in 1993 from 5.0%
in 1992.
As a result of the above, the company recorded a net loss of $1.3
million, or $0.28 loss per share, in 1993 including the after-tax effects of a
restructuring charge ($5.1 million, or $1.09 per share ) and a one time $1.5
million gain related to the adoption of SFAS 109.
The restructuring charge was recorded during 1993 to recognize the
expected financial effects of the closure or sale of heat treat facilities
that were no longer earning an adequate return on capital employed or where
assets had ceased to be acceptably productive and the elimination of certain
other non-productive assets within the company.
11
<PAGE> 3
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
OPERATIONS 1994 1993
---- ----
<S> <C> <C>
Net Sales $99,858,339 $69,619,134
Net Earnings (Loss)(1) 4,374,374 (1,317,527)
FINANCIAL POSITION
Total Assets $70,521,568 $47,603,896
Total Debt 18,201,420 7,780,000
Shareholders' Equity 24,668,516 21,154,567
Debt/Capitalization Ratio 42% 27%
Return on Average Shareholders' Equity(1) 19.1% (5.9%)
PER SHARE DATA
Net Earnings (Loss)(1) $ .92 $ (.28)
Cash Dividends .21 .20
Book Value 5.23 4.50
</TABLE>
(1) Excluding the effects of an $8,261,000 restructuring charge ($5,122,000
after-tax) and a cumulative gain of $1,500,000 for an accounting change, 1993
net earnings would have increased $3,622,000, or $0.77 per share.
<PAGE> 4
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net Sales $99,858,339 $69,619,134 $71,039,481
Cost of Sales 78,616,438 54,516,072 56,377,962
--------------------------------------------
Gross Profit 21,241,901 15,103,062 14,661,519
Selling, General and Administrative Expenses 13,129,634 11,055,531 12,916,262
Restructuring Charge - 8,261,000 -
--------------------------------------------
Earnings (Loss) From Operations 8,112,267 (4,213,469) 1,745,257
Other Income (Expense):
Interest Expense (891,455) (409,380) (510,598)
Interest Income 77,998 78,740 102,744
--------------------------------------------
Total Other Income (Expense) (813,457) (330,640) (407,854)
--------------------------------------------
Earnings (Loss) Before Income Taxes and Cumulative Effect
of Change in Accounting Principle 7,298,810 (4,544,109) 1,337,403
(Provision) Benefit for Income Taxes
(2,924,436) 1,726,582 (395,133)
--------------------------------------------
Earnings (Loss) Before Cumulative Effect
of Change in Accounting Principle 4,374,374 (2,817,527) 942,270
Cumulative Effect of Change in Accounting Principle - 1,500,000 -
--------------------------------------------
NET EARNINGS (LOSS)
$4,374,374 $ (1,317,527) $942,270
--------------------------------------------
Per Share Amounts:
Earnings (Loss) Before Cumulative Effect
of Change in Accounting Principle $.92 $(.60) $.20
Cumulative Effect of Change in Accounting Principle - .32 -
--------------------------------------------
NET EARNINGS (LOSS) $.92 $(.28) $.20
--------------------------------------------
</TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
For the Years Ended December 31, 1994, 1993 and 1992
----------------------------------------------------------------------------------------
Underfunded
Common Additional Retained Treasury Pension Liability
Shares Paid-in Captial Earnings Shares Adjustment Total
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $14,183,493 $1,573,790 $13,618,679 $(5,600,441) $ (161,690) $23,613,831
Net Earnings 942,270 942,270
Dividends Paid (1,126,211) (1,126,211)
Stock Award (6,500) 56,500 50,000
Pension Adjustment (18,187) (18,187)
-------------------------------------------------------------------------------------------
Balance, December 31, 1992 14,183,493 1,567,290 13,434,738 (5,543,941) (179,877) 23,461,703
Net Loss (1,317,527) (1,317,527)
Dividends Paid (940,508) (940,508)
Stock Award (21,500) 56,500 35,000
Pension Adjustment (84,101) (84,101)
-------------------------------------------------------------------------------------------
Balance, December 31, 1993 14,183,493 1,545,790 11,176,703 (5,487,441) (263,978) 21,154,567
Net Earnings 4,374,374 4,374,374
Dividends Paid (989,237) (989,237)
Exercise of Stock Options (14,190) 81,784 67,594
Pension Adjustment 61,218 61,218
-------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 $14,183,493 $1,531,600 $14,561,840 $(5,405,657) $(202,760) $24,668,516
-------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
12
<PAGE> 5
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
For the Years Ended December 31,
---------------------------------
1994 1993
ASSETS ---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash $ 111,060 $ 210,660
Receivables, Less Allowance for Doubtful Accounts
of $264,000 in 1994 and $257,000 in 1993 16,751,894 10,612,408
Inventories 4,331,267 1,415,398
Prepaid and Refundable Income Taxes 2,027,147 1,723,752
Prepaid Expenses and Other Current Assets 2,665,358 1,812,772
----------- -----------
Total Current Assets 25,886,726 15,774,990
PROPERTY AND EQUIPMENT
Land 2,165,204 1,827,204
Buildings and Improvements 18,589,999 15,776,007
Machinery and Equipment 68,534,930 60,635,305
Construction in Progress 1,036,754 1,019,430
----------- -----------
Total Property and Equipment 90,326,887 79,257,946
Less-Accumulated Depreciation (51,469,024) (50,993,301)
----------- -----------
Net Property and Equipment 38,857,863 28,264,645
Other Assets 5,776,979 3,564,261
----------- -----------
TOTAL ASSETS $ 70,521,568 $ 47,603,896
LIABILITIES
CURRENT LIABILITIES:
Current Maturities on Long-Term Debt $ 1,501,478 $ 80,000
Accounts Payable 8,281,648 2,757,388
Accrued Expenses:
Salaries and Wages 1,960,967 1,197,229
Taxes, other than income 740,978 712,502
Employee Insurance and Benefits 1,670,259 1,398,427
Utilities 547,907 537,954
Other 2,576,004 2,541,105
----------- -----------
Total Current Liabilities 17,279,241 9,224,605
NON-CURRENT LIABILITIES:
Deferred Income Taxes 6,491,387 4,302,058
Long-Term Debt (Less Current Maturities) 16,699,942 7,700,000
Accrued Pension 2,526,996 2,603,738
Other Non-Current Liabilities 2,855,486 2,618,928
----------- -----------
Total Non-Current Liabilities 28,573,811 17,224,724
SHAREHOLDERS' EQUITY:
Common Shares, $2.50 par value:
Authorized 12,000,000 shares in 1994 and 1993
Issued 5,673,397 shares in 1994 and 1993 14,183,493 14,183,493
Additional Paid-In Capital 1,531,600 1,545,790
Earnings Retained in the Business 14,561,840 11,176,703
Shares Held in Treasury (956,381 in 1994 and 970,856 in 1993), at Cost (5,405,657) (5,487,441)
Underfunded Pension Liability Adjustment (202,760) (263,978)
----------- -----------
Total Shareholders' Equity 24,668,516 21,154,567
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 70,521,568 $ 47,603,896
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these balance sheets.
13
<PAGE> 6
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
-----------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings (Loss) $ 4,374,374 $(1,317,527) $ 942,270
Adjustments to Reconcile Net Earnings (Loss)
to Net Cash Provided by Operating Activities:
Depreciation 4,455,002 3,715,882 4,419,952
Goodwill Amortization 61,019 - -
Increase (Decrease) in Deferred Taxes 728,031 (192,809) (286,620)
Non-Cash Portion of Restructuring Charge-Net of Tax Benefits - 2,444,804 -
Change in Assets and Liabilities:
Receivables (1,306,809) 234,992 (598,321)
Inventories (967,818) 72,139 (104,554)
Prepaid and Refundable Income Taxes 336,078 (252,028) (4,780)
Prepaid Expenses and Other Current Assets (703,637) 350,687 59,526
Accounts Payable and Accrued Expenses 1,213,006 (628,783) 739,127
Other (767,073) 318,072 (3,341)
---------- ---------- ----------
Total Adjustments to Reconcile Net Earnings (Loss) to Net Cash
Provided by Operating Activities 3,047,799 6,062,956 4,220,989
---------- ---------- ----------
Net Cash Provided by Operating Activities 7,422,173 4,745,429 5,163,259
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (6,194,914) (3,088,560) (4,787,624)
Proceeds from Note Receivable for Sale of International Affiliate 484,000 566,000 200,000
Proceeds from Notes Receivable for Sales of Heat Treat Facilities 1,504,350 500,000 -
Payment for Purchase of Impact Industries, Inc., Net of Cash Acquired (5,497,106) - -
Payment for Purchase of H&H Heat Treating, Inc., Net of Cash Acquired (474,800) - -
---------- ---------- ----------
Net Cash Used in Investing Activities (10,178,470) (2,022,560) (4,587,624)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings (Payments) Under Revolving Credit Agreement 3,900,000 (1,700,000) 900,000
Borrowings Under Bank Term Loan 7,000,000 - -
Principal Payments on Long-Term Debt (780,000) (80,000) (280,000)
Repayment of Long-Term Debt of Impact Industries, Inc. (6,411,633) - -
Principal Payments of Capital Lease Obligations (62,433) - -
Dividends Paid (989,237) (940,508) (1,126,211)
---------- ---------- ----------
Net Cash Provided by (Used in) Financing Activities 2,656,697 (2,720,508) (506,211)
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (99,600) 2,361 69,424
Cash at Beginning of Year 210,660 208,299 138,875
---------- ---------- ----------
Cash at End of Year $ 111,060 $ 210,660 $ 208,299
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest Paid $ 857,978 $ 443,923 $ 667,862
Income Taxes Paid 2,111,777 807,286 641,089
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Contribution of Assets to Joint Venture 559,429 - -
---------- ---------- ----------
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
14
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1994, 1993 and 1992
NOTE 1. ACCOUNTING POLICIES
A. Principles of Consolidation
The consolidated financial statements include the accounts of Lindberg
Corporation and its subsidiaries. Significant intercompany balances and
transactions have been eliminated.
B. INVENTORIES
Inventories consist of material, labor and indirect manufacturing costs and are
valued at the lower of cost (determined on a first-in, first-out basis) or net
realizable value.
C. PROPERTY AND DEPRECIATION
Property and equipment are stated at cost. Depreciation is provided on the
straight line method for financial statement purposes and on accelerated
methods for income tax purposes. Maintenance costs are charged to expense as
incurred. Expenditures which improve efficiency or capacity or extend the
useful life of assets are capitalized. Interest cost incurred during the
period of construction of plant and equipment is capitalized as part of the
cost of such plant and equipment.
D. INCOME TAXES
For the years ended December 31, 1994 and 1993, the company determined its tax
provision and deferred tax balance in compliance with SFAS 109, "Accounting for
Income Taxes" (SFAS 109). Under this approach, the provision for income taxes
represents income taxes paid or payable for the current year adjusted for the
change in deferred taxes during the year. Deferred income taxes reflect the
net tax effects of temporary differences between the financial statement bases
and the tax bases of assets and liabilities and are adjusted for changes in tax
rates and tax laws when changes are enacted. Prior years have not been
restated and, accordingly, reflect the procedures required by APB Opinion No.
11.
E. EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares
outstanding and common share equivalents of dilutive stock options. Shares
used in the calculations for the years ended December 31, 1994, 1993 and 1992
were 4,757,867, 4,701,966 and 4,691,913, respectively.
F. RECLASSIFICATIONS
Certain prior period amounts have been reclassified to be consistent with the
1994 presentation.
NOTE 2. ACQUISITIONS
On April 29, 1994, the company acquired all of the outstanding shares of
Rexcorp U.S. Inc. and its wholly-owned subsidiary Impact Industries, Inc.
(Impact), paying $5.50 million in cash and retiring $6.41 million of its
outstanding debt. The results of operations since April 29, 1994 are included
in the 1994 totals of the company.
On November 30, 1994, the company acquired all of the outstanding shares of
H&H Heat Treating, Inc. (H&H) for $500,000. The results of operations
since November 30, 1994 are included in the 1994 totals of the company.
Both acquisitions were accounted for using the purchase method; accordingly,
the assets and liabilities of the acquired entities have been recorded at their
estimated fair value at the date of acquisition. The allocations of the purchase
prices are based upon preliminary results of asset valuations and liability and
contingency assessments. Actual allocations may differ based on the final asset
valuations and liability assessments.
The preliminary allocations of the purchase prices are as follows: (in
thousands)
<TABLE>
<CAPTION>
Impact H&H
------ ---
<S> <C> <C>
Property and Equipment $ 9,156 $ 466
Accounts Receivable 4,534 302
Inventory 2,417 -
Goodwill 2,746 -
Other Assets 788 49
Accounts Payable (3,282) (111)
Other Liabilities (4,447) (206)
------- -----
$11,912 $ 500
======= =====
</TABLE>
Goodwill is being amortized over a period of 30 years.
The following table presents proforma information for the combined entities
of Lindberg Corporation, Rexcorp U.S. Inc. and H&H Heat Treating, Inc. for the
twelve months ended December 31, 1994 as if the acquisitions had taken place on
January 1, 1994. Adjustments to the income statement include additional
depreciation and interest charges, the reduction of certain other expenses and
income tax effects.
<TABLE>
<CAPTION>
Unaudited 1994
--------------
<S> <C>
Net Sales (in thousands) $112,567
--------
Net Earnings (in thousands) 4,576
--------
Net Earnings Per Share $ .96
--------
</TABLE>
NOTE 3. INVENTORIES
The components of inventory are: (in thousands)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Raw material $1,678 $ 856
Work in process and finished goods 2,653 559
------ ------
$4,331 $1,415
====== ======
</TABLE>
15
<PAGE> 8
NOTE 4. INCOME TAXES
The major components of the provision (benefit) for income taxes for 1994, 1993
and 1992 are as follows: (in thousands)
<TABLE>
<CAPTION>
Current Deferred Total
------- -------- -------
<S> <C> <C> <C>
1994
Federal $1,933 $ 402 $ 2,335
State 510 79 589
------ -------- --------
$2,443 $ 481 $ 2,924
====== ======== ========
1993
Federal $ 705 $(2,032) $(1,327)
State 148 (548) (400)
------ -------- --------
$ 853 $(2,580) $(1,727)
====== ======== ========
1992
Federal $ 219 $ 58 $ 277
State 71 47 118
------ -------- --------
$ 290 $ 105 $ 395
====== ======== ========
</TABLE>
The provision for income taxes includes deferred tax expense/(benefit)
resulting from timing differences in the recognition of revenue and expense for
tax and financial statement purposes. The sources of these differences and the
tax effect of each are as follows: (in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Depreciation $ 49 $ 349 $ 37
Noncurrent pension expense (8) 33 203
Restructuring activities 402 (3,091) -
Investment tax credit amortization - - (155)
Other 38 129 20
----- ------- -----
$ 481 $(2,580) $ 105
===== ======= =====
</TABLE>
The differences between the provision (benefit) for income taxes at the
statutory rate and that shown in the consolidated statements of earnings are
summarized as follows: (in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Consolidated pretax earnings (loss)
at statutory rate $2,482 $(1,545) $ 455
State income taxes, net of
Federal tax benefit 389 (264) 78
Investment tax credit amortization - - (155)
Other 53 82 17
------ ------- -----
$2,924 $(1,727) $ 395
====== ======= =====
</TABLE>
Effective January 1, 1993, the company adopted SFAS 109. As permitted under
the new rules, prior years' financial statements were not restated. The
cumulative effect of adopting SFAS 109 was to reduce the company's net loss in
1993 by $1,500,000.
Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the company's deferred tax liabilities and assets at December 31, 1994 and
1993 are as follows: (in thousands)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Deferred Tax Liabilities:
Tax depreciation over book $7,357 $5,494
Other liabilities 562 176
------ ------
Total Deferred Tax Liabilities 7,919 5,670
====== ======
Deferred Tax Assets:
Restructuring activities 502 1,578
Reserves not deducted for tax 1,062 261
Employee benefit provisions in
excess of cash payments 1,386 870
Other assets 697 351
------ ------
Total Deferred Tax Assets 3,647 3,060
------ ------
Net Deferred Tax Liability $4,272 $2,610
====== ======
</TABLE>
NOTE 5. DEBT
Long-term debt consists of the following: (in thousands)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Revolving credit $11,600 $7,700
Term loan 6,300 --
Capital lease agreements 301 --
Industrial revenue bond -- 80
------- ------
18,201 7,780
Less-current maturities (1,501) (80)
------- ------
$16,700 $7,700
======= ======
</TABLE>
In April 1994, the company entered into an unsecured credit agreement with two
banks which provides for a line of credit of $20,000,000 and a term loan of
$7,000,000. The agreement will expire in April 1999 unless renewed. At the
company's option, on or prior to the expiration date, all or part of the line
of credit borrowings may be converted to a term loan.
The company may choose from two interest rate alternatives - the bank's
reference rate (prime rate) and a rate based on the Eurodollar. At the
company's option, on not more than one occasion prior to the expiration date,
the interest rate on the term loan may be converted to a quoted or fixed rate.
The effective interest rate for the credit agreement and term loan was 6.0%
during 1994 and 7.6% at year-end.
The agreement also provides for the issuance of letters of credit, as part
of the total unsecured line of credit, up to a maximum of $5,000,000. At
December 31, 1994 the company used $3,800,000 for a letter of credit in
accordance with an insurance agreement.
The interest rate on the industrial revenue bond was 7.25% and the final
installment was paid in December 1994.
Annual maturities of long-term debt, excluding the revolving credit
agreement, for the five years following December 31, 1994 are $1,501,000,
$1,486,000, $1,462,000, $1,451,000 and $701,000, respectively.
16
<PAGE> 9
NOTE 6. EMPLOYEE BENEFITS
The company and its subsidiaries have various pension plans covering
substantially all of their employees. The company also administers 401(k)
savings plans in connection with the acquisitions of Impact Industries and H&H
Heat Treating. The company made contributions of $79,000 to these plans in
1994.
The pension expense for 1994, 1993 and 1992 was $237,000, $306,000 and
$454,000, respectively, which included, as to certain defined benefit plans,
amortization of past service cost over 30 years. The standards utilized by the
company to fund the pension plans satisfy the minimum funding requirements
under the provisions of ERISA.
Net periodic pension cost for 1994, 1993 and 1992 included the following
components: (in thousands)
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Service cost - benefits earned
during the period $ 670 $ 641 $ 695
Interest cost on projected
benefit obligations 1,071 1,105 1,111
Return on plan assets 161 (1,318) (793)
Net amortization and deferral (1,665) (122) (559)
------- ------- ------
$ 237 $ 306 $ 454
======= ======= ======
</TABLE>
Table 1 summarizes the funded status of the plans and provides a reconciliation
to the long-term pension liability recorded on the company's consolidated
balance sheets at December 31, 1994 and 1993.
Table 1: Reconciliation of Funded Status (in thousands)
<TABLE>
<CAPTION>
Assets Accumu- Assets Accumu-
Exceed lated Exceed lated
Accumu- Benefits Accumu- Benefits
lated Exceed ated Exceed
Benefits Assets Benefits Assets
--------- ------- -------- ------
1994 1993
---- ----
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligations:
Vested benefit obligations $ (9,167) $(1,719) $ (9,909) $(1,893)
-------- ------- -------- -------
Accumulated benefit
obligations (9,571) (1,746) (10,390) (1,923)
-------- ------- -------- -------
Projected benefit obligations (12,127) (1,746) (13,384) (1,923)
-------- ------- -------- -------
Plan assets at fair value 13,966 518 14,851 504
-------- ------- -------- -------
Plan assets in excess of
(or less than) projected
benefit obligations 1,839 (1,228) 1,467 (1,419)
Unrecognized net (gain) loss (883) 353 (374) 457
Unrecognized net (assets) obli-
gations amortized over average
remaining service period of
the employee workforce (1,447) 165 (1,620) 193
Unrecognized prior
service cost 237 116 278 124
Long-term balance
sheet liability - (634) - (774)
-------- ------- -------- -------
Long-term pension liability $ (254) $(1,228) $ (249) $(1,419)
======== ======= ======== =======
</TABLE>
The discount rate used in determining the projected benefit obligation was
8.25% in 1994 and 7.25% in 1993. The rate of increase in future compensation
levels and the expected long-term rate of return on assets were 5.0% and 9.0%,
respectively, in both 1994 and 1993.
The company maintains no postretirement or postemployment benefit plans
other than pensions.
NOTE 7. LEASES
The company has a number of lease agreements related to the rental of
production and administrative facilities and equipment. These leases are of
varying terms and extend as far as the year 2007. The company capitalizes all
significant leases which qualify as capital leases.
The following is a schedule of estimated future minimum rental payments
required under leases that have initial or remaining noncancelable terms in
excess of one year as of December 31, 1994: (in thousands)
<TABLE>
<CAPTION>
Operating Capital
Leases Leases
--------- -------
<S> <C> <C>
1995 $1,107 $125
1996 933 100
1997 917 70
1998 893 53
1999 1,044 1
Thereafter 1,459 -
------ ----
Total minimum payment required $6,353 349
----
Less imputed interest (48)
----
Present value of minimum lease payments $301
====
</TABLE>
Sublease income due in 1995 is $81,000. No sublease income is due after 1995.
The total rent expense for 1994, 1993 and 1992 was $856,000, $939,000 and
$1,151,000, respectively.
NOTE 8. STOCK OPTIONS
In 1982, the Board of Directors and shareholders approved a qualified incentive
stock option plan. This plan had reserved 250,000 shares of common stock for
issue upon exercise of options granted under the plan. In 1989, the plan was
amended by the Board of Directors and shareholders to increase the reserve to
450,000 shares. In 1991, the shareholders approved a new stock option plan for
key employees covering a maximum of 300,000 shares. This plan replaced the 1982
plan which expired during 1991. The plan provides for the issue, from time to
time, of options to purchase shares of the company's common stock at prices not
less than 100% of the fair market value of the stock at the time an option is
granted. Information as to options granted, exercised, cancelled and
outstanding under these plans during
17
<PAGE> 10
the past three years is summarized as follows:
<TABLE>
<CAPTION>
Average Option
Shares Price per Share
---------- ---------------
<S> <C> <C>
Outstanding, December 31, 1991 276,700 $7.02
Options granted during year 10,000 5.00
Options cancelled during year (74,200) 8.56
------- -----
Outstanding, December 31, 1992 212,500 6.39
Options granted during year 71,000 3.54
Options cancelled during year (20,000) 6.63
------- -----
Outstanding, December 31, 1993 263,500 5.61
Options granted during year 89,500 7.52
Options exercised during year (14,475) 4.67
Options cancelled during year (20,125) 5.37
------- -----
Outstanding, December 31, 1994 318,400 $6.20
------- -----
</TABLE>
In 1991, the shareholders approved a stock option plan for members of the Board
of Directors who are not employees of the company, covering a maximum of 72,000
shares. Under the terms of this plan, options to purchase an aggregate of
36,000 shares have been granted. The price for these options is $7.00 per
share. At December 31, 1994, 36,000 shares were available for future grant.
NOTE 9. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for 1994 and 1993 are shown in Table 2.
The first quarter 1993 Net Earnings (Loss) includes an $8,261,000 ($5,122,000
after-tax), or $1.09 per share, charge against earnings for the restructuring
of the company's heat treating operations (see Note 12) and a $1,500,000, or
$0.32 per share, gain related to the cumulative effect of the adoption of SFAS
109 (see Note 4).
NOTE 10. BUSINESS SEGMENT INFORMATION
The company is engaged in Heat Treating Services and Precision Products
industry segments. Through its Heat Treating Services segment, it provides
commercial heat treating and consulting services. The Precision Products
segment produces alloy conveyor belts and specialized castings of aluminum.
The products are used mainly in the automotive, construction equipment,
consumer products, defense and food processing industries.
Intersegment and export sales are insignificant. Operating earnings are
defined as sales and other income directly related to a segment's operations,
less operating expenses. Identifiable assets by segment are those assets used
in the company's operations in that segment. Corporate assets are principally
cash, notes receivable and prepaid expenses. Table 3 sets forth certain
financial information for the years ended 1994, 1993 and 1992.
1993 Operating Earnings for the Heat Treating segment include an $8,261,000
($5,122,000 after-tax) charge for restructuring (see Note 12).
Table 2: Quarterly Financial Data (Unaudited)
(in thousands of dollars except for per share amounts)
<TABLE>
<CAPTION>
Net Earnings
Quarter Net Gross Earnings (Loss) Per
Ended Sales Profit (Loss) Share
------- ------ -------- -------- ----------
<S> <C> <C> <C> <C>
1994
March 31 $18,827 $ 4,734 $ 992 $ .21
June 30 26,501 5,901 1,322 .28
September 30 26,919 5,646 1,157 .24
December 31 27,611 4,961 903 .19
------- ------- ------- -------
$99,858 $21,242 $ 4,374 $ .92
------- ------- ------- -------
1993
March 31 $18,004 $ 3,899 $(3,099) $(.66)
June 30 17,438 3,992 646 .14
September 30 16,671 3,475 456 .10
December 31 17,506 3,737 679 .14
------- ------- ------- -------
$69,619 $15,103 $(1,318) $(.28)
------- ------- ------- -------
</TABLE>
NOTE 11. RELATED PARTY
The company holds an 11% equity interest in Thixomat, Inc., a company formed to
promote and commercialize Thixomolding(TM) technology. The Chairman of Thixomat
serves on the Board of Directors of Lindberg, and is also the President and
Chief Executive Officer of University Science Partners, Inc., which holds a 26%
equity interest in Thixomat. In addition, Lindberg holds a seat on Thixomat's
Board of Directors. At December 31, 1994, the company held a $350,000 equity
investment in Thixomat and had a $132,000 investment in related capital
equipment.
Table 3: Business Segment Information (in thousands)
<TABLE>
<CAPTION> Net Operating Identifiable Depreciation Capital
Sales Earnings Assets Expense Expenditures
------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1994
Heat Treating Services $59,512 $ 8,782 $34,959 $3,099 $4,260
Precision Products 40,346 2,904 29,243 1,287 1,848
Corporate - (3,574) 6,320 69 87
------- ------- ------- ------ ------
$99,858 $ 8,112 70,522 $4,455 $6,195
------- ------- ------- ------ ------
1993
Heat Treating Services $56,009 $(2,141) $33,592 $3,235 $2,537
Precision Products 13,610 1,179 6,918 355 529
Corporate - (3,251) 7,094 126 23
------- ------- ------- ------ ------
$69,619 $(4,213) $47,604 $3,716 $3,089
------- ------- ------- ------ ------
1992
Heat Treating Services $57,392 $ 3,880 $40,591 $3,887 $4,487
Precision Products 13,647 1,352 6,793 356 268
Corporate - (3,487) 4,672 177 33
------- ------- ------- ------ ------
$71,039 $ 1,745 $52,056 $4,420 $4,788
------- ------- ------- ------ ------
</TABLE>
18
<PAGE> 11
NOTE 12. RESTRUCTURING
In March 1993, the company recorded a pre-tax charge to earnings of $8,261,000
($5,122,000 after-tax) for the restructuring of its Heat Treating operations.
As a part of this restructuring, the company sold its facilities in Florida and
Georgia and closed its Boston, Massachusetts plant. Also related to this plan,
certain non-productive assets were written off.
NOTE 13. SALE OF 50%-OWNED INTERNATIONAL AFFILIATE
In May 1992, the company sold all of the shares in its 50%-owned international
affiliate, Lindberg do Brasil, for cash and a note receivable. Final payment
on the note was received in June 1994. There was no effect on the company's
earnings in 1992 as a result of this transaction or from that subsidiary's
operations prior to the sale.
NOTE 14. COMMITMENTS AND CONTINGENCIES
The company is a party to various lawsuits and claims arising in the ordinary
course of business. Management, after review and consultation with legal
counsel, considers that any liability resulting from these matters would not
materially affect the financial condition or results of operations of the
company.
The company's Heat Treating Services segment employs some environmentally
hazardous materials, including oil and solvents, and has some underground
storage tanks. The company has made expenditures to comply with
laws and regulations relating to the protection of the environment, including
studies, investigations and remediation of ground contamination, and expects to
make such expenditures in the future in its efforts to comply with existing and
future requirements. While such expenditures to date have not materially
affected the company's capital expenditures, competitive position, financial
condition or results of operations, there can be no assurance that more
stringent regulation or enforcement in the future will not have such effects.
In some cases, the company has notified state authorities of a possible need
for remediation at sites it previously operated, or, in one case, currently
operates. At all such sites, costs which may be incurred are difficult to
accurately predict until the level of contamination is determined, and would be
subject to increase if more contamination is discovered during investigation or
remediation or if state authorities require more remediation than anticipated.
Such costs may be less if the contamination proves to be less than currently
expected and to the extent costs are covered by insurance or are allocable to
others. The company has estimated a range of costs in establishing the reserves
noted below.
The company has also been notified by various state and federal
governmental authorities that they believe it may be a "potentially responsible
party" or otherwise have responsibility with respect to clean-up obligations at
certain hazardous and other waste disposal sites which were never owned or
operated by the company. In some such cases, the company has effected
settlements with the relevant authorities for immaterial amounts. In other such
cases, the company is participating in negotiations for settlement with the
relevant authorities or other parties believed by the company to be responsible
or has notified the authorities that it denies responsibility for clean-up
obligations. Management believes that the ultimate outcome will not have a
material effect on the company's financial condition or results of operations.
At December 31, 1994, the company had reserves of approximately $1.6 million
to cover future anticipated costs. Such reserves give no effect to possible
recoveries from insurers or other potentially responsible parties nor do they
reflect any discount for the several years over which investigation or
remediation amounts may be paid out.
19
<PAGE> 12
SIX YEAR FINANCIAL REVIEW
<TABLE>
<CAPTION>
For the Years Ended December 31,
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS (In thousands of dollars)
Net Sales $ 99,858 $ 69,619 $ 71,039 $ 73,819 $ 76,141 $ 78,958
Gross Profit 21,242 15,103 14,662 15,977 20,407 20,047
Interest Expense 891 409 511 424 635 1,050
Earnings (Loss) Before Income Taxes 7,299 (4,544) 1,337 449 5,301 4,479
Provision (Benefit) for Income Taxes 2,925 (1,726) 395 322 2,096 1,614
---------- ---------- ---------- ---------- ---------- ----------
Net Earnings (Loss)(1) $ 4,374 $ (1,318) $ 942 $ 127 $ 3,205 $ 2,865
---------- ---------- ---------- ---------- ---------- ----------
Net Earnings (Loss) Per Share(1) $ .92 $ (.28) $ .20 $ .03 $ .68 $ .61
========== ========== ========== ========== ========== ==========
FINANCIAL POSITION (In thousands
of dollars)
Working Capital $ 8,607 $ 6,550 $ 8,012 $ 7,384 $ 6,380 $ 9,656
Property and Equipment (net) 38,858 28,265 33,706 33,672 31,151 29,765
Total Assets 70,522 47,604 52,056 51,329 47,876 49,466
Long-Term Debt 16,700 7,700 9,480 8,660 5,440 9,355
Total Debt 18,201 7,780 9,560 8,940 5,730 9,665
Shareholders' Equity 24,669 21,155 23,462 23,614 24,727 23,297
========== ========== ========== ========== ========== ==========
OTHER FINANCIAL INFORMATION
Cash Dividends Declared and Paid
(In thousands of dollars) $ 989 $ 941 $ 1,126 $ 1,311 $ 1,321 $ 1,323
Cash Dividends Per Share .21 .20 .24 .28 .28 .28
Return on Average Shareholders' Equity(1) 19.1% (5.9%) 4.0% .5% 13.4% 12.8%
Book Value Per Share of
Shareholders' Equity $ 5.23 $ 4.50 $ 5.00 $ 5.04 $ 5.30 $ 4.93
Debt/Capitalization Ratio 42% 27% 29% 27% 19% 29%
Shares Outstanding at Year End 4,717,016 4,702,541 4,692,541 4,682,541 4,669,207 4,724,874
Capital Expenditures
(In thousands of dollars) $ 6,195 $ 3,089 $ 4,788 $ 6,627 $ 5,183 $ 4,447
Depreciation (In thousands of dollars) 4,455 3,716 4,420 4,102 3,763 3,734
Number of Employees at Year End 1,168 737 760 803 880 965
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
(1) 1993 includes a provision of $8,261,000 ($5,122,000 after-tax) for the
restructuring of the company's heat treat operations and a gain of $1,500,000
representing the cumulative effect of adopting SFAS 109, Accounting for Income
Taxes.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Lindberg Corporation:
We have audited the accompanying consolidated balance sheets of Lindberg
Corporation (a Delaware Corporation) and Subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of earnings, shareholders'
equity and cash flows for the years ended December 31, 1994, 1993 and 1992.
These financial statements are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Lindberg
Corporation and Subsidiaries as of December 31, 1994 and 1993 and the results
of its operations and its cash flows for the years ended December 31, 1994,
1993 and 1992, in conformity with generally accepted accounting principles.
As explained in Note 4 to the consolidated financial statements, effective
January 1, 1993, the company changed its method of accounting for income taxes.
Arthur Andersen LLP
Chicago, Illinois
January 20, 1995
20
<PAGE> 13
<TABLE>
<CAPTION>
DIRECTORS, OFFICERS, STOCK MARKET
AND SHAREHOLDER INFORMATION DIRECTORS OFFICERS
<S> <C> <C>
George H. Bodeen (2)(3) George H. Bodeen
Chairman of the Board Chairman of the Board
Dr. Raymond F. Decker (1) Leo G. Thompson
President and Chief Executive Officer President
University Science Partners, Inc. and Chief Executive Officer
Chairman Thixomat, Inc.
Stephen S. Penley
John W. Puth (1)(2)(3) Senior Vice President and
President, J. W. Puth Associates Chief Financial Officer
Chairman, American Lantern Company Secretary
J. Thomas Schanck (1)(2) Michael W. Nelson
Retired Vice Chairman Senior Vice President and
Illinois Tool Works, Inc. Manager of Heat Treat Operations
Leo G. Thompson (3)(4) Terrence D. Brown
President and Chief Executive Officer Vice President
COMMITTEES OF THE BOARD: Geoffrey S. Calhoun
1. Audit Vice President
2. Executive Compensation
3. Finance Roger J. Fabian
4. Directors Stock Option Vice President
Paul J. McCarren
Vice President
Brian M. Harris
Assistant Treasurer
STOCK MARKET INFORMATION SHAREHOLDER INFORMATION
The company's common stock trades on STOCK TRANSFER AGENT AND REGISTRAR ANNUAL MEETING
The NASDAQ Stock Market under the Harris Trust & Savings Bank The annual shareholders' meeting
symbol LIND. Stock price quotations can Chicago, Illinois will be held on Wednesday, April 26,
be found in national listings in many daily 1995 at 9 a.m., in the auditorium
newspapers. High and low market prices INDEPENDENT PUBLIC ACCOUNTANTS at Riverway, 6133 N. River Road,
and dividend payments during the past Arthur Andersen LLP Rosemont, Illinois. A
two years are as follows: Chicago, Illinois formal notice of the meeting will be
mailed to shareholders on or about
1994 Market Price Dividend GENERAL COUNSEL April 1, 1995.
Quarter High Low Per Share Bell, Boyd & Lloyd
----------------------------------------- Chicago, Illinois
1st $6.500 $4.125 $.05
2nd 8.250 5.750 .05 CORPORATE OFFICES FORM 10-K
3rd 8.750 6.500 .05 Lindberg Corporation A copy of the company's Annual
4th 8.500 6.250 .06 6133 N. River Road Report to the Securities and
----------------------------------------- Suite 700 Exchange Commission (Form 10-K), for
$.21 Rosemont, Illinois 60018 the year ended December 31, 1994,
(708) 823-2021 is available to any shareholder upon
1993 Market Price Dividend written request to the Secretary
Quarter High Low Per Share of the Company, 6133 N. River Road,
----------------------------------------- Suite 700, Rosemont, Illinois,
1st $5.750 $3.500 $.05 60018
2nd 5.000 3.500 .05
3rd 4.500 3.500 .05
4th 4.750 4.000 .05 [RECYCLED PAPER LOGO]
----------------------------------------- Printed on recycled paper
$.20
</TABLE>
<PAGE> 1
Exhibit 22
SUBSIDIARY OF REGISTRANT
Name Where Incorporated
Impact Industries, Inc. Delaware
<PAGE> 1
Exhibit 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 10-K into the Company's previously filed
Registration Statement File No. 33-47323.
Chicago, Illinois
March 28, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND IS QUALIFIFED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 111,060
<SECURITIES> 0
<RECEIVABLES> 17,015,894
<ALLOWANCES> 264,000
<INVENTORY> 4,331,267
<CURRENT-ASSETS> 25,886,726
<PP&E> 90,326,887
<DEPRECIATION> 51,469,024
<TOTAL-ASSETS> 70,521,568
<CURRENT-LIABILITIES> 17,279,241
<BONDS> 0
<COMMON> 14,183,493
0
0
<OTHER-SE> 10,485,023
<TOTAL-LIABILITY-AND-EQUITY> 70,521,568
<SALES> 99,858,339
<TOTAL-REVENUES> 99,858,339
<CGS> 78,616,438
<TOTAL-COSTS> 78,616,438
<OTHER-EXPENSES> 13,129,634
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 891,455
<INCOME-PRETAX> 7,298,810
<INCOME-TAX> 2,924,436
<INCOME-CONTINUING> 4,374,374
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,374,374
<EPS-PRIMARY> .92
<EPS-DILUTED> .92
</TABLE>
