SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as
permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MacDermid, Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
(MacDermid)
(Logo)
MACDERMID, Incorporated
245 Freight Street
Waterbury, CT. 06702-0671
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 20, 1995
The Annual Meeting of Shareholders of MacDermid, Incorporated
("MacDermid") will be held at the Holiday Inn Waterbury, 63 Grand
Street, Waterbury, Connecticut, on Thursday, July 20, 1995 at 3:30 P.M.
EDT, for the following purposes:
1. To elect five directors to hold office until the next annual
meeting and until their successors are elected and qualified;
2. To consider and act upon a proposal to approve the
MacDermid, Incorporated 1995 Equity Incentive Plan; and
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 1,
1995 as the record date for the determination of shareholders who will
be entitled to notice of and to vote at the meeting.
You are requested to promptly vote, date and sign the enclosed
proxy and return it in the enclosed postage-paid envelope at your
earliest convenience prior to the meeting. Because it is impractical to
eliminate duplication, separate proxies are mailed to persons whose
names are shown in more than one way on MacDermid's stock records.
Therefore, you may receive more than one proxy. Please vote, date, sign
and return all proxies received.
If you are an employee participating in MacDermid's Employee Profit
Sharing or Employee Stock Ownership Plans, you will receive separate
instructions covering shares held for your account in such plan or
plans.
Your proxy vote is very important. Prompt return of all your
proxies will minimize proxy solicitation expense, assure a quorum and
avoid confusion and delay at the meeting.
By Order of the Board of Directors,
Waterbury, Connecticut JOHN L. CORDANI
June 26, 1995 Corporate Secretary
IN ORDER TO AVOID UNNECESSARY EXPENSE, we urge you to indicate voting
instructions on the enclosed proxy and date, sign and return it promptly
PRIOR to the meeting in the envelope provided, no matter how large or
small your holdings may be.
<PAGE>
(MacDermid
(Logo)
MACDERMID
Incorporated
245 Freight Street
Waterbury, Connecticut 06702-0671
PROXY STATEMENT GENERAL
The accompanying proxy is being solicited by the Board of Directors
of MacDermid, Incorporated ("MacDermid") for use at the annual meeting
of shareholders of MacDermid and at any and all adjournments thereof
(the "Meeting") to be held, pursuant to the accompanying Notice of
Annual Meeting of Shareholders, at Holiday Inn Waterbury, 63 Grand
Street, Waterbury, Connecticut on Thursday, July 20, 1995 at 3:30 P.M.,
EDT.
Each holder of MacDermid's common stock (the "Common Stock") is
entitled to one vote per share on each matter to be brought before the
Meeting. Valid proxies will be voted as specified thereon at the
Meeting. Any shareholder giving a proxy in the accompanying form (a
"Proxy") retains the power to revoke it at any time prior to the
exercise of the powers conferred thereby by (1) delivering written
notice of such revocation to John L. Cordani, Corporate Secretary,
MacDermid, Incorporated, 245 Freight Street, Waterbury, Connecticut
06702-0671; (2) delivering to the Corporate Secretary a duly executed
Proxy or other proxy form bearing a date subsequent to the date on the
given Proxy; or (3) appearing at the Meeting and requesting to vote his
or her shares in person. Any shareholder who attends the Meeting in
person will not be deemed thereby to revoke the Proxy unless such
shareholder affirmatively indicates at the Meeting his intention to vote
the shares in person.
Unless a shareholder provides contrary instructions on a Proxy, all
shares represented by the Proxy (if not revoked before such shares are
voted) will be voted for the election of the nominees for directors
named below, for approval of the MacDermid, Incorporated 1995 Equity
Incentive Plan, and by the persons granted the proxies in their
discretion on any other business properly to come before the Meeting.
MacDermid has retained D.F. King & Co., Inc. of New York, New York
("King") to assist with the solicitation of Proxies and the mailing and
distribution of proxy material. The anticipated cost of King's
services, including reimbursement for expenses, is approximately $8,500.
MacDermid will bear the cost of the solicitation of Proxies, which may
include the reasonable expenses of brokerage firms and others for
forwarding Proxies and proxy material to the beneficial owners of Common
Stock of MacDermid. In addition to the use of the mails, Proxies may be
solicited by King and by regular employees of MacDermid personally or by
telephone or telegram. Votes will be counted by employees of Harris
Trust Company of New York, New York ("Harris"), the Corporation's
transfer agent. Harris will also provide an Inspector of Election who
will certify the votes at the meeting of shareholders.
Only holders of Common Stock of record at the close of business on
June 1, 1995 are entitled to notice of and to vote at the Meeting. On
that date there were 2,767,533 shares of Common Stock outstanding and
entitled to be voted. Holders of a majority of such outstanding shares,
present in person or represented by proxy, will be necessary to
constitute a quorum at the Meeting. If a quorum is present, the
affirmative vote of a majority of the shares present in person or
represented by proxy at the Meeting will be necessary for the election
of each nominee for director and for approval of the MacDermid,
Incorporated 1995 Equity Incentive Plan. Abstentions and broker non-
votes are counted for purposes of determining the presence or absence of
a quorum. Abstentions are counted in determining the shares represented
at the Meeting with respect to each proposal presented to shareholders,
but broker non-votes are not counted for such purpose.
Any shares held for the account of a shareholder who participates
in the MacDermid Dividend Reinvestment Plan will be voted automatically
with the shareholder's other shares of Common Stock as directed by the
shareholder on the enclosed Proxy.
The approximate date on which this Proxy Statement and the
accompanying Proxy are first sent to shareholders is June 26, 1995.
MacDermid's Annual Report to Shareholders, containing financial
statements for the fiscal year ended March 31, 1995, accompanies these
proxy materials to each shareholder.
(EVERY SHAREHOLDER'S VOTE IS IMPORTANT)
Please complete, sign and return your proxy card in the enclosed
envelope.
<PAGE>
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors, pursuant to the By-Laws, has fixed at five
the number of directors to be elected at the Meeting. Shares
represented by Proxies will be voted for the election of the nominees
for director listed below, unless otherwise indicated. Each director of
MacDermid shall serve until the next annual meeting and until his
successor has been elected and qualified. All the nominees are
currently directors of MacDermid.
Management has no reason to believe that any nominee named below
will be unable to serve as a director. If at the time of the Meeting a
nominee should be unable to stand for election, it is the intention of
the persons granted the Proxies to vote in their discretion for such
person as may be designated as a nominee by the Board of Directors of
MacDermid.
Messrs. Walter F. Torrance, Jr., Robert F. Weltzien, and Francis M.
White are retiring as Directors and will not be standing for re-election
as Directors, posts in which they have served well and faithfully for
many years.
The following information has been provided by each director
nominee.
-Nominees for Director-
HAROLD LEEVER Mr. Leever joined MacDermid (Full face photo of
in 1938. He was elected President in 1954 and Harold Leever will
Chairman of the Board in 1977. Mr. Leever is be placed here.)
active in a number of organizations concerned
with education, health and youth development.
Mr. Leever has a B.S. degree in Chemical
Engineering from Michigan State University.
Principal occupation - Chairman of the Board of MacDermid
Director since 1947
207,035 shares - 7.48% (1)
Chairman of the Executive and Nominating Committees.
Age: 81
- ------------------------------------------------------------------------
<PAGE>
--Nominees for Director --
(Full face photo of DANIEL H. LEEVER Mr. Leever joined
Daniel H. Leever will MacDermid in 1982. In 1989, he was
be placed here) appointed Senior Vice President and
Chief Operating Officer. In the
following year, he was appointed President
and Chief Executive Officer. Mr. Leever
attended undergraduate school at Kansas
State University and the Graduate School at
the University of New Haven School of
Business.
Principal occupation -President and Chief Executive Officer of MacDermid
Director since 1989
124,803 shares - 4.38% (3)
Member of the Executive and Nominating Committees
Age: 46
- ------------------------------------------------------------------------
DONALD G. OGILVIE - Mr. Ogilvie is the
Executive Vice President of the American
Bankers Association. He was from 1980 to
1985 a Vice President of Celanese Corporation (Full face photo of
and from 1977 to 1980 Associate Dean of Yale Donald G. Ogilvie
University's School of Organization and Management. will be placed here)
Earlier he held posts in the U.S. Department of
Defense and in the Executive Office of the President
as Associate Director National Security and
International Affairs in the Office of Management
and Budget. Mr. Ogilvie has a B.A. degree from Yale
University and an M.B.A. from Stanford University's
School of Business.
Principal occupation - Executive Vice President of American Bankers
Association
Director since 1986
708 shares - *(2)
Member of the Audit, Compensation, Executive and Nominating Committees.
Age: 52
<PAGE>
--Nominees for Director--
(Full face photo of JAMES C. SMITH Mr. Smith is Chairman of
James C. Smith the Board and Chief Executive Officer of
will be placed here) Webster Financial Corporation and its
its subsidiaries, First Federal Bank of
Waterbury, Connecticut and Bristol Savings
Bank of Bristol, Connecticut. He also
serves and has served since prior to 1987
as President of Webster and First Federal.
Mr. Smith is active in a number of
organizations dedicated to enhancing the
quality of life in the communities served
by Webster. Mr. Smith has an AB degree
from Dartmouth College.
Principal occupation - Chairman of the Board and Chief Executive Officer
of Webster Financial Corporation and its subsidiaries, First Federal
Bank and Bristol Savings Bank.
Director since 1994
1,000 shares - * (2)
Member of the Audit, Compensation, Executive and Nominating Committees.
Age: 46
- ------------------------------------------------------------------------
THOMAS W. SMITH Mr. Smith is and since 1973 (Full face photo of
has been the President of Prescott Investors, Thomas W. Smith will
Inc. He is on the board of directors of Lawson be placed here)
Products, Inc. and The New York City Technical
College Foundation. Mr. Smith has a B.A. degree
from Miami University and an M.A. from the
University of California at Berkeley.
Principal occupation - President of Prescott Investors, Inc.
Director since 1989
211,460 shares - 7.64%(4)
Chairman of the Audit and Compensation Committees and a member of the
Executive and Nominating Committees
Age: 67
- ------------------------------------------------------------------------
* Indicates less than 1% of the outstanding shares of Common Stock.
<PAGE>
Notes to Election of Directors
(1) Includes 21,900 shares owned by his wife, Ruth Ann Leever, as
to all of which shares Mr. Leever disclaims any beneficial interest, and
5,520 shares held by MacDermid's Profit Sharing and Employee Stock
Ownership Plans. Mr. Leever has sole voting power with respect to
179,615 shares. The Bank of Boston Connecticut, as trustee of a
revocable trust, may have or succeed to the rights to vote 150,275
shares. A portion of the information for Mr. Leever was obtained from
his amended Schedule 13G dated February 13, 1995. MacDermid has entered
into an agreement with Mr. Leever that up to the greater of $522,988 or
the then face amount of a life insurance policy held by MacDermid on Mr.
Leever's life will be used to purchase a portion of his MacDermid shares
upon his death. The total purchases to be made are not to exceed the
total of the state and federal estate taxes and funeral and
administration expenses of Mr. Leever's estate. The price per share of
such purchase is to be the market price at the time of death.
(2) Owner has sole investment and voting power.
(3) Includes 8,973 shares held by MacDermid's Profit Sharing and
Employee Stock Ownership plans, 7,500 and 20,000 shares which are
subject to restrictions on transfer until May 30, 1998 and May 17, 1999
respectively under the Special Stock Purchase Plan and 80,000 shares
which may be acquired upon exercise of options granted under the Special
Stock Purchase Plan. Also includes 7,062 shares held in trust by Mr.
Leever for his minor son and 202 shares owned by his spouse, as to both
of which Mr. Leever disclaims beneficial interest.
(4) Includes 201,012 shares held by partnerships in which Mr. Smith
is a general partner and 5,000 shares held by Prescott Investors, Inc.
Employee Profit Sharing Plan, as to all of which Mr. Smith shares voting
and investment power. A portion of the information for Prescott
Investors, Inc. is taken from its amended Schedule 13D dated August 3,
1990.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee has furnished the following report on
executive compensation in the fiscal year ended March 31, 1995.
EXECUTIVE OFFICER COMPENSATION
The Compensation Committee is primarily responsible for
implementing MacDermid's overall executive officer compensation policy
of compensating MacDermid's executive officers with base salaries
competitive with those of comparable companies, rewarding exceptional
performance where appropriate and providing incentive for future such
performance through incentive bonuses and equity incentives.
MacDermid's executive compensation has three basic components: base
annual salary, incentive bonus and equity incentives (long term
compensation).
In establishing levels of annual salary, incentive bonus and equity
incentives, the Committee generally considers the following factors: (i)
the compensation policies and practices of competitive and other
businesses, (ii) the level and degree of responsibility of each officer,
(iii) the level of compensation and equity incentives which would be
required to attract and hold qualified and experienced officers, (iv)
the individual and collective performance and achievements of
MacDermid's executive officers and (v) MacDermid's performance, growth
and achievements relative to the industries in which MacDermid competes.
MacDermid uses a comparator group of companies, some of which are in
the specialty chemicals industry, (the "Comparator Group") to serve as a
factor for determining the appropriate cash and equity incentive components
of the program. The companies in the Comparator Group are selected based
upon their similarity to MacDermid, as determined by total revenue and
other relevant factors. Earnings trends, return on equity and other
performance measures are compared. The size and composition of the
Comparator Group may change from year to year. The Comparator Group
differed from the group of companies included in the Media General
Specialty Chemical stock index used in the Comparative Stock Performance
graph on page 9. The Media General Specialty Chemical stock index,
which consists of approximately 70 companies, is too unwieldy to use for
compensation purposes because of the large number of companies and their
disparate compensation practices. The Comparator Group is not used in
the performance graph principally because of the need to maintain
consistency in the indices or peer groups used in the graph.
Before considering the other compensation factors discussed above,
the Committee targets base annual compensation at a level which,
together with incentive bonuses, would provide cash compensation to
individual executives at below median market compensation levels for
poor corporate performance, at median market compensation levels for
good corporate performance, and above median market compensation levels
for excellent corporate performance.
Executive officers were eligible to receive incentive bonuses
pursuant to MacDermid's Executive Incentive Bonus Plan, the purpose of
which is to motivate executive officers to use their best efforts to
enhance shareholder value through improvements in MacDermid's financial
performance. The Committee uses a formula as a guide in determining the
initial amount of the executive incentive bonus. The formula utilizes
the following three factors, each of which is given equal weight: (i)
the increase in consolidated earnings per share averaged over the most
recent two-year period (the "EPS Change"), (ii) the relationship of
net earnings to net sales ("ROS") and (iii) the relationship of net
earnings to average shareholders' equity ("ROE"). An incentive bonus
is paid with respect to a particular factor only if the EPS Change, ROS
or ROE equal or exceed 3%, 4% and 14%, respectively. The amount of
incentive bonus that is actually paid to executive officers is subject
to adjustment by the Committee.
During the fiscal year ended March 31, 1995 MacDermid's executive
officers were eligible to receive equity incentives under the MacDermid
Special Stock Purchase Plan (the "Plan"). The Committee administers
the Plan, which was approved by MacDermid's shareholders in 1992, and
awards equity incentives to executives and other employees of MacDermid.
The purpose of awarding equity incentives under the Plan is to enable
MacDermid to attract, retain and motivate its employees to exert their
best efforts to enhance shareholder value by giving them the ability to
participate in the long-term growth of MacDermid. The Committee
generally considers the same factors in establishing the amounts of
equity awards for MacDermid's executive officers as those listed above.
The amounts of the awards are based upon the relative position of each
executive officer within MacDermid and individual performance
independent of the terms and amount of awards previously granted.
Equity incentives awarded under the Plan are in the form of options
to purchase a specified number of restricted shares of MacDermid Common
Stock at an exercise price equal to 66.6% of the market price of the Common
Stock on the date of award. The options are exercisable only during the
four-year period beginning on the date of award. The shares of Common Stock
acquired upon any exercise are treated as restricted stock for a period of
four years commencing on the date of exercise. Such shares may not be sold
during such period (other than to MacDermid at the exercise price) and must
be resold to MacDermid at the exercise price if the Plan participant's
employment with MacDermid is terminated during such period, except in the
case of death, retirement, permanent disability or involuntary termination
without cause. Such restrictions may, however, be waived by the Committee
in its discretion from time to time. The Committee believes that the Plan
allows executive officers to participate in the enhancement of shareholder
value but only after requiring them to share in the risk of share ownership
by holding restricted stock for a period of four years.
CHIEF EXECUTIVE OFFICER COMPENSATION
The base annual salary and incentive bonus for Daniel H. Leever, MacDermid's
Chief Executive Officer, were determined utilizing the methods and factors
discussed above. Mr. Leever's base annual salary was set at $275,000 in
Fiscal Year 1995 based upon the foregoing factors and additional
consideration including the growth of MacDermid's earnings to record levels
and the Committee's appraisal of the effectiveness of programs instituted
by Mr. Leever. Mr. Leever received a bonus for the fiscal year ended March
31, 1995 based on the stated bonus factors, each of which exceeded the
minimum requirements for payment of a bonus, and adjusted to recognize
programs implemented to improve the Corporation's capital structure, which,
in the opinion of the Committee, will benefit the shareholders. MacDermid's
performance during the fiscal year ended March 31, 1995 placed MacDermid
solidly in the upper range of the Comparator Group. Approximately one-half
of the incentive bonus was paid with respect to the EPS change with the
balance attributable to the ROS and the ROE. During the fiscal year, Mr.
Leever received the award of an option to purchase 25,000 shares of Common
Stock. The size of the award was equal to the award that Mr. Leever
received in fiscal 1994. In determining the size of the award, the
Committee considered the likely effect upon shareholder value of the
success of the programs proposed and embarked upon by Mr. Leever.
Respectfully submitted by,
THE COMPENSATION COMMITTEE
Thomas W. Smith, Chairman
Donald G. Ogilvie
James E. Smith
Walter F. Torrance, Jr.
Robert F. Weltzien
Francis M. White
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table summarizes annual, long-term and
other compensation paid by MacDermid and its subsidiaries for each of its
three fiscal years ended March 31, 1995 to MacDermid's Chief Executive
Officer and four other most highly compensated executive officers.
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- -----------------------
Securities
underlying All other
Name and Salary Bonus options compensation
principal position Year ($) <F1> ($) <F5> (#) ($) <F2>
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Daniel H. Leever 1995 287,000 481,250 25,000 35,268
President and 1994 260,724 125,000 25,000 17,752
Chief Executive 1993 226,600 125,000 25,000 15,854
Officer
Charles T. Cobb <F3> 1995 123,732 150,000 8,000 113,786
Vice President 1994 61,047 4,900 5,000 12,879
1993 - - - -
Terrence C. Copeland 1995 124,500 180,000 5,000 24,301
Vice President 1994 119,492 30,000 2,000 21,016
1993 113,300 43,449 5,000 8,728
Michael A. Pfaff 1995 126,750 180,000 10,000 20,273
Vice President 1994 109,969 105,000 5,000 14,480
1993 103,393 73,736 5,000 10,809
Charles D. Rice <F4> 1995 147,676 209,375 15,000 24,354
Vice President 1994 140,180 50,000 5,000 22,994
Chief Financial 1993 120,345 46,469 5,000 18,114
Officer and
Treasurer
<FN>
<F1> Salary figures include certain amounts which, previous to 1992,
would have been included in MacDermid's contribution to the Profit
Sharing Plan. Employees generally have the right to contribute this
amount to the Profit Sharing Plan under 401(k) rules. However, due to
limitations imposed by Internal Revenue Service Rules, certain executive
officers are prevented from making such a contribution and receive the
amount as additional cash compensation.
<F2> Amounts listed for 1995 include payments by MacDermid for premiums
for split dollar life insurance in the amounts of $4,384, $27,984,
$5,984 and $9,679 on behalf of, respectively, Messrs. Leever, Cobb,
Copeland, Pfaff and Rice; contributions to the E.S.O.P. in the amounts
of $3,110, $3,500, $2,250 and $3,583 on behalf of, respectively, Messrs.
Cobb, Copeland, Pfaff and Rice; moving expense reimbursement in the
amount of $72,351 on behalf of Mr. Cobb; contributions to the Profit
Sharing Plan in the amounts of $29,792, $9,265, $11,172, $11,172 and
$14,151 on behalf of, respectively, Messrs. Leever, Cobb, Copeland,
Pfaff and Rice; and premiums for term life insurance in the amounts of
$1,092, $1,076, $1,416, $1,541 and $524 on behalf of, respectively,
Messrs. Leever, Cobb, Copeland, Pfaff and Rice.
<F3> Annual compensation for Mr. Cobb is shown only for the periods
following his appointment as executive officer.
<F4> Mr. Rice resigned as an executive officer of MacDermid effective
April 15, 1995.
<F5> Amounts listed for 1995 include a portion which has not been paid
but which may be paid in restricted stock, subject to approval of the
MacDermid,Incorporated 1995 Equity Incentive Plan by the Shareholders,
and subject to the discretion of the Compensation Committee.
</TABLE>
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to stock options granted to the
Chief Executive Officer and the named executive officers during the fiscal year ended
March 31, 1995.
Individual Grants
__________________________________________________________________________________________
<CAPTION>
Potential realizable value
Percent value at assumed annual
Number of of total rates of stock price
securities options appreciation for option term <F2>
underlying granted to Exercise Market ----------------------------------
options employees or base price
granted in fiscal price on Date Expiration
Name (#) <F1> year ($/Sh) of Grant date 0%($) 5%($) 10%($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel H. Leever 25,000 25.9% $16.1505 $24.44 4/18/98 $202,488 $491,945 $895,788
Charles T. Cobb 8,000 8.3% $16.1505 $24.44 4/18/98 $ 64,796 $157,422 $286,652
Terrence C. 5,000 5.2% $16.1505 $24.44 4/18/98 $ 40,498 $ 98,389 $179,158
Copeland
Michael A. Pfaff 10,000 10.4% $16.1505 $24.44 4/18/98 $ 80,995 $196,778 $358,315
Charles D. Rice 15,000 15.5% $16.1505 $24.44 4/18/98 $121,493 $245,167 $537,473
<FN>
<F1> Shares of Common Stock acquired upon exercise of an option are
treated as restricted stock for a period of four years commencing on the
date of exercise. Such shares may not be sold during such period (other
than to MacDermid at the exercise price) and must be resold to MacDermid
at the exercise price if the participant's employment with MacDermid is
terminated during such period, except in the case of death, retirement,
permanent disability or involuntary termination without cause. Such
restrictions may, however, be waived by the Compensation Committee in
its discretion from time to time.
<F2> Amounts are based upon an actual option term together with a
restricted period totaling eight years. At the end of eight years, the total
value of the 2,742,533 shares owned as of March 31, 1995 by the shareholders
of MacDermid at 5% and 10% compounding from the market price on the date of
grant would be approximately $35.83 and $51.98 per share or an aggregate value
for all shares of $98,265,000 and $142,557,000, respectively.
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to the aggregate
number of unexercised options held on such date by the Chief Executive Officer
and the named executive officers as of March 31, 1995.
<CAPTION>
Number of Value of
Shares Securities underlying unexercised
acquired unexercised in-the-money
on Value options at options at
exercise realized FY-end (#) <F2> FY-end ($)
Name # $ <F1> Exercisable/ Exercisable
Unexercisable <F2><F3>
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel H. Leever 7,500 $ 71,985 92,500 $2,443,203
Charles T. Cobb 13,000 $ 344,881
Terrence C.Copeland 16,000 $ 424,764
Michael A. Pfaff 2,050 $ 50,938 21,268 $ 559,615
Charles D. Rice 10,000 $191,830 20,000 $ 532,828
<FN>
<F1> Value is determined as the spread between the exercise price
and the market price on the date of exercise.
<F2> All options were exercisable on the date of grant and at March 31,
1995.
<F3> Calculated using a market value per share at March 31, 1995 of
$43.00 as reported by the Nasdaq Stock Market.
</TABLE>
EMPLOYEES PENSION PLAN
The MacDermid Employees Pension Plan (the 'Pension Plan) is a qualified
defined benefit plan. Pension payments may be made under the Pension Plan
upon normal retirement commencing when an executive reaches age 60 based
upon credited years of service up to a maximum of 30 years. Annual benefits
are calculated on a single-life annuity basis and are subject to offsets for
(i) amounts based on the value of the executive's interest in the Profit
Sharing Plan as of March 31, 1976, if any, and (ii) 0.45% of the lesser of
covered compensation or final average compensation, as defined by the
Internal Revenue Service Code (the "Code") Section 401(1), multiplied by
the years of service.
Under the MacDermid, Incorporated Supplemental Executive Retirement
Plan (the "Supplemental Plan"), executive officers are entitled to the
difference between the benefits actually paid to them under the Pension
Plan and the benefits which they would have received under the Pension
Plan were it not for certain restrictions imposed under the Code relating
to the amount of benefits payable under the Pension Plan and the amount of
annual compensation which may be taken into account in determining benefits
under the Pension Plan.
Assuming that there are no changes in the Pension Plan and that
participants historically have had earnings at least equal to the maximum
Social Security wage base in each year of employment with MacDermid, the
following table illustrates the estimated annual benefit payable for life
under the Pension Plan and the Supplemental Plan to an employee retiring
at age 60 on March 31, 1995 with maximum service under the Plan of up to
30 years. These benefits neither reflect an offset for the participant's
March 31, 1976 interest in the Profit Sharing Plan nor do they recognize
a Social Security supplement which is payable under the Pension Plan until
the employee reaches age 65.
<TABLE>
ESTIMATED ANNUAL PENSION PAYABLE AT NORMAL RETIREMENT
BASED ON YEARS OF SERVICE INDICATED
<CAPTION>
Final Average
Earnings 10 Years 15 Years 20 Years 25 Years 30 Years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$150,000 21,049 31,573 42,097 52,621 63,146
$200,000 28,549 42,823 57,097 71,371 85,646
$250,000 36,048 54,073 72,097 90,121 108,145
$300,000 43,548 65,323 87,097 108,871 130,645
$350,000 51,048 76,573 102,097 127,621 153,145
$400,000 58,548 87,823 117,097 146,371 175,645
$450,000 66,048 99,073 132,097 165,121 198,145
$500,000 73,548 110,323 147,097 183,871 220,645
$600,000 88,548 132,823 177,097 221,371 265,645
$700,000 103,548 155,323 207,097 258,871 310,645
$800,000 118,548 177,823 237,097 296,371 355,645
</TABLE>
Covered compensation under the Pension Plan includes an employee's
annual salary and bonus, which, for the Chief Executive Officer and four
other named executive officers, is set forth in the Summary Compensation
Table. Messrs. Leever, Cobb, Copeland, Pfaff, and Rice have 14, 20, 5,
13, and 5 years of credited service, respectively, under the Pension Plan.
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph and chart compare, during the five-year period
commencing March 31, 1990 (at the market close) and ending March 31, 1995,
the annual change in the cumulative total return on MacDermid's Common
Stock with the Nasdaq Stock Market (U.S. & Foreign) and the Media General
Specialty Chemicals Stock indices, assuming the investment of $100 on March
31, 1990 (at the market close) and the reinvestment of any dividends.
FIVE YEAR CUMULATIVE TOTAL RETURN
(Graph)
(The graph provided here has three data lines. Each line provides a
representation of the cumulative total return achieved on MacDermid Common
Stock, the Nasdaq Stock Market (U.S. and Foreign) and the Media General
Specialty Chemicals Stock indices, respectively. The three lines each begin
at $100 and then diverge, connecting each of their respective five other
data points. The lines for the Nasdaq Stock Market and for Specialty
Chemicals are similar and show fairly even growth from 1990 to 1995.
MacDermid's data line generally trails Nasdaq and Specialty Chemicals
through 1994 and, in 1995, increases to well above the comparator indices
at the end of 1995.)
Past share performance should not be viewed as necessarily indicative of
future performance.
<TABLE>
<CAPTION>
Graph Dollar Values 1990 1991 1992 1993 1994 1995
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MacDermid, Inc. 100 129 136 149 147 247
Nasdaq 100 114 145 166 181 198
Specialty Chemicals 100 122 150 155 167 173
</TABLE>
<PAGE>
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table sets forth information as of June 1, 1995, with
respect to ownership of Common Stock by any person known to MacDermid to be
a beneficial owner of more than 5% of its Common Stock, by MacDermid's
five most highly compensated executive officers and by all directors and
officers of MacDermid as a group. Unless otherwise noted, each person
has sole voting and disposition power with respect to such person's
shares. The total of shares of Common Stock beneficially owned by the
executive officers includes the right to acquire ownership through
exercise of stock options.
- ---------------------------------------------------------------------------
<CAPTION>
Number of Shares Percent
Beneficial Owner Beneficially Owned of Class
- ---------------------------------------------------------------------------
<S> <C> <C>
FIVE PERCENT BENEFICIAL OWNERS
Harold Leever 207,035 <F1> 7.48
366 Guilds Hollow Road
Bethlehem, Connecticut 06751
MacDermid Employees Profit Sharing, 669,169 <F2> 24.18
Pension and Stock Ownership Plans
245 Freight Street
Waterbury, Connecticut 06702
Thomas W. Smith and 211,460 <F1> 7.64%
Prescott Investors, Inc.
323 Railroad Avenue
Greenwich, Connecticut 06830
Bank of Boston Corporation 264,196 <F3> 9.55%
100 Federal Street
Boston, Massachusetts 02110
Lazard Freres & Co. 157,300 <F4> 5.68%
One Rockefeller Plaza
New York, N.Y. 10020
Vanguard/Primecap Fund, Inc. 189,000 <F5> 6.83%
P.O. Box 2600
Valley Forge, PA 19482
NAMED EXECUTIVE OFFICERS
Daniel H. Leever 124,803<F1> <F6> <F7> 4.38
Charles T. Cobb 13,295<F6> *
Terrence C. Copeland 18,833<F6> *
Michael A. Pfaff 32,456<F6> <F7> 1.16
Charles D. Rice 38,800<F6> 1.40
All Directors and Officers 773,846(6) 26.30
as a group (19 persons)
<FN>
* Less than 1% of shares outstanding
<F1> Additional explanation of the shares beneficially owned by the
Directors is provided in the footnotes under Election of Directors.
<F2> 463,566 shares in the MacDermid Employees Profit Sharing Plan
and 161,908 shares in the MacDermid, Incorporated Employee Stock
Ownership Plan are beneficially owned by the Trustee of the plans,
Shawmut Bank, N.A., One Federal Street, Boston, MA 02211, and 43,695
shares in the MacDermid, Incorporated Employees Pension Plan are
beneficially owned by the Trustee of the plan, Investors Bank & Trust
Company, 24 Federal Street, Boston, MA 02110. Under the terms of the
Profit Sharing Plan and the ESOP, participants have the right to vote
the shares credited to their accounts; however, the Trustee may, in its
discretion, vote any shares (including unallocated shares) not voted by
the participants. The trustee of the Pension Plan may vote all the
MacDermid shares beneficially owned thereunder.
<F3> The information for Bank of Boston Corporation ("BOB") is taken
from its Schedule 13G dated February 13, 1995. Through its subsidiary,
Bank of Boston Connecticut, BOB has sole voting power with respect to
264,196 shares, shared voting power with respect to no shares, sole
dispositive power with respect to 89,190 shares and shared dispositive
power with respect to 174,806 shares. 150,275 of the shares held by BOB
are also beneficially owned by Mr. Harold Leever. See footnote (1) under
Election of Directors.
<F4> The information for Lazard Freres & Co. ("Lazard") is taken
from its schedule 13G dated February 14, 1995.
<F5> The information for Vanguard Primecap Fund, Inc. ("Primecap")
is taken from its Schedule 13G dated February 10, 1995.
<F6> The beneficial owners of these shares generally have sole voting and
investment power. Includes 124,803; 13,295; 18,833; 32,456 and 30,800
shares of Common Stock held by Messrs. Leever, Cobb, Copeland, Pfaff and
Rice, respectively, and 87,902 shares of Common Stock beneficially owned
by 13 officers as a group in MacDermid's Profit Sharing and ESOP Plans.
Also includes 80,000, 13,000, 16,000 and 21,268 shares of Common Stock
which may be acquired upon exercise of options granted to Messrs. Leever,
Cobb, Copeland, and Pfaff, respectively, and 175,268 shares of Common Stock
in the aggregate which may be acquired upon exercise of options granted to
10 officers as a group through MacDermid's Special Stock Purchase Plan.
<F7> Includes 20,000 and 2,732 shares of Common Stock for Messrs.
Leever and Pfaff, respectively, which are subject to restrictions on
transfer under the Special Stock Purchase Plan.
</TABLE>
<PAGE>
INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS AND FAMILY RELATIONSHIPS
Harold Leever is the Chairman, Director, and a nominee for Director
of MacDermid. Mr. Leever's son, Daniel H. Leever is President, Chief
Executive Officer, a Director and a nominee for Director of MacDermid.
ADDITIONAL INFORMATION RELATING TO
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held a total of six regular meetings during
the 1995 fiscal year. Each of the eight members of the Board of
Directors attended 75% or more of the aggregate number of meetings of the
Board and the committees of which they are members. The Board has Audit,
Compensation, Executive and Nominating Committees.
The Audit Committee recommends independent auditors, reviews the
scope of the audit examination and the independence of the auditors,
reviews and approves non-audit services provided by the auditors, reviews
findings and recommendations of the auditors and management's response
thereto and reviews MacDermid's internal audit function. The Committee
met three (3) times during the 1995 fiscal year. Members of the
Committee are: Thomas W. Smith, Chairman, Donald G. Ogilvie, James C.
Smith, and retiring Directors, Walter F. Torrance, Jr., Robert F.
Weltzien and Francis M. White.
The Compensation Committee reviews and makes recommendations to
the Board with respect to officer compensation and administers the
MacDermid, Incorporated Special Stock Purchase Plan, determining the
persons to whom equity incentives are to be granted, the number of shares
to be granted and the manner in which the exercise price shall be
payable. The Committee, which met four (4) times during the 1995 fiscal
year, includes Mr. Thomas W. Smith, Chairman, Donald G. Ogilvie, James C.
Smith and retiring Directors, Walter F. Torrance, Jr., Robert F. Weltzien
and Francis M. White.
The Executive Committee may exercise, subject to limitations
prescribed by law, those powers assigned to it by the Board of Directors.
The Committee, which did not meet during the 1995 fiscal year, includes
Harold Leever, Chairman; Daniel H. Leever, Donald G. Ogilvie, Thomas W.
Smith, James C. Smith and retiring Directors, Walter F. Torrance, Jr.,
Robert F. Weltzien and Francis M. White.
The Nominating Committee reviews and makes recommendations to the
Board with regard to director nominees. Any shareholder wishing to
recommend a nominee to the Board should do so in writing addressed to
John L. Cordani, Corporate Secretary, MacDermid, Incorporated, 245
Freight Street, Waterbury, Connecticut 06702-0671. The Committee, which
met once during the 1995 fiscal year, includes Harold Leever, Chairman;
Daniel H. Leever; Donald G. Ogilvie, Thomas W. Smith, James C. Smith and
retiring Directors, Walter F. Torrance, Jr., Robert F. Weltzien and
Francis M. White.
Directors who are employees of MacDermid receive no compensation in
addition to their salaries and benefits received as employees. Directors
who are not employees are paid $500 for each meeting of the Board
attended, an additional $500 for each meeting of the Board exceeding four
hours duration, $150 for each committee meeting attended not coincident
with a meeting of the Board, a quarterly cash retainer of $750, and an
annual retainer of $2,000 payable in shares of MacDermid Common Stock.
MacDermid provides up to $50,000 group term life insurance for each
outside director for which it paid a total of $635 in premiums during the
1995 fiscal year.
SECTION 16 COMPLIANCE
Mr. James C. Smith, a Director and current nominee, filed his Form 3,
with respect to his election as a Director July 22, 1994, on August 3, 1994.
ITEM 2
Proposal To Approve
The MacDermid, Incorporated 1995 Equity Incentive Plan
On May 15, 1995, the Board of Directors adopted, subject to approval
by the shareholders, the MacDermid, Incorporated 1995 Equity Incentive
Plan (the "Plan"), which provides for the grant to employees of MacDermid
and its subsidiaries of restricted stock under the terms and conditions of
the Plan.
The Board believes that it is advisable to adopt the Plan because it will
enable MacDermid and its subsidiary corporations to grant certain of
their employees the means to acquire a proprietary interest in MacDermid,
thereby providing additional financial incentives for such employees to
contribute to MacDermid's growth and profitability. Further, the Board
believes that the availability of such incentives will be a factor in
attracting and retaining those highly competent individuals upon whose
judgment, initiative and leadership MacDermid's continuing success in
large measure depends. Therefore, the Board of Directors recommends that
the shareholders approve the Plan.
The principal provisions of the Plan are summarized below. This
summary is qualified in its entirety by reference to the Plan, a copy of
which is attached hereto as Exhibit A.
The Plan is administered by a committee of not fewer than two
members of the Board of Directors (the "Committee"), each of whom must be
a "disinterested person" within the meaning of Rule 16b-3(c) under the
Securities Exchange Act of 1934, as amended ("Rule 16b-3") and an
"outside director" within the meaning of section 162(m)(4)(c)(i) of the
Internal Revenue Code (the "Code"). The Committee may adopt such rules
and regulations as it may deem desirable for administration of the Plan.
Under the Plan, restricted shares may be granted for an aggregate,
subject to certain adjustments, of up to 50,000 shares of Common Stock.
Such shares may be treasury shares or may be authorized and unissued
shares. Not more than 25,000 restricted shares may be issued under the
Plan in any one year. On June 1, 1995, the closing price of a share of
MacDermid stock on the Nasdaq National Market System was 44-3/4. A
participant who is awarded restricted stock will have no rights with
respect to such award unless the participant accepts the award by written
instrument delivered to the Company accompanied by payment in full of the
specified purchase price. Payment may be made in cash, certified or
cashiers check or at the discretion of the Committee, by delivering
shares of Common Stock having a fair market value not less than the
amount for which payment is being made. Subject to certain exceptions,
all shares of restricted stock issued under the Plan must be held and
cannot be sold or otherwise transferred by the participant (except to
MacDermid for the price paid therefor) for a period of four (4) years
from the date of the award. In its sole discretion, the Committee may
waive the restrictions against transfer applicable to the shares prior to
the expiration of the four (4) year period.
Under the Plan the Committee will select the appropriate individuals
who will participate. Subject to the provisions of the Plan the
Committee will then determine the size of the award of restricted stock
("Restricted Stock"), the conditions under which the award will be made,
the purchase price to be paid, and the restrictions to be placed upon the
shares. In the case of a participant who also participates in a
MacDermid annual bonus plan, an award, if any, will be comprised of
Restricted Stock having a fair market value equal to twenty (20%) of the
annual bonus payout awarded to the participant under the applicable bonus
plan and will be made in lieu of the allocable bonus amount. The
Committee in its discretion may also award such a participant an
additional number of shares as long-term compensation in any multiple or
fraction of the number of shares awarded in lieu of the allocable bonus
payout. The total annual award to any participant in any one year may
not exceed an amount equal to that participant's annual bonus payout for
such year. A participant will have all the rights of a stockholder with
respect to the Restricted Stock awarded to him or her including voting
and dividend rights, subject to any applicable restrictions on transfer
and MacDermid repurchase rights, and subject to any other conditions
contained in the award.
If a participant's employment by MacDermid is terminated for any
reason other than death, retirement in accordance with MacDermid"s
qualified pension plan at or after attainment of age sixty (60),
permanent disability or involuntary termination without cause while the
participant holds shares which are subject to restrictions on transfer
imposed by the Plan, the participant is required, at MacDermid's option,
to sell such shares to MacDermid for the price he or she paid for the
shares. However, if a participant's employment is terminated due to
death or permanent disability any restrictions on the transfer of shares
held by the participant pursuant to the Plan will lapse and such shares
may be freely transferred.
If a participant's employment is terminated by retirement in
accordance with MacDermid's qualified pension plan at or after attainment
of age sixty (60) while the participant holds shares which are subject to
restrictions on transfer imposed by the Plan, the participant will be
required to sell such shares to MacDermid for the price paid therefor if
the Committee determines that the participant has engaged in misconduct,
or if the participant competed with MacDermid within the restriction period.
If the employment of a holder of shares of Restricted Stock is terminated
due to involuntary termination without cause, while the shares are subject
to restrictions, the restrictions on such shares shall be deemed to have
lapsed in annual installments of twenty-five (25) percent on the first
anniversary of the date of award of such shares and twenty-five (25) percent
on each of the next three anniversaries of such date. Provision is made in
the Plan for waiver of restrictions, at the discretion of the Committee.
In the event that MacDermid's outstanding shares of Common Stock are
increased or decreased as the result of a stock dividend, stock split,
recapitalization or other similar event, the number of shares available
for issuance under the Plan may be adjusted to the extent the Committee
deems appropriate, with the approval of counsel, to preserve the rights
of the participants.
In addition, if MacDermid reclassifies or exchanges outstanding
shares of Common Stock, consolidates or merges with or into another
corporation or otherwise recapitalizes or reorganizes (other than with
a subsidiary controlled by MacDermid), or sells or conveys to another
corporation all or substantially all of MacDermid's assets (each a
"Reorganization"), a Plan participant will have the right upon receipt
of shares pursuant to an award to acquire the same kind and amount of
securities and property which the participant would have been able to
acquire if the participant had received such shares immediately before
the Reorganization. In addition, the Committee will have the right in
connection with any Reorganization to terminate all outstanding awards
and/or to remove restrictions from some or all outstanding shares of
restricted stock.
If any person or entity owns or acquires, directly or indirectly,
shares of the capital stock of MacDermid entitled to cast 25% or more of
the votes to be cast generally in an election of directors (other than
any such shares owned or acquired by any qualified employee benefit plan
maintained by MacDermid), all restrictions imposed on any shares of
Common Stock issued pursuant to the Plan will immediately lapse unless
all members of the Board, who were members before such event and who
comprise a majority of the Board of Directors, determine otherwise by
unanimous vote.
The Board of Directors may amend, suspend, or terminate the Plan
except that no action may be taken which impairs participants' rights
under outstanding awards without their consent and no amendment may be
made without shareholder approval where such approval is required under
Rule 16b-3 under the Securities and Exchange Act of 1934. The Committee
may substitute new awards for awards previously granted to participants.
A recipient of Restricted Stock generally will be subject to tax at
ordinary income rates on the fair market value of the stock at the time
the stock is no longer subject to forfeiture, less any amount paid for
the stock. However, a recipient who makes an election under Section
83(b) of the Code within 30 days of the date of issuance of the
Restricted Stock will realize ordinary income on the date of issuance
equal to the fair market value of the shares of Restricted Stock at that
time (measured as if the shares were unrestricted and could be sold
immediately), less any amount paid for the stock. If the election is
made, no taxable income will be recognized when the shares subject to the
election are no longer subject to forfeiture. If the shares subject to
the election are forfeited, the recipient will not be entitled to any
deduction, refund or loss for tax purposes with respect to amounts
previously included in income. Subject to the limitations of Section
162(m) of the Code, MacDermid, in general, will be entitled to a
deduction equal to the amount of income recognized by the recipient in
respect of the transfer of the shares of Restricted Stock. The holding
period to determine whether the recipient has long-term or short-term
capital gain or loss upon sale of the shares after the forfeiture period
has expired begins when the restriction period expires (or upon earlier
issuance of the shares, if the recipient elected immediate recognition of
income under Section 83(b) of the Code.)
The choice of individuals who will participate in the Plan is
subject to the discretion of the Committee. In addition, any award made
is subject to acceptance by the participant in accordance with its terms.
As a result, it is not possible to indicate at this time the specific
awards which may be received by any individual participant or groups of
participants under the Plan.
Under the terms of the Plan, as adopted by the Board of Directors,
and as provided in the By-Laws of MacDermid, approval requires the
affirmative vote of the holders of a majority of the Common Stock
represented at the Meeting.
The Board of Directors recommends a vote "for" adoption of the
MacDermid, Incorporated 1995 Equity Incentive Plan (Item 2).
<PAGE>
INDEPENDENT ACCOUNTANTS
The independent public accountants for MacDermid for fiscal year
1995 were KPMG Peat Marwick LLP ("KPMG"), which firm has been selected to
be MacDermid's auditors for fiscal year 1996 by the Board of Directors.
At the Meeting, a representative of KPMG will have the opportunity to
make a statement if he or she wishes to do so and will be available to
answer any appropriate questions that may be asked by shareholders.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy statement relating
to the 1996 annual meeting must comply in all respects with the rules and
regulations of the Securities and Exchange Commission and be received at
MacDermid's principal executive offices at 245 Freight Street, Waterbury,
Connecticut 06702-0671 no later than February 27, 1996. Such proposals
should be addressed to the attention of John L. Cordani, Corporate
Secretary.
ANNUAL REPORT
This Proxy Statement has been preceded by or is accompanied with the
Annual Report for the fiscal year ended March 31, 1995. Shareholders are
referred to such report for financial and other information about the
activities of the Corporation, but such report is not to be deemed a
part of the proxy soliciting material.
MISCELLANEOUS
The Board of Directors knows of no matters other than those referenced
in the Notice of Annual Meeting which are to be brought before the Meeting.
However, if any other matters are properly presented, it is the intention
of the persons named in the Proxy to vote the Proxy in accordance with their
best judgment.
It is important that Proxies be returned prior to the Meeting.
Shareholders are urged to sign and date the enclosed Proxy and promptly
return it in the enclosed envelope.
June 26, 1995 JOHN L. CORDANI
Corporate Secretary
MacDermid, Incorporated will provide without charge, to any
shareholder, upon written request, a copy of its Annual Report on Form
10-K to the Securities and Exchange Commission for the fiscal year ended
March 31, 1995. Such request should be directed to John L. Cordani,
Corporate Secretary, MacDermid, Incorporated, 245 Freight Street,
Waterbury, Connecticut 06702-0671.
<PAGE>
Exhibit A
MACDERMID, INCORPORATED
1995 EQUITY INCENTIVE PLAN
Effective May 15, 1995
1. PURPOSES. The purposes of the MacDermid, Incorporated 1995
Equity Incentive Plan (the "Plan") are (a) to enable MacDermid,
Incorporated and its subsidiary corporations (hereinafter referred to,
unless the context otherwise requires, as the "Company") to provide to
its employees the means to acquire a proprietary interest in the Company,
in order that such persons will have additional financial incentives to
contribute to the Company's growth and profitability, and (b) to enhance
the ability of the Company to attract and retain individuals of outstanding
ability upon whom the success of the Company will depend. The Plan is
intended to accomplish these goals by enabling the Company to grant awards
("Awards") in the form of restricted stock, all as more fully described
below.
2. ADMINISTRATION. The Plan shall be administered by a committee of
not fewer than two members of the Board of Directors of the Company (the
"Board"). Each member of the Committee shall be a "disinterested person"
within the meaning of Rule 16b-3(c) under the Securities Exchange Act of
1934, as amended (the "Act") and an "outside director" within the meaning
of Section 162(m)(4)(C)(i) of the Internal Revenue Code of 1986, as
amended (the "Code") and applicable Treasury regulations thereunder. The
Committee may adopt such rules and regulations as it may deem necessary
or advisable for the administration of the Plan. The Committee shall
have no authority to take any action if the authority to take such action,
or the taking of such action, would disqualify the Plan from the exemption
provided by Rule 16b-3 under the Act or any successor provision.
3. PARTICIPANTS. All employees of the Company shall be eligible to
receive Awards and thereby become participants in the Plan. In granting
Awards the Committee may include or exclude previous participants in the
Plan as the Committee may determine. Receipt of an Award shall in no way
be deemed to constitute a consent to or promise of continued employment
by the Company.
4. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided
herein, an aggregate of up to 50,000 shares of the Common Stock, without
par value per share (the "Common Stock"), shall be available for issuance
under the Plan. Such shares may be authorized and unissued shares or
shares held in the Company's treasury. If any Award in respect of shares
of Common Stock is forfeited for any reason or settled in a manner that
results in fewer shares of Common Stock outstanding than were initially
awarded, including without limitation the surrender of shares of Common
Stock in payment of any tax obligation on the Award, the shares of Common
Stock subject to such Award or so surrendered, as the case may be, to the
extent of such forfeiture or decrease, shall again be available for award
under the Plan.
5. GRANT OF AWARDS.
(a) Subject to the provisions of the Plan, the Committee may
award shares of restricted stock to a participant under the Plan. A
restricted stock Award entitles the recipient to acquire, for a purchase
price equal to or exceeding par value, shares of Common Stock subject to
the restrictions described in Section 6 below ("Restricted Stock"). A
maximum of 25,000 shares of Restricted Stock may be awarded by the
Committee in any year.
(b) Subject to the provisions of the Plan, the Committee shall
determine the persons to whom Awards are to be granted, the size of the
Award and all other terms and conditions of the Award, provided, however,
that in the case of a Plan participant who is also then a participant in
a Company annual bonus plan, any Award granted by the Committee to such
participant shall be comprised of:
(i) That number of shares of Restricted Stock having a fair
market value as of the date of the Award, as determined in good faith by
the Committee, equal to twenty (20) percent of the annual bonus payout
awarded to the participant under the applicable bonus plan (such Award
to be in lieu of payment of the allocable bonus amount); plus
(ii) That additional number of shares, if any, which the
Committee in its sole discretion determines is appropriate to award to
the participant for long-term compensation and which is a fraction or
multiple of the number of shares awarded to the participant under the
immediately preceding clause (i);
provided, further, however, that in no event shall the fair market value
of shares awarded to any participant under the preceding clauses (i) and
(ii) exceed in any year one hundred (100) percent of the annual bonus
payout awarded to the participant under the applicable bonus plan.
6. TERMS OF RESTRICTED STOCK.
(a) A participant who is granted a Restricted Stock Award will
have no rights with respect to such Award unless the participant accepts
the Award by written instrument delivered or mailed to the Company
accompanied by payment in full of the specified purchase price, if any,
of the shares covered by the Award. Payment may be by certified or bank
check or other instrument acceptable to the Committee.
(b) A participant who receives Restricted Stock will have all
rights of a stockholder with respect to the Stock, including voting and
dividend rights, subject to the restrictions described in this Section 6
and any other conditions imposed by the Committee at the time of grant.
Unless the Committee otherwise determines, certificates evidencing shares
of Restricted Stock will remain in the possession of the Company until
(i) such shares are free of all restrictions under the Plan and (ii) the
participant provides for payment to (or withholding by) the Company of all
amounts, if any, required under then applicable provisions of the Code and
state and local tax laws to be withheld with respect to the issuance of
such shares to the participant.
(c) Except as otherwise specifically provided by the Plan,
Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of, except to the Company (if the
Company agrees to purchase the shares) for an amount equal to the price
paid for the shares, for a period of four (4) years from the date of
issuance pursuant to an Award; provided, however, that the Committee in
its sole discretion may determine from time to time for any reason to
waive in whole or in part the restrictions applicable to any shares prior
to the expiration of such four (4) year period.
(d) If the employment of a holder of shares of Restricted Stock
is terminated for any reason other than death, retirement in accordance
with the Company's qualified pension plan at or after attainment of age
sixty (60), permanent disability or involuntary termination without
cause, while the shares are subject to the restrictions described in the
immediately preceding paragraph, the holder shall be required to sell
such shares to the Company for the price paid therefor by the holder, and
all rights of the holder with respect to such shares shall be immediately
canceled, unless the Company declines in writing to purchase the shares.
(e) If the employment of a holder of shares of Restricted Stock
is terminated for retirement in accordance with the Company's qualified
pension plan at or after attainment of age sixty (60), and the Committee,
at any time while the shares are subject to the restrictions described in
paragraph (c) above, determines that the holder, either before or after
termination of the holder's employment by the Company,
(i) has committed an act of misconduct for which he or she
could have been discharged for cause by the Company, or
(ii) has engaged, directly or indirectly, in competition
with the Company, whether as an officer, employee, agent, proprietor or
otherwise of, or by having any material investment or other material
interest in, any business that involves in whole or in part any product
or device similar to or competitive with any product or device sold by the
Company during the employment of the holder or under active development by
the Company at the time of the holder's cessation of employment, the holder
shall be required to sell such shares to the Company for the price paid
therefor by the holder, and all rights of the holder with respect to such
shares shall be immediately canceled, unless the Company declines in writing
to purchase the shares.
(f) If the employment of a holder of shares of Restricted Stock
is terminated due to involuntary termination without cause, while the
shares are subject to the restrictions described in paragraph (c) above,
the restrictions on such shares shall be deemed to have lapsed in annual
installments as follows: twenty-five (25) percent on the first anniversary
of the date of award of such shares and twenty-five (25) percent on each of
the next three anniversaries of such date (reduced in the event of any
resulting fraction to the next lowest whole number).
(g) If the employment of a holder of shares of Restricted Stock is
terminated due to death or permanent disability, while the shares are subject
to the restrictions described in paragraph (c) above, the restrictions on
such shares shall lapse as of the date of such event, and the holder shall
be free to dispose of the shares without further restriction.
(h) The restrictions imposed under this Section 6 shall apply
as well to all shares or other securities issued in respect of shares in
connection with any stock split, reverse stock split, stock dividend,
recapitalization, reclassification, spinoff, split-off, merger,
consolidation or reorganization. Any stock certificate issued in respect
of shares awarded under the Plan shall be registered in the name of the
participant, and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such shares.
7. CONDITIONS TO EFFECTIVENESS OF THE PLAN. The Plan shall not
become effective, and any Awards granted under the Plan shall not be
effective, unless and until the Plan shall have been duly approved by the
shareholders of the Company.
8. AMENDMENT AND TERMINATION. The Board by resolution at any time
may amend, suspend or terminate the Plan, provided that (a) no such
action shall be taken which impairs the rights of any participant under
any outstanding Award, without such participant's consent, and (b) no
amendment shall be made without shareholder approval if such approval
is necessary to comply with any applicable tax or regulatory requirement,
including any requirements for exemptive relief under Section 16(b) of
the Act, or any successor provision.
9. EFFECT OF CHANGES IN COMMON STOCK. If the Company shall
combine, subdivide or reclassify the shares of Common Stock which have
been or may be awarded under the Plan, or shall declare thereon any
dividend payable in shares of Common Stock, or shall take any other
action of a similar nature affecting the Common Stock, then the number
and class of shares of stock as to which Awards may thereafter be granted
(in the aggregate and to any participant) shall be appropriately adjusted
and, in the case of each Award outstanding at the time of any such
action, the number and class of shares subject to such Award shall
likewise be appropriately adjusted, all to such extent as may be
determined by the Committee in its sole discretion, with the approval of
counsel, to be necessary to preserve unimpaired the rights of the
participant. Each and every such determination shall be conclusive and
binding upon the participants.
10. EFFECT OF REORGANIZATIONS. In case of any one or more
reclassifications, changes or exchanges of outstanding shares of Common
Stock or other stock (other than as provided in Section 11), or
consolidations of the Company with, or mergers of the Company into, other
corporations, or other recapitalizations or reorganizations (other than
consolidations with a subsidiary in which the Company is the continuing
corporation and which do not result in any reclassifications, changes or
exchanges of shares of the Company), or in case of any one or more sales
or conveyances to any other corporation of the property of the Company as
an entirety, or substantially as an entirety, any and all of which are
hereinafter in this Section called "Reorganizations," a participant shall
have the right, upon any subsequent receipt of shares pursuant to an Award,
to acquire the same kind and amount of securities and property which such
participant would then have if such participant had received such shares
immediately before the first of any such Reorganizations and continued to
hold all securities and property which came to such participant as a result
of that and subsequent Reorganizations, less all securities and property
surrendered or canceled pursuant to any of the same, the adjustment rights
in Section 9 and this Section 10 being continuing and cumulative.
Notwithstanding any provision of Section 6 or any foregoing
provision of this Section 10 to the contrary, the Committee shall have
the right in connection with any Reorganization, upon not less than
thirty (30) days' written notice to the participants, to terminate all
outstanding Awards. In connection with such termination, the Committee
in its discretion, prior to the effective date of the reorganization, may
remove the restrictions from some or all outstanding shares of Restricted
Stock.
11. CHANGE IN CONTROL. In the event that at any time after the
effective date of the Plan the Company shall have a "Principal
Stockholder," as hereinafter defined, then notwithstanding anything to
the contrary contained herein, upon the date such event occurs, all
restrictions imposed pursuant to Section 6 with respect to shares shall
immediately lapse, unless the Board by unanimous vote of members who
served as directors before such event and who constitute at least fifty-one
(51) percent of the Board determines otherwise.
For purposes of this Section 11, (a) the term "Principal
Stockholder" means any corporation, person or other entity ("person")
owning beneficially, directly or indirectly, shares of the capital stock
of the Company entitled to cast twenty-five percent (25%) or more of the
votes at the time entitled to be cast generally in the election of
Directors by all of the outstanding shares of all classes of capital
stock of the Company (other than any such shares held by any qualified
employee benefit plan maintained by the Company), considered for purposes
of this Section 11 as one class; (b) in determining such ownership, a
person shall be deemed to be the beneficial owner of any shares of
capital stock of the Company which are beneficially owned, directly or
indirectly, by any other person (i) with which it or its "affiliate" or
"associate," as hereinafter defined, has any agreement, arrangement or
understanding for the purposes of acquiring, holding, voting or disposing
of capital stock of the Company or (ii) which is its "affiliate" or
"associate;" (c) a person shall be deemed to be an "affiliate" of, or
affiliated with, a specified person if such person directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is
under common control with, the person specified; and (d) the term
"associate" used to indicate a relationship with any person shall mean (A)
any corporation or organization (other than the Company or any subsidiary
of the Company) of which such person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten percent (10%) or more
of any class of equity security, (B) any trust or other estate in which
such person has a substantial beneficial interest or as to which such
person serves as trustee or in a similar fiduciary capacity, and (C) any
relative or spouse of such person, or any relative of such spouse, who has
the same home as such person.
12. GENERAL PROVISIONS.
(a) Notwithstanding any other provision of the Plan, to the
extent required to qualify for the exemption provided by Rule 16b-3 under
the Act, and any successor provision, any Common Stock or other equity
security offered under the Plan to a person subject to Section 16 of the
Act may not be sold for at least six months after acquisition.
(b) Each Award under the Plan shall be evidenced by a writing
delivered to the participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable
to achieve the purposes of the Plan or comply with applicable tax or
regulatory laws and accounting principles.
(c) The terms of each Award need not be identical, and the
Committee need not treat participants uniformly. Except as otherwise
provided by the Plan or a particular Award, any determination with
respect to an Award may be made by the Committee at the time of award
or at any time thereafter.
(d) No Award may be transferred other than by will or by the
laws of descent and distribution.
(e) When a participant purchases Restricted Stock pursuant to
an Award for a price equal to the par value of the Restricted Stock, the
Committee in its discretion may determine that such price has been
satisfied by past services rendered by the participant.
13. INTERPRETATION. The interpretation and construction of any
provision of the Plan and the adoption of rules and regulations for
administering the Plan shall be made by the Committee. Determinations
made by the Committee with respect to any matter or provision contained
in the Plan shall be final, conclusive and binding upon the Company and
upon all participants, their heirs and legal representatives. Any rule
or regulation adopted by the Committee (whether under the authority of
this Section or Section 2 above) shall remain in full force and effect
unless and until altered, amended or repealed by the Committee.
<PAGE>
Appendix A
FORM OF PROXY
(Front)
PROXY MACDERMID, INCORPORATED PROXY
This Proxy is Solicited on Behalf of the Board of Directors
Annual Meeting of Shareholders -- July 20, 1995 at 3:30 P.M., E.D.T.
At The Holiday Inn Waterbury, 63 Grand Street, Waterbury, Connecticut
The undersigned hereby constitutes and appoints HAROLD LEEVER and
DANIEL H. LEEVER, or either of them, with full power of substitution in
each, attorneys and proxies to act on behalf of the undersigned at said
meeting and at any adjournment thereof, with authority to vote on the
following matters all shares of stock which the undersigned would be
entitled to vote at said Meeting if personally present as directed on
the reverse side hereof with respect to the items set forth in the
accompanying Proxy Statement and in their discretion upon such other
matters as may properly come before the Meeting.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY VOTING INSTRUCTION CARD
IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
(Reverse)
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
A vote FOR items 1, 2 and 3 is recommended by the Board of Directors.
1. Election of Directors
Nominees: Harold Leever, Daniel H. Leever,
Donald G. Ogilvie, James C. Smith and
Thomas W. Smith
FOR WITHHOLD FOR ALL (Except Nominee(s) written below)
[ ] [ ] [ ] _________________________________
2. Approval of MacDermid, Incorporated 1995 Equity Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, upon any other matters as may properly come
before the meeting.
AUTHORITY AUTHORITY
GRANTED WITHHELD
[ ] [ ]
This proxy, when properly executed, will bevoted in the manner
directed herein by the stockholder. If no direction is made,
this proxy will be voted FOR the above matters.
Dated:________________________,1995
Signature(s)_____________________________
_____________________________
NOTE: Please sign exactly as name appears hereon.
For joint accounts both owners should sign. When
signing as executor, administrator, attorney,
trustee, guardian, corporate officer, etc., please
give your full title.
[Space is provided for a mailing label containing the
shareholder's name, address, account number, CUSIP
number, sequence number and number of shares.]
EXHIBIT 13
PORTIONS OF MACDERMID'S 1995 ANNUAL REPORT TO STOCKHOLDERS.
Except for the pages and information expressly incorporated by
reference, the financial and other information included in this Exhibit
13 is provided solely for the information of the Securities and Exchange
Commission and is not deemed "filed."
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
(In thousands, except share and per share data)
<CAPTION>
1995 1994 % Change
-----------------------------------
<S> <C> <C> <C>
Net Sales, North America $ 93,867 $ 73,861 27
Overseas 88,233 76,165 16
-----------------------------------
Total Revenues $ 182,100 $ 150,026 21
===================================
Net Earnings* $ 11,142 $ 7,771 43
Return on Sales* 6.1% 5.2% -
Return on Average Equity* 18.3% 11.7% -
Net Cash Provided by Operations $ 20,733 $ 15,766 32
Research and Development Expense $ 9,644 $ 6,687 44
Capital Expenditures $ 3,990 $ 7,526 (47)
Long-term Debt
(Includes Short-term Portion) $ 22,535 $ 1,157 1,848
Average Shares Outstanding 3,141,855 3,567,875 (12)
Shareholders' Equity $ 53,654 $ 68,169 (21)
Per Common Share
Net Earnings* $3.55 $2.18 63
Cash Dividends $0.60 $0.60 -
Book Value $19.56 $19.11 2
</TABLE>
<TABLE>
GRAPHIC PRESENTATION
(Three horizontal bar graphs are provided here, proprietary net sales,
net earnings and earnings per share. Each graph depicts one facet of
results of operations for the fiscal years 1991 through 1995. The graph
for proprietary net sales indicate a decline in sales in 1992, an
increase in 1993, followed by a marginal increase in 1994 and a large
increase in 1995. The graphs for both net earnings and earnings per
share indicate increases in each year since 1991 with a substantial
increase in 1995.)
GRAPH VALUES
(Amounts in thousands except per share data)
<CAPTION>
1991 1992 1993 1994 1995
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Proprietary net sales $120,937 $115,595 $130,132 $130,601 $163,315
Net earnings $ 6,784 $ 7,244 $ 7,687 $ 7,771 $ 11,142
Earnings per share $1.90 $2.03 $2.16 $2.18 $3.55
</TABLE>
* Before the cumulative effect of accounting changes which resulted
in one-time after tax charges of $371,000 ($0.12/share) in 1995 and
$2,082,000 ($0.58/share) in 1994. Fiscal 1995 indicates primary
earnings per share.
<PAGE>
<TABLE>
FIVE YEAR FINANCIAL REVIEW
(In thousands, except share and per share data)
<CAPTION>
OPERATING RESULTS 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 182,100 $ 150,026 $ 156,324 $ 144,984 $ 151,359
Net Earnings<F1> $ 11,142 $ 7,771 $ 7,687 $ 7,244 $ 6,784
Net Earnings Per Share <F1> <F2> $3.55 $2.18 $2.16 $2.03 $1.90
Return On Sales (%)<F1> 6.1 5.2 4.9 5.0 4.5
Return On Average Equity (%)<F1> 18.3 11.7 12.1 12.7 12.9
FINANCIAL POSITION AT YEAR END
- -------------------------------------------------------------------------------------------------------
Working Capital $ 34,711 $ 34,959 $ 31,050 $ 27,620 $ 23,301
Current Ratio 1.7 2.0 1.8 1.7 1.5
Capital Expenditures $ 3,990 $ 7,526<F3> $ 4,594 $ 4,453 $ 3,198
Total Assets $ 123,305 $ 105,867 $ 107,173 $ 101,214 $ 103,252
Long-Term Debt (Includes Short-Term Portion) $ 22,642 $ 1,157 $ 2,684 $ 2,812 $ 4,199
Percent of Total Capitalization 29.7 1.7 4.0 4.4 7.0
SHARE DATA
- -------------------------------------------------------------------------------------------------------
Shareholders' Equity $ 53,654 $ 68,169 $ 65,181 $ 61,050 $ 55,848
Per Share $19.56 $19.11 $18.27 $17.12 $15.67
Cash Dividends Per Share $0.60 $0.60 $0.60 $0.60 $0.60
Payout as Percent of Net Earnings <F1> 15.9 27.6 27.8 29.5 31.5
Shares Outstanding
Average During Year 3,141,855 3,567,875 3,565,371 3,565,000 3,565,000
At Year End 2,742,533 3,567,882 3,567,382 3,565,000 3,565,000
Stock Price
High 44 1/2 31 29 1/2 29 26 1/2
Low 24 24 1/2 23 3/4 21 16 1/2
Year End 43 26 27 28 1/8 24 1/2
<FN>
<F1> Before cumulative effect of accounting changes which resulted in one-time after tax charges of
$371,000 ($0.12/share) in 1995 and $2,082,000 ($0.58/share) in 1994.
<F2> For 1995 indicates primary earnings per share. Fully diluted earnings per share were $3.50 for
1995, the first period during which the dilutive effect was large enough to report.
<F3> Includes cost attributable to a new Hong Kong warehouse and office facility and is not offset by
proceeds from disposal of the previous facilities which occurred in fiscal 1995 and 1994.
</TABLE>
<PAGE>
MESSAGE TO SHAREHOLDERS
Fiscal 1995 was the third consecutive year of record earnings for
MacDermid.
Sales increased to $182.1 million from $150 million in 1994, up
21%. Earnings* increased to $11,142,000 from $7,771,000 in 1994, up
43%. Earnings per share* increased to $3.55 from $2.18 in 1994, up
63%. The significantly greater percentage increase in earnings per
share was largely a result of our repurchase in August of 24% of our
outstanding shares.
MacDermid is an international specialty chemical company
serving the metal finishing and electronics industries. Our focus
is to increase the per share intrinsic value of the business by the
combination of careful cost control, internal growth and
acquisitions. We are ever mindful of our responsibilities as a
corporate citizen. We know our source of sustainable competitive
advantage is our employees.
In 1995 we enjoyed growth across all product lines and in all
markets, both domestic and international. This was the result of
our on-going effort to run our business more efficiently, the
improved economy worldwide, and the Allied-Kelite acquisition. 1995
was better than we expected.
This year's annual report is evidence of our increased
attention to cost within MacDermid. The simple black and white
format resulted in lower cost. We know that elaborate reports do
not lower cost or increase revenues - our clearly understood
objectives.
Our effort to improve efficiency is Company-wide in all markets
and in all functions. In Europe we completed restructuring in a
number of countries, reducing costs and improving effectiveness. As
a result, today we are not only more competitive but more
profitable. The same is true in every country in which we operate.
This is important since some 52% of sales are outside the United
States.
Our effort to improve effectiveness is not focused solely on
costs. We believe effectiveness is also measured in terms of
customer satisfaction. We place a high priority not only on product
quality but on the quality of service we give to our customers. We
are committed to Total Quality Management, and teams are in place
throughout the Company. For example:
.CUSTOMER SATISFACTION TEAM
This team, in its second year, is charged with understanding
what our customers think of MacDermid and helping us respond
to their suggestions. The team's actions are supported with
hard data gathered through formal survey procedures.
.ISO 9002
We received this international certification in all major
manufacturing plants: England, Spain, Taiwan, Connecticut and
Michigan.
.ON TIME DELIVERY TEAM
This team is charged with monitoring and improving our
performance in meeting our customers' shipment requirements.
We have made considerable progress and we expect more.
.PRODUCT DEVELOPMENT PROTOCOL TEAM
We are working to reduce the cycle time and improve the
success ratio in new product development.
Research and development has always been an important priority
for MacDermid. We do not look upon R&D as a discretionary
expenditure. In 1995, our R&D investment was $9.6 million compared
with $6.7 million in 1994. R&D, like our acquisition effort, is
focused not only on broadening and improving our product line
serving current markets, but also on new products in new markets, all
within our core competencies. This is a long-term, on-going effort.
* Before the effects of accounting changes
In May of 1994 MacDermid acquired the metal finishing business
of Allied-Kelite (A.K.). We thought it a perfect fit for our metal
finishing business as they were strong in markets we were not.
Their product line complements ours. Importantly, with A.K. came
outstanding people. Because of the competent people within A.K. and
within MacDermid, the merger of the two businesses went smoothly,
and the results were better than expected.
In August of 1994 we repurchased, through a tender offer,
approximately 852,000 shares, 24% of our outstanding stock. The
tender offered shareholders who wished to sell a price substantially
higher than the market. It gave shareholders who wished to remain
shareholders, in essence, a dividend. The reduced number of share
outstanding gave each remaining shareholder 31% more of our future.
Because of our improved cash flow and improved balance sheet,
we were able to finance the acquisition of Allied-Kelite and the
tender offer with added debt. Our cash flow is at record levels.
Our debt/capital ratio is 34%. Our total debt is little more today
than it was in 1990 when our earnings were $1.49 per share and our
cash flow was considerably less. Nevertheless, at this juncture, a
dividend increase is not planned by your Board of Directors. The
Board believes shareholders are better served by utilizing excess
cash flow to reduce our debt and/or to grow the Company internally
and through acquisitions. We are aware that each dollar invested
should produce at leas one added dollar of intrinsic value to our
business.
While a lot of things have been changing at MacDermid, one
thing has not - our Corporate Philosophy. It is published, as
usual, on the inside cover of our annual report. Everyone at
MacDermid is dedicated to conducting our business in accordance with
that Philosophy.
At MacDermid, we know we work for our shareholders. We know
our stewardship will be measured, over the years, in per share
terms. This is encouraged by the widespread and significant stock
ownership within the Company. Through our ESOP and other plans, we,
your employees, own 24% of the outstanding shares.
This year, three of our senior Directors are not standing for
reelection, having reach Board retirement age. Walter Torrance,
Robert Welzien and Francis White have served your Company with
distinction. Their advice, judgment and support will be missed. We
know all shareholders join us in thanking them and wishing them
well.
We begin fiscal 1996 in the best shape ever. While fiscal 1995
results have undoubtedly been helped by the economy here in the
United States and internationally, they are also the result of a
four-year effort to reorganize and refocus our business.
Our effort to improve and grow is an everyday effort. We are
working to make what has been accomplished but a beginning.
We want to thank all of our associates at MacDermid who have
worked hard and effectively to produce an outstanding fiscal 1995,
and our shareholders for their confidence.
/s/ Harold Leever /s/ Daniel H. Leever
Harold Leever Daniel H. Leever
Chairman of the Board President and Chief Executive Officer
<PAGE>
<TABLE>
MACDERMID, INCORPORATED AND SUBSIDIARIES
FIVE YEAR OPERATIONS REPORT
(In thousands, except per share amounts) Year Ended March 31
--------------------------------------------------------
<CAPTION>
1995 1994 1993 1992 1991
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales:
Proprietary chemicals $163,315 $130,601 $130,132 $115,595 $120,937
Equipment, chemicals and supplies resale 18,785 19,425 26,192 29,389 30,422
---------------------------------------------------------
182,100 150,026 156,324 144,984 151,359
Cost of sales 94,059 76,914 83,900 79,908 82,175
---------------------------------------------------------
Gross profit 88,041 73,112 72,424 65,076 69,184
Selling, technical and administrative expenses 67,904 60,063 56,880 54,038 55,938
---------------------------------------------------------
Operating profit 20,137 13,049 15,544 11,038 13,246
Other income (expense):
Interest income 185 300 364 384 368
Interest expense (2,029) (1,403) (1,870) (1,576) (2,021)
Foreign exchange (291) (683) (472) (392) (189)
Other, net 145 1,161 (1,228) 1,531 (71)
---------------------------------------------------------
(1,990) (625) (3,206) (53) (1,913)
---------------------------------------------------------
Earnings before income taxes and
cumulative effect of accounting change 18,147 12,424 12,338 10,985 11,333
Income taxes 7,005 4,653 4,651 3,741 4,549
---------------------------------------------------------
Earnings before cumulative effect
of accounting change 11,142 7,771 7,687 7,244 6,784
Cumulative effect of accounting change (371) (2,082) - - -
---------------------------------------------------------
Net earnings $ 10,771 $ 5,689 $ 7,687 $ 7,244 $ 6,784
=========================================================
Earnings per share before cumulative effect
of accounting change $3.55<F1> $2.18 $2.16 $2.03 $1.90
Cumulative effect of accounting change (0.12) (0.58) - - -
---------------------------------------------------------
Net earnings per common share $3.43 $1.60 $2.16 $2.03 $1.90
=========================================================
Average number of shares 3,141,855 3,567,875 3,565,371 3,565,000 3,565,000
=========================================================
<FN>
<F1> For 1995 indicates primary earnings per share. Fully diluted earnings per share for 1995, the first
period during which the dilutive effect was large enough to report, was $3.50 before the cumulative
effect of an accounting change and $3.38 after such change.
</TABLE>
<PAGE>
<TABLE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
FIVE YEAR SUMMARY
<CAPTION>
(In thousands, except per share amounts) 1995 1994 1993 1992 1991
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales:
North America $ 93,867 $ 78,861 $ 74,068 $ 73,119 $ 79,881
Overseas 88,233 76,165 82,256 71,865 71,478
--------------------------------------------------------
$182,100 $150,026 $156,324 $144,984 $151,359
========================================================
Net Earnings<F1> $ 11,142 $ 7,771 $ 7,687 $ 7,244 $ 6,784
Net Earnings per Common Share<F1><F2> $3.55 $2.18 $2.16 $2.03 $1.90
Cash Dividends Declared per Share $0.60 $0.60 $0.60 $0.60 $0.60
Total Assets $123,305 $105,867 $107,173 $101,214 $103,252
Long Term Obligations - non current $ 18,229 $ 922 $ 983 $ 1,348 $ 1,940
<FN>
<F1> Before cumulative effect of accounting changes which resulted in one-time after tax charges of
$371,000 ($0.12/share) in 1995 and $2,082,000 ($0.58/share) in 1994.
<F2> For 1995 indicates primary earnings per share. Fully diluted earnings per share were $3.50 for
1995, the first period during which the dilutive effect was large enough to report.
</TABLE>
NET SALES & OPERATING PROFITS
OVERVIEW
Worldwide proprietary chemical sales were $163.3 million, an
increase of 25% in fiscal 1995 over the previous year's record
levels. This increase reflects the effects of new accounts in
every geographic segment, improving business conditions and a
business acquisition in the U.S. Total sales of $182.1 million,
which increased 21%, were affected by a change during fiscal 1994
to an agency basis for certain products previously resold.
Net earnings increased for the fifth consecutive year to
$11,142,000, $3.55 per share, as compared to fiscal 1994 net
earnings of $7,771,000, $2.18 per share (before deducting for
the cumulative effect of accounting changes in each year).
NORTH AMERICA
1995 vs 1994
Total net sales increased in North America 27% because of a
strengthening economic climate strongly enhanced by the effects
of the purchase of Allied-Kelite's proprietary chemical business
during the first quarter of fiscal 1995 and despite reduced
direct sales of process equipment.
During the transition period following the acquisition of
assets,costs of sales were affected by inventory purchased from
Allied-Kelite at prices higher than MacDermid's normal replacement
costs.
Selling, technical and administrative expenses increased
principally as a result of additional sales and research
personnel hired in connection with the Allied-Kelite business,
continuing development of imaging products, and employee
incentives related to higher earnings levels.
An increase in interest expense resulting from borrowings
to finance a common stock repurchase was more than offset by an
increase in the Corporation's share of earnings from Hollmuller
America, a joint venture manufacturer of high quality,
precision, modular, horizontal production equipment used by
printed circuit and chemical machining industries, plus the
effects of higher royalties received on overseas sales and
reduced foreign exchange losses.
During the first quarter of fiscal year 1995, the
Corporation acquired certain assets of the Allied-Kelite Company
(a subsidiary of Witco Corporation), a major supplier of plating
surface preparation proprietary chemical products to automotive and
electronics hardware industries. The business, located primarily in
the United States, includes licenses of technology to companies in
several other countries. The acquisition cost (approximately $8.9
million), financed through short-term borrowings, included
inventories,a research facility and technology. The acquisition,
accounted for as a purchase, is producing consolidation cost
benefits in addition to improved domestic sales coverage.
During fiscal 1995, the Corporation adopted the provisions
of Statement of Financial Accounting Standards No. 112,
Employers' Accounting for Postemployment Benefits (SFAS 112).
SFAS 112 requires accrual accounting for recognition of the
postemployment cost of salary continuation benefits rather than
the previously used cash basis accounting. Adoption of SFAS 112
resulted in a one-time $371,000 charge against earnings, net of
income taxes. The ongoing expense effects are not material to
the consolidated financial statements.
1994 vs 1993
In fiscal 1994, sales of proprietary chemical products began a
recovery from the U.S. recession which started in fiscal 1990.
Operating profits increased despite additional spending for
research and market development in support of new programs. Net
earnings in North America reflect the effects of a decline in
royalty income because of lower covered sales overseas.
Hollmuller America, Inc., a joint venture with a German partner,
reported profits for the first time in fiscal 1994 reflecting
aggressive cost reductions and standardization of certain
equipment offerings. End of year sales backlogs were greatly
improved over the previous year.
During fiscal 1994, the Corporation adopted the provisions
of Statement of Financial Accounting Standards No. 106,
Employers' Accounting for Postretirement Benefits Other than
Pensions (SFAS 106). Adoption of the accrual accounting,
required by SFAS 106, resulted in a one-time charge against
earnings, net of income taxes, of $2,082,000 in recognition of
the postretirement cost of health benefits. The effect upon
ongoing expense is not material.
EUROPE
1995 vs 1994
Net sales for the European group (which includes operations in
Israel and South Africa) increased almost 9% despite a change
in the marketing of certain resale products to an agency basis
which was completed during fiscal 1994. (MacDermid now receives
a commission on the covered products.) Proprietary chemical
product sales, which account for 84% of the group's business,
were generally improved throughout the area.
Selling, technical and administrative expenses were reduced
overall by over 6% from fiscal 1994 to size the operations more
appropriately for the level of sales achieved. Operating
profits in fiscal 1995 were almost double those of the previous
year reflecting, in large measure, the effects of proprietary
chemical sales increases and the expense reductions made in
Germany during fiscal years 1994 and 1995.
1994 vs 1993
The group's net sales for fiscal 1994 were $38 million compared
to $45 million for fiscal 1993. The sales decline was
principally the result of changing currency exchange rates,
which accounted for $4.8 million, and the change in marketing of
certain resale products which accounted for another $1.1
million. Actual proprietary chemical sales were little changed
overall, in terms of local currency, despite the effects of
severe recession in Germany.
Net earnings for the group were marginal in fiscal 1994
because no tax benefit was recorded in connection with 1994
losses in Germany and because of expenses incurred to make group
operations more efficient.
ASIA/PACIFIC
1995 vs 1994
Total net sales for the Asia/Pacific group increased 23% to $47
million in fiscal year 1995 and earnings before income taxes
increased 31%. The sales increase was principally due to new
business in expanding markets, enhanced by economic recovery in
certain areas, with only a small effect late in the fiscal year
from a rapidly strengthening Japanese yen. Costs of sales
percentages were down 2% as sales of proprietary chemical
products grew much faster than sales of equipment and resale
chemicals.
Selling, technical and administrative expenses rose
8% as a new research and technical center in Japan was fully
operational throughout the year and some additional expenses
were incurred to support the higher sales levels. Other income
and expense for fiscal 1995 includes profit on the sale of
certain office and warehouse property following expansion into
new quarters. This income, however, was offset by additions to
reserves to cover losses by a joint venture operation, higher
levels of foreign exchange losses on transactions and increased
royalties paid to the parent company due to increased sales.
Profits recorded in fiscal 1994 on sales of a minority interest
in a Hong Kong company were not repeated in fiscal 1995.
1994 vs 1993
Total net sales of $38.2 million in fiscal 1994 were about 3%
above the previous year. The group achieved real proprietary
chemical sales growth with some benefit from favorable currency
changes. Profits from sales of a minority interest in a Hong
Kong company and profits from sales of property more than offset
increased costs related to a new research group in Japan and a
charge against earnings for a bad debt loss. Net earnings were
14% above fiscal year 1993.
INTEREST EXPENSE
Interest expense, net of interest income, in fiscal 1995,
increased by $741,000 over fiscal 1994 following a decrease of
$403,000 from the previous year. The increase in 1995 was due
principally to U.S. borrowings in August 1994 to finance the
purchase of treasury stock pursuant to a self-tender offer and
to an increase in short-term borrowings to finance the Allied-
Kelite business acquisition. The 1994 decrease was attributable
to repayments of borrowings and generally lower interest rates
than in 1993.
INCOME TAXES
Overall effective income tax rates increased slightly to 38.6%
in fiscal 1995 from 37.5% in fiscal 1994 as compared to 37.7%
in fiscal 1993. The 1995 increase and the 1994 decrease were
principally attributable to changes in the amounts included in
each year's earnings before income taxes for non taxable one-
time profits on sales of property and minority equity interests,
a 1995 non tax-deductible charge for losses in a joint venture
and 1994 losses in a subsidiary where tax benefits were not
recognized until 1995.
DIVIDENDS
MacDermid has paid cash dividends out of accumulated earnings
continuously since 1948. The total dividend paid for fiscal
1995 was $0.60 per share or approximately 16% of net earnings
before the cumulative effect of an accounting change.
LIQUIDITY & CAPITAL RESOURCES
Cash flows from operations are used to fund dividend payments to
shareholders, other working capital requirements of the
Corporation and most capital projects. From time to time
MacDermid utilizes additional outside sources to fund overall
needs, including major capital projects for new and upgraded
research and technical, manufacturing and administrative
facilities, and for business acquisitions. During the last
several years, most of the funds previously provided by such
outside sources have been repaid utilizing cash flows from
operations and from disposition of certain business and
properties no longer required after consolidation of
manufacturing and other operations. Total borrowings, which
were over $26 million at March 31, 1990, were reduced to $9
million by the end of fiscal 1994. Early during fiscal 1995,
MacDermid purchased certain assets used in Allied-Kelite's metal
finishing business for approximately $8.9 million, financed
through short-term loans. Subsequently (August 1, 1994), the
Corporation completed the purchase of approximately 852,000
shares of MacDermid's common stock under a self-tender offer at
a price of $30 per share. The total cost of this purchase,
including commitment fees, professional costs, etc., was
approximately $26.2 million, financed through a six-year term loan
with a group of banks. (This loan is further discussed in note
7 to the Consolidated Financial Statements.) Because of the
strong cash flows generated by operations and sales of certain
assets, total debt at March 31, 1995 is approximately $27
million.
New capital spending during fiscal 1995 of approximately $4
million, as compared with $7.5 million in fiscal 1994 and $4.5
million in fiscal 1993, included upgrades to manufacturing
facilities and new equipment to provide for the transfer of
Allied-Kelite manufacturing operations to existing facilities
and technical equipment. For fiscal 1996, planned new capital
projects total approximately $5 million.
New opportunities for business acquisitions, which become
available from time to time, are evaluated individually as they
arise based upon MacDermid's criteria for technological
improvement and innovation, potential for earnings growth and
compatibility with existing manufacturing capability and
distribution channels. Management intends to pursue those
opportunities which have strong potential to enhance shareholder
value.
The Board of Directors has, from time to time, authorized
the purchase of issued and outstanding shares of the
Corporation's common stock for its treasury. Following the
August 1, 1994 completion of the self-tender offer, the
directors authorized the purchase of up to an additional 148,000
shares of MacDermid's common stock. Pursuant to this
authorization, MacDermid acquired 11,000 shares in December
1994 in a privately negotiated purchase. Treasury shares may be
used for transfer or sale to employee benefit plans, business
acquisitions or for other Corporate purposes. The outstanding
authorization to purchase up to 137,000 shares, if exercised at
the Nasdaq Stock Market closing price on March 31, 1995, would
cost approximately $5.9 million.
<TABLE>
The principal sources and uses of cash in fiscal years 1995
and 1994 were as follows:
<CAPTION>
(In Thousands) 1995 1994
------------------------
<S> <C> <C>
Cash provided by:
Operations $20,733 $15,766
Proceeds from dispositions of
fixed assets and certain
business 3,376 2,998
Net increase in borrowings 17,718 -
------------------------
$41,827 $18,764
========================
Cash used for:
Capital expenditures $ 3,990 $ 7,526
Business acquisitions 8,910 -
Purchase of treasury shares 26,152 -
Dividend payments 1,767 2,141
Net decrease in borrowings - 7,295
Other - net (138) 1,149
------------------------
$40,681 $18,111
========================
</TABLE>
MacDermid's financial position is strong and, other than
satisfaction of debt obligations, there are no long-range
commitments which would have a significant impact upon results
of operations, financial condition or liquidity. At March 31,
1995 the Corporation had unused domestic and foreign short-term
credit lines with banks approximating $43 million and management
believes that additional borrowing could be obtained if needed.
INFLATION AND CHANGING PRICES
MacDermid operates principally in stable areas throughout the
world. Sales are mainly to companies whose outputs become
components in consumer and industrial products having wide
application and demand and no one customer accounts for a
material proportion of sales. Management, therefore, believes
that inflation, generally, has had little overall impact upon
the Corporation's operations and reported earnings. While there
may be temporary disruptions of economic stability, management
believes that their long-term effects will not be significant to
the Corporation.
ENVIRONMENTAL ACTIVITIES
MacDermid continues its commitment to an active program of
environmental responsibility through its Environmental Initiative
2000 program, research and development of alternative,
environmentally safer products and installation of equipment to
reduce or eliminate emissions.
The Corporation sponsors community clean-up programs and
promotes community awareness of environmental issues. The terms of
a State of Connecticut permit require MacDermid to have periodic
environmental compliance and environmental management audits
performed at its Waterbury, Connecticut facility. These audits take
place over a five-year period which commenced in 1993. An
environmental consultant retained by MacDermid conducts the audits
and submits appropriate recommendations.
MacDermid continuously conducts research to formulate products
which are environmentally friendly and which provide superior
operating characteristics in customer applications. Many companies
have come to MacDermid for assistance in meeting their environmental
needs.
Environmental expenditures that relate to current operations
are expensed; long-term betterments are capitalized. The
expenditure by MacDermid for these various programs is estimated to
be in excess of $1 million per year. MacDermid has been named as a
potentially responsible party (PRP) by the Environmental Protection
Agency in connection with two waste sites. There are many other
companies involved at each of these sites and MacDermid's
participation is minor. The Corporation has recorded its best
estimate of liabilities in connection with site clean-up based upon
the extent of its involvement, the number of PRPs and estimates of
the total costs of the site clean-up. Though it is difficult to
predict the final costs of site remediation, management believes
that the recorded liabilities are reasonable estimates of probable
liability and that future cash outlays are unlikely to be material
to financial condition, results of operations or cash flows.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended March 31
-------------------------------------
<CAPTION>
(In thousands, except share and per share amounts) 1995 1994 1993
-------------------------------------
<S> <C> <C> <C>
Net sales:
Proprietary chemicals $163,315 $130,601 $130,132
Equipment, chemicals and supplies resale 18,785 19,425 26,192
-------------------------------------
182,100 150,026 156,324
Cost of Sales 94,059 76,914 83,900
-------------------------------------
Gross profit 88,041 73,112 72,424
Selling, technical and administrative expenses 67,904 60,063 56,880
-------------------------------------
Operating profit 20,137 13,049 15,544
Other income (expense):
Interest income 185 300 364
Interest expense (2,029) (1,403) (1,870)
Foreign exchange (291) (683) (472)
Miscellaneous, net 145 1,161 (1,228)
-------------------------------------
(1,990) (625) (3,206)
-------------------------------------
Earnings before income taxes and cumulative
effect of accounting change 18,147 12,424 12,338
Income taxes (note 5) 7,005 4,653 4,651
-------------------------------------
Earnings before cumulative
effect of accounting change 11,142 7,771 7,687
Cumulative effect of accounting change (note 4) (371) (2,082) -
-------------------------------------
Net earnings $ 10,771 $ 5,689 $ 7,687
=====================================
Net earnings per share (note 1):
Primary
Before cumulative effect of
accounting change $3.55 $2.18 $2.16
Cumulative effect of accounting change (note 4) (0.12) (0.58) -
---------------------------------------
$3.43 $1.60 $2.16
=======================================
Fully diluted
Before cumulative effect of
accounting change $3.50 $2.18 $2.16
Cumulative effect of accounting changes (note 4) (0.12) (0.58) -
---------------------------------------
$3.38 $1.60 $2.16
=======================================
Weighted average number of shares outstanding (note 1)
Primary 3,141,855 3,567,875 3,565,371
=======================================
Fully Diluted 3,179,832 3,567,875 3,565,371
=======================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
ASSETS March 31
-----------------------------
<CAPTION>
(In thousands) 1995 1994
-----------------------------
<S> <C> <C>
Current assets:
Cash and equivalents $ 7,630 $ 6,484
Accounts receivable, less allowance for doubtful receivables
of $2,859 and $2,317 45,559 39,738
Inventories (note 2) 22,801 17,744
Prepaid expenses 2,052 1,380
Deferred income taxes 3,155 3,069
-----------------------------
81,197 68,415
Total current assets -----------------------------
Property, plant and equipment, at cost:
Land and improvements 2,829 2,590
Buildings and improvements 26,346 26,190
Machinery, equipment and fixtures 33,581 31,699
-----------------------------
62,756 60,479
Less accumulated depreciation and amortization 35,721 32,690
-----------------------------
Net property, plant and equipment 27,035 27,789
-----------------------------
Other assets 15,073 9,663
-----------------------------
$123,305 $105,867
=============================
</TABLE>
<PAGE>
<TABLE>
LIABILITIES & SHAREHOLDERS' EQUITY March 31
-----------------------------
<CAPTION>
(In thousands, except share and per share data) 1995 1994
-----------------------------
<S> <C> <C>
Current liabilities:
Notes payable (note 3) $ 4,720 $ 7,609
Current installments of long-term obligations (note 7) 4,413 429
Accounts payable 18,064 12,961
Dividends payable 411 535
Accrued compensation 6,089 2,588
Accrued expenses, other 7,258 6,663
Income taxes (note 5) 5,531 2,671
-----------------------------
Total current liabilities 46,486 33,456
-----------------------------
Long-term obligations (note 7) 18,229 922
Accrued postretirement benefits (note 4) 3,899 3,214
Deferred income taxes (note 5) 960 106
Shareholders' equity (note 9):
Preferred stock, authorized 2,000,000 shares; none issued - -
Common stock. Authorized 20,000,000 shares; issued
4,136,080 and 4,098,530 shares at stated value of
$1.00 per share (note 4) 4,136 4,099
Additional paid-in capital (note 4) 1,676 834
Retained earnings 84,043 75,039
Equity adjustment from foreign currency translation 1,551 (203)
Less cost of 1,393,547 and 530,648 common shares in treasury (37,752) (11,600)
------------------------------
Total shareholders' equity 53,654 68,169
------------------------------
Contingencies and commitments (notes 8 and 10)
$123,305 $105,867
==============================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended March 31
---------------------------------------
<CAPTION>
(In thousands) 1995 1994 1993
---------------------------------------
<S>
Cash flows from operating activities: <C> <C> <C>
Net earnings $ 10,771 $ 5,689 $ 7,687
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 4,349 4,596 4,745
Effect of change in accounting (note 4) 371 2,082 -
Amortization of goodwill and other intangible assets 685 1,011 911
Provision for bad debts 664 1,792 1,797
Deferred income taxes (1,420) (422) (518)
Changes in assets and liabilities net of effects
from acquisitions and dispositions:
Decrease (increase) in receivables (4,685) 1,090 (7,822)
Decrease (increase) in inventories (265) 931 1,870
Decrease (increase) in prepaid expenses (713) (111) (362)
Increase (decrease) in accounts payable 4,453 (1,697) (989)
Increase (decrease) in accrued expenses 3,505 2,094 2,171
Increase (decrease) in income tax liabilities 2,860 596 (26)
Other 158 (1,885) (122)
---------------------------------------
Net cash flows provided by operating activities 20,733 15,766 9,342
---------------------------------------
Cash flows from investing activities:
Capital expenditures (3,990) (7,526) (4,594)
Proceeds form disposition of fixed assets 3,376 2,998 916
Acquisitions of business (8,910) - (2,259)
Other investments (216) (1,062) (662)
---------------------------------------
Net cash flows used in investing activities (9,740) (5,590) (6,599)
---------------------------------------
Cash flows from financing activities:
Long-term and short-term borrowings 26,609 1,943 5,814
Long-term and short-term repayments (8,891) (9,238) (5,003)
Acquisition of treasury stock (note 9) (26,152) - -
Dividends paid (1,767) (2,141) (2,139)
---------------------------------------
Net cash flows used in financing activities (10,201) (9,436) (1,328)
---------------------------------------
Effect of exchange rate changes on cash
and equivalents 354 (87) (216)
---------------------------------------
Net increase in cash and equivalents 1,146 653 1,199
Cash and equivalents at beginning of year 6,484 5,831 4,632
---------------------------------------
Cash and equivalents at end of year $ 7,630 $ 6,484 $ 5,831
=======================================
Cash paid for interest $ 2,182 $ 1,627 $ 1,823
=======================================
Cash paid for income taxes $ 4,226 $ 4,398 $ 4,768
=======================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation. The accompanying consolidated
financial statements include accounts of the parent corporation and
all of its domestic and foreign subsidiaries. Certain foreign
subsidiaries, for practical purposes, are included on a calendar
year basis. All significant intercompany accounts and transactions
have been eliminated in consolidation.
(b) Acquisition. In May 1994 the Corporation acquired certain
assets of the U.S. based Allied-Kelite Company from Witco
Corporation. Chemical products produced by Allied-Kelite include
plating and surface preparation proprietary chemical products which
are sold to customers in the aerospace, automotive and electronics
hardware industries. Certain technology was also acquired which is
licensed to several customers in specific overseas markets. The
total purchase price for the acquisition was approximately $8.9
million including inventory, fixed assets, goodwill (being amortized
over 15 years) and other intangibles. Total assets and pretax
earnings resulting from the purchase were less than 10% of the
Corporation's consolidated total assets and pretax earnings before
acquisition. The acquisition was accounted for as a purchase
transaction. Consolidated operating results for fiscal 1995 include
the results of the Allied-Kelite business from May 2, 1994.
(c) Inventories. Inventories are stated at the lower of cost
(average moving cost) or replacement market.
(d) Property, Plant and Equipment. Property, plant and equipment
are stated at cost. Depreciation and amortization of property,
plant and equipment are provided over the estimated useful lives of
the respective assets, principally on the straight-line basis.
Expenditures for maintenance and repairs are charged directly to
expense; renewals and betterments, which significantly extend the
useful lives, in general are capitalized. Costs and accumulated
depreciation and amortization on assets retired or disposed of are
removed from the accounts and the gains or losses resulting
therefrom, if any, are credited or charged to earnings.
(e) Employee Benefits. The Corporation sponsors a variety of
employee benefit programs, most of which are non-contributory.
Retirement. Pension, profit sharing and other retirement plans
generally are non-contributory and cover substantially all
employees. Domestically, the Corporation funds a pension plan based
upon plan costs accrued in accordance with the principles of
Statement of Financial Accounting Standards No. 87. The projected
unit credit actuarial method is used for financial reporting
purposes. The pension plan provides retirement benefits based upon
years of service and compensation levels. In addition, the
Corporation contributes to profit sharing and employee stock
ownership plans which provide retirement benefits based upon amounts
credited to employee accounts within the plans. The Corporation's
funding policy for qualified plans is consistent with federal or
other regulations and customarily equals the amount deducted for
income tax purposes. Foreign subsidiaries contribute to plans which
may be administered privately or by government agencies in
accordance with local regulations.
Postretirement. The Corporation has postretirement health care
benefits for most employees. Effective April 1, 1993, the
Corporation adopted Statement of Financial Accounting Standards No.
106, Employers' Accounting for Postretirement Benefits Other than
Pensions (SFAS 106), for its domestic plan. For its foreign plans
the effect was immaterial. SFAS 106 requires accrual accounting for
all postretirement benefits other than pensions rather than the
previously used pay-as-you-go method. The postretirement health
care plan is unfunded.
Postemployment. The Corporation provides postemployment
disability benefits to employees meeting specified service
requirements. Effective April 1, 1994, the Corporation adopted
Statement of Financial Accounting Standards No. 112, Employers'
Accounting for Post Employment Benefits (SFAS 112). SFAS 112
requires accrual for such benefits if the obligation is attributable
to employees' services already rendered, employees' rights to those
benefits accumulate or vest, payment of the benefits is probable,
and the amount of the benefits can be reasonably estimated.
(f) Research and Development. Research and development costs,
charged to expenses as incurred, were $9,644,000, $6,687,000 and
$5,796,000 in 1995, 1994 and 1993, respectively.
(g) Income Taxes. In fiscal year 1993 the Corporation adopted
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes (SFAS 109), which requires the use of the liability
method of accounting for deferred income taxes. Pursuant to SFAS
109, the provision for income taxes includes Federal, foreign, state
and local income taxes currently payable and those deferred because
of temporary differences between the financial statement and tax
bases of assets and liabilities. No provision for deferred income
taxes is made with respect to equity adjustments from foreign
currency translation or to undistributed earnings of subsidiaries
which, in management's opinion, will be permanently reinvested or
repatriated at a minimal tax cost to the Corporation. Foreign tax
credits are recorded as a reduction of the provision for Federal
income taxes in the year realized.
(h) Foreign Operations. The balance sheet accounts of foreign
subsidiaries are translated into U.S. dollars at year-end rates of
exchange while revenue and expense accounts are translated at
weighted average rates in effect during the periods. Translation of
the balance sheets resulted in an increase in equity of $1,754,000
in 1995 and decreases in equity of $781,000 and $1,569,000 in 1994
and 1993, respectively. Gains and losses on foreign currency
transactions are included in the consolidated statements of
earnings.
(i) Cash and Equivalents. For the purpose of the consolidated
statements of cash flows, the Corporation considers all highly
liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
(j) Fair Value of Financial Instruments. Statement of Financial
Accounting Standards No. 107 requires that reporting entities
provide, to the extent practicable, the fair value of financial
instruments, both assets and liabilities. The carrying amounts for
the Corporation's financial instruments approximate fair value
because of the short maturity of those instruments. The carrying
values of other financial instruments approximate fair value or are
not material to the balance sheets.
(k) Earnings Per Common Share. The computation of primary earnings
per share is based upon the weighted average number of outstanding
shares plus (in periods in which they have a dilutive effect) the
effect of common shares contingently issuable from stock options.
The fully diluted per share computations also reflect additional
dilution related to stock options due to the use of the market price
at the end of the period, when higher than the average price for the
period. Fiscal 1995 is the only year presented for which the
dilutive effect was large enough to report.
<TABLE>
2. INVENTORIES
The major components of inventory at March 31 were as follows:
<CAPTION>
(In thousands) 1995 1994
----------------------
<S> <C> <C>
Finished goods $16,074 $13,091
Raw materials and supplies 6,727 4,653
----------------------
$22,801 $17,744
======================
</TABLE>
3. NOTES PAYABLE
Notes payable at March 31, 1995 consisted primarily of $4,720,000 of
outstanding borrowings under available lines of credit aggregating
approximately $48,000,000. The terms of the lines of credit
generally provide for interest rates at or below the prime rate on
the date of borrowing domestically and, for foreign company
borrowings, rates that vary with base rates in each currency. With
the exception of a $10 million committed revolving credit line, the
lines of credit can be withdrawn at any time at the option of the
banks. The weighted average interest rates on short-term borrowings
outstanding were 5.1% and 7.9% at the end of 1995 and 1994,
respectively.
4. EMPLOYEE RETIREMENT & WELFARE PLANS
The Corporation has defined benefit pension, defined contribution
profit sharing and employees' stock ownership plans, each of which
is funded annually, as required, for substantially all its domestic
employees. Aggregate amounts charged to earnings for these plans
were $1,791,000, $1,194,000 and $971,000 in 1995, 1994 and 1993,
respectively.
<TABLE>
Pension. Net pension cost of the Corporation's defined benefit plan
included the following components for the years ended March 31:
<CAPTION>
(In thousands) 1995 1994 1993
---------------------------------
<S> <C> <C> <C>
Service cost $ 581 $ 557 $ 564
Interest cost 1,158 1,119 1,012
Actual return on investment (1,879) (238) (1,511)
Net amortization and deferrals 341 (1,320) 36
---------------------------------
Net periodic pension cost $ 201 $ 118 $ 101
=================================
</TABLE>
The rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit
obligation was 5% for 1995, 4% for 1994 and 5% for 1993. The
expected long-term rate of return on assets was 9% for 1995, 1994
and 1993, and the weighted average settlement rate was 8% for 1995,
7.5% for 1994 and 8.25% for 1993.
<TABLE>
The following table sets forth the plan's funded status at March
31, 1995 and 1994 and the amount recognized in the Corporation's
consolidated balance sheet at March 31:
<CAPTION>
(In thousands) 1995 1994
-----------------------
<S> <C> <C>
Actuarial present value of
benefit obligation:
Accumulated benefit obligation
including vested benefits of
$11,989 and $11,780 $12,588 $12,421
=======================
Projected benefit obligation $15,947 $15,115
Plan assets at fair value (primarily
listed stocks, bonds and guaranteed
investment contracts) 16,685 15,130
-----------------------
Plan assets in excess of
projected benefits obligation 738 15
Unrecognized portion of transition
asset (being amortized over 14 yrs) (1,145) (1,314)
Unrecognized net loss 311 1,146
Accrued pension cost $ (96) $ (153)
=======================
</TABLE>
Plan assets included 43,695 and 58,695 shares of the
Corporation's common stock having a market value of $1,879,000 and
$1,526,000 at March 31, 1995 and 1994, respectively.
Postretirement benefits. The Corporation sponsors a defined
benefit postretirement medical and dental plan that covers all of
its domestic full-time employees. Employees who retire after age 55
with at least 10 to 20 years of service (depending upon the date of
hire) are eligible. Current retirees are required to contribute
toward the cost of the plan until they attain age 65. All future
retirees will be required to contribute. The Corporation's subsidy
level is subject to a cap which increases by 3% each year. Retirees
will be required to contribute the plan cost in excess of the cap in
addition to other required contributions.
During fiscal 1994 adoption of SFAS 106 resulted in a one-time
charge against earnings for the transition obligation for past
services of $2,082,000 (net of a $1,382,000 deferred income tax
benefit). The ongoing additional after tax annual cost to the
Corporation is not material.
The Corporation's postretirement medical and dental plan is
unfunded. The accumulated postretirement benefit obligation,
covering both active and retired employees, was $3,882,000 and
$3,749,000 at March 31, 1995 and 1994, respectively. The
Corporation's accrued postretirement medical and dental benefit
liability at March 31, 1995 was $3,502,000 consisting of the
unfunded postretirement benefit obligation of $3,882,000 less the
unrecognized net loss of $380,000 and at March 31, 1994 was
$3,419,000 consisting of the unfunded postretirement benefit
obligation of $3,749,000 less the unrecognized loss of $330,000.
For measurement purposes, a 10.5% annual rate of increase in the
per capita cost of covered medical benefits was assumed for fiscal
1994; the rate is assumed to decrease gradually down to 6% for
fiscal 2002 and remain at that level thereafter. No annual rate
increase is assumed for the dental benefit cost since it is a
scheduled plan. The medical cost trend rate assumption has only a
small effect on the amounts reported due to the cap on contributions
paid by the Corporation. Increasing the assumed health care cost
trend rate one percentage point in each year would increase the
accumulated postretirement benefit obligation as of March 31, 1995
by approximately $200,000 (5%). The aggregate of the service and
interest cost components of the net periodic postretirement benefit
cost for fiscal 1995 would increase by approximately $12,000 (4%).
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 8%, 7.5% and 8.25%
at March 31, 1995, 1994 and 1993, respectively. Since the plan is
unfunded, no assumption is needed as to the long-term rate of return
on assets.
<TABLE>
The net periodic postretirement benefit costs for the years ended
March 31 were as follows:
<CAPTION>
(In thousands) 1995 1994
--------------------
<S> <C> <C>
Service cost $ 62 $ 47
Interest cost 292 279
Net amortization 11 -
Recognition of transition obligation
at April 1, 1993 - 3,464
--------------------
Net periodic postretirement benefit cost $ 365 $3,790
====================
</TABLE>
Postemployment benefits. The Corporation sponsors a defined
benefit postemployment compensation continuation plan that covers
all of its full time domestic employees. Employees who have
completed at least six months of service, become permanently
disabled and are unable to return to work are eligible to receive a
benefit under the plan. The benefit may range from one week to a
maximum of six months of compensation.
During fiscal 1995 adoption of SFAS 112 resulted in a one-time
charge against earnings for the transition obligation for past
services of $371,000 (net of a $248,000 deferred income tax benefit)
which was recorded on April 1, 1994. The estimated ongoing
additional after-tax annual cost of this plan is not material.
The postemployment salary continuation plan is unfunded. The
expected net periodic postemployment benefit cost for salary
continuation for fiscal 1995 included approximately $2,000 for
service cost (benefits attributed to service during the period),
$6,000 for interest cost and $619,000 for recognition of the
transition obligation at April 1, 1994 for a total net periodic
postemployment benefit cost of $627,000. The rate of increase in
future compensation levels used in determining the actuarial present
value of the projected benefit obligation was 5% and the weighted
average settlement rate was 8%.
Stock option plan. Under a non-qualified stock option plan
approved by the Shareholders in July 1992 (the 1992 Plan), certain
employees have been granted options to purchase up to an aggregate
294,500 shares of common stock. During fiscal 1995 there were
96,500 options granted having an exercise price of $16.1505 and
8,500 options were canceled upon termination of employment of the
grantees; during fiscal 1994 there were 73,500 options granted
having exercise prices from $16.983 to $18.315; and during fiscal
1993 there were 68,500 options granted having exercise prices from
$17.649 to $17.982. Options granted under the 1992 Plan generally
are exercisable during a four-year period beginning with the grant
date. Options for 37,550, 500 and 2,382 shares were exercised during
fiscal years 1995, 1994 and 1993, respectively, at prices ranging
from $14.652 to $17.982 per share. At March 31, 1995, there were
254,068 options outstanding with exercise prices from $14.652 to
$18.315 per share.
The options are exercisable into restricted shares of common
stock which cannot be sold or transferred, except back to the
Corporation at cost, during the four-year period commencing with the
exercise date. Compensation expense, which is equal to the
difference between the fair market value on the date of an option
grant and the exercise price of shares which may be purchased
thereunder, is amortized over an estimated combined period from the
date of grant through the end of the four-year period during which
purchased shares must be held or resold to the Corporation. The
amounts of such compensation expense charged to results of
operations following the date of grant for the years ended March 31,
1995, 1994 and 1993 were $370,000, $213,000, and $117,000,
respectively.
5. INCOME TAXES
As discussed in Note 1, the Corporation adopted SFAS 109 at the
beginning of fiscal year 1993. The cumulative effect of this change
in accounting for income taxes was immaterial.
Earnings before income taxes included foreign earnings of
$11,896,000, $7,864,000 and $7,141,000 for 1995, 1994 and 1993,
respectively.
<TABLE>
Income tax expense attributable to income from operations for the
years ended March 31 consisted of:
<CAPTION>
(In thousands) Current Deferred Total
-------------------------------------
1995
----
<S> <C> <C> <C>
U.S. Federal $ 3,887 $ (504) $ 3,383
State and local 500 36 536
Foreign 4,038 (952) 3,086
-------------------------------------
Totals $ 8,425 $(1,420) $ 7,005
=====================================
1994
----
U.S. Federal $ 2,272 $ (434) $ 1,838
State and local 590 (86) 504
Foreign 2,213 98 2,311
-------------------------------------
Totals $ 5,075 $ (422) $ 4,653
=====================================
1993
----
U.S. Federal $ 2,044 $ (44) $ 2,000
State and local 663 (12) 651
Foreign 2,462 (462) 2,000
-------------------------------------
Totals $ 5,169 $ (518) $ 4,651
=====================================
</TABLE>
<TABLE>
Income tax expense for the years ended March 31, 1995, 1994 and
1993 differed from the amounts computed by applying the U.S. Federal
statutory tax rates to pretax income from operations as a result of
the following:
<CAPTION>
(In thousands, except tax rates) 1995 1994 1993
------------------------------------
<S> <C> <C> <C>
U.S. Federal statutory tax rate 35% 34% 34%
====================================
Computed "expected"
Federal income tax $6,351 $4,224 $4,195
State income taxes, net of
Federal tax benefit 354 333 429
Adjustment of prior years
tax accruals 1,251 (24) 177
Foreign tax rate differential (132) (442) (405)
Change in the beginning of
the year balance of the
valuation allowance for
deferred income taxes
allocated to income tax
expense (872) 482 34
No tax benefit for (gain) loss of
unconsolidated corporate
joint venture (172) (10) 200
Other, net 225 90 21
--------------------------------------
Actual income taxes $7,005 $4,653 $4,651
======================================
Effective tax rate 38.6% 37.5% 37.7%
======================================
</TABLE>
<TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and liabilities at
March 31 are:
<CAPTION>
(In thousands) 1995 1994
------------------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts $ 228 $ 277
Inventories, principally due to additional
costs inventoried for tax purposes pursuant
to the Tax Reform Act of 1986 and non-
deductible inventory reserves 607 420
Accrued liabilities 3,527 2,169
Foreign net operating loss carry forwards 1,198 1,345
Other 1,248 308
------------------
Total gross deferred tax assets 6,808 4,519
Less valuation allowance - 872
------------------
Net deferred assets 6,808 3,647
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation 773 550
Other 187 166
------------------
Total gross deferred tax liabilities 960 716
------------------
Net deferred asset $5,848 $2,931
==================
</TABLE>
The deferred tax asset of $1,198,000 and $1,345,000 at March 31,
1995 and 1994, respectively, which relate to foreign net operating
loss carry forwards, results primarily from prior year losses
incurred by a foreign subsidiary. The valuation allowance in 1994
was related to those losses. The valuation allowance decreased
$872,000 in 1995 and increased $482,000 in 1994. Management now
believes the deferred tax asset is more likely than not to be
realized from future taxable income generated by the subsidiary.
The net operating loss carry forward has an indefinite expiration
period.
The Corporation has not recognized a deferred tax liability for
the undistributed earnings of subsidiaries that arose in 1995 and
prior years because the Corporation currently does not expect those
unremitted earnings to reverse and become taxable to the Corporation
in the foreseeable future. A deferred tax liability will be
recognized when the Corporation expects that it will recover those
undistributed earnings in a taxable manner, such as through receipt
of dividends, net of available foreign tax credits, or sale of the
investments. At March 31, 1995, the undistributed earnings of those
subsidiaries were approximately $22,000,000.
6. SEGMENT REPORTING
The Corporation is engaged in the business of developing,
manufacturing and marketing industrial chemicals, supplies and
related equipment.
<TABLE>
The following table is a summary of the Corporation's operations
by geographic area:
<CAPTION>
North Asia-
(In thousands) America Europe Pacific Consolidated
--------------------------------------------
1995
----
<S> <C> <C> <C> <C>
Net sales to unaffiliated
customers:
Proprietary $90,177 $34,490 $38,648 $163,315
========================================
Total Sales $93,866 $41,196 $47,038 $182,100
Cost of goods sold 47,544 24,200 22,315 94,059
Selling, technical and
administrative expense 40,308 12,311 15,285 67,904
----------------------------------------
Operating profit 6,014 4,685 9,438 20,137
Other income (expense) 1,532 (1,488) (2,034) (1,990)
----------------------------------------
Earnings before
income taxes <F1> 7,546 3,197 7,404 18,147
Income taxes 3,476 1,458 2,071 7,005
----------------------------------------
Net earnings <F1> $ 4,070 $ 1,739 $ 5,333 $ 11,142
========================================
Identifiable assets $67,780 $21,943 $33,582 $123,305
========================================
1994 <F2>
----
Net sales to unaffiliated
customers:
Proprietary $68,864 $31,469 $30,268 $130,601
========================================
Total Sales $73,861 $37,951 $38,214 $150,026
Cost of goods sold 35,538 22,416 18,960 76,914
Selling, technical and
administrative expense 32,785 13,118 14,160 60,063
----------------------------------------
Operating profit 5,538 2,417 5,094 13,049
Other income (expense) 268 (1,478) 585 (625)
----------------------------------------
Earnings before
income taxes <F1> 5,806 939 5,679 12,424
Income taxes 2,843 683 1,127 4,653
----------------------------------------
Net earnings <F1> $ 2,963 $ 256 $ 4,552 $ 7,771
========================================
Identifiable assets $56,708 $19,942 $29,217 $105,867
========================================
1993 <F2>
----
Net sales to unaffiliated
customers:
Proprietary $66,822 $35,406 $27,904 $130,132
========================================
Total Sales $74,068 $45,042 $37,214 $156,324
Cost of goods sold 38,363 27,372 18,165 83,900
Selling, technical and
administrative expense 30,472 14,197 12,211 56,880
----------------------------------------
Operating profit 5,233 3,473 6,838 15,544
Other income (expense) 880 (2,637) (1,449) (3,206)
----------------------------------------
Earnings before
income taxes 6,113 836 5,389 12,338
Income taxes 3,076 177 1,398 4,651
----------------------------------------
Net earnings $ 3,037 $ 659 $ 3,991 $ 7,687
========================================
Identifiable assets $53,645 $24,796 $28,732 $107,173
========================================
<FN>
<F1> Before the cumulative effect of accounting changes which
resulted in one-time after tax charges of $371,000 ($0.12/share) in
1995 and $2,082,000 ($0.58/share in 1994).
<F2> Certain amounts in the 1994 and 1993 geographic segment
presentations have been reclassified to conform with the 1995
presentation.
</TABLE>
7. LONG-TERM OBLIGATIONS
<TABLE>
Long-term obligations at March 31 consisted of the following:
<CAPTION>
(In thousands) 1995 1994
----------------------
<S> <C> <C>
Term loan, variable interest
(7.5% at March 31, 1995), due
in quarterly installments to 2,001 $21,875 $ -
Note payable, variable interest - 450
Debenture, 3.5% interest due in
annual installments to 1999 607 649
Other, due in varying amounts
to 1999 160 252
-----------------------
Total long-term obligations 22,642 1,351
Less current portion 4,413 429
-----------------------
Long-term portion $18,229 $ 922
=======================
</TABLE>
<TABLE>
Minimum future principal payments on long-term obligations
subsequent to March 31, 1995 are as follows:
(In thousands)
<S> <C>
1996 $ 4,413
1997 4,385
1998 4,349
1999 4,288
2000 4,166
2001 1,041
-------
Total $22,642
=======
</TABLE>
The term loan bears interest at a variable rate, which initially
was equal to the London interbank market rate (LIBOR) plus 1.25
percentage points. The Corporation has purchased an interest rate
cap which limits the LIBOR interest rate payable on the outstanding
portions of the debt, except for the last $3.1 million. The maximum
payable rates increase gradually from 5.81%, initially, to 8.97%
when the interest rate cap expires. At March 31, 1995 the 7.5%
effective interest rate included a LIBOR rate of 6.5% plus 1%. The
maximum payable LIBOR rate under the interest rate cap was 6.98%.
The maximum effective interest rate payable would have been 7.98%.
Under the term loan, the most restrictive covenants provide that
dividends to shareholders cannot exceed 50% of net earnings; a
future business acquisition cannot cause consolidated debt to exceed
three hundred percent of earnings before interest, taxes,
depreciation and amortization; the ratio of earnings before income
taxes to interest expense must be at least 2.5 to 1; the minimum
consolidated net worth shall be at least $37 million plus one-half
of consolidated net earnings after October 6, 1994; and the ratio of
total debt to net worth shall be no greater than 1.2 to 1 during
calendar year 1995 and .9 to 1 thereafter.
8. LEASE COMMITMENTS
The Corporation leases certain warehouse space, transportation,
computer and other equipment. Contingent rentals are paid for
warehouse space on the basis of the monthly quantities of materials
stored and for transportation and other equipment on the basis of
mileage or usage. Total rental expense amounted to $4,968,000 in
1995, $4,126,000 in 1994, and $4,427,000 in 1993 of which $821,000,
$587,000 and $610,000, respectively, were contingent rentals.
<TABLE>
Minimum lease commitments under operating leases for the fiscal
years subsequent to March 31, 1995 are as follows:
(In thousands)
<S> <C>
1996 $2,648
1997 766
1998 261
1999 143
2000 31
------
Total $3,849
======
</TABLE>
9. SHAREHOLDERS' EQUITY
<TABLE>
The following summarizes the changes in shareholders' equity accounts
for each of the three years in the period ended March 31,1995:
(In thousands, except share data)
<CAPTION>
Common Stock Total
------------ Additional Cumulative Treasury Stock Share-
Stated Paid-in Retained Translation -------------- holders
Shares Value Capital Earnings Adjustment Shares Cost Equity
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance March 31, 1992 4,095,648 $4,096 $ 464 $65,943 $2,147 530,648 $(11,600) $61,050
Stock options
exercised 2,382 2 150 152
Net earnings 7,687 7,687
Cash dividends
$.60 per share (2,139) (2,139)
Foreign currency
translation
adjustment (1,569) (1,569)
-------------------------------------------------------------------------------
Balance March 31, 1993 4,098,030 4,098 614 71,491 578 530,648 (11,600) 65,181
Stock options
exercised 500 1 220 221
Net earnings 5,689 5,689
Cash dividends
$.60 per share (2,141) (2,141)
Foreign currency
translation
adjustment (781) (781)
--------------------------------------------------------------------------------
Balance March 31, 1994 4,098,530 4,099 834 75,039 (203) 530,648 (11,600) 68,169
Stock options
exercised 37,550 37 842 879
Net earnings 10,771 10,771
Cash dividends
$.60 per share (1,767) (1,767)
Foreign currency
translation
adjustment 1,754 1,754
Treasury stock purchase 862,899 (26,152) (26,152)
--------------------------------------------------------------------------------
Balance March 31, 1995 4,136,080 $4,136 $1,676 $84,043 $1,551 1,393,547 $(37,752) $53,654
================================================================================
</TABLE>
Effective August 1, 1994, the Corporation purchased 851,899
shares of its common stock at a price of $30 per share pursuant to a
"Dutch Auction" self tender offer that commenced on June 23, 1994
(the Offer). Under the terms of the Offer, the Corporation had
sought to purchase up to 1,000,000 shares at prices not greater than
$30 nor less than $25 per share, as specified by the tendering
shareholders. The shares purchased pursuant to the Offer represent
approximately 23.8% of the shares outstanding immediately prior to
the commencement of the Offer. The total cost of the Offer,
including all related fees and expenses, of approximately $26.2
million was funded primarily by borrowing $25 million on an
unsecured basis under a six-year term loan which is discussed under
Note 7 to these consolidated financial statements.
Separately, the Board of Directors authorized the purchase of up
to 148,000 shares of the Corporation's common stock to be acquired
through open market purchases or privately negotiated transactions
from time to time. During the third quarter of fiscal 1995, 11,000
shares of common stock were repurchased at $35 per share pursuant to
this authorization. Any future repurchases under this authorization
will depend on various factors, including the market price of the
shares, the Corporation's business and financial position and
general economic and market conditions. Additional shares acquired
pursuant to such authorization will be held in the Corporation's
treasury and will be available for the Corporation to issue without
further shareholder action (except as required by applicable law or
the rules of any securities exchange on which the share are then
listed). Such shares may be used for various Corporate purposes,
including contributions under existing or future employee benefit
plans, the acquisition of other businesses and the distribution of
stock dividends. At March 31, 1995, there was a balance of such
outstanding authorizations totaling 137,000 shares.
10. CONTINGENCIES
The Corporation has been named as a potentially responsible party
(PRP) by the Environmental Protection Agency in connection with two
waste sites. There are many other companies involved at each of
these sites and the Corporation's participation is minor. The
Corporation has recorded its best estimate of liabilities in
connection with site clean-up based upon the extent of its
involvement, the number of PRPs and estimates of the total costs of
the site clean-up. Though it is difficult to predict the final
costs of site remediation, management believes that the recorded
liabilities are reasonable estimates of probable liability and that
future cash outlays are unlikely to be material to its consolidated
financial position, results of operations or cash flows.
The Corporation is a party to a number of lawsuits and claims
arising out of the ordinary conduct of business. While the ultimate
results of the proceedings against the Corporation cannot be
predicted with certainty, management does not expect that resolution
of these matters will have a material adverse effect upon its
consolidated financial position.
The Corporation's business operations, consist principally of
manufacture and sale of specialty chemicals, supplies and related
equipment to customers throughout much of the world. Approximately
60% of the business is concentrated with manufacturers of printed
circuit boards which are used in a wide variety of end-use
applications, including computers, communications and control
equipment, appliances, automobiles and entertainment products. As
is usual for this business, the Corporation generally does not
require collateral or other security as a condition of sale,
choosing, rather, to control credit risk of trade account financial
instruments by credit approval, balance limitation and monitoring
procedures. Management believes that reserves for losses, which are
established based upon review of account balances and historical
experience, are adequate.
<PAGE>
MANAGEMENT'S STATEMENT OF FINANCIAL RESPONSIBILITY
MacDermid, Incorporated (Logo)
245 Freight Street
Waterbury, CT 06702
To The Shareholders
MacDermid, Incorporated
The financial information in this report, including the audited
consolidated financial statements, has been prepared by management.
Preparation of consolidated financial statements and related data
involves the use of judgment. Accounting principles used in
preparing consolidated financial statements are those that are
generally accepted in the United States.
To safeguard Corporate assets, it is important to have a sound
but dynamic system of internal controls and procedures that balances
benefits and costs. The Corporation employs professional financial
managers whose responsibilities include implementing and overseeing
the financial control system, reporting on management's stewardship
of assets entrusted to it by share owners and performing accurate
and proper maintenance of the accounts.
Management has long recognized its responsibility for conducting
the affairs of the Corporation and its affiliates in an ethical and
socially responsible manner. MacDermid, Incorporated is dedicated
to the highest standards of integrity. Integrity is not an
occasional requirement, but a continuing commitment.
KPMG Peat Marwick LLP conducts an objective, independent review
of management's fulfillment of its obligations relating to the
fairness of reported operating results and financial condition.
Their report for 1995 appears adjacent to this statement.
The Audit Committee of the Board of Directors, consisting solely
of Directors independent of MacDermid, maintains an ongoing
appraisal on behalf of the share owners of the effectiveness of the
independent auditors and the Corporation's staff of financial and
operating management with respect to the financial and internal
controls.
/s/Daniel H. Leever
Daniel H. Leever
President and Chief Executive Officer
<PAGE>
INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick LLP (Logo)
Certified Public Accountants
City Place II
Hartford, CT 06103-4103
The Board of Directors and Shareholders
MacDermid, Incorporated
We have audited the accompanying consolidated balance sheets of
MacDermid, Incorporated and subsidiaries as of March 31, 1995 and
1994, and the related consolidated statements of earnings and cash
flows for each of the years in the three-year period ended March 31,
1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of MacDermid, Incorporated and subsidiaries at March 31,
1995 and 1994 and the results of their operations and their cash
flows for each of the years in the three-year period ended March 31,
1995 in conformity with generally accepted accounting principles.
As discussed in Note 4 to the consolidated financial statements,
the Company adopted the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" in 1995,
and Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" in 1994.
/s/KPMG Peat Marwick LLP
/s/KPMG Peat Marwick LLP
May 12, 1995
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
SELECTED QUARTERLY RESULTS
(UNAUDITED)
(In thousands, except per share amounts)
1995 by Quarters
----------------------------------------------
<CAPTION>
June September December March Total
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $42,587 $46,498 $44,547 $48,468 $182,100
Gross profit 21,262 21,779 21,684 23,316 88,041
Net earnings 2,799<F2> 2,667 2,637 2,668 10,771<F2>
Primary earnings
per share<F1> $0.78<F2> $0.85 $0.92 $0.92 $3.43<F2>
1994 by Quarters
----------------------------------------------
June September December March Total
----------------------------------------------
Net sales $39,850 $37,755 $34,814 $37,607 $150,026
Gross profit 19,500 17,979 16,806 18,827 73,112
Net earnings (184)<F2> 1,860 1,477 2,536 5,689<F2>
Earnings per share $(0.05)<F2> $0.52 $0.42 $0.71 $1.60<F2>
<FN>
<F1> Fiscal 1995 was the first year in which the dilutive effect of
options granted was large enough to report.
<F2> After cumulative effect of accounting changes which resulted
in one-time after tax charges of $371,000 ($0.12/share) in 1995 and
$2,082,000 ($0.58/share) in 1994.
</TABLE>
- ---------------------------------------------------------------------------
<TABLE>
MARKET RANGE TRADING RECORD
Fiscal 1995 Fiscal 1994
------------------ -----------------
<CAPTION>
High Low High Low
QUARTER ------------------ -----------------
<S> <C> <C> <C> <C>
June 29 1/2 24 31 25 1/4
September 36 1/2 29 28 1/2 26 3/4
December 42 34 28 3/4 24 1/2
March 44 1/2 36 1/2 27 1/4 24 1/2
Closing price March 31 43 26
<FN>
Source: Nasdaq Stock Market Monthly Statistical Report
</TABLE>
<TABLE>
DIVIDEND RECORD
Fiscal 1995 Fiscal 1994
--------------------------- ----------------------------
<CAPTION>
Record Payable Amount Record Payable Amount
QUARTER Date Date Declared Date Date Declared
--------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
June 6/15/94 7/1/94 $0.15 6/15/93 7/1/93 $0.15
September 9/15/94 10/3/94 $0.15 9/15/93 10/1/93 $0.15
December 12/15/94 1/3/95 $0.15 12/15/93 1/3/94 $0.15
March 3/15/95 4/3/95 $0.15 3/15/94 4/1/94 $0.15
</TABLE>
<PAGE>
CORPORATE INFORMATION
DIRECTORS:
Harold Leever, Chairman of the Board
Daniel H. Leever, President and Chief Executive Officer
Donald G. Ogilvie, Executive Vice President,
American Bankers Association
James C. Smith, Chairman of the Board and Chief Executive Officer,
Webster Financial Corporation
Thomas W. Smith, President of Prescott Investors, Inc.
Walter F. Torrance, Jr., Partner, Carmody & Torrance, Attorneys
Robert F. Welzien, Chairman and Chief Executive Officer of
LISA Products Corporation
Francis M. White, Retired Chairman of the Board,
Bank of Boston Connecticut
OFFICERS:
Harold Leever, Chairman of the Board
Daniel H. Leever, President and Chief Executive Officer
VICE PRESIDENTS:
Charles T. Cobb
Terrence C. Copeland
David A. Erdman
John J. Grunwald
Peter E. Kukanskis
Gary B. Larson
Michael A. Pfaff
OTHER OFFICERS:
Gregory M. Bolingbroke, Corporate Controller
John L. Cordani, Corporate Secretary
Sharon J. Stone, Assistant Treasurer
CORPORATE HEADQUARTERS:
245 Freight Street
Waterbury, Connecticut 06702
(203) 575-5700
AUDITORS:
KPMG Peat Marwick LLP
REGISTRAR OF STOCK AND TRANSFER AGENT:
Harris Trust Company of New York
SEC FORM 10-K:
The Annual Report and the SEC Form 10-K report are
available without charge by written request to:
Corporate Secretary
MacDermid, Incorporated
245 Freight Street
Waterbury, CT 06702
DIVIDEND REINVESTMENT PLAN:
A systematic investment service is available to all MacDermid
shareholders. The service permits investment of MacDermid,
Incorporated dividends and voluntary cash payments in additional
shares of MacDermid stock.
Please direct any inquiries to:
Harris Trust Company of New York
c/o Harris Trust and Saving Bank
Dividend Reinvestment Department
P.O. Box A3309
Chicago, IL 60690
SHAREHOLDERS' QUESTIONS:
Shareholders with questions concerning non-receipt of dividend
checks, transfer requirements, registration and address changes,
or who need a duplicate 1099 statement, should write to:
Harris Trust Company of New York
c/o Harris Trust and Savings Bank
111 West Monroe, P.O. Box 755
Chicago, IL 60690
MARKET & DIVIDEND INFORMATION:
The common shares of MacDermid, Incorporated are traded on
the Nasdaq Stock Market (Symbol: MACD). Price and shares
traded are listed in principal daily newspapers and are
supplied by Nasdaq. Approximate number of Holders as of
May 31, 1995 - 800. CUSIP-554273 102.
ANNUAL MEETING:
The Annual Meeting of Shareholders will be held on Thursday,
July 20, 1995 at 3:30 p.m., at the Holiday Inn Waterbury,
63 Grand Street, Waterbury, CT.
<PAGE>
LOCATIONS IN THE AMERICAS:
United States: Waterbury, CT; New Hudson, MI; Cincinnati, OH; Ferndale,
Dallas, TX
Canada: MacDermid Chemicals, Inc.
LOCATIONS WORLDWIDE:
Australia: MacDermid Australia Branch
Benelux: MacDermid Benelux, B.V.
England: MacDermid G.B., Ltd.
France: MacDermid France, S.A.
Germany: MacDermid GmbH
Hong Kong: MacDermid Asia Ltd; MacDermid Hong Kong, Ltd.
Israel: MacDermid Israel Ltd.
Italy: MacDermid Italiana SRL
Japan: Nippon MacDermid Co. Ltd.
Korea: MacDermid Korea Ltd.
New Zealand: MacDermid New Zealand, Ltd.
Rep. of South Africa: MacDermid S.A. (PTY) Ltd.
Singapore: MacDermid Singapore, Pte Ltd.
Spain: MacDermid Espanola, S.A.
Switzerland: MacDermid Suisse, S.A.
Taiwan: MacDermid Taiwan, Ltd.
AFFILIATE:
Hollmuller America, Inc.: Waterbury, CT
