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
[X] 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:
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[ ] 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.:
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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 25, 1996
The Annual Meeting of Shareholders of MacDermid, Incorporated
("MacDermid") will be held at the Marriot Courtyard, 63 Grand Street,
Waterbury, Connecticut, on Thursday, July 25, 1996 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 proposed amendment to the
MacDermid, Incorporated Special Stock Purchase Plan dated November 15,
1991; 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 May 31,
1996 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 Employees
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 24, 1996 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 Marriot Courtyard, 63 Grand Street, Waterbury,
Connecticut on Thursday, July 25, 1996 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 proposed amendment to
the MacDermid, Incorporated Special Stock Purchase Plan dated November
15, 1991, 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. MacDermid currently anticipates that Mr. John L. Cordani and Ms.
Sharon J. Stone, employees of MacDermid, will be the Inspectors of
Election who will certify the votes at the meeting of shareholders.
<PAGE>
Only holders of Common Stock of record at the close of business on
May 31, 1996 are entitled to notice of and to vote at the Meeting. On
that date there were 2,791,530 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 proposed amendment
to the MacDermid, Incorporated Special Stock Purchase Plan dated
November 15, 1991. 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 Stockas 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 24, 1996.
MacDermid's Annual Report to Shareholders, containing financial
statements for the fiscal year ended March 31, 1996, 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 or 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.
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
203,832 shares - 7.30%(1)
Chairman of the Executive and Nominating Committees.
Age: 82
- ----------------------------------------------------------------------
DANIEL H. LEEVER Mr. Leever joined MacDermid
(Full face photo of in 1982. In 1989, he was appointed Senior
Mr. Daniel H. Leever Vice President and Chief Operatintg Officer.
will be placed here) In the following year, he was appointed
President and Chief Executive Officer. Mr.
Leever attended undergraduate schoo 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
133,749 shares - 4.79%(2) (3)
Member of the Executive and Nominating Committees
Age: 47
<PAGE>
DONALD G. OGILVIE - Mr. Ogilvie has been the
Executive Vice President of the American Bankers
Association since 1980. He was from 1980 to
1985 a Vice President of Celanese Corporation (Full face
and from 1977 to 1980 Associate Dean of Yale photo of Donald
University's School of Organization and Management. G. Ogilvie will
Earlier he held posts in the U.S. Department of be placed here)
Defense and in the Executive Office of the President
as Associate Director of 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
838 shares - *(2)
Member of the Audit, Compensation, Executive and Nominating
Committees.
Age: 53
- ----------------------------------------------------------------------
(Full face photo of JAMES C. SMITH Mr. Smith is Chairman
James C. Smith of the Board and Chief Executive
will be placed here) Officer of Webster Financial Corporation
and its subsidiary, Webster Bank of
Connecticut. He also serves and has
served since prior to 1987 as President
of Webster. 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 subsidiary, Webster
Bank of Connecticut.
Director since 1994
1,130 shares - * (2)
Member of the Audit, Compensation, Executive and Nominating Committees.
Age: 47
<PAGE>
THOMAS W. SMITH Mr. Smith is and since 1973 (Full face photo of
has been the Managing Partner of Prescott Thomas W. Smith
Investors. He is on the board of directors will be placed here)
of Cataline Marketing Corporation and the
National Center for Policy Analysis. Mr.
Smith has a B.A. degree from Miami University
and an M.A. from the University of California
at Berkeley.
Principal occupation - Managing Partner of
Prescott Investors.
Director since 1989
211,590 shares - 7.58%(4)
Chairman of the Audit and Compensation Committees and a member of
the Executive and Nominating Committees
Age: 68
- ------------------------------------------------------------------------
* Indicates less than 1% of the outstanding shares of Common Stock.
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 5,757 shares held by MacDermid's Profit Sharing and
Employee Stock Ownership Plans. Mr. Leever has sole voting power
with respect to 176,175 shares. The Bank of Boston Connecticut, as
trustee of a revocable trust, may have or succeed to the rights to
vote 146,175 shares. A portion of the information for Mr. Leever was
obtained from his amended Schedule 13G dated February 6, 1996.
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 9,410 shares held by MacDermid's Profit Sharing and
Employee Stock Ownership plans, 7,500 shares which are subject to
restrictions on transfer until May 30, 1998 and 12,500 shares which
are subject to restrictions on transfer until May 18, 1999 both under
the terms of 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 4,398 and 3,287 shares which are
subject to restrictions on transfer until August 1, 1999 and May 14,
2000 respectively under the terms of the MacDermid 1995 Equity
Incentive Plan. Includes 7,887 shares held in trust by Mr. Leever
for his sons and 202 shares owned by his spouse, as to all of which
Mr. Leever disclaims beneficial interest.
<PAGE>
(4) Includes 201,012 shares held by partnerships in which Mr. Smith
is a general partner and 5,000 shares held by Prescott Investors'
Employee Profit Sharing Plan, as to all of which Mr. Smith shares voting
and investment power and 5,578 shares held by Mr. Smith personally.
A portion of the information for Prescott Investors, 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, 1996.
EXECUTIVE OFFICER COMPENSATION
The Compensation Committee is primarily responsible for
implementing MacDermid's overall executive officer compensation policy
ofcompensating 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, in order of emphasis, 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 theirsimilarity to MacDermid, as determined by total
revenue. 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 10. 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.
<PAGE>
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
based upon individual performance and the results of the individual
business units for which they are respectively responsible.
During the fiscal year ended March 31, 1996 MacDermid's executive
officers were eligible to receive equity incentives (Stock Options or
Restricted Stock Awards) under the MacDermid Special Stock Purchase
Plan (the "Special Stock Purchase Plan") and the MacDermid, Incorporated
1995 Equity Incentive Plan (the "Equity Incentive Plan"). The
Committee administers the Plans, which were approved by MacDermid's
shareholders in 1992 and 1995 respectively, and awards equity incentives
to executives and other employees of MacDermid. The purpose of
awarding equity incentives under the Plans 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.
Stock Options awarded under the Special Stock Purchase 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
participant's employment with MacDermid is terminated during such
period, except in the case of death, retirement, permanent disability
<PAGE>
or involuntary termination without cause. Such restrictions may,
however, be waived by the Committee in its discretion from time to time.
Restricted Stock Awards issued under the Equity Incentive Plan
generally consist of restricted stock awards equal to twenty (20)
percent of the amount of a participant's annual bonus payout awarded
to the participant under the participant's bonus plan in lieu of
payment of the allocable bonus amount plus some additional amount
of matching awards, which amount is determined by the Committee.
The restricted stock awards may not be sold or transferred during a
period of four (4) years from the date of the award. The restricted
stock is forfeited to MacDermid if the participant's employment with
MacDermid is terminated during the restricted period, except in the
case of death, permanent disability, involuntary termination without
cause or retirement. Such restrictions may, however, be waived by
the Committee in its discretion from time to time.
The Committee believes that the Plans allow 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
remained at $275,000 in fiscal 1996. Mr. Leever's base salary has
remained constant at this level for the past two years, with any
potential increase being deferred to the performance based bonus.
Mr. Leever received a bonus for the fiscal year ended March 31, 1996
based on each of the bonus factors, all of which exceeded the minimum
requirements for payment of a bonus. MacDermid's performance during
the fiscal year ended March 31, 1996 placed MacDermid solidly in the
upper quintile of the Comparator Group. Approximately one-half of
the incentive bonus was paid with respect to the EPS change with the
balance attributable to the ROS and the ROE. During fiscal year 1996,
Mr. Leever received a restricted stock award of 4,398 shares of
Common Stock.
Respectfully submitted by,
THE COMPENSATION COMMITTEE
Thomas W. Smith, Chairman
Donald G. Ogilvie
James C. Smith
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table summarizes annual, long-
term and other compensation paid by MacDermid and its subsidiaries
for each of its three fiscal years ended March 31, 1996 to
MacDermid's Chief Executive Officer and four other most highly
compensated executive officers.
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- -----------
Securities All
Underlying Other
Options or Compen-
Name and Year Salary Bonus Restricted Stock sation
principal position ($) ($)<F1> (#)<F2> ($)<F3><F4>
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Daniel H. Leever 1996 275,000 448,668 4,398 56,569
President and 1995 275,000 385,000 25,000 47,268
Chief Executive 1994 260,725 125,000 25,000 15,854
Officer
Arthur J. LoVetere,Jr.1996 120,684 160,000 8,414 79,101
Vice President and 1995 - - - -
Chief Financial 1994 - - - -
Officer <F5>
Terrence C. Copeland 1996 145,000 - 1,646 33,185
Vice President <F6> 1995 120,800 144,000 5,000 27,901
1994 119,492 30,000 2,000 21,016
Michael A. Pfaff 1996 145,000 100,000 1,646 30,688
Vice President 1995 123,150 144,000 10,000 23,873
1994 109,969 105,000 5,000 14,480
Peter E. Kukanskis 1996 115,000 40,000 951 22,299
Vice President 1995 104,000 83,200 2,000 16,861
1994 100,000 30,000 2,000 14,400
<FN>
<F1> The bonuses reported were actually paid in the following
fiscal year but calculated and accrued based upon performance in
the fiscal year indicated in each case. 1995 bonuses were adjusted
downward from the 1995 proxy because of the 20% reduction required
by the MacDermid, Incorporated 1995 Equity Incentive Plan which
was approved by the Shareholders at the 1995 Annual Meeting.
<F2> Awarded in fiscal year indicated. For Fiscal 1996, all awards
listed, except for the shares indicated for Mr. LoVetere, consisted of
restricted Stock Awards under the 1995 Equity Incentive Plan. The
8,414 shares noted for Mr. LoVetere consisted of 7,500 options awarded
under the Special Stock Purchase Plan and 914 shares issued under the
1995 Equity Incentive Plan.
<PAGE>
<F3> Includes 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. For Fiscal 1996 these amounts were
$19,584, $6,051, $8,670, $8,670 and $5,940 for Messrs. Leever,
LoVetere, Copeland, Pfaff and Kukanskis respectively.
<F4> Amounts listed for 1996 include payments by MacDermid for
premiums for split dollar life insurance in the amounts of $4,384,
$8,198, $5,024, and $5,174 on behalf of, respectively, Messrs.
Leever, Copeland, Pfaff, and Kukanskis; contributions to the
E.S.O.P. in the amounts of $3,750, $3,750, $3,750, and $1,982 on
behalf of, respectively, Messrs. LoVetere, Copeland, Pfaff, and
Kukanskis; contributions to the Profit Sharing Plan in the amounts
of $29,793, $8,015, $11,172, $11,172, and $7,865 on behalf of,
respectively, Messrs. Leever, LoVetere, Copeland, Pfaff, and
Kukanskis; and premiums for term life insurance in the amounts of
$2,808, $967, $1,395, $2,072, and $1,338 on behalf of, respectively,
Messrs. Leever, LoVetere, Copeland, Pfaff, and Kukanskis. The
amount listed for Mr. LoVetere includes $60,318 in reimbursed
moving expenses.
<F5> Reported only for the fiscal year in which Mr. LoVetere
became an executive officer, Fiscal Year 1996.
<F6> Mr. Copeland resigned as an executive officer and employee
of MacDermid effective April 15, 1996.
</TABLE>
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to
stock options granted to the Chief Executive Officer and the
named executive officers during the fiscal year ended March 31,
1996.
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------
<CAPTION>
Percent Potential realizable value at
Number of of total assumed annual rates of stock
securities options price appreciation for option
underlying granted to Exercise Market term <F2>
options employees or base price -----------------------------
granted in fiscal price on date Expiration
Name (#) <F1> year ($/Sh) of grant date 0% ($) 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arthur J. 7,500 50% $30.85 $46.25 10/3/99 $115,500 $281,100 $512,175
LoVetere, Jr.
<FN>
<F1> (1) 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> (2) 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 2,794,231 shares owned as of March 31,
1996 by the shareholders of MacDermid at 5% and 10% compounding from
the market price on the date of grant would be approximately $68.33
and $99.14 per share or an aggregate value for all shares of
$190,930,000 and $277,019,000, respectively.
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information with respect to the
aggregate number of unexercised options held by the Chief Executive
Officer and the named executive officers as of March 31, 1996.
<CAPTION>
Shares Number of Securities Value of
Acquired Underlying Unexercised
on Unexercised In-the-money
Exercise Options/SARs at Options at
During FY-end (#) <F2> FY-end ($)
Name Fiscal Value Exercisable/ Exercisable/
1996 Realized Unexercisable Unexercisable
# $ <F1> <F2> <F3>
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel H. Leever 12,500 348,100 80,000 3,918,853
Arthur J. LoVetere,Jr 3,000 81,966 7,500 262,688
Terrence C.Copeland 4,000 120,392 12,000 585,872
Michael A. Pfaff 1,268 36,896 20,000 981,130
Peter E. Kukanskis 0 0 10,000 497,911
<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, 1996.
<F3> Calculated using a market value per share at March 29, 1996 of
$65 7/8, as reported by NASDAQ Stock Market ("NASDAQ").
</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 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
<PAGE>
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, 1996 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 20,899 31,334 41,778 52,223 62,668
$200,000 28,389 42,584 56,778 70,973 85,168
$250,000 35,889 53,834 71,778 89,723 107,668
$300,000 43,389 65,084 86,778 108,473 130,168
$350,000 50,889 76,334 101,778 127,223 152,668
$400,000 58,389 87,584 116,778 145,973 175,168
$450,000 65,889 98,834 131,778 164,723 197,668
$500,000 73,389 110,084 146,778 183,473 220,168
$600,000 88,389 132,584 176,778 220,973 265,168
$700,000 103,389 155,084 206,778 258,473 310,168
</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, LoVetere, Copeland, Pfaff, and Kukanskis have 15,
7, 9, 14, and 27 years of credited service, respectively, under the
Pension Plan.
COMPARATIVE STOCK PERFORMANCE
The following graph and chart compare, during the five-year
period commencing March 31, 1991 (at the market close) and ending
March 31, 1996, 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, 1991 (at the market
close) and the reinvestment of any dividends.
<PAGE>
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 1991 to 1996. MacDermid's data line generally trails
Nasdaq and Specialty Chemicals through 1994 and, in 1995, increases
to well above the comparator indices by the end of 1995 and through
1996.)
Past share performance should not be viewed as necessarily
indicative of future performance.
<TABLE>
<CAPTION>
Graph Dollar Values 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
MacDermid, Inc. 100 118 116 114 192 297
NASDAQ 100 105 118 136 145 195
Specialty Chemicals 100 123 127 137 142 165
</TABLE>
<TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table sets forth information as of May 31, 1996,
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 203,832 <F1> 7.30%
366 Guilds Hollow Road
Bethlehem, Connecticut 06751
MacDermid Employees Profit Sharing, 664,285 <F2> 23.80%
Pension and Stock Ownership Plans
245 Freight Street
Waterbury, Connecticut 06702
Thomas W. Smith and 211,590 <F1> 7.58%
Prescott Investors
323 Railroad Avenue
Greenwich, Connecticut 06830
Bank of Boston Corporation 289,375 <F3> 10.37%
100 Federal Street
Boston, Massachusetts 02110
Vanguard/Primecap Fund, Inc. 189,000 <F5> 6.77%
P.O. Box 2600
Valley Forge, PA 19482
Lazard Freres & Co. 139,700 (F4) 5.00%
One Rockefeller Plaza
New York, N.Y. 10020
NAMED EXECUTIVE OFFICERS
Daniel H. Leever 133,749 <F1> <F6> <F7> 4.79%
Arthur J. LoVetere, Jr. 21,481 <F6> <F7> *
Terrence C. Copeland 21,244 <F6> *
Michael A. Pfaff 35,360 <F6> <F7> 1.27%
Peter E. Kukanskis 20,480 <F6> <F7> *
All Directors and Officers 729,894 <F6> <F7> 26.15%
as a group (15 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> 620,590 shares in the MacDermid Employees Profit Sharing Plan
and in the MacDermid, Incorporated Employee Stock Ownership Plan are
beneficially owned by the Trustee of the plans, Fleet Bank, 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, 1996. Through its subsidiary,
Bank of Boston Connecticut, BOB has sole voting power with respect to
289,375 shares, shared voting power with respect to no shares, sole
dispositive power with respect to 119,805 shares and shared dispositive
power with respect to 169,570 shares. 146,175 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. is taken from its
Schedule 13G dated February 14, 1996.
<F5> The information for Vanguard Primecap Fund, Inc. is taken
from its Schedule 13G dated February 14, 1996.
<F6> The beneficial owners of these shares generally have sole
voting and investment power. Includes 133,749; 21,481; 21,244;
35,360; and 20,480 shares of Common Stock held by Daniel H. Leever
and Messrs. Lovetere, Copeland, Pfaff, and Kukanskis, respectively,
and 73,943 shares of Common Stock beneficially owned by 12 officers
as a group in MacDermid's Profit Sharing and ESOP Plans. Also
includes 80,000, 7,500, 20,000,and 10,000 shares of Common Stock
which may be acquired upon exercise of options granted to Messrs.
Leever, LoVetere, Pfaff, and Kukanskis respectively, and 165,000
shares of Common Stock in the aggregate which may be acquired
upon exercise of options granted to 11 officers as a group through
MacDermid's Special Stock Purchase Plan.
<F7> Includes 20,000, and 4,000 shares of Common Stock for Messrs.
Leever, and Pfaff, respectively, which are subject to restrictions
on transfer under the Special Stock Purchase Plan, and 7,685, 1,758,
2,320, and 1,244 shares of Common Stock for Messrs. Leever, LoVetere,
Pfaff, and Kukanskis respectively, which are subject to restrictions
on transfer under MacDermid's 1995 Equity Incentive Plan.
</TABLE>
<PAGE>
INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS AND FAMILY RELATIONSHIPS
Harold Leever is the Chairman, a 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 eight (8) regular meetings
during the 1996 fiscal year. Each of the five current 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 were 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 1996 fiscal year. Members of
the Committee are: Thomas W. Smith, Chairman, Donald G. Ogilvie and
James C. Smith.
The Compensation Committee reviews and makes recommendations to
the Board with respect to officer compensation and it administers the
MacDermid, Incorporated Special Stock Purchase Plan and the MacDermid,
Incorporated 1995 Equity Incentive 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 six (6) times during the 1996 fiscal year, includes
Mr. Thomas W. Smith, Chairman, Donald G. Ogilvie and James C. Smith.
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 1996 fiscal year, includes
Harold Leever, Chairman; Daniel H. Leever, Donald G. Ogilvie, Thomas W.
Smith, and James C. Smith.
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 1996 fiscal year, includes Harold Leever, Chairman; Daniel H.
Leever; Donald G. Ogilvie, Thomas W. Smith, and James C. Smith.
Directors who are employees of MacDermid received no compensation in
addition to their salaries and benefits received as employees. Directors
who are not employees were 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 provided up to $50,000 group term life insurance for each
outside director for which it paid a total of $635 in premiums during the
1996 fiscal year.
<PAGE>
ITEM 2: PROPOSAL TO AMEND THE MACDERMID, INCORPORATED
SPECIAL STOCK PURCHASE PLAN
The Board of Directors proposes that the shareholders approve
certain amendments (the "Amendments") to the MacDermid, Incorporated
Special Stock Purchase Plan (the "Plan") intended to align more closely
the interests of shareholders and MacDermid employees granted options
under the Plan. The Amendments, which are described below, extend the
period during which certain options may be exercised, allow employees
limited use of their options as collateral and provide specific
protections for the exempt status of the Plan under Rule 16b-3 of the
Securities Exchange Act of 1934. The Plan, as proposed to be modified
by the Amendments, is attached to this Proxy Statement as Exhibit A
(capitalized portions are additions to the original Plan and "^" denotes
a deletion therefrom).
The original Plan was approved by the shareholders of MacDermid at
the 1992 Annual Meeting of Shareholders. In February 1996, the Board of
Directors approved the Amendments, subject to shareholder approval.
PRINCIPAL RROVISIONS OF THE ORIGINAL PLAN.
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" under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). The Committee
determines the persons to whom options are to be granted, the number of
shares to be optioned and the manner in which the option price shall be
payable. Additionally, the Committee may adopt such rules and
regulations as it may deem desirable for administration of the Plan.
Under the Plan, options may be granted for an aggregate, subject
to certain adjustments, of up to 300,000 shares of Common Stock. Such
shares may be treasury shares or may be authorized and unissued shares.
The purchase price per share upon exercise of an option under the Plan
shall be equal to 66.6% of the fair market value of such shares at the
time the option is granted. Any option granted under the Plan may be
exercised only within four years from the date of grant (or, if later,
within four years from the date that the Plan is approved by the
shareholders of MacDermid). However, in the event that a participant
retires, dies or otherwise leaves the employment of MacDermid, any
option held by the participant must be exercised, if at all, as follows:
(i) within three months following retirement in accordance with
MacDermid's established retirement policies, (ii) within six months
following death and (iii) within one month following termination of
employment with MacDermid for reasons other than retirement or death;
provided that in no event may any option be exercised more than four
years after the date of grant (or shareholder approval). Upon request
by a retiring participant, the Committee may extend the three month
period within which his or her options may be exercised.
The shares purchased by a participant upon exercise of an option
must be held and may not be transferred by the participant (except to
MacDermid) for a period of four years commencing on the date of exercise
of the option. In its sole discretion, the Committee may waive the
<PAGE>
restrictions against transfer applicable to the shares prior to the
expiration of the four year period.
If a participant's employment with MacDermid is terminated for
any reason other than death, retirement in accordance with MacDermid's
established retirement policies, 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 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 one of the reasons listed in the preceding sentence,
any restrictions on the transfer of shares held by the participant
pursuant to the Plan will lapse and such shares may be freely transferred.
For federal income tax purposes, no taxable income results to the
optionee upon the grant of a stock option under the Plan or upon the
issuance of shares upon the exercise of the option. Correspondingly, no
deduction is allowed to MacDermid upon either the grant or the exercise
of an option. The optionee will be deemed to have received compensation
equal to the difference between the exercise price of the option for the
shares purchased and the fair market value of the shares upon the
expiration of the restrictions described above. If, however, a
participant makes an election under Section 83(b) of the Code within 30
days of the exercise of the option, the participant will realize
ordinary income on the date of exercise equal to the fair market value of
the shares at that time (measured as if the shares were unrestricted and
could be sold immediately) less the exercise price paid for such shares.
If the election is made, no taxable income will be realized when the
shares subject to such election are no longer subject to the restrictions
on transfer. If the shares subject to an election are repurchased by
MacDermid, the participant will not be entitled to any deduction, refund
or loss for tax purposes with respect to the repurchased shares. Upon
sale of the shares after the restrictions on transfer have expired, the
holding period to determine whether the participant has long-term or
short-term capital gain or loss begins when the restriction period
expires (or upon earlier issuance of the shares, if the participant
elected immediate recognition of income under Section 83(b) of the Code.)
Full payment of the exercise price, together with the amount of any
taxes due, must be made at the time any option granted under the Plan is
exercised. Payment may be made in cash, by certified or cashiers check
or, at the discretion of the Committee, by delivery of shares of Common
Stock having a fair market value equivalent to the amount required to be
paid.
Provision is made in the Plan for hardship withdrawals and waiver
of restrictions, at the discretion of the Committee, where there is a
demonstrated need which cannot be satisfied from other reasonably
available resources. Hardship may include medical expenses incurred by
the participant or the participants dependents, payment of tuition for
post-secondary education or expenditures to prevent eviction of the
participant from his or her principal residence.
<PAGE>
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, the number of shares issuable
pursuant to any outstanding option and the exercise price of any option
outstanding 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 (other than with a subsidiary controlled by MacDermid)
or otherwise recapitalizes or reorganizes, or sells or conveys to
another corporation all or substantially all of its assets
(collectively referred to herein as "Reorganizations"), each
participant shall have the right upon any subsequent exercise of an
option to acquire the same kind and amount of securities and property
which the participant would have been able to acquire if the
participant had exercised the option immediately before the
Reorganization. In addition, the Committee shall have the right
in connection with any Reorganization to cause any outstanding
options to become immediately exercisable in whole or in part.
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 entitled 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 pursuant to the Plan will immediately lapse and all
options outstanding under the Plan will become immediately exercisable.
The Board of Directors may amend, suspend, or terminate the Plan
except that no action may be taken which impairs particpants' rights
under outstanding options without their consent and no amendment shall
be made without shareholder approval where such approval is required
under Rule 16b-3. The Committee may substitute new options for options
previously granted to participants, including without limitation,
previously granted options having higher exercise prices.
PROPOSED AMENDMENTS
OPTION PERIOD
The original Plan provides that any option granted may be
exercised only within four (4) years from the date of grant (or, if
later, within four (4) years from the date that the Plan is approved by
the Shareholders). The proposed Amendments would extend this exercise
period for previously granted but unexercised options from four (4)
years to ten (10) years on a share for share basis, depending upon the
number of options previously exercised by a participant at any point in
time. For example, a participant having a total of 10,000 options
granted under the Plan, with 4,000 of those 10,000 exercised, would be
allowed, under the Amendments, an additional six (6) years to exercise
4,000 of the 6,000 remaining options. The final 2,000 options would
expire according to their original terms after four (4) years.
<PAGE>
RESTRICTIONS ON SHARES ISSUED UNDER THE PLAN
The original Plan provided that Shares issued upon exercise of
an option under the Plan may not be sold, transferred or otherwise
hypothecated, except to the Company for an amount equal to the price
paid for such Shares upon exercise, for a period of four (4) years
from the date of issuance pursuant to such exercise. The Amendments
would allow participants to pledge such Shares as security for
obligations directly related to the acquisition of shares under the
Plan, during the restriction period, subject to the restrictions on
sale and transfer. Further, the Amendments specify that retirement,
for purposes of the Plan means retirement, in accordance with the
Company's qualified pension plan, at or after the attainment of age
sixty (60). Payment of tuition for post-secondary education has been
deleted as a specifically listed hardship.
AMENDMENT AND TERMINATION; MODIFICATION
The Plan allows the Committee the ability to substitute new
options for options previously granted to participants. The
Amendments add additional clarity by specifying that the Committee
may modify the terms of options previously granted to participants,
provided that no such action may be taken which impairs the rights
of any participant under any outstanding option, without obtaining
the consent of such participant.
SECTION 16 EXEMPTION
The Amendments provide specific protection for the exempt status
of the Plan under Rule 16b-3 of the Securities Exchange Act of 1934
(the "Act"), by specifying that Shares acquired by a Plan participant
who is subject to Section 16 of the Act, may not be sold for six (6)
months after the latter of the grant of the option and, if applicable,
the date on which the exercise period of the option was extended to ten
years pursuant to the Amendments.
In addition, the Amendments prevent any action by the Committee or
the Board if such action would disqualify the Plan from the exemption
provided by Rule 16b-3 or any successor provision.
The Board of Directors adopted the Amendments effective February
13, 1996 subject to the approval of the Shareholders at the 1996 Annual
Meeting of Shareholders. The affirmative vote of the holders of a
majority of the Common Shares of MacDermid represented at the Annual
Meeting of Shareholders is necessary for approval of the Amendments.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
<PAGE>
INDEPENDENT ACCOUNTANTS
The independent public accountants for MacDermid for fiscal year
1996 were KPMG Peat Marwick ("KPMG"), which firm had 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 1997 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy statement relating
to the 1997 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 24, 1997. Such
proposals should be addressed to the attention of John L. Cordani,
Corporate Secretary.
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 24, 1996 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, 1996. 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
SPECIAL STOCK PURCHASE PLAN
Dated November 15, 1991
(Restated November 1, 1992 and
Amended Effective February 13, 1996)
1. PURPOSES. The purposes of the MacDermid, Incorporated Special
Stock Purchase Plan (the "Plan") are (i) to enable MacDermid,
Incorporated and its subsidiary corporations (hereinafter referred to,
unless the context otherwise requires, as the "Company") to grant to its
employees who are in a position to make a notable contribution to the
welfare of the Company, the means to acquire a proprietary interest in
the Company, in order that such persons will have financial incentives to
contribute to the Company's growth and profitability, and (ii) to enhance
the ability of the Company to attract and retain in its employ individuals
of outstanding ability upon whom the success of the Company will depend.
2. ADMINISTRATION. The Plan shall be administered by a committee
of not fewer than two members of the Board of Directors (the "Committee")
appointed by 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"). The Committee may adopt such rules and regulations
as it may deem necessary or advisable for the administration of the Plan.
3. GRANT OF AWARDS. Subject to the terms and provisions of the
Plan, options to purchase shares of Common Stock of the Company shall be
granted on behalf of the Company by the Committee.
4. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided
herein, an aggregate of 300,000 shares of the Common Stock of the Company
(the "Common Stock"), shall be available for issuance pursuant to options
granted under the Plan. Such shares may be authorized and unissued shares
or shares held in the Company's treasury. All shares subject to options
that shall have terminated or shall have been forfeited in whole or in
part or canceled for any reason (other than by surrender for cancellation
upon any exercise of all or part of such options) shall be available for
issuance pursuant to options granted subsequently under the Plan.
5. PARTICIPANTS. All employees of the Company who are in a position
to make a notable contribution to its welfare shall be eligible to receive
options and thereby become participants in the Plan. Receipt of an option
shall in no way be deemed to constitute a contract or promise of continued
employment by the Company.
6. OPTION PRICE. The purchase price per share purchasable upon
exercise of an option under the Plan shall be equal to sixty-six and six
tenths percent (66.6%) of the fair market value of such shares at the
time the option is granted, as determined in good faith by the Committee.
<PAGE>
7. OPTION PERIOD. Subject to Sections 12 and 13 and the following
provisions of this Section 7, the period for exercising an option (the
"Exercise Period") shall begin with the later of the date of grant of the
option and the date of approval of the Plan by the Company's stockholders
and shall end four (4) years thereafter.
NOTWITHSTANDING THE FOREGOING, AND SUBJECT TO THE APPROVAL OF THE
PLAN AS AMENDED BY THE COMPANY'S STOCKHOLDERS, THE EXERCISE PERIOD FOR
THAT NUMBER OF OPTIONS HELD BY A PARTICIPANT AT THE END OF SUCH FOUR (4)
YEARS (THE "ORIGINAL TERMINATION DATE") THAT IS EQUAL TO THE LESSER OF:
(A) ONE-HALF (1/2) OF THE TOTAL NUMBER OF OPTIONS GRANTED TO SUCH
PARTICIPANT UNDER THE PLAN, AND
(B) THE TOTAL NUMBER OF OPTIONS GRANTED TO SUCH PARTICIPANT UNDER
THE PLAN THAT HAVE BEEN EXERCISED BY THE PARTICIPANT ON OR PRIOR TO
THE ORIGINAL TERMINATION DATE,
SHALL BE EXTENDED AUTOMATICALLY AS OF THE ORIGINAL TERMINATION DATE
FOR AN ADDITIONAL SIX (6) YEARS THEREAFTER.
ALL EXTENSIONS OF THE EXPIRATION DATE OF OUTSTANDING OPTIONS
UNDER THE PLAN WILL BE DOCUMENTED PROMPTLY AFTER THE ORIGINAL
TERMINATION DATE BY THE ISSUANCE OF A NEW STOCK OPTION AGREEMENT,
ALTHOUGH THE FAILURE TO DO SO SHALL NOT BE CONSTRUED TO INVALIDATE
ANY SUCH EXTENSION.
If a participant retires in accordance with the Company's
established retirement policies at any time between the commencement and
the expiration of the Exercise Period, an option shall be exercisable
by him or her only during the three (3) months following his or her
retirement (but in no event after the expiration of the Exercise Period)
and only as to the number of shares, if any, as to which it was
exercisable immediately prior to retirement. At the written request of a
participant, the Committee may, at its sole discretion, extend the period
for exercise of a particular option beyond said three-month period. Any
such request shall be delivered to the Committee at the principal business
office of the Company at least one (1) month prior to expiration of said
three-month period and shall set forth the reasons for the request.
If a participant dies at any time between the commencement and the
expiration of the Exercise Period, an option shall be exercisable by his
or her executor or administrator or, if not so exercised, by the legatees
or the distributees of his or her estate, only during the six (6) months
following his or her death (but in no event after the expiration of the
Exercise Period), and only as to the number of shares, if any, as to
which it was exercisable immediately prior to death.
If a participant ceases to be an employee of the Company for any
reason other than retirement or death at any time between the
commencement and the expiration of the Exercise Period, an option shall
be exercisable by him or her during the thirty (30) days following the
cessation of his or her employment (but in no event after the expiration
of the Exercise Period) and only as to the number of shares, if any, as
to which it was exercisable immediately prior to cessation of employment.
<PAGE>
8. PAYMENT FOR SHARES AND RELATED MATTERS. Full payment for shares
purchased, together with the amount of any tax or excise due in respect
of the sale and issue thereof, shall be paid at the time of exercise of
an option and shall be made in cash or by certified or bank cashier's
check or, in the discretion of the Committee, in whole or in part by
delivery of shares of Common Stock of the Company having a fair market
value at the date of such delivery (determined in a manner approved by
the Committee) of not less than the amount for which payment is being
made by delivery of the shares. The Company shall issue no certificates
for shares until (a) full payment therefor has been made and (b) the
participant purchasing such shares provides for payment to (or
withholding by) the Company of all amounts required under then applicable
provisions of the Internal Revenue Code of 1986, as amended, and state
and local tax laws to be withheld with respect to such purchase, and a
participant shall have none of the rights of a stockholder until
certificates for the shares purchased are issued to him or her.
9. RESTRICTIONS ON SHARES ISSUED UNDER THE PLAN. Shares of COMMON
STOCK issued upon exercise of an option under the Plan may not be sold or
otherwise transferred, ^ except to the Company for an amount equal to the
price paid for such shares upon exercise, for a period of four (4) years
from the date of issuance pursuant to such exercise, 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 such shares prior to the expiration of such four (4) year period.
NOTWITHSTANDING THE FOREGOING, SUCH SHARES OF COMMON STOCK MAY BE
PLEDGED, SUBJECT TO THE RESTRICTIONS UNDER THIS SECTION 9, AS SECURITY
FOR OBLIGATIONS, DIRECTLY RELATED TO THE ACQUISITION OF SUCH SHARES OF
COMMON STOCK HEREUNDER, PRIOR TO THE EXPIRATION OF SUCH FOUR (4) YEAR
PERIOD, AND NOTHING HEREIN SHALL PREVENT THE PLEDGEE FROM RECOVERING ON
SUCH SECURITY (TO THE EXTENT OF AND CONSISTENT WITH THE PROVISION OF THIS
SECTION 9) IN THE EVENT OF A DEFAULT ON ANY SUCH OBLIGATION.
If the employment of the holder of shares issued upon exercise of
an option under the Plan 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 such 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 such shares.
Notwithstanding the foregoing provisions of this Section 9, if the
employment of the holder of shares issued upon exercise of an option
under the Plan is terminated due to 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, the restrictions on such shares shall lapse as of the date of
such event, and such holder shall be free to dispose of the shares
without further restriction.
The restrictions imposed under this Section 9 shall apply as
well to all shares or other securities issued in respect of shares in
<PAGE>
connection with any stock split, reverse stock split, stock dividend,
recapitalization, reclassification, spinoff, split-off, merger,
consolidation or reorganization. In the event any stock certificate
is issued in respect of shares awarded upon the exercise of an option
under this Plan, such certificate 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.
10. NONTRANSFERABILITY. No option shall be assignable or
transferable by a participant otherwise than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or
Title I of the Employee Retirement Income Security Act of 1974, or the
rules thereunder. Each option shall be exercisable during the lifetime
of a participant only by such participant, except that, if permissible
under applicable law, an option may also be exercised by the guardian
or legal representative of a participant.
11. EFFECT OF CHANGES IN COMMON STOCK. In the event that the
outstanding shares of Common Stock of the Company are increased or
decreased as a result of a stock dividend, stock split, recapitalization
or other means having the same effect, the number of shares available
for issuance under the Plan, the number of shares issuable pursuant to
any outstanding option, and the exercise price of any option outstanding
under the Plan, shall be adjusted as the Committee shall deem
appropriate, in its sole discretion and with the approval of counsel, to
preserve unimpaired the rights of the participants. All determinations
made by the Committee hereunder shall be conclusive and binding upon the
participants.
12. EFFECT OF REORGANIZATIONS. In case of any one or more
reclassifications, changes or exchanges of outstanding shares of Common
Stock 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 outstanding shares of Common
Stock), or in case of any one or more sales or conveyances to another
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 exercise of an option, to acquire the same
kind and amount of securities and property which such participant would
then have if such participant had exercised such option 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 same, the adjustment rights
in Section 11 and this Section being continuing and cumulative, except
that, anything to the contrary herein contained notwithstanding, the
Committee shall have the right in connection with any Reorganizations,
upon not less than thirty (30) days' written notice to the participants,
to terminate the term of any outstanding options so that, in such event,
all outstanding options may be exercised in whole or in part, only at a
time prior to or simultaneously with the consummation of such
<PAGE>
Reorganization. The provisions and term of options held by participants
who are no longer employees of the Company shall not be affected pursuant
to the preceding sentence. In any such event, such options may be
exercised or converted, to the extent permitted by their terms, prior to
or simultaneously with the consummation of such Reorganization.
13. 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 (a) all
restrictions imposed pursuant to Section 9 with respect to shares shall
immediately lapse, and (b) all outstanding options shall be exercisable
immediately in whole or in part.
For purposes of this Section 13, (a) the term "Principal
Stockholder" shall mean 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 13 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 trusts 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.
14. HARDSHIP WITHDRAWALS. Notwithstanding anything to the
contrary contained in Section 9 above, the Committee, in its sole
discretion, may waive the restrictions imposed by Section 9 on any
shares issued upon exercise of options under the Plan upon demonstration
by a participant of financial hardship. For purposes hereof, financial
hardship shall mean an immediate and heavy financial need of the
participant such that the waiver of the restrictions imposed by Section
9 is necessary to satisfy that need. Such an immediate and heavy
financial need may be deemed to exist with respect to the following
expenditures:
<PAGE>
(a) Medical expenses incurred by the participant or his or her
spouse or dependents (as defined in Section 152 of the Internal
Revenue Code of 1986, as amended);
^
(b) Expenditures to prevent eviction of the participant from his
or her principal residence or foreclosure of a mortgage on the same.
A distribution will be deemed to be necessary to satisfy such
a need only if it is demonstrated on the basis of all the facts and
circumstances that it does not exceed the amount required to satisfy
the need and the need cannot be satisfied from other reasonably
available resources.
15. EFFECTIVE DATE ON PLAN. Subject to the approval of the
shareholders of the Company, the Plan shall be effective on November
19, 1991. Prior to such approval, options may be granted under the
Plan expressly subject to such approval.
16. AMENDMENT AND TERMINATION; MODIFICATION. The Board by
resolution at any time may amend, suspend or terminate the Plan,
provided that (i) no such action shall be taken which impairs the
rights of any participant under any outstanding option, without such
participant's consent, and (ii) 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. The Committee may substitute new options
for, OR MODIFY THE TERMS OF, options previously granted to
participants, including, without limitation, previously granted
options having higher exercise prices, PROVIDED THAT NO SUCH ACTION
SHALL BE TAKEN WHICH IMPAIRS THE RIGHTS OF ANY PARTICIPANT UNDER ANY
OUTSTANDING OPTION, WITHOUT SUCH PARTICIPANT'S CONSENT.
17. SECTION 16 EXEMPTION. NOTWITHSTANDING ANY OTHER PROVISION
OF THE PLAN, IN ORDER TO QUALIFY FOR THE EXEMPTION PROVIDED BY RULE
16B-3 UNDER THE ACT, OR ANY SUCCESSOR PROVISION, ANY SHARES OF COMMON
STOCK ACQUIRED BY A PLAN PARTICIPANT WHO IS SUBJECT TO SECTION 16 OF
THE ACT UPON EXERCISE OF AN OPTION GRANTED UNDER THE PLAN MAY NOT BE
SOLD FOR SIX MONTHS AFTER THE LATTER OF THE GRANT OF THE OPTION AND,
IF APPLICABLE, THE DATE ON WHICH THE EXERCISE PERIOD OF THE OPTION
WAS EXTENDED TO TEN YEARS PURSUANT TO SECTION 7 HEREOF. THE COMMITTEE
AND THE BOARD 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, AND ANY SUCCESSOR PROVISION.
18. 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 25, 1996 at 3:30 P.M., E.D.T.
At The Marriot Courtyard, 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 (the "Meeting"), with authority
to vote on the following matters all shares of stock which the
undersigned would be entitled to vote at the 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 and 2 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 the Amendment to the MacDermid, Incorporated
Special Stock Purchase 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 be
voted in the manner directed herein by the
stockholder. If no direction is made, this
proxy will be voted FOR the above matters.
Dated:____________________,1996
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 1996 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."
(All amounts except share and per share data in this financial report are
shown in thousands.)
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
(In thousands, except share and
per share amounts) 1996 1995 Change %
-----------------------------------
<S> <C> <C> <C>
Net Sales, North America $ 131,404 $ 93,867 40
Overseas 104,487 88,233 18
-----------------------------------
Total Net Sales $ 235,891 $ 182,100 30
===================================
Net Earnings* $ 13,195 $ 11,142 18
Return on Sales* 5.6% 6.1% -
Return on Average Equity* 22.1% 18.3% -
Net Cash Provided by Operations $ 17,493 $ 20,733 (16)
Research and Development Expense $ 10,042 $ 9,644 4
Capital Expenditures $ 4,303 $ 3,990 8
Long-term Debt (Includes
Short-term Portion) $ 112,254 $ 22,642 396
Average Shares Outstanding 2,928,352 3,141,855 (7)
Shareholders' Equity $ 65,817 $ 53,654 23
Per Common Share
Net Earnings* $4.51 $3.55 27
Cash Dividends $0.60 $0.60 -
Book Value $23.55 $19.56 20
</TABLE>
<TABLE>
GRAPHIC PRESENTATION
(Three horizontal bar graphs are provided here, net sales, net earnings
and earnings per share. Each graph depicts one facet of results of
operations for the fiscal years 1992 through 1996. The graph for net
sales indicates an increase in 1993, followed by a marginal decrease in
1994 and large increases in 1995 and 1996. The graphs for both net
earnings and earnings per share indicate increases in each year since
1992 with substantial increases in 1995 and 1996.)
<PAGE>
-2-
GRAPH VALUES
(In thousands, except share and per share amounts)
<CAPTION>
1992 1993 1994 1995 1996
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $144,984 $156,324 $150,026 $182,100 $235,891
Net earnings <F1> $ 7,244 $ 7,687 $ 7,771 $ 11,142 $ 13,195
Earnings per common
share <F1> $2.03 $2.16 $2.18 $3.55 $4.51
<FN>
<F1> Before the cumulative effect of accounting changes which resulted
in one-time after tax charges of $371 ($0.12/common share) in 1995
and $2,082 ($0.58/common share) in 1994. Fiscal 1995 and 1996
indicate primary earnings per common share.
</TABLE>
<TABLE>
FIVE YEAR FINANCIAL REVIEW
(In thousands, except share and per share amounts)
<CAPTION>
OPERATING RESULTS 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $235,891 $182,100 $150,026 $156,324 $144,984
Net Earnings<F1> $ 13,195 $ 11,142 $ 7,771 $ 7,687 $ 7,244
Net Earnings Per
Common Share <F1><F2> $4,51 $3.55 $2.18 $2.16 $2.03
Return On Sales
(%)<F1> 5.6 6.1 5.2 4.9 5.0
Return On Average
Equity (%)<F1> 22.1 18.3 11.7 12.1 12.7
FINANCIAL POSITION AT YEAR END
- -----------------------------------------------------------------------------
Working Capital $ 59,714 $ 34,711 $ 34,959 $ 31,050 $ 27,620
Current Ratio 2.0 1.7 2.0 1.8 1.7
Capital Expenditures $ 4,303 $ 3,990 $ 7,526<F3> $ 4,594 $ 4,453
Total Assets $264,756 $123,305 $105,867 $107,173 $101,214
Long-term Debt
(Includes Short-
term Portion) $112,254 $ 22,642 $ 1,157 $ 2,684 $ 2,812
Percent of Total
Capitalization 63.0 29.7 1.7 4.0 4.4
<PAGE>
-3-
SHARE DATA
- ------------------------------------------------------------------------------
Shareholders' Equity $ 65,817 $ 53,654 $ 68,169 $ 65,181 $ 61,050
Per Common Share $23.55 $19.56 $19.11 $18.27 $17.12
Cash Dividends Per
Common Share $0.60 $0.60 $0.60 $0.60 $0.60
Payout as Percent
of Net Earnings <F1> 12.7 15.9 27.6 27.8 29.5
Common Shares
Outstanding
Average During Year 2,928,352 3,141,855 3,567,875 3,565,371 3,565,000
At Year End 2,794,231 2,742,533 3,567,882 3,567,382 3,565,000
Stock Price
High 72 1/4 44 1/2 31 29 1/2 29
Low 41 1/2 24 24 1/2 23 3/4 21
Year End 65 7/8 43 26 27 28 1/8
<FN>
<F1> Before cumulative effect of accounting changes which resulted in one-
time after tax charges of $371 ($0.12/common share) in 1995 and $2,082
($0.58/common share) in 1994.
<F2> For 1996 and 1995 indicates primary earnings per common share. Fully
diluted earnings per common share were $4.49 in 1996 and $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>
-4-
MESSAGE TO SHAREHOLDERS
Fiscal 1996 was the fifth consecutive year of record earnings per share
for MacDermid. Sales increased to $235.9 million from $182.1 million in
1995, up 30%. Earnings increased to $13.2 million from $11.1 million in
1995, up 18%. Earnings per share increased to $4.51 from $3.55 in 1995,
up 27%. We continue to benefit in per share terms from our repurchase
in August of 1994 of 24% of our then outstanding shares.
For the second year, we enjoyed growth across all product lines in all
markets, both domestic and international. We continued to benefit from
acquisitions, from our ongoing effort to improve our efficiency, and
from the 1995 turnaround in a number of our European operations. In
almost every country in which we operate, fiscal 1996 was an outstanding
year. This is important since 47% of our sales are outside the United
States.
In the third quarter, we acquired the Electronics and Printing Division
of Hercules Incorporated, a producer of photoresists used in forming
patterns on printed circuits and photopolymers used in the manufacturing
of advanced printing plates for commercial printing.
This is an important acquisition. It brings a new technology in
commercial printing with excellent growth potential and fills out our
product offerings to the printed circuits market so that we now have
unique total systems capabilities to offer our customers. The
management is excellent, the integration has gone smoothly, and our
competitive position has been significantly strengthened.
Because of the strength of our cash flow and balance sheet, we were
able to finance this $130 million acquisition with added debt and a
callable, non-convertible preferred stock issue, both at attractive
fixed rates. Our cash flow is at record levels. Our debt/capital
ratio is 63%. Nevertheless, a dividend increase is not currently
planned. Your Board of Directors believes shareholders are better
served by utilizing excess cash flow to reduce debt and to fund
internal growth and acquisitions.
Our Acquisition Philosophy, simply stated, is to acquire businesses
that will strengthen the competitive position of our core business in
both technology and market share thus, most important, increasing the
intrinsic value of your company on a per share basis.
We place a high priority on R&D. It is not considered a discretionary
expenditure. Our focus is not only on broadening and improving our
current product line but on new products in new markets, all within our
core competencies. In 1996, our R&D investment was $10 million compared
with $9.6 million in 1995.
Our Corporate Philosophy is on the inside cover of our annual report.
Everyone at MacDermid is dedicated to conducting our business in
accordance with that Philosophy.
We begin fiscal 1997 a much bigger company than just a year ago with
greater potential than at any time in our history. Nevertheless, our
policies remain unchanged--improve our product and services so as to be
<PAGE>
-5-
the preferred supplier/partner with our customers, remove all excess
costs, and grow as rapidly as prudently possible. Our awareness, that
we work for our shareholders and that our stewardship will be measured
by the long-term per share results, is heightened by the fact that,
through personal holdings, our ESOP and other plans, we, your employees,
own 34% of the outstanding shares. Our objective is to look back on our
progress to date as but a beginning.
All of our worldwide associates at MacDermid have worked hard and
effectively to produce outstanding results in fiscal 1996. They deserve
congratulations. We enthusiastically welcome our new associates from
Hercules. We look forward to a long and productive relationship.
Importantly, we thank our shareholders for their confidence.
/s/ Harold Leever /s/ Daniel H. Leever
Harold Leever Daniel H. Leever
Chairman of the Board Chief Executive Officer
<PAGE>
-6-
<TABLE>
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
(In thousands, except share and per share amounts)
FIVE YEAR SUMMARY
<CAPTION>
1996 1995 1994 1993 1992
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales:
North America $131,404 $ 93,867 $ 73,861 $ 74,068 $ 73,119
Overseas 104,487 88,233 76,165 82,256 71,865
--------------------------------------------------------
$235,891 $182,100 $150,026 $156,324 $144,984
========================================================
Net Earnings<F1> $ 13,195 $ 11,142 $ 7,771 $ 7,687 $ 7,244
Net Earnings per
Common Share<F1>
<F2> $4.51 $3.55 $2.18 $2.16 $2.03
Cash Dividends
Declared per
Common Share $0.60 $0.60 $0.60 $0.60 $0.60
Total Assets $264,756 $123,305 $105,867 $107,173 $101,214
Long-term
Obligations -
non current $105,189 $ 18,229 $ 922 $ 983 $ 1,348
<FN>
<F1> Before cumulative effect of accounting changes which resulted in one-
time after tax charges of $371 ($0.12/common share) in 1995 and $2,082
($0.58/common share) in 1994.
<F2> For 19930 3,376 2,998
Acquisitions of businesses (101,600) (8,910) -
Other investments - (216) (1,062)
---------------------------
Net cash flows used in investing
activities (105,273) (9,740) (5,590)
---------------------------
Cash flows from financing activities:
Long-term and short-term borrowings 106,601 26,609 1,943
Long-term and short-term repayments 15,833 (8,891) (9,238)
Exercise of stock options 659 879 221
Acquisition of treasury stock (note 9) (685) (26,152) -
Dividends paid (1,674) (1,767) (2,141)
---------------------------
Net cash flows used in financing
activities 89,068 (9,322) (9,215)
---------------------------
Effect of exchange rate changes on cash
and cash equivalents (85) 354 (87)
---------------------------
Net increase in cash and cash equivalents 1,203 1,146 653
Cash and cash equivalents at beginning of year 7,630 6,484 5,831
---------------------------
Cash and cash equivalents at end of year $ 8,833 $ 7,630 $ 6,484
===========================
Cash paid for interest $ 4,534 $ 2,182 $ 1,627
===========================
Cash paid for income taxes $ 7,198 $ 4,226 $ 4,398
==================ed in the Asia/Pacific markets where expanding markets were
enhanced by economic recovery in certain areas.
COSTS AND EXPENSES
1996 VS 1995
Costs of sales decreased as a percentage of sales because of customer
acceptance of newer, more environmentally friendly proprietary products
which replace older, less efficient products. This decrease was achieved
despite recognition of the acquisition related accounting charge of
approximately $1,700 associated with purchased inventories (in
accordance with purchase accounting requirements) and a higher level of
equipment sales.
Selling, technical and administrative expenses declined as a
percentage of sales because of ongoing cost control programs. Actual
costs increased as a result of business acquisitions and a higher level
of employee costs.
New borrowings to finance the purchase of the electronics and
printing business caused interest expense to more than double that of
fiscal 1995. Since the additional borrowings were only in place during
the last four months of fiscal 1996, interest expense for the coming
full year are likely to be as much as double the 1996 level.
1995 VS 1994
During the transition period following the acquisition of assets,
costs of sales in the United States were affected by inventory
purchased from Allied-Kelite at prices higher than MacDermid's
normal replacement costs. These effects were largely offset by
marketing changes in Europe and by growth in the proportion of
proprietary chemical sales in the Far East.
Selling, technical and administrative expenses decreased 3%
as a percentage of sales though actual costs were higher. The
increases were principally the result of new business throughout
<PAGE>
-8-
the world, the newly-acquired Allied-Kelite business in the
United States, product development and employee incentives.
A sharp increase in interest expense resulted principally from
borrowings in August, 1994 to finance a common stock repurchase and
from short-term financing of the Allied-Kelite business acquisition.
ACQUISITIONS
During the third quarter of fiscal 1996, MacDermid acquired the assets,
subject to certain liabilities, of the Electronics and Printing
Division of Hercules Incorporated through a wholly-owned subsidiary,
MacDermid Imaging Technology, Inc. ("MIT"). The acquisition brought
new technology in commercial printing and enhanced the Corporation's
product offerings to the printed circuits market. The purchase price
of $130,000, excluding closing costs, funded by $100,000 cash and
$30,000 in redeemable preferred stock, was paid at closing. A further
$15,000 is contingently payable in fiscal year 2004 in the event that
the Corporation's consolidated cumulative earnings, before interest,
taxes on earnings, depreciation, and amortization, exceed $250,000
for the first four full fiscal years following December 5, 1995. The
acquisition, which included $77,000 in goodwill, being amortized over
25 years, has been accounted for under the purchase method of
accounting. MIT activity has been included in the consolidated results
of operations beginning December 1, 1995. Additionally, during fiscal
1996 MacDermid acquired the remaining 50% share in its joint venture
for equipment manufacture. This investment had been accounted for on
the equity method and as of July 1, 1995 was consolidated.
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 $8,900)
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.
ACCOUNTING CHANGE
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 charge against earnings, net of
income taxes. The ongoing expense effects are not material to
the consolidated financial statements.
<PAGE>
-9-
INCOME TAXES
Overall effective income tax rates increased to 41.6% in fiscal
1996 from 38.6% in fiscal 1995 as compared to 37.5% in fiscal 1994.
The 1996 and 1995 increases 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 prior year 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
1996 was $0.60 per share or approximately 13% of the net
earnings available to common shareholders.
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 two years, MacDermid has embarked on programs
which have required significant amounts of funds in excess of those
available from cash flows from operations. Early during fiscal 1995,
MacDermid purchased certain assets used in Allied-Kelite's metal
finishing business for approximately $8,900, 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 $26,200, financed through a six-year
term loan with a group of banks. During the third quarter of fiscal
1996, MacDermid purchased the assets, subject to certain liabilities,
of the Electronics and Printing Division of Hercules Incorporated for
a purchase price of $130,000. This purchase was financed through
bank borrowing, under a seven-year term loan (which incorporated
outstanding balances remaining under the six-year term loan), a
revolving credit agreement and issuance of $30,000 in unregistered 6%
redeemable preferred stock. As previously discussed, another $15,000
may be payable in fiscal year 2004, contingent upon future earnings.
New capital spending during fiscal 1996 of approximately
$4,303 as compared with $3,990 in fiscal 1995 and $7,526 in
fiscal 1994, 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 1997, planned new capital projects total
approximately $7,500.
<PAGE>
-10-
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
12,400 shares during fiscal 1996 and 11,000 shares during fiscal 1995
in privately negotiated purchases. 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 124,600 shares, if exercised at the Nasdaq Stock
Market closing price on March 31, 1996, would cost approximately
$8,208.
</TABLE>
<TABLE>
The principal sources and uses of cash in fiscal years 1996
and 1995 were as follows:
<CAPTION>
1996 1995
------------------------
<S> <C> <C>
Cash provided by:
Operations $ 17,493 $19,854
Proceeds from dispositions of
fixed assets and certain
business 630 3,376
Option exercises 659 879
Net increase in borrowings 93,268 17,718
------------------------
$112,050 $41,827
========================
Cash used for:
Capital expenditures $ 4,303 $ 3,990
Business acquisitions 104,100 8,910
Purchase of treasury shares 685 26,152
Dividend payments 1,674 1,767
Other - net 85 (138)
------------------------
$110,847 $40,681
========================
</TABLE>
MacDermid's financial position is strong and, other than
satisfaction of debt and preferred stock redemption obligations, there
are no long-range commitments which would have a significant impact
<PAGE>
-11-
upon results of operations, financial condition or liquidity. At March
31, 1996 the Corporation had domestic and foreign short-term uncommitted
credit lines with banks approximating $40,000 in addition to a domestic
$65,000 committed revolving credit line. 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 $1,000 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
<PAGE>
-12-
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.
OUTLOOK: ISSUES AND RISKS
This report and other Corporation reports and statements describe
many of the positive factors affecting the Corporation's future
business prospects. Readers should also be aware of factors which
could have a negative impact on those prospects. These include
political, economic or other conditions such as currency exchange
rates, inflation rates, recessionary or expansive trends, taxes and
regulations and laws affecting the business; competitive products,
advertising, promotional and pricing activity, the degree of
acceptance of new product introductions in the marketplace and the
difficulty of forecasting sales at various times in various markets.
<PAGE>
-12-
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands except share and
per share amounts) Year Ended March 31
--------------------------------------
<CAPTION>
1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
Net sales $235,891 $182,100 $150,026
Cost of Sales 119,812 94,059 76,914
--------------------------------------
Gross profit 116,079 88,041 73,112
Selling, technical and
administrative expenses 86,978 68,423 60,378
--------------------------------------
Operating profit 29,101 19,618 12,734
Other income (expense):
Interest income 430 185 300
Interest expense (4,435) (2,029) (1,403)
Miscellaneous, net (1,475) 373 793
--------------------------------------
(5,480) (1,471) (310)
--------------------------------------
Earnings before income
taxes and cumulative
effect of accounting change 23,621 18,147 12,424
Income taxes (note 5) 9,826 7,005 4,653
--------------------------------------
Earnings before cumulative
effect of accounting change 13,795 11,142 7,771
Cumulative effect of accounting
change (note 4) - (371) (2,082)
--------------------------------------
Net earnings 13,795 10,771 5,689
Preferred dividends (600) - -
--------------------------------------
Net earnings available for
common shareholders $ 13,195 $ 10,771 $ 5,689
======================================
<PAGE>
-13-
Net earnings per common
share (note 1):
Primary
Before cumulative effect
of accounting change $4.51 $3.55 $2.18
Cumulative effect of
accounting change (note 4) - (0.12) (0.58)
--------------------------------------
$4.51 $3.43 $1.60
======================================
Fully diluted
Before cumulative effect of
accounting change $4.49 $3.50 $2.18
Cumulative effect of
accounting changes (note 4) - (0.12) (0.58)
--------------------------------------
$4.49 $3.38 $1.60
======================================
Weighted average number of common
shares outstanding (note 1)
Primary 2,928,352 3,141,855 3,567,875
=======================================
Fully Diluted 2,941,732 3,179,832 3,567,875
=======================================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
-14-
<TABLE>
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands) March 31
---------------------
<CAPTION>
1996 1995
---------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,833 $ 7,630
Accounts receivable, less allowance for
doubtful receivables of $4,829 and $2,859 64,410 45,559
Inventories (note 2) 38,538 22,801
Prepaid expenses 2,911 2,052
Deferred income taxes 4,045 3,155
---------------------
118,737 81,197
Total current assets ---------------------
Property, plant and equipment, at cost:
Land and improvements 3,930 2,829
Buildings and improvements 31,930 26,346
Machinery, equipment and fixtures 43,372 33,581
---------------------
79,232 62,756
Less accumulated depreciation and amortization 37,916 35,721
---------------------
Net property, plant and equipment 41,316 27,035
---------------------
Goodwill, net 80,398 4,541
Other assets, net 24,305 10,532
---------------------
$264,756 $123,305
=====================
</TABLE>
<PAGE>
-15-
<TABLE>
LIABILITIES & SHAREHOLDERS' EQUITY
(In thousands except share and
per share amounts) March 31
---------------------
<CAPTION>
1995 1994
---------------------
<S> <C> <C>
Current liabilities:
Notes payable (note 3) $ 5,219 $ 4,720
Current installments of long-term
obligations (note 7) 7,065 4,413
Accounts payable 20,877 18,064
Dividends payable 419 411
Accrued compensation 7,966 6,089
Accrued expenses, other 11,299 7,258
Income taxes (note 5) 6,178 5,531
---------------------
Total current liabilities 59,023 46,486
---------------------
Long-term obligations (note 7) 105,189 18,229
Accrued postretirement benefits (note 4) 3,997 3,899
Deferred income taxes (note 5) 45 960
Minority interest in subsidiary 85 77
Preferred Stock - 6% redeemable
Series A (no par) (note 8) 30,600 -
Shareholders' equity (note 9):
Common stock. Authorized 20,000,000 shares;
issued 4,200,178 shares in 1996 and 4,136,080
shares in 1995 at stated value of $1.00 per
share (note 4) 4,200 4,136
Additional paid-in capital (note 4) 3,456 1,676
Retained earnings 95,564 84,043
Equity adjustment from foreign currency
translation 1,034 1,551
Less cost of 1,405,947 and 1,393,547 common
shares in treasury (38,437) (37,752)
---------------------
Total shareholders' equity 65,817 53,654
---------------------
Contingencies and commitments (notes 10 and 11)
$264,756 $123,305
=====================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
-16-
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Year Ended March 31
---------------------------
<CAPTION>
1996 1995 1994
---------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 13,195 $10,771 $ 5,689
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 4,525 4,349 4,596
Effect of change in accounting (note 4) - 371 2,082
Amortization of goodwill and other
intangible assets 3,307 685 1,011
Provision for bad debts 1,793 664 1,792
Deferred income taxes 266 (1,420) (422)
Changes in assets and liabilities net of
effects from acquisitions and dispositions:
Decrease (increase) in receivables (3,792) (4,685) 1,090
Decrease (increase) in inventories (654) (265) 931
Decrease (increase) in prepaid expenses (789) (713) (111)
Increase (decrease) in accounts payable (1,791) 4,453 (1,697)
Increase (decrease) in accrued expenses 5,059 3,505 2,094
Increase (decrease) in income tax
liabilities 555 2,860 596
Other (4,141) (721) (2,106)
---------------------------
Net cash flows provided by operating
activities 17,493 19,854 15,545
---------------------------
Cash flows from investing activities:
Capital expenditures (4,303) (3,990) (7,526)
Proceeds form disposition of fixed assets 630 3,376 2,998
Acquisitions of businesses (104,100) (8,910) -
Other investments - (216) (1,062)
---------------------------
Net cash flows used in investing
activities (107,773) (9,740) (5,590)
---------------------------
Cash flows from financing activities:
Long-term and short-term borrowings 109,101 26,609 1,943
Long-term and short-term repayments (15,833) (8,891) (9,238)
Exercise of stock options 659 879 221
Acquisition of treasury stock (note 9) (685) (26,152) -
Dividends paid (1,674) (1,767) (2,141)
---------------------------
Net cash flows used in financing
activities 91,568 (9,322) (9,215)
---------------------------
Effect of exchange rate changes on cash
and cash equivalents (85) 354 (87)
---------------------------
Net increase in cash and cash equivalents 1,203 1,146 653
Cash and cash equivalents at beginning of year 7,630 6,484 5,831
---------------------------
Cash and cash equivalents at end of year $ 8,833 $ 7,630 $ 6,484
===========================
Cash paid for interest $ 4,534 $ 2,182 $ 1,627
===========================
Cash paid for income taxes $ 7,198 $ 4,226 $ 4,398
===========================
<FN>
Supplemental disclosure of non cash financing activities:
During fiscal 1996, MacDermid Imaging Technology, Inc. issued
unregistered 6% redeemabele Series A preferred stock for $30,000
and issued $600 preferred stock as dividends in kind.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
-18-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts)
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) Acquisitions. In December 1995 the Corporation acquired the
assets, subject to certain liabilities, of the Electronics and
Printing Division of Hercules Incorporated, forming a new wholly-
owned subsidiary, MacDermid Imaging Technology, Inc. ("MIT"), for
that purpose. The acquired business consists principally of the
manufacture and sale of proprietary products including photoresists,
used to imprint electrical patterns on circuit boards, and photopolymer
printing, which reproduces quality graphics on package printing and
in-store displays. The total purchase price for the acquisition,
accounted for as a purchase transaction, was approximately $130,000
including inventory, fixed assets, goodwill (being amortized over 25
years) and other intangibles. A further $15,000 is contingently
payable in fiscal year 2004 in the event that the consolidated
cumulative earnings, before interest, taxes on earnings, depreciation
and amortization exceed $250,000 for the first four full fiscal years
following December 5, 1995. Consolidated operating results for fiscal
1996 include the results of the MIT business from December 1, 1995.
The following unaudited pro forma summary of consolidated results is
presented as if the acquisition had occurred on April 1, 1994 after
giving effect to certain pro forma adjustments, including recognition
of additional interest expense on debt to acquire the business,
amortization of goodwill and other intangibles, additional depreciation
for purchasee price allocation, elimination of corporate allocations
previously levied on the acquired business, the related tax effects and
recognition of the preferred dividend requirement.
(In thousands, except per share amounts)(Unaudited)
1996 1995
-------------------------
Net sales $283,318 $248,180
Net earnings $ 16,351 $ 12,414
Earnings per common share $5.58 $3.95
The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the results which
would have occurred if the acquisition had commenced at that date, nor
are they indicative of future results.
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
<PAGE>
-19-
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 $8,900 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 include the results of
the Allied-Kelite business from May 2, 1994. Results of operations
were not significant for purposes of presenting pro forma information.
(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. 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 currently has accrued postretirement
health care benefits for most U.S. employees. The postretirement health
care plan is unfunded.
Postemployment. The Corporation currently accrues for postemployment
disability benefits to employees meeting specified service requirements.
The postemployment benefits plan is unfunded.
(f) Research and Development. Research and development costs, charged
to expenses as incurred, were $10,042, $9,644 and $6,687 in 1996, 1995
and 1994, respectively.
<PAGE>
-20-
(g) Income Taxes. 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 a decrease in equity of $517 in 1996, an
increase of $1,754 in 1995 and a decrease of $781 in 1994. Gains
and losses on foreign currency transactions are included in the
consolidated statements of earnings.
(i) Cash and Cash Equivalents. For the purpose of the consolidated
statements of cash flows, the Corporation considers all highly
liquid debt instruments purchased with an initial 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
current financial instruments approximate fair value because of the
short maturity of those instruments. The carrying amounts of other
financial instruments approximate fair value due to the interest rate
at year end approximating that for similar instruments.
(k) Earnings Per Common Share. The computation of primary earnings per
common share is based upon the weighted average number of outstanding
common shares plus (in periods in which they have a dilutive effect) the
effect of common shares contingently issuable from stock options and
stock awards. 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 years 1996 and 1995 are the only years
presented for which the dilutive effects were large enough to report.
(l) Stock-based Plans. In October 1995 the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," which establishes
financial accounting and reporting standards for stock based plans.
The Statement, which becomes effective in fiscal 1997, requires the
Corporation to choose between accounting for issuances of stock and
other equity instruments to employees based on their fair value or
disclosing the pro forma effects such accounting would have had on
the Corporation's net income and earnings per share. The Corporation
continues to evaluate the impact of this statement as it prepares for
adoption.
<PAGE>
-21-
(m) Intangible Assets. Goodwill is amortized over its estimated
period of benefit on a straight line basis; other intangible assets
are amortized on an appropriate basis over their estimated useful
lives. No amortization period currently exceeds 25 years. MacDermid
evaluates the carrying value of intangible assets at each balance
sheet date to determine if impairment exists based upon estimated
undiscounted future cash flows. The impairment, if any, is measured
by the difference between carrying value and estimated fair value and
charged to expense in the period identified.
(n) Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(o) Reclassification of Accounts. Certain accounts have been
reclassified to conform with the 1996 presentation.
2. INVENTORIES
The major components of inventory at March 31 were as follows:
(In thousands) 1996 1995
----------------------
Finished goods $21,270 $16,074
Raw materials and supplies 17,268 6,727
----------------------
$38,538 $22,801
======================
3. NOTES PAYABLE
Notes payable at March 31, 1996 consisted of $5,219 of outstanding
borrowings under available lines of credit aggregating approximately
$40,000. 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 $65,000
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 5.6% and
5.1% at the end of 1996 and 1995, respectively.
4. EMPLOYEE RETIREMENT & WELFARE PLANS
The Corporation has defined benefit pension, defined contribution
profit sharing and employees' stock ownership plans for substantially
all its domestic employees. Aggregate amounts charged to earnings for
these plans were $1,892, $1,791, and $1,194 in 1996, 1995 and 1994,
respectively.
<PAGE>
-22-
<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) 1996 1995 1994
---------------------------------
<S> <C> <C> <C>
Service cost $ 678 $ 581 $ 557
Interest cost 1,421 1,158 1,119
Actual return on investment (4,263) (1,879) (238)
Net amortization and deferrals 2,604 341 (1,320)
---------------------------------
Net periodic pension cost $ 440 $ 201 $ 118
=================================
</TABLE>
<TABLE>
The following table sets forth the plan's funded status at March
31, 1996 and 1995 and the amount recognized in the Corporation's
consolidated balance sheet at March 31:
<CAPTION>
(In thousands) 1996 1995
-----------------------
<S> <C> <C>
Actuarial present value of
benefit obligation:
Accumulated benefit obligation
including vested benefits of
$15,401 and $11,989 $16,043 $12,588
=======================
Projected benefit obligation 21,411 $15,947
Plan assets at fair value (primarily
listed stocks, bonds and guaranteed
investment contracts) 21,189 16,685
-----------------------
Plan assets (less than) in excess of
projected benefits obligation (222) 738
Unrecognized portion of transition
asset (being amortized over 14 years) (954) (1,145)
Unrecognized net loss 1,587 311
-----------------------
Prepaid (accrued) pension cost $ 411 $ (96)
=======================
</TABLE>
The rate of increase in future compensation levels used in determining
the actuarial present value of the projected benefit obligation was 5%
for 1996 and 1995. The expected long-term rate of return on assets was
9% for 1996 and 1995 and the weighted average settlement rate was 7.25%
and 8% for 1996 and 1995, respectively.
Plan assets included 43,695 shares of the Corporation's common stock
having a market value of $2,878 and $1,879 at March 31, 1996 and 1995,
respectively.
<PAGE>
-23-
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 (net of a $1,382 deferred income tax
benefit).
The Corporation's postretirement medical and dental plan is
unfunded. The following table sets forth the plan amounts, covering
both active and retired employees, recognized in the Corporation's
consolidated balance sheet at March 31:
(In thousands) 1996 1995
---------------------
Accumulated postretirement
benefit obligation $4,267 $3,882
Unrecognized net loss 760 380
---------------------
Accrued postretirement medical
and dental liability $3,507 $3,502
=====================
For measurement purposes, an 8.5% annual rate of increase in the
per capita cost of covered medical benefits was assumed for fiscal
1996; 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, 1996
by approximately $200 (5%). The aggregate of the service and
interest cost components of the net periodic postretirement benefit
cost for fiscal 1996 would increase by approximately $12 (4%).
The weighted average discount rate used in determining the
accumulated postretirement benefit obligation was 7.25% at March
31, 1996 and 8% at March 31, 1995. Since the plan is unfunded, no
assumption is needed as to the long-term rate of return on assets.
<PAGE>
-24-
<TABLE>
The net periodic postretirement benefit costs for the years ended
March 31 were as follows:
<CAPTION>
(In thousands) 1996 1995 1994
------------------------------
<S> <C> <C> <C>
Service cost $ 61 $ 62 $ 47
Interest cost 305 292 279
Net amortization 2 11 -
Recognition of transition
obligation at April 1, 1993 - - 3,464
------------------------------
Net periodic postretirement
benefit cost $ 368 $ 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 (net of a $248 deferred income tax benefit) which
was recorded on April 1, 1994. The estimated ongoing additional
after-tax annual cost of this unfunded plan is not material.
Stock option plan. 1992 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. There were
15,000, 96,500 and 73,500 options granted during fiscal 1996,
1995 and 1994, respectively, at exercise prices of $30.85,
$16.1505 and $16.983 to $18.315, respectively. There were 20,500
and 8,500 options canceled upon termination of the grantees during
1996 and 1995, respectively. Options granted under the 1992 Plan
generally are exercisable during a four-year period beginning with
the grant date. Options for 42,268, 37,550 and 500 shares were
exercised during fiscal years 1996, 1995 and 1994, respectively,
at prices ranging from $14.652 to $18.315 per share. At March 31,
1996, there were 206,300 options outstanding with exercise prices
from $14.652 to $30.85 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
<PAGE>
-25-
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, 1996, 1995 and 1994 were $330, $370 and $213, respectively.
1995 Plan. Under a non-qualified equity incentive plan approved by
the the Shareholders in July 1995 (the 1995 Plan), certain employees
may be granted shares of restricted stock for an aggregate of up to
50,000 shares of common stock. During fiscal 1996 there were 21,830
shares of such restricted shares granted having market prices of
$42.75 to $53 on the dates of the grant. A participant who is awarded
restricted stock has no rights with respect to such award until the
award is accepted in writing and the specified purchase price is paid
in full. All shares of restricted stock issued under the 1995 Plan
must be held and cannot be sold or transferred, except to MacDermid
for the price paid, for a period of four years from the date of the
award. Compensation expense, which is equal to the difference between
the fair market value on the date of an award and the purchase price
of the stock to be purchased thereunder, is generally amortized over
the four-year restricted period during which the purchased shares must
be held or resold to the Corporation. The amount of such compensation
expense charged to results of operations following the award date for
the year ended March 31, 1996 was $993.
<PAGE>
-26-
5. INCOME TAXES
Earnings before income taxes included foreign earnings of
$15,035, $11,896 and $7,864 for 1996, 1995 and 1994, respectively.
<TABLE>
Income tax expense attributable to income from operations for the
years ended March 31 consisted of:
<CAPTION>
(In thousands) Current Deferred Total
-----------------------------------
1996
----
<S> <C> <C> <C>
U.S. Federal $7,108 $(3,259) $3,849
State and local 1,681 (999) 682
Foreign 811 4,484 5,295
----------------------------------
Totals $9,600 $ 226 $9,826
==================================
1995
----
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
==================================
</TABLE>
<PAGE>
-27-
<TABLE>
Income tax expense for the years ended March 31, 1996, 1995 and
1994 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) 1996 1995 1994
--------------------------------
<S> <C> <C> <C>
U.S. Federal statutory tax rate 35% 35% 34%
================================
Computed "expected"
Federal income tax $8,267 $6,351 $4,224
State income taxes, net of
Federal tax benefit 474 354 333
Adjustment of prior years
tax accruals 193 1,251 (24)
Foreign tax rate differential 741 (132) (442)
Change in the beginning of
the year balance of the
valuation allowance for
deferred income taxes
allocated to income tax
expense - (872) 482
No tax benefit for (gain) loss
of unconsolidated corporate
joint venture (14) (172) (10)
Other, net 165 225 90
--------------------------------
Actual income taxes $9,826 $7,005 $4,653
================================
Effective tax rate 41.6% 38.6% 37.5%
================================
</TABLE>
<PAGE>
-28-
<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) 1996 1995
------------------
<S> <C> <C>
Deferred tax assets:
Accounts receivable, principally due to
allowance for doubtful accounts $ 705 $ 228
Inventories, principally due to additional
costs inventoried for tax purposes pursuant
to the Tax Reform Act of 1986 and non-
deductible inventory reserves 1,022 607
Accrued liabilities 1,292 3,527
Foreign net operating loss carry forwards 1,018 1,198
Other 2,983 1,248
------------------
Total gross deferred tax assets 7,020 6,808
Deferred tax liabilities:
Plant and equipment, principally due to
differences in depreciation 894 773
Other 504 187
------------------
Total gross deferred tax liabilities 1,398 960
------------------
Net deferred asset $5,622 $5,848
==================
</TABLE>
The deferred tax asset of $1,018 and $1,198 at March 31, 1996 and
1995, respectively, which relate to foreign net operating loss carry
forwards, results primarily from prior year losses incurred by a
foreign subsidiary. The valuation allowance related to those losses
decreased by $872 in 1995. Management 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 1996 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, 1996, the undistributed earnings of those
subsidiaries were approximately $23,000.
During fiscal 1996 the exercise of stock options under the stock
option and award plans resulted in a tax benefit of $130 which was
recorded as an increase in additional paid-in capital.
<PAGE>
-29-
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-
America Europe Pacific Consolidated
--------------------------------------------
(In thousands) 1996
----------------------------------------
<S> <C> <C> <C> <C>
Net sales to unaffiliated
customers $131,404 $49,461 $55,026 $235,891
Operating profit 10,945 7,069 11,087 29,101
Identifiable Assets 205,035 25,716 34,005 264,756
1995
----------------------------------------
Net sales to unaffiliated
customers $93,866 $41,196 $47,038 $182,100
Operating profit 5,799 4,424 9,395 19,618
Identifiable assets 67,780 21,943 33,582 123,305
1994
----------------------------------------
Net sales to unaffiliated
customers $73,861 $37,951 $38,214 $150,026
Operating profit 5,527 2,156 5,051 12,734
Identifiable assets 56,708 19,942 29,217 105,867
</TABLE>
<PAGE>
-30-
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, unsecured, variable interest
(6.44% at March 31, 1996) due in
quarterly installments to 2003 $ 83,482 $ -
Revolving loan, unsecured, variable
interest (6.44% at March 31, 1996)
due in 2001 27,500 -
Mortgage note, 9.25% interest due
in 1997 802 -
Term loan, unsecured, variable interest
(7.5% at March 31, 1995) - 21,875
Debenture, 3.5% interest due in
annual installments to 1999 359 607
Other, due in varying amounts
to 1999 111 160
------------------------
Total long-term obligations 112,254 22,642
Less current portion 7,065 4,413
------------------------
Long-term portion $105,189 $18,229
=======================
</TABLE>
Minimum future principal payments on long-term obligations
subsequent to March 31, 1996 are as follows:
(In thousands)
1997 $ 7,065
1998 7,752
1999 12,257
2000 12,144
2001 39,643
Thereafter 33,393
--------
Total $112,254
========
The term loan bears interest at a variable rate, which is based on
a ratio of the Corporation's debt to earnings before certain expenses
and which presently falls within a range of 0.5% to 1.25% above the
March 29, 1996 London interbank market rate (LIBOR) which was 5.44%.
At March 31, 1996 the effective interest rate was 6.44%. Under the
term loan, the most restrictive covenants provide that: earnings
before interest and taxes, as a ratio to interest expense, must be
greater than 2.5 to 1; consolidated net worth and the preferred stock
<PAGE>
-31-
must be at least $80,000; and the total debt must not exceed 200% of
net worth and the preferred stock.
The revolving loan represents amounts outstanding under a $65,000
committed revolving credit line which expires in 2001. Commitment
fees under the revolving credit line are variable, ranging from 18.75
to 37.5 basis points.
The Corporation has entered into interest rate swap agreements
with a bank for the purpose of reducing its exposure to possible
future changes in interest rates applicable to the term and revolving
loans. Pursuant to the terms of the agreements, the notational
amounts of $85,000 and $29,000 are reduced in accordance with
applicable schedules until the expiration dates, September 30, 2002
and September 30, 1998, respectively. Applicable fixed rates of
5.63% and 5.39%, respectively, are compared to the U.S. dollar LIBOR
rates every three months as a basis for payment or receipt of the
rate differential as applied to the then covered notational amount.
The value of these off balance sheet agreements at March 31, 1996 was
not material to the Corporation's consolidated financial position.
8. REDEEMABLE PREFERRED STOCK
On December 5, 1995 MacDermid Imaging Technology, Inc., a wholly-owned
subsidiary of the Corporation, issued 30,000 shares of unregistered 6%
redeemable Series A preferred stock of 75,000 authorized shares to
Hercules Incorporated in part payment for the purchase of its Electronics
and Printing Division. Dividends in kind are payable on March 31, each
year by the issuance of additional Series A preferred stock at the rate
of one share per $1 of dividends. Transfer of the preferred stock is
restricted for a period of ten years and Hercules Incorporated has the
right, under certain conditions, to appoint one person to be a director
of MacDermid, Incorporated. Cumulative payments for redemption of
preferred stock and dividends paid in kind are to be paid out of
cumulative net earnings which accrue beginning with the December 1, 1995
effective date and continuing through the payment dates, as follows:
(In thousands)
March 31, 2000 $12,877
March 31, 2001 13,650
March 31, 2002 14,469
-------
$40,996
=======
Cumulative redemption payments may not exceed 50% of the cumulative
net earnings through the payment date. Any preferred stock or
dividends not so redeemed because of this limitation will be redeemed
in the year(s) following 2002. The preferred stock may be redeemed
earlier at the option of MacDermid. In the event that MacDermid is in
default of its obligations with respect to the preferred dividend or
redemption, it may not pay a dividend with respect to its common stock.
<PAGE>
-32-
9. SHAREHOLDERS' EQUITY
<TABLE>
The following summarizes the changes in shareholders' equity accounts
for each of the three years in the period ended March 31,1996:
<CAPTION>
(In thousands, Common Stock Total
except share data) ------------ 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, 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
Stock options
exercised 42,268 42 946 988
Tax benefit from
exercise of stock
options 130 130
Stock awards 21,830 22 704 726
Net earnings 13,195 13,195
Cash dividends
$.60 per share (1,674) (1,674)
Foreign currency
translation
adjustment (517) (517)
Treasury stock purchase 12,400 (685) (685)
-------------------------------------------------------------------------------
Balance March 31, 1996 4,200,178 4,200 3,456 95,564 1,034 1,405,947 (38,437) 65,817
===============================================================================
</TABLE>
<PAGE>
-33-
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. The shares purchased pursuant to the
Offer represented 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 $26,200 was funded primarily by bank borrowings.
The Board of Directors has authorized the additional 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. Common stock repurchases of 12,400 shares in 1996,
at prices ranging from $42.25 to $64 per share, and 11,000 shares in
1995 at $35 per share were completed 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 shares 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, 1996, there was a balance of such outstanding authorizations
totaling 124,600 shares.
10. 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 &$6,750, $4,968 and $4,126 in 1996, 1995
and 1994, respectively, of which $1,522, $821 and $587, respectively, were
contingent rentals.
Minimum lease commitments under operating leases for the fiscal years
subsequent to March 31, 1996 are as follows:
(In thousands) 1997 $3,079
1998 1,991
1999 761
2000 404
2001 254
Thereafter 208
------
$6,697
======
<PAGE>
-34-
11. 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, results of operations or cash flows.
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>
-35-
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 1996 appears below 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 /s/Arthur J. LoVetere, Jr.
Daniel H. Leever Arthur J. LoVetere, Jr.
Chief Executive Officer Vice President, Chief Financial
Officer and Treasurer
<PAGE>
-36-
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, 1996 and
1995, and the related consolidated statements of earnings and cash
flows for each of the years in the three-year period ended March 31,
1996. 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,
1996 and 1995 and the results of their operations and their cash
flows for each of the years in the three-year period ended March 31,
1996 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 22, 1996
<PAGE>
-37-
<TABLE>
SELECTED FINANCIAL DATA
(UNAUDITED)
(In thousands, except share and per share amounts)
SELECTED QUARTERLY RESULTS
1996 by Quarters
----------------------------------------------
<CAPTION>
June September December March Total
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $48,966 $53,359 $58,279 $75,287 $235,891
Gross profit 25,204 26,032 28,223 36,620 116,079
Net earnings 2,910 3,114 3,088 4,083 13,195
Primary earnings
per common share <F1> $1.00 $1.07 $1.05 $1.39 $4.51
1995 by Quarters
----------------------------------------------
June September December March Total
----------------------------------------------
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<F1> 2,667 2,637 2,668 10,771<F1>
Primary earnings
per common share <F1> $0.78<F1> $0.85 $0.92 $0.92 $3.43<F1>
<FN>
<F1> After cumulative effect of accounting changes which resulted
in one-time after tax charges of $371 ($0.12/common share).
</TABLE>
<TABLE>
MARKET RANGE TRADING RECORD
Fiscal 1996 Fiscal 1995
------------------ ------------------
<CAPTION>
High Low High Low
QUARTER ------------------ ------------------
<S> <C> <C> <C> <C>
June 46 41 1/2 29 1/2 24
September 47 1/2 43 36 1/2 29
December 60 1/8 46 42 34
March 72 1/4 59 44 1/2 36 1/2
Closing price March 31 65 7/8 43
<FN>
Source: Nasdaq Stock Market Monthly Statistical Report
</TABLE>
<PAGE>
-38-
<TABLE>
DIVIDEND RECORD
Fiscal 1996 Fiscal 1995
--------------------------- ---------------------------
<CAPTION>
Record Payable Amount Record Payable Amount
QUARTER Date Date Declared Date Date Declared
--------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
June 6/15/95 7/3/95 $0.15 6/15/94 7/1/94 $0.15
September 9/15/95 10/2/95 $0.15 9/15/94 10/3/94 $0.15
December 12/15/95 1/2/96 $0.15 12/15/94 1/3/95 $0.15
March 3/15/96 4/3/96 $0.15 3/15/95 4/3/95 $0.15
</TABLE>
<PAGE>
-39-
CORPORATE INFORMATION
DIRECTORS:
Harold Leever, Chairman of the Board
Daniel H. Leever, 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, Managing Partner of Prescott Investors
CORPORATE OFFICERS:
Harold Leever, Chairman of the Board
Daniel H. Leever, Chief Executive Officer
Arthur J. LoVetere, Jr., Vice President, Chief Financial
Officer
EXECUTIVE MANAGEMENT:
Patricia I. Janssen, Group Vice President and President,
Electronics and Printing
Michael A. Pfaff, Group Vice President and President,
Industrial Products
Thomas M. Leever, President, MacDermid Equipment, Inc.
OTHER OFFICERS:
Vice Presidents-
David A. Erdman
John J. Grunwald
Peter E. Kukanskis
Gary B. Larson
Division Vice Presidents-
Michael P. D'Angelo
David Rosenberg
Michael J. Siegmund
Victor L. Sprenger
Other-
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
<PAGE>
-40-
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, 1996 - 800. CUSIP-554273 102.
ANNUAL MEETING:
The Annual Meeting of Shareholders will be held on Thursday,
July 25, 1996 at 3:30 p.m., at the Marriott Courtyard,
63 Grand Street, Waterbury, CT.
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LOCATIONS IN THE AMERICAS:
United States: Waterbury, CT; New Hudson, MI; Cincinnati, OH; Ferndale,
MI; Middletown and Wilmington, DE; Springfield, VT
Canada: MacDermid Chemicals, Inc.
LOCATIONS WORLDWIDE:
Australia: MacDermid Australia Branch
Belgium: MacDermid Imaging Technology Belgium NV;
Benelux: MacDermid Benelux, B.V.; MacDermid Imaging Technology Europe BV
England: MacDermid G.B., Ltd.
France: MacDermid France, S.A.
Germany: MacDermid GmbH; MacDermid Equipment 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.
