AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 11, 2001
REGISTRATION NO. 333-49830
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
MINNESOTA MINING AND MANUFACTURING COMPANY
(Exact name of registrant as specified in its articles of incorporation)
DELAWARE 3290 41-0417775
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Identification
Code Number) Number)
----------------------
<TABLE>
<S> <C>
3M CENTER GREGG M. LARSON, ESQ.
ST. PAUL, MINNESOTA 55144 ASSISTANT GENERAL COUNSEL,
(651) 733-1110 ASSISTANT SECRETARY
(Address, including zip code, and telephone number, MINNESOTA MINING AND MANUFACTURING COMPANY
including area code, of registrant's principal 3M CENTER
executive offices) ST. PAUL, MINNESOTA 55144
(651) 733-1110
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
</TABLE>
----------------------
<TABLE>
<S> <C> <C>
COPIES TO:
JEAN E. HANSON, ESQ. GREGG M. LARSON, ESQ. BERKLEY W. DUCK III, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON ASSISTANT GENERAL COUNSEL, ICE MILLER
ONE NEW YORK PLAZA ASSISTANT SECRETARY ONE AMERICAN SQUARE
NEW YORK, NEW YORK 10004 MINNESOTA MINING AND MANUFACTURING COMPANY BOX 82001
TEL: (212) 859-8000 3M CENTER INDIANAPOLIS, IN 46282-0002
FAX: (212) 859-4000 ST. PAUL, MN 55144-1000 TEL: (317) 236-2100
TEL: (651) 733-1110 FAX: (317) 236-2219
FAX: (651) 736-9469
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after the effectiveness of this Registration Statement
and the effective time of the merger described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED BE REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE(3)
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<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 1,370,268(1) Not Applicable Not Applicable $28,981.43(2)
==================================================================================================================================
</TABLE>
(1) Based on 5,913,975 common shares, no par value, of Robinson Nugent, Inc.,
which is the maximum number of Robinson Nugent common shares that may be
outstanding immediately prior to the completion of the transactions
described herein, assuming an exchange ratio of 0.2317 of a share of 3M
common stock for each Robinson Nugent common share (which is the highest
possible exchange ratio in the merger).
(2) Pursuant to Rules 457(f)(1) and 457(c) under the Securities Act of 1933, as
amended, the registration fee has been calculated based on a price of
$18.5625 per Robinson Nugent common share (the average of the high and low
price per Robinson Nugent common share as reported on the Nasdaq National
Market on November 7, 2000, and the maximum number of shares of such common
stock that may be outstanding immediately prior to the completion of the
transactions described herein as set forth in footnote 1 above).
(3) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
[LOGO] ROBINSON
NUGENT
January 11, 2001
Dear Shareholder:
The board of directors of Robinson Nugent, Inc. has unanimously approved a
merger agreement dated October 2, 2000 that provides for the merger of Minnesota
Mining and Manufacturing Company (3M) and Robinson Nugent. As a result of the
merger, Robinson Nugent will become a wholly owned subsidiary of 3M. Each
Robinson Nugent common share will be exchanged for between 0.2317 and 0.19 of a
share of 3M common stock, depending on the average closing price of 3M common
stock during the 20 trading days prior to the completion of the merger.
On January 10, 2001, the last trading day before the date of the
accompanying proxy statement/ prospectus, 3M common stock, which trades on the
New York Stock Exchange under the symbol "MMM," closed at $112.313 and Robinson
Nugent common shares, which trade on the Nasdaq National Market under the symbol
"RNIC," closed at $21.500.
Robinson Nugent has scheduled a special meeting of its shareholders to vote
on the merger. A majority of the outstanding common shares of Robinson Nugent
entitled to vote is required to approve and adopt the merger agreement and the
merger. We cannot complete the merger unless the shareholders of Robinson Nugent
vote in favor of this proposal. For a more detailed description of the special
meeting, see "The Special Shareholders Meeting" on page 17.
The accompanying proxy statement/prospectus gives you detailed information
about 3M, Robinson Nugent and the merger, and includes a copy of the merger
agreement. We encourage you to read the entire document carefully before
deciding how to vote. IN PARTICULAR, YOU SHOULD READ THE "RISK FACTORS" SECTION
BEGINNING ON PAGE 13 FOR A DESCRIPTION OF VARIOUS RISKS YOU SHOULD CONSIDER IN
EVALUATING THE MERGER.
We are very enthusiastic about the merger. I join all the other members of
the board of directors in recommending that you vote "FOR" each of the proposals
being submitted to shareholders.
/s/ Patrick C. Duffy
Patrick C. Duffy
CHAIRMAN
Robinson Nugent, Inc.
--------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE ISSUED IN CONNECTION
WITH THE MERGER OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
THIS PROXY STATEMENT/PROSPECTUS IS DATED JANUARY 11, 2001, AND IS FIRST
BEING MAILED TO SHAREHOLDERS ON OR ABOUT JANUARY 17, 2001.
<PAGE>
ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about 3M and Robinson Nugent from documents each has filed
with the SEC that are not included in or delivered with this proxy
statement/prospectus. If you call or write, 3M will send you copies of these
documents, excluding exhibits, without charge. You may contact 3M at:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55144
Attention: Investor Relations
Telephone number: (651) 736-1915
If you call or write, Robinson Nugent will send you copies of the documents
that it has filed with the SEC, excluding exhibits, without charge. You may
contact Robinson Nugent at:
Robinson Nugent, Inc.
800 East Eighth Street
P.O. Box 1208
New Albany, IN 47151
Attention: Investor Relations
Telephone Number: (812) 945-0211
IN ORDER TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS IN ADVANCE OF THE
SPECIAL SHAREHOLDERS MEETING, YOU SHOULD MAKE YOUR REQUEST NO LATER THAN
FEBRUARY 8, 2001.
For more information on the matters incorporated by reference in this proxy
statement/prospectus, see "Where You Can Find More Information" on page 60.
<PAGE>
[LOGO] ROBINSON
NUGENT
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 15, 2001
----------------------
To the Shareholders of Robinson Nugent, Inc.:
A special meeting of the shareholders of Robinson Nugent, Inc. will be held
at the Holiday Inn Lakeview, 505 Marriott Drive, Clarksville, Indiana on
Thursday, February 15, 2001, at 10:00 a.m., local time, to consider and vote on
the matter of Proposal No. 1 and any other matters which may properly come
before the Robinson Nugent special shareholders meeting or any adjournment or
postponement of the special shareholders meeting.
1. To approve and adopt the Agreement and Plan of Merger, dated as of
October 2, 2000, by and among Minnesota Mining and Manufacturing
Company (3M), Barbados Acquisition Inc., a wholly owned subsidiary of
3M, and Robinson Nugent, Inc. and the merger contemplated thereby of
Barbados Acquisition Inc. with and into Robinson Nugent, Inc. A copy
of the merger agreement is attached to the proxy statement/prospectus
as Annex A.
THE BOARD OF DIRECTORS OF ROBINSON NUGENT UNANIMOUSLY RECOMMENDS THAT YOU
VOTE "FOR" PROPOSAL NO. 1.
Only shareholders of record at the close of business on January 11, 2001
are entitled to notice of, and to vote at, the special shareholders meeting or
any adjournment or postponement of the special shareholders meeting.
You are cordially invited to attend the Robinson Nugent special
shareholders meeting. Whether or not you plan to attend, please act promptly to
vote your shares on the proposal described above. You may vote your shares by
completing, signing, and dating the enclosed proxy card and returning it as
promptly as possible in the enclosed postage-paid envelope. You may revoke your
proxy in the manner described in the accompanying proxy statement/prospectus at
any time before it has been voted at the special meeting.
If you attend the Robinson Nugent special shareholders meeting, you may
vote your shares in person even if you have previously submitted a proxy.
By Order of the Board of Directors,
/s/ Richard L. Mattox
Richard L. Mattox
SECRETARY
New Albany, Indiana
January 11, 2001
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER AGREEMENT ................................ 35
THE 3M/ROBINSON NUGENT Structure of the Merger .......................... 35
MERGER ............................................ 1 Closing; Effective Time .......................... 35
CAUTIONARY STATEMENT What Shareholders Will Receive in the
CONCERNING FORWARD-LOOKING Merger ......................................... 35
STATEMENTS ........................................ 3 Procedures for Surrender of Robinson
SUMMARY ............................................. 4 Nugent Certificates; Fractional Shares ......... 36
RISK FACTORS ........................................ 13 Representations and Warranties ................... 36
Risks Relating to the Merger Transaction ......... 13 Conduct of Business .............................. 37
Risks Relating to 3M ............................. 14 No Solicitation .................................. 38
THE SPECIAL SHAREHOLDERS Employee Benefit Plans ........................... 40
MEETING ........................................... 17 Insurance and Indemnification .................... 40
Time and Place of the Special Meeting; Expenses ......................................... 40
Matters to Be Considered ....................... 17 Conditions to the Completion of the
Vote Required .................................... 17 Merger ......................................... 40
Record Date; Quorum .............................. 17 Termination ...................................... 42
How Proxies Will Be Voted at the Amendments ....................................... 43
Robinson Nugent Special Shareholders THE VOTING AND STOCK OPTION
Meeting ........................................ 17 AGREEMENT ......................................... 44
Treatment of Abstentions and Broker 3M Voting Agreement with Robinson
Non-Votes ...................................... 17 Nugent Shareholders ............................ 44
How to Revoke a Proxy ............................ 18 COMPARATIVE PER SHARE MARKET
Solicitation of Proxies .......................... 18 PRICE AND DIVIDEND
Appraisal Rights ................................. 18 INFORMATION ....................................... 45
THE MERGER .......................................... 19 Market Prices and Dividends ...................... 45
General .......................................... 19 THE BUSINESS OF MINNESOTA
Background of the Merger ......................... 20 MINING AND MANUFACTURING
Reasons for the Merger; Recommendations COMPANY ........................................... 46
of the Board of Directors ...................... 22 THE BUSINESS OF ROBINSON
Opinion of Financial Advisor to NUGENT, INC. ...................................... 47
Robinson Nugent ................................ 24 COMPARISON OF STOCKHOLDER
Interests of Directors and Executive RIGHTS ............................................ 48
Officers of Robinson Nugent in the WHERE YOU CAN FIND MORE
Merger ......................................... 30 INFORMATION ....................................... 60
Accounting Treatment ............................. 31 EXPERTS ............................................. 62
Federal Income Tax Consequences .................. 32 INDEPENDENT AUDITORS ................................ 62
Regulatory Matters ............................... 33 LEGAL MATTERS ....................................... 62
Federal Securities Laws Consequences; SHAREHOLDER PROPOSALS FOR
Stock Transfer Restrictions .................... 34 ANNUAL MEETINGS ................................... 62
</TABLE>
<TABLE>
<S> <C>
LIST OF ANNEXES
ANNEX A Agreement and Plan of Merger ......................................................................... A-1
ANNEX B Voting and Stock Option Agreement .................................................................... B-1
ANNEX C Opinion of Goelzer Investment Banking ................................................................ C-1
ANNEX D Restated Robinson Nugent, Inc. 2000 Annual Report on Form 10-K ....................................... D-1
ANNEX E Robinson Nugent, Inc. Quarterly Report on Form 10-Q for the Quarter
Ended September 30, 2000 ............................................................................ E-1
</TABLE>
i
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE 3M/ROBINSON NUGENT MERGER
Q: WHAT IS THE PROPOSED TRANSACTION?
A: 3M will acquire Robinson Nugent by merging a wholly owned subsidiary of 3M
with and into Robinson Nugent. As a result of the merger, Robinson Nugent
will be a wholly owned subsidiary of 3M.
Q: WHY IS THE ROBINSON NUGENT BOARD OF DIRECTORS RECOMMENDING THE APPROVAL OF
THE MERGER AGREEMENT?
A: The Robinson Nugent board of directors believes that the merger is fair to
and in the best interests of Robinson Nugent and its shareholders. The
Robinson Nugent board of directors received an opinion from Goelzer
Investment Banking that, as of October 2, 2000, and based on and subject to
the various considerations described in the opinion, the terms of the
proposed merger are fair from a financial point of view to the holders of
Robinson Nugent common shares. See "The Merger -- Reasons for the Merger;
Recommendations of the Board of Directors" on page 22.
Q: WHAT WILL ROBINSON NUGENT SHAREHOLDERS RECEIVE IN THE MERGER?
A: Robinson Nugent shareholders will receive common stock of 3M in the merger.
The amount of 3M common stock that will be received will be based on a
formula contained in the merger agreement. If the "average trading price"
of 3M common stock is between $82.00 and $100.00, for each Robinson Nugent
common share you own you will receive a number of shares of 3M common stock
having a value of $19.00, based on the average trading price, subject to
the collar described below. The average trading price is based on the
average closing price for a share of 3M common stock on the New York Stock
Exchange Composite Tape for the 20 consecutive trading days ending on the
business day before the closing of the merger. Within this range of average
trading prices, the actual number of shares of 3M common stock you will
receive will vary based on the formula contained in the merger agreement
which adjusts the number of shares you receive to maintain their value at
$19.00, based on the average trading price, subject to the collar described
below.
If the average trading price of shares of 3M common stock is below $82.00,
you will receive 0.2317 shares of 3M common stock for each Robinson Nugent
common share you own. In that case, the value of the 3M common stock you
receive in the merger will be less than $19.00 for each Robinson Nugent
common share you own, based on the average trading price.
If the average trading price of shares of 3M common stock is above $100.00,
you will receive 0.19 shares of 3M common stock for each Robinson Nugent
common share you own. In that case, the value of the shares of 3M common
stock you receive in the merger will be more than $19.00 for each Robinson
Nugent common share, based on the average trading price.
Immediately after the merger, former Robinson Nugent shareholders will own
less than 1% of 3M.
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this proxy statement/prospectus, please fill
out, sign and date the enclosed proxy card and mail it in the enclosed
prepaid return envelope as soon as possible, so that your shares may be
represented and voted at the Robinson Nugent special shareholders meeting.
You may also attend the Robinson Nugent special shareholders meeting in
person.
Q: WHAT ARE ROBINSON NUGENT SHAREHOLDERS BEING ASKED TO VOTE ON AT THE SPECIAL
SHAREHOLDERS MEETING?
A: For Robinson Nugent to complete the merger, Robinson Nugent shareholders
must vote to approve and adopt the merger agreement and the merger. IF YOU
DO NOT VOTE YOUR ROBINSON NUGENT COMMON SHARES, THE EFFECT WILL BE A VOTE
AGAINST THE MERGER AGREEMENT AND THE MERGER.
THE BOARD OF DIRECTORS OF ROBINSON NUGENT UNANIMOUSLY RECOMMENDS VOTING
"FOR" THE PROPOSAL BEING PRESENTED AT THE ROBINSON NUGENT SPECIAL
SHAREHOLDERS MEETING.
1
<PAGE>
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES FOR ME?
A: No. Your broker is not permitted to vote your shares without specific
instructions from you. Unless you follow the directions your broker
provides you regarding how to instruct your broker to vote your shares,
your shares will not be voted.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY PROXY CARD?
A: Yes. You may change your vote:
* by writing to Robinson Nugent's corporate secretary prior to the
Robinson Nugent special shareholders meeting stating that you are
revoking your proxy;
* by signing a later-dated proxy card and returning it by mail prior to
the Robinson Nugent special shareholders meeting; or
* by attending the Robinson Nugent special shareholders meeting and
voting in person.
Q: SHOULD I SEND IN MY SHARE CERTIFICATES NOW?
A: No. After we complete the merger, 3M will send Robinson Nugent shareholders
written instructions explaining how to exchange their share certificates.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We are working toward completing the merger as quickly as possible. We
anticipate completing the merger shortly after the Robinson Nugent special
shareholders meeting is held, assuming that the Robinson Nugent
shareholders approve and adopt the merger agreement and the merger.
Q: WILL THE MERGER BE TAXABLE TO ME?
A: The merger generally will not be taxable to Robinson Nugent shareholders.
Q: WILL I HAVE THE RIGHT TO HAVE MY SHARES APPRAISED IF I DISSENT FROM THE
MERGER?
A: No. Robinson Nugent is organized under Indiana law. Under Indiana law,
Robinson Nugent shareholders do not have appraisal rights in connection
with the merger.
Q: WHERE CAN I FIND MORE INFORMATION ABOUT THE COMPANIES?
A: Both companies file reports and other information with the SEC. You may
read and copy this information at the SEC's public reference facilities.
Please call the SEC at 1-800-SEC-0330 for information about these
facilities. This information is also available at the Internet site the SEC
maintains at http://www.sec.gov and at the offices of the New York Stock
Exchange and the National Association of Securities Dealers. You can also
request copies of these documents from either 3M or Robinson Nugent. Also,
you can get information about our companies from an Internet Site located
at www.3M.com and www.robinsonnugent.com. See "Where You Can Find More
Information," on page 60.
Q: WHO CAN ANSWER MY QUESTIONS?
A: If you have questions, or want additional copies of this proxy
statement/prospectus, please contact the proxy solicitor, Corporate
Investor Communication, Inc., by calling its toll-free number: (800)
809-5936.
2
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains or incorporates by reference
forward-looking statements, including information concerning possible or assumed
future results of operations of 3M and Robinson Nugent, that are subject to
risks and uncertainties. These forward-looking statements are necessarily
dependent upon assumptions, estimates and dates that may be incorrect or
imprecise and involve known and unknown risks, uncertainties and other factors,
including those set forth under "Risk Factors," "The Merger -- Background of the
Merger," "The Merger -- Reasons for the Merger; Recommendations of the Board of
Directors" and "The Merger -- Opinion of Financial Advisor to Robinson Nugent,"
and those preceded by, followed by or that include the words "believes,"
"expects," "anticipates" or similar expressions.
The following important factors, in addition to those discussed elsewhere
in this proxy statement/ prospectus and in the documents that are incorporated
into this proxy statement/prospectus by reference, could affect the industries
in which 3M and Robinson Nugent operate in general, and/or each company in
particular. Accordingly, future results could differ materially from those
expressed in these forward-looking statements contained in this proxy
statement/prospectus:
* the effects of, and changes in, worldwide economic conditions;
* foreign currency exchange rates and fluctuations in those rates;
* the timing and market acceptance of new product offerings;
* manufacturing risks, including shortages and increases in the costs of
key raw materials;
* acquisitions, divestitures and strategic alliances;
* liabilities and other claims asserted against either company;
* the ability to compete in a rapidly changing marketplace;
* protection of intellectual property rights; or
* Robinson Nugent's dependence on key customers.
Accordingly, you should not place undue reliance on forward-looking
statements, which speak only as of the date of this proxy statement/prospectus,
or, in the case of documents incorporated by reference, the date of those
documents.
All subsequent written and oral forward-looking statements attributable to
3M or Robinson Nugent or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Neither 3M nor Robinson Nugent assumes any obligation to
update any of these forward-looking statements to reflect events or
circumstances after the date of this proxy statement/prospectus.
3
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT/PROSPECTUS. IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE PROPOSED TRANSACTIONS FULLY AND THEIR
CONSEQUENCES TO YOU, WE URGE YOU TO READ CAREFULLY THE ENTIRE PROXY
STATEMENT/PROSPECTUS AND THE DOCUMENTS WE REFER TO IN THIS PROXY
STATEMENT/PROSPECTUS. PLEASE SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE
60. WE HAVE INCLUDED PAGE REFERENCES DIRECTING YOU TO A MORE COMPLETE
DESCRIPTION OF EACH ITEM PRESENTED IN THIS SUMMARY.
THE COMPANIES
MINNESOTA MINING AND MANUFACTURING COMPANY.
(SEE PAGE 46)
3M Center
St. Paul, Minnesota 55144
(651) 733-1110
3M was incorporated in 1929 under the laws of the State of Delaware to
continue operations, begun in 1902, of a Minnesota corporation of the same name.
3M is an integrated enterprise characterized by substantial intercompany
cooperation in research, manufacturing and marketing of products. 3M's business
has developed from its research and technology in coating and bonding for coated
abrasives, 3M's original product. Coating and bonding is the process of applying
one material to another, such as:
* abrasive granules to paper or cloth, namely, coated abrasives;
* adhesives to a backing, namely, pressure-sensitive tapes;
* ceramic coating to granular mineral, namely, roofing granules;
* glass beads to plastic backing, namely, reflective sheeting; and
* low-tack adhesives to paper, namely, repositionable notes.
3M is among the leading manufacturers of products for many of the markets
it serves. In all cases, 3M products are subject to direct or indirect
competition. Most 3M products involve expertise in product development,
manufacturing and marketing, and are subject to competition from products
manufactured and sold by other technically oriented companies.
3M's strategic business units are aggregated into six reportable segments:
* Industrial Markets;
* Health Care Markets;
* Transportation, Graphics and Safety Markets;
* Consumer and Office Markets;
* Electro and Communications Markets; and
* Specialty Material Markets.
These segments bring together common or related 3M technologies, enhancing
the development of innovative products and services and providing for efficient
sharing of business resources. These segments have worldwide responsibility for
virtually all 3M product lines. A few miscellaneous businesses and
staff-sponsored products, as well as various corporate assets and corporate
overhead expenses, are not assigned to the segments.
ROBINSON NUGENT, INC. (SEE PAGE 47)
800 East Eighth Street
P. O. Box 1208
New Albany, IN 47151
(812) 945-0211
Robinson Nugent was organized as an Indiana corporation in 1955. Robinson
Nugent designs, manufactures and markets electronic devices used to interconnect
components of electronic systems. Robinson Nugent's principal products are
integrated circuit sockets: connectors used in board-to-board, wire-to-board,
and custom molded-on cable assemblies. Robinson Nugent also offers application
tooling that is used in applying wire and cable to its connectors.
Robinson Nugent's products are used in electronic telecommunication
equipment, including:
* switching and networking equipment such as servers and routers, mass
storage devices, modems and private branch exchange (PBX) stations;
* data processing equipment such as mainframe computers, personal
computers, workstations and computer assisted design (CAD) systems;
* peripheral equipment such as printers, disk drives, plotters and
point-of-sale terminals;
* industrial controls and electronic instruments;
* consumer products; and
* a variety of other applications.
Major markets of Robinson Nugent include the United States, Europe, Japan,
and the Southeast Asian
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4
<PAGE>
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countries, including Singapore and Malaysia. Manufacturing facilities are
located in New Albany, Indiana; Dallas, Texas; Reynosa, Mexico; Sungai Petani,
Malaysia; Inchinnan, Scotland; and Hamont-Achel, Belgium.
Robinson Nugent's corporate headquarters are located in New Albany,
Indiana, which also is the site for Robinson Nugent's corporate engineering,
research and development, preproduction, testing of new products and North
American distribution and warehousing. International headquarters are located in
s-Hertogenbosch, The Netherlands; Singapore; and Tokyo, Japan.
THE MERGER (SEE PAGE 19)
3M and Robinson Nugent have entered into a merger agreement that provides
for a merger of Barbados Acquisition, Inc., an Indiana corporation and a wholly
owned subsidiary of 3M, into Robinson Nugent. As a result of the merger,
Robinson Nugent will become a wholly owned subsidiary of 3M. Each Robinson
Nugent common share will be exchanged for between 0.19 and 0.2317 of a share of
3M common stock, subject to the collar provisions described elsewhere in this
summary. We urge you to read carefully the entire merger agreement, which is
attached to this proxy statement/prospectus as Annex A.
THE SPECIAL SHAREHOLDERS MEETING (SEE PAGE 17)
The Robinson Nugent special shareholders meeting will be held at the
Holiday Inn Lakeview, 505 Marriott Drive, Clarksville, Indiana, on Thursday,
February 15, 2001 at 10:00 a.m., local time. You may vote at the Robinson Nugent
special shareholders meeting if you owned Robinson Nugent common shares at the
close of business on the record date, January 11, 2001.
In order for us to complete the merger, Robinson Nugent shareholders must
vote to approve and adopt the merger agreement and the merger. The affirmative
vote of the holders of a majority of the outstanding shares of Robinson Nugent
common shares entitled to vote is required to approve the merger agreement. If
you do not vote your Robinson Nugent common shares, the effect will be a vote
against the approval and the adoption of the merger agreement and the merger.
RECOMMENDATIONS OF ROBINSON NUGENT'S BOARD OF DIRECTORS (SEE PAGE 22)
After careful consideration, Robinson Nugent's board of directors
unanimously recommends that you vote "FOR" the proposal to approve and adopt the
merger agreement and the merger.
OPINION OF FINANCIAL ADVISOR (SEE PAGE 24)
Goelzer Investment Banking, Robinson Nugent's financial advisor in
connection with the merger, delivered its oral opinion to the Robinson Nugent
board of directors, which was later confirmed in writing, that, as of October 2,
2000, and based on and subject to the various considerations described in the
opinion, the terms of the proposed merger are fair from a financial point of
view to the holders of Robinson Nugent common shares. This opinion is not a
recommendation to any Robinson Nugent shareholder as to how to vote. We have
attached a copy of the Goelzer Investment Banking written opinion as Annex C to
this proxy statement/prospectus. You should read it in its entirety.
SHARE OWNERSHIP BY MANAGEMENT (SEE PAGE 17)
On October 2, 2000, Robinson Nugent directors and executive officers
beneficially owned 2,306,563 Robinson Nugent common shares, including 569,920
shares that could have been acquired upon exercise of options. These shares
represented approximately 39% of the outstanding Robinson Nugent common shares
on October 2, 2000 on a fully diluted basis. Each of the directors and executive
officers of Robinson Nugent has indicated that he intends to vote for approval
of the merger agreement, and four of the directors and executive officers of
Robinson Nugent, whose 1,815,301 shares are included in the 2,306,563 share
number referred to above, have entered into a voting and stock option agreement
committing them, among other things, to vote for the approval of the merger
agreement. The affirmative vote of the holders of a majority of the outstanding
shares of Robinson Nugent common shares entitled to vote is required to approve
and adopt the merger agreement and the merger.
VOTING AND STOCK OPTION AGREEMENT (SEE PAGE 44)
Samuel C. Robinson and James W. Robinson, who are directors of Robinson
Nugent, Patrick C. Duffy, the Chairman of the board of directors of Robinson
Nugent, and Larry W. Burke, a director and the President of Robinson Nugent,
each of whom is a Robinson Nugent shareholder, owning collectively approximately
30.7% of the outstanding Robinson Nugent common shares on a fully diluted basis,
have entered into a voting and stock option agreement with 3M and Robinson
Nugent, that in each case commits those shareholders, among other things, to
vote all their shares in favor of the merger. We have attached a copy of the
voting and stock option agreement as Annex B to this proxy statement/prospectus.
You should read it in its entirety.
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WHAT ROBINSON NUGENT SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 35)
Robinson Nugent shareholders will receive common stock of 3M in the merger.
The amount of 3M common stock that will be received will be based on a formula
contained in the merger agreement. If the "average trading price" of 3M common
stock is between $82.00 and $100.00, for each Robinson Nugent common share you
own you will receive a number of shares of 3M common stock having a value of
$19.00, based on the average trading price, subject to the collar described
below. The average trading price is based on the average closing price for a
share of 3M common stock on the New York Stock Exchange Composite Tape for the
20 consecutive trading days ending on the business day before the closing of the
merger. Within this range of average trading prices, the actual number of shares
of 3M common stock you will receive will vary based on the formula contained in
the merger agreement which adjusts the number of shares you receive to maintain
their value at $19.00, based on the average trading price, subject to the collar
described below.
If the average trading price of shares of 3M common stock is below $82.00,
you will receive 0.2317 shares of 3M common stock for each Robinson Nugent
common share you own. In that case, the value of the 3M common stock you receive
in the merger will be less than $19.00 for each Robinson Nugent common share you
own, based on the average trading price.
If the average trading price of shares of 3M common stock is above $100.00,
you will receive 0.19 shares of 3M common stock for each Robinson Nugent common
share you own. In that case, the value of the shares of 3M common stock you
receive in the merger will be more than $19.00 for each Robinson Nugent common
share you own, based on the average trading price.
Neither Robinson Nugent nor 3M has the right to terminate the merger
agreement if the average trading price of 3M common stock is below $82.00 or
above $100.00. This means that if the average trading price of shares of 3M
common stock is below $82.00, you will receive 0.2317 shares of 3M common stock
for each Robinson Nugent common share you own with the result that the value of
the 3M common stock you receive in the merger will be less than $19.00 for each
Robinson Nugent common share you own. The exact value of the 3M common stock you
receive in the merger will be determined based on the average trading price.
Immediately after the merger, Robinson Nugent shareholders will own less
than 1% of 3M.
ROBINSON NUGENT OPTIONS (SEE PAGE 30)
All outstanding unvested options under the 1993 Robinson Nugent, Inc.
Employee and Non-Employee Director Stock Option Plan automatically vested as a
result of the execution of the merger agreement. However, all options that were
not exercised prior to 5:00 p.m. on November 8, 2000 were terminated on November
8, 2000.
ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 31)
The merger will be accounted for as a purchase by 3M for financial
reporting purposes. That means that the purchase price will be allocated by 3M
to Robinson Nugent assets and liabilities based on the fair values of the assets
acquired and the liabilities assumed. Any excess of cost over the fair market
value of the net tangible and intangible assets of Robinson Nugent acquired will
be recorded on 3M's books as goodwill and will be amortized in accordance with
accounting principles generally accepted in the United States of America.
TAX CONSEQUENCES OF THE MERGER (SEE PAGE 32)
We intend that the merger will qualify as a reorganization for United
States federal income tax purposes. Accordingly, Robinson Nugent shareholders
generally will not recognize any gain or loss for United States federal income
tax purposes on the exchange of their Robinson Nugent common shares for shares
of 3M common stock in the merger, except for any gain or loss recognized in
connection with the receipt of cash instead of a fractional share of 3M common
stock.
Tax matters are very complicated, and the tax consequences of the merger to
each shareholder will depend on the facts of that shareholder's situation. You
are urged to consult your tax advisor for a full understanding of the tax
consequences of the merger to you.
NO APPRAISAL OR DISSENTERS' RIGHTS (SEE PAGE 55)
Under Indiana law, Robinson Nugent shareholders will not have any appraisal
or dissenters' rights in connection with the merger.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF ROBINSON NUGENT IN THE MERGER
(SEE PAGE 30)
In considering the recommendations of the Robinson Nugent board of
directors with respect to the merger, you should be aware that some directors
and members of management of Robinson Nugent have interests in the merger that
are different from, or in addition to, your interests as a shareholder.
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6
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* The signing of the merger agreement caused all unvested and
unexercisable options under the Robinson Nugent stock option plan to
vest and become exercisable.
* In connection with the merger agreement, Samuel C. Robinson and James W.
Robinson, who are directors of Robinson Nugent, Patrick C. Duffy, the
Chairman of the board of directors of Robinson Nugent, and Larry W.
Burke, a director and the President of Robinson Nugent, each of whom is
a Robinson Nugent shareholder, entered into a voting and stock option
agreement with 3M and Robinson Nugent under which they have agreed,
among other things, to vote all of their Robinson Nugent common shares
(1) in favor of the merger agreement, and (2) against any other
acquisition proposal.
* Under the voting and stock option agreement, those same shareholders
also granted 3M an irrevocable option to purchase all of their common
shares at a price of $19.00 per share.
* At the completion of the merger, Robinson Nugent will sell its
manufacturing facility in Dallas, Texas to a company owned by Samuel C.
Robinson and James W. Robinson, who are directors, for $1,750,000 in
cash. This facility will be leased back to Robinson Nugent for $220,000
per year, under a three-year lease.
* Under the merger agreement, 3M has agreed to provide various continuing
indemnification and insurance benefits for officers, directors and
employees of Robinson Nugent.
REGULATORY APPROVALS REQUIRED FOR THE MERGER (SEE PAGE 33)
On October 6, 2000, we filed the information required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with the
Antitrust Division of the Department of Justice and the Federal Trade
Commission. On November 5, 2000, the waiting period expired. The Antitrust
Division and the Federal Trade Commission have the authority to challenge the
merger on antitrust grounds at any time. On November 7, 2000, 3M made a filing
with the German Cartel Office, whose clearance is required for the merger. On
December 7, 2000, the review period with the German Cartel Office expired. We
are not aware of any other significant regulatory approvals required for the
merger.
MATERIAL TERMS OF THE MERGER AGREEMENT (SEE PAGE 35)
WE HAVE ATTACHED THE MERGER AGREEMENT AS ANNEX A TO THIS PROXY
STATEMENT/PROSPECTUS. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT BECAUSE IT
IS THE LEGAL DOCUMENT THAT GOVERNS THE MERGER.
CONDITIONS TO COMPLETION OF THE MERGER (SEE PAGE 40)
We will complete the merger only if a number of conditions are satisfied or
waived, some of which are:
* Robinson Nugent shareholders approve and adopt the merger agreement and
the merger;
* no court order or injunction prohibits the completion of the merger;
* the waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, will have expired or been terminated;
* any other antitrust approval or waiting period required prior to the
completion of the merger will have been obtained, other than those the
failure of which to have been obtained would not reasonably be expected
to have a materially adverse affect or result in the commission of a
criminal offense; and
* material compliance by 3M and Robinson Nugent with their obligations
under the merger agreement.
We anticipate completing the merger shortly after the Robinson Nugent
special shareholders meeting is held, assuming that the Robinson Nugent
shareholders approve and adopt the merger agreement and the merger.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 42)
We may agree in writing to terminate the merger agreement at any time
without completing the merger, even after the Robinson Nugent shareholders have
approved and adopted the merger agreement and the merger. In addition, the
merger agreement may be terminated:
BY EITHER 3M OR ROBINSON NUGENT IF:
* the merger has not been completed by February 28, 2001;
* a court or other governmental agency issues a final order, decree or
ruling or if a law is enacted prohibiting the merger; or
* the other company breaches its representations or obligations under the
merger agreement in a material manner and does not cure the breach
within 30 days after being notified of the breach;
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7
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BY 3M IF:
* the Robinson Nugent shareholders fail to approve and adopt the merger
agreement and the merger;
* the board of directors of Robinson Nugent does not recommend, or
withdraws or adversely modifies its recommendation, that the Robinson
Nugent shareholders vote in favor of approval and adoption of the
merger agreement and the merger, or approves, recommends or fails to
take a position that is adverse to any proposal for a competing
transaction involving Robinson Nugent;
* the board of directors of Robinson Nugent refuses to affirm to 3M its
recommendation of the merger to the Robinson Nugent shareholders within
five days of a request from 3M that it do so; or
* Robinson Nugent fails to hold the Robinson Nugent special shareholders
meeting when scheduled; or
BY ROBINSON NUGENT IF:
* in order to enter into a transaction that the board of directors of
Robinson Nugent has determined, after complying with the procedures
contained in the merger agreement, to be more favorable to Robinson
Nugent shareholders than the merger.
A TERMINATION FEE MAY BE PAYABLE IF THE MERGER IS NOT COMPLETED (SEE
PAGE 42)
If the merger is not completed because 3M or Robinson Nugent exercises its
right to terminate the merger agreement in some circumstances, Robinson Nugent
will be required to pay 3M a termination fee of $3.45 million.
RESTRICTIONS ON ALTERNATIVE TRANSACTIONS (SEE PAGE 38)
The merger agreement prohibits Robinson Nugent from soliciting, and
restricts Robinson Nugent from participating in, discussions with third parties
or taking other actions related to alternative transactions to the merger.
RESTRICTIONS ON THE ABILITY OF ROBINSON NUGENT AFFILIATES TO SELL 3M COMMON
STOCK (SEE PAGE 34)
All shares of 3M common stock that Robinson Nugent shareholders will
receive in connection with the merger will be freely transferable unless the
holder is considered an "affiliate" of Robinson Nugent for purposes of the
federal securities laws. Shares of 3M common stock held by these affiliates may
be sold only pursuant to a registration statement or an exemption under the
Securities Act of 1933.
COMPARISON OF RIGHTS OF 3M STOCKHOLDERS AND ROBINSON NUGENT SHAREHOLDERS (SEE
PAGE 48)
After the merger, Robinson Nugent shareholders will become stockholders of
3M, and their rights as stockholders will be governed by Delaware law and the
certificate of incorporation and bylaws of 3M. There are some differences
between Delaware law and Indiana law and the certificates or articles of
incorporation and bylaws of 3M and Robinson Nugent.
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COMPARATIVE MARKET DATA (SEE PAGE 45)
Shares of 3M common stock currently trade on the New York Stock Exchange
under the Symbol "MMM" and Robinson Nugent common shares are currently quoted on
the Nasdaq National Market under the symbol "RNIC." The following table presents
trading information for 3M common stock and Robinson Nugent common shares on
October 2, 2000. The table also presents the equivalent per share price of
Robinson Nugent common shares, determined by multiplying the prices of 3M common
stock by 0.2147, the exchange ratio that would have been applicable if the
merger had been completed on October 2, 2000. October 2, 2000 was the last
trading day before the announcement of the signing of the merger agreement. You
should read the information presented below in conjunction with "Comparative Per
Share Market Price and Dividend Information" on page 45.
<TABLE>
<CAPTION>
ROBINSON NUGENT 3M COMMON
3M COMMON STOCK COMMON SHARES STOCK EQUIVALENT
--------------------------- --------------------------- ---------------------------
HIGH LOW CLOSING HIGH LOW CLOSING HIGH LOW CLOSING
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
October 2, 2000 ........ $92.688 $90.813 $91.688 $18.375 $16.063 $16.625 $19.898 $19.495 $19.683
</TABLE>
The market prices of the shares of 3M common stock and Robinson Nugent
common shares fluctuate. These fluctuations will affect the value of the
consideration Robinson Nugent shareholders will receive in the merger. You
should obtain current market quotations.
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SELECTED HISTORICAL FINANCIAL DATA OF 3M
You should read the following selected historical financial data in
conjunction with the historical financial statements and accompanying notes that
3M has included in its Annual Report on Form 10-K for the year ended December
31, 1999 and its Quarterly Report on Form 10-Q for the nine months ended
September 30, 2000. The Annual Report on Form 10-K and Quarterly Report on Form
10-Q are incorporated by reference into this proxy statement/prospectus. See
"Where You Can Find More Information" on page 60.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------- -------------------
1995 1996 1997 1998 1999 1999 2000
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales ................... $13,460 $14,236 $15,070 $15,021 $15,659 $11,636 $12,528
Income from continuing
operations ................. 1,306(1) 1,516 2,121(2) 1,213(3) 1,763(4) 1,319(4) 1,456(5)
Income per share from
continuing operations --
basic ...................... 3.11 3.63 5.14 3.01 4.39 3.28 3.67
Income per share from
continuing operations --
diluted .................... 3.09 3.59 5.06 2.97 4.34 3.25 3.64
Cash dividends declared and
paid per share ............. 1.88 1.92 2.12 2.20 2.24 1.68 1.74
BALANCE SHEET DATA:
Total assets ................ $14,183(6) $13,364 $13,238 $14,153 $13,896 $14,682
Long-term debt (excluding
portion due within one year) 1,203 851 1,015 1,614 1,480 1,141
</TABLE>
-----------------------
(1) 1995 includes a restructuring charge of $52 million after tax, or 12 cents
per diluted share.
(2) 1997 includes a gain of $495 million after tax, or $1.18 per diluted share,
on the sale of National Advertising Company.
(3) 1998 includes a restructuring charge of $313 million after tax, or 77 cents
per diluted share.
(4) Total year 1999 and the first nine months of 1999 include a gain of $52
million after tax, or 13 cents per diluted share, relating to gains on
divestitures, litigation expense, an investment valuation adjustment, and a
change in estimate that reduced the 1998 restructuring charge.
(5) The first nine months of 2000 includes non-recurring costs, primarily
relating to the company's decision to phase-out its perfluorooctanyl
chemistry production, and includes non-recurring gains relating to asset
dispositions, which together offset each other. The first nine months of
2000 also reflects a benefit of $31 million after tax, or 8 cents per
diluted share, associated with the termination of a product distribution
agreement.
(6) 1995 total assets include net assets of discontinued operations.
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SELECTED HISTORICAL FINANCIAL DATA OF ROBINSON NUGENT
You should read the following selected historical financial data in
conjunction with the historical financial statements and accompanying notes that
Robinson Nugent has included in its Annual Report on Form 10-K for the year
ended June 30, 2000 and its Quarterly Report on Form 10-Q for the three months
ended September 30, 2000. The Annual Report on Form 10-K and Quarterly Report on
Form 10-Q are incorporated by reference and are attached as Annex D and Annex E
to this proxy statement/prospectus. See "Where You Can Find More Information" on
page 60.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------------------------------ --------------------
1996 1997 1998 1999 2000 1999 2000
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales ....................... $80,964 $84,840 $74,146 $69,992 $92,839 $20,950 $23,356
Income (loss) from continuing
operations ..................... (2,159) 2,355 (6,181)(1) 390(1) 4,630(1) 784(2) 879(2)
Net income (loss) per share,
basic .......................... (.40) .48 (1.26) .08 .93 .16 .17
Net income (loss) per share,
diluted ........................ (.40) .48 (1.26) .08 .88 .16 .16
Cash dividends per share ........ .12 .12 .12 -- -- -- --
BALANCE SHEET DATA:
Total assets .................... $51,466 $49,696 $42,302 $46,626 $58,067 $55,561
Long-term debt .................. 3,036 5,926 7,607 9,016 11,779 11,918
</TABLE>
-------------------------
(1) As discussed in Management's Discussion and Analysis of Financial Condition
and the Results of Operations contained in Robinson Nugent's Form 10-K for
the year ended June 30, 2000, the fiscal years 2000, 1999 and 1998 include
special and unusual expenses. The $0.8 million ($0.5 million after tax), or
10 cents per diluted share of special and unusual expenses in 2000, related
to the implementation of a new information and enterprise resource planning
system for operations in the United States and Europe. Special and unusual
expenses in 1999 totaled $1.6 million ($1.0 million after tax), or 21 cents
per diluted share. These expenses involved $1.1 million ($0.7 million after
tax), or 15 cents per diluted share, of system implementation costs and
$0.5 million ($0.3 million after tax), or 7 cents per diluted share, of
costs required to relocate the company's North American cable assembly
operations to Reynosa, Mexico. Special and unusual expenses were $5.1
million ($3.3 million after tax), or 68 cents per diluted share in 1998.
These charges included $3.1 million ($2.0 million after tax), or 41 cents
per diluted share, of restructuring and reorganization expenses as well as
$2.0 million ($1.3 million after tax) or 27 cents per diluted share, of
unusual charges related to a reduction in the carrying value of various
pieces of assembly equipment, mold tools and dies.
(2) As discussed in Management's Discussion and Analysis of Financial Condition
and the Results of Operations contained in Robinson Nugent's Form 10-Q for
the quarter ended September 30, 2000, the first quarter of FY2001 and
FY2000 include special and unusual expenses. The $0.2 million ($0.1 million
after tax) or 2 cents per diluted share of special and unusual expenses in
the first quarter of 2001 includes personnel costs, professional fees and
other costs related to the negotiations, due diligence and preparations
associated with the definitive merger agreement between 3M and Robinson
Nugent. The special and unusual expenses in the prior year include
personnel costs incurred to design and implement a new information and
enterprise resource planning system in Europe and North America.
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COMPARATIVE PER SHARE DATA
The following table sets forth (i) selected historical per share data for
3M and Robinson Nugent, and (ii) the unaudited pro forma combined per share data
for 3M and Robinson Nugent after giving effect to the merger as if it had
occurred on January 1, 1999. You should read this information in conjunction
with the selected historical financial data for 3M and Robinson Nugent, included
elsewhere in this document, and the historical audited financial statements of
3M and Robinson Nugent and related notes that are incorporated in this document
by reference.
The unaudited pro forma combined per share information does not purport to
represent what the actual financial position or results of operations of 3M and
Robinson Nugent would have been had the merger occurred on January 1, 1999 or to
project 3M's or Robinson Nugent's financial position or results of operations
for any future date or period.
<TABLE>
<CAPTION>
YEAR NINE MONTHS
ENDED ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 2000
----------------- ------------------
<S> <C> <C>
3M -- HISTORICAL
Historical per common share:
Income per basic share ........................ $ 4.39 $ 3.67
Income per diluted share ...................... 4.34 3.64
Cash dividends per share ...................... 2.24 1.74
Book value per share .......................... 15.77 16.32
<CAPTION>
TWELVE MONTHS THREE MONTHS
ENDED ENDED
JUNE 30, 2000 SEPTEMBER 30, 2000
----------------- ------------------
ROBINSON NUGENT -- HISTORICAL
Historical per common share:
Income per basic share ........................ $ 0.93 $ 0.17
Income per diluted share ...................... 0.88 0.16
Cash dividends per share ...................... 0.00 0.00
Book value per share .......................... 5.57 5.61
<CAPTION>
TWELVE MONTHS NINE MONTHS
ENDED ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 2000
----------------- ------------------
UNAUDITED PRO FORMA COMBINED
Unaudited pro forma per share of 3M common stock:
Income per basic share ........................ $ 4.34 $ 3.65
Income per diluted share ...................... 4.29 3.62
Cash dividends per share ...................... 2.23 1.73
Book value per share(1) ....................... 16.03 16.58
UNAUDITED PRO FORMA ROBINSON NUGENT EQUIVALENTS(2)
Unaudited pro forma per share of Robinson Nugent
common shares:
Income per basic share ........................ $ 0.93 $ 0.78
Income per diluted share ...................... 0.92 0.78
Cash dividends per share ...................... 0.48 0.37
Book value per share .......................... 3.44 3.56
</TABLE>
---------------------
(1) The quoted market value of 3M common stock at September 30, 2000 is used to
value the Robinson Nugent transaction.
(2) Amounts are calculated by multiplying the unaudited pro forma combined per
share amounts by the exchange ratio for the merger, which we have assumed
to be 0.2147 of a share of 3M common stock for each Robinson Nugent common
share.
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<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION INCLUDED AND INCORPORATED BY REFERENCE
IN THIS PROXY STATEMENT/ PROSPECTUS, YOU SHOULD CAREFULLY READ AND CONSIDER THE
FOLLOWING FACTORS IN EVALUATING THE PROPOSAL TO BE VOTED ON AT THE ROBINSON
NUGENT SPECIAL SHAREHOLDERS MEETING.
RISKS RELATING TO THE MERGER TRANSACTION
BECAUSE THE MARKET VALUE OF SHARES OF 3M COMMON STOCK AT THE TIME OF THE
MERGER MAY BE EITHER HIGHER OR LOWER THAN THE AVERAGE TRADING PRICE USED TO
DETERMINE THE NUMBER OF SHARES OF 3M COMMON STOCK YOU WILL RECEIVE IN THE
MERGER, YOU CANNOT BE CERTAIN OF THE MARKET VALUE OF THE SHARES OF 3M COMMON
STOCK YOU WILL RECEIVE.
If the "average trading price" of 3M common stock is between $82.00 and
$100.00, for each Robinson Nugent common share you own, you will receive a
number of shares of 3M common stock having a value of $19.00, based on the
average trading price. The average trading price is based on the average closing
price for a share of 3M common stock on the New York Stock Exchange Composite
Tape for the 20 consecutive trading days ending on the business day before the
closing of the merger. However, because the actual trading price of shares of 3M
common stock at the time of the merger may be either lower or higher than the
average trading price, the market value of the shares of 3M common stock you
receive in the merger may be either lower or higher than $19.00, based on the
average trading price.
If the average trading price of shares of 3M common stock is below $82.00,
you will receive 0.2317 shares of 3M common stock for each Robinson Nugent
common share you own. In that case, the value of the shares of 3M common stock
you receive in the merger will be less than $19.00 for each Robinson Nugent
common share you own, based on the average trading price. If the average trading
price of shares of 3M common stock is above $100.00, you will receive 0.19
shares of 3M common stock for each Robinson Nugent common share you own. In that
case, the value of the shares of 3M common stock you receive in the merger will
be more than $19.00 for each Robinson Nugent common share you own, based on the
average trading price. Furthermore, in any case, because the actual trading
price of shares of 3M common stock at the time of the merger may be either lower
or higher than the average trading price, the market value of the shares of 3M
common stock you receive in the merger may be either lower or higher than the
value of those shares based on the average trading price.
SOME DIRECTORS AND EXECUTIVE OFFICERS OF ROBINSON NUGENT HAVE POTENTIAL
CONFLICTS OF INTEREST THAT MAY HAVE INFLUENCED THEM IN RECOMMENDING THAT
ROBINSON NUGENT SHAREHOLDERS VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND THE MERGER.
Some directors, including directors who are executive officers, of Robinson
Nugent who recommended that Robinson Nugent shareholders vote in favor of the
approval of the merger agreement have employment or other benefit arrangements
that provide them with interests in the merger that differ from yours. Also,
Samuel C. Robinson and James W. Robinson, who are directors of Robinson Nugent,
Patrick C. Duffy, the Chairman of the board of directors of Robinson Nugent, and
Larry W. Burke, a director and the President of Robinson Nugent, have signed a
voting and stock option agreement with 3M and Robinson Nugent. Under the
agreement, they agreed, among other things, to vote in favor of the approval of
the merger agreement and have granted 3M an irrevocable option to purchase all
of their Robinson Nugent common shares at a price of $19.00 per share in various
circumstances.
The receipt of compensation or other benefits in the merger, and the
continuation of indemnification arrangements for current directors of Robinson
Nugent following completion of the merger, may have influenced these directors
in making their recommendation that Robinson Nugent shareholders vote in favor
of the approval of the merger agreement. See "The Merger -- Interests of
Directors and Executive Officers of Robinson Nugent in the Merger" on page 30.
13
<PAGE>
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT THE ROBINSON NUGENT
COMMON SHARE PRICE AND FUTURE BUSINESS AND OPERATIONS.
If the merger is not completed, Robinson Nugent may be subject to the
following risks:
* it may be required to pay 3M a termination fee of $3.45 million,
depending on the reason the merger was not completed;
* the price of its common shares may decline to the extent that the market
price of Robinson Nugent common shares reflects a market assumption that
the merger will be completed; and
* various costs related to the merger, such as legal and accounting fees
and the expenses and fairness opinion fee of its financial advisor, must
be paid even if the merger is not completed.
Furthermore, if the merger agreement is terminated and the Robinson Nugent
board of directors determines to seek another merger or business combination,
Robinson Nugent may not be able to find a partner willing to pay an equivalent
or more attractive price than the price to be paid in the merger. In addition,
while the merger agreement is in effect, Robinson Nugent is prohibited from
soliciting, initiating or knowingly encouraging, including entering into or
taking various other actions with respect to, any alternative transaction, such
as a merger, sale of assets or other business combination, with any party other
than 3M.
RISKS RELATING TO 3M
An investment in 3M's common stock involves a number of risks, some of
which could be substantial and are inherent in its businesses. You should
consider the following factors carefully in evaluating the proposal to be voted
on at the Robinson Nugent special shareholders meeting. Additional risks not
presently known to 3M or that 3M currently deems immaterial may also impair 3M's
business operations. Actual future results and trends may differ materially from
historical results or those anticipated depending on a variety of factors,
including, but not limited to, the following.
3M'S BUSINESS MAY BE AFFECTED BY THE EFFECTS OF, AND CHANGES IN, WORLDWIDE
ECONOMIC CONDITIONS.
3M operates in more than 60 countries and derives approximately 52% of its
revenues from sales outside the United States. 3M's business may be affected by
factors in other countries that are beyond its control, such as downturns in
economic activity in a specific country or region, the economic difficulties
that occurred in Asia in 1998 as an example; social, political or labor
conditions in a specific country or region; or potential adverse foreign tax
consequences.
FOREIGN CURRENCY EXCHANGE RATES AND FLUCTUATIONS IN THOSE RATES MAY AFFECT
3M'S ABILITY TO REALIZE PROJECTED GROWTH RATES IN ITS SALES AND NET EARNINGS AND
ITS RESULTS OF OPERATIONS.
Because 3M derives more than half of its revenues from sales outside the
United States, 3M's ability to realize projected growth rates in its sales and
net earnings and its results of operations could be adversely affected if the
United States dollar strengthens significantly against foreign currencies.
3M'S GROWTH OBJECTIVES ARE LARGELY DEPENDENT ON THE TIMING AND MARKET
ACCEPTANCE OF ITS NEW PRODUCT OFFERINGS.
3M's growth objectives are largely dependent on its ability to renew its
pipeline of new products and to bring those products to market. This ability may
be adversely affected by difficulties or delays in product development, such as
the inability to:
* identify viable new products;
* successfully complete clinical trials and obtain regulatory approvals;
* obtain adequate intellectual property protection; or
* gain market acceptance of new products.
3M'S FUTURE RESULTS ARE SUBJECT TO FLUCTUATIONS IN THE COSTS OF RAW
MATERIALS DUE TO MARKET DEMAND, CURRENCY EXCHANGE RISKS, SHORTAGES AND OTHER
FACTORS.
3M depends on various raw materials for the manufacturing of its products.
Although 3M has not experienced any difficulty in obtaining raw materials, it
is possible that any of its supplier relationships
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could be terminated in the future. Any sustained interruption in 3M's receipt of
adequate supplies could have a material adverse effect on it. In addition, while
3M has a process to minimize volatility in raw material pricing, no assurance
can be given that 3M will be able to successfully manage price fluctuations due
to market demand, currency risks, or shortages or that future price fluctuations
will not have a material adverse effect on it.
3M'S ACQUISITIONS, DIVESTITURES AND STRATEGIC ALLIANCES MAY NOT BE
BENEFICIAL TO 3M.
As part of 3M's strategy for growth, it has made and may continue to make
acquisitions, divestitures and strategic alliances. However, there can be no
assurance that any of these will be completed or beneficial to 3M.
3M IS THE SUBJECT OF VARIOUS LEGAL PROCEEDINGS.
3M and some of its subsidiaries are named defendants in a number of
actions, governmental proceedings and claims, including environmental
proceedings and products liability claims involving products that 3M now or
formerly manufactured and sold.
With respect to the environmental proceedings, 3M may be jointly and
severally liable under various environmental laws, including the United States
Comprehensive Environmental Response, Compensation and Liability Act of 1980 and
similar state laws, for the costs of environmental contamination at current or
former facilities and at off-site locations at which 3M has disposed of
hazardous waste. 3M has identified numerous locations, most of which are in the
United States, at which it may have some liability for remediating
contamination. Amounts expensed for environmental remediation activities are not
expected to be material at these locations.
Breast implant products liability claims are reported in 3M's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2000. 3M and various
other companies have been named as defendants in a number of claims and lawsuits
alleging damages for personal injuries of various types resulting from breast
implants formerly manufactured by 3M or a related company. In some actions, the
claimants seek damages and other relief, which, if granted, would require
substantial expenditures.
These lawsuits purport to represent 4,514 individual claimants. 3M has
confirmed that 111 of the 4,514 claimants have opted out of the class action
settlement and have 3M implants. Approximately 93% of the claimants in these
confirmed cases have alleged an unspecified amount of damages above the
jurisdictional limit of the courts in which the cases were filed. As of
September 30, 2000, we had eight claimants that filed lawsuits in the New York
state courts alleging damages of $20 million each. All but one of these eight
lawsuits has since been resolved.
3M believes that most of the remaining 4,403 claimants will be dismissed
either because the claimants did not have 3M implants or the claimants accepted
benefits under the class action settlement. Approximately 88% of these claimants
have filed lawsuits that either do not allege a specific amount of damages or
allege an unspecified amount of damages above the jurisdictional limit of the
court. The rest of these claimants allege damages of approximately $300 million
in their lawsuits. Approximately 390 claimants that have filed lawsuits in New
York state courts have alleged damages in excess of $20 million each. 3M expects
that all of these New York cases will be dismissed without payment for the
reasons stated above.
Based on 3M's experience in resolving thousands of these lawsuits, 3M
believes that the amount of damages alleged in complaints is not a reliable or
meaningful measure of the potential liability that 3M may incur in the breast
implant litigation. Investors should place no reliance on the amount of damages
alleged in breast implant lawsuits against 3M.
3M's best estimate of the remaining probable amount to cover all costs for
resolving the breast implant litigation is $41 million. 3M believes that the
ultimate outcome of these proceedings and claims, individually and in the
aggregate, will not have a material adverse effect on the consolidated financial
position, results of operations, or cash flows
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of 3M. However, there can be no absolute certainty that 3M may not ultimately
incur charges for breast implant claims in excess of presently established
accruals. While 3M believes that a material adverse impact on its consolidated
financial position, results of operations, or cash flows from any future charges
is remote, when litigation is involved there exists the remote possibility that
a future adverse ruling could result in future charges that could have a
material adverse impact on 3M. The estimate of the potential impact on 3M's
financial position for breast implant litigation could change in the future.
3M also has recorded receivables for the probable amount of insurance
recoverable with respect to these matters. As of September 30, 2000, 3M has
remaining insurance receivable related to these matters of $527 million, which
represents 3M's best estimate of the remaining probable insurance recoverable.
3M can provide no assurance that 3M will collect all amounts of the insurance
recoverable with respect to these matters.
For a more detailed discussion of legal proceedings involving 3M, see the
discussion of "Legal Proceedings" in Part II, Item 1 of 3M's Quarterly Report on
Form 10-Q for the period ended September 30, 2000, which is incorporated by
reference.
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THE SPECIAL SHAREHOLDERS MEETING
TIME AND PLACE OF THE SPECIAL MEETING; MATTERS TO BE CONSIDERED
The Robinson Nugent special shareholders meeting will be held at the
Holiday Inn Lakeview, 505 Marriott Drive, Clarksville, Indiana on Thursday,
February 15, 2001 at 10:00 a.m., local time. At the Robinson Nugent special
shareholders meeting, shareholders of Robinson Nugent will vote on a proposal to
approve and adopt the merger agreement and the merger. THE ROBINSON NUGENT BOARD
OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS OF ROBINSON NUGENT VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding
Robinson Nugent common shares entitled to vote is required to approve and adopt
the merger agreement and the merger. If you abstain or fail to vote your shares
on these proposals, it will have the same effect as voting against approval and
adoption of the merger agreement and the merger.
On October 2, 2000, Robinson Nugent directors and executive officers
beneficially owned 2,306,563 common shares, including 569,920 shares that could
have been acquired upon exercise of options. These shares represented
approximately 39% of the outstanding Robinson Nugent common shares on October 2,
2000 on a fully diluted basis. Each of the directors and executive officers of
Robinson Nugent has indicated that he or she intends to vote for the approval of
the merger agreement.
Samuel C. Robinson and James W. Robinson, who are directors of Robinson
Nugent, Patrick C. Duffy, the Chairman of the board of directors of Robinson
Nugent, and Larry W. Burke, a director and the President of Robinson Nugent,
whose 1,815,301 shares are included in the 2,306,563 share number referred to in
the preceding paragraph, have entered into a voting and stock option agreement
with 3M and Robinson Nugent in which, among other things, they have agreed to
vote all of their Robinson Nugent common shares in favor of approval of the
merger agreement. These shares represent approximately 30.7% of the outstanding
Robinson Nugent common shares on a fully diluted basis as of October 2, 2000.
RECORD DATE; QUORUM
Only holders of record of Robinson Nugent common shares at the close of
business on January 11, 2001 are entitled to receive notice of and vote at the
Robinson Nugent special shareholders meeting. As of January 11, 2001, there were
5,917,583 Robinson Nugent common shares entitled to vote, held by approximately
380 holders of record. Each Robinson Nugent common share is entitled to one
vote. Holders of at least 50% of the outstanding Robinson Nugent common shares
entitled to vote, present in person or represented by proxy, will constitute a
quorum for the transaction of business at the Robinson Nugent special
shareholders meeting.
Robinson Nugent will have a list of its shareholders entitled to vote at
the Robinson Nugent special shareholders meeting available during normal
business hours at the offices of Robinson Nugent, 800 East Eighth Street, New
Albany, Indiana 47151, for the ten-day period before the Robinson Nugent special
shareholders meeting, and also at the Robinson Nugent special shareholders
meeting.
HOW PROXIES WILL BE VOTED AT THE ROBINSON NUGENT SPECIAL SHAREHOLDERS MEETING
Robinson Nugent common shares represented by a proxy will be voted at the
Robinson Nugent special shareholders meeting as specified in the proxy. Properly
executed proxies that do not contain voting instructions will be voted "FOR"
approval of the merger agreement and, in the discretion of the proxy holders,
any other matter that may come before the Robinson Nugent special shareholders
meeting or any adjournments or postponements of the meeting.
TREATMENT OF ABSTENTIONS AND BROKER NON-VOTES
ABSTENTIONS. If you submit a proxy that indicates an abstention from
voting on any of the proposals being submitted to shareholders for a vote, your
shares will be counted as present for
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purposes of determining the existence of a quorum, but they will not be voted on
the proposal or proposals as to which you are abstaining from voting.
An abstention from voting on the approval of the merger agreement will have
the same effect as a vote against approval and adoption of the merger agreement
and the merger.
BROKER NON-VOTES. Under NASD rules, your broker cannot vote your Robinson
Nugent common shares without specific instructions from you.
If you do not provide instructions with your proxy, your bank or broker may
deliver a proxy card expressly indicating that it is NOT voting your shares.
This indication that a broker is not voting your shares is referred to as a
"broker non-vote." Broker non-votes will be counted for the purpose of
determining the existence of a quorum, but will not be voted on any proposal
being submitted to shareholders.
A broker non-vote will have the same effect as a vote against approval of
the merger agreement.
HOW TO REVOKE A PROXY
Your grant of a proxy on the enclosed proxy card does not prevent you from
voting in person at the Robinson Nugent special shareholders meeting, which
would automatically revoke your proxy. If your shares are held in the name of
your broker, bank or other nominee and you wish to vote at the special
shareholders meeting, you will need to obtain a proxy from the institution that
holds your shares.
In addition, a Robinson Nugent shareholder may revoke a proxy at any time
before it is voted at the Robinson Nugent special shareholders meeting by
delivering a later dated signed proxy or a written notice of revocation to
Richard L. Mattox, Secretary of Robinson Nugent, 800 East Eighth Street, P.O.
Box 1208, New Albany, IN 47151.
SOLICITATION OF PROXIES
Robinson Nugent has retained Corporate Investor Communications, Inc. to
assist in the solicitation of proxies from the Robinson Nugent shareholders.
Corporate Investor Communications, Inc. will receive a base fee of $7,000 as
compensation for its services and reimbursement for its related out-of-pocket
expenses. Robinson Nugent has agreed to indemnify Corporate Investor
Communications, Inc. against liabilities arising out of or in connection with
its engagement. Robinson Nugent will bear the cost of soliciting proxies from
its shareholders, except that the cost of printing and mailing this proxy
statement/prospectus is being shared by 3M and Robinson Nugent equally. In
addition to solicitation by mail, our directors, officers and employees may
solicit proxies from holders of Robinson Nugent common shares by telephone, in
person or through other means. Robinson Nugent will not compensate these people
for this solicitation, but Robinson Nugent will reimburse them for reasonable
out-of-pocket expenses they incur in connection with this solicitation. Robinson
Nugent will also arrange for brokerage firms, fiduciaries and other custodians
to send solicitation materials to the beneficial owners of Robinson Nugent
common shares held of record by those persons. Robinson Nugent will reimburse
these brokerage firms, fiduciaries and other custodians for their reasonable
out-of-pocket expenses.
APPRAISAL RIGHTS
Robinson Nugent is organized under Indiana law. Under Indiana law, Robinson
Nugent shareholders do not have a right to receive the appraised value of their
shares in connection with the merger.
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THE MERGER
GENERAL
The merger agreement provides for the merger of a wholly owned subsidiary
of 3M into Robinson Nugent. As a result of the merger, Robinson Nugent will
become a wholly owned subsidiary of 3M and Robinson Nugent shareholders will
receive shares of 3M common stock in exchange for the Robinson Nugent common
shares they own.
If the "average trading price" of 3M common stock is between $82.00 and
$100.00, for each Robinson Nugent common share you own you will receive a number
of shares of 3M common stock having a value of $19.00, based on the average
trading price, subject to the collar described below. The average trading price
is based on the average closing price for a share of 3M common stock on the New
York Stock Exchange Composite Tape for the 20 consecutive trading days ending on
the business day before the closing of the merger. Within this range of average
trading prices, the actual number of shares of 3M common stock you will receive
will vary based on the formula contained in the merger agreement which adjusts
the number of shares you receive to maintain their value at $19.00, based on the
average trading price, subject to the collar described below.
If the average trading price of shares of 3M common stock is below $82.00,
you will receive 0.2317 shares of 3M common stock for each Robinson Nugent
common share you own. In that case, the value of the 3M common stock you receive
in the merger will be less than $19.00 for each Robinson Nugent common share you
own, based on the average trading price.
If the average trading price of shares of 3M common stock is above $100.00,
you will receive 0.19 shares of 3M common stock for each Robinson Nugent common
share you own. In that case, the value of the shares of 3M common stock you
receive in the merger will be more than $19.00 for each Robinson Nugent common
share you own, based on the average trading price.
This information is summarized in the table below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF 3M COMMON STOCK
AVERAGE TRADING PRICE OF YOU RECEIVE FOR EACH ROBINSON NUGENT VALUE OF 3M COMMON STOCK YOU RECEIVE
3M COMMON STOCK COMMON SHARE FOR EACH ROBINSON NUGENT COMMON SHARE
---------------------------- ------------------------------------ -------------------------------------
<S> <C> <C>
less than $82.00 0.2317 less than $19.00
between $82.00 and $100.00 $19.00 divided by the average $19.00
trading price
more than $100.00 $0.19 more than $19.00
</TABLE>
Neither Robinson Nugent nor 3M has the right to terminate the merger
agreement if the average trading price of 3M common stock is below $82.00 or
above $100.00. As stated above, this means that if the average trading price of
shares of 3M common stock is below $82.00, you will receive 0.2317 shares of 3M
common stock for each Robinson Nugent common share you own with the result that
the value of the 3M common stock you receive in the merger will be less than
$19.00 for each Robinson Nugent common share you own. The exact value of the 3M
stock you receive in the merger will be determined based on the average trading
price.
As a result of the merger, former Robinson Nugent shareholders will own
less than 1% of 3M. This percentage is based on the number of shares of 3M
common stock and Robinson Nugent common shares outstanding on October 2, 2000 on
a fully diluted basis.
On October 2, 2000, the last trading day before the merger was publicly
announced, the closing price of 3M common stock was $91.688. Had the merger
taken place then, each Robinson Nugent common share would have been converted
into 0.2147 of a share of 3M common stock with a value of $19.68. This
represented a premium of 18.40% over the closing price of Robinson Nugent common
shares on that day. For further illustrative purposes, had the merger taken
place on January 9, 2001, when the closing price of 3M common stock was
$113.438, each Robinson Nugent common share would have been converted into 0.19
of a share of 3M common stock with a value of $21.55. When we complete the
merger, the value you receive for your Robinson Nugent common shares may be more
or less than this amount depending on the market value of 3M common stock at
that time. The
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merger will be completed as quickly as possible following the Robinson Nugent
special shareholders meeting. Assuming satisfaction of the conditions to
completion of the merger, Robinson Nugent and 3M expect the merger to be
completed within a week following the Robinson Nugent special shareholders
meeting.
The discussion in this proxy statement/prospectus of the merger and the
description of the principal terms of the merger agreement and the merger are
summarized only. You should refer to the merger agreement for the details of the
merger and the terms of the merger agreement. We have attached a copy of the
merger agreement to this proxy statement/prospectus as Annex A. See "The Merger
Agreement" on page 35.
BACKGROUND OF THE MERGER
In 1998, the board of directors of Robinson Nugent created a Development
Committee of the board of directors to consider Robinson Nugent's strategic
alternatives. Patrick C. Duffy, Chairman of Robinson Nugent, Donald Neel and
Richard Strain were appointed to the Development Committee.
On September 10, 1999, Mr. Duffy, and Bob Pfleg, Business Development
Director of 3M's Interconnect Solutions Division, had a general conversation to
explore possible alliances between 3M and Robinson Nugent. Over the next several
weeks, the conversations began to focus on a possible acquisition of Robinson
Nugent by 3M. On September 20, 1999, Mr. Pfleg and Herve Gindre, Business
Development Manager of 3M's Interconnect Solutions Division, met with Mr. Duffy
and Mr. Neel in Indianapolis, Indiana to discuss possible terms of an
acquisition. Based upon these discussions, 3M and Robinson Nugent entered into a
non-disclosure agreement on September 20, 1999, covering the confidential
exchange of information between the parties and agreed to meet in November to
discuss possible acquisition plans.
Over the course of the next several months, senior management of both
companies held numerous discussions regarding various business, financial,
operational and technical issues involved in combining the companies.
On October 1, 1999, Mr. Duffy furnished Mr. Pfleg with requested documents
concerning Robinson Nugent's products, plans and financial projections. Over the
next several weeks, the two parties held numerous discussions concerning the
possible synergies available in an acquisition of Robinson Nugent by 3M.
On November 22, 1999, Mr. Pfleg, Richard Iverson, Division Vice President,
Electronic Products Division, Jeff Kick, Financial Manager, Electronic Products
Division and Dave Fellner, Manager, Corporate Financial Services, from 3M met in
Dallas, Texas with a team from Robinson Nugent that included Mr. Duffy, Larry
Burke, President and a director of Robinson Nugent, Robert Knabel, Chief
Financial Officer, and Mr. Neel and Mr. Strain, both directors of Robinson
Nugent, to exchange information, discuss possible transaction structures,
further due diligence the parties expected to conduct, and potential bases for
setting an acceptable exchange ratio.
From late November 1999 to late December 1999, 3M and Robinson Nugent
exchanged due diligence materials.
On December 2, 1999, 3M and Robinson Nugent signed a non-binding letter of
intent covering the possible acquisition of Robinson Nugent by 3M pursuant to
which Robinson Nugent agreed not to enter into discussions with another party
regarding a possible business combination through March 15, 2000. Under the
letter of intent, completion of the acquisition was subject to the satisfactory
completion by 3M of a due diligence review, negotiation of a merger agreement
and approval of the board of directors of both parties.
On January 5, 2000, Mr. Iverson, Mr. Pfleg, Mr. Kick, Tom Funk,
Engineering Manager, Electronic Products Division, and Michael Stevens,
Business Development Director, Interconnect Solutions Division, from 3M met
with Mr. Duffy, Mr. Burke, Mr. Knabel, Mr. Neel and Mr. Strain in Dallas, Texas
to further discuss terms and conditions of an acquisition of Robinson Nugent by
3M.
In early February 2000, Mr. Pfleg and Mr. Funk reviewed Robinson Nugent's
European operations with Mr. Burke. They toured Robinson Nugent's facilities in
the Netherlands, Belgium and Scotland
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and were given briefings of the operations by Robinson Nugent's European
management team. Also in early February 2000, Mr. Pfleg and Mr. Funk reviewed
Robinson Nugent's North American operations with Mr. Duffy and Mr. Burke. They
toured Robinson Nugent's facilities in Reynosa, Mexico and Dallas, Texas and
were given briefings of the operations by Robinson Nugent management teams at
each location. In late February 2000, Mr. Pfleg and Mr. Stevens met with Mr.
Duffy in Florida to discuss possible integration issues, including sales
synergies, information systems and personnel.
In connection with the proposed transaction, in early March, 2000, 3M
engaged Fried, Frank, Harris, Shriver & Jacobson as legal counsel and Robinson
Nugent engaged Ice Miller as legal counsel. Consultation with the legal counsels
continued throughout the discussions and negotiations.
On March 10, 2000, Mr. Duffy met with a team from 3M that included Harry
Andrews, Executive Vice President for 3M's Electro and Communications Markets
Group, Mr. Pfleg, Mr. Stevens, Mr. Fellner, Elton Perry, Human Resource Manager
and Mark Gibson, Manufacturing Manager, in Austin, Texas. Among the matters
discussed were Robinson Nugent's operations, its past financial performance and
its future prospects.
On March 20, 2000, Mr. Pfleg informed Mr. Duffy via electronic mail that 3M
had concerns over Robinson Nugent's ability to implement its restructuring plan
and maintain constant profitability improvement and, for these reasons, 3M was
suspending its immediate plans to acquire Robinson Nugent, pending further
review of Robinson Nugent's restructuring plan and profitability improvement
over the next few months. In particular, it was noted that since 1998, Robinson
Nugent had been making a massive shift in market focus from the consumer to the
telecommunications and wireless markets with existing products being
rationalized and new high speed, high performance interconnects being developed
and produced, and that the mature core product lines were being moved to Asian
and Mexican sites for margin improvement.
Following March 20, 2000 to late June 2000, occasional contacts were made
by Mr. Pfleg with Mr. Duffy regarding Robinson Nugent's operations, financial
performance and future prospects, as well as the progress of its restructuring
plan.
Between June 8 and September 9, 2000, Mr. Duffy had discussions with three
other concerns that had expressed an interest in an acquisition of Robinson
Nugent, but those discussions were terminated by those other concerns following
discussions regarding the price that would be required in order to make any
offer more favorable to the shareholders of Robinson Nugent than those then
under discussion with 3M.
On June 28, 2000, Mr. Stevens, Richard Becker, Mr. Pfleg and John
Woodworth, General Manager, Interconnect Solutions Division, from 3M met in
Dallas, Texas with Mr. Duffy and Mr. Neel to re-open merger discussions. A week
later, representatives of 3M met with representatives of Robinson Nugent team
in Indianapolis, Indiana to discuss the setting of an acceptable exchange ratio
for the proposed transaction.
During July 2000, representatives of 3M reviewed the acquisition proposal
and internal 3M approvals of the proposed transaction were received subject to
completion of 3M's due diligence, the negotiation of a merger agreement and
related agreements acceptable to both parties, and approval of 3M's board of
directors.
On July 28, 2000, Mr. Duffy, Mr. Neel and Mr. Strain described the
proposed transaction to the board of directors of Robinson Nugent.
On August 3, 2000, a draft merger agreement was distributed by 3M to
Robinson Nugent and its outside counsel, Ice Miller.
From early August until early October 2000, the parties and their legal
advisors negotiated the terms of, and the documents for, the transaction. During
this time, 3M continued to conduct its legal and financial due diligence of
Robinson Nugent. The members of Robinson Nugent's board of directors were
updated informally from time to time during this period.
On August 14, 2000, the 3M board of directors met to review and approve
the proposed transaction. Mr. Woodworth of the 3M Interconnect Solutions
Division reviewed the transaction with the board,
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including the strategic reasons for the proposed transaction. The 3M board of
directors approved the acquisition of Robinson Nugent subject to completion of
3M's due diligence review and negotiation of the merger and related agreements,
and appointed officers to execute the agreements on behalf of 3M.
On August 24, 2000, Robinson Nugent retained Goelzer Investment Banking to
deliver a fairness opinion to the Robinson Nugent board of directors regarding
the proposed merger.
On September 29, 2000, 3M's integration team met with Mr. Burke to initiate
integration planning.
On October 2, 2000, the board of directors of Robinson Nugent met in New
Albany, Indiana. Mr. Duffy reviewed the transaction with the board, including
strategic reasons for the proposed transaction and the principal and other terms
of the proposed transaction.
Ice Miller, counsel to Robinson Nugent, outlined the directors' legal
duties and responsibilities in connection with considering the merger and
discussed the principal terms of the merger agreement and related documents. In
addition, Goelzer Investment Banking, financial advisors to Robinson Nugent,
delivered its oral opinion, which was later confirmed in writing, that the
transaction contemplated by the merger agreement was fair from a financial point
of view to the holders of Robinson Nugent common shares.
Upon completing its deliberations, the board of directors of Robinson
Nugent unanimously approved the merger agreement and the related agreements and
transactions contemplated by those agreements, declared them advisable, and
resolved to recommend that the Robinson Nugent shareholders vote in favor of the
merger agreement. On the evening of October 2, 2000, representatives of 3M and
Robinson Nugent executed the merger agreement. In addition, Samuel C. Robinson
and James W. Robinson, Mr. Duffy and Mr. Burke, all of whom are directors and
shareholders of Robinson Nugent, executed a voting and stock option agreement
with 3M and Robinson Nugent, in which they agreed, among other things, to vote
all of their Robinson Nugent common shares in favor of the merger and against
other proposals and also granted 3M an irrevocable option to purchase all of
their Robinson Nugent common shares at a price of $19.00 per share.
Prior to the commencement of trading on October 3, 2000, Robinson Nugent
and 3M issued a joint press release announcing the execution of the merger
agreement.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARD OF DIRECTORS
In approving the merger agreement and recommending the merger to the
shareholders of Robinson Nugent, the Robinson Nugent board of directors
considered the following factors, among others, relating to Robinson Nugent and
its business, that supported the board's decision to proceed with the merger:
* The connector industry has experienced significant consolidation, and
Robinson Nugent is increasingly vulnerable to competition from larger
firms having far greater capital and human resources than those
available to Robinson Nugent.
* The product lines of 3M's Interconnect Solutions Division and of
Robinson Nugent are complimentary, and the merger should enhance the
sales and competitive conditions of both operations.
* The combination of the connector operations of 3M with those of
Robinson Nugent should allow the resulting operation to be a preferred
supplier to major customers in the electronics industry, which Robinson
Nugent could not achieve standing alone.
* The combined operations will benefit from increased financial strength,
allowing the more rapid introduction of new products to the market and
greater profit potential.
* The combined operations will benefit from a common vision and culture,
and the intellectual resources, proven technology development
capabilities and seasoned management teams of both parties should
enable the combined enterprise to launch new initiatives that meet the
accelerating demand for new products and technologies.
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* There can be no assurance that Robinson Nugent as a stand-alone
enterprise will be able to continue providing the innovative products
that have allowed it to maintain its market niche.
* Robinson Nugent is vulnerable to the entry by a major competitor into
Robinson Nugent's market niche.
* Robinson Nugent risks the loss of key employees due to the opportunities
presented by industry consolidation in relation to the limited
opportunities available at and location of Robinson Nugent.
* The business of Robinson Nugent has been cyclical, and the erratic sales
and earnings of Robinson Nugent have been reflected in dramatic swings
in its stock price.
* Robinson Nugent's profit margins have lagged below the connector
industry average.
* The small number of Robinson Nugent common shares available for trading
and the lack of securities analyst interest in Robinson Nugent have
resulted in a thin trading market in the Robinson Nugent common shares
and have generally depressed share prices in relation to the Nasdaq
Composite Index and Nasdaq Industrial Index.
* The merger should provide to Robinson Nugent the additional strategic
management capability that has not been available due to its small size
and headquarters location.
The board of directors also considered the following factors, among others,
relating to the terms of the proposed merger, that supported the board's
decision to proceed with the merger:
* The value of the 3M shares to be received by Robinson Nugent
shareholders in the merger represents a significant premium in relation
to the historic market prices of Robinson Nugent common shares.
* The merger is expected to be a tax-free reorganization, with the result
that, in general, shareholders will pay no federal income tax as a
result of the exchange of Robinson Nugent common shares for 3M shares.
* The shares of 3M have a wide following in the securities markets and
far greater trading volume than do the Robinson Nugent common shares.
* Members of the Robinson Nugent board of directors holding approximately
30.7% of the outstanding shares of Robinson Nugent were willing to
agree to vote their shares in favor of the merger.
* Goelzer Investment Banking was prepared to render its opinion that the
merger is fair, from a financial point of view, to the shareholders of
Robinson Nugent.
The Robinson Nugent board of directors also considered the following risks
and other potentially negative factors relating to the terms of the proposed
merger:
* There is a risk that the merger may not be completed due to the
inability of the parties to meet one or more of the conditions contained
in the merger agreement.
* Robinson Nugent is severely limited in its ability to respond to other
offers during the term of the merger agreement, and Robinson Nugent
would incur significant fees payable to 3M in the event that Robinson
Nugent unilaterally terminated the merger agreement.
* There is a possibility that another buyer might be willing to pay a
higher price for Robinson Nugent, but there also is a risk of diversion
of management attention and of the loss of management, administrative
and technical personnel if Robinson Nugent were to engage in a
protracted series of negotiations with several potential acquirers.
The board of directors also considered that some directors and executive
officers of Robinson Nugent have interests in the merger that are different
from, or in addition to, the interests of the Robinson Nugent shareholders
generally. See "-- Interests of Directors and Executive Officers of Robinson
Nugent in the Merger" on page 30.
23
<PAGE>
In light of the number and variety of information and factors considered by
the Robinson Nugent board, the board did not find it practicable to, and did
not, assign any specific or relative weights to the factors listed above. In
addition, individual directors may have given differing weights to different
factors. The board of directors was advised in its deliberations by Robinson
Nugent's senior management, by its legal counsel and by Goelzer Investment
Banking.
The board of directors of Robinson Nugent believes that the merger will:
* provide Robinson Nugent shareholders with greater liquidity and fair
value in the form of the shares of 3M to be received in the merger, and
a more favorable investment opportunity than continuing to hold shares
of Robinson Nugent;
* provide operational opportunities to Robinson Nugent including:
-- the ability to apply 3M's proprietary and other technology to the
business of Robinson Nugent; and
-- cross marketing, joint product development and broader international
expansion; and
* increase Robinson Nugent's growth potential as a result of:
-- greater marketing capabilities; and
-- availability of capital resources.
Accordingly, the Robinson Nugent board of directors determined that the
merger is advisable, fair to and in the best interests of Robinson Nugent and
its shareholders, and it unanimously approved the merger agreement.
THE BOARD OF DIRECTORS OF ROBINSON NUGENT UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF ROBINSON NUGENT VOTE "FOR" THE APPROVAL OF THE MERGER.
OPINION OF FINANCIAL ADVISOR TO ROBINSON NUGENT
Goelzer Investment Banking has assisted the Robinson Nugent board of
directors in its examination of the fairness, from a financial point of view, to
the shareholders of Robinson Nugent of the terms of the proposed merger between
Robinson Nugent and 3M. As described in this proxy statement/ prospectus,
Goelzer's opinion dated as of October 2, 2000 (together with the related
presentation) to the Robinson Nugent board of directors was only one of many
factors the Robinson Nugent board of directors considered in determining to
approve the merger agreement. Goelzer is an investment banking firm that is
regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions. The Robinson Nugent board of directors selected
Goelzer because of Goelzer's experience and expertise. Robinson Nugent has
agreed to pay Goelzer a fee of approximately $40,000 for its services plus
reasonable out of pocket expenses incurred in connection with its engagement.
Neither Goelzer nor any affiliate of Goelzer has had any material relationship
in the past five years with Robinson Nugent or any of its affiliates, nor is any
material relationship contemplated.
On October 2, 2000, Goelzer orally delivered its opinion, which was later
confirmed in writing, to the Robinson Nugent board of directors that, as of that
date and based upon and subject to the matters stated in its opinion, the terms
of the proposed merger were fair to the Robinson Nugent shareholders from a
financial point of view.
THE FULL TEXT OF THE GOELZER FAIRNESS OPINION, WHICH CONTAINS MANY OF THE
ASSUMPTIONS GOELZER MADE, THE MATTERS IT CONSIDERED, AND THE LIMITATIONS ON THE
REVIEW IT UNDERTOOK IN CONNECTION WITH ITS DELIVERY OF THIS OPINION, IS ATTACHED
AS ANNEX C AND IS INCORPORATED BY REFERENCE INTO THIS PROXY
STATEMENT/PROSPECTUS. GOELZER'S OPINION IS DIRECTED TO THE ROBINSON NUGENT BOARD
OF DIRECTORS, AND ADDRESSES ONLY THE FAIRNESS OF THE TERMS OF THE PROPOSED
MERGER TO HOLDERS OF ROBINSON NUGENT COMMON SHARES FROM A FINANCIAL POINT OF
VIEW. IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER OR ANY RELATED
TRANSACTION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO
HOW THAT SHAREHOLDER SHOULD VOTE AT THE ROBINSON NUGENT SPECIAL MEETING. THE
FOLLOWING SUMMARY OF THE GOELZER FAIRNESS OPINION IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE DETAILED ANALYSIS COMPLETED BY GOELZER.
24
<PAGE>
In connection with its opinion, Goelzer:
* Conducted detailed interviews with management concerning Robinson
Nugent's history and operating record, the nature of the markets served,
competitive situation, financial condition, recent performance and
current outlook;
* Analyzed trading data (stock price and volume trends) of Robinson
Nugent's common shares for a period of ten years and analyzed the
stock's total return relative to appropriate indices over the last five
years as provided by BLOOMBERG ANALYTICS;
* Analyzed Robinson Nugent's financial statements and studied its filings
under the Securities Exchange Act of 1934, as amended, including the
latest Form 10-K and Form 10-Q and Annual Reports for the three fiscal
years ended June 30, 2000;
* Conducted a search using BLOOMBERG ANALYTICS and utilized a June 26,
2000 Robinson Nugent Press Release in order to find publicly traded
companies which could be used as reasonable comparables in determining
the fair value of Robinson Nugent;
* Conducted a search for merger and acquisition transactions involving
both publicly traded and privately held corporations within the
electronic connector/electrical interconnection industry using two
large proprietary databases (MERGERSTAT and World M&A Network's DONE
DEALS) and the February 1999 edition of THE BISHOP REPORT (a
publication of Bishop & Associates);
* Analyzed trading data (stock price and volume trends), operating record,
the nature of the markets served, financial condition, recent
performance and current outlook of 3M; and
* Performed such other studies, analyses and investigations as deemed
appropriate.
In preparing its opinion, Goelzer relied on the accuracy and completeness
of all information supplied or otherwise made available to it by Robinson Nugent
and 3M, discussed with or reviewed by or for it, or publicly available, and
Goelzer did not assume responsibility for independently verifying any of this
information. Goelzer did not undertake an independent evaluation or appraisal of
any of the assets or liabilities, contingent or otherwise, of Robinson Nugent or
3M.
In connection with the preparation of its opinion, Goelzer was not
authorized by Robinson Nugent or the Robinson Nugent board of directors to
solicit, nor did Goelzer solicit, third party indications of interest in the
acquisition of all or any part of, or any combination with, Robinson Nugent.
Goelzer's opinion was necessarily based on information available to it and
on general market, economic and other conditions as they existed and could be
evaluated on the date of its opinion. Goelzer did not address the merits of the
underlying decision by Robinson Nugent to engage in the merger. Goelzer
expressed no opinion as to what the value of the 3M common stock actually would
be when issued to the shareholders of Robinson Nugent pursuant to the merger,
the prices at which the 3M common stock would trade after the merger or the
price at which Robinson Nugent common shares would trade between the date of its
opinion and the date the merger is completed. Although Goelzer evaluated the
terms of the proposed merger from a financial point of view, Goelzer was not
requested to, and did not, recommend any specific terms of the merger.
In preparing its opinion for the Robinson Nugent board of directors,
Goelzer performed a variety of financial and comparative analyses, including
those described below. The summary of analyses performed by Goelzer as set forth
below is not a complete description of the analyses underlying Goelzer's
opinion. The preparation of a fairness opinion is a complex analytic process
involving various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial or summary description. No company, business or transaction used in
those analyses as a comparison is identical to 3M, Robinson Nugent or the
merger, nor is an evaluation of the results of those analyses entirely
mathematical; rather, it involves complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the merger, public trading or other values of the companies, business
segments or transactions being analyzed. The estimates contained in those
analyses and the ranges of valuations resulting from any particular
25
<PAGE>
analysis are not necessarily indicative of actual values or predictive of future
results or values, which may be significantly more or less favorable than those
suggested by those analyses. In addition, analyses relating to the value of
businesses or securities are not appraisals and may not reflect the prices at
which businesses, companies or securities actually may be sold. Accordingly,
these analyses and estimates are inherently subject to substantial uncertainty.
Goelzer did not place any particular reliance or weight on any individual
analysis, but instead concluded that its analyses, taken as a whole supported
its opinion. Accordingly, Goelzer believes that its analyses must be considered
as a whole and that selecting portions of its analyses and factors, without
considering all analyses and factors, could create an incomplete view of the
processes underlying such analyses and its opinion.
The following is a summary of the material financial and comparative
analyses performed by Goelzer in arriving at its October 2, 2000 opinion
presented to the Robinson Nugent board of directors.
COMPARABLE TRANSACTION ANALYSIS. Goelzer reviewed publicly available
information relating to selected comparable mergers and acquisition transactions
involving companies engaged in businesses similar to those of Robinson Nugent.
The following table lists the recently completed transactions in Robinson
Nugent's SIC Code reviewed by Goelzer:
CLOSING
BUYER SELLER DATE
--------------------------------- ---------------------------- ----------
Molex A Unit of Axsys Technologies 03/20/2000
Tyco International Raychem Corp. 08/13/1999
Smiths Industries PLC Engineered Transitions Co. 12/02/1998
PCD, Inc. Wells Electronics 12/26/1997
Framatome SA Berg Electronics 03/28/1997
Thomas & Betts Augat Inc. 12/11/1996
LaBarge, Inc. Sorep Technology Corp. 05/16/1996
Semiconductor Packaging Materials Retconn, Inc. 01/04/1996
With respect to the proposed transaction, Goelzer analyzed several
valuation multiples implied by the offer price in comparison with the multiples
paid in the prior comparable transactions. The valuation multiples examined
include the following: (1) equity price paid to net income, (2) Total Invested
Capital (which equals equity price paid plus the value of indebtedness assumed)
to revenues, (3) Total Invested Capital to EBITDA (earnings before interest,
taxes, depreciation, and amortization), (4) Total Invested Capital to EBIT
(earnings before interest and taxes), and (5) Total Invested Capital to assets.
Goelzer also analyzed the stock price premiums implied under the proposed
transaction in relationship to the premiums paid in prior comparable
transactions. The stock price premiums examined compared the offer price to the
pre-announcement stock price one day prior to announcement, five days prior to
announcement and thirty days prior to announcement. The ranges of these
multiples and premiums and their comparison to the merger are included in the
following table:
26
<PAGE>
CONNECTOR INDUSTRY TRANSACTION ANALYSIS (SIC CODE #3678)
<TABLE>
<CAPTION>
ROBINSON DISCOUNT
AVERAGE MINIMUM MAXIMUM NUGENT TO AVERAGE
--------- ------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Equity Price ($ millions) ......... 643.84 2.50 3,020.85 $112.77(1) 82%
Total Invested Capital (TIC)
($ millions) ..................... 755.26 2.90 3,420.85 $124.99(2) 83%
Equity Price/Net Income ........... 27.7x 3.4x 57.6x 21.6x(3) 22%
TIC/Revenues ...................... 1.6x 0.5x 3.0x 1.3x 18%
TIC/EBITDA ........................ 12.7x 11.6x 14.5x 10.2x 20%
TIC/EBIT .......................... 23.2x 17.6x 32.6x 16.5x(4) 29%
TIC/Assets ........................ 3.3x 1.9x 4.7x 2.2x 35%
1 Day Market Premium .............. 37.09% 23.37% 62.34% 16.92%(5) 54%
5 Day Market Premium .............. 45.30% 21.22% 71.23% 34.22%(6) 24%
10 Day Market Premium ............. 58.89% 36.44% 70.73% 11.56%(7) 80%
</TABLE>
------------------------
Notes:
------
(1) Equity Price is calculated using the $19 a share offer price multiplied by
fully diluted shares (5,935,244 equaling 5,112,799 shares outstanding as of
8/8/00 plus 822,445 options outstanding at 8/8/00 which became fully vested
on the signing of the merger agreement).
(2) TIC is calculated using the Equity Price plus interest bearing debt as of
6/30/00.
(3) Calculated by multiplying the $19 a share offer price by the fully diluted
shares as of 8/8/00 and dividing by net income from continuing operations
in fiscal 2000 ($5.21 million).
(4) EBIT was calculated by adding operating income and special and unusual
expenses.
(5) Calculated using the offer price of $19 a share and the average stock price
of $16.25 a share (the range was $15.50-$17.00) on 9/29/00.
(6) Calculated using the offer price of $19 a share and the average stock price
of $14.1563 a share (the range was $14.50-$13.8125) on 9/22/00.
(7) Calculated using the offer price of $19 a share and the average stock price
of $17.0313 a share (the range was $17.50-$16.5625) on 8/29/00.
Goelzer also reviewed the following connector industry transaction analyses
provided in the February 1999 edition of The Bishop Report and compared them to
the terms of the merger. The Bishop Report analyses included six transactions:
Tyco International's purchase of AMP, Thomas & Betts' acquisition of AFC Cable,
Framatone's purchase of Berg Electronics, KKR's purchase of Amphenol, Thomas &
Betts' acquisition of Augat, and AMP's acquisition of M/A Com.
<TABLE>
<CAPTION>
ROBINSON NUGENT -- DISCOUNT TO
AVERAGE HIGH LOW 3M MULTIPLES AVERAGE
--------- -------- -------- ------------------ -----------
<S> <C> <C> <C> <C> <C>
Total Invested Capital/Sales .............. 1.99x 2.36x 0.95x 1.35x 32%
Total Invested Capital/Book value ......... 4.47x 13.60x 2.75x 4.40x(1) 2%
Total Invested Capital/EBITDA ............. 11.80x 12.30x 7.20x 10.15x 14%
Total Invested Capital/EBIT ............... 19.80x 22.30x 10.90x 16.48x 17%
Market Premium ............................ 47.5% 62.3% 12.4% 16.9%(2) 64%
</TABLE>
------------------------
Notes:
------
(1) Book value for Robinson Nugent as of June 30, 2000.
(2) The $19.00 per share offer price is a 16.9% premium to the average stock
price of $16.25 a share on September 29, 2000.
Goelzer noted that most of the proposed mergers' calculated multiples are
at the lower end of the previously completed comparable transactions. In
Goelzer's opinion, Robinson Nugent's erratic historical financial performance,
which includes losses from continuing operations in two of the last five years,
explains the Total Invested Capital multiples, based on the proposed merger
price, being at the lower end of the range seen for the previously completed
transactions. The proposed transaction is also at the low end of the range from
a market premium standpoint, but Goelzer viewed this outcome as consistent with
Robinson Nugent's current competitive position within the electronic connector
industry and the responses received by Robinson Nugent from others with whom it
held discussions during the course of negotiations with 3M.
27
<PAGE>
Goelzer further noted that the terms of the proposed merger reflect
transaction multiples that are within the range of the transactions that have
occurred in the recent past within the electronic connector industry. However,
due to the inherent differences between the operations and financial conditions
of Robinson Nugent and the selected companies and the fact that the reasons for,
and circumstances surrounding, each of the comparable transactions analyzed were
so diverse, Goelzer was of the view that a purely quantitative analysis based on
comparable transactions would not be entirely appropriate in the context of the
merger. Goelzer also was of the view that an appropriate use of a comparable
transaction analysis in this instance involved qualitative judgments concerning
the differences between the characteristics of these transactions and the merger
that would affect the value of the acquired companies and Robinson Nugent, which
judgments were taken into account by Goelzer in rendering its opinion.
COMPARABLE COMPANY TRADING ANALYSIS. Using publicly available information,
Goelzer compared selected stock trading data and financial information for
Robinson Nugent with corresponding data and information of similar publicly
traded companies that have operations within the electronic connector industry.
The following companies were selected by Goelzer based upon Goelzer's views as
to the comparability of the financial and operating characteristics of these
companies to Robinson Nugent: Amphenol, Methode, Molex, PCD, Woodhead
Industries, and Thomas & Betts.
In order to analyze the fairness from a financial point of view of the
terms of the proposed merger, Goelzer compared Robinson Nugent's financial
trends and ratios to the corresponding trends and ratios of the comparable
companies. Furthermore, Goelzer examined the implied offer price multiples
(i.e., price to earnings, price to EBITDA and Total Invested Capital to EBITDA)
for Robinson Nugent common shares in comparison with the same multiples for the
comparable companies.
The following table compares certain financial ratios and statistics of
Robinson Nugent to the companies named above:
COMPETITOR SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
ROBINSON THOMAS & WOODHEAD
NUGENT AMPHENOL METHODE MOLEX PCD BETTS INDUSTRIES
(RNIC) (APH) (METHA) (MOLX) (PCDI) (TNB)(12) (WDHD)
-------- --------- ------- --------- -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales ($ millions)(1).......... $ 92.8 $ 1,161.5 $ 422.2 $ 2,217.1 $ 54.2 $ 2,569.7 $ 186.8
Sales Growth (%) .............. +32.6% +22.7% +4.6% +29.5% -1.3% +11.8% +12.5%
EPS -- Cont. Opns.(1) ......... $ 0.99 $ 1.78 $ 0.95 $ 1.12 $ 0.11 $ 2.65 $ 1.13
EPS Growth (%) ................ +230.0% +81.6% -2.1% +23.1% -73.8% -6.7% +34.5%
Current Ratio ................. 2.4:1 1.6:1 3.2:1 2.2:1 0.5:1 2.3:1 2.6:1
Debt/Equity (%) ............... 43.0% Negative 0.4% 1.3% 72.7% 88.8% 51.8%
PE Ratio ...................... 21.6(2) 33.1 51.1 42.1 71.6 7.3 16.8
Price/Book Ratio .............. 4.0X(3) Negative 6.3X 5.5X 1.2X 1.0X 2.6X
Dividends per Share ........... $ 0.00 $ 0.00 $ 0.20 $ 0.10 $ 0.00 $ 1.12 $ 0.36
R&D Expenses(4) ............... $ 4.5 $ 18.5 $ 23.6 $ 128.8 N/A(5) $ 47.9 $ 6.2
Capital Expenditures(4) ....... $ 5.0 $ 23.5 $ 24.7 $ 337.3 $ 3.7 $ 133.1 $ 7.8
8/15/00 Share Price ........... $ 19.00(6) $ 58.94 $ 48.56 $ 47.13 $ 7.88 $ 19.44 $ 19.00
52 Wk. High-Low ............... $ 21.00- $ 70.38- $ 66.44- $ 63.75- $ 10.50- $ 53.69- $ 24.00-
$ 4.38 $ 21.00 $ 13.50 $ 24.40 $ 3.00 $ 17.63 $ 8.31
Equity Mkt. Cap(7) ............ $ 112.8(8) $ 2,525.5 $ 1,736.1 $ 9,345.4 $ 70.7 $ 1,125.2 $ 225.9
Mkt. Cap. (w/Debt)(9) ......... $ 125.0(10) $ 3,266.5 $ 1,737.3 $ 9,367.0 $ 113.9 $ 2,096.7 $ 270.9
EBITDA(11) .................... $ 12.31 $ 236.84 $ 59.63 $ 455.39 $ 15.49 $ 289.86 $ 33.65
</TABLE>
-----------------------
Notes:
------
(1) Last four quarters available.
(2) Uses the $19.00 per share offer price, earnings from continuing operations
of $5.21 million in fiscal 2000, and fully diluted shares outstanding of
5,935,244 shares as of 8/8/00 (5,112,799 shares outstanding plus 822,445
options outstanding as of 8/8/00 which became fully vested on the signing
of the merger agreement).
28
<PAGE>
(3) Uses the $19.00 per share offer price, stockholders' equity of $28.4
million as of 6/30/00, and fully diluted shares outstanding of 5,935,244
shares as of 8/8/00 (5,112,799 shares outstanding plus 822,445 options
outstanding as of 8/8/00 which became fully vested on the signing of the
merger agreement).
(4) Based on most recent fiscal year.
(5) Information is not available.
(6) Offer price.
(7) Calculated using the closing stock price on 8/15/00 multiplied by the
number of fully diluted shares outstanding as of the most recent quarter.
(8) Calculated by multiplying $19.00 per share offer price by fully diluted
shares (5,935,244 which equals 5,112,799 shares outstanding as of 8/8/00
plus 822,445 options outstanding as of 8/8/00 which became fully vested on
the signing of the merger agreement).
(9) Calculated by adding the equity market capitalization figure and interest
bearing debt as of the most recent quarter.
(10) Calculated by adding Equity Market Cap and interest bearing debt as of
6/30/00.
(11) Calculated using the trailing four (4) quarters.
(12) Thomas & Betts subsequently restated fiscal 1999 and YTD 2000 results. The
figures and ratios included herein are those that were available to Goelzer
when it provided its opinion.
Goelzer noted that the implied offer price for Robinson Nugent placed two
of Robinson Nugent's key financial ratios, price-to-earnings and price-to-book,
within the range of Robinson Nugent's publicly traded competitors. Also, the
table illustrates the fact that Robinson Nugent spent less on research and
development and capital expenditures in comparison to almost all of Robinson
Nugent's main competitors in the four most recent quarters available. Goezler
also noted that a merger with 3M would strengthen Robinson Nugent's position
within the industry due to the fact that 3M has the financial resources to spend
significantly more than Robinson Nugent as a stand-alone company on research and
development and capital expenditures in order to expand Robinson Nugent's future
operations and product line. The table also shows that the offer price was very
close to Robinson Nugent's 52-week high trading price. Robinson Nugent's offer
price was closer to its 52-week high than its competitors' current trading
prices at the time Goezler gave its opinion were to their 52-week highs.
The following table compares certain financial ratios calculated from the
statistics provided in the table above of Robinson Nugent to those of similar
publicly traded companies named above:
COMPETITOR VALUATION METRICS
<TABLE>
<CAPTION>
ROBINSON NUGENT
AVERAGE MINIMUM MAXIMUM (RNIC)(1)
--------- --------- --------- ----------------
<S> <C> <C> <C> <C>
Equity Mkt. Cap/EBITDA ............ 12.6x 3.9x 29.1x 9.2X
Mkt. Cap. (w/Debt)/EBITDA ......... 14.4x 7.2x 29.1x 10.2X
</TABLE>
----------------------
Notes:
------
(1) Figures based on $19.00 per share offer price.
Goelzer noted that the equity market capitalization-to-EBITDA ratio
(equivalent to the equity price-to-EBITDA ratio) of Robinson Nugent, based on
the terms of the merger agreement, is well within the range of Robinson Nugent's
publicly traded competitors. Furthermore, the equity market capitalization plus
debt-to-EBITDA ratio (equivalent to the Total Invested Capital-to-EBITDA ratio)
of Robinson Nugent is also within the range of Robinson Nugent's competitors.
Goelzer considered both of the aforementioned multiples to be important for the
purpose of comparison because they most accurately reflect multiples of
operating cash flow with and without the effects of financing.
Goezler also noted that the terms of the proposed merger reflect
fundamental ratios and multiples that are within the range of those applicable
to Robinson Nugent's publicly traded competitors. However, because of the
inherent differences among the operations of Robinson Nugent and the selected
comparable companies, Goelzer was of the view that a purely quantitative
analysis based on comparable public company data would not be entirely
appropriate in the context of the merger. Goelzer further believes that an
appropriate use of a comparable company analysis in this instance involves
qualitative judgments concerning differences among the financial and operating
characteristics
29
<PAGE>
of Robinson Nugent and the selected comparable companies, which judgments were
taken into account by Goelzer in rendering its opinion.
PURCHASE PRICE ANALYSIS AND STOCK TRADING HISTORY. Goelzer performed
analyses relating to the consideration to be received by the shareholders of
Robinson Nugent assuming various prices for 3M common stock. Goelzer also
examined the history of trading prices and volume for Robinson Nugent common
shares and 3M common stock.
Goezler noted that the implied offer price of $19.00 per share is close to
Robinson Nugent's 52-week trading price high (and within 10% of the $21.00 per
share price achieved in March 2000). Goezler also noted that the offer price is
considerably above Robinson Nugent's stock price trading range over the prior
ten calendar years (a high of $13.25 per share on December 31, 1999 and a low of
$1.88 per share on January 31, 1991). In addition, Goelzer took into
consideration the fact that Robinson Nugent's stock price significantly
underperformed the Nasdaq Composite Index and the Nasdaq Industrial Index for
the five years ending July 31, 2000. Additionally, Goelzer analyzed the stock
price performance of 3M over the last ten years. 3M's stock price as of August
23, 2000 ($95.94 per share), was near the top of 3M's stock price trading range
over the prior ten calendar years. The high of $105.50 per share was set on June
30, 1997 and the low of $35.48 was set on October 31, 1990. Finally, Goelzer
analyzed the average trading volume of Robinson Nugent shares (less than 30,000
shares a day) and 3M (well over 1 million shares a day). In Goelzer's opinion,
the ability of Robinson Nugent shareholders to receive a more liquid/marketable
stock in the form of 3M shares in exchange for their Robinson Nugent shares was
another advantage of the proposed merger.
OTHER FACTORS AND ANALYSES. In the course of preparing its opinion, Goelzer
performed other analyses and reviewed other matters including, among other
things, the expected trading characteristics of Robinson Nugent common shares
and 3M common stock. In reaching its conclusion, Goelzer also relied in part
upon a letter provided to it by the Chairman of the Robinson Nugent board of
directors describing his discussions with other possible purchasers of Robinson
Nugent and the conditions in the industry. Goelzer also considered its
discussions with members of the Robinson Nugent board of directors and its
Chairman regarding the results of Robinson Nugent's discussions with potential
acquirers other than 3M.
In summarizing its report, Goelzer noted a number of factors that suggest
the terms of the proposed merger are fair including:
* Robinson Nugent's erratic sales, earnings, and share price history;
* the ability of Robinson Nugent shareholders to receive a much more
liquid/marketable investment in the form of 3M stock in exchange for
their Robinson Nugent common shares;
* 3M's ability to bring a litany of human and capital resources to expand
Robinson Nugent's operations much faster than Robinson Nugent could on
a stand-alone basis;
* 3M's ability to strengthen Robinson Nugent's position against
competitors; and
* a lack of product overlap between the two companies.
Considering all factors, it was the opinion of Goelzer, based upon and
subject to the matters stated in its opinion, that the terms of the proposed
merger are fair to the shareholders of Robinson Nugent from a financial point of
view.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS OF ROBINSON NUGENT IN THE MERGER
In considering the recommendations of the Robinson Nugent board of
directors with respect to the merger, shareholders of Robinson Nugent should be
aware that some directors and members of management of Robinson Nugent have
interests in the merger that are different from, or in addition to, their
interests as shareholders generally. The Robinson Nugent board of directors was
aware of these interests and considered them, among other matters, in approving
the merger agreement.
ROBINSON NUGENT OPTIONS. On October 1, 2000, the directors and executive
officers of Robinson Nugent held options to purchase Robinson Nugent common
shares, some of which were unvested and unexercisable. Upon the signing of the
merger agreement on October 2, 2000, all unvested and
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unexercisable options automatically vested and became exercisable. In accordance
with the stock option plan, Robinson Nugent sent holders of the outstanding
options notice that all options that were not exercised prior to 5:00 p.m. on
November 8, 2000 would cease to exist. As of October 1, 2000, Larry W. Burke, a
director and the President of Robinson Nugent, and the four other most highly
compensated executive officers of Robinson Nugent held 95,000 unexercised and
unvested options each of which has been exercised, and all of the Robinson
Nugent executive officers and directors as a group held 198,500 unexercised and
unvested options each of which has been exercised. Based on the average trading
price of the 3M common stock for the 20 consecutive trading days ending on
September 29, 2000, which was $88.506, Mr. Burke and the four other most highly
compensated executive officers of Robinson Nugent would have received a total of
20,397 shares of 3M common stock in exchange for the Robinson Nugent common
shares they received upon exercise of their previously unvested and
unexercisable options. Based on the same average trading price, all of the
Robinson Nugent executive officers and directors as a group would have received
a total of 42,618 shares of 3M common stock in exchange for the Robinson Nugent
common shares they received upon exercise of their previously unvested and
unexercisable options. See "The Merger Agreement -- Employee Benefit Plans" on
page 40.
VOTING AND STOCK OPTION AGREEMENT. As an inducement to 3M to enter into the
merger agreement, on October 2, 2000, Samuel C. Robinson and James W. Robinson,
who are directors of Robinson Nugent, Patrick C. Duffy, the Chairman of the
board of directors of Robinson Nugent, and Larry W. Burke, a director and
President of Robinson Nugent, each of whom is a shareholder of Robinson Nugent,
entered into a voting and stock option agreement with 3M and Robinson Nugent
under which they have agreed, among other things, to vote all of the Robinson
Nugent common shares owned by them or to be acquired by them upon the exercise
of any options or otherwise (1) in favor of the merger agreement, and (2)
against any other acquisition proposal. The voting and stock option agreement
also grants 3M an irrevocable option to purchase all of their common shares at a
price of $19.00 per share. 3M may exercise the option at any time prior to the
earlier of the time at which the merger is completed and fifteen days after the
termination of the merger agreement. These Robinson Nugent shareholders own a
total of 1,815,301 Robinson Nugent common shares representing approximately
30.7% of the Robinson Nugent common shares outstanding on a fully diluted basis
as of October 2, 2000. See "The Voting and Stock Option Agreement" on page 44.
DALLAS MANUFACTURING FACILITY SALE AND LEASE. At the closing of the merger,
Robinson Nugent will sell its manufacturing facility in Dallas, Texas to a
limited liability company, owned two-thirds by Samuel C. Robinson and one-third
by James W. Robinson, for $1,750,000 in cash. In determining the purchase price,
the parties relied in part upon an independent third party appraisal made in
conjunction with a prior financing of the property. This transaction has been
approved by the Robinson Nugent board of directors. Samuel C. Robinson and James
W. Robinson did not participate in this vote. Simultaneously, this facility will
be leased back by Robinson Nugent for $220,000 per year, under a three-year,
triple-net lease. The gain on the sale will be deferred and amortized over the
life of the lease term.
INSURANCE AND INDEMNIFICATION. Under the merger agreement, 3M has agreed to
provide various continuing indemnification and insurance benefits for officers,
directors and employees of Robinson Nugent. See "The Merger Agreement --
Insurance and Indemnification" on page 40.
ACCOUNTING TREATMENT
The merger will be accounted for as a purchase by 3M for financial
reporting purposes. After completion of the merger, the results of operations of
Robinson Nugent will be included in the consolidated financial statements of 3M.
The purchase price will be allocated to Robinson Nugent assets and liabilities
based on the fair values of the assets acquired and the liabilities assumed. Any
excess of cost over the fair value of the net tangible and intangible assets of
Robinson Nugent acquired will be recorded as goodwill and will be amortized by
charges to operations in accordance with accounting principles generally
accepted in the United States of America. These allocations will be made based
upon valuations and other studies that have not yet been finalized.
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FEDERAL INCOME TAX CONSEQUENCES
The discussion below is the opinion of Fried, Frank, Harris, Shriver &
Jacobson, special counsel to 3M, as to the material federal income tax
consequences of the merger to 3M, Robinson Nugent, and the holders of Robinson
Nugent common shares who are citizens or residents of the United States or that
are domestic corporations. The discussion below does not address all aspects of
federal income taxation that may affect particular shareholders in light of
their particular circumstances, that are generally assumed to be known by
investors or that may affect shareholders subject to special treatment under
federal income tax laws. See "-- Qualifications" on page 33. The following
discussion assumes that Robinson Nugent common shares are held as capital assets
and that the merger and related transactions will be completed on the terms and
conditions of the merger agreement and as described in this proxy
statement/prospectus without waiver or modification of any such terms or
conditions. The discussion below is based on the current provisions of the
Internal Revenue Code, currently applicable Treasury regulations, judicial
decisions and administrative pronouncements, all of which are subject to change,
possibly with retroactive effect. In addition, no information is provided in
this document with respect to the tax consequences of the merger under foreign,
state or local laws.
Neither 3M nor Robinson Nugent has requested a ruling from the Internal
Revenue Service with regard to any of the federal income tax consequences of the
merger. The opinion of counsel described below to be delivered as a condition to
the merger will not be binding on the Internal Revenue Service and there can be
no assurance that the Internal Revenue Service or the courts will not take a
contrary view.
CLOSING TAX OPINION. As conditions to their respective obligations to
complete the merger, 3M and Robinson Nugent must receive an opinion, dated as of
the date of the merger, of Fried, Frank, Harris, Shriver & Jacobson, subject to
the assumptions and qualifications set forth below, to the effect that the
merger will qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code. 3M and Robinson Nugent have agreed that this
condition will not be waived without resoliciting proxies from shareholders of
Robinson Nugent. Following delivery of the opinion to 3M and Robinson Nugent, a
copy of the opinion in the form delivered to 3M and Robinson Nugent will be
filed as an exhibit to the registration statement on Form S-4 of which this
proxy statement/prospectus is a part.
This opinion will be based on, among other things:
* current provisions of the Internal Revenue Code, currently applicable
Treasury regulations, and judicial and administrative decisions and
rulings, all of which are subject to change, possibly with retroactive
effect;
* certain factual representations and statements of 3M and Robinson
Nugent;
* the assumption that such representations and statements will be
complete and accurate as of the effective time of the merger; and
* the assumption that the merger and related transactions will be
completed on the terms and conditions of the merger agreement and as
described in this proxy statement/prospectus without waiver or
modification of any such terms or conditions.
As stated above in this section, the following discussion is the opinion of
Fried, Frank, Harris, Shriver & Jacobson, special counsel to 3M, as to the
material federal income tax consequences of the merger to Robinson Nugent
shareholders, 3M and Robinson Nugent. The opinion is subject to the
qualifications stated in the first paragraph of this section and is in addition
to the opinion that is required to be delivered to satisfy the conditions to the
completion of the merger.
EFFECT OF RECEIPT OF 3M COMMON STOCK. Except as discussed below with
respect to cash received in lieu of a fractional share of 3M common stock,
Robinson Nugent shareholders who exchange Robinson Nugent common shares for
shares of 3M common stock will not recognize gain or loss as a result of the
merger. The tax basis of the shares of 3M common stock received by the Robinson
Nugent shareholders in the merger will be the same as the tax basis of the
Robinson Nugent common shares
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exchanged for those shares. The holding period of the shares of 3M common stock
received in the merger will include the holding period of the Robinson Nugent
common shares exchanged for those shares.
FRACTIONAL SHARES. If a Robinson Nugent shareholder receives cash in lieu
of a fractional share of 3M common stock in the merger, that cash amount will be
treated as received in exchange for the fractional share of 3M common stock.
Gain or loss recognized as a result of that exchange will be equal to the cash
amount received for the fractional share of 3M common stock less the proportion
of the shareholder's tax basis in the Robinson Nugent common shares exchanged
and allocable to the fractional share of 3M common stock.
ROBINSON NUGENT SHAREHOLDER REPORTING REQUIREMENTS. A Robinson Nugent
shareholder who exchanges Robinson Nugent common shares for shares of 3M common
stock will be required to retain in such shareholder's records and file with
such shareholder's federal income tax return for the taxable year in which the
merger takes place a statement setting forth all relevant facts in respect of
the nonrecognition of gain or loss upon the exchange. The statement is required
to include:
* the shareholder's tax basis in the Robinson Nugent common shares
surrendered in the merger; and
* the fair market value of the shares of 3M common stock received in the
merger as of the effective time of the merger.
CONSEQUENCES TO 3M, ROBINSON NUGENT AND BARBADOS ACQUISITION, INC. None of
3M, Robinson Nugent or Barbados Acquisition, Inc. will recognize gain or loss
as a result of the merger.
QUALIFICATIONS. As noted above, the preceding discussion does not address
aspects of federal income taxation that may be relevant to Robinson Nugent
shareholders to which special provisions of the federal income tax law may apply
based on their particular circumstances or status. For example, the discussion
does not address aspects of federal income taxation that may be relevant to:
* dealers in securities or currencies;
* traders in securities;
* financial institutions;
* tax-exempt organizations;
* insurance companies;
* persons holding Robinson Nugent common shares as part of a hedging,
straddle, conversion, synthetic security or other integrated
transaction;
* non-United States persons;
* persons whose functional currency is not the United States dollar; or
* persons who acquired their Robinson Nugent common shares through the
exercise of employee stock options or otherwise as compensation.
THE PRECEDING DISCUSSION SETS FORTH THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER BUT DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OR
DISCUSSION OF ALL POTENTIAL TAX EFFECTS RELEVANT TO THE MERGER. THUS, ROBINSON
NUGENT SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING
REQUIREMENTS, THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER
APPLICABLE TAX LAWS AND THE EFFECT OF ANY PROPOSED CHANGES IN THE TAX LAWS.
REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules promulgated under that Act by the Federal Trade Commission, in
order to complete the merger we are required to give notification and furnish
information relating to the Robinson Nugent and 3M businesses and the industries
in which they operate to the Federal Trade Commission and the Antitrust Division
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of the United States Department of Justice, and a specified waiting period
requirement has to be satisfied. 3M and Robinson Nugent filed notification and
report forms with the Federal Trade Commission and the Antitrust Division on
October 6, 2000. On November 5, 2000, the waiting period expired. Even after the
expiration of the waiting period, the Federal Trade Commission and the Antitrust
Division retain the authority to challenge the merger on antitrust grounds. In
addition, each state in which 3M or Robinson Nugent operates may also seek to
review the merger. Any of these authorities may seek to challenge the merger.
The merger is also subject to German regulatory approval. On November 7,
2000, 3M made a filing with the German Cartel Office, whose clearance is
required before the merger may be completed. On December 7, 2000, the review
period with the German Cartel Office expired.
3M and Robinson Nugent each conduct business in numerous countries
throughout the world. Some of these countries have mandatory premerger
notification requirements. In some other countries the merger can be completed,
but the transaction cannot be implemented locally without regulatory approval.
The authorities in each country may review the merger to determine if it is
compatible with their national laws on merger control. If a national authority
concludes that the transaction is incompatible with applicable law, it could
withhold its approval or condition its approval of the merger locally on the
receipt of undertakings by the parties, including the divestiture of assets or
businesses.
There can be no assurance that a challenge to the merger on antitrust
grounds will not be made by antitrust authorities or, if a challenge is made, of
the result. Under the merger agreement, 3M and Robinson Nugent have agreed to
use their reasonable best efforts to take, or cause to be taken, all actions,
and or cause to be done all things necessary, proper or appropriate to complete
and make effective the merger and the other transactions contemplated by the
merger. With respect to other competition, merger control, antitrust or similar
approvals or waiting periods, the merger agreement requires that these approvals
or waiting periods be obtained or expire or terminate before completion of the
merger, if the failure to obtain these approvals or have the waiting periods
expire or be terminated would reasonably be expected to result in a material
adverse effect or result in the commission of a criminal offense. If any other
approval or action is required, 3M and Robinson Nugent currently contemplate
that that approval or action will be sought.
Under the merger agreement, we have both agreed to use our reasonable best
efforts to take all actions to obtain all necessary regulatory and governmental
approvals necessary to complete the merger and to address any concerns of
regulators and governmental officials. Our obligations to complete the merger
are dependent on the condition that there be no law enacted, and no judgment,
injunction or decree of any court or governmental entity in effect, that
prohibits the merger.
It is a condition to the merger that the shares of 3M stock to be issued in
the merger be approved for listing on the New York Stock Exchange, subject only
to official notice of issuance. Since 3M intends to use shares from its
treasury, no filing with the New York Stock Exchange to list these shares will
be necessary. Following the merger, Robinson Nugent common shares will no longer
be registered under the Securities and Exchange Act or quoted on the Nasdaq
National Market.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTIONS
This proxy statement/prospectus does not cover any resales of the 3M common
stock that Robinson Nugent shareholders will receive in the merger, and no
person is authorized to make any use of this proxy statement/prospectus in
connection with any resale of 3M common stock.
All shares of 3M common stock received by Robinson Nugent shareholders in
the merger will be freely transferable, except that shares received by
"affiliates" of Robinson Nugent under the Securities Act of 1933 at the time of
the Robinson Nugent special shareholders meeting may be resold only in
transactions permitted by Rule 145 under the Securities Act of 1933 or as
otherwise permitted under the Securities Act of 1933. Persons who may be
affiliates of Robinson Nugent for those purposes generally include individuals
or entities that control, are controlled by, or are under common control with,
Robinson Nugent, and would not include shareholders who are not officers,
directors or principal shareholders of Robinson Nugent.
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THE MERGER AGREEMENT
THE FOLLOWING SUMMARY OF THE MERGER AGREEMENT IS QUALIFIED BY REFERENCE TO
THE COMPLETE TEXT OF THE MERGER AGREEMENT, WHICH IS INCORPORATED BY REFERENCE
AND ATTACHED AS ANNEX A TO THIS PROXY STATEMENT/PROSPECTUS. WE ENCOURAGE YOU TO
READ THE MERGER AGREEMENT IN ITS ENTIRETY.
STRUCTURE OF THE MERGER
Under the merger agreement, Barbados Acquisition, Inc., a wholly owned
subsidiary of 3M, will merge with and into Robinson Nugent. As a consequence of
the merger, Robinson Nugent will become a wholly owned subsidiary of 3M.
CLOSING; EFFECTIVE TIME
The merger will become effective when the articles of merger are filed with
the Secretary of State of the State of Indiana. However, we may agree that the
merger will become effective as of a later time, as we specify in the articles
of merger. We expect to file the articles of merger and complete the merger
shortly after the conditions in the merger agreement are satisfied or waived.
See "-- Conditions to the Completion of the Merger" on page 40.
WHAT SHAREHOLDERS WILL RECEIVE IN THE MERGER
If the "average trading price" of 3M common stock is between $82.00 and
$100.00, for each Robinson Nugent common share you own you will receive a number
of shares of 3M common stock having a value of $19.00, based on the average
trading price. The average trading price is based on the average closing price
for a share of 3M common stock on the New York Stock Exchange Composite Tape for
the 20 consecutive trading days ending on the business day before the closing of
the merger. Within this range of average trading prices, the actual number of
shares of 3M common stock you will receive will vary based on the formula
contained in the merger agreement which adjusts the number of shares you receive
to maintain their value at $19.00, based on the average trading price, subject
to the collar described below.
If the average trading price of shares of 3M common stock is below $82.00,
you will receive 0.2317 shares of 3M common stock for each Robinson Nugent
common share you own. In that case, the value of the 3M common stock you receive
in the merger will be less than $19.00 for each Robinson Nugent common share you
own, based on the average trading price.
If the average trading price of shares of 3M common stock is above $100.00,
you will receive 0.19 shares of 3M common stock for each Robinson Nugent common
share you own. In that case, the value of the shares of 3M common stock you
receive in the merger will be more than $19.00 for each Robinson Nugent common
share you own, based on the average trading price.
This information is summarized in the table below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF 3M COMMON STOCK
AVERAGE TRADING PRICE OF YOU RECEIVE FOR EACH ROBINSON NUGENT VALUE OF 3M COMMON STOCK YOU RECEIVE
3M COMMON STOCK COMMON SHARE FOR EACH ROBINSON NUGENT COMMON SHARE
---------------------------- ------------------------------------ -------------------------------------
<S> <C> <C>
less than $82.00 0.2317 less than $19.00
between $82.00 and $100.00 $19.00 divided by the average $19.00
trading price
more than $100.00 0.19 more than $19.00
</TABLE>
Neither Robinson Nugent nor 3M has the right to terminate the merger
agreement if the average trading price of 3M common stock is below $82.00 or
above $100.00. As stated above, this means that if the average trading price of
shares of 3M common stock is below $82.00, you will receive 0.2317 shares of 3M
common stock for each Robinson Nugent common share you own with the result that
the value of the 3M common stock you receive in the merger will be less than
$19.00 for each Robinson Nugent common share you own. The exact value of the 3M
stock you receive in the merger will be determined based on the average trading
price.
Immediately after the merger, former Robinson Nugent shareholders will own
less than 1% of 3M.
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PROCEDURES FOR SURRENDER OF ROBINSON NUGENT CERTIFICATES; FRACTIONAL SHARES
As soon as reasonably practicable after the closing of the merger, 3M will
instruct the exchange agent for the merger to mail to each person who holds
Robinson Nugent common shares at the time of the merger, a letter of transmittal
and instructions with respect to the surrender of the person's Robinson Nugent
share certificates. The letter of transmittal will also describe the procedures
for electronic delivery of shares.
YOU SHOULD NOT SEND YOUR SHARE CERTIFICATES WITH THE ENCLOSED PROXY.
Commencing immediately after the closing of the merger, upon surrender by
Robinson Nugent shareholders of their share certificates representing Robinson
Nugent common shares in accordance with the instructions, Robinson Nugent
shareholders will receive share certificates representing shares of 3M common
stock for which those Robinson Nugent common shares have been exchanged,
together with a cash payment instead of fractional shares, if any, as described
below.
No fractional share of 3M common stock will be issued for Robinson Nugent
common shares. Instead, the exchange agent will pay an amount in cash determined
by multiplying (x) the fractional share interest to which the Robinson Nugent
shareholder would otherwise be entitled by (y) the closing price of a share of
3M common stock on the New York Stock Exchange on the day upon which the merger
becomes effective.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties by Robinson
Nugent to 3M and Barbados Acquisition Inc. relating to, among other things:
* corporate organization, qualification, standing and power;
* articles of incorporation and by laws;
* capitalization;
* authority to enter into, approve, execute and deliver the merger
agreement;
* no conflict or violation of organizational documents, securities laws or
agreements;
* documents filed with the SEC including financial statements;
* absence of specified material changes or events since June 30, 2000;
* litigation and liabilities;
* compliance with applicable laws;
* employee benefit plan matters;
* labor matters;
* environmental matters;
* required board action and shareholder votes;
* brokers;
* tax matters;
* intellectual property matters;
* insurance;
* material contracts;
* title to assets;
* state takeover laws;
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* shareholder rights agreement;
* product warranty; and
* product liability.
The merger agreement contains representations and warranties by 3M and
Barbados Acquisition, Inc. to Robinson Nugent relating to among other things:
* corporate organization, standing, power and valid issuance of the 3M
common stock following the merger;
* no conflict or violation of organizational documents, securities laws or
agreements;
* inapplicability of state takeover laws; and
* documents filed with the SEC including financial statements.
The representations and warranties will not survive the closing of the
merger.
CONDUCT OF BUSINESS
During the period from the date of the merger agreement to the completion
of the merger, Robinson Nugent must comply with agreements relating to the
conduct of its business, except as otherwise permitted by the merger agreement
or as consented to by 3M.
Robinson Nugent has agreed that it will:
* conduct its business in all material respects in the ordinary and usual
course;
* use its reasonable commercial efforts to preserve its business
organization intact in all material respects; and
* maintain the services of its officers and employees as a group; and
maintain its existing relations and goodwill in all material respects
with customers, suppliers, regulators, distributors, creditors, lessors
and others having business dealings with it.
The merger agreement prohibits Robinson Nugent and its subsidiaries,
without the consent of 3M, from taking any action outside of the parameters
specified in the merger agreement relating to the following matters:
* issuing, delivering, granting or selling any capital stock or options;
* amending its articles of incorporation or bylaws;
* amending or taking any action under its shareholder rights agreement, or
adopting any other shareholders rights plan;
* entering into any agreement with any of its shareholders;
* splitting, combining, subdividing or reclassifying its outstanding
shares of capital stock;
* declaring, setting aside or paying any dividend or distribution payable
in cash, stock or property in respect of any of its capital stock;
* repurchasing, redeeming or otherwise acquiring or permitting any of its
subsidiaries to purchase, redeem or otherwise acquire, any shares of
its capital stock or options;
* taking any action that would prevent the merger from qualifying as a
"reorganization" under the Internal Revenue Code;
* taking any action that it knows would cause any of its representations
and warranties in the merger agreement to become inaccurate in any
material respect;
* entering into, adopting or amending any agreement or arrangement
relating to severance, or entering into, adopting or amending any
employee benefit plan or employment or consulting agreement, or
granting any options or other equity related awards;
* except for borrowings under existing lines of credit, issuing,
incurring or amending the terms of any indebtedness for borrowed money
or guarantee;
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* making any capital expenditures in an aggregate amount in excess of the
amount previously budgeted by Robinson Nugent;
* other than in the ordinary course of business consistent with past
practice, and except pursuant to existing contracts, transferring,
leasing, licensing, selling, mortgaging, pledging, encumbering or
otherwise disposing of any of its or its subsidiaries' property or
assets material to Robinson Nugent and its subsidiaries taken as a
whole;
* issuing, delivering, selling or encumbering shares of any class of its
capital stock or any securities convertible into, or any rights,
warrants or options to acquire any capital stock except under its
benefit plans;
* acquiring any business, including any facilities, whether by merger,
consolidation, purchase of property or assets in excess of a certain
amount;
* changing its accounting policies, practices or methods except as
required by generally accepted accounting principles or by the rules
and regulations of the SEC;
* taking any action to cause its common stock to cease to be quoted on
the Nasdaq National Market System;
* entering into or amending any distribution, supply, inventory purchase,
franchise, license, sales, agency or advertising contracts outside of
the ordinary course of business that have a term which extends more
than one year from the completion of the merger;
* entering into any contract, lease, agreement, instrument or other
arrangement limiting the freedom of Robinson Nugent to engage in any
line of business or competing with anyone;
* entering into any joint venture or partnership agreement that is
material to Robinson Nugent and its subsidiaries taken as a whole; or
* changing, other than in the ordinary course of business consistent with
past practice, or making any material tax election, settling any audit
or filing any amended tax returns.
NO SOLICITATION
The merger agreement provides that Robinson Nugent will not, nor will it
authorize or permit any of its subsidiaries or any of its subsidiaries'
directors, officers, employees, advisors, agents or representatives to, directly
or indirectly:
* solicit, initiate or encourage (including furnishing information) or
take any other action to facilitate any inquiries or the making of any
proposal which constitutes or may reasonably be expected to lead to an
acquisition proposal, as defined in the merger agreement;
* engage in any discussion or negotiations relating to an acquisition
proposal; or
* enter into any contract or understanding requiring it to abandon,
terminate or fail to complete the merger with 3M.
In addition, Robinson Nugent agreed in the merger agreement that it would
immediately cease all existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any persons conducted prior to the
execution of the merger agreement with respect to any acquisition proposal and
request the return or destruction of all non-public information furnished in
connection with any proposal.
However, Robinson Nugent has agreed that, if before its special
shareholders meeting takes place, it receives an unsolicited written proposal
with respect to an acquisition transaction, and the Robinson Nugent board of
directors determines, in good faith by a majority vote, after advice from its
outside legal counsel, that the failure to furnish information and negotiate or
otherwise engage in discussions would constitute a breach of the fiduciary
duties of its board of directors, and after consultation with Robinson Nugent's
independent financial advisors that such proposal could reasonably be expected
to lead to a superior transaction, as defined in the merger agreement, then
Robinson Nugent may:
* furnish information to the person making the proposal under a customary
confidentiality agreement; and
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* participate in discussions or negotiations regarding the proposal.
Robinson Nugent has agreed to notify 3M orally and in writing of any
inquiries, offers or acquisition proposals, including, without limitation, the
terms and conditions of any offer or proposal and the identity of the person
making it, as promptly as practicable following the receipt of the inquiry,
offer or proposal, and to keep 3M reasonably informed of the status and material
terms of the inquiry, offer or proposal.
If the board of directors of Robinson Nugent determines, based on the
written opinion from Robinson Nugent's independent financial advisors, that the
acquisition transaction is a superior transaction, and based on the advice of
Robinson Nugent's outside legal counsel, that the acquisition transaction
constitutes a superior transaction, and is in the best interests of Robinson
Nugent and its shareholders and failure to enter into the acquisition
transaction would constitute a breach of the fiduciary duties of the board of
directors of Robinson Nugent, then, first, Robinson Nugent must provide 3M three
business days' written notice that it intends to terminate the merger agreement
and, second, on the date of termination, Robinson Nugent must deliver to 3M:
* a written notice of termination of the merger agreement;
* a wire transfer in the amount of the termination fee of $3.45 million;
* a written acknowledgment from Robinson Nugent that the termination of
the merger agreement and the entry into the superior transaction are
events which entitle 3M to be paid the termination fee; and
* a written acknowledgment from each other party to the superior
transaction that it has read the terminating Robinson Nugent
acknowledgment referred to above and will not contest the matters
acknowledged by Robinson Nugent, including the payment of the
termination fee.
An "acquisition proposal" is defined in the merger agreement as any
inquiry, proposal or offer from any person relating to any:
* direct or indirect acquisition or purchase of a business of Robinson
Nugent or any of its subsidiaries, that constitutes 15% or more of the
consolidated net revenues, net income or assets of Robinson Nugent and
its subsidiaries;
* direct or indirect acquisition or purchase of 15% or more of any class
of equity securities of Robinson Nugent and its subsidiaries whose
business constitutes 15% or more of the consolidated net revenues, net
income or assets of Robinson Nugent and its subsidiaries;
* tender offer or exchange offer that if consummated would result in any
person beneficially owning 15% or more of the capital stock of Robinson
Nugent; or
* merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Robinson
Nugent and its subsidiaries whose business constitutes 15% or more of
the consolidated net revenues, net income or assets of Robinson Nugent
and its subsidiaries.
Each of the transactions in the immediately preceding bullet points is
referred to as an "acquisition transaction" in the merger agreement.
A "superior transaction" is defined in the merger agreement as an
acquisition transaction which the board of directors of Robinson Nugent,
reasonably determines is more favorable to Robinson Nugent and its shareholders
than the merger and which is not subject to any financing condition. An
acquisition transaction cannot constitute a superior transaction unless, in the
written opinion of Robinson Nugent's independent financial advisors, the value
of the consideration to be paid in the acquisition transaction is more favorable
to the shareholders of Robinson Nugent from a financial point of view than the
consideration being paid by 3M in the merger, taking into account any proposed
alteration to the terms of the merger agreement submitted in writing by 3M in
response to an acquisition proposal.
Robinson Nugent may not take any action to make any takeover laws or its
rights agreement inapplicable to any acquisition transaction in respect of
Robinson Nugent prior to the termination of the merger agreement.
39
<PAGE>
EMPLOYEE BENEFIT PLANS
As part of the merger Robinson Nugent will take all necessary action to:
* cause the entire account balances of the participants in its pension
plan to vest as of the closing date of the merger and will distribute
the account balances to the participants upon receipt of approval from
the Internal Revenue Service;
* approve the merger of its 401(k) plan with 3M's voluntary investment
and employee stock option plan;
* cause all outstanding options granted under the Robinson Nugent stock
option plan to be exercised and satisfied in full or terminated prior
to 5:00 p.m. on November 8, 2000;
* cause the annual reports for Robinson Nugent's retirement plan and
401(k) plan to be filed with the appropriate government agency, pay any
penalties associated with the late filings of those reports, file
reasonable cause statements with the Internal Revenue Service related
to the reports, and comply with the summary annual report requirements
of ERISA;
* file a registration statement with the SEC with respect to the offering
of Robinson Nugent common shares under the 401(k) plan;
* commence an offer to repurchase Robinson Nugent common shares from each
person who exercised options under the Robinson Nugent stock option
plan prior to August 31, 2000 or purchased Robinson Nugent common
shares under the 401(k) plan for the 12 months prior to the filing of
the registration statement relating to the plan; and
* complete and furnish 3M with documentation of Robinson Nugent's bonus
plan in a form which is reasonably satisfactory to 3M.
Each of the holders of options to purchase Robinson Nugent common shares
has been given written notice of the execution of the merger agreement and of
Robinson Nugent's decision to terminate the options, as he or she is entitled to
receive under the terms of the 1993 Robinson Nugent, Inc. Employee and
Non-Employee Director Stock Option Plan. In accordance with the terms of the
plan, the holders of options were given until 5:00 p.m. on November 8, 2000 to
exercise their options or have them terminated.
INSURANCE AND INDEMNIFICATION
3M has agreed to maintain in effect, for three years following the merger,
Robinson Nugent's current directors' and officers' liability insurance covering
those persons currently covered by that insurance policy, except that 3M need
not pay more than two times the most recent annual premium currently paid by
Robinson Nugent for its existing coverage.
3M has also agreed to indemnify the current and former directors and
officers of Robinson Nugent or any of its subsidiaries for acts or omissions
occurring at or prior to the merger to the fullest extent permitted by
applicable law.
3M has agreed to keep in effect all provisions in Robinson Nugent's
articles of incorporation and bylaws that provide exculpation and
indemnification, and related advancement of expenses, for its past and present
officers and directors.
EXPENSES
Whether or not the merger is completed, each party will pay its own costs
and expenses incurred in connection with the merger agreement except that the
expenses incurred in connection with the filing and printing of the registration
statement, the mailing of the proxy statement/prospectus and all filing fees in
connection with any filings under state securities laws will be shared by 3M and
Robinson Nugent equally, and the fee paid in connection with the filings
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, will be paid by 3M.
CONDITIONS TO THE COMPLETION OF THE MERGER
The obligations of each party to complete the merger are subject to the
satisfaction or waiver of the following additional conditions:
40
<PAGE>
* the Robinson Nugent shareholders have approved and adopted the merger
agreement and the merger;
* there is no order, decree or injunction in effect that prohibits the
completion of the merger;
* the registration statement on Form S-4 of which this proxy
statement/prospectus is a part is effective under the Securities Act;
* all requirements under state securities or "blue sky" laws have been
satisfied;
* the shares of 3M common stock to be issued in the merger are approved
for listing on the New York Stock Exchange subject to official notice
of issuance;
* 3M and Robinson Nugent have received opinions from Fried, Frank,
Harris, Shriver & Jacobson that the merger will qualify for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code;
* the waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, will have expired or been terminated; and
* any other approval or waiting period required prior to the completion
of the merger under any other competition, merger control, antitrust or
similar law or regulation will have been obtained or terminated or have
expired, other than those the failure of which to have been obtained or
terminated or to have expired would not reasonably be expected to have
a materially adverse affect or result in the commission of a criminal
offense.
The obligation of 3M to complete the merger is subject to the satisfaction
or waiver of the following conditions:
* the representations and warranties of Robinson Nugent contained in the
merger agreement are true and correct on the date of the merger as if
made on the date of the merger, except where the failure of the
representations and warranties to be true and correct, individually or
in the aggregate, would not reasonably be expected to have resulted in
a material adverse effect;
* all agreements and covenants required to be performed and complied with
on or before the date of the merger will have in all material respects
been performed or complied with;
* 3M will have received a certificate of an executive officer of Robinson
Nugent that the conditions in the two immediately preceding clauses
have been satisfied;
* all of Robinson Nugent options will have either been exercised or
terminated;
* 3M will have received the resignation of each director of Robinson
Nugent, with the resignation being effective upon completion of the
merger;
* the voting and stock option agreement between 3M and certain Robinson
Nugent shareholders will be in effect;
* Robinson Nugent's manufacturing facility in Dallas, Texas will have
been sold and leased back to Robinson Nugent; and
* the rescission offer made by Robinson Nugent to each person who
exercised options under the Robinson Nugent stock option plan or
purchased Robinson Nugent common shares under the 401(k) plan will have
been completed.
The obligation of Robinson Nugent to complete the merger is subject to the
satisfaction or waiver of the following conditions:
* the representations of 3M contained in the merger agreement are true
and correct on the date of the merger, as if made on the date of the
merger, except to the extent that any failure of the representations
and warranties to be true and correct would not, individually or in the
aggregate, have or reasonably be expected to have a material adverse
effect on 3M's ability to complete the merger;
* all agreements and covenants required to be performed and complied with
on or before the date of the merger will have in all material respects
been performed or complied with;
41
<PAGE>
* Robinson Nugent will have received a certificate of an executive
officer of 3M that the conditions in the two immediately preceding
clauses have been satisfied; and
* 3M will have obtained all consents, approvals, releases or
authorizations and will have made all filings and registrations with
governmental or other entities necessary to complete the merger, unless
the failure to do so would not individually or in the aggregate have,
or reasonably be expected to have, a material adverse effect on 3M's
ability to complete the merger or perform its obligations under the
merger agreement.
TERMINATION
The merger agreement may be terminated:
* by mutual written consent of 3M and Robinson Nugent;
* by either 3M or Robinson Nugent:
-- if the merger is not completed by February 28, 2001, except that a
party may not terminate the merger agreement if its failure to
fulfill its obligations is the cause of the merger not being
completed by that date;
-- if a governmental entity issues an order, decree or injunction
making the completion of the merger illegal, permanently prohibiting
the completion of the merger and the order, decree or injunction
will become final and non-applicable; or
-- if there has been a material breach by the other party of any of its
representations, warranties, covenants or agreements contained in
the merger agreement, and the breach would result in the failure to
satisfy each respective party's representations and warranties which
are a condition to the other completing the merger, and that breach
is incapable of being cured or, if capable of being cured, has not
been cured within 30 days after written notice was received by the
party alleged to be in breach.
* by 3M:
-- if Robinson Nugent shareholders, at a duly held shareholders
meeting, fail to approve and adopt the merger agreement and the
merger;
-- if the board of directors of Robinson Nugent (1) does not recommend
that Robinson Nugent shareholders vote in favor of the merger
agreement or withdraws its recommendation, (2) modifies its
recommendation in a manner adverse to 3M, or (3) approves,
recommends or fails to take a position that is adverse to any
proposed acquisition transaction involving Robinson Nugent;
-- if the board of directors of Robinson Nugent refuses to affirm its
recommendation of approval of the merger agreement within five days
after receipt of any reasonable written request for such affirmation
from 3M; or
-- if Robinson Nugent fails to hold the Robinson Nugent special
shareholders meeting when scheduled; or
* by Robinson Nugent:
-- in order to enter into a superior acquisition transaction that the
Robinson Nugent board has determined, after complying with the
procedures contained in the merger agreement, is a superior
transaction.
Robinson Nugent has agreed that it will pay 3M a $3.45 million termination
fee if:
* 3M terminates the merger agreement because the board of directors of
Robinson Nugent:
-- does not recommend that Robinson Nugent shareholders vote in favor
of the merger agreement and the merger or withdraws its
recommendation;
-- modifies its recommendation in a manner adverse to 3M;
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<PAGE>
-- approves, recommends or fails to take a position that is adverse to
any proposed competing transaction involving Robinson Nugent;
-- refuses to affirm to 3M its recommendation within five days after
receipt of any reasonable request to do so from 3M; or
-- Robinson Nugent fails to hold its special shareholders meeting when
scheduled;
* 3M or Robinson Nugent terminates the merger agreement because (1) the
merger is not completed before February 28, 2001, or (2) 3M terminates
the merger agreement because either (x) there has been a material
breach by Robinson Nugent of any of its representations, warranties,
covenants or agreements contained in the merger agreement, and the
breach would result in the failure to satisfy its representations and
warranties which are a condition to 3M completing the merger, and that
breach is incapable of being cured or, if capable of being cured, has
not been cured within 30 days after written notice was received by
Robinson Nugent or (y) the Robinson Nugent shareholders fail to approve
and adopt the merger agreement and the merger at the Robinson Nugent
special shareholders meeting, and, in either case (1) or (2), an
acquisition transaction is entered into, agreed to, or completed by
Robinson Nugent or any of its subsidiaries within twelve months
following termination of the merger agreement;
* 3M terminates the merger agreement because (x) there has been a
material breach by Robinson Nugent of any of its representations,
warranties, covenants or agreements contained in the merger agreement,
and the breach would result in the failure to satisfy its
representations and warranties which are a condition to 3M completing
the merger, and that breach is incapable of being cured or, if capable
of being cured, has not been cured within 30 days after written notice
was received by Robinson Nugent or (y) the Robinson Nugent shareholders
fail to approve and adopt the merger agreement and the merger at the
Robinson Nugent special shareholders meeting, and in either case, an
acquisition proposal was publicly proposed or announced prior to the
Robinson Nugent special shareholders meeting and in the case of (y)
only, the acquisition proposal has not been publicly rejected by
Robinson Nugent's board of directors; or
* Robinson Nugent terminates the merger agreement to enter into a superior
transaction.
AMENDMENTS
The merger agreement may be amended prior to the time the merger is
completed if a writing to that effect is executed and delivered by 3M and
Robinson Nugent.
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<PAGE>
THE VOTING AND STOCK OPTION AGREEMENT
THE FOLLOWING SUMMARY OF THE VOTING AND STOCK OPTION AGREEMENT IS QUALIFIED
BY REFERENCE TO THE COMPLETE TEXT OF THE VOTING AND STOCK OPTION AGREEMENT,
WHICH IS ATTACHED AS ANNEX B TO THIS PROXY STATEMENT/PROSPECTUS. YOU ARE
ENCOURAGED TO READ THE VOTING AND STOCK OPTION AGREEMENT IN ITS ENTIRETY.
3M VOTING AGREEMENT WITH ROBINSON NUGENT SHAREHOLDERS
As an inducement to 3M to enter into the merger agreement, on October 2,
2000, Samuel C. Robinson and James W. Robinson, who are directors of Robinson
Nugent, Patrick C. Duffy, the Chairman of the board of directors of Robinson
Nugent, and Larry W. Burke, a director and the President of Robinson Nugent,
each of whom is a Robinson Nugent shareholder, entered into a voting and stock
option agreement with 3M and Robinson Nugent under which they have agreed, among
other things, to vote all of the Robinson Nugent common shares owned by them or
to be acquired by them upon the exercise of any options or otherwise (1) in
favor of the merger agreement, and (2) against any other acquisition proposal.
As part of the voting and stock option agreement, each of these Robinson
Nugent shareholders granted an irrevocable proxy to 3M to vote the Robinson
Nugent common shares owned by them in accordance with the voting and stock
option agreement. These Robinson Nugent shareholders own a total of 1,815,301
Robinson Nugent common shares, representing approximately 30.7% of the Robinson
Nugent common shares outstanding on a fully diluted basis as of October 2, 2000.
The voting and stock option agreement also grants 3M an irrevocable option
to purchase all of the shareholders' Robinson Nugent common shares at a price of
$19.00 per share. 3M may exercise the option at any time prior to the earlier of
the time at which the merger is completed and 15 days after the termination of
the merger agreement. Robinson Nugent has also agreed to register shares
obtained by 3M pursuant to the voting and stock option agreement at the request
of 3M up to two times during the two years following exercise of the option by
3M, if such registration is necessary to permit 3M to sell or dispose of those
shares and to provide unlimited piggyback registration rights to 3M.
In connection with the signing of the merger agreement, Robinson Nugent
amended its shareholder rights agreement to make it inapplicable to the merger,
the voting and stock option agreement and the transactions contemplated by that
agreement.
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<PAGE>
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
MARKET PRICES AND DIVIDENDS
3M common stock is listed on the New York Stock Exchange under the symbol
"MMM." Robinson Nugent common shares are quoted on the Nasdaq National Market
under the symbol "RNIC."
The table below sets forth, for the periods indicated, the high and low
sale prices and the dividends declared per share of 3M common stock as reported
on the New York Stock Exchange and Robinson Nugent common shares as quoted on
the Nasdaq National Market, based on published financial sources.
<TABLE>
<CAPTION>
3M COMMON STOCK ROBINSON NUGENT COMMON SHARES
--------------------------------- ----------------------------------
DIVIDENDS DIVIDENDS
DECLARED DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
-------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1999:
First Quarter ................ $ 81.375 $ 69.313 $ 0.56 $ 4.500 $ 3.500 $ --
Second Quarter ............... 96.375 70.063 0.56 4.625 2.563 --
Third Quarter ................ 100.000 85.000 0.56 5.250 3.875 --
Fourth Quarter ............... 103.375 87.438 0.56 13.250 4.375 --
2000:
First Quarter ................ 103.813 78.188 0.58 21.000 10.000 --
Second Quarter ............... 98.313 80.438 0.58 16.250 9.063 --
Third Quarter ................ 97.438 80.500 0.58 17.875 11.125 --
Fourth Quarter ............... 122.938 83.938 0.58 23.000 16.063 --
2001:
First Quarter (through January
10, 2001) ................... 121.500 109.000 -- 22.938 20.563 --
</TABLE>
On October 2, 2001, the last full trading day prior to the public
announcement of the proposed merger, the closing prices of 3M common stock as
reported on the New York Stock Exchange and of Robinson Nugent common shares as
quoted on Nasdaq National Market were $91.688 and $16.625 per share,
respectively. On January 10, 2001, the last trading date prior to the date of
this proxy statement/prospectus, the closing prices of 3M common stock as
reported on the New York Stock Exchange and of Robinson Nugent common stock as
quoted on the Nasdaq National Market, were $112.313 and $21.500 per share,
respectively. Shareholders should obtain current market quotations prior to
making any decision with respect to the merger.
45
<PAGE>
THE BUSINESS OF MINNESOTA MINING AND MANUFACTURING COMPANY
3M is an integrated enterprise characterized by substantial intercompany
cooperation in research, manufacturing and marketing of products. 3M's business
has developed from its research and technology in coating and bonding for coated
abrasives, 3M's original product. Coating and bonding is the process of applying
one material to another, such as:
* abrasive granules to paper or cloth, namely, coated abrasives;
* adhesives to a backing, namely, pressure-sensitive tapes;
* ceramic coating to granular mineral, namely, roofing granules;
* glass beads to plastic backing, namely, reflective sheeting; and
* low-tack adhesives to paper, namely, repositionable notes.
3M is among the leading manufacturers of products for many of the markets
it serves. In all cases, 3M products are subject to direct or indirect
competition. Most 3M products involve expertise in product development,
manufacturing and marketing, and are subject to competition from products
manufactured and sold by other technically oriented companies.
3M's strategic business units have been aggregated into six reportable
segments:
* Industrial Markets;
* Health Care Markets;
* Transportation, Graphics and Safety Markets;
* Consumer and Office Markets;
* Electro and Communications Markets; and
* Specialty Material Markets.
These segments bring together common or related 3M technologies, enhancing
the development of innovative products and services and providing for efficient
sharing of business resources. These segments have worldwide responsibility for
virtually all 3M product lines. A few miscellaneous businesses and
staff-sponsored products, as well as various corporate assets and corporate
overhead expenses, are not assigned to the segments.
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<PAGE>
THE BUSINESS OF ROBINSON NUGENT, INC.
Robinson Nugent was organized as an Indiana corporation in 1955. Robinson
Nugent designs, manufactures and markets electronic devices used to interconnect
components of electronic systems. Robinson Nugent's principal products are
integrated circuit sockets: connectors used in board-to-board, wire-to-board,
and custom molded-on cable assemblies. Robinson Nugent also offers application
tooling that is used in applying wire and cable to its connectors.
Robinson Nugent's products are used in electronic telecommunication
equipment, including:
* switching and networking equipment such as servers and routers, mass
storage devices, modems and PBX stations;
* data processing equipment such as mainframe computers, personal
computers, workstations, CAD systems;
* peripheral equipment such as printers, disk drives, plotters and
point-of-sale terminals;
* industrial controls and electronic instruments;
* consumer products; and
* a variety of other applications.
Major markets of Robinson Nugent include the United States, Europe, Japan,
and the Southeast Asian countries, including Singapore and Malaysia.
Manufacturing facilities are located in New Albany, Indiana; Dallas, Texas;
Reynosa, Mexico; Sungai Petani, Malaysia; Inchinnan, Scotland; and Hamont-Achel,
Belgium.
Robinson Nugent's corporate headquarters are located in New Albany,
Indiana, which also is the site for Robinson Nugent's corporate engineering,
research and development, preproduction, testing of new products and North
American distribution and warehousing. International headquarters are located in
s-Hertogenbosch, The Netherlands; Singapore; and Tokyo, Japan.
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<PAGE>
COMPARISON OF STOCKHOLDER RIGHTS
The rights of 3M stockholders are governed by 3M's certificate of
incorporation and bylaws and Delaware law. The rights of Robinson Nugent
shareholders are governed by Robinson Nugent's articles of incorporation and
bylaws and Indiana law. After the merger, the rights of Robinson Nugent
shareholders who become 3M stockholders will be governed by 3M's certificate of
incorporation, the 3M bylaws and Delaware law. The following is a summary of the
material differences between the rights of 3M stockholders and Robinson Nugent
shareholders. This summary is not a complete statement of all differences
between rights of the holders of 3M common stock and Robinson Nugent common
shares and is qualified by the full text of each document and by Delaware law
and Indiana law. For information as to how to get those documents, see "Where
You Can Find More Information" on page 60.
<TABLE>
<CAPTION>
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ROBINSON NUGENT 3M
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AMENDMENT OF CHARTER DOCUMENTS
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<S> <C>
Under Indiana law, the amendment of a Under Delaware law, the amendment of a
corporation's articles of incorporation requires corporation's certificate of incorporation
generally that, if a quorum is present, action on requires the affirmative vote of a majority of
an amendment is approved if the votes cast votes entitled to be cast thereon, unless a
favoring the amendment exceed the votes cast corporation's certificate of incorporation
opposing the amendment, unless the articles of provides otherwise. 3M's certificate of
incorporation or the Indiana law require a incorporation provides that the certificate of
greater number of affirmative votes. In addition, incorporation may be amended in accordance
the amendment must be approved by a majority with Delaware law. 3M's certificate of
of the votes entitled to be cast on the incorporation specifies that Article Tenth,
amendment by any voting group with respect to election of directors, cannot be amended or
which the amendment would create dissenters' repealed without the approval of at least 80%
rights. Robinson Nugent's articles of of the voting power of all of the outstanding
incorporation do not provide otherwise. shares of capital stock voting together as a
single class.
---------------------------------------------------- ---------------------------------------------------
AMENDMENT OF BYLAWS
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Under Indiana law, unless a corporation's Under Delaware law, holders of a majority of
articles of incorporation provide otherwise, only the voting power of a corporation and, when
a corporation's board of directors may amend or provided in the certificate of incorporation, the
repeal a corporation's bylaws. Robinson directors of the corporation have the power to
Nugent's articles of incorporation do not adopt, amend and repeal the bylaws of a
provide otherwise. corporation. 3M's certificate of incorporation
grants the directors the power to adopt, amend or
repeal the bylaws, provided that any bylaws made
by the directors may be amended or repealed by
the directors and by the stockholders by an
affirmative vote of the holders of at least
eighty percent (80%) of the voting power of all
of the outstanding shares of capital stock of 3M
entitled to vote generally in the election of
directors voting as a single class.
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
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ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
PROVISIONS AFFECTING BUSINESS COMBINATIONS
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<S> <C>
Indiana law provides that a corporation may not Delaware law provides generally that a
engage in any "business combination" with any corporation may not engage in a wide range of
"interested shareholder" for a period of five "business combinations" with any person who
years following the interested shareholder's acquires 15% or more of a corporation's voting
share acquisition date, unless the business stock, thereby becoming an "interested
combination or the purchase of shares made by stockholder", for a period of three years
the interested shareholder is approved by the following the date the person became an
board of directors of the corporation before the interested stockholder, unless:
interested shareholder's share acquisition date.
A "business combination" under Indiana law is (i) the board of directors of the corporation
generally defined as any of the following has approved, prior to that acquisition date,
transactions involving the corporation and an either the business combination or the
interested shareholder thereof: transaction that resulted in the person
becoming an interested stockholder;
(i) a merger or consolidation; (ii) upon completion of the transaction that
(ii) a sale, lease, exchange, mortgage, pledge, resulted in the person becoming an
transfer, or other disposition of 10% or interested stockholder, that person owns at
more of the corporation's assets or least 85% of the corporation's voting stock
representing 10% or more of the earning outstanding at the time the transaction
power or net income of the corporation; commenced, excluding shares owned by
(iii) an issuance or transfer of shares of the persons who are directors and also officers
corporation's stock representing 5% or and shares owned by employee stock plans
more of the aggregate market value of all of in which participants do not have the right
such corporation's outstanding stock; to determine confidentially whether shares
(iv) the adoption of a plan of liquidation or will be tendered in a tender or exchange
dissolution proposed by or under agreement offer; or
with such interested shareholder; (iii) the business combination is approved by the
(v) a transaction having the effect of directly or board of directors and authorized by the
indirectly increasing the proportionate share affirmative vote, at an annual or special
of the corporation's stock held by such meeting and not by written consent, of at
interested shareholder; or least 66 2/3% of the outstanding voting stock
(vi) any receipt by such interested shareholder not owned by the interested stockholder.
of the benefit of any loans, advances,
guarantees, pledges, or other financial
assistance or any tax credits or other tax
advantages.
An "interested shareholder" under Indiana law
is generally defined as any person owning 10%
or more of the voting power of the outstanding
voting shares of the corporation.
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
CONTROL SHARE ACQUISITION LAWS
----------------------------------------------------------------------------------------------------------
<S> <C>
Indiana law requires that, unless the articles of Delaware law does not contain a similar
incorporation or bylaws of a corporation exempt provision.
the corporation, which Robinson Nugent's articles
of incorporation and bylaws do not, any person
who proposes to acquire or has acquired, a
"control share acquisition" ownership of, or the
power to direct the voting of shares representing
one-fifth, one-third, or a majority of the voting
power of an issuing public corporation in the
election of directors, must provide the
corporation with a statement describing such
acquisition, an "acquiring person statement". If
the acquiring person so requests at the time of
delivery of such statement, and undertakes to pay
the expenses relating thereto, the corporation
shall cause a special meeting of its shareholders
to be called for the purpose of considering the
voting rights to be accorded the shares acquired
in the control share acquisition. The shares so
acquired must be accorded the same voting rights
as were accorded these shares before the control
share acquisition only to the extent granted by
resolution of the shareholders of such
corporation. Shares acquired in a control share
acquisition as to which no acquiring person
statement has been filed may be redeemed by the
corporation at the fair value thereof under
certain circumstances. In the event that shares
acquired in a control share acquisition are
accorded full voting rights and the acquiring
person has acquired shares representing a
majority or more of all voting power, all
shareholders will be entitled to appraisal
rights.
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</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
ANTI-TAKEOVER LAWS
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<S> <C>
Indiana law provides that a person shall not Delaware law does not contain a comparable
make a takeover offer unless the following provision.
conditions are satisfied:
(i) a statement which consists of each
document required to be filed with the
Commission is filed with the Indiana
Securities Commissioner and delivered to
the president of the target company
before making the takeover offer;
(ii) a consent to service of process and the
requisite filing fee accompanies the
statement filed with the Indiana Securities
Commissioner;
(iii) the takeover offer is made to all offerees
holding the same class of equity securities
on substantially equivalent terms;
(iv) a hearing is held within 20 business days
after the statement described in clause
(i) above is filed; and
(v) the Indiana Securities Commissioner must
have approved the takeover offer.
In addition, such section provides that no
offeror may acquire any equity security of any
class of a target company within two years
following the conclusion of a takeover offer with
respect to that class, unless the holder of such
equity security is afforded, at the time of that
acquisition, a reasonable opportunity to dispose
of such securities to the offeror upon
substantially equivalent terms.
A "takeover offer" means an offer to acquire or
an acquisition of any equity security of a target
company pursuant to a tender offer or request or
invitation for tenders if, after the acquisition,
the offeror is directly or indirectly a record or
beneficial owner of more than ten percent of any
class of the outstanding equity securities of the
target company. A "target company" means an
issuer of securities which is organized under the
laws of Indiana, has its principal place of
business in Indiana and has substantial assets in
Indiana.
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</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
RELATED PERSON TRANSACTIONS
----------------------------------------------------------------------------------------------------------
<S> <C>
Robinson Nugent's articles of incorporation do 3M's certificate of incorporation requires
not contain a similar provision. the affirmative vote of at least 80% of the
outstanding shares of common stock for a business
transaction with a related person, unless the
continuing directors of 3M approve the
transaction, or the terms of the transaction
provide that the amount of cash per share to be
paid by the related person is at least equal to
the highest consideration paid for any share of
3M common stock by the related person since the
time when he, she or it became a related person
or during the one year prior to such time.
A "business transaction" is:
* the merger or consolidation of 3M;
* the sale of substantially all of the assets
of 3M;
* the issuance or sale of 3M's securities, a
recapitalization of 3M's securities; or
* a liquidation, spin-off or dissolution of 3M.
A "related person" is the beneficial owner of at
least 10% of the voting stock of 3M.
A "continuing director" is a director who either
was a member of the board of directors of 3M on
May 13, 1986, or who became a director after that
date with the approval of the continuing
directors.
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</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
RIGHTS AGREEMENT
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<S> <C>
Robinson Nugent entered into a shareholder 3M has not adopted a shareholder rights
rights agreement dated as of April 21, 1988, as agreement.
amended, which was intended to discourage a
takeover of Robinson Nugent. Under the
shareholder rights agreement, Robinson Nugent
issued rights that attached to each outstanding
Robinson Nugent common share. The rights:
* represent the right of each holder of
Robinson Nugent common shares to purchase
for $40 a number of additional Robinson
Nugent common shares, based on 50% of the
market value of one Robinson Nugent
common share, subject to anti-dilution
adjustments;
* will become exercisable and will trade
separately from the common shares on the
earlier of the public announcement of the
acquisition of 20% or more of outstanding
Robinson Nugent common shares by any
person or group of affiliated persons or ten
days after the commencement or
announcement of a tender or exchange offer
for 30% or more of the Robinson Nugent
common shares; and
* will expire on April 15, 2008, unless redeemed
earlier by the board of directors.
The Robinson Nugent board of directors may redeem
the rights in whole, at $.01 per right until the
earlier of 10 calendar days following the date of
initial public disclosure that a person has
acquired 20% or more of the Robinson Nugent
common shares or the expiration date of the
rights.
The Robinson Nugent board of directors has
amended the shareholder rights agreement to
exempt the merger and the voting and stock
option agreement from triggering the
shareholders rights under the shareholder
rights agreement.
----------------------------------------------------------------------------------------------------------
RIGHT TO CALL SPECIAL MEETINGS
----------------------------------------------------------------------------------------------------------
Robinson Nugent's bylaws provide that a special 3M's bylaws provide that a special meeting of
meeting of the Robinson Nugent shareholders the stockholders may be called only by the
may be called by the Robinson Nugent board of chairman of its board of directors.
directors, the president, or by Robinson Nugent
shareholders holding not less than 55% of all
outstanding common shares of Robinson
Nugent entitled to vote at that meeting.
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</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
STOCKHOLDER ACTION WITHOUT A MEETING
----------------------------------------------------------------------------------------------------------
<S> <C>
Under Indiana law, action permitted at a 3M's certificate of incorporation provides that
shareholders' meeting may be taken without a any action permitted to be taken at a
meeting if the action is taken by all the stockholders' meeting must be effected at an
shareholders entitled to vote on the action and annual or special meeting of stockholders and
is evidenced by one or more written consents. may not be effected by written action in lieu of
a meeting.
----------------------------------------------------------------------------------------------------------
DIVIDENDS AND REPURCHASES
----------------------------------------------------------------------------------------------------------
Under Indiana law, a corporation may make Under Delaware law, a corporation may pay
distributions to its shareholders as long as the dividends and repurchase stock out of surplus
corporation's total assets exceed the sum of its or, if there is no surplus, out of any net profits
total liabilities, plus any amount that would be for the fiscal year in which the dividend was
needed, if the corporation were to be dissolved declared or for the preceding fiscal year as long
at the time of the distribution: as no payment reduces capital below the
amount of capital represented by all classes of
* to satisfy the preferential rights upon shares having a preference upon the distribution
dissolution of shareholders whose preferential of assets.
rights are superior to those receiving the
distribution;
* debts may be paid as they come due; and
* the payment of these distributions is
consistent with the corporation's articles of
incorporation.
The board of directors may base its determination
of whether the corporation may make distributions
either on financial statements prepared on the
basis of accounting practices and principals that
are reasonable in the circumstances or on a fair
valuation or other method that is reasonable in
the circumstances.
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</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
PREFERRED STOCK
----------------------------------------------------------------------------------------------------------
<S> <C>
Robinson Nugent's articles of incorporation only Under Delaware law, a corporation may issue
provides for the issuance of common shares. The more than one class or series of stock with the
articles of incorporation do not provide for the rights and preferences set forth in the certificate
issuance of preferred shares. of incorporation. 3M's certificate of
incorporation provides that 3M can issue common
stock and preferred stock. 3M's certificate of
incorporation gives the board of directors "blank
check" authority to establish the rights,
preferences, powers, privileges and restrictions
of the preferred stock, including such terms as
the designation, the dividend rate, the voting
rights, the liquidation rights and the conversion
rights. 3M's board of directors can, without
stockholder approval, issue preferred stock with
voting and conversion rights that could adversely
affect the voting power or other rights of the
holders of 3M common stock. The issuance of
preferred stock may have the effect of delaying,
deferring or preventing a change in control of
3M. There are currently no shares of preferred
stock outstanding.
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DISSENTERS' RIGHTS
----------------------------------------------------------------------------------------------------------
Under Indiana law, if a corporation's shares are Under Delaware law, unless the certificate of
listed on a national securities exchange, or on incorporation otherwise provides, Delaware law
the Nasdaq National Market, there are no does not provide for appraisal rights if (1) the
dissenters' rights with respect to actions to be shares of the corporation are listed on a
taken at a shareholders meeting that would national securities exchange or designated as a
otherwise provide for dissenters' rights. Because national market systems security on an
the Robinson Nugent common shares are interdealer quotations system by the National
quoted on the Nasdaq National Market, Association of Securities Dealers, Inc., or are
Robinson Nugent shareholders are not entitled held of record by more than 2,000 stockholders,
to exercise dissenters' rights with respect to the as long as the stockholders receive in the
proposed merger. merger shares of the surviving corporation or of
any other corporation, the shares of which are
listed on a national securities exchange or
designated as a national market systems security
on an interdealer quotations system by the
National Association of Securities Dealers, Inc.,
or are held of record by more than 2,000
stockholders, or (2) the corporation is the
surviving corporation and no vote of its
stockholders is required for the merger. 3M's
certificate of incorporation does not provide
otherwise.
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</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
SIZE OF BOARD
----------------------------------------------------------------------------------------------------------
<S> <C>
Under Indiana law, the board of directors must Delaware law provides that unless the certificate
consist of one or more individuals with the of incorporation specifies the number of
number specified in or fixed in accordance with directors, a board of directors may change the
the corporation's articles of incorporation or authorized number of directors by an
bylaws. Robinson Nugent's bylaws state that the amendment to the bylaws if fixed by the bylaws,
number of directors shall be 10. or in such manner as may be provided by the
bylaws. If the certificate of incorporation
specifies the number of directors, then that
number can be changed only by amending the
certificate of incorporation. 3M's certificate of
incorporation provides that the number of
directors is to be fixed by the bylaws. 3M's
bylaws provide that the number of directors is
set by the majority vote of the board of
directors. The current number of directors is 10.
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REMOVAL OF DIRECTORS
----------------------------------------------------------------------------------------------------------
Indiana law provides that directors may be Delaware law provides that directors may be
removed in any manner provided by a removed from office, with or without cause, by
corporation's articles of incorporation and can the holders of a majority of the voting power of
be removed with or without cause, unless a all outstanding voting stock of the corporation,
corporation's articles of incorporation provide unless the corporation has a classified board, in
otherwise. A director may be removed by the which case directors may only be removed by
shareholders only at a meeting called for the shareholder vote for cause or if its certificate of
purpose of removing the director. Robinson incorporation otherwise provides. 3M's
Nugent's bylaws provide that any director may certificate of incorporation provides that no
be removed with or without cause by action of director may be removed from office without
the holders of at least 55% of the votes entitled cause.
to be cast at any meeting of the shareholders,
the notice of which states that one of the
purposes of the meeting is the removal of the
director. A removal is effective immediately.
----------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
VACANCIES ON THE BOARD OF DIRECTORS
----------------------------------------------------------------------------------------------------------
<S> <C>
Under Indiana law, unless the articles of Delaware law provides that unless the governing
incorporation of a corporation provide documents of a corporation provide otherwise,
otherwise, vacancies on the board of directors vacancies and newly created directorships
may be filled by a majority of the board of resulting from a resignation or any increase in
directors or, if the remaining directors constitute the authorized number of directors may be
less than a quorum, the majority of the filled by a majority of the directors then in
remaining members may fill the vacancy. office. 3M's certificate of incorporation provides
Robinson Nugent's articles of incorporation do that any vacancy in the board of directors
not address vacancies on the board of directors. occurring by reason of an increase in the
However, Robinson Nugent's bylaws provide number of directors, or by reason of the death,
that the board of directors may fill any vacancy resignation or removal of a director, will be
on the board of directors, including a vacancy filled for the unexpired portion of the term by a
resulting from an increase in the number of majority vote of the remaining directors, though
directors. If the directors remaining in office less than a quorum, or by the sole remaining
constitute fewer than a quorum of the board, director. 3M's certificate of incorporation also
the directors remaining in office may fill the provides that if there is a class of stock having
vacancy by the affirmative vote of a majority of preference over the common stock as to the
those directors. The term of a director elected to election of directors and there occurs a vacancy
fill a vacancy expires at the end of the term for among those directors, then the remaining
which the director's predecessor was elected. directors elected by that class will fill the
vacancy, and if there are no remaining directors
so elected, then the holders of that class of
stock shall vote to fill the vacancy in the same
manner in which they originally elected a
director.
----------------------------------------------------------------------------------------------------------
OTHER CORPORATE CONSTITUENCIES
----------------------------------------------------------------------------------------------------------
Under Indiana law, in discharging his or her Delaware law does not contain a specific
duties to the corporation and in determining provision outlining the duties of a board of
what he or she believes to be in the best directors with respect to the best interests of a
interests of the corporation, a director or officer corporation. Delaware courts have permitted
may, in addition to considering the effects of directors to consider various constituencies,
any action on shareholders, consider the effects provided that there be some rationally related
of the action on employees, suppliers, customers, benefit to stockholders.
the communities in which the corporation
operates and any other factors that the director
or officer considers pertinent.
----------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
DIRECTOR LIABILITY
----------------------------------------------------------------------------------------------------------
<S> <C>
Indiana law provides that a director is not liable Delaware law allows a Delaware corporation to
for any action taken as a director, or any failure include in its certificate of incorporation, and
to take any action, unless (i) the director has 3M's certificate of incorporation contains, a
breached or failed to perform the duties of provision eliminating the liability of a director
the director's office in compliance with to the corporation or its stockholders for
Section 23-1-35-1 of the Indiana Business monetary damages for breach of fiduciary duty
Corporation Law, which requires, among other as a director, except:
things, that a director discharge his duties as a
director in good faith, with the care an * liability for any breach of the director's duty
ordinarily prudent person in a like position of loyalty to the corporation or its
would exercise under similar circumstances and stockholders;
in a manner the director reasonably believes to * for acts or omissions not in good faith or
be in the best interests of the corporation, and which involve intentional misconduct or
(ii) the breach or failure to perform constitutes knowing violation of law, under Section 174 of
willful misconduct or recklessness. Delaware law, which deals generally with
unlawful payments of dividends, stock
Actions taken in connection with a proposed repurchases and redemptions; and
acquisition of control of the corporation by * for any transaction from which the director
directors in the good faith exercise of their derived an improper personal benefit.
business judgment are not subject to a different
or higher degree of scrutiny than other actions
of the directors.
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</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------- ---------------------------------------------------
ROBINSON NUGENT 3M
---------------------------------------------------- ---------------------------------------------------
INDEMNIFICATION
----------------------------------------------------------------------------------------------------------
<S> <C>
Indiana law authorizes Indiana corporations to Delaware law permits a Delaware corporation
indemnify officers and directors for their to indemnify directors, officers, employees, and
conduct if such conduct was in good faith and agents under certain circumstances and
was in the corporation's best interests or, in the mandates indemnification under certain
case of directors, was not opposed to such best circumstances. Delaware law permits a
interests, and permits the purchase of insurance corporation to indemnify an officer, director,
in this regard. The indemnification provided by employee or agent for fines, judgments or
Indiana law is not exclusive. The corporation settlements, as well as expenses:
may also provide other rights of indemnification
in its articles of incorporation and bylaws, a * in the context of actions other than derivative
contract approved by the board of directors or actions, if such person acted in good faith and
the shareholders, or any other authorization in a manner he or she reasonably believed to
approved by the shareholders. Rights of be in or not opposed to the best interests of
indemnification that may be provided in such the corporation; or
documents are limited only by the terms of such * in the case of a criminal proceeding, if such
documents and public policy. person had no reasonable cause to believe
that his or her conduct was unlawful.
Robinson Nugent's bylaws provide that
Robinson Nugent may indemnify any person Indemnification against expenses incurred by a
who is or was a director, officer or employee of director, officer, employee or agent in
Robinson Nugent, or is or was serving as a connection with a proceeding against such
director, officer, or employee of another person for actions in such capacity is mandatory
corporation partnership, or other enterprise at to the extent that such person has been
the request of Robinson Nugent, against successful on the merits. If a director, officer,
expenses, including attorneys' fees, judgments, employee or agent is determined to be liable to
fines, penalties, and amounts paid in settlement the corporation, indemnification for expenses is
reasonably incurred by such person in not allowable, subject to limited exceptions
connection with or resulting from any claim, when a court deems the award of expenses
action, suit, or proceeding, whether actual or appropriate.
threatened, civil, criminal, administrative, or
investigative, or in connection with an appeal Delaware law grants express power to a
relating thereto, in which such person may be Delaware corporation to purchase liability
involved as a party or otherwise by reason of insurance for its directors, officers, employees,
being or having been a director, officer, or and agents, regardless of whether any such
employee of Robinson Nugent or of such other person is otherwise eligible for indemnification
organization; provided, such person acted in by the corporation. Advancement of expenses is
good faith and in a manner that he reasonably permitted, but a person receiving such advances
believed to be in, or not opposed to, the best must repay those expenses if it is ultimately
interests of Robinson Nugent and, with respect determined that he or she is not entitled to
to any criminal action or proceeding by indemnification.
judgment, order, settlement, whether with or
without court approval, conviction, or upon a 3M's bylaws provide that the corporation will
plea of nolo contendere or its equivalent, will indemnify, to the full extent authorized or
not, of itself, create a presumption that the permitted by law, any person made or
person did not act in good faith and in a threatened to be made a party to any action,
manner which he reasonably believed to be in, suit, or proceeding, whether criminal, civil,
or not opposed to, the best interests of administrative, or investigative, by reason of the
Robinson Nugent and, with respect to any fact that such person or such person's testator
criminal action, suit, or proceeding, in a manner or intestate is or was a director, officer, or
which he or she had no reasonable cause to employee of the corporation or serves or served
believe was unlawful. at the request of the corporation any other
enterprise as a director, officer, or employee.
----------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
3M has filed a registration statement on Form S-4 to register with the SEC
the 3M common stock to be issued to Robinson Nugent shareholders in the merger.
This proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of 3M in addition to being a proxy statement of
Robinson Nugent for its special shareholders meeting. As allowed by SEC rules,
this proxy statement/ prospectus does not contain all the information you can
find in the registration statement or the exhibits to the registration
statement.
In addition, 3M and Robinson Nugent file reports, proxy statements and
other information with the SEC under the Exchange Act. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
read and copy this information at the following locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet World Wide
Web site that contains reports, proxy statements and other information about
issuers, including 3M and Robinson Nugent, who file electronically with the SEC.
The address of that site is http://www.sec.gov. You can also inspect reports,
proxy statements and other information about 3M at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005 and about Robinson
Nugent at the offices of the National Association of Securities Dealers, 1735 K
Street, N.W., Washington, D.C. 20006. 3M's and Robinson Nugent's SEC filings are
also available to the public over the Internet at EDGAR Online, Inc.'s web site
at http://freeedgar.com.
The SEC allows 3M to "incorporate by reference" information into this proxy
statement/prospectus. This means that 3M and Robinson Nugent can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be a part of this proxy statement/prospectus, except for any information that
is superseded by information that is included directly in this proxy
statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents
listed below that 3M and Robinson Nugent have previously filed with the SEC.
These documents contain important information about 3M, Robinson Nugent and
their finances. Some of these filings have been amended by later filings, which
are also listed below.
3M COMMISSION FILINGS (FILE NO. 1-3285) DATE/PERIOD
--------------------------------------------- --------------------------------
Description of 3M's common stock contained in Dated July 31, 2000, as amended
3M's Registration Statement on Form S-3 on August 18, 2000
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports on Form 10-Q Quarters ended March 31, 2000,
June 30, 2000 and September 30,
2000
Current Reports on Form 8-K May 16, 2000, July 27, 2000,
July 27, 2000, October 23, 2000,
November 20, 2000, December 6,
2000, December 7, 2000 and
January 11, 2001
60
<PAGE>
ROBINSON NUGENT COMMISSION FILINGS
(FILE NO. 0-9010) DATE/PERIOD
----------------------------------- ------------------------------------------
Annual Report on Form 10-K Year ended June 30, 2000, as amended by
Form 10-K/A October 10, 2000
Quarterly Report on Form 10-Q Quarter ended September 30, 2000
Current Reports on 8-K October 10, 2000
3M and Robinson Nugent incorporate by reference any additional documents
that either company may file with the SEC pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act, between the date of this proxy
statement/prospectus and the date of the Robinson Nugent special shareholders
meeting. These documents include periodic reports, including Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this proxy
statement/prospectus from the SEC through the SEC's web site at the address
provided above, as well as at EDGAR Online, Inc.'s web site at
http://freeedgar.com. Documents incorporated by reference are also available
from 3M and Robinson Nugent without charge, excluding any exhibits to those
documents, unless the exhibit is specifically incorporated by reference as an
exhibit in this proxy statement/prospectus. You can obtain these documents by
requesting them in writing or by telephone from 3M and Robinson Nugent at the
following addresses:
Robinson Nugent, Inc. Minnesota Mining and Manufacturing Company
800 East Eighth Street 3M Center
P.O. Box 1208 St. Paul, Minnesota 55144
New Albany, IN 47151 Attention: Investor Relations
Attention: Investor Relations Telephone number: (651) 736-1915
Telephone Number: (812) 945-0211
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM EITHER COMPANY, PLEASE DO SO BY
FEBRUARY 8, 2001, IN ORDER TO RECEIVE THEM BEFORE THE ROBINSON NUGENT SPECIAL
SHAREHOLDERS MEETING. If you request any incorporated documents from Robinson
Nugent or 3M, they will be mailed to you by first class mail, or another equally
prompt means, within one business day after receipt of your request.
We have not authorized anyone to give any information or make any
representation about the merger of Robinson Nugent and 3M that differs from, or
adds to, the information in this proxy statement/ prospectus or the Robinson
Nugent and 3M documents that are publicly filed with the SEC. Therefore, if
anyone does give you different or additional information, you should not rely on
it.
If you are in a jurisdiction where it is unlawful to offer to exchange or
sell, or to ask for offers of exchange or to buy, the securities offered by this
proxy statement/prospectus or to ask for proxies, or if you are a person to whom
it is unlawful to direct these activities, then the offer presented by this
proxy statement/prospectus does not extend to you.
The information contained in this proxy statement/prospectus speaks only as
of its date, unless the information specifically indicates that another date
applies. Information about 3M has been supplied by 3M, and information about
Robinson Nugent has been supplied by Robinson Nugent.
61
<PAGE>
EXPERTS
The consolidated financial statements of Minnesota Mining and Manufacturing
Company and Subsidiaries incorporated in this proxy statement/prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent auditors, given on the authority of said
firm as experts in auditing and accounting. The financial statements and the
related financial statement schedule incorporated in this proxy
statement/prospectus by reference from Robinson Nugent, Inc.'s Annual Report on
Form 10-K for the year ended June 30, 2000 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated in this proxy statement/prospectus by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
INDEPENDENT AUDITORS
With respect to the unaudited consolidated financial information of
Minnesota Mining and Manufacturing Company and Subsidiaries for the three-month
periods ended March 31, 2000 and 1999, the three-and six-month periods ended
June 30, 2000 and 1999 and the three-and nine-month periods ended September 30,
2000 and 1999, incorporated by reference in this proxy statement/prospectus,
PricewaterhouseCoopers LLP reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate reports dated April 25, 2000, July 26, 2000 and October
23, 2000, incorporated by reference herein, state that they did not audit and
they do not express an opinion on that unaudited consolidated financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. PricewaterhouseCoopers LLP is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on the
unaudited consolidated financial information because those reports are not a
"report" or a "part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.
LEGAL MATTERS
The validity of the issuance of 3M common stock being offered by this
document will be passed upon for 3M by Gregg M. Larson, Assistant General
Counsel and Assistant Secretary of 3M. Certain federal income tax matters
relating to the merger will be passed upon for 3M and Robinson Nugent by Fried,
Frank, Harris, Shriver & Jacobson, New York, New York, a partnership that
includes professional corporations.
SHAREHOLDER PROPOSALS FOR ANNUAL MEETINGS
If the merger agreement is terminated, Robinson Nugent will hold its 2000
annual meeting of shareholders in accordance with its bylaws. As described in
Robinson Nugent's proxy statement on Schedule 14A relating to its 1999 annual
meeting of shareholders, shareholder proposals to be considered at the 2000
annual meeting must have been received by Robinson Nugent at its principal
executive offices no later than June 5, 2000. In addition, the proxy solicited
by Robinson Nugent's board of directors for its 2000 annual meeting of
shareholders will confer discretionary authority to vote on any shareholder
proposal presented at that meeting, unless Robinson Nugent received notice of
such proposal on or before June 5, 2000. Robinson Nugent did not receive any
notice of shareholder proposals.
62
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF
OCTOBER 2, 2000
BY AND BETWEEN
MINNESOTA MINING AND MANUFACTURING COMPANY,
BARBADOS ACQUISITION, INC.
AND
ROBINSON NUGENT, INC.
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I ................................................................................ A-6
Section 1.1 The Merger ................................................................. A-6
Section 1.2 The Closing; Effective Time ................................................ A-6
Section 1.3 Subsequent Actions ......................................................... A-6
Section 1.4 Articles of Incorporation; Bylaws; Directors and Officers of the Surviving
Corporation ................................................................ A-7
ARTICLE II ............................................................................... A-7
Section 2.1 Effect of the Merger on Capital Stock; Conversion of Securities ............ A-7
Section 2.2 Exchange of Certificates ................................................... A-8
ARTICLE III .............................................................................. A-10
Section 3.1 Organization and Qualification; Subsidiaries ............................... A-10
Section 3.2 Articles of Incorporation and Bylaws ....................................... A-10
Section 3.3 Capitalization ............................................................. A-11
Section 3.4 Power and Authority; Authorization; Valid & Binding ........................ A-11
Section 3.5 No Conflict; Required Filings and Consents ................................. A-11
Section 3.6 SEC Reports; Financial Statements .......................................... A-12
Section 3.7 Absence of Certain Changes ................................................. A-13
Section 3.8 Litigation and Liabilities ................................................. A-13
Section 3.9 No Violation of Law; Permits ............................................... A-13
Section 3.10 Employee Matters; ERISA .................................................... A-13
Section 3.11 Labor Matters .............................................................. A-15
Section 3.12 Environmental Matters ...................................................... A-15
Section 3.13 Board Action; Vote Required ................................................ A-16
Section 3.14 Brokers .................................................................... A-17
Section 3.15 Tax Matters ................................................................ A-17
Section 3.16 Intellectual Property ...................................................... A-18
Section 3.17 Insurance .................................................................. A-18
Section 3.18 Contracts and Commitments .................................................. A-18
Section 3.19 Title to Assets ............................................................ A-19
Section 3.20 State Takeover Statutes .................................................... A-19
Section 3.21 Rights Agreement ........................................................... A-19
Section 3.22 Product Warranty ........................................................... A-20
Section 3.23 Product Liability .......................................................... A-20
ARTICLE IV ............................................................................... A-20
Section 4.1 Existence; Corporate Authority ............................................. A-20
Section 4.2 Authorization, Validity and Effect of Agreements ........................... A-20
Section 4.3 No Violation ............................................................... A-20
Section 4.4 Interested Stockholder ..................................................... A-21
Section 4.5 Parent Public Reports; Financial Statements ................................ A-21
ARTICLE V ................................................................................ A-21
Section 5.1 Interim Operations of The Company .......................................... A-21
Section 5.2 No Solicitation ............................................................ A-23
ARTICLE VI ............................................................................... A-25
Section 6.1 Meetings of Stockholders ................................................... A-25
Section 6.2 Filings; Other Action ...................................................... A-25
Section 6.3 Publicity .................................................................. A-25
Section 6.4 Registration Statement ..................................................... A-25
Section 6.5 Listing Application ........................................................ A-26
Section 6.6 Further Action ............................................................. A-26
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Section 6.7 Expenses ................................................................... A-26
Section 6.8 Notification of Certain Matters ............................................ A-26
Section 6.9 Access to Information ...................................................... A-27
Section 6.10 Insurance; Indemnity ....................................................... A-27
Section 6.11 Employee Benefit Plans ..................................................... A-28
Section 6.12 Rights Agreement ........................................................... A-29
ARTICLE VII .............................................................................. A-29
Section 7.1 Conditions to Obligations of the Parties to Consummate the Merger .......... A-29
Section 7.2 Additional Conditions to Obligations of Parent and Merger Sub .............. A-30
Section 7.3 Additional Conditions to Obligations of the Company ........................ A-30
ARTICLE VIII ............................................................................. A-31
Section 8.1 Termination ................................................................ A-31
Section 8.2 Effect of Termination and Abandonment ...................................... A-32
Section 8.3 Amendment .................................................................. A-32
ARTICLE IX ............................................................................... A-33
Section 9.1 Non-Survival of Representations, Warranties and Agreements ................. A-33
Section 9.2 Notices .................................................................... A-33
Section 9.3 Certain Definitions; Interpretation ........................................ A-33
Section 9.4 Headings ................................................................... A-34
Section 9.5 Severability ............................................................... A-34
Section 9.6 Entire Agreement; No Third-Party Beneficiaries ............................. A-35
Section 9.7 Assignment ................................................................. A-35
Section 9.8 Governing Law .............................................................. A-35
Section 9.9 Counterparts ............................................................... A-35
Section 9.10 Confidential Nature of Information ......................................... A-35
Exhibit A (Omitted) -- Voting and Stock Option Agreement
Exhibit B (Omitted) -- Form of Articles of Incorporation
</TABLE>
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
------------ -------
401(k) Plan .................................................... 6.11(b)
Acquisition Proposal ........................................... 5.2 (c)
Acquisition Transaction ........................................ 5.2 (c)
Action ......................................................... 6.10(b)
affiliate ...................................................... 9.3 (a)(ii)
Agreement ...................................................... preamble
Audited Balance Sheet .......................................... 3.19
Average Price .................................................. 2.1 (b)
Barbados Acquisition ........................................... preamble
Board of Directors ............................................. 9.3 (a)(iii)
Business Combination ........................................... 2.1 (c)
Cap ............................................................ 6.10(a)
Certificates ................................................... 2.2 (b)
Closing ........................................................ 1.2 (a)
Closing Date ................................................... 1.2 (a)
Code ........................................................... recitals
Company ........................................................ preamble
Company Benefit Plan ........................................... 3.10(a)
Company Common Shares .......................................... recitals
Company Contracts .............................................. 3.18
Company Disclosure Letter ...................................... Article III
Company Employee ............................................... 3.10(b)
Company Employees .............................................. 3.10(b)
Company ERISA Affiliate ........................................ 3.10(d)
Company Multiemployer Plan ..................................... 3.10(a)
Company Options ................................................ 2.1 (e)
Company Pension Plan ........................................... 3.10(c)
Confidentiality Agreement ...................................... 9.6
control ........................................................ 9.3 (a)(iii)
Dallas Facility ................................................ 7.2 (g)
Effective Time ................................................. 1.2 (b)
Encumbrance .................................................... 3.16
Environmental Claim ............................................ 3.12(e)(i)
Environmental Laws ............................................. 3.12(e)(ii)
Environmental Permits .......................................... 3.12(b)
ERISA .......................................................... 9.3 (a)(iv)
Exchange Act ................................................... 3.5 (a)
Exchange Agent ................................................. 2.2 (a)
Exchange Ratio ................................................. 2.1 (b)
Form S-4 ....................................................... 6.4
GAAP ........................................................... 3.6 (b)
Governmental Entity ............................................ 3.5 (b)
Hazardous Materials ............................................ 3.12(e)(iii)
HSR Act ........................................................ 3.5 (b)
IBCL ........................................................... 1.1
Indemnified Party .............................................. 6.10(b)
Intellectual Property .......................................... 3.16
knowledge ...................................................... 9.3 (a)(v)
Material Adverse Effect ........................................ 9.3 (a)(i)
Merger ......................................................... recitals
Merger Consideration ........................................... 5.2 (e)
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DEFINED TERM SECTION
------------ -------
Merger Consideration ........................................... 2.2 (b)
Merger Sub ..................................................... preamble
Merger Sub Articles of Incorporation ........................... 1.4 (a)
MPP Plan ....................................................... 6.11(a)
NYSE ........................................................... 2.1 (b)
Parent ......................................................... preamble
Parent Common Stock ............................................ 2.1 (b)
Parent Public Reports .......................................... 4.5
Paying Agent ................................................... 2.2 (b)
PCBs ........................................................... 3.12(iii)
Pension Plan ................................................... 3.10(c)
Person ......................................................... 9.3 (a)(vi)
Proposing Party ................................................ 5.2 (b)
Proxy Statement/Prospectus ..................................... 6.4
Recapitalization ............................................... 2.1 (c)
Release ........................................................ 3.12(e)(iv)
Rescission Offers .............................................. 37
Rights ......................................................... 3.3
Rights Agreement ............................................... 3.21
SEC ............................................................ 3.5 (b)
SEC Reports .................................................... 3.6 (a)
Securities Act ................................................. 3.5 (a)
Significant Subsidiary ......................................... 9.3 (a)(vii)
Stock Option Agreement ......................................... recitals
Stock Option Plan .............................................. 2.1 (e)
Subsidiary ..................................................... 9.3 (a)(viii)
Superior Transaction ........................................... 5.2 (e)
Surviving Corporation .......................................... 1.1
Tax ............................................................ 3.15(i)
Tax Return ..................................................... 3.15(i)
Taxable ........................................................ 3.15(i)
Taxes .......................................................... 3.15(i)
Termination Date ............................................... 8.1 (b)
Termination Fee ................................................ 8.2 (b)
Trading Day .................................................... 2.1 (b)
Triggering Event ............................................... 8.2 (b)
VIP ............................................................ 6.11(b)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 2, 2000 (this
"AGREEMENT"), by and among Minnesota Mining and Manufacturing Company a Delaware
corporation, Barbados Acquisition, Inc. an Indiana corporation and a wholly
owned Subsidiary of Parent ("BARBADOS ACQUISITION" or "MERGER SUB") and Robinson
Nugent, Inc. (the "COMPANY"), an Indiana corporation.
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have each determined that the merger of Merger Sub with and into the
Company (the "MERGER") upon the terms and subject to the conditions set forth in
this Agreement is advisable, and in the best interests of their respective
corporations and stockholders and have approved the Merger;
WHEREAS, it is intended that, for federal income tax purposes, the Merger
will qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder (the "CODE");
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's and Merger Sub's willingness to enter
into this Agreement, Parent and the stockholders of the Company listed on
Exhibit A have executed and delivered a Voting and Stock Option Agreement (a
"STOCK OPTION AGREEMENT"), dated as of this date, pursuant to which those
stockholders have agreed to vote in favor of the Merger and, among other things,
are granting to Parent an option to purchase, under certain circumstances, all
of the common shares, no par value, of the Company (the "COMPANY COMMON SHARES")
beneficially owned by them, with an exercise price of $19.00 per share.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained in this Agreement, and intending to be legally bound
hereby, the parties agree as follows (certain capitalized terms used herein are
defined in Section 9.3):
ARTICLE I
Section 1.1 THE MERGER. At the Effective Time and subject to and upon the
terms and conditions of this Agreement and in accordance with the Indiana
Business Corporation Law ("IBCL"), Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall cease. The
Company shall continue as the surviving corporation (sometimes referred to as
the "SURVIVING CORPORATION") in the Merger. The Merger shall have the effects
specified in Section 23-1-40-6 of the IBCL.
Section 1.2 THE CLOSING; EFFECTIVE TIME.
(a) The closing of the Merger (the "CLOSING") shall take place (i) at
the offices of Parent, 3M Center, St. Paul, MN 55133 at 10:00 A.M. local
time, on the second business day following the date on which the last to be
satisfied or waived of the conditions set forth in Article VII (other than
those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or, where permitted, waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement
or (ii) at such other place, time and/or date as the Company and Parent
shall agree (the date of the Closing, the "CLOSING DATE").
(b) On the Closing Date, the Company and Merger Sub shall cause
articles of merger in respect of the Merger to be properly executed and
filed with the Secretary of State of the State of Indiana as provided in
Section 23-1-40-5 of the IBCL. The Merger shall become effective at such
time at which the articles of merger shall be duly filed with the Secretary
of State of Indiana or at such later time reflected in the articles of
merger as shall be agreed by the Company and Parent (the time that the
Merger becomes effective, the "EFFECTIVE TIME").
Section 1.3 SUBSEQUENT ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions
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or things are necessary or desirable to continue, vest, perfect or confirm of
record or otherwise the Surviving Corporation's right, title or interest in, to
or under any of the rights, properties, privileges, franchises or assets of
either of its constituent corporations acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger, or
otherwise to carry out the intent of this Agreement, the officers and directors
of the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either of the constituent corporations of the Merger, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties,
privileges, franchises or assets in the Surviving Corporation or otherwise to
carry out the intent of this Agreement.
Section 1.4 ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS OF
THE SURVIVING CORPORATION. Unless otherwise agreed by Parent, Merger Sub and the
Company prior to the Closing, at the Effective Time:
(a) The Articles of Incorporation of the Company (the "COMPANY
ARTICLES OF INCORPORATION") shall be amended at the Effective Time to read
in the form of Exhibit B and, as so amended, such Articles of Incorporation
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law;
(b) The bylaws of the Company as in effect immediately prior to the
Effective Time shall be at and after the Effective Time (until amended as
provided by law, the Company Certificate of Incorporation and the bylaws of
the Company, as applicable) the bylaws of the Surviving Corporation;
(c) The officers of Merger Sub immediately prior to the Effective Time
shall continue to serve in their respective offices of the Surviving
Corporation from and after the Effective Time, until their successors are
elected or appointed and qualified or until their resignation or removal;
and
(d) The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation from and after the
Effective Time, until their successors are elected or appointed and
qualified or until their resignation or removal.
ARTICLE II
Section 2.1 EFFECT OF THE MERGER ON CAPITAL STOCK; CONVERSION OF
SECURITIES. At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of the Company, Merger Sub
or Parent:
(a) CANCELLATION OF CERTAIN COMPANY COMMON SHARES. Each Company Common
Share that is owned by the Company as treasury stock and all Company Common
Shares that are owned by Parent shall be canceled and shall cease to exist,
and no stock of Parent or other consideration shall be delivered in
exchange therefor. All references to Company Common Shares include the
Rights attached thereto.
(b) CONVERSION OF COMPANY COMMON SHARES. Subject to the provisions of
this Section 2.1, each Company Common Share other than shares canceled
pursuant to Section 2.1(a), issued and outstanding immediately prior to the
Effective Time, shall by virtue of the Merger and without any action on the
part of the holder thereof be converted into, subject to Section 2.1(c),
the right to receive that number of fully paid, non-assessable shares of
common stock, $0.01 par value, of Parent ("PARENT COMMON STOCK") equal to
the Exchange Ratio. All such Company Common Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each certificate previously evidencing any such shares shall
thereafter represent the right only to receive the Merger Consideration (as
defined in Section 2.2(b)). The holders of such certificates previously
evidencing such Company Common Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Company
Common
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<PAGE>
Shares except as otherwise provided herein or by law. Such certificates
previously evidencing Company Common Shares shall be exchanged for
certificates evidencing whole shares of Parent Common Stock issued in
consideration therefor upon the surrender of such certificates in
accordance with the provisions of Section 2.2. No fractional shares of
Parent Common Stock shall be issued, and, in lieu thereof, a cash payment
shall be made pursuant to Section 2.2(d). The "EXCHANGE RATIO" shall be
equal to $19.00 divided by either (i) the Average Price of Parent Common
Stock if such Average Price is no greater than $100.00 and no less than
$82.00, (ii) $100.00 if the Average Price of Parent Common Stock is greater
than $100.00, in which case the Exchange Ratio shall equal 0.19 or (iii)
$82.00 if the Average Price of Parent Common Stock is less than $82.00, in
which case the Exchange Ratio shall equal 0.2317. "AVERAGE PRICE" means the
average of the closing prices as reported in THE WALL STREET JOURNAL'S New
York Stock Exchange Composite Transactions Reports for each of the 20
consecutive Trading Days in the period ending on the business day preceding
the Effective Time. "TRADING DAY" means a day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for trading.
(c) ANTI-DILUTION PROVISIONS. If between the date of this Agreement
and the Effective Time, the number of shares of Parent Common Stock or
Company Common Shares issued and outstanding changes as a result of a stock
split, reverse stock split, stock dividend, stock combination,
recapitalization, reclassification, reorganization or similar transaction
(a "RECAPITALIZATION") with a record date within such period, the Exchange
Ratio shall be proportionately adjusted to provide the holders of Company
Common Shares the same economic effect as contemplated by this Agreement.
If, between the date hereof and the Effective Time, Parent shall merge or
consolidate with or into any other corporation (a "BUSINESS COMBINATION")
and the terms thereof shall provide that Parent Common Stock shall be
converted into or exchanged for the shares of any other corporation or
entity, then provision shall be made so that shareholders of the Company
who would be entitled to receive shares of Parent Common Stock pursuant to
this Agreement shall be entitled to receive, in lieu of each share of
Parent Common Stock issuable to such shareholders as provided herein, the
same kind and amount of securities or assets as shall be distributable upon
such Business Combination with respect to one share of Parent Common Stock
and the parties shall agree on an appropriate restructuring of the
transactions contemplated herein.
(d) CONVERSION OF COMMON STOCK OF MERGER SUB. At the Effective Time,
each share of common stock of Merger Sub issued and outstanding immediately
prior to the Effective Time, and all rights in respect thereof, shall
forthwith cease to exist and be converted into one validly issued, fully
paid and nonassessable common share of the Surviving Corporation.
(e) OPTIONS. In accordance with Section 6.11, as soon as practicable
but not more than five (5) days from the date hereof, the Company shall
provide written notice to each holder of a Company Option of the execution
of this Agreement which notice shall include the election by the Company to
terminate all Company Options as of the 30th day immediately following the
date of the sending of such notice as contemplated by the provisions of the
Company's 1993 Employee and Non-Employee Director Stock Option Plan (the
"STOCK OPTION PLAN"), so that as of the Closing Date all Company Options
will have been either exercised and satisfied in full or terminated. For
purposes of this Agreement, "COMPANY OPTIONS" shall mean subscriptions,
options, warrants, calls, commitments, agreements, conversion rights or
other rights of any character (contingent or otherwise) to purchase or
otherwise acquire from the Company or any of its Subsidiaries at any time,
or upon the happening of any stated event, any shares of the capital stock
of the Company.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) DEPOSIT WITH EXCHANGE AGENT. As soon as practicable after the
Effective Time, Parent shall deposit with a bank or trust company mutually
agreeable to Parent and the Company (the "EXCHANGE AGENT"), pursuant to an
agreement in form and substance reasonably acceptable to Parent and the
Company, when required, certificates representing shares of Parent Common
Stock required to effect the conversion of Company Common Stock into Parent
Common Shares in accordance with Section 2.1(b) and an amount of cash in
respect of fractional shares pursuant to Section 2.2(d).
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<PAGE>
(b) EXCHANGE AND PAYMENT PROCEDURES. As soon as practicable after the
Effective Time, Parent shall cause Parent's transfer agent and registrar as
paying agent (the "PAYING AGENT") to mail to each holder of record of a
certificate or certificates representing Company Common Shares (the
"CERTIFICATES") that have been converted pursuant to Section 2.1: (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to Parent's Paying Agent) and (ii)
instructions for effecting the surrender of the Certificates and receiving
the Merger Consideration. Upon surrender of a Certificate to the Paying
Agent for cancellation, together with a duly executed letter of transmittal
and such other documents as the Paying Agent may require, the holder of
such Certificate shall be entitled to receive in exchange therefor (i) a
certificate representing that number of shares of Parent Common Stock into
which the Company Common Shares previously represented by such Certificate
are converted in accordance with Section 2.1(b) and (ii) the cash in lieu
of fractional shares of Parent Common Stock to which such holder has the
right to receive pursuant to Section 2.2(d) (the shares of Parent Common
Stock and cash described in clauses (i) and (ii) above being referred to
collectively as the "MERGER CONSIDERATION"). In the event the Merger
Consideration is to be delivered to any Person who is not the Person in
whose name the Certificate surrendered in exchange therefor is registered
in the transfer records of the Company, the Merger Consideration may be
delivered to a transferee if the Certificate is presented to the Paying
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence satisfactory to the Paying Agent that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate (other than a
certificate representing Company Common Shares to be canceled in accordance
with Section 2.1(a)) shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration contemplated by this Section 2.2. No interest will be paid or
will accrue on any cash payable to holders of Certificates pursuant to
provisions of this Article II.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect
to shares of Parent Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(d) until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of unclaimed
property, escheat and other applicable laws, following surrender of any
such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.2(d) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to surrender and a payment date subsequent to surrender
payable with respect to such whole shares of Parent Common Stock.
(d) NO FRACTIONAL SECURITIES. In lieu of the issuance of any
fractional securities in connection with the Merger, each holder of Company
Common Shares who would otherwise have been entitled to a fraction of a
share of Parent Common Stock upon surrender of Certificates for exchange
pursuant to this Article II will be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying (a) the
per share closing price on the NYSE of Parent Common Stock on the date of
the Effective Time by (b) the fractional interest to which such holder
would otherwise be entitled (after taking into account all Company Common
Shares then held of record by such holder).
(e) CLOSING OF TRANSFER BOOKS. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for transfer, they
shall be canceled and exchanged for certificates representing the
appropriate number of shares of Parent Common Stock and the appropriate
amount of cash as provided in this Section 2.2.
(f) TERMINATION OF EXCHANGE AGENT. Any certificates representing
shares of Parent Common Stock deposited with the Exchange Agent pursuant to
Section 2.2(a) and not exchanged within six
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<PAGE>
months after the Effective Time pursuant to this Section 2.2 shall be
returned by the Exchange Agent to Parent, which shall thereafter act as
Exchange Agent. All cash held by the Exchange Agent for payment to the
holders of unsurrendered Certificates and unclaimed at the end of six
months from the Effective Time shall be returned to Parent, after which
time any holder of unsurrendered Certificates shall look as a general
creditor only to Parent for payment of such cash to which such holder may
be due subject to applicable law.
(g) ESCHEAT. The Company shall not be liable to any Person for such
shares or funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. Parent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement such amounts as Parent is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
by Parent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Company Common Shares in
respect of which such deduction and withholding was made by Parent.
ARTICLE III
Except as set forth in the corresponding sections or subsections of the
disclosure letter, dated this date, delivered by the Company to Parent (the
"COMPANY DISCLOSURE LETTER"), the Company hereby represents and warrants to
Parent and Merger Sub as follows:
Section 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized and validly existing
under the laws of the State of Indiana and with respect to which no
articles of dissolution have been filed. Each of the Subsidiaries of the
Company is a corporation or other business entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization, and each of the Company and its Subsidiaries
has the requisite corporate or other organizational power and authority to
own, operate or lease its properties and to carry on its business as it is
now being conducted, and is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character
of its properties owned, operated or leased or the nature of its activities
makes such qualification necessary, in each case except as would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
(b) All of the outstanding shares of capital stock and other equity
securities of the Subsidiaries of the Company have been validly issued and
are fully paid and nonassessable, and are owned, directly or indirectly, by
the Company, free and clear of all pledges and security interests. There
are no subscriptions, options, warrants, calls, commitments, agreements,
conversion rights or other rights of any character (contingent or
otherwise) entitling any Person to purchase or otherwise acquire from the
Company or any of its Subsidiaries at any time, or upon the happening of
any stated event, any shares of capital stock or other equity securities of
any of the Subsidiaries of the Company. The Company Disclosure Letter lists
the name and jurisdiction of incorporation or organization of each
Subsidiary of the Company.
(c) Except for interests in its Subsidiaries, neither the Company nor
any of its Subsidiaries owns directly or indirectly any capital stock of,
or other equity or voting or similar interest (including a joint venture
interest) in any Person or has any monetary or other obligation or made any
commitment to acquire any such interest or make any such investment.
Section 3.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has
furnished, or otherwise made available, to Parent a complete and correct copy of
the Company Articles of Incorporation and its bylaws, as amended to the date of
this Agreement. Such Articles of Incorporation and bylaws are in full force and
effect. The Company is not in violation of any of the provisions of the Articles
of Incorporation or bylaws.
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Section 3.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 15,000,000 Company Common Shares, and no shares of preferred stock.
As of October 2, 2000, (a) 5,128,740 Company Common Shares were outstanding, (b)
5,128,740 rights to purchase Company Common Shares ("RIGHTS") issued pursuant to
the Company's Rights Agreement were outstanding, (c) Company Options to purchase
an aggregate of 785,235 shares of Company Common Stock were outstanding, all of
which were granted under the Stock Option Plan, 785,235 Company Common Shares
were reserved for issuance upon the exercise of outstanding Company Options,
123,245 Company Common Shares were reserved for future grants under the Stock
Option Plan and 5,128,740 Company Common Shares were reserved for issuance under
the Company's Rights Agreement, (d) 1,885,901 Company Common Shares were held by
the Company in its treasury, and (e) no shares of capital stock of the Company
were held by the Company's Subsidiaries. Except for the Rights, the Company has
no outstanding bonds, debentures, notes or other obligations entitling the
holders thereof to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter. Since June 30, 2000, the Company (i) has not issued any Company Common
Shares other than upon the exercise of Company Options, (ii) has granted no
Company Options to purchase Company Common Shares under the Stock Option Plan or
otherwise, and (iii) has not split, combined or reclassified any of its shares
of capital stock. All issued and outstanding Company Common Shares are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except for the Rights, there are no other shares of capital stock or
voting securities of the Company, and no existing options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock of, or equity interests in, the
Company or any of its Subsidiaries and there are no stock appreciation rights or
limited stock appreciation rights outstanding other than those attached to such
Company Options. There are no outstanding obligations of the Company or any
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company and there are no performance awards outstanding under the
Stock Option Plan or any other outstanding stock related awards. After the
Effective Time, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of capital stock of the Company, the Parent or the
Surviving Corporation pursuant to any Company Benefit Plan, including the Stock
Option Plan. There are no voting trusts or other agreements or understandings to
which the Company or any of its Subsidiaries is a party with respect to the
voting of capital stock of the Company or any of its Subsidiaries. No Company
Common Shares have been repurchased by the Company or any of its Subsidiaries
since June 30, 2000.
Section 3.4 POWER AND AUTHORITY; AUTHORIZATION; VALID & BINDING. The
Company has the necessary corporate power and authority to enter into and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby, except that the Merger is
subject to the approval of this Agreement by the Company's stockholders as
required by the IBCL. The execution and delivery of this Agreement by the
Company, the performance by it of its obligations hereunder and the consummation
by the Company of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Company (other
than with respect to the Merger and the adoption and approval of this Agreement
by its stockholders as required by the IBCL). This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Parent and Merger Sub, this
Agreement constitutes a legal, valid and binding obligation of the Company
enforceable against it in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company does
not, and the performance by the Company of its obligations hereunder and
the consummation by the Company of the transactions contemplated hereby,
will not (i) violate or conflict with the Articles of Incorporation or the
bylaws of the Company, (ii) subject to obtaining or making the notices,
reports, filings, waivers, consents, approvals or authorizations referred
to in paragraph (b) below, conflict with or violate any law, regulation,
court order, judgment or decree applicable to the Company or any of its
Subsidiaries or by which any of their respective property is bound or
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affected, other than the filings required under the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), and the Securities Act of 1933,
as amended (the "SECURITIES ACT"), (iii) require any consent, approval or
authorization of, or declaration, filing or registration with, any
Governmental Entity or (iv) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, cancellation,
vesting, modification, alteration or acceleration of any obligation under,
result in the creation of a lien, claim or encumbrance on any of the
properties or assets of the Company or any of its Subsidiaries pursuant to,
result in the loss of any material benefit under (including an increase in
the price paid by, or cost to, the Company or any of its Subsidiaries),
require the consent of any other party to, or result in any obligation of
the part of the Company or any of its Subsidiaries to repurchase (with
respect to a bond or a note), any agreement, contract, instrument, bond,
note, indenture, permit, license or franchise to which the Company or any
of its Subsidiaries is a party or by which the Company, any of its
Subsidiaries or any of their respective property is bound or affected,
except, in the case of clauses (ii) and (iii) above, as would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect.
(b) Except for applicable requirements, if any, under the premerger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), the filing of articles of merger
with respect to the Merger as required by the IBCL, filings with the
Securities and Exchange Commission (the "SEC") under the Securities Act,
and the Exchange Act, any filings required pursuant to any state securities
or "blue sky" laws, or pursuant to the rules and regulations of any stock
exchange on which the Company Common Shares are listed, neither the Company
nor any of its Subsidiaries is required to submit any notice, report or
other filing with any Governmental Entity in connection with the execution,
delivery, performance or consummation of this Agreement or the Merger.
Except as set forth in the immediately preceding sentence, no waiver,
consent, approval or authorization of any governmental or regulatory
authority, court, agency, commission or other Governmental Entity or any
securities exchange or other self-regulatory body, domestic or foreign
("GOVERNMENTAL ENTITY"), is required to be obtained by the Company or any
of its Subsidiaries in connection with its execution, delivery, performance
or consummation of this Agreement or the transactions contemplated hereby
except for such waivers, consents, approvals or authorizations that, if not
obtained or made, would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 3.6 SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents (including
all exhibits, schedules and annexes thereto) required to be filed by it
with the SEC since June 30, 1997, including any amendments or supplements
(collectively, including any such forms, reports and documents filed after
this date, the "SEC REPORTS"), and, with respect to the SEC Reports filed
by the Company after the date hereof and prior to the Closing Date, will
deliver or make available to Parent all of its SEC Reports in the form
filed with the SEC. The SEC Reports (i) were (and any SEC Reports filed
after this date will be) in all material respects in compliance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations promulgated thereunder, and (ii) as of their
respective filing dates, did not (and any SEC Reports filed after this date
will not) contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) The financial statements, including all related notes and
schedules, contained in the SEC Reports (or incorporated therein by
reference) fairly present (or, with respect to financial statements
contained in the SEC Reports filed after this date, will fairly present)
the consolidated financial position of the Company and its consolidated
subsidiaries as of the respective dates and the consolidated results of
operations, retained earnings and cash flows of the Company and its
consolidated subsidiaries for the respective periods indicated, in each
case in accordance with generally accepted accounting principles ("GAAP"),
applied on a consistent basis throughout the periods involved (except for
changes in accounting principles disclosed in the notes) and the rules and
regulations of the SEC, except that interim financial statements are
subject to normal year-
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end adjustments which are not and are not expected to be, individually or
in the aggregate, material in amount and do not include certain notes which
may be required by GAAP but which are not required by Form 10-Q of the SEC.
Section 3.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the SEC
Reports filed prior to this date, (a) since June 30, 2000, the Company and each
of its Subsidiaries has conducted its business in the ordinary and usual course
of its business consistent with past practice and there has not been any change
in the financial condition, business, prospects or results of operations of the
Company and its Subsidiaries, or any development or combination of developments
that, individually or in the aggregate, has had or would be expected to have a
Material Adverse Effect and (b) since June 30, 2000, there has not been any
action by the Company which if taken after the date hereof would constitute a
breach of Section 5.1 hereof.
Section 3.8 LITIGATION AND LIABILITIES.
(a) Except as disclosed in the SEC Reports filed prior to this date,
there are no civil, criminal or administrative actions, suits or claims,
proceedings (including condemnation proceedings) or hearings or
investigations, pending or, to the knowledge of the Company, threatened
against, or otherwise adversely affecting the Company or any of its
Subsidiaries or any of their respective properties and assets, except for
any of the foregoing which would not, individually or in the aggregate,
have or reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries has any
liabilities or obligations, (absolute, accrued, contingent or otherwise),
except (i) liabilities and obligations in the respective amounts reflected
or reserved against in the Company's consolidated balance sheet as of June
30, 2000 included in the SEC Reports, (ii) liabilities and obligations
incurred in the ordinary course of business since June 30, 2000 consistent
with past practice which individually or in the aggregate would not have or
reasonably be expected to have a Material Adverse Effect or (iii)
liabilities permitted to be incurred pursuant to Section 5.1.
Section 3.9 NO VIOLATION OF LAW; PERMITS. The business of the Company and
each of its Subsidiaries is not in violation of any statutes of law, ordinances,
regulations, judgments, orders or decrees of any Governmental Entity, any
permits, franchises, licenses, authorizations or consents granted by any
Governmental Entity, and the Company and each of its Subsidiaries has obtained
all permits, franchises, licenses, authorizations or consents necessary for the
conduct of its business, except, in each case, as would not, individually or in
the aggregate, have or reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is subject to any cease and
desist or other order, judgment, injunction or decree issued by, or is a party
to any written agreement, consent agreement or memorandum of understanding with,
is a party to any commitment letter or similar undertaking to, is subject to any
order or directive by, or has adopted any board resolutions at the request of,
any Governmental Entity that restricts the conduct of its business (whether the
type of business, the location or otherwise) and which, individually or in the
aggregate, would have or reasonably be expected to have a Material Adverse
Effect, nor has the Company been advised that any Governmental Entity has
proposed issuing or requesting any of the foregoing.
Section 3.10 EMPLOYEE MATTERS; ERISA.
(a) Set forth in the Company Disclosure Letter is a complete list of
each Company Benefit Plan. The term "COMPANY BENEFIT PLAN" shall mean (i)
each plan, program, policy, contract or agreement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits of any
kind, including, without limitation, any "employee benefit plan," within
the meaning of Section 3(3) of ERISA but excluding any "multiemployer plan"
within the meaning of Sections 3(37) or 4001(a)(3) of ERISA, and (ii) each
employment, severance, consulting, non-compete, confidentiality, or similar
agreement or contract, in each case, with respect to which the Company or
any Subsidiary of the Company has or may have any liability (accrued,
contingent or otherwise). As of the date hereof, the Company is not a party
to any Company Multiemployer Plan. The term "COMPANY MULTIEMPLOYER PLAN"
shall mean any "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA in
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respect to which the Company or any Subsidiary of the Company has or may
have any liability (accrued, contingent or otherwise).
(b) The Company has provided or made available, or has caused to be
provided or made available, to Parent (i) current, accurate and complete
copies of all documents embodying each Company Benefit Plan, including all
amendments, written interpretations (which interpretation could be regarded
as increasing the liabilities of the Company and its Subsidiaries taken as
a whole under the relevant Company Benefit Plan) and all trust or funding
agreements with respect thereto; (ii) the most recent annual actuarial
valuation, if any, prepared for each Company Benefit Plan; (iii) the most
recent annual report (Series 5500 and all schedules), if any, required
under ERISA in connection with each Company Benefit Plan or related trust;
(iv) the most recent determination letter received from the Internal
Revenue Service, if any, for each Company Benefit Plan and related trust
which is intended to satisfy the requirements of Section 401(a) of the
Code; (v) if any Company Benefit Plan is funded, the most recent annual and
periodic accounting of such Company Benefit Plan's assets; (vi) the most
recent summary plan description together with the most recent summary of
material modifications, if any, required under ERISA with respect to each
Company Benefit Plan; and (vii) all material communications to any one or
more current, former or retired employee, officer, consultant, independent
contractor, agent or director of the Company or any Subsidiary of the
Company (each, a "COMPANY EMPLOYEE" and collectively, the "COMPANY
EMPLOYEES") relating to each Company Benefit Plan (which communication
could be regarded as increasing the liabilities of the Company and its
Subsidiaries taken as a whole under the relevant Company Benefit Plan).
(c) All Company Benefit Plans have been administered in all respects
in accordance with the terms thereof and all applicable laws except for
violations which, individually or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect. Each Company
Benefit Plan which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("PENSION PLAN") and which is intended to be
qualified under Section 401(a) of the Code (each, an "COMPANY PENSION
PLAN"), has received a favorable determination letter from the Internal
Revenue Service, and the Company is not aware of any circumstances that
would reasonably be expected to result in the revocation or denial of this
qualified status. Except as otherwise set forth in the Company Disclosure
Letter or in the SEC Reports filed prior to this date, there is no pending
or, to the Company's knowledge, threatened, claim, litigation, proceeding,
audit, examination or investigation relating to any Company Benefit Plans
or Company Employees that, individually or in the aggregate, would have or
reasonably be expected to have a Material Adverse Effect.
(d) No material liability under Title IV of ERISA has been or is
reasonably expected to be incurred by the Company or any Subsidiaries of
the Company or any entity which is considered a single employer with the
Company or any Subsidiary of the Company under Section 4001(a)(15) of ERISA
or Section 414 of the Code (a "COMPANY ERISA AFFILIATE"). No notice of a
"reportable event," within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to
be filed for any Company Pension Plan within the past twelve (12) months.
(e) All contributions, premiums and payments (other than
contributions, premiums or payments that are not material, in the
aggregate) required to be made under the terms of any Company Benefit Plan
have been made. No Company Pension Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA. Neither the Company nor any Subsidiaries
of the Company nor any Company ERISA Affiliate has provided, or is required
to provide, security to any Company Pension Plan pursuant to Section
401(a)(29) of the Code.
(f) As of the Closing Date, neither the Company, any Subsidiary of the
Company nor any Company ERISA Affiliate will have incurred any withdrawal
liability as described in Section 4201 of ERISA for withdrawals that have
occurred on or prior to the Closing Date that has not previously been
satisfied. Neither the Company, any Subsidiary of the Company nor any
Company
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ERISA Affiliate has knowledge that any Company Multiemployer Plan fails to
qualify under Section 401(a) of the Code, is insolvent or is in
reorganization within the meaning of Part 3 of Subtitle E of Title IV of
ERISA nor of any condition that would reasonably be expected to result in a
Company Multiemployer Plan becoming insolvent or going into reorganization.
(g) Except as set forth in the Company Disclosure Letter, the
execution of, and performance of the transactions contemplated in, this
Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) (i) constitute an event under any Company Benefit
Plan, trust or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund benefits
with respect to any Company Employee, or (ii) result in the triggering or
imposition of any restrictions or limitations on the right of the Company,
any Subsidiary of the Company or Parent to amend or terminate any Company
Benefit Plan. Except as set forth in the Company Disclosure Letter, no
payment or benefit which will or may be made by the Company, any Subsidiary
of the Company, Parent or any of their respective affiliates with respect
to any Company Employee will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code.
(h) Set forth in the Company Disclosure Letter is a list of all
outstanding and unexercised options granted under the Company's Stock
Option Plan, specifying the name of each optionee, the date on which each
option was granted, the number of shares that may be purchased pursuant to
each option, the exercise price at which such shares may be purchased, the
vesting period for each option, and the expiration date of each option.
Immediately prior to the Closing, there will be no Company Options
outstanding.
Section 3.11 LABOR MATTERS. Except as set forth in the SEC Reports filed
prior to this date, and except for those matters that would not, individually or
in the aggregate, have or reasonably be expected to have a Material Adverse
Effect, there is no (i) work stoppage, slowdown, lockout or labor strike against
the Company or any Subsidiary of the Company by Company Employees (or any union
that represents them) pending or, to the knowledge of the Company, threatened,
or (ii) alleged unfair labor practice, labor dispute (other than routine
grievances), union organizing activity or labor arbitration proceeding pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries relating to their businesses. Neither the Company nor any of
its Subsidiaries is a party to, or bound by, any collective bargaining agreement
or other contracts with a labor union or labor organization. The Company is in
compliance with all laws regarding employment, employment practices, terms and
conditions of employment and wages and laws, except for such noncompliance
which, either individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect.
Section 3.12 ENVIRONMENTAL MATTERS. Except as set forth in the SEC Reports
filed prior to this date and except for those matters that would not,
individually or in the aggregate, have or reasonably be expected to have a
Material Adverse Effect:
(a) The Company and each of its Subsidiaries is in compliance with all
applicable Environmental Laws, and neither the Company nor any of its
Subsidiaries has received any written communication from any Person or
Governmental Entity that alleges that the Company or any of its
Subsidiaries is not in compliance with applicable Environmental Laws.
(b) The Company and each of its Subsidiaries has obtained or has
applied for all applicable environmental, health and safety permits,
licenses, variances, approvals and authorizations required under
Environmental Laws (collectively, the "ENVIRONMENTAL PERMITS") necessary
for the construction of its facilities or the conduct of its operations,
and all those Environmental Permits are in effect or, where applicable, a
renewal application has been timely filed and is pending agency approval,
and the Company and its Subsidiaries are in compliance with all terms and
conditions of such Environmental Permits.
(c) There is no Environmental Claim pending or, to the knowledge of
the Company, threatened (i) against the Company or any of its Subsidiaries,
(ii) against any Person whose
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liability for any Environmental Claim has been retained or assumed
contractually by the Company or any of its Subsidiaries, or (iii) against
any real or personal property or operations which the Company or any of its
Subsidiaries owns, leases or operates, in whole or in part.
(d) There have been no Releases of any Hazardous Material that would
be likely to form the basis of any Environmental Claim against the Company
or any of its Subsidiaries, or against any Person whose liability for any
Environmental Claim has been retained or assumed contractually by the
Company or any of its Subsidiaries.
(e) None of the properties owned, leased or operated by the Company,
its Subsidiaries or any predecessor thereof are now, or were in the past,
listed on the National Priorities List of Superfund Sites or any analogous
state list (excluding easements that transgress those Superfund sites).
For purposes of this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, directives, claims,
liens, investigations, proceedings or notices of noncompliance or violation
(written or oral) by any Person (including any federal, state, local or
foreign governmental authority) alleging potential liability (including,
without limitation, potential responsibility for or liability for
enforcement, investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location, whether or not
owned, operated, leased or managed by the Company or any of its
Subsidiaries; or (B) circumstances forming the basis of any violation or
alleged violation of any Environmental Law; or (C) any and all claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials.
(ii) "ENVIRONMENTAL LAWS" means all applicable foreign, federal, state
and local laws, rules, requirements and regulations relating to pollution,
the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or protection of human
health as it relates to the environment including, without limitation, laws
and regulations relating to Releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials or relating
to management of asbestos in buildings.
(iii) "HAZARDOUS MATERIALS" means (A) any petroleum or any by-products
or fractions thereof, asbestos or asbestos-containing materials, urea
formaldehyde foam insulation, any form of natural gas, explosives,
polychlorinated biphenyls ("PCBS"), radioactive materials, ionizing
radiation, electromagnetic field radiation or microwave transmissions; (B)
any chemicals, materials or substances, whether waste materials, raw
materials or finished products, which are now defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances," "toxic pollutants," "pollutants,"
"contaminants," or words of similar import under any Environmental Law; and
(C) any other chemical, material or substance, whether waste materials, raw
materials or finished products, regulated or forming the basis of liability
under any Environmental Law.
(iv) "RELEASE" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including without limitation ambient air, atmosphere, soil,
surface water, groundwater or property).
Section 3.13 BOARD ACTION; VOTE REQUIRED.
(a) The Company's Board of Directors has unanimously approved this
Agreement and the transactions contemplated hereby, including the Merger,
has determined that the Merger is advisable, fair to and in the best
interests of the Company and its stockholders and has resolved to recommend
to stockholders that they vote in favor of approving this Agreement and
approving the Merger.
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(b) Approval of this Agreement by a majority of the votes entitled to
be cast with respect thereto by the holders of Company Common Shares is
sufficient to constitute approval of this Agreement and the transactions
contemplated hereby on behalf of the stockholders of the Company. The
Merger will give rise to no dissenters' rights under the IBCL.
Section 3.14 BROKERS. Set forth in the Company Disclosure Letter is a list
of each broker, finder or investment banker and other Person entitled to any
brokerage, finder's, investment banking or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries and
the expected amounts of such fees and commissions. The Company has previously
provided to Parent copies of any agreements giving rise to any such fee or
commission.
Section 3.15 TAX MATTERS.
(a) All Tax Returns required to be filed by the Company or its
Subsidiaries on or prior to the Effective Time have been or will be
prepared in good faith and timely filed with the appropriate Governmental
Entity on or prior to the Effective Time and all such Tax Returns are (or,
as to Tax Returns not filed on the date hereof, will be) complete and
accurate in all material respects.
(b) All material Taxes that are required to be paid by the Company or
its Subsidiaries, either (x) have been fully paid on a timely basis (except
with respect to matters contested in good faith as set forth in the Company
Disclosure Letter) or (y) are adequately reflected as a liability on the
Company's or its Subsidiaries' books and records and financial statements
and remitted to the appropriate Governmental Entity. All Taxes required to
be collected or withheld from third parties by the Company or its
Subsidiaries have been collected or withheld.
(c) The Company and its Subsidiaries have made due and sufficient
accruals and reserves for their respective liabilities for Taxes in their
respective books and records and financial statements.
(d) The Company and each of its Subsidiaries have not waived any
statute of limitations, or agreed to any extension of time, with respect to
Taxes or a Tax assessment or deficiency, which waiver or extension is in
effect.
(e) As of this date, (A) there are not pending or, threatened in
writing, any audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters and (B) there are not any unresolved
questions or claims concerning the Company's or any of its Subsidiary's Tax
liability that (i) were raised by any taxing authority in a communication
to the Company or any Subsidiary and (ii) would be individually or in the
aggregate, material to the Company and its Subsidiaries taken as a whole,
after taking into account any reserves for Taxes set forth on the most
recent balance sheet contained in the SEC Reports filed prior to this date.
(f) The Company has made available to Parent true and correct copies
of the United States federal income and all material state income or
franchise Tax Returns filed by the Company and its Subsidiaries for each of
its fiscal years ended on or about June 30, 1997, 1998 and 1999.
(g) The Company has not distributed the stock of a "controlled
corporation" (as defined in section 355(a) of the Code) in a transaction
subject to section 355 of the Code within the past two years or before such
time if the distribution was part of a plan (or series of related
transactions) of which the Merger is also a part.
(h) Neither Company nor any of its Subsidiaries (i) has any liability
under Treasury Regulation Section 1.1502-6 or analogous state, local or
foreign Law for any Taxes, other than for Taxes of Company or its
Subsidiaries or (ii) is a party to a Tax sharing or Tax indemnity contract
or any other contract of a similar nature with any entity other than
Company or any of its Subsidiaries that remains in effect.
(i) Neither the Company nor any of its Subsidiaries know of any fact
relating to the Company or its Subsidiaries that could reasonably be
expected to prevent the Merger from qualifying as a reorganization within
the meaning of Section 368(c) of the Code.
As used in this Agreement, (i) the term "TAX" (including, with correlative
meaning, the terms "TAXES" and "TAXABLE") includes all federal, state, local and
foreign income, profits, franchise, gross
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receipts, license, premium, environmental (including taxes under Section 59A of
the Code), capital stock, severance, stamp, payroll, sales, employment,
unemployment, disability, use, transfer, property, withholding, excise,
production, occupation, windfall profits, customs duties, social security (or
similar), registration, value added, alternative or add-on minimum, estimated,
occupancy and other taxes, duties or governmental assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "TAX RETURN" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
Section 3.16 INTELLECTUAL PROPERTY. Neither the Company nor any of its
Subsidiaries currently utilizes, any patented invention, trademark, trade name,
service mark, copyright, software, trade secret or know-how (collectively,
"INTELLECTUAL PROPERTY"), except for those which are owned, possessed or
lawfully used by the Company or its Subsidiaries in their business operations,
and neither the Company nor any of its Subsidiaries infringes upon or unlawfully
uses any patented invention, trademark, trade name, service mark, copyright, or
trade secret owned or validly claimed by another Person except, in each case, as
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect. The Company and its Subsidiaries own, have a
valid license to use or have the right validly to use all patented inventions,
trademarks, tradenames, service marks, copyrights, trade secrets, know how and
software necessary to carry on their respective businesses except the failure of
which to own, validly license or have the right validly to use, individually or
in the aggregate, would not have or reasonably be expected to have a Material
Adverse Effect. All ownership rights, license rights and other rights to use any
patented invention, trademark, trade name, service mark, copyright, software,
trade secret or know-how necessary to carry on the businesses of the Company and
its Subsidiaries are transferable free of any lien, pledge, change, security
interest or other encumbrance (each, an "ENCUMBRANCE"), except the failure of
which to be freely transferable would not have or reasonably be expected to have
a Material Adverse Effect. Neither the Company nor its Subsidiaries are aware of
any third party infringement or misappropriation of any patent, trademark, trade
name, service mark, copyright, software, trade secret or know-how owned by the
Company or its Subsidiaries.
Section 3.17 INSURANCE. Except to the extent adequately accrued on the most
recent balance sheet contained in the SEC Reports filed as of this date, neither
the Company nor its Subsidiaries has any obligation (contingent or otherwise) to
pay in connection with any insurance policies any retroactive premiums or
"retro-premiums" that, individually or in the aggregate, would have or
reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries have obtained and maintained in full force and effect insurance
with insurance companies or associations in such amounts, on such terms and
covering such risks, as is customarily carried by reasonably prudent persons
conducting businesses or owning or leasing assets similar to those conducted,
owned or leased by the Company, except where the failure to obtain or maintain
such insurance, individually or in the aggregate, would not have or be
reasonably be expected to have a Material Adverse Effect.
Section 3.18 CONTRACTS AND COMMITMENTS. Set forth in the Company Disclosure
Letter is a complete and accurate list of all of the following contracts
(written or oral), plans, undertakings, commitments or agreements ("COMPANY
CONTRACTS") to which the Company or any of its Subsidiaries is a party or by
which any of them is bound as of the date of this Agreement:
(a) each distribution, supply, inventory purchase, franchise, license,
sales, agency or advertising contract involving annual expenditures or
liabilities in excess of $100,000 which is not cancelable (without material
penalty, cost or other liability) within one year;
(b) each promissory note, loan, agreement, indenture, evidence of
indebtedness or other instrument providing for the lending of money,
whether as borrower, lender or guarantor, in excess of $100,000;
(c) each contract, lease, agreement, instrument or other arrangement
containing any covenant limiting the freedom of the Company or any of its
subsidiaries to engage in any line of business or compete with any person;
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(d) each joint venture or partnership agreement that is material to
the Company and its Subsidiaries taken as a whole; and
(e) any contract that would constitute a "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC).
True and complete copies of the written Company Contracts, as amended to
date, that would be required to be filed as exhibits to the Company's Form 10-K
if such Form 10-K were being filed on this date, that have not been filed prior
to the date hereof as exhibits to the SEC Reports have been delivered or made
available to Parent.
Each Company Contract is valid and binding on the Company, and any
Subsidiary of the Company which is a party thereto and, to the knowledge of the
Company, each other party thereto and is in full force and effect, and the
Company and its Subsidiaries have performed and complied with all obligations
required to be performed or compiled with by them under each Company Contract,
except in each case as would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.
Section 3.19 TITLE TO ASSETS. The Company and its Subsidiaries have good
and marketable title to all of their real and personal properties and assets
reflected in the audited consolidated balance sheet of the Company as of June
30, 2000 (the "AUDITED BALANCE SHEET") (other than assets disposed of since June
30, 2000 in the ordinary course of business, and properties and assets acquired
since June 30, 2000), in each case free and clear of all Encumbrances except for
(i) Encumbrances which secure indebtedness reflected in the SEC Reports; (ii)
liens for Taxes accrued but not yet due; (iii) liens arising as a matter of law
in the ordinary course of business with respect to obligations incurred after
the date of the Audited Balance Sheet, provided that the obligations secured by
such liens are not delinquent; and (iv) such imperfections of title and
Encumbrances, if any, as would not have or reasonably be expected to have a
Material Adverse Effect. The Company and its Subsidiaries own, or have valid
leasehold interests in, all properties and assets used in the conduct of their
business. Any real property and other assets held under lease by the Company or
any of its Subsidiaries are held under valid, subsisting and enforceable leases
with such exceptions which, individually or in the aggregate, would not
reasonably be expected to interfere with the use made or proposed to be made by
the Company or any of its Subsidiaries of such property.
Section 3.20 STATE TAKEOVER STATUTES. The Board of Directors of the Company
has approved the Merger and this Agreement and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the transactions
contemplated by this Agreement, the provisions of Section 23-1-43 of the IBCL to
the extent, if any, such section is applicable to the transactions contemplated
by this Agreement. The Board of Directors of the Company has amended the bylaws
of the Company so as to render inapplicable to the Stock Option Agreement and
the other transactions contemplated by this Agreement the provisions of IC
23-1-42. To the Company's knowledge, no other state takeover statute or similar
statute or regulation applies to the Merger or the transactions contemplated
hereby.
Section 3.21 RIGHTS AGREEMENT. No "Distribution Date" or "Triggering Event"
(as such terms are defined in the Rights Agreement, dated as of April 21, 1998,
between the Company and Compushare Investor Services, LLC, as successor rights
agent, as amended (the "RIGHTS AGREEMENT")) has occurred as of this date. This
Agreement and the Stock Option Agreement, and the consummation of the
transactions contemplated hereunder and thereunder, including the Merger, have
been approved by at least two-thirds (2/3) of the Disinterested Directors (as
defined in the Rights Agreement). The Rights Agreement has been amended so that
neither the execution or delivery of this Agreement, nor the exchange of the
Company Common Shares for the shares of Parent Common Stock and cash in
accordance with Article II will cause (A) the Rights issued pursuant to the
Rights Agreement to become exercisable under the Rights Agreement, (B) Parent or
Merger Sub to be deemed an "Acquiring Person" (as defined in the Rights
Agreement), or (C) the "Shares Acquisition Date" or a "Triggering Event" (each
as defined in the Rights Agreement) to occur upon any such event. The execution
and delivery of this Agreement and the Stock Option Agreement and the
consummation of the transactions contemplated hereby and thereby will not result
in the ability of any Person to exercise any Rights or cause the Rights to
separate from the Company Common Shares to which they are attached or to be
triggered or become exercisable.
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Section 3.22 PRODUCT WARRANTY. Each product manufactured, sold, leased, or
delivered by any of the Company and its Subsidiaries has been in substantial
conformity with all applicable contractual commitments and all express and
implied warranties, and none of the Company and its Subsidiaries has any
liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) for replacement or repair thereof or
other damages in connection therewith other than liabilities that would not have
or reasonably be expected to have a Material Adverse Effect, subject only to the
reserve for product warranty claims as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company
and its Subsidiaries. No product manufactured, sold, leased, or delivered by any
of the Company and its Subsidiaries is subject to any guaranty, warranty, or
other indemnity beyond the applicable standard terms and conditions of sale or
lease. The Company Disclosure Letter includes copies of the standard terms and
conditions of sale or lease for each of the Company and its Subsidiaries
(containing applicable guaranty, warranty, and indemnity provisions).
Section 3.23 PRODUCT LIABILITY. None of the Company and its Subsidiaries
has any liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by any of the Company and its
Subsidiaries, other than liabilities that would not have or reasonably be
expected to have a Material Adverse Effect.
ARTICLE IV
Parent and Merger Sub hereby represent and warrant to the Company as of the
date of this Agreement as follows:
Section 4.1 EXISTENCE; CORPORATE AUTHORITY. Parent and Merger Sub are
corporations duly incorporated, validly existing and in good standing under the
laws of their jurisdiction of incorporation and have all requisite corporate
power and authority to own, operate and lease its properties and carry on its
business as now conducted, except where the failure to have such power and
authority, individually or in the aggregate, would not materially adversely
affect their ability to consummate the Merger. Merger Sub is directly and wholly
owned by Parent and has conducted no business other than in connection with the
transactions contemplated by this Agreement.
Section 4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Parent and
Merger Sub have the necessary corporate power and authority to enter into and
deliver this Agreement and to perform their obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub, the performance by them of their
respective obligations hereunder and the consummation by Parent and Merger Sub
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on their part. This Agreement has been duly executed
and delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery of this Agreement by the Company, this Agreement
constitutes a legal, valid and binding obligation of Parent and Merger Sub
enforceable against each of them in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Parent Company Stock, when
issued and delivered in accordance with the terms and conditions of this
Agreement, will be validly issued and fully paid and non-assessable.
Section 4.3 NO VIOLATION.
(a) The execution and delivery of this Agreement by Parent and Merger
Sub does not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation by Parent and Merger Sub of the
transactions contemplated hereby, will not (i) violate or conflict with the
Merger Sub's articles of incorporation, Parent's certificate of
incorporation or the bylaws of Parent or Merger Sub, (ii) subject to
obtaining or making the notices, reports, filings, waivers,
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consents, approvals or authorizations referred to in paragraph (b) below,
conflict with or violate any law, regulation, court order, judgment or
decree applicable to Parent or any of its Subsidiaries (including Merger
Sub) or by which any of their respective property is bound or affected,
other than the filings required under the Exchange Act and the Securities
Act, except, in the case of clause (ii) above, as would not, individually
or in the aggregate, have or reasonably be expected to have a material
adverse effect on their ability to consummate the Merger.
(b) Except for applicable requirements, if any, under the premerger
notification requirements of the HSR Act, the filing of articles of merger
with respect to the Merger as required by the IBCL, filings with the SEC
under the Securities Act and the Exchange Act, any filings required
pursuant to any state securities or "blue sky" laws, or pursuant to the
rules and regulations of any stock exchange on which shares of Parent
Common Stock are listed, neither Parent nor any of its Subsidiaries
(including Merger Sub) is required to submit any notice, report or other
filing with any Governmental Entity in connection with the execution,
delivery, performance or consummation of this Agreement or the Merger,
except where the failure to submit such notice, report or other filing
would not, individually or in the aggregate, have or reasonably be expected
to have a material adverse effect on Parent's or Merger Sub's ability to
consummate the Merger or otherwise prevent Parent or Merger Sub from
performing its obligations under this Agreement. Except as set forth in the
immediately preceding sentence, no waiver, consent, approval or
authorization of any governmental or regulatory authority, court, agency,
commission or other governmental entity or any securities exchange or other
self-regulatory body, domestic or foreign Governmental Entity is required
to be obtained by Parent or any of its Subsidiaries (including Merger Sub)
in connection with its execution, delivery, performance or consummation of
this Agreement or the transactions contemplated hereby except for such
waivers, consents, approvals or authorizations that, if not obtained or
made, would not, individually or in the aggregate, have or be expected to
have a material adverse effect on Parent's or Merger Sub's ability to
consummate the Merger or otherwise prevent Parent or Merger Sub from
performing their obligations under this Agreement.
Section 4.4 INTERESTED STOCKHOLDER. As of the date hereof, (i) neither
Parent, Merger Sub nor any of their affiliates is, with respect to the Company,
an "Interested Shareholder", as such term is defined in Section 23-1-43-10 of
the IBCL and (ii) neither Parent, Merger Sub nor any of their affiliates
beneficially owns any Company Common Shares.
Section 4.5 PARENT PUBLIC REPORTS; FINANCIAL STATEMENTS. Parent has
delivered to the Company true and complete copies of, including all amendments
thereto, its Annual Report for the calendar year ended December 31, 1999, the
annual report on Form 10-K for the year ended December 31, 1999, the quarterly
reports on Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000
(collectively, the "PARENT PUBLIC REPORTS"). The consolidated financial
statements of and contained in the Parent Public Reports present fairly the
financial position of Parent and its consolidated subsidiaries at the respective
dates of the balance sheet and the results of operations for the periods then
ended, in conformity with generally accepted accounting principles applied on a
consistent basis. The Parent Public Reports do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
will be made, not misleading.
ARTICLE V
Section 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants and
agrees as to itself and its Subsidiaries that, after this date and prior to the
Effective Time (unless Parent shall otherwise approve in writing, or unless as
otherwise expressly contemplated by this Agreement or expressly disclosed in the
Company Disclosure Letter):
(i) the business of the Company and its Subsidiaries shall be
conducted in all material respects in the ordinary and usual course and, to
the extent consistent therewith, each of the Company and its Subsidiaries
shall use its reasonable commercial efforts to preserve its business
organization intact in all material respects, keep available the services
of its officers and employees as a group (subject to changes in the
ordinary course) and maintain its existing relations and
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goodwill in all material respects with customers, suppliers, regulators,
distributors, creditors, lessors, and others having business dealings with
it;
(ii) the Company shall not issue, deliver, grant or sell any
additional Company Common Shares or any Company Options (other than the
issuance, delivery, grant or sale of Company Common Shares or Company
Options pursuant to the exercise or conversion of Company Options
outstanding as of this date);
(iii) the Company shall not (A) amend its Articles of Incorporation or
bylaws, amend or take any action under the Rights Agreement, or adopt any
other shareholders rights plan or enter into any agreement with any of its
stockholders in their capacity as such; (B) split, combine, subdivide or
reclassify its outstanding shares of capital stock; (C) declare, set aside
or pay any dividend or distribution payable in cash, stock or property in
respect of any of its capital stock; or (D) repurchase, redeem or otherwise
acquire or permit any of its Subsidiaries to purchase, redeem or otherwise
acquire, any shares of its capital stock or any Company Options (it being
understood that this provision shall not prohibit the exercise (cashless or
otherwise) of Company Options);
(iv) the Company shall not, and shall not cause or permit any of its
Subsidiaries to, take any action that would prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368 of the
Code or take any action that it knows would cause any of its
representations and warranties in this Agreement to become inaccurate in
any material respect;
(v) except as expressly permitted by this Agreement, and except as
required by applicable law or pursuant to contractual obligations in effect
on this date; the Company shall not, and shall not permit its Subsidiaries
to, (A) enter into, adopt or amend (except for renewals on substantially
identical terms) any agreement or arrangement relating to severance, (B)
enter into, adopt or amend (except for renewals on substantially identical
terms) any employee benefit plan or employment or consulting agreement
(including, without limitation, the Company Benefit Plans referred to in
Section 3.10); or (C) grant any stock options or other equity related
awards;
(vi) except for borrowings under lines of credit existing as of this
date in the ordinary course of business consistent with past practice,
neither the Company nor any of its Subsidiaries shall issue, incur or amend
the terms of any indebtedness for borrowed money or guarantee any such
indebtedness (other than indebtedness of the Company or any wholly-owned
Subsidiary);
(vii) neither the Company nor any of its Subsidiaries shall make any
capital expenditures in an aggregate amount in excess of the aggregate
amount reflected in the capital expenditure budget, a copy of which is
attached to the Company Disclosure Letter;
(viii) other than in the ordinary course of business consistent with
past practice, neither the Company nor any of its Subsidiaries shall
transfer, lease, license, sell, mortgage, pledge, encumber or otherwise
dispose of any of its or its Subsidiaries' property or assets (including
capital stock of any of its Subsidiaries) material to the Company and its
Subsidiaries taken as a whole, except pursuant to contracts existing as of
this date (the terms of which have been previously disclosed to Parent);
(ix) neither the Company nor any of its Subsidiaries shall issue,
deliver, sell or encumber shares of any class of its capital stock or any
securities convertible into, or any rights, warrants or options to acquire,
any such shares, except any such shares issued pursuant to options and
other awards outstanding on this date under Company Benefit Plans;
(x) neither the Company nor any of its Subsidiaries shall acquire any
business, including any facilities, whether by merger, consolidation,
purchase of property or assets or otherwise, except to the extent provided
for in the capital expenditure budget attached to the Company Disclosure
Letter;
(xi) The Company shall not change its accounting policies, practices
or methods except as required by GAAP or by the rules and regulations of
the SEC;
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(xii) other than pursuant to this Agreement, the Company shall not,
and shall not permit any of its Subsidiaries to, take any action to cause
Company Common Shares to cease to be listed on the Nasdaq National Market
System;
(xiii) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into any Company Contract described in clauses (c)
and (d) of Section 3.18, or enter into or amend any distribution, supply,
inventory purchase, franchise, license, sales agency or advertising
contract outside of the ordinary course of business consistent with past
practice in scope and amount but in no event for a term (or an extension of
a term) beyond the date that is one year after the Closing Date;
(xiv) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, change or, other than in the ordinary course of business
consistent with past practice, make any material Tax election, settle any
audit or file any amended Tax Returns; or
(xv) The Company shall not enter into, or permit any of its
Subsidiaries to enter into, any commitments or agreements to do any of the
foregoing.
Section 5.2 NO SOLICITATION.
(a) The Company shall immediately cease and terminate any existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any Persons conducted heretofore by the Company, its
Subsidiaries or any of their respective representatives with respect to any
proposed, potential or contemplated Acquisition Transaction and request the
return or destruction of all non-public information furnished in connection
therewith.
(b) From and after this date, without the prior written consent of
Parent, the Company will not, will not authorize or permit any of its
Subsidiaries to, and shall use its reasonable best efforts to cause any of
its or their respective officers, directors, employees, financial advisors,
agents or other representatives not to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing information) or take
any other action to facilitate any inquiries or the making of any proposal
which constitutes or may reasonably be expected to lead to an Acquisition
Proposal from any Person, engage in any discussion or negotiations relating
thereto or accept any Acquisition Proposal or enter into any contract or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any of the other transactions contemplated by this Agreement;
provided that, at any time prior to receipt of the stockholder approval
referred to in Section 6.1, the Company may, subject to compliance with
this Section 5.2(b), furnish information to, and negotiate or otherwise
engage in discussions with, any Person (a "PROPOSING PARTY") who (x)
delivers a bona fide written Acquisition Proposal which was not solicited,
initiated, encouraged or facilitated by the Company, directly or
indirectly, after the date of this Agreement or otherwise resulted from a
breach of this Section 5.2, and (y) enters into an appropriate
confidentiality agreement with the Company (which agreement shall be no
less favorable to the Company than the Confidentiality Agreement and a copy
of which will be delivered to Parent promptly after the execution thereof),
if, but only if, the Board of Directors of the Company determines in good
faith by a majority vote, (i) after consultation with, and receipt of
advice from, its outside legal counsel, that failing to take such action
would constitute a breach of the fiduciary duties of such Board of
Directors under the IBCL, and (ii) after consultation with the Company's
independent financial advisors, that such proposal could reasonably be
expected to lead to a Superior Transaction.
(c) The Company shall notify Parent orally and in writing of any such
inquiries, offers or proposals (including, without limitation, the terms
and conditions of any such offers or proposals, any amendments or
revisions, and the identity of the Person making it), as promptly as
practicable following the receipt, and shall keep Parent reasonably
informed of the status and material terms of any such inquiry, offer or
proposal. For purposes of this Agreement, "ACQUISITION PROPOSAL" shall
mean, with respect to the Company, any inquiry, proposal or offer from any
Person (other than Parent or any of its Subsidiaries) relating to any (i)
direct or indirect acquisition or purchase of a business of the Company or
any of its Subsidiaries, that constitutes 15% or more of the consolidated
net revenues, net income or assets of Company and its Subsidiaries, (ii)
direct or indirect acquisition or purchase of 15% or more of any class of
equity securities of the Company
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or any of its Subsidiaries whose business constitutes 15% or more of the
consolidated net revenues, net income or assets of the Company and its
Subsidiaries, (iii) tender offer or exchange offer that if consummated
would result in any Person beneficially owning 15% or more of the capital
stock of the Company, or (iv) merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its Subsidiaries whose business constitutes 15% or
more of the consolidated net revenues, net income or assets of the Company
and its Subsidiaries. Each of the transactions referred to in clauses (i) -
(iv) of the definition of Acquisition Proposal, other than any such
transaction to which Parent or any of its Subsidiaries is a party, is
referred to as an "ACQUISITION TRANSACTION".
(d) If, prior to the approval of this Agreement by the stockholders of
the Company, the Board of Directors of the Company determines in good faith
by a majority vote, with respect to any written proposal from a Proposing
Party for an Acquisition Transaction received after the date hereof that
was not solicited, initiated, encouraged or facilitated by the Company,
directly or indirectly, after the date of this Agreement or did not
otherwise result from a breach of this Section 5.2, that, based upon (x)
the written opinion (a copy of which shall have been delivered to Parent)
from the Company's independent financial advisors that the Acquisition
Transaction is a Superior Transaction and (y) the advice of the Company's
outside legal counsel, that such Acquisition Transaction is a Superior
Transaction and is in the best interest of the Company and its stockholders
and failure to enter into such Acquisition Transaction would constitute a
breach of the fiduciary duties of the Board of Directors of the Company
under the IBCL, then the Company may terminate this Agreement and enter
into an acquisition agreement for the Superior Transaction; provided that,
prior to any such termination, and in order for such termination to be
effective, (i) the Company shall provide Parent three business days'
written notice that it intends to terminate this Agreement pursuant to this
Section 5.2(d), identifying the Superior Transaction and the parties
thereto and delivering an accurate description of all material terms of the
Superior Transaction to be entered into, and (ii) on the date of
termination (provided that the opinion and advice referred to in clauses
(x) and (y) above shall continue in effect without revocation, revision or
modification), the Company shall deliver to Parent (A) a written notice of
termination of this Agreement pursuant to this Section 5.2(d), (B) a wire
transfer of immediately available funds in the amount of the Termination
Fee, (C) a written acknowledgment from the Company that the termination of
this Agreement and the entry into the Superior Transaction are a Triggering
Event, and (D) a written acknowledgment from each other party to the
Superior Transaction that it has read the Company's acknowledgment referred
to in clause (C) above and will not contest the matters thus acknowledged
by the Company, including the payment of the Termination Fee.
(e) "SUPERIOR TRANSACTION" shall mean an Acquisition Transaction which
the Board of Directors of the Company, reasonably determines is more
favorable to the Company and its stockholders than the Merger and which is
not subject to any financing condition; provided, however, that, without
limiting the foregoing, an Acquisition Transaction shall not constitute a
Superior Transaction unless, in the written opinion (with only customary
qualifications) of the Company's independent financial advisors, the value
of the consideration to be paid in the Acquisition Transaction is more
favorable to the stockholders of such company from a financial point of
view than the Merger Consideration. Reference in the foregoing definition
to the "Merger" and "Merger Consideration" shall include, as applicable,
any proposed alteration of the terms of this Agreement submitted by Parent
in writing in response to any Acquisition Proposal.
(f) Nothing in this Section 5.2 shall prevent the Board of Directors
of the Company, from taking, and disclosing to the Company's stockholders,
a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under
the Exchange Act or making any disclosure required under the IBCL (subject,
however, to compliance with the balance of this sentence where applicable),
and the Company's Board of Directors may prior to the date of its
stockholders meeting, withdraw, modify or change its recommendation if, but
only if and only to the extent that, the Board of Directors determines in
good faith that such withdrawal, modification or change is required in
order to comply with its fiduciary duties to its stockholders under the
IBCL after receiving advice from its outside legal counsel; provided that
in the case of a tender offer, the Board of Directors
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of the Company shall not recommend that stockholders tender their Company
Common Shares in such tender offer unless (i) such tender offer is
determined to be a Superior Transaction in accordance with the provisions
of Section 5.2(d) and (ii) the Company has provided Parent with not less
than three business days, prior written notice of any such action;
provided, further, that in no event shall the Company or its Board of
Directors take, agree, or resolve to take any action prohibited by Section
5.2(b) or 5.2(d) except as expressly permitted by such Sections.
(g) Notwithstanding anything to the contrary contained herein, the
Company shall not take any action to make the provisions of IC 23-1-43
inapplicable to any Acquisition Transaction in respect of the Company
(including any Superior Transaction) or release any standstill agreements
or other similar restrictions prior to the termination of this Agreement in
accordance with its terms.
ARTICLE VI
Section 6.1 MEETINGS OF STOCKHOLDERS. The Company will take all action
necessary in accordance with applicable law and its Articles of Incorporation
and its bylaws to convene a meeting of its stockholders as promptly as
practicable to consider and vote upon the approval and authorization of this
Agreement and the Merger. The Board of Directors of the Company shall recommend
this approval and the Company shall take all lawful action to solicit such
approval including, without limitation, timely mailing the Proxy
Statement/Prospectus.
Section 6.2 FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, the Company, Parent and Merger Sub shall: (a) make promptly
their respective filings, and any other submissions, under the HSR Act with
respect to the Merger and the other transactions contemplated hereby, and (b)
use their reasonable best efforts to cooperate with one another in (i)
determining which other filings are required to be made prior to the expiration
of the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from,
Governmental Entities or other third parties in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby and (ii) timely making all such filings and timely seek all
such consents, approvals, permits, authorizations and waivers; and (b) use their
reasonable best efforts to take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement;
provided, however, that such reasonable best efforts shall not include (i) the
sale or divestiture of any assets of Parent (or its affiliates) or (ii) the
licensing of any Intellectual Property of Parent, or its affiliates or
Intellectual Property to be acquired under this Agreement. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purpose of this Agreement, the proper officers and directors of Parent or
the Surviving Corporation shall take all such necessary action.
Section 6.3 PUBLICITY. The initial press release relating to this Agreement
shall be issued jointly by the Company, Parent and Merger Sub. Thereafter,
subject to their respective legal obligations, the Company, Parent and Merger
Sub shall consult with each other, and use reasonable efforts to agree upon the
text of any press release, before issuing any such press release or otherwise
making public statements with respect to the transactions contemplated hereby
and in making any filings with any Governmental Entity or with any national
securities exchange with respect thereto.
Section 6.4 REGISTRATION STATEMENT. The parties shall cooperate and
promptly prepare, and Parent shall file with the SEC as soon as practicable, a
Registration Statement on Form S-4 (the "FORM S-4") under the Securities Act
with respect to the Parent Common Stock issuable in the Merger, a portion of
which Registration Statement shall also serve as the joint proxy
statement/prospectus with respect to the meeting of the Company stockholders in
connection with the Merger (the "PROXY STATEMENT/PROSPECTUS"). The parties will
cause the Proxy Statement/Prospectus and the Form S-4 to comply as to form in
all material respects with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. Parent shall use its
reasonable best efforts to, and the Company will cooperate with Parent to, have
the Form S-4 declared effective by the SEC as
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promptly as practicable. Parent shall use its reasonable best efforts to obtain,
prior to the effective date of the Form S-4, all necessary state securities law
or "blue sky" permits or approvals required to carry out the Merger (provided
that Parent shall not be required to qualify to do business in any jurisdiction
in which it is not now so qualified). Each of the parties agree that the
information provided by it for inclusion in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof, at the
time of the meeting of the Company stockholders, and at the time it is filed or
becomes effective, will not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 6.5 LISTING APPLICATION. Parent shall as soon as reasonably
practicable prepare and submit to the NYSE and all other securities exchanges on
which the shares of Parent Common Stock are listed a listing application with
respect to the shares of Parent Common Stock issuable in the Merger, and shall
use its reasonable best efforts to obtain, prior to the Effective Time, approval
for the listing of such Parent Common Stock on such exchanges, subject to
official notice of issuance.
Section 6.6 FURTHER ACTION. Each of the parties shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth in this Agreement or the waiver thereof, use its
reasonable best efforts to perform those further acts and execute those
documents as may be reasonably required to effect the transactions contemplated
hereby. Each of the parties agrees to use its reasonable best efforts to obtain
in a timely manner all necessary waivers, consents, approvals and opinions and
to effect all necessary registrations and filings, and to use its reasonable
best efforts to take, or cause to be taken, all other actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the Merger. In furtherance of the
foregoing, the Company shall use its reasonable best efforts to procure the
execution of agreements between the Surviving Corporation and employees of the
Company identified by Parent on terms satisfactory to Parent and such employees.
Section 6.7 EXPENSES. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including the Merger) shall be paid by the party incurring
those expenses except as expressly provided in this Agreement and except that
(a) the filing fees in connection with the filing of the Form S-4 and the Proxy
Statement/Prospectus with the SEC, (b) all filing fees in connection with any
filings, permits or approvals required under applicable state securities or
"blue sky" laws, and (c) the expenses incurred in connection with printing and
mailing of the Form S-4 and the Proxy Statement/Prospectus, shall be shared by
Parent and the Company equally, and the filing fees, if any, incurred by the
Company in connection with the filing of the Company notification under the HSR
Act shall be paid by Parent.
Section 6.8 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
notice to the other parties of the following:
(a) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence is reasonably expected to cause any of the conditions
precedent set forth in Article VII not to be satisfied; and
(b) any facts relating to that party which would make it necessary or
advisable to amend the Proxy Statement/Prospectus or the Form S-4 in order
to make the statements therein not untrue or misleading or to comply with
applicable law; provided, however, that the delivery of any notice pursuant
to this Section 6.8 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
(c) From time to time after the date of this Agreement and prior to
the Effective Time, the Company will promptly supplement or amend the
Disclosure Letter with respect to any matter hereafter arising which, if
existing or occurring at or prior to the date of this Agreement, would have
been required to be set forth or described in the Disclosure Letter which
is necessary to correct any information in the Disclosure Letter or in any
representation and warranty of the Company that has been rendered
inaccurate thereby. For purposes of determining the accuracy of the
representations and warranties of the Company contained in Article III in
order to determine
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the fulfillment of the conditions set forth in Sections 7.2(a), the
schedules delivered by the Company shall be deemed to include only that
information contained therein on the date of this Agreement and shall be
deemed to exclude any information contained in any subsequent supplement or
amendment thereto.
Section 6.9 ACCESS TO INFORMATION. (a) From the date of this Agreement
until the Closing, upon reasonable notice, the Company shall, and shall cause
its Subsidiaries to, (i) give Parent and its authorized representatives full
access to all books, records, personnel, offices and other facilities and
properties of the Company and its Subsidiaries and their accountants and
accountants' work papers, (ii) permit Parent to make such copies and inspections
thereof as Parent may reasonably request and (iii) furnish Parent with such
financial and operating data and other information with respect to the business
and properties of the Company and its Subsidiaries as Parent may from time to
time reasonably request; provided that no investigation or information furnished
pursuant to this Section 6.9 shall affect any representation or warranty made
herein by the Company or the conditions to the obligations of Parent and Merger
Sub to consummate the transactions contemplated by this Agreement. Parent will
endeavor to describe information requests with as much specificity as is
practicable. Each of Parent and the Company shall designate a representative to
coordinate information and other requests pursuant to this Section 6.9. All
access shall be subject to the condition that such examinations shall be
conducted during normal business hours and in a manner designed to minimize to
the extent practicable disruption to the normal business operations of the
Company.
Section 6.10 INSURANCE; INDEMNITY.
(a) Parent will maintain in effect for not less than three years after
the Effective Time, the Company's current directors and officers insurance
policies, if such insurance is obtainable (or policies of at least the same
coverage containing terms and conditions no less advantageous to the
current and all former directors and officers of the Company) with respect
to acts or failures to act prior to the Effective Time, including acts
relating to the transactions contemplated by this Agreement; provided,
however, that in order to maintain or procure such coverage, Parent shall
not be required to maintain or obtain policies providing such coverage
except to the extent such coverage can be provided at an annual cost of no
greater than two times the most recent annual premium paid by the Company
prior to the date hereof (the "CAP"); and provided, further, that if
equivalent coverage cannot be obtained, or can be obtained only by paying
an annual premium in excess of the Cap, Parent shall only be required to
obtain as much coverage as can be obtained by paying an annual premium
equal to the Cap.
(b) From and after the Effective Time, Parent shall indemnify and hold
harmless to the fullest extent permitted under applicable law, each Person
who is, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer or director of the Company or any
of its Subsidiaries (each, an "INDEMNIFIED PARTY") against all losses,
claims, damages, liabilities, costs or expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation
arising out of or pertaining to acts or omissions, or alleged acts or
omissions, by them in their capacities as such, which acts or omissions
occurred prior to the Effective Time, whether asserted or claimed prior to,
at or after the Effective Time. In the event of any such claim, action,
suit, proceeding or investigation (an "ACTION"), the Parent shall control
the defense of such Action with counsel selected by the Parent, which
counsel shall be reasonably acceptable to the Indemnified Party; provided,
however, that the Indemnified Party shall be permitted to participate in
the defense of such Action through counsel selected by the Indemnified
Party, which counsel shall be reasonably acceptable to the Parent, at the
Indemnified Party's expense. Notwithstanding the foregoing, if there is any
conflict between the Parent and any Indemnified Parties or there are
additional defenses available to any Indemnified Parties, the Indemnified
Parties shall be permitted to participate in the defense of such Action
with counsel selected by the Indemnified Parties, which counsel shall be
reasonably acceptable to the Parent, and Parent shall cause Parent to pay
the reasonable fees and expenses of such counsel, as accrued and in advance
of the final disposition of such Action to the fullest extent permitted by
applicable law; provided, however, that the Parent shall not be obligated
to pay the reasonable fees and expenses of more than one counsel
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for all Indemnified Parties in any single Action except to the extent that,
in the opinion of counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of such
Action. The Parent shall not be liable for any settlement effected without
its written consent, which consent shall not unreasonably be withheld.
(c) The Surviving Corporation shall keep in effect all provisions in
its articles of incorporation and by-laws that provide for exculpation of
director and officer liability and indemnification (and advancement of
expenses related thereto) of the past and present officers and directors of
the Company to the fullest extent permitted by the IBCL and such provisions
shall not be amended except as either required by applicable law or to make
changes permitted by law that would enhance the rights of past or present
officers and directors to indemnification or advancement of expenses.
(d) If the Surviving Corporation or any of its respective successors
or assigns (i) shall consolidate with or merge into any other corporation
or other entity and shall not be the continuing or surviving corporation or
entity of the consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any individual,
corporation or other entity, then and in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving
Corporation shall assume all of the obligations set forth in this Section
6.10.
(e) The provisions of this Section 6.10 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties,
their heirs and their representatives.
Section 6.11 EMPLOYEE BENEFIT PLANS. The Company agrees to promptly take
all actions necessary to cause the following to occur on or prior to the Closing
Date:
(a) TERMINATION OF MONEY PURCHASE PENSION PLAN. As the plan sponsor,
the Company will (i) adopt all amendments to the Robinson Nugent, Inc.
Retirement Plan (the "MPP PLAN") necessary to make such Plan comply with
the applicable legal requirements as changed by the laws described in Rev.
Proc. 99-23 issued by the Internal Revenue Service, (ii) amend the MPP Plan
to fully vest the entire account balances of all the participants in such
Plan effective as of the Closing Date, (iii) take all actions necessary to
terminate the MPP Plan effective as of the Closing Date, and (iv) direct
the trustee of the MPP Plan to prepare for the distribution of the account
balances of all participants as soon as reasonably possible following the
receipt of a favorable determination letter from the Internal Revenue
Service.
(b) MERGER OF 401(k) PLAN. As the plan sponsor, the Company will (i)
adopt all amendments to the Company's 401(k) plan (the "401(k) PLAN")
necessary to make such Plan comply with the applicable legal requirements
as changed by the laws described in Rev. Proc. 99-23 issued by the Internal
Revenue Service, (ii) approve the merger of such 401(k) Plan with the 3M
Voluntary Investment Plan and Employee Stock Ownership Plan (the "VIP")
effective as of the Closing Date, and (iii) direct the trustee of the
401(k) Plan to prepare for the transfer of the assets and records of such
Plan to the trustee of the VIP as soon as reasonably possible following the
Closing Date.
(c) TERMINATION OF STOCK OPTION PLAN. As the plan sponsor, the Company
will cause all of the Company Options to be either exercised and satisfied
in full or terminated prior to the Closing Date. As soon as practicable,
but in no event later than 5 days from the date hereof, the Company shall
provide written notice to each holder of a Company Option of the execution
of this Agreement which notice shall be effective to terminate all Company
Options as of the 30th day immediately following the date of the sending of
the notice as contemplated in Section 6(i) of the Stock Option Plan.
(d) ANNUAL REPORTS. As the plan sponsor, the Company will (i) cause to
be filed with the appropriate government agency the annual reports (Form
5500s) that have not been filed by the respective due dates with respect to
the MPP Plan and the 401(k) Plan, (ii) pay the appropriate penalties for
the late filing of such annual reports under the U.S. Department of Labor's
Delinquent Filer Voluntary Compliance Program, (iii) file reasonable cause
statements with the Internal Revenue Service with respect to the late
filing of such annual reports, and (iv) comply with the summary annual
report requirements of ERISA with respect to such annual reports.
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(e) SECURITIES REGISTRATION. The Company will file and cause to become
effective the registration statement required by the Securities Act with
respect to the offering and purchase of Company Common Shares by
participants in the 401(k) Plan with respect to the investment of the
assets of their account balances under such Plan.
(f) RESCISSION OFFERS. As soon as practicable, but in no event later
than five days after the date hereof, the Company shall commence an offer
to repurchase Company Common Shares from each individual who exercised
Company Options under the Stock Option Plan prior to August 31, 2000 and an
offer to repurchase Company Common Shares from each individual who
purchased Company Common Shares under the Company's 401(k) Plan (the
"RESCISSION OFFERS") during the twelve month period prior to the filing of
the registration statement contemplated in Section 6.11(e) in respect of
such plan, each substantially on the terms furnished to Parent prior to the
date hereof and in compliance with all applicable federal and state
securities laws.
(g) BONUS PLAN. The Company shall complete and furnish to Parent the
documentation of the Company's Bonus Plan for the fiscal year ending June
30, 2001, which documentation shall be reasonably satisfactory to Parent in
both form and substance.
Section 6.12 RIGHTS AGREEMENT. The Board of Directors of the Company shall
take all action requested by Parent in order to render the Company Rights
inapplicable to the Merger and the other transactions contemplated hereby.
ARTICLE VII
Section 7.1 CONDITIONS TO OBLIGATIONS OF THE PARTIES TO CONSUMMATE THE
MERGER. The respective obligation of each party to consummate the Merger shall
be subject to the satisfaction of each of the following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall have
been approved and adopted by the holders of a majority of the outstanding
Company Common Shares in accordance with the IBCL and the rules and
regulations of the Nasdaq National Market System.
(b) LEGALITY. No order, decree or injunction shall have been entered
or issued by any Governmental Entity which is in effect and has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger. Each party agrees that, in the event that any such order, decree or
injunction shall be entered or issued, it shall use its reasonable best
efforts to cause any such order, decree or injunction to be lifted or
vacated.
(c) REGISTRATION STATEMENT EFFECTIVE. The Form S-4 shall have become
effective prior to the mailing of the Proxy Statement/Prospectus to the
Company's stockholders and no stop order suspending the effectiveness of
the Form S-4 shall then be in effect.
(d) BLUE SKY APPROVALS. All such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses or permits as may
be required under state securities or "blue sky" laws in connection with
the shares of Parent Common Stock to be issued pursuant to the Merger have
been obtained.
(e) STOCK EXCHANGE LISTING. The shares of Parent Common Stock to be
issued pursuant to the Merger shall have been duly approved for listing on
the New York Stock Exchange, subject to official notice of issuance.
(f) TAX OPINION. Parent and the Company shall each have received an
opinion of Fried, Frank, Harris, Shriver & Jacobson, based on certain
factual representations of the Company, Parent, and Merger Sub, dated as of
the Closing Date, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code, in form and substance reasonably satisfactory to Parent
and the Company.
(g) ANTITRUST. The waiting period (and any extension thereof) under
the HSR Act applicable to the Merger shall have expired or been terminated
and any other approval or waiting period
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required prior to the Effective Time under any other applicable
competition, merger control, antitrust or similar law or regulation shall
have been obtained or terminated or shall have expired, other than those
the failure of which to have been obtained or terminated or to have expired
would not (x) reasonably be expected to have a Material Adverse Effect (it
being understood for purposes of this clause (x) that no party may rely on
the failure of this condition to be satisfied if such failure was caused by
such party's failure to comply with the terms of Section 6.2) or (y) result
in the commission of a criminal offense.
Section 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate the Merger shall also be
subject to the satisfaction or waiver of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company contained in this Agreement shall be true and correct on and
as of the Closing Date (except to the extent such representations and
warranties shall have been expressly made as of an earlier date, in which
case such representations and warranties shall have been true and correct
as of such earlier date) with the same force and effect as if made on and
as of the Closing Date, except to the extent that any failures of such
representations and warranties to be so true and correct (determined
without regard to materiality qualifiers or limitations contained therein),
in the aggregate, would not reasonably be expected to have resulted in a
Material Adverse Effect.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
before the Effective Time.
(c) CERTIFICATES. Parent shall have received a certificate of an
executive officer of the Company that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) OPTIONS. All Company Options shall have been exercised or
terminated.
(e) RESIGNATIONS. Parent shall have received the resignation of each
of the directors of the Company effective as of the Effective Time.
(f) STOCK OPTION AGREEMENT. The Stock Option Agreement shall be in
full force and effect.
(g) LEASE AGREEMENT. The sale of the Company's manufacturing facility
in Dallas, Texas (the "DALLAS FACILITY") shall have taken place and the
Dallas Facility shall have been leased to the Company on the terms
described in the Contract for Purchase and Sale/Leaseback between the
Company and Sam & JB, LLC, an Indiana limited liability company, and the
lease agreement attached thereto as Exhibit B, each in the form attached to
the Disclosure Letter as Exhibit 7.2(g).
(h) RESCISSION OFFERS. The Rescission Offers shall have been completed
in accordance with Section 6.11(f).
Section 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger shall also be subject to the
satisfaction or waiver of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true on and
as of the Closing Date (except to the extent such representations and
warranties shall have been expressly made as of an earlier date, in which
case such representations and warranties shall have been true and correct
as of such earlier date) with the same force and effect as if made on and
as of the Closing Date, except to the extent that any failures of such
representations and warranties to be so true and correct (determined
without regard to materiality qualifiers or limitations contained therein),
would not, individually or in the aggregate, have or reasonably be expected
to have a material adverse effect on Parent's or Merger Sub's ability to
consummate the Merger or otherwise prevent Parent or Merger Sub from
performing their obligations under this Agreement.
(b) AGREEMENTS AND COVENANTS. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or before the Effective Time.
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(c) CERTIFICATES. The Company shall have received a certificate of an
executive officer of Parent and Merger Sub that the conditions set forth in
paragraphs (a) and (b) above have been satisfied.
(d) CONSENTS. The Company shall have received evidence, in form and
substance reasonably satisfactory to it, that Parent and Merger Sub shall
have obtained (i) all consents, approvals, authorizations, qualifications
and orders of all Governmental Entities (including any in connection with
Environmental Laws) legally required in connection with this Agreement and
the transactions contemplated hereby and (ii) all consents, approvals,
authorizations and qualifications of third parties required in connection
with this Agreement and the transactions contemplated hereby, except in the
case of clauses (i) and (ii) for those the failure of which to be obtained
would not, individually or in the aggregate reasonably be expected to have
a material adverse effect on Parent's and Merger Sub's ability to
consummate the Merger or otherwise prevent Parent and Merger Sub from
performing their obligations under this Agreement. This condition shall not
be applicable to consents, approvals, authorizations, qualifications and
orders under any competition, merger control antitrust or similar law or
regulation, which are the subject of Section 7.1(h).
ARTICLE VIII
Section 8.1 TERMINATION. This Agreement may be terminated at any time
before the Effective Time (except as otherwise provided) as follows:
(a) by mutual written consent of each of the Company and Parent;
(b) by any party, if the Effective Time shall not have occurred on or
before February 28, 2001 (the "TERMINATION DATE"); provided, however, that
the right to terminate this Agreement under this Section 8.1(b) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
(c) by any party, if a Governmental Entity shall have issued an order,
decree or injunction having the effect of making the Merger illegal or
permanently prohibiting the consummation of the Merger, and such order,
decree or injunction shall have become final and nonappealable (but only if
such party shall have used its reasonable best efforts to cause such order,
decree or injunction to be lifted or vacated);
(d) by either Parent or the Company, if (x) there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach would
result in the failure to satisfy one or more of the conditions set forth in
Section 7.2(a) or (b) (in the case of a breach by the Company) or Section
7.3(a) or (b) (in the case of a breach by Parent), and such breach shall be
incapable of being cured or, if capable of being cured, shall not have been
cured within 30 days after written notice thereof shall have been received
by the party alleged to be in breach.
(e) by Parent, if after a duly held stockholders' meeting, including
any adjournments or postponements, the condition set forth in Section
7.1(a) has not been satisfied.
(f) by Parent, if (i) the Board of Directors of the Company shall or
shall resolve to (A) either not recommend that the Company's stockholders
vote in favor of this Agreement or withdraw its recommendation, (B) modify
its recommendation of approval of this Agreement in a manner adverse to
Parent or Merger Sub, or (C) approve, recommend or fail to take a position
that is adverse to any proposed Acquisition Transaction (other than the
Merger) involving the Company or any of its Subsidiaries, or (ii) the Board
of Directors of the Company shall have refused to affirm to Parent its
recommendation of approval of this Agreement as promptly as practicable
(but in any case within five days) after receipt of any reasonable written
request for such affirmation from Parent or (iii) the Company shall have
failed as promptly as practicable after the Form S-4 is declared effective
by the SEC to call a special stockholders meeting or mail the Proxy
Statement/Prospectus to its stockholders or failed to include its
recommendation of
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approval of this Agreement in the Proxy Statement/Prospectus or failed to
hold the a special stockholders meeting when scheduled.
(g) by the Company pursuant to, but only in compliance with, Section
5.2; or
Notwithstanding anything herein to the contrary, no termination by the
Company pursuant to this Section 8.1 under circumstances requiring payment of a
Termination Fee shall be effective unless, concurrently with such termination,
the fee is paid in full by the Company, in accordance with Section 8.2.
Section 8.2 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement pursuant to this
Article VIII, this Agreement shall become void (other than this Section
8.2) with no liability on the part of either party (or of any of its
representatives); provided, however, no such termination shall relieve
either party from any liability for damages resulting from any willful or
intentional breach of this Agreement whether or not any fees contemplated
by this Section 8.2 are payable.
(b) Upon the happening of a Triggering Event, the Company shall pay to
Parent (or to any Subsidiary of Parent designated in writing by Parent to
the Company) the amount of $3,450,000 (the "TERMINATION FEE"). "TRIGGERING
EVENT" means any one of the following:
(i) a termination of this Agreement by Parent pursuant to Section
8.1(f);
(ii) a termination of this Agreement by Parent pursuant to
Section 8.1(d) or 8.1(e), if any Acquisition Proposal is publicly
proposed or announced on or after the date hereof and prior to the
meeting of the Company's Stockholders and (in the case of Section
8.1(e) only) such Acquisition Proposal has not been publicly rejected
by the Board of Directors of the Company;
(iii) a termination of this Agreement by the Company pursuant to
Section 8.1(g); or
(iv) if any Acquisition Transaction is entered into, agreed to or
consummated by the Company within twelve months of a termination of
this Agreement by (A) Parent or the Company pursuant to Section
8.1(b), or (B) Parent pursuant to Section 8.1(d) or 8.1(e), the
entering into, agreeing to or consummation of such Acquisition
Transaction.
Payment of the Termination Fee shall be made by wire transfer of
immediately available funds (1) on the second business day after such
termination in the case of clauses (i) and (ii) of the definition of
Triggering Event, (2) on or prior to the date of such termination, in the
case of clause (iii) of the definition of Triggering Event, or (3) on the
earlier of the date a contract is entered into with respect to an
Acquisition Transaction or is consummated, in the case of clause (iv) of
the definition of Triggering Event. In no event shall more than one
Termination Fee be payable under this Agreement.
(c) Any Termination Fee payable hereunder shall be payable by wire
transfer of immediately available funds.
(d) The parties acknowledge that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into
this Agreement. Accordingly, if the Company fails to pay promptly amounts
due pursuant to this Section 8.2, and, in order to obtain such payment,
Parent commences a suit which results in a judgment against the Company for
such amount (or any portion thereof), the Company shall pay the costs and
expenses (including attorneys fees) of the other party in connection with
such suit, together with interest on such amount in respect of the period
from the date such amount became due until paid at the prime rate of The
Chase Manhattan Bank in effect from time to time during such period.
Section 8.3 AMENDMENT. This Agreement may be amended at any time before the
Effective Time but only pursuant to a writing executed and delivered by the
Company and Parent.
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ARTICLE IX
Section 9.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
8.1, as the case may be, except that (a) the agreements set forth in Sections
1.3, 6.10 and 6.11 shall survive the Effective Time, and (b) the agreements set
forth in Sections 6.7, 8.2 and this Article IX shall survive termination
indefinitely.
Section 9.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the applicable party at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) if to the Company:
Robinson Nugent, Inc.
880 East Eight Street
P. O. Box 1208
New Albany, IN 47151
Attention: Patrick Duffy
Telecopy No.: (317) 594-1836
with a copy to:
Ice Miller
One American Square
Box 82001
Indianapolis, IN 46282-0002
Attention: Berkely W. Duck III, Esq.
Telecopy No.: (317) 592-4642
(b) if to Parent or Merger Sub:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: General Counsel
with a copy to
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: Gregg Larson, Esq.
with a further copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Jean Hanson, Esq.
Telecopy No.: (212) 859-4000
Section 9.3 CERTAIN DEFINITIONS; INTERPRETATION.
(a) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "MATERIAL ADVERSE EFFECT" means any change, circumstance,
event, effect or state of facts (x) that has or can reasonably be
expected to have a material adverse effect on the
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business, operations, results of operations, assets, prospects, or
conditions (financial or otherwise) of the Company or any of its
Subsidiaries having a value of $150,000 individually or $1,500,000 in
the aggregate (except for purposes of Section 7.2(a), a value of
$3,000,000 in the aggregate), or the ability of the Company and its
Subsidiaries to conduct their business after the closing consistent in
all material respects with the manner conducted in the past, or (y)
that will prevent or materially impair the Company's ability to
consummate the Merger; PROVIDED, HOWEVER, that a Material Adverse
Effect will not be deemed to have occurred if the change,
circumstance, event, effect or state of facts results primarily from
(i) changes in general business conditions in the connector industry
or (ii) the public announcement or pendency of the Merger that
reasonably would be expected to have only a temporary effect on the
Company.
(ii) "AFFILIATE" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
Person.
(iii) "BOARD OF DIRECTORS" of the Company includes any committee
thereof.
(iv) "CONTROL" (including the terms "controlled by" and "under
common control with") means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise.
(v) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended and the rules and regulations promulgated thereunder.
(vi) "KNOWLEDGE" of the Company with respect to any matter means
actual knowledge of any of the Company's senior executive officers
after reasonable investigation and due diligence. Such Persons and
their respective areas of responsibility are set forth on Section 9.3
of the Company Disclosure Letter.
(vii) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization, entity or group (as defined in the Exchange Act).
(viii) "SIGNIFICANT SUBSIDIARY" shall have the meaning set forth
in Rule 1-02 of Regulation S-X of the SEC.
(ix) "SUBSIDIARY" of a Person means any corporation or other
legal entity of which that Person (either alone or through or together
with any other Subsidiary or Subsidiaries) is the general partner or
managing entity or of which at least a majority of the stock (or other
equity interests the holders of which are generally entitled to vote
for the election of the board of directors or others performing
similar functions of such corporation or other legal entity) is
directly or indirectly owned or controlled by that Person (either
alone or through or together with any other Subsidiary or
Subsidiaries).
(b) When a reference is made in this Agreement to Articles, Sections,
Company Disclosure Letter or Exhibits, this reference is to an Article or a
Section of, or an Exhibit to, this Agreement, unless otherwise indicated.
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be understood to be
followed by the words "without limitation."
Section 9.4 HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.5 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon a determination that any term or other provision is
invalid, illegal or incapable of
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being enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the maximum extent possible.
Section 9.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement,
the Company Disclosure Letter and the Confidentiality Agreement dated November
30, 1999 between Parent and the Company (the "CONFIDENTIALITY AGREEMENT")
constitute the entire agreement and supersede any and all other prior agreements
and undertakings, both written and oral, among the parties hereto, or any of
them, with respect to the subject matter hereof and, except for Section 6.10
(Insurance; Indemnity), does not, and is not intended to, confer upon any Person
other than the parties hereto any rights or remedies hereunder.
Section 9.7 ASSIGNMENT. This Agreement shall not be assigned by any party
by operation of law or otherwise without the express written consent of each of
the other parties.
Section 9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Indiana without regard to
the conflicts of laws provisions thereof. Each of the parties hereto hereby
irrevocably and unconditionally waives any right it may have to trial by jury in
connection with any litigation arising out of or relating to this Agreement, the
Merger or any of the other transactions contemplated hereby or thereby.
Section 9.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
Section 9.10 CONFIDENTIAL NATURE OF INFORMATION. Between the date of this
Agreement and the Effective Time the parties hereto will hold and will cause
their respective officers, directors, employees, representatives, consultants
and advisors to hold in strict confidence in accordance with the terms of the
Confidentiality Agreement, all documents and information furnished to such party
by or on behalf of the other party in connection with the transactions
contemplated by this Agreement. If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained in accordance
with such Confidentiality Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
MINNESOTA MINING AND
MANUFACTURING COMPANY
By: /s/ Robert J. Burgstahler
------------------------------------
Name: Robert J. Burgstahler
Title: Vice President, Finance and
Administrative Services
BARBADOS ACQUISITION, INC.
By: /s/ John Woodworth
------------------------------------
Name: John Woodworth
Title: President
ROBINSON NUGENT, INC.
By: /s/ Larry W. Burke
------------------------------------
Name: Larry W. Burke
Title: President and CEO
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ANNEX B
VOTING AND STOCK OPTION AGREEMENT
VOTING AND STOCK OPTION AGREEMENT (this "Agreement"), dated as of October
2, 2000, by and between Minnesota Mining and Manufacturing Company, a Delaware
corporation ("Parent"), Robinson Nugent, Inc., an Indiana corporation (the
"Company"), and the Stockholders listed on Schedule A hereto (collectively, the
"Stockholders").
RECITALS
A. Parent, Barbados Acquisition, Inc., ("Merger Sub") an Indiana
Corporation and wholly owned Subsidiary of Parent, and the Company, are
entering into an Agreement and Plan Merger of even date herewith (the "Merger
Agreement") providing for a business combination between Parent and the
Company.
B. As of the date of this Agreement, the Stockholders own beneficially and
of record the Common Shares of the Company ("Company Common Shares") set forth
opposite their respective names on Schedule A (Company Common Shares owned by
each Stockholder are referred to as such Stockholder's "Owned Shares").
C. Subject to the terms and conditions of the Merger Agreement, the
Stockholders will receive shares ("Parent Shares") of the Parent's common stock,
par value $0.01 per share ("Parent Common Stock") in exchange for the Shares (as
defined in Section 1) held by them at the Effective Time.
D. As an inducement and a condition to Parent's willingness to enter into
the Merger Agreement, Parent, the Company and the Stockholders are entering
into this Agreement.
E. Capitalized terms not defined herein shall have the meanings set forth
in the Merger Agreement.
F. This Agreement and the Merger Agreement are being entered into
simultaneously.
NOW, THEREFORE, in consideration of the execution and delivery by Parent of
the Merger Agreement and the mutual covenants, conditions and agreements
contained herein and therein, and intending to be legally bound hereby, the
parties agree as follows:
1. VOTING AGREEMENT. Each Stockholder agrees in accordance with
Section 23-1-32-1 of the IBCL that, at any meeting of the stockholders of
the Company (a "Company Stockholders' Meeting"), however called, and at
every adjournment or postponement thereof, he, she or it shall (i) appear
at the meeting or otherwise cause his, her or its Owned Shares, together
with any Company Common Shares acquired by the Stockholder after the date
of this Agreement whether upon the exercise of options or warrants
conversion of convertible securities or otherwise (the Stockholder's
acquired shares, together with the Stockholder's Owned Shares, are referred
to as the Stockholder's "Shares"), to be counted as present thereat for
purposes of establishing a quorum, (ii) vote, or execute consents in
respect of, his, her or its Shares, or cause his, her or its Shares to be
voted, or consents to be executed in respect thereof, in favor of the
approval and adoption of the Merger Agreement, and any action required in
furtherance thereof and (iii) for the period commencing the date hereof and
ending 90 days after the date of termination of the Merger Agreement, vote,
or execute consents in respect of, his, her or its Shares, or cause his,
her or its Shares to be voted, or consents to be executed in respect
thereof, against any agreement or transaction relating to any Acquisition
Proposal presented for the Stockholders of the Company or in respect of
which vote of consent of the Stockholder is requested or sought.
2. IRREVOCABLE PROXY. As security for the Stockholders' obligations
under Section 1, each of the Stockholders hereby irrevocably constitutes
and appoints Parent as his, her or its attorney and proxy in accordance
with the provisions of Section 23-1-30-3 of the IBCL, with full power of
substitution and resubstitution, to cause the Stockholder's shares to be
counted as present at any Company Stockholders Meetings to vote his, her or
its Shares at any Company Stockholders'
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Meeting, however called, and execute consents in respect of his, her or its
shares as and to the extent provided in Section 1. THIS PROXY AND POWER OF
ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. Each Stockholder
hereby revokes all other proxies and powers of attorney with respect to
his, her or its Shares that he, she or it may have heretofore appointed or
granted, and no subsequent proxy or power of attorney shall be granted (and
if granted, shall not be effective) by any Stockholder with respect
thereto, other than for the sole purpose of voting Shares as contemplated
by, or other than in a manner inconsistent with the Stockholders
obligations under Section 1.
3. OPTION.
(a) Subject to the terms and conditions set forth in this
Agreement, each of the Stockholders hereby grants to Parent an
irrevocable option (the "Option") to purchase (i) the number of Shares
set forth next to such Stockholder's name on Exhibit A hereto (as
adjusted as set forth herein) and any other Shares owned by such
Stockholder beneficially or acquired after the date of this Agreement,
at a purchase price of $19.00 (as adjusted as set forth herein) per
Share (the "Purchase Price").
(b) The Option may be exercised by Parent, in whole at any time
prior to the earlier of (i) the date upon which the Effective Time (as
defined in the Merger Agreement) occurs and (ii) the date fifteen
business days after the date of termination of the Merger Agreement.
(c) In the event that Parent wishes to exercise the Option, it
shall send to the Stockholders a written notice (the date of each such
notice being herein referred to as a "Notice Date") to that effect,
which notice also specifies a date not earlier than three business
days nor later than 30 business days from the Notice Date for the
closing of such purchase (an "Option Closing Date"); provided,
however, that (i) if the closing of a purchase and sale pursuant to
the Option (an "Option Closing") cannot be consummated by reason of
any applicable judgment, decree, order, law or regulation, the period
of time that otherwise would run pursuant to this sentence shall run
instead from the date on which the restriction on consummation has
expired or been terminated and (ii) without limiting the foregoing, if
prior notification to or approval of any regulatory authority is
required in connection with the purchase, Parent and the Stockholders
shall promptly file the required notice or application for approval
and shall cooperate in the expeditious filing of such notice or
application, and the period of time that otherwise would run pursuant
to this sentence shall run instead from the date on which, as the case
may be, (A) any required notification period has expired or been
terminated or (B) any required approval has been obtained, and in
either event, any requisite waiting period has expired or been
terminated. Each of Parent and the Stockholders agrees to use
commercially reasonable efforts to cooperate with and provide
information to the other, for the purpose of any required notice or
application for approval. Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto. The place of any Option
Closing shall be at the offices of Parent, 3M Center, St Paul, MN
55133 and the time of the Option Closing shall be 10:00 a.m. (Central
Time) on the applicable Option Closing Date.
(d) At any Option Closing, Parent shall pay to each Stockholder
in immediately available funds by wire transfer to a bank account
designated in writing by such Stockholder an amount equal to the
Purchase Price multiplied by the number of Shares being delivered by
such Stockholder; provided, that failure or refusal of any Stockholder
to designate a bank account shall not preclude Parent from exercising
the Option, in whole or in part.
(e) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided above, each Stockholder shall
deliver to Parent a certificate or certificates representing its pro
rata portion of the Shares to be purchased at such Option Closing,
which Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever.
(f) In the event of any change in the Company Common Shares by
reason of a stock dividend, split-up, merger, recapitalization,
combination, exchange of shares or similar
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transaction, the type and number of Shares subject to the Option, and
the Purchase Price therefor, shall be adjusted appropriately, so that
Parent shall receive upon exercise of the Option the number and class
of shares or other securities or property that Parent would have
received in respect of the Option Shares if the Option had been
exercised immediately prior to such event or the record date therefor,
as applicable.
4. REGISTRATION RIGHTS. The Company shall, if requested by Parent at
any time and from time to time within two years after the date of first
exercise of the Option, as expeditiously as possible prepare and file up to
two registration statements under the Securities Act if such registration
is necessary in order to permit the sale or other disposition of any or all
securities that have been acquired by exercise by Parent of the Option, in
accordance with the intended method of sale or other disposition stated by
Parent, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision; and the Company shall use
commercially reasonable efforts to qualify such securities under any
applicable state securities laws. Parent agrees to use reasonable best
efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis. The
Company shall use reasonable best efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration
statement effective for such period not in excess of 90 calendar days from
the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The
obligations of the Company to file a registration statement and to maintain
its effectiveness may be suspended for one or more periods of time not
exceeding 90 calendar days in the aggregate with respect to any
registration statement if the Board of Directors of the Company shall have
determined that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect the Company or would
interfere with a planned merger, sale of material assets, recapitalization
or other significant corporate action (other than the issuance of equity
securities). Any registration statement prepared and filed under this
Section 4, and any sale covered thereby, shall be at the Company's expense
except for underwriting discounts or commissions and brokers' fees, which
shall be borne solely by Parent. Parent shall provide in writing all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. If, during the time periods
referred to in the first sentence of this Section, the Company effects a
registration under the Securities Act of the Company's equity securities
for its own account or for any other of its stockholders (other than on
Form S-4 or Form S-8, or any successor form), it shall allow Parent the
right to participate in such registration; provided however, that, if the
managing underwriters of such offering advise the Company that in their
opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering on a
commercially reasonable basis, priority shall be given to the securities
intended to be included therein by the Company for its own account and,
thereafter, the Company shall include the securities requested to be
included therein by Parent pro rata with the securities intended to be
included therein by other stockholders of the Company. In connection with
any registration pursuant to this Section, Parent and the Company shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution
in connection with such registration.
5. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and
warrants to the Stockholders as follows:
(a) ORGANIZATION; DUE AUTHORIZATION; ENFORCEABILITY. Parent is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Parent has full corporate
power and authority to execute and deliver this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of Parent, and no other corporate
proceedings on the part of Parent are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has
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been duly and validly executed and delivered by Parent and constitutes
a valid and binding agreement of Parent, enforceable against Parent in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors'
rights and to general principles of equity.
(b) NO CONFLICTS. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary
for the consummation by Parent of the transactions contemplated by
this Agreement. The execution, delivery and performance of this
Agreement by Parent will not constitute a breach, violation or default
(or any event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any
lien or encumbrance upon any of the properties or assets of Parent
under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument to which Parent is a party or by
which its properties or assets are bound, other than breaches,
violations, defaults, terminations, accelerations or creation of liens
and encumbrances which, in the aggregate, would not materially impair
the ability of Parent to perform its obligations hereunder.
(c) BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made
by or on behalf of Parent.
6. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder hereby severally and not jointly represents and warrants to
Parent as follows:
(a) ORGANIZATION; DUE AUTHORIZATION; ENFORCEABILITY. If the
Stockholder is a corporation or other entity, the Stockholder is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. The Stockholder has full power and
authority to execute and deliver this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary action on the part of the Stockholder, and no other
proceedings on the part of the Stockholder are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the
Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against such Stockholder in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and to general
principles of equity.
(b) OWNERSHIP OF SHARES OF COMPANY COMMON SHARES; VOTING RIGHTS.
Except as set forth on Schedule A, the Stockholder owns, of record and
beneficially, the shares of Company Common Shares set forth opposite
the Stockholder's name on Schedule A. The Stockholder has sole voting
power with respect to his, her or its Owned Shares. Except pursuant to
this Agreement or as set forth on Schedule A, the Stockholder's Owned
Shares and the Shares are not subject to any voting trust agreement or
other contract, agreement, arrangement, commitment or understanding
restricting or otherwise relating to the voting, dividend rights or
disposition of such Owned Shares. Upon the exercise of the Option and
the delivery to Parent by Stockholder of a certificate or certificates
evidencing the Shares, Parent will receive good, valid and marketable
title to the Shares, free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements,
limitations on Parent's voting rights, charges and other encumbrances
of any nature whatsoever.
(c) NO CONFLICTS. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary
for the consummation by such Stockholder of the transactions
contemplated by this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not constitute
a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in
the creation of any lien or encumbrance upon
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any of the properties or assets of such Stockholder under, any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument to which such Stockholder is a party or by which his,
her or its properties or assets are bound, other than breaches,
violations, defaults, terminations, accelerations or creation of liens
and encumbrances which, in the aggregate, would not materially impair
the ability of such Stockholder to perform his, her or its obligations
hereunder.
(d) BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made
by or on behalf of the Stockholder.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent as follows:
(a) ORGANIZATION; DUE AUTHORIZATION; ENFORCEABILITY. The Company
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Indiana. The Company has full corporate
power and authority to execute and deliver this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and to general principles of equity.
(b) NO CONFLICTS. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary
for the consummation by the Company of the transactions contemplated
by this Agreement. The execution, delivery and performance of this
Agreement by the Company will not constitute a breach, violation or
default (or any event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any
lien or encumbrance upon any of the properties or assets of the
Company under, any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument to which the Company is
a party or by which its properties or assets are bound, other than
breaches, violations, defaults, terminations, accelerations or
creation of liens and encumbrances which, in the aggregate, would not
materially impair the ability of the Company to perform its
obligations hereunder.
(c) BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made
by or on behalf of the Company.
(d) STATE TAKEOVER STATUTES. The Board of Directors of the
Company has approved the Merger and this Agreement and such approval
is sufficient to render inapplicable to the Merger, this Agreement and
the transactions contemplated by this Agreement, the provisions of IC
23-1-43 to the extent, if any, such section is applicable to the
transactions contemplated by this Agreement. The Board of Directors of
the Company has amended the bylaws of the Company so as to render
inapplicable to this Agreement the provisions of IC 23-1-42. To the
Company's knowledge, no other state takeover statute or similar
statute or regulation applies to the transactions contemplated hereby.
(e) RIGHTS AGREEMENT. No "Distribution Date" or "Triggering
Event" (as such terms are defined in the Rights Agreement, dated as of
April 21, 1998, between the Company and Compushare Investor Services,
LLC, as successor rights agent, as amended (the "RIGHTS AGREEMENT"))
has occurred as of this date. This Agreement, and the consummation of
the transactions contemplated hereunder have been approved by at least
two-thirds (2/3) of the Disinterested Directors (as defined in the
Rights Agreement). The Rights Agreement has been amended so that
neither the execution or delivery of this Agreement, nor the exchange
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of the Company Common Shares for the shares of Parent Common Stock and
cash in accordance with Article II of the Merger Agreement will cause
(A) the Rights issued pursuant to the Rights Agreement to become
exercisable under the Rights Agreement, (B) Parent or Merger Sub to be
deemed an "Acquiring Person" (as defined in the Rights Agreement), or
(C) the "Shares Acquisition Date" or a "Triggering Event" (each as
defined in the Rights Agreement) to occur upon any such event. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in the ability of any
Person to exercise any Rights or cause the Rights to separate from the
shares of Company Common Shares to which they are attached or to be
triggered or become exercisable.
8. STOCKHOLDER COVENANTS. Each Stockholder hereby severally covenants
and agrees as follows:
(a) Each Stockholder hereby agrees, during the period commencing
on the date hereof and ending 90 days after the termination of the
Merger Agreement, except as contemplated hereby, not to sell,
transfer, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, encumbrance, assignment or
other disposition of (all of the foregoing, "Sell", "Sold" or "Sale",
as the case may be), any of the Owned Shares or Shares, PROVIDED,
HOWEVER, that such Stockholder may transfer, pledge, encumber, assign
or otherwise dispose the Owned Shares or Shares as a gift, in which
case, as a condition of the gift, the Stockholder must require the
person to which any such Owned Shares or Shares are to be transferred,
pledged, encumbered, assigned or otherwise disposed of to agree in
writing, pursuant to an agreement reasonably satisfactory to Parent to
which Parent is an express third-party beneficiary, that with respect
to such Owned Shares or Shares such person shall be subject to the
restrictions AND OBLIGATIONS hereunder as if such person was a
Stockholder hereunder, (ii) not to grant any proxies, powers of
attorney or other authorization or consent, deposit any shares of
capital stock of the Company into a voting trust or enter into a
voting agreement with respect to any such Shares and (iii) not to take
any action that would make any representation or warranty of such
Stockholder contained in this Agreement untrue or incorrect or have
the effect of preventing or disabling such Stockholder from performing
his, her or its obligations under this Agreement.
(b) Such Stockholder hereby agrees, during the period commencing
on the date hereof and ending 90 days after the termination of the
Merger Agreement, to promptly notify Parent of the number of new
shares of capital stock of the Company acquired by such Stockholder,
if any, after the date of this Agreement.
(c) Such Stockholder shall immediately cease any discussions or
negotiations with any parties other than Parent that may be ongoing
with respect to an Acquisition Proposal. For so long as Section 5.2 of
the Merger Agreement is in effect, such Stockholder shall not (i)
solicit, initiate or encourage any inquiries or the making of any
Acquisition Proposal, or (ii) participate in any discussions or
negotiations regarding any Acquisition Proposal, except to the extent
such discussions or negotiations are participated in by the
Stockholder in his or her capacity as a director of the Company in
accordance with the terms of the Merger Agreement.
9. NON COMPETITION; NON-SOLICITATION.
(a) Upon the terms and subject to the conditions set forth in
this Section 9, each Stockholder covenants and agrees that, as a
material consideration running to Parent for the Parent entering into
the Merger Agreement, for a period of five years from and after the
earlier of the exercise of the Option hereunder or the Effective Time,
each Stockholder will not engage in any business directly or
indirectly in competition with the business as carried on, or as
proposed to be carried on, by the Company or its subsidiaries or
affiliates on the earlier of the exercise of the Option hereunder or
the Effective Time, in the United States of America, or in any country
or political subdivision of the world in which the Business is located
or conducts business.
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(b) The term of the covenant contained in Section 9(a) hereof
shall be tolled with respect to any Stockholder for the period
commencing on the date any successful action is filed for injunctive
relief or damages arising out of a breach by such Stockholder of
Section 9(a) hereof and ending upon final adjudication (including
appeals) of such action.
(c) If, in any judicial proceeding, the court shall refuse to
enforce the covenant contained in Section 9(a) hereof because the time
limit is too long, it is expressly understood and agreed between the
parties hereto that for purposes of such proceeding such time
limitation shall be deemed reduced to the extent necessary to permit
enforcement of such covenant. If, in any judicial proceeding, the
court shall refuse to enforce the covenant contained in Section 9(a)
hereof because it is more extensive (whether as to geographic area,
scope of business or otherwise) than necessary to protect the business
and goodwill of Parent, it is expressly understood and agreed between
the parties hereto that for purposes of such proceeding the geographic
area, scope of business or other aspect shall be deemed reduced to the
extent necessary to permit enforcement of such covenant.
(d) Each Stockholder acknowledges that a breach of Section 9(a)
hereof would cause irreparable damage to Parent, and in the event of
each Stockholder's actual or threatened breach of the provisions of
Section 9(a) hereof, Parent shall be entitled to a temporary
restraining order and an injunction restraining each Stockholder from
breaching such covenants without the necessity of posting bond or
proving irreparable harm, such being conclusively admitted by each
Stockholder. Nothing shall be construed as prohibiting Parent from
pursuing any other available remedies for such breach or threatened
breach, including the recovery of damages from each Stockholder.
(e) Each Stockholder covenants and agrees that, for a period of
one year, following the earlier of the exercise of the Option
hereunder or the Effective Time, he or she will not, and will cause
his or her affiliates not to, directly or indirectly, solicit for
employment any employee of the Company or any of its affiliates who is
engaged in the business of the Company and was an employee of the
Company as of the date hereof to become an employee or otherwise
provide services to such Stockholder or any of its affiliates.
10. MISCELLANEOUS.
(a) FEES AND EXPENSES. Except as otherwise provided in the Merger
Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be borne by
the party incurring such expenses.
(b) AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA,
WITHOUT REGARD TO ITS CONFLICT OF LAWS RULES OR PRINCIPLES.
(d) NOTICES. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed
to have been duly given upon receipt) by delivery in person, by cable,
telegram, telex or other standard form of telecommunications, or by
registered or certified mail, postage prepaid, return receipt
requested, addressed as follows:
If to a Stockholder:
to the address set forth
beneath the name of such
Stockholder on Schedule A
B-7
<PAGE>
If to Parent:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: General Counsel
With a copy to:
Minnesota Mining and Manufacturing Company
3M Center
St. Paul, Minnesota 55114
Telecopy: (651) 736-9469
Attention: Gregg Larson
with a further copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Jean Hanson, Esq.
Telecopy No.: (212) 859-4000
If to the Company:
To the address set forth in the Merger Agreement
or to such other address as any party may have furnished to the other
parties in writing in accordance with this Section.
(e) ASSIGNMENT; BINDING EFFECT; NO THIRD PARTY BENEFICIARIES.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of
the other party. Subject to the preceding sentence, this Agreement
(including the obligations of each Stockholder under Sections 1 and 2
hereof) shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
(f) ENFORCEMENT. THE PARTIES HERETO AGREE THAT IRREPARABLE DAMAGE
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT
WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT, SUBJECT TO THE NEXT
SENTENCE, THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE
SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE
UNITED STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION
TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
(g) COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but
together signed by all of the parties hereto.
B-8
<PAGE>
IN WITNESS WHEREOF, Parent and the Stockholders have caused this Agreement
to be duly executed as of the day and year first above written.
MINNESOTA MINING AND
MANUFACTURING COMPANY
By /s/ ROBERT J. BURGSTAHLER
-------------------------------------
Name: Robert J. Burgstahler
Title: Vice President, Finance and
Administrative Services
ROBINSON NUGENT, INC.
By /s/ LARRY W. BURKE
-------------------------------------
Name: Larry W. Burke
Title: President and CEO
STOCKHOLDERS
By /s/ SAMUEL C. ROBINSON
-------------------------------------
Samuel C. Robinson
By /s/ JAMES W. ROBINSON
-------------------------------------
James W. Robinson
By /s/ PATRICK C. DUFFY
-------------------------------------
Patrick C. Duffy
By /s/ LARRY W. BURKE
-------------------------------------
Larry W. Burke
B-9
<PAGE>
SCHEDULE A
STOCKHOLDER OPTIONS SHARES
----------- ------- ------
Samuel C. Robinson -0- 1,115,360
226 Barefoot Beach Blvd
Bonita Springs, FL 34134
James W. Robinson 34,000 280,741
7621 State Road 62
Lanesville, IN 47136
Patrick C. Duffy 88,000 37,099
583 Clubside Circle
Venice, FL 34293
Larry W. Burke 97,650 162,451
205 Ponder Way
Clarksville, IN 47129
B-10
<PAGE>
ANNEX C
October 2, 2000
Board of Directors
Attn: Mr. Patrick E. Duffy
Chairman
Robinson Nugent, Inc.
800 East Eighth Street
P.O. Box 1208
New Albany, IN 47150
Members of the Board:
You have requested Goelzer Investment Banking's ("Goelzer") opinion as to
the fairness, from a financial point of view, of the terms of the
stock-for-stock transaction between Robinson Nugent, Inc. ("the Company") and
Minnesota Mining & Manufacturing Company ("the acquirer" or "3M"). The terms of
the transaction, which have been presented to Goelzer by the Company and its
advisers, provide that for each share of Robinson Nugent shareholders will
receive $19.00 worth of fully registered, unrestricted Minnesota Mining &
Manufacturing Co. common stock if the average closing trading price of 3M trades
between a collar of $82.00 and $100.00 per share. If the average price exceeds
$100 per share, the exchange ratio will be fixed at 0.19 shares of 3M for every
share of the Company. If the average price falls below $82.00 per share, the
exchange ratio will be fixed at 0.2317 shares of 3M for every share of the
Company.
It should be noted that Goelzer has not rendered any investment banking or
other services to the Company in the past. For the purpose of this opinion,
Goelzer has undertaken analyses, investigations and interviews deemed necessary
and relevant. In the course of such activities Goelzer has among other things:
1. Conducted detailed interviews with management concerning the Company's
history and operating record, the nature of the markets served,
competitive situation, financial condition, recent performance and
current outlook;
2. Analyzed trading data (stock price and volume trends) of the Company's
Common Shares for a period of ten years and analyzed the stock's total
return relative to appropriate indices over the last five years as
provided by BLOOMBERG ANALYTICS;
3. Analyzed the Company's financial statements and studied its filings
under the Securities Exchange Act of 1934 including the latest Form
10-K and Form 10-Q and annual reports for the three fiscal years ended
June 30, 2000;
4. Conducted a search using BLOOMBERG ANALYTICS and utilized a 6/26/00
Company Press Release in order to find publicly traded companies which
could be used as reasonable comparables in determining the fair value
of the Company;
5. Conducted a search for merger and acquisition transactions involving
both publicly traded and privately held corporations within the
electronic connector/electrical interconnection industry using two
large proprietary databases (MERGERSTAT and World M&A Network's DONE
DEALS) and the February 1999 edition of THE BISHOP REPORT (a
publication of Bishop & Associates);
6. Analyzed trading data (stock price and volume trends), operating
record, the nature of the markets served, financial condition, recent
performance and current outlook of the potential acquirer; and
7. Performed such other studies, analyses and investigations as deemed
appropriate.
In rendering this opinion Goelzer has relied on the accuracy and
completeness of the information furnished and has not attempted to independently
verify such information nor has Goelzer made or caused to be made any
independent evaluation of the assets of the Company. In reaching our conclusions
C-1
<PAGE>
we have also relied in part upon the letter provided to us by the Chairman of
the Board, Mr. Patrick Duffy, a copy of which is included in the materials
provided herein.
Based upon the foregoing, it is our opinion that the proposed
stock-for-stock transaction is fair, from a financial point of view, to the
shareholders of the Company.
Respectfully submitted,
/s/ GOELZER INVESTMENT BANKING
GOELZER INVESTMENT BANKING
C-2
<PAGE>
ANNEX D
RESTATED ROBINSON NUGENT, INC.
2000 ANNUAL REPORT ON FORM 10-K*
*Robinson Nugent, Inc. filed its Annual Report on Form 10-K for the year ended
June 30, 2000 on August 24, 2000. It subsequently filed an amendment to its
Annual Report on Form 10-K/A on October 10, 2000, which restated Item 11 from
its 10-K. For the reader's convenience, the Form 10-K attached hereto has been
restated to include the changes made in the amendment on Form 10-K/A.
D-1
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _____________________
Commission file number 0-9010
ROBINSON NUGENT, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 35-0957603
------------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
organization or incorporation) Identification Number)
800 East Eighth Street, New Albany, Indiana 47151-1208
------------------------------------------- -------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (812) 945-0211
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, Common Share
Without Par Value Purchase Rights
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days: Yes __X__ No _____
The aggregate market value of Common Shares held by nonaffiliates of the
registrant, based on the closing price of the Common Shares of $13.75, as of
August 8, 2000, was approximately $28,956,000.
As of August 8, 2000, the registrant had outstanding 5,112,799 Common
Shares, without par value.
DOCUMENTS INCORPORATED BY REFERENCE:
PARTS OF FORM 10-K INTO WHICH
IDENTITY OF DOCUMENT DOCUMENT IS INCORPORATED
-------------------------------------- ------------------------------------
No documents incorporated by reference
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any Amendment to this
Form 10-K. [ ]
D-2
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Robinson Nugent, Inc. (the "Company") or ("RN"), an Indiana corporation
organized in 1955, designs, manufactures and markets electronic devices used to
interconnect components of electronic systems. The Company's principal products
are integrated circuit sockets; connectors used in board-to-board,
wire-to-board, and custom molded-on cable assemblies. The Company also offers
application tooling that is used in applying wire and cable to its connectors.
The Company's products are used in electronic telecommunication equipment
including switching and networking equipment such as servers and routers, mass
storage devices, modems and PBX stations; data processing equipment such as
mainframe computers, personal computers, workstations, CAD systems; peripheral
equipment such as printers, disk drives, plotters and point-of-sale terminals;
industrial controls and electronic instruments; consumer products; and a variety
of other applications.
Major markets are the United States, Europe, Japan, and the Southeast Asian
countries including Singapore and Malaysia. Manufacturing facilities are located
in New Albany, Indiana; Dallas, Texas; Reynosa, Mexico; Sungai Petani, Malaysia;
Inchinnan, Scotland; and Hamont-Achel, Belgium.
Corporate headquarters are located in New Albany, Indiana, which also is
the site for the Company's corporate engineering, research and development,
preproduction, testing of new products and North American distribution and
warehousing. International headquarters are located in s-Hertogenbosch, The
Netherlands; Singapore; and Tokyo, Japan.
PRODUCTS
The Company produces a broad range of sockets that accommodate a variety of
integrated circuit package styles. Sockets are offered for dual in-line package
(DIP) and pin grid array (PGA) devices, as well as plastic leaded chip carriers
(PLCC).
Sockets are used in a wide variety of applications within electronic
equipment, but are primarily used to connect integrated circuits, such as
microprocessors and memory devices, to an electronic printed circuit board
(PCB). In many applications, semiconductor devices have been subject to
replacement, which encouraged the use of a socket rather than soldering the
device directly to the printed circuit board. But, due to the improved
reliability of semiconductor technology, more and more semiconductor devices are
being soldered directly to PCB's. This trend will continue to reduce the
worldwide demand for integrated circuit sockets.
Dual in-line memory module (DIMM) sockets were introduced in fiscal 1992
and were designed to interconnect dual in-line memory modules with electronic
printed circuit boards. In addition to DIMM sockets, the Company offers several
other products that interconnect memory devices to electronic printed circuit
boards. These include small outline dual in-line memory module sockets (SO-DIMM)
and PCMCIA memory card headers, sockets and type II and III PC card kits.
The Company provides a broad range of electronic connectors, such as
insulation displacement flat cable connectors (IDC), used in cable-to-board
applications. The use of insulation displacement connectors in electronic
hardware increases productivity by eliminating the labor involved in stripping
insulation from wires prior to attachment to the connector contacts. This
technology permits the automated manufacturing of cable assemblies. The range of
connectors also includes several product styles that provide for board-to-board
or board-stacking (parallel-mounting) applications.
The Company offers several product families in the two-piece style of
connectors. These connectors are used to connect printed circuit boards which
are positioned either at right angles, in-line, or parallel stacked at close
intervals. The products offered include .025 inch square post connectors and
receptacle sockets; DIN series connectors; high-density, high-pin-count
connectors (HDC); half-pitch, high-density (RN PAK-50(R)) connectors; and a
higher pin count 2-millimeter-spaced connector (METPAK(R)2) used in backplane
applications. In addition, a line of high density .8mm (RN PAK 8(TM)) and .5mm
(RN PAK 5(TM))
D-3
<PAGE>
board stacking interconnects are offered by the Company to address the growing
demand for miniaturized connectors used in the portable computers, mobile
communication equipment and other markets.
The DIN series of connectors has many variations in connecting
configurations and pin count. The product is based on a European standard, but
has gained wide acceptance in the U.S. and other markets worldwide. While there
are a large number of producers of DIN connectors in Europe, the Company is one
of a limited number of manufacturers producing the product in the U.S.
The high-pin-count, high-density connector (HDC) includes pin counts
ranging from 60 to 492 in a three-and four-row configuration. This connector
family, along with DIN connectors, is widely used on backplane applications and
frequently requires the terminals to be press-fit to the backplane. This is
accomplished by forming a compliant section in the tails of the connector
contacts such that, when pressed into a plated through-hole on a backplane PCB,
forms a reliable gas-tight connection. The Company has become recognized as a
leader in press-fit backplane connectors and has focused marketing efforts in
promoting its products for this type of application.
The Company's half-pitch (PAK-50) connector family has been accepted as one
of the industry's most reliable .050 inch spaced connectors. The contact design
and compact shape has gained wide acceptance in applications, such as small form
factor computers that require connectors that are highly reliable yet consume
little space.
The METPAK(R)2 series of connectors includes four and five row versions of
both standard and inverse configurations. The METPAK(R)2 is an industry standard
connector style used in board-to-board and board-to-back plane applications and
over time has displaced some of the more mature product types such as the DIN
series and HDC connectors. This product line has wide acceptance in many new
applications, primarily in the computer workstations, telecommunication and data
communication equipment and other networking equipment used to support the
Internet. The inverse METPAK(R)2 is a Company patented design which has gained
acceptance in high-end computer work stations, networking and communications
equipment.
Robinson Nugent introduced a new line of high-speed backplane connectors in
1999 to the U.S., Europe, and Asian markets. These connectors are known
throughout the industry as Compact PCI connectors which comply with existing
industry standards for this type of product. Robinson Nugent is marketing this
product line as the next generation backplane connector for use in data
communication, telecommunication, and other high-speed, high-density
applications.
A new generation of high-speed backplane connectors was developed and
introduced to the market. This high-speed hard metric (HSHM) connector line
provides customers the capability to process electronic signals at transmission
speeds up to 5 gigahertz. This new product line provides for higher-speed signal
transmissions with greater signal integrity, at a higher contact density than
connectors currently available. This new HSHM product line provides the Company
with a product that will generate future sales as customers seek the next higher
level of technical performance.
PAK-5(TM) and PAK-8(TM) connectors represent the latest high density,
surface mount, fine pitch board-to-board interconnect systems offered by the
Company. As electronic systems continue to downsize and the need for higher pin
counts continues to increase, electronic connector geometry will have to be
reduced. The PAK-5(TM) series is available with a "floating" contact,
accommodating potential torsional and positional discrepancies incurred with
tolerance build up when stacking connectors. The PAK-8(TM) series utilizes a
hermaphroditic two-point contact construction that maximizes contact wiping
action, minimizes contact resistance and insures a highly reliable contact
interface. These interconnects offer system designers the board-to-board
stacking solutions required for today's miniaturized electronic system designs.
Technology continues to drive the connector industry to an ever-increasing
number of circuits in less space to meet the increasing complexity, capacity and
processing speed of electronic and semiconductor devices. This trend has caused
increased demand for all types of high-density connector products. The Company
is focusing its new product development in socket and connector products that
meet these technology trends.
D-4
<PAGE>
The Company also produces electronic cable assemblies of various types
including insulation displacement connector, fabricated and molded-on cable
assemblies. The Company utilizes its own connectors whenever possible, but also
provides cable assemblies with other manufacturers' connectors if the customer
is specific regarding its requirements.
In addition to standard products, the Company provides engineering
assistance, product design, and manufacturing of custom and derivative products.
These products may require special production tooling that, in some cases, is
paid for by the customer, shared, or amortized over future orders, depending
upon contractual agreements reached with the customer. Current trends in the
market indicate a growing demand for custom and derivative products. There is
also an increased demand for the Company's engineers to be involved in the early
development of the customer's product design.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company's worldwide engineering efforts are directed toward the
development of new products to meet customer needs, the improvement of
manufacturing processes and the adaptation of new materials to all products. New
products include new creations as well as the design of derivative products to
meet both the needs of the general market and customer proprietary custom
designs. Engineering development covers new or improved manufacturing processes,
assembly and inspection equipment, and the adaptation of new plastics and metals
to all products. In recent years, the Company's products have become more
sophisticated and complex in response to developments in semiconductors and
their applications. The Company has the engineering capability to analyze
customer designed, high-speed applications and to design connectors that reduce
electrical interference that can result from very high processing speeds of
newer and more powerful microprocessors.
The Company's expenditures for research, development and engineering were
approximately $4.5 million in 2000, $3.5 million in 1999 and $4.0 million in
1998.
Consistent with industry direction, the Company is active in improving
manufacturing processes through automation and also designs and builds its
proprietary assembly equipment. The Company continues to apply advanced
technologies, such as laser and video devices, to automatically inspect products
during the assembly process. All new automated assembly machines are direct
microcomputer-controlled, which provides greater flexibility in the
manufacturing process.
SALES AND DISTRIBUTION
The Company sells its products in the United States and international
markets. The primary market for Robinson Nugent is the United States, which
produces approximately 58 percent of the consolidated sales of the Company. Its
principal markets outside the United States are Europe, including the United
Kingdom and Scandinavia, Japan, Singapore, Malaysia, Hong Kong, and the emerging
market of China. The Company has begun doing business in China through a Hong
Kong distributor.
Sales outside the United States accounted for 42 percent of total sales in
2000, 37 percent of total sales in 1999 and 36 percent in 1998. The Company
believes that the growth and development of its presence in global markets is
essential to support its customer base. The Company does not believe that its
international business presents any unusual risks. The following table sets
forth the percentage of Company sales by major geographical location for the
periods shown:
YEARS ENDED JUNE 30
--------------------------
2000 1999 1998
---- ---- ----
United States .............................. 58% 63% 64%
Europe ..................................... 27 25 25
Asia ....................................... 10 9 9
Other ...................................... 5 3 2
--- --- ---
100% 100% 100%
=== === ===
The lower percentage of sales in the United States in 2000 was a result of
a substantial growth in sales in Europe, and an accelerated shift of contract
manufacturing from the United States to countries in Southeast Asia. The Company
experienced sales growth in all geographical regions.
D-5
<PAGE>
The Company had sales of approximately $14 million to Customer A, $11
million to Customer B and $10 million to Customer C in 2000 and $8.4 million to
Customer A in 1999. No sales to a single customer exceeded 10% of total sales in
1998.
Other financial data relating to domestic and foreign operations are
included in Note (16), Business Segment and Foreign Sales, of Notes to
Consolidated Financial Statements and the Management's Discussion and Analysis
of the Results of Operations and Financial Condition, included herein.
Principal markets in North America, Europe, and Asia are served by the
Company's direct sales force and a network of distributors serving the
electronics industry. The Company has U.S. regional sales offices located in the
San Francisco, California and Chicago, Illinois metropolitan areas. Other
Company sales offices are located in Japan, Singapore, England, Germany, France,
Sweden, and The Netherlands. These offices serve customers to whom the Company
sells directly, provide coordination between the plants and customers, and
technical training and assistance to distributors and manufacturers'
representatives in their respective territories. Additional marketing expertise
is provided by the product marketing specialists located in New Albany, Indiana;
Kent, England; Singapore; and s.Hertogenbosch, The Netherlands.
The Company engages independent manufacturers' representative firms in the
United States, Canada and several European and Far East countries. These firms
are granted exclusive territories and agree not to carry competing products.
These firms are paid on a commission basis on sales made to original equipment
manufacturers and to distributors. All representative relationships are subject
to termination by either party on short notice.
The Company has an international network of distributors who are
responsible for serving their respective customers from an inventory of the
Company's products. Approximately one-third of the Company's worldwide sales are
made through the distributor network. No distributor is required to accept only
the franchise of the Company. All distributor agreements are subject to
termination by either party on short notice.
BACKLOG
The Company's backlog was approximately $23.4 million at June 30, 2000,
compared to $13.0 million at June 30, 1999 and $10.2 million at June 30, 1998.
These amounts represent orders with firm shipment dates acceptable to the
customers. The Company does not manufacture pursuant to long-term contracts, and
purchase orders are generally cancelable subject to payment by the customer for
charges incurred up to the date of cancellation.
COMPETITION
There is active competition in all of the Company's standard product lines.
The Company's competitors include both large corporations having significantly
more resources than the Company and smaller, highly specialized firms. The
Company competes on the basis of customer service, product performance, quality,
and price. Management believes that the Company's capabilities in customer
service, new product design and its continued efforts to reduce cost of products
are significant factors in maintaining the Company's competitive position.
MANUFACTURING
The Company's manufacturing operations include plastic molding,
electroplating and assembly. The Company designs and builds the majority of its
automated and semi-automated assembly machines. Robinson Nugent manufactures
most of its goods in-house and utilizes subcontractors and brokered products on
a limited basis. The Company is continuing with its plan to relocate a major
portion of its high-labor content connector manufacturing processes from its
facilities in Dallas, Texas and Inchinnan, Scotland into its facilities in
Sungai Petani, Malaysia and Reynosa, Mexico. The Company is making these
transfers in order to take advantage of the high-quality, low-cost workforces
available in these existing low cost facilities.
D-6
<PAGE>
RAW MATERIALS AND SUPPLIES
The Company utilizes copper alloys, precious metals, and plastics in the
manufacture of its products. Although some raw materials are available from only
a few suppliers, the Company believes it has adequate sources of supply for most
of its raw material and component requirements. Recently, the Company has had to
deal with a supply shortage of one of its critical raw materials, berylium
copper, which is used for various connector contacts. When possible, the Company
has purchased safety stock for use by its stamping suppliers, and substituted
similar copper alloys where possible. Moderate price increases are expected in
the near future on these materials. Management believes that the current
shortage of berylium copper contact material and expected price increases should
not have a significant negative impact on the Company's operating results in
future periods. Other raw material prices did not increase or decrease
materially during fiscal year 2000.
The use of gold, while still significant, has declined substantially over
the past several years. Plating processes using ROBEX(TM), a palladium nickel
alloy, and tin have accelerated in demand from customers of the Company. The
cost of palladium has risen substantially in the past year and could result in
an industry wide price increase of connectors, if the trend continues.
HUMAN RESOURCES
As of June 30, 2000, the Company had approximately 826 full-time employees;
478 in the United States, 210 in Europe and 138 in Asia and Japan.
PATENTS AND TRADEMARKS
Management believes that success in the electronic connector industry is
dependent upon engineering and production skills and marketing ability; however,
there is a trend in the industry toward more patent consideration and protection
of proprietary designs and knowledge. It is the policy of the Company to pursue
patent applications to protect its unique product features. The Company reviews
each new product design for possible patent application. The Company has been
granted patents over the past several years and is presently awaiting acceptance
on other pending applications. The Company has obtained registration of its
trade and service marks in the United States and in major foreign markets.
ENVIRONMENT
The Company's manufacturing facilities are subject to several laws and
regulations designed to protect the environment. In the opinion of management,
the Company is complying with those laws and regulations in all material
respects and compliance has not had and is not expected to have a material
effect upon its operations or competitive position.
D-7
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are:
SERVED IN PRESENT
NAME AGE POSITIONS HELD CAPACITY SINCE
------------------ --- ----------------------- -----------------
Larry W. Burke 60 President & Chief 1990
Executive Officer
Robert L. Knabel 42 Vice President, 1997
Treasurer & Chief
Financial Officer
W. Michael Coutu 49 Vice President -- 1992
Information Technology
Raymond T. Wandell 52 Vice President Sales -- 1999
North America
Dennis I. Smith 51 Vice President -- 1999
Global Marketing
The Bylaws of the Company provide that the corporate officers are to be
elected at each Annual Meeting of the Board of Directors. Under the Indiana
Business Corporation Law, officers may be removed by the Board of Directors at
any time, with or without cause.
ITEM 2. PROPERTIES
The Company leases a 36,000-square-foot building used for its executive
offices, engineering, quality assurance and administrative operations, and an
adjacent 83,000-square-foot manufacturing facility located on approximately four
acres in New Albany, Indiana. A limited amount of manufacturing operations are
performed there, but most of the connector finished goods inventory sold in the
U.S. is held at the New Albany site. A major portion of the New Albany
manufacturing facility is utilized by the Company's engineering, research and
preproduction development groups. In addition, the New Albany facility is
instrumental in training plant personnel on new equipment and manufacturing
processes prior to their release to the manufacturing facilities in Dallas,
Scotland and Malaysia.
The Company owns a 60,000-square-foot manufacturing facility located on
approximately five acres in Dallas, Texas, an engineering design center,
distribution and warehousing facility with approximately 14,000 square feet in
Hamont-Achel, Belgium, and a facility with approximately 50,000 square feet in
Inchinnan, Scotland. The Company purchased this facility in Scotland for
approximately 1.2 million pounds sterling (approximately $1.8 million) in 2000.
Financing for this purchase was obtained from a bank in the United Kingdom.
Robinson Nugent owns a manufacturing facility with approximately 21,000 square
feet in Sungai Petani, Malaysia. Both cable assemblies and connectors are
manufactured in Malaysia.
In March 1999, Robinson Nugent sold its manufacturing facility in Delemont,
Switzerland for approximately $2.0 million in cash. The Company currently leases
a small amount of storage space in this facility.
The Company's primary electronic cable assembly operations are currently
located in a leased manufacturing facility, with approximately 44,000 square
feet, in Reynosa, Mexico. Robinson Nugent began cable assembly operations in
Reynosa in September 1998. In 2000, a portion of the North American connector
assembly production was transferred into this facility.
The Company also leases a 40,000 square foot facility in Kings Mountain,
North Carolina. All operations in this facility were discontinued by December
1998. The Company is currently obligated under a long-term lease on the Kings
Mountain facility through July 2012. Management intends to sublet this facility
to minimize the financial impact of this obligation.
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<PAGE>
Robinson Nugent also leases office space for customer service, sales and
administration in the The Netherlands; Germany; France; Sweden; the United
Kingdom; Tokyo, Japan; Singapore; Lake Zurich, Illinois and San Ramon,
California.
ITEM 3. LEGAL PROCEEDINGS.
Other than ordinary routine litigation incidental to the business, there
are no pending legal proceedings to which the Company is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of the Company
during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE AND DIVIDEND INFORMATION
The following table sets forth the high and low closing price of the
Company's which are traded over the Nasdaq National Market under the symbol:
RNIC, and the cash dividends declared per share in each of the quarters during
the past three fiscal years.
PRICE RANGE CASH
----------------- ---------
HIGH LOW DIVIDENDS
---- --- ---------
Fiscal 2000
First quarter ended September 30 ......... $ 5 1/4 3 7/8 $ --
Second quarter ended December 31 ......... 13 1/4 4 3/8 --
Third quarter ended March 31 ............. 21 10 --
Fourth quarter ended June 30 ............. 16 1/4 9 1/16 --
Fiscal 1999
First quarter ended September 30 ......... $ 5 3 1/8 $ --
Second quarter ended December 31 ......... 4 3 --
Third quarter ended March 31 ............. 4 1/2 3 1/2 --
Fourth quarter ended June 30 ............. 4 5/8 2 9/16 --
Fiscal 1998
First quarter ended September 30 ......... $ 7 3/4 5 1/32 $.03
Second quarter ended December 31 ......... 6 1/8 3 7/8 .03
Third quarter ended March 31 ............. 5 3/4 3 5/8 .03
Fourth quarter ended June 30 ............. 6 1/8 3 3/4 .03
As of June 30, 2000, the Company had approximately 750 holders of record of
its Common Shares.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30
--------------------------------------------------------------
2000 1999 1998 1997 1996
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Net sales ............................... $92,839 69,992 74,146 84,840 80,964
Cost of sales ........................... 66,830 53,654 62,557 65,769 65,604
Gross profit ........................... 26,009 16,338 11,589 19,071 15,360
Selling, general and administrative
expenses ............................... 18,423 13,796 14,565 15,598 16,749
Special and unusual charges ............. 757 1,663 5,063 -- --
Operating income (loss) ................ 6,829 879 (8,039) 3,473 (1,389)
Other income (expense) .................. (938) (791) (403) 376 (305)
Income (loss) before income tax
expense (benefit) ..................... 5,891 88 (8,442) 3,849 (1,694)
Income tax expense (benefit) ............ 1,261 (302) (2,261) 1,494 465
Net income (loss) ...................... $ 4,630 390 (6,181) 2,355 (2,159)
Return on net sales ..................... 5.0% 0.6% (8.3)% 2.8% (2.7)%
PER SHARE INFORMATION:
Net income (loss), basic ................ $ .93 .08 (1.26) .48 (.40)
Net income (loss), dilutive ............. $ .88 .08 (1.26) .48 (.40)
Cash dividends .......................... -- -- .12 .12 .12
Basic weighted average shares
outstanding ............................ 4,993 4,904 4,892 4,892 5,333
Dilutive weighted average shares
outstanding ............................ 5,254 4,905 4,892 4,911 5,333
Book value at year-end* ................. $ 5.57 4.76 4.73 6.37 6.13
BALANCE SHEET:
Working capital ......................... $24,281 14,690 10,740 16,581 10,328
Property, plant and equipment -- net .... 15,989 18,539 19,424 21,188 23,618
Total assets ............................ 58,067 46,626 42,302 49,696 51,466
Long-term debt .......................... 12,220 9,016 7,607 5,926 3,036
Shareholders' equity .................... 28,393 23,450 23,128 31,140 29,968
OTHER DATA:
Current ratio to 1.0 .................... 2.4 2.1 1.9 2.4 1.6
Return on shareholders' average
equity ................................. 17.8% 1.7% (22.8)% 7.8% (6.0)%
Capital expenditures .................... $ 4,957 5,766 7,818 4,202 7,474
Depreciation and amortization ........... $ 4,725 4,452 8,557 5,451 6,135
</TABLE>
----------------------
*On the basis of year-end outstanding.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE
RESULTS OF OPERATIONS.
Statements made in this annual report with respect to Robinson Nugent's
current plans, estimates, strategies and beliefs and other statements that are
not historical facts are forward-looking statements about the future performance
of RN. These statements are based on management's assumptions and beliefs in
light of the information currently available to it and therefore you should not
place undue reliance on them. RN cautions you that a number of important factors
could cause actual results to differ materially from those discussed in the
forward-looking statements.
D-10
<PAGE>
GENERAL
RN reported net income of $4.6 million on sales of $92.8 million for the
year ended June 30, 2000, compared to $0.4 million on sales of $70 million in
the prior year. The Company incurred a net loss of $6.2 million on sales of
$74.1 million in the year ended June 30, 1998.
Customer orders for the year increased 42 percent to $103 million compared
to $72.8 million in the prior year and $69.9 million in the year ended June 30,
1998.
Revenues increased by 33% in 2000 compared to 1999. This increase was
driven by a twenty-two percent increase in the United States, a forty-five
percent increase in Europe and a fifty percent increase in Asia. Gross profit
margins increased to 27.9% compared to 23.3% in 1999 due to stronger profit
margins in Europe, and the increased sales of higher-margin connectors sold in
the United States.
Research, development and engineering expenses, which are included in gross
profit, were $4.5 million or 5% of sales in 2000 compared to $3.5 million or 5%
of sales in 1999 and $4.0 million or 5.4% of sales in 1998. RN intends to
continue to increase its engineering effort in the United States and Europe in
the coming year. The U.S. team will focus primarily on higher-margin connectors
for applications in electronic data communication and telecommunication
hardware. The European engineering team is focused primarily on developing new
applications for its custom, single and double smart card reader connectors for
our European and Asian customers.
SALES
Customer sales in the United States were $58.2 million in 2000 compared to
$46.3 million in 1999 and $48.7 million in 1998. RN experienced an increase in
sales of higher-margin PC board and telecom/ data-com connectors in the United
States. These telecom/data-com connectors are used in high speed, high-end
computer network servers and other network and communication equipment. It is
estimated that the amount of data flowing over the Internet is doubling every
100 days. This explosive growth will require the expansion of the Internet's
speed and capacity, and thereby an increase in its hardware infrastructure. RN
is positioning itself to provide high performance, high-density connectors for
the electronic components and hardware used in that infrastructure.
Cable assembly sales in the United States increased ten percent compared to
the prior year. This increase was partially driven by the benefits resulting
from the relocation of the cable assembly facility from North Carolina to
Mexico. The Reynosa, Mexico facility allows RN access to high-quality, efficient
manufacturing at a lower labor cost, plus it is a location that is closer,
geographically, to a major portion of RN's cable assembly customer base.
European customer sales were $25.4 million in 2000 compared to $17.5
million in 1999 and $18.5 million in 1998, measured in U.S. dollars. This
increase was due primarily to an increase in its sales of newer designs of smart
card reader connectors and PCMCIA connectors used in digital satellite receiver
applications. The Company expects the demand for these types of products to
continue to grow, and will augment the sales generated by these products with
sales of a new proprietary double smart card reader connector.
Asian customer sales were $9.3 million in 2000 compared to $6.2 million in
1999 and $7.0 million in 1998. Sales in Japan have been favorably impacted by
the strength of the Japanese yen against the U.S. dollar. Most of the Company's
sales to customers in Southeast Asia are transacted in U.S. dollars.
GROSS PROFITS
Gross profits were $26.0 million in 2000 compared to $16.3 million in 1999
and $11.6 million in 1998. Gross profit margins improved in all three geographic
regions. An increase in the sales volume of higher margin telecom/data-com
connectors increased U.S. gross profits over the prior years. European gross
profit margins, while lower than those generated in the U.S. and Asia, improved
significantly over 1999. Operations in Asia have shown steady improvement in
their gross profit margins over the past several years.
SPECIAL AND UNUSUAL EXPENSES
RN reported special and unusual expenses of $0.8 million in 2000. These
expenses related to the implementation of a new information and enterprise
resource planning system for the U.S. and Europe.
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<PAGE>
Special and Unusual Expenses in 1999 involved $1.1 million of system
implementation costs and $0.5 million required to relocate the cable assembly
operations to Reynosa, Mexico. Special and unusual expenses were $5.1 million in
1998. These charges included $3.1 million of restructuring and reorganization
expenses as well as $2.0 million of unusual charges related to a reduction in
the carrying value of various pieces of assembly equipment, mold tools and dies.
RN successfully implemented the PeopleSoft(R) enterprise resource
optimization software system in its operations in the U.S. and Europe. This
system was designed and implemented to satisfy Year 2000 requirements, enhance
management and control systems, as well as improve customer service and vendor
communications. This software system includes accounting, cost and inventory
control, order processing, enterprise planning, production planning and
engineering management. It is an integrated business system that has been
installed on a Windows based client-server architecture laid over a Windows NT
backbone.
RN invested a total of $6.8 million to design and implement this new
information system. Approximately $0.9 million was invested in 1998, $4.6
million in 1999 and an additional $1.3 million in 2000 to complete the
implementation. U.S. connector operations implemented the system in 1999. The
U.S. cable assembly operations as well as European operations implemented the
system in the second quarter of 2000. Included in the project cost is
approximately $2.0 million of expenditures for computer hardware and the
PeopleSoft software. RN is leasing these information system assets under a long
term operating lease. Approximately $2.6 million of the project costs, related
to outside consulting support, are being capitalized as expended, and
depreciated over its useful life. RN is expensing in the respective accounting
periods the costs of using internal personnel on this project, as well as
training and travel expenses. The Company expensed approximately $0.3 million of
these costs in 1998, $1.1 million in 1999 and $0.8 million in 2000.
RN has recorded $2.1 million of expenses related to the relocation of its
primary custom cable assembly operations to Mexico. Approximately $1.6 million
of this cost was recorded in 1998 and was primarily related to the closure of
the North Carolina facility. An additional $0.5 million was expensed in the
first quarter of 1999 to complete the move.
RN recorded $5.1 million of special and unusual charges in 1998. These
charges included $3.1 million of restructuring expenses related to the
reorganization of the sales, management and manufacturing organizations in
Europe and North America, the closure and move of the cable assembly facility,
and the cost to discontinue several product lines. The additional $2.0 million
of unusual charges reflect a reduction in the carrying value of various pieces
of assembly equipment, mold tools and dies. These charges resulted from
management's evaluation of RN's ability to generate sufficient cash flow to
recover these asset costs given the existing market conditions.
SELLING AND GENERAL ADMINISTRATIVE
Selling general and administrative expenses were $18.4 million in 2000
compared to $13.8 million in 1999 and $14.6 million in 1998. This increase is
due primarily to an increase in selling expenses in the U.S. and Europe
resulting from higher sales.
OTHER INCOME AND EXPENSES
RN recorded a net other expense of $1.0 million in 2000, $0.8 million in
1999 and $0.4 million in 1998. Other income and expense for each of these years
was comprised primarily of three components; interest expense, currency exchange
gains and losses, and royalty income. Interest expense increased from $756,000
in 1999 to $874,000 in 2000. This increase was due primarily to a higher level
of long term debt in the current year. In addition, interest rates have been
increasing over the last two years.
RN entered into a multi-year interest rate swap agreement with its primary
lending institution in 1999. This agreement covers $3.0 million of floating rate
long-term debt, and effectively fixes the interest rate on these borrowings at
7.59%.
RN recorded currency exchange losses of $140,000 in 2000 and $258,000 in
1999, compared to a currency exchange gain of $105,000 in 1998. The current year
losses were incurred primarily by the European operations. These losses were
driven by the deterioration in the relative value of the euro,
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<PAGE>
compared to the pound sterling and U.S. dollar over the last two years. Prior
year currency exchange gains were primarily related to intercompany accounts
receivable and accounts payable positions between RN's various operating
subsidiaries.
RN received $168,000 of royalty income in 1999 and $17,000 in 2000 from
agreements to license the use of certain patent rights to several of its
competitors.
TAXES
The provision for income taxes was provided using the appropriate effective
tax rates on the pretax income of each of the tax jurisdictions in which RN has
operations. RN recorded a tax expense of $1.3 million in 2000, including a tax
benefit of $0.4 million related to the value of accumulated net operating loss
carryforwards of the company's operations in Belgium and Japan. RN recorded a
tax benefit of $302,000 in 1999, including a tax benefit of $0.5 million related
to the value of accumulated net operating loss carry forwards of the company's
operations in Scotland. The decision to recognize the value of these benefits in
the current and previous year was based upon the earnings that had been
generated in these operations, and the anticipation of additional taxable
earnings in these operating divisions in the future. RN recorded an income tax
benefit of $2.3 million on pretax losses of $8.4 million in 1998. This tax
benefit includes the recognition of a $0.5 million benefit for deferred tax
assets related to the U. S. operations. RN maintains a valuation allowance of
approximately $0.4 million, at June 30, 2000, for tax benefits of prior period
net operating losses in Malaysia. At such time as management is able to project
the probable utilization of all or part of these net operating loss carryforward
provisions, the valuation allowances for these deferred tax assets will be
reversed, resulting in a tax benefit in that respective period.
NET INCOME AND EARNINGS PER SHARE
RN generated a net income of $4.6 million or 88 cents (dilutive) per share
in 2000 compared to $0.4 million or 8 cents (dilutive) per share in 1999. The
net loss was $6.2 million or $1.26 per share in 1998. Operations in the U.S.
generated $4.1 million of pretax profits in 2000 compared to $422,000 in 1999
and a loss of $6.3 million in 1998. European operations generated $1.1 million
on a pretax basis in 2000 compared to a loss of $249,000 in 1999. Asia
operations generated $791,000 in pretax profits in 2000 compared to $85,000 in
losses in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 2000 was at $24.3 million compared to $14.7
million at June 30, 1999. The Company's current ratio at June 30, 2000 was 2.4
to 1 compared to 2.1 to 1 at June 30, 1999. Cash balances at June 30, 2000 were
$2.1 million compared to $0.8 million at year-end June 30, 1999. The Company's
long-term debt as a percentage of stockholders' equity was 43% at year-end 2000
compared to 38.4% at year-end 1999.
Capital expenditures in 2000 were primarily for new mold tools, contact
dies and assembly equipment. Total capital expenditures were $5.0 million in the
fiscal year 2000 compared to $5.8 million in 1999.
The Company believes future cash requirements for capital expenditures and
working capital can be funded from operations, supplemented by proceeds from the
existing long-term credit agreement.
RN has a $10.0 million unsecured revolving credit facility with its primary
bank. Interest rates under this revolver are dependent on the type of loan
advance selected. The first type of basic advance rate is equal to the London
Interbank Offered Rate (LIBOR) plus 2.25%, (approximately 7.8% as of June 30,
2000). The second interest rate utilizing the bank's prime interest rate minus
1/2 of 1%, (9.0% as of June 30, 2000) is also available. As of June 30, 2000, RN
had borrowings of $8.9 million under this revolver, plus an additional $0.6
million on standby letters of credit. This revolving credit agreement includes
various operating and financial covenants including minimum current ratio, a
maximum ratio of indebtedness to tangible net worth, a minimum fixed charge
coverage ratio and a maximum funded indebtedness to EBITDA ratio. This agreement
expires in December 2003 and can be extended by mutual consent of RN and the
bank. RN entered into a multi-year interest rate swap agreement with
D-13
<PAGE>
its primary lending institution in 1999. This agreement covers $3.0 million of
floating rate long-term debt, and effectively fixes the interest rate on these
borrowings at 7.59%.
The Company currently has $1.1 million in unused and available credit under
the existing credit agreement at June 30, 2000.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
NEW PRODUCTS AND TECHNOLOGICAL CHANGE
RN's results from operations and competitive strength depend upon the
successful and rapid development of new products and enhancements to existing
products. The market for the Company's products is characterized by rapid
technological advances and changes in customer demand, which necessitate
frequent product introductions and enhancements. These factors can result in
unpredictable product transition and shortened product life cycles, and can
render existing products obsolete or unmarketable. The Company must make
significant investments in research and product development and successfully
introduce competitive new products and enhancements on a timely basis. The
success of new product introductions is dependent on a number of factors,
including the rate at which a new product gains acceptance and RN's ability to
effectively manage product transitions. The development of new technology,
products, and enhancements is complex and involves uncertainties, which
increases the risk of delays in the introduction of new products and
enhancements. From time to time, RN has encountered delays that have adversely
affected the Company's financial results and competitive position in the market.
There can be no assurances that RN will not encounter development or production
delays, or that despite intensive testing by the Company, flaws in design or
production will not occur in the future. Design flaws could result in delays of
shipment or of product sales, could trigger substantial repair or replacement
costs, could damage RN's reputation and cause material adverse effect upon RN's
financial results.
RN has historically generated its revenue and operating profits primarily
from the sale of products to the computer, network equipment and communications
industries. RN is focusing resources on expanding further into these markets, as
well as taking a more aggressive posture towards Internet related equipment.
There can be no assurance that the Company will be successful in expanding these
markets.
DEPENDENCE ON KEY CUSTOMERS
Some of RN's products are designed specifically for individual customers.
Future revenue from these products is therefore dependent on the customer's
continued need and acceptance of these products.
COMPETITION
The market for RN's products is intensely competitive and subject to
continuous, rapid technological change, frequent product performance
improvements and price reductions. In the connector marketplace, competition
comes from companies that have substantially greater resources, as well as
several other similarly sized companies. RN expects that the markets for its
products will continue to change as customer buying patterns continue to migrate
to emerging products and technologies. The Company's ability to compete will
depend to a considerable extent on its ability to continuously develop and
introduce new products and enhancements to existing products. Increased
competition may result in price reductions, reduced margins and declining market
share, which may have a material adverse effect on RN's business and financial
results.
INTELLECTUAL PROPERTY
RN's intellectual property rights are material assets and key to its
business and competitive strength. Robinson Nugent protects its intellectual
property rights through a combination of patents, trademarks, copyrights,
confidentiality procedures, trade secret laws and licensing arrangements. The
Company's policy is to apply for patents, or other appropriate proprietary or
statutory protection,
D-14
<PAGE>
when it develops new or improved technology that is important to its business.
Such protection, however, may not preclude competitors from developing similar
products. In addition, competitors may attempt to restrict the Company's ability
to compete by advancing various intellectual property legal theories which
could, if enforced by the courts, restrict the Company's ability to develop and
manufacture products. Also, the laws of certain foreign countries do not protect
the Company's intellectual property rights to the same extent as the laws of the
United States. RN also relies on certain technology that is licensed from
others. RN is unable to predict whether its license arrangements can be renewed
on acceptable terms. The failure to successfully protect its intellectual
property rights or obtain licenses from others as needed could have a material
adverse effect on RN's business and financial results.
The connector industry is characterized by vigorous pursuit and protection
of intellectual property rights or positions, which in some instances has
resulted in significant litigation that is often protracted and expensive. From
time to time, Robinson Nugent has commenced actions against other companies to
protect or enforce its intellectual property rights. Similarly, from time to
time, RN has been notified that it may be infringing certain patent or other
intellectual property rights of others. Licenses or royalty agreements are
generally offered in such situations. Litigation by or against the Company may
result in significant expense and divert the efforts of RN's technical and
management personnel, whether or not such litigation results in any
determination unfavorable to RN. In the event of an adverse result, RN could be
required to pay substantial damages; cease the manufacture, use and sale of
infringing products; expend significant resources to develop non-infringing
technology; or discontinue the use of certain processes if it is unable to enter
into royalty arrangements. There can be no assurances that litigation will not
be commenced in the future regarding patents, copyrights, trademarks or trade
secrets or that any license, royalty or other rights can be obtained on
acceptable terms, or at all.
MANUFACTURING RISKS; DEPENDENCE ON SUPPLIERS
The Company uses standard molding compounds and pin sockets for many of its
products and believes that, in most cases, there are a number of alternative,
competent vendors for these components. In addition, RN designs its own custom
stamped and formed connector contacts. Robinson Nugent enters into agreements
with custom stamping manufacturers to design and build stamping dies to produce
proprietary stamped and formed contacts for RN. The Company believes that these
stamping operations are currently the only suppliers of these particular
components that meet RN's specifications and design requirements. Alternative
sources are not readily available. An unanticipated failure of any sole source
supplier to meet the Company's requirements for an extended period, or an
interruption of the Company's ability to secure comparable components, could
have a material adverse effect on its revenue and results of operations. In the
event a sole source supplier was unable or unwilling to continue to supply
components, RN would have to identify and qualify other acceptable suppliers.
This process could take an extended period, and no assurance can be given that
any additional source would become available or would be able to satisfy RN's
production requirements on a timely basis.
EURO CONVERSION
Effective January 1, 1999, 11 of the 15 member countries of the European
Union adopted a single European currency, the euro, as their common legal
currency. Like many companies that operate in Europe, various aspects of RN's
business and financial accounting have been affected by the euro conversion and
the transitions in the business environment resulting from the convergence of
these currencies. RN will continue to evaluate the European pricing strategies
for its products and the implications of the euro on its contractual agreements,
tax strategy and foreign currency risk management strategy.
EARNINGS FLUCTUATIONS
The RN's reported earnings have fluctuated significantly in the past and
may continue to fluctuate significantly in the future from quarter to quarter
due to a variety of factors, including, among others, the effects of (i)
customers' historical tendencies to make purchase decisions in the second half
of the fiscal year, (ii) the timing of the announcement and availability of
products and product enhancements by the Company and its competitors, (iii)
fluctuating foreign currency exchange rates, (iv) changes in
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<PAGE>
the mix of products sold, (v) variations in customer acceptance periods for the
Company's products, and (vi) global economic conditions.
VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Shares has fluctuated and in the
future may fluctuate substantially in response to anticipated or reported
operating results, industry conditions, new product or product development
announcements by the Company or its competitors, announced acquisitions and
joint ventures by the Company or its competitors, broad market trends unrelated
to the Company's performance, general market and economic conditions
international currency fluctuations and other events or factors. Further, the
volatility of the stock markets in recent years has caused wide fluctuations in
trading prices of stocks of companies independent of their individual operating
results. In the future, the Company's reported operating results may be below
the expectations of stock market analysts and investors, and in such events,
there could be an immediate and significant adverse effect on the trading price
of the Company's Common Shares.
INTERNATIONAL OPERATIONS
In connection with its international operations, the Company is subject to
various risks inherent in foreign activities. These risks may include unstable
economic and political conditions, changes in trade policies and regulations of
countries involved, fluctuations in currency exchange rates and requirements for
letters of credit or bank guarantees. Most of the Company's international
operations are in western European countries, mainly Great Britain, Belgium, and
The Netherlands, and to a lesser degree in the Asian countries of Japan,
Singapore and Malaysia. The Company is exposed to risks associated with
fluctuations in exchange rates, including the euro, Swiss franc, pound sterling,
Deutsche mark, Malaysian ringgit and the Dutch guilder. The Company limits its
exposure to these risks by incurring and paying for its expenses in the same
currencies as those of its revenue. It is the Company's policy not to enter into
derivative financial instruments for speculative purposes. There were no
derivative foreign currency instruments outstanding as of June 30, 2000.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," establishes accounting and
reporting standards for hedging activities and for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives). It required that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. RN adopted the new
standard on July 1, 2000. The effect on the results of operations of adopting
this new standard will be insignificant.
The Securities and Exchange Commission Staff Accounting Bulletin No. 101
"Revenue Recognition" establishes accounting and reporting standards for the
recognition of revenues. The Company will adopt this new bulletin in 2001. The
Company does not expect the adoption of this bulletin will have a material
impact on its financial statements.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Robinson Nugent, Inc.
New Albany, Indiana
We have audited the accompanying consolidated balance sheets of Robinson
Nugent, Inc. and subsidiaries (Company) as of June 30, 2000, 1999 and 1998, and
the related consolidated statements of operations and comprehensive income,
shareholders' equity, and cash flows for each of the three years in the period
ended June 30, 2000. Our audits also included the financial statement schedule
listed in the Index at Item 14. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Robinson Nugent, Inc. and
subsidiaries as of June 30, 2000, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2000, in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Louisville, Kentucky
August 4, 2000
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ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000, 1999 AND 1998
IN THOUSANDS
<TABLE>
<CAPTION>
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ...................... $ 2,114 $ 845 $ 959
Receivables, less allowance for doubtful
receivables of $584 in 2000, $581 in 1999,
and $571 in 1998 .............................. 17,949 13,159 9,274
Inventories .................................... 18,985 10,632 10,062
Other .......................................... 2,378 3,313 2,012
--------- --------- ---------
Total current assets .......................... $ 41,426 $ 27,949 $ 22,307
Property, Plant and Equipment, net .............. 15,989 18,539 19,424
Other ........................................... 652 138 571
--------- --------- ---------
Total ........................................... $ 58,067 $ 46,626 $ 42,302
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt ......... $ 441 $ 449 $ 367
Short-term bank borrowings ..................... -- -- 570
Accounts payable ............................... 9,329 7,441 5,147
Accrued expenses ............................... 7,375 5,369 5,483
--------- --------- ---------
Total current liabilities ..................... $ 17,145 $ 13,259 $ 11,567
Long-term Debt .................................. 11,779 9,016 7,607
Other Liabilities ............................... 750 901 --
--------- --------- ---------
Total liabilities ............................. $ 29,674 $ 23,176 $ 19,174
Commitments and contingencies
Shareholders' Equity:
Common Shares without par value,
15,000 authorized shares ...................... 21,562 20,950 20,950
Retained earnings .............................. 19,535 14,847 14,563
Equity adjustment from foreign
currency translation .......................... (134) 492 713
Employee stock purchase plan loans
and deferred compensation ..................... (22) (77) (106)
Less cost of Common Shares in treasury ......... (12,548) (12,762) (12,992)
Total shareholders' equity .................... 28,393 23,450 23,128
--------- --------- ---------
Total ........................................... $ 58,067 $ 46,626 $ 42,302
========= ========= =========
</TABLE>
See notes to consolidated financial statements.
D-18
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
IN THOUSANDS EXCEPT PER SHARE DATA
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
NET SALES ............................... $92,839 $69,992 $74,146
COST OF SALES ........................... 66,830 53,654 62,557
------- ------- -------
GROSS PROFIT ............................ 26,009 16,338 11,589
SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES ............ 18,423 13,796 14,565
SPECIAL AND UNUSUAL EXPENSES ............ 757 1,663 5,063
------- ------- -------
OPERATING INCOME (LOSS) ................. 6,829 879 (8,039)
------- ------- -------
OTHER INCOME (EXPENSES):
Interest income ........................ 59 55 84
Interest expense ....................... (874) (756) (592)
Currency exchange gain (loss) .......... (140) (258) 105
Royalty income ......................... 17 168
------- -------
Other expenses, net ................... (938) (791) (403)
------- ------- -------
INCOME (LOSS) BEFORE
INCOME TAX EXPENSE (BENEFIT) ........... 5,891 88 (8,442)
INCOME TAX EXPENSE (BENEFIT) ............ 1,261 (302) (2,261)
------- ------- -------
NET INCOME (LOSS) ....................... 4,630 390 (6,181)
======= ======= =======
OTHER COMPREHENSIVE INCOME:
Foreign currency translation ........... (626) (221) (1,360)
------- ------- -------
Comprehensive income (loss) ............ $ 4,004 $ 169 (7,541)
======= ======= =======
NET INCOME (LOSS) PER COMMON SHARE:
Basic .................................. $ 0.93 $ 0.08 $ (1.26)
======= ======= =======
Dilutive ............................... $ 0.88 $ 0.08 $ (1.26)
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
D-19
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
IN THOUSANDS
<TABLE>
<CAPTION>
EMPLOYEE
STOCK PURCHASE
COMMON SHARES FOREIGN PLAN LOANS TREASURY SHARES
---------------- RETAINED CURRENCY AND DEFERRED ----------------------
SHARES AMOUNT EARNINGS TRANSLATION COMPENSATION SHARES AMOUNT
------ ------ -------- ----------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1997 ............ 6,851 $20,950 $ 21,290 $ 2,073 $ (177) (1,959) $ (12,996)
Net Income ........................ (6,181)
Dividends ($.12 per share) ........ (587)
Equity adjustments from
foreign currency translation ..... (1,360)
Stock purchase plan
repayments ....................... 60
Amortization of deferred
compensation ..................... 11
Stock purchase plan
forfeitures ...................... 38 (7) (38)
Stock options exercised ........... 5 32
Treasury shares ................... 3 2 10
----- ------- -------- -------- ------ ------ ---------
BALANCE AT JUNE 30, 1998 6,851 20,950 14,563 713 (106) (1,959) (12,992)
Net Income ........................ 390
Equity adjustments from
foreign currency translation ..... (221)
Stock purchase plan
repayments ....................... 26
Amortization of deferred
compensation ..................... 3
Treasury shares ................... (106) 33 230
----- ------- -------- -------- ------ ------ ---------
BALANCE AT JUNE 30, 1999 6,851 20,950 14,847 492 (77) (1,926) (12,762)
Net Income ........................ 4,630
Equity adjustments from
foreign currency translation ..... (626)
Stock purchase plan
repayments ....................... 9 52
Amortization of deferred
compensation ..................... 3
Stock options exercised ........... 127 612
Treasury shares ................... 49 32 214
----- ------- -------- -------- ------ ------ ---------
BALANCE AT JUNE 30, 2000 6,978 $21,562 $ 19,535 $ (134) $ (22) (1,894) $ (12,548)
===== ======= ======== ======== ====== ======== =========
</TABLE>
See notes to consolidated financial statements.
D-20
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
IN THOUSANDS
<TABLE>
<CAPTION>
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ..................................... $ 4,630 $ 390 $ (6,181)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization ........................ 4,725 4,452 8,557
Issuances of treasury shares as compensation ......... 260 124 --
Deferred income taxes ................................ (784) 560 (1,409)
(Gain) loss on sales and disposals of property,
plant and equipment ................................ 77 (76) 360
Changes in assets and liabilities:
Receivables ......................................... (4,790) (3,885) 2,510
Inventories ......................................... (8,353) (570) 1,038
Other current assets ................................ 1,179 (1,861) (498)
Accounts payable and accrued expenses ............... 3,894 2,180 805
Other liabilities ................................... (151) 901 --
Income taxes payable ................................ -- -- (1,581)
-------- -------- --------
Net cash provided by operating activities .......... 687 2,215 3,601
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .................................. (4,957) (5,766) (7,818)
Proceeds from sales of property, plant and
equipment ............................................ 2,526 2,126 --
Other assets .......................................... (20) 397 (47)
-------- -------- --------
Net cash used in investing activities ................ (2,451) (3,243) (7,865)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank borrowings .............. -- 250 570
Repayments of short-term bank borrowings .............. -- (820) --
Proceeds from long-term debt .......................... 6,641 5,220 3,250
Repayments of long-term debt .......................... (3,754) (3,738) (1,426)
Cash dividends ........................................ -- -- (587)
Sales of treasury shares .............................. 122 -- 13
Repayments of employee stock purchase plan loans 61 26 60
Proceeds from exercised stock options ................. 493 -- 32
-------- -------- --------
Net cash provided by financing activities ............ 3,563 938 1,912
-------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES
ON CASH ............................................... (530) (24) (807)
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS ...................................... 1,269 (114) (3,159)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR ..................................... 845 959 4,118
-------- -------- --------
CASH AND CASH EQUIVALENTS AT
END OF YEAR ........................................... $ 2,114 $ 845 $ 959
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
D-21
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000, 1999 AND 1998
IN THOUSANDS EXCEPT PER SHARE DATA
1. NATURE OF OPERATIONS AND ORGANIZATIONS
Robinson Nugent, Inc. and its subsidiaries (Company) designs, manufactures,
and markets electronic connectors, integrated circuit sockets and cable
assemblies. Its products are sold throughout the world for use by
manufacturers of computers.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include
the accounts of Robinson Nugent, Inc. and its subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS -- Cash and cash equivalents are defined as cash
in banks and investment instruments having maturities of ninety-one days or
less on their acquisition date.
INVENTORIES -- Inventories are stated at the lower of cost (first in, first
out) or market (net realizable value).
PROPERTY, PLANT, AND EQUIPMENT -- Property, plant and equipment is recorded
at cost. Depreciation is provided by the straight-line method over the
estimated useful lives of buildings, ranging from 30 to 45 years, and
machinery and equipment, ranging from 3 to 12 years. Depreciation expense
also includes the amortization of buildings capitalized under lease
obligations. Depreciation expense was approximately $4,676 in 2000, $4,405
in 1999, and $8,507 in 1998.
REVENUE RECOGNITION -- Revenue from product sales is recognized upon
shipment or the date of receipt by the customer. Estimated returns and other
adjustments are provided for in the same period the related sales are
recorded.
SPECIAL AND UNUSUAL EXPENSES -- In 2000 and 1999, special and unusual
expenses primarily related to the implementation of a new information and
enterprise resource planning computer system. In 1998, such expenses were
primarily related to the restructuring and reorganization of the sales,
management and manufacturing operations in Europe and North America.
Selected information as to the restructuring and reorganization charges are
as follows:
<TABLE>
<CAPTION>
EMPLOYEE WRITE-DOWN RECOGNITION
TERMINATION OF OF LEASE
BENEFITS ASSETS LIABILITY OTHER TOTAL
----------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
1998 restructuring charge .......... $ 200 $ 3,200 $1,100 $ 600 $ 5,100
Cash outlays
Write-down of assets .............. (3,200) (3,200)
------ -------- ------ -------- -------
Restructuring liability
at June 30, 1998 .................. 200 1,100 600 1,900
1999 restructuring charges ......... 500 500
Cash outlays ....................... (200) (100) (1,100) (1,400)
------ -------- ------ -------- -------
Restructuring liability
at June 30, 1999 .................. 1,000 1,000
Cash outlays ....................... (100) (100)
------ -------- ------ -------- -------
Restructuring liability
at June 30, 2000 .................. $ $ $ 900 $ $ 900
====== ======== ====== ======== =======
</TABLE>
INCOME TAXES -- The Company follows Statement of Financial Accounting
Standards (SFAS) No. 109 "Accounting for Income Taxes," which requires the
recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been recognized in the financial
statements or the income tax returns.
D-22
<PAGE>
RESEARCH, DEVELOPMENT, AND ENGINEERING -- Research, development, and
engineering expenditures for the creation and application of new and
improved products and manufacturing processes were approximately $4,500 in
2000, $3,500 in 1999, and $3,950 in 1998. Research, development and
engineering costs are charged to operations as incurred.
GOVERNMENT INCENTIVE GRANTS -- The Company has received an incentive grant,
from the government in Scotland related to capital expenditures for
equipment and machinery over the period of 1995-1999. The Company's policy
is to defer this capital expenditure grant and amortize to income over the
estimated useful life of the equipment and machinery. The financial
statements include grant income of approximately $264 in 2000, $291 in 1999,
and $254 in 1998.
DISCLOSURE OF CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES -- The preparation
of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date
of the consolidated financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from these estimates. The Company's periodic filings with the
Securities and Exchange Commission include, where applicable, disclosures of
estimates, assumptions, uncertainties and concentrations in products,
sources of supply and markets that could affect the consolidated financial
statements and future operations of the Company.
CONCENTRATION OF CREDIT RISK -- Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of
cash investments and trade receivables. The Company has cash investment
policies that limit the amount of credit exposure to any one issuer and
restrict placement of these investments to issuers evaluated as credit
worthy. Concentrations of credit risk with respect to trade receivables are
limited due to the large number of customers comprising the Company's
customer base and their dispersion across many different industries and
geographies.
FOREIGN CURRENCY -- The accounts of foreign subsidiaries are measured using
local currency as the functional currency. For these operations, assets and
liabilities are translated into U.S. dollars at period-end exchange rates,
and income and expense accounts are translated at average monthly exchange
rates. Net exchange gains or losses resulting from such translation are
excluded from net income and accumulated as other comprehensive income.
Gains and losses from completed foreign currency transactions are included
as a separate component of other income (expense) in the consolidated
statements of operations.
SEGMENT REPORTING -- The Company operates in one industry. The Company
identifies operating segments by geographical location.
NEW ACCOUNTING STANDARDS -- SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," establishes accounting and reporting
standards for hedging activities and for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives). It requires that an entity recognize all
derivatives as other assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company adopted
the new standard on July 1, 2000. The effect on the results of operations of
adopting this new standard will be insignificant.
The Security and Exchange Commission Staff Accounting Bulletin No. 101
"Revenue Recognition" establishes accounting and reporting standards for the
recognition of revenues. The Company will adopt the new bulletin in 2001.
The Company does not expect the adoption of this bulletin will have a
material impact on its financial statements.
INTERNATIONAL OPERATIONS -- In connection with its international operations
the Company is subject to various risks inherent in foreign activities.
These risks may include unstable economic and political conditions, changes
in trade policies and regulations of countries involved, fluctuations in
currency exchange rates and requirements for letters of credit or bank
guarantees. Most of the Company's international operations are in western
European countries, mainly Great Britain, Belgium, and The Netherlands, and
to a lesser degree in the Asian countries of Japan, Singapore
D-23
<PAGE>
and Malaysia. The Company is exposed to risks associated with fluctuations
in exchange rates, including the euro, Swiss franc, pound sterling, Deutsche
mark, yen, Singapore dollar, Malaysian ringgit and the Dutch guilder. The
Company limits its exposure to these risks by incurring and paying for its
expenses in the same currencies as those of its revenue. It is the Company's
policy not to enter into derivative financial instruments for speculative
purposes. There were no derivative foreign currency instruments outstanding
as of June 30, 2000.
COMMON SHARE DATA -- Per Common Share data for 2000, 1999 and 1998 is
presented using basic and dilutive weighted average number of Common Shares
outstanding.
The following is the reconciliation of the numerators and denominators used
to compute the net income (loss) per Common Share, basic and dilutive:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Numerator
Income (loss) available to
common shareholders ............... $ 4,630 $ 390 $(6,181)
Denominator
Basic-weighted shares outstanding
(in thousands) .................... 4,993 4,904 4,892
Stock options ...................... 261 1
------- ------- -------
Dilutive-weighted shares outstanding
(in thousands) .................... 5,254 4,905 4,892
------- ------- -------
Net income (loss) per common share:
Basic ............................. $ 0.93 $ 0.08 $ (1.26)
======= ======= =======
Dilutive .......................... $ 0.88 $ 0.08 $ (1.26)
======= ======= =======
</TABLE>
Options to purchase 4,479 and 577 shares of common stock were outstanding
during 2000, 1999 and 1998, respectively, but were not included in the
computation of diluted earnings per share because the option exercise price
was greater than the average market price.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Finished goods ...................... $ 9,434 $ 4,092 $ 2,970
Work in process ..................... 8,479 5,569 5,595
Raw materials and supplies .......... 1,072 971 1,497
------- ------- -------
Total ............................... $18,985 $10,632 $10,062
======= ======= =======
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Land ................................ $ 309 $ 737 $ 732
Buildings ........................... 7,049 9,481 12,942
Machinery and equipment ............. 52,547 51,361 49,416
------- ------- -------
59,905 61,579 63,090
Less accumulated depreciation
and amortization ................... 43,916 43,040 43,666
------- ------- -------
Net ................................. $15,989 $18,539 $19,424
======= ======= =======
</TABLE>
D-24
<PAGE>
5. ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Compensation ............................ $2,212 $1,195 $ 955
Commissions ............................. 687 1,012 721
Distributor allowances .................. 421 441 447
Deferred grant income ................... 341 617
Provision for plant relocation .......... 150 119 1,900
Income taxes ............................ 1,838
Other ................................... 1,726 1,985 1,460
------ ------ ------
Total ................................... $7,375 $5,369 $5,483
====== ====== ======
</TABLE>
In November of 1998, the Company moved its cable assembly operations in
Kings Mountain, North Carolina, to a leased facility in Reynosa, Mexico. The
1998 provision for the relocation of this facility included the present
value of the remaining future lease payments on the vacated building, plus
accruals for severance payments and other costs related to this relocation.
In 1999, management determined that $901 of the future lease payments were
long-term in nature.
6. DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------ ------
<S> <C> <C> <C>
United States' obligations:
Loans under a long-term credit agreement ....... $ 8,900 $6,800 $6,180
7.75% fixed rate real estate mortgage,
payable in monthly installments through
October 2005, with interest ................... 1,156 1,242
Foreign obligations:
6.938% fixed-rate loan, payable in annual
installments through 2004, with interest ...... 890 1,122 1,335
8.0% fixed-rate real estate mortgage,
payable in quarterly installments through
2015, with interest ........................... 1,138
Other long-term debt ........................... 136 301 459
------- ------ ------
Total ........................................... 12,220 9,465 7,974
Less current installments of long-term debt ..... 441 449 367
------- ------ ------
Long-term debt .................................. $11,779 $9,016 $7,607
======= ====== ======
</TABLE>
In February 2000, the Company amended the long-term credit agreement with
its primary lending institution. This agreement provides for up to $10
million in revolving credit loans and is secured by a lien on U.S.
inventories and receivables. The Company had $1.1 million in unused and
available credit under this agreement and additional standby letters of
credit at June 30, 2000. Interest rates under this revolver are dependent on
the type of loan advance selected. The first type of basic advance rate is
equal to the London Interbank Offered Rate (LIBOR) plus 2.25%,
(approximately 7.8% as of June 30, 2000). Second interest rate utilizing the
bank's prime interest rate minus 1/2 of 1%, (9.0% as of June 30, 2000) is
also available. This agreement includes various operating and financial
covenants, including a minimum current ratio, a maximum ratio of
indebtedness to tangible net worth, a minimum fixed charge coverage ratio
and a maximum funded indebtedness to EBITDA ratio. The agreement terminates
in December 2003, and can be extended by mutual consent of the Company and
the bank.
The aggregate maturities of long-term debt for the five years ending June
30, 2005, amount to $441 in 2001, $379 in 2002, $341 in 2003, $9,241 in
2004, $341 in 2005 and $1,477 thereafter.
D-25
<PAGE>
During 1999, the Company entered into a multi-year interest rate swap
agreement with its primary lending institution. This agreement covers $3.0
million of floating rate long-term debt, and effectively fixes the interest
rate on these borrowings at 7.59%. Total interest paid, including the
interest rate swap agreement, under the long-term debt agreements was $809
in 2000, $710 in 1999 and $539 in 1998.
In addition, the Company has short-term lines of credit available in
Malaysia and Belgium at interest rates of 13.80% and 8.75%, respectively.
Total unused and available credit under these agreements was approximately
$50, as of June 30, 2000.
Property, plant and equipment with an approximate net book value of $2,840
is pledged as collateral under the various long-term debt agreements.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of the Company's noncurrent financial liabilities are shown
below. The fair values of current assets and current liabilities are assumed
to be equal to their reported carrying amounts.
<TABLE>
<CAPTION>
2000 1999 1998
----------------------- ---------------------- ----------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Long-term debt ......... $12,220 $12,505 $9,465 $9,372 $7,974 $7,872
</TABLE>
The valuations for long-term debt, including a $77 and $44 in 2000 and 1999,
respectively, reduction in fair value for the interest rate swap agreement,
are determined based on the expected future payments discounted at
risk-adjusted rates.
8. INCOME TAXES
The provision (benefit) for income taxes follows:
<TABLE>
<CAPTION>
2000 1999 1998
---------- ---------- ------------
<S> <C> <C> <C>
Current:
Federal ................. $ 724 $ (959) $ (1,132)
State ................... 328 (154) (38)
Foreign ................. 993 251 318
------ ------ --------
Total current .......... 2,045 (862) (852)
------ ------ --------
Deferred:
Federal ................. 20 897 (1,149)
State ................... 17 190 (173)
Foreign ................. (821) (527) (87)
------ ------ --------
Total deferred ......... (784) 560 (1,409)
------ ------ --------
Total .................... $1,261 $ (302) $ (2,261)
====== ====== ========
</TABLE>
D-26
<PAGE>
The following reconciles income taxes computed at the U.S. Federal statutory
rate to income taxes reported for financial reporting purposes:
<TABLE>
<CAPTION>
2000 1999 1998
-------- ------ --------
<S> <C> <C> <C>
Income tax expense (benefit) at
statutory rate ............................... $ 2,003 $ 30 $ (2,870)
Non-U.S. tax-exempt (earnings) losses ......... (1,165) 2 729
Foreign loss carryforwards .................... (498) (483)
Foreign dividends ............................. 237
Foreign taxes, net of U.S. tax credit ......... 327 118 197
State and local taxes, net of
U.S. Federal income tax ...................... 198 24 (139)
Research and experimentation credit ........... (62) (58) (59)
Other ......................................... 221 65 (119)
-------- ------ --------
Income tax expense (benefit) .................. $ 1,261 $ (302) $ (2,261)
======== ====== ========
</TABLE>
No U.S. Federal income taxes have been provided at June 30, 2000, on
approximately $6,400 of accumulated earnings of certain foreign subsidiaries
since the Company plans to reinvest such amounts for an indefinite future
period.
The Company made income tax payments, net of tax refunds received, of
approximately $1,100 in 2000, $265 in 1999 and $770 in 1998.
The net current and non-current components of deferred income taxes
recognized in the balance sheet at June 30 follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Net current assets ................................ $ 857 $609 $ 745
Net non-current assets ............................ 540 4 428
------ ---- ------
Net assets ........................................ $1,397 $613 $1,173
====== ==== ======
</TABLE>
The tax effect of the significant temporary differences that comprise the
deferred tax assets and liabilities at June 30 follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ -------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ............... $ 972 $1,263 $ 1,504
Tax credit carryforwards ....................... 216 248
Employee compensation and benefits ............. 312 311 355
Inventories and other current assets ........... 80 363 247
State and local income taxes, net of
U.S. Federal income tax benefit ............... 28 141
Plant closing settlement costs ................. 306 333 541
Other accrued expenses ......................... 830 400 68
------ ------ -------
Total deferred tax assets ..................... 2,716 2,946 2,856
------ ------ -------
Deferred tax liabilities:
Depreciation and amortization .................. 918 1,468 179
Total deferred tax liabilities ................ 918 1,468 179
Net deferred tax assets
before valuation allowance ................... 1,798 1,478 2,677
Deferred tax assets valuation allowance ......... (401) (865) (1,504)
------ ------ -------
Net deferred tax assets ....................... $1,397 $ 613 $ 1,173
====== ====== =======
</TABLE>
D-27
<PAGE>
At June 30, 2000, certain foreign subsidiaries have accumulated foreign net
operating loss carryforwards of approximately $2,900 (tax benefit of $972).
Under foreign jurisdictions, these loss carryforwards do not expire.
Management is unable at this time to project future taxable income that will
utilize the deferred benefit of these loss carryforwards. As a result, a
valuation allowance has been established of $401. The tax benefit of the
remaining net operating loss carryforwards will be recognized when
management is able to project future taxable income of these foreign
subsidiaries. Tax credit carryforwards begin to expire after June 30, 2004.
Management anticipates future taxable income from U.S. operations will
utilize these tax credit carryforwards before their expiration.
9. LEASED ASSETS AND LEASE COMMITMENTS
The consolidated financial statements include land and buildings under a
capital lease as follows:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ -------
<S> <C> <C> <C>
Land and buildings ........................ $553 $542 $497
Less accumulated amortization ............. 154 121 89
---- ---- ----
Net assets under a capital lease .......... $399 $421 $408
==== ==== ====
</TABLE>
The Company leases office and plant facilities, automobiles, computer
systems, and certain other equipment under noncancelable operating leases,
which expire at various dates. Taxes, insurance, and maintenance expenses
are normally obligations of the Company. Rental expenses charged to
operations under operating leases amounted to approximately $1,490 in 2000,
$1,540 in 1999 and $1,360 in 1998.
A summary of future minimum lease payments follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING JUNE 30 LEASE LEASE
------------------- ------- ---------
<S> <C> <C>
2001 ...................................... $41 $1,672
2002 ...................................... 38 1,280
2003 ...................................... 823
2004 ...................................... 463
2005 ...................................... 386
Later years ............................... 495
--- ------
Total minimum lease payments .............. 79 $5,119
======
Less amount representing interest ......... 7
---
Present value of net minimum lease payments
(included in long-term debt) ............. $72
===
</TABLE>
During 2000, the Company sold its corporate headquarter building in New
Albany, Indiana to a related party for approximately $2.2 million. The
Company has entered into an agreement to lease back the building for a
two-year lease expiring February 2002 for approximately $220 per year. The
gain on such sale, which was insignificant, was deferred and is being
amortized over the life of the lease.
D-28
<PAGE>
10. EMPLOYEE BENEFITS
The Company has a defined contribution pension plan and a defined
contribution 401(k) plan for eligible employees in the United States. Annual
contributions by the Company to the defined contribution pension plan are
based upon specified percentages of the annual compensation of participants.
Under the terms of the 401(k) plan, employees may contribute a portion of
their compensation to the plan and the Company makes matching contributions
up to a specified level. The contributions charged to expense under the
defined contribution plans were approximately $450 in 2000, $460 in 1999 and
$525 in 1998.
Company personnel in Europe and Asia are provided retirement benefits under
various programs that are regulated by foreign law. Annual contributions are
generally regulated in amount and shared equally by the Company and its
employees. The Company's share of annual contributions to the aforementioned
foreign defined contribution plans was approximately $100 in 2000, $100 in
1999 and $250 in 1998.
11. STOCK OPTION PLANS
In September 1993, the Company adopted a stock option plan for eligible
employees and nonemployee directors. Under the terms of the plan, the Board
of Directors is authorized to grant options in the aggregate of 500 Common
Shares of the Company to eligible employees and a predetermined annual
number of shares to nonemployee directors at prices not less than the market
value at the date of grant. In 1998, the Board of Directors authorized an
additional 500 Common Shares to the pool of shares available for option
grants under the terms of the plan. Fifty percent of the options are
exercisable after the first anniversary of the date of grant. One hundred
percent of the options are exercisable after the second anniversary date of
the grant. All options expire ten years after the date of the grant.
The following is a summary of the option transactions under the plan:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTION PRICE
2000 SHARES PER SHARE
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year ......... 559 $5.99
Granted ......................................... 250 4.45
Expired ......................................... (1) 6.63
Cancelled ....................................... (28) 5.30
Exercised ....................................... (127) 4.85
----
Shares under option at end of year ............... 653 5.65
====
</TABLE>
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTION PRICE
1999 SHARES PER SHARE
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year ......... 577 $ 6.30
Granted ......................................... 120 4.13
Expired ......................................... (28) 7.00
Cancelled ....................................... (110) 5.33
----
Shares under option at end of year ............... 559 5.99
</TABLE>
D-29
<PAGE>
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
OPTION PRICE
1998 SHARES PER SHARE
---- ------ ----------------
<S> <C> <C>
Shares under option at beginning of year ......... 500 $ 6.56
Granted ......................................... 144 6.25
Expired ......................................... (19) 10.88
Cancelled ....................................... (43) 7.09
Exercised ........................................ (5) 6.17
---
Shares under option at end of year ............... 577 6.30
===
</TABLE>
A total of 358, 386 and 360 shares at an average option price per share of
$6.69, $6.52 and $6.59 were exercisable and 174, 441 and 532 shares were
available for future grants at June 30, 2000, 1999 and 1998, respectively.
The following table summarizes information about stock options outstanding
at June 30, 2000:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------- -----------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
OUTSTANDING CONTRACTUAL LIFE EXERCISE EXERCISABLE EXERCISED
RANGE OF EXERCISE PRICES AT 6/30/2000 (YEARS) PRICE AT 6/30/2000 PRICE
------------------------ ------------ ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Price $4.00 to $5.875 ........ 414 8.44 $ 4.35 130 $ 4.64
$6.00 to $7.375 .............. 100 5.25 6.46 93 6.42
$8.625 to $9.25 .............. 135 4.36 8.84 135 8.84
$12.875 to $18.00 ............ 4 9.67 13.46
</TABLE>
The weighted average fair value of options granted during 2000, 1999 and
1998 was $2.94, $1.91 and $2.19, respectively.
The fair value of each stock option granted in 2000, 1999 and 1998 was
estimated as of the date of the grant using the Black-Scholes option-pricing
model with the following assumptions for 2000, 1999 and 1998, respectively:
dividend yield of 0%, 0%, and 1.6% to 2.8%; volatility factor of 47%, 45%
and 37%; a range of risk-free interest rates of 6.2% to 6.8%, 4.7% to 5.1%
and 5.5% to 6.0%; and expected lives of 10 years for all years.
In accordance with Accounting Principle Board No. 25, the Company has not
recognized any compensation cost for the stock option plan. Had compensation
cost for the Company's stock option plans been determined based on the fair
value at the grant dates for awards under those plans consistent with the
method of SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company's net income and earnings per share would have been reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Net income (loss):
As reported ........................ $ 4,630 $ 390 $ (6,181)
Pro forma .......................... 3,934 164 (6,471)
Earnings (loss) per share (dilutive):
As reported ........................ $ 0.88 $ 0.08 $ (1.26)
Pro forma .......................... 0.75 0.03 (1.32)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts.
12. STOCK PURCHASE PLAN
The Company had an employee stock purchase plan for key employees that
provided for participants of the plan to purchase Common Shares of the
Company on the open market
D-30
<PAGE>
through an independent trustee. The plan permitted the Board of Directors to
authorize interest-free loans to the participants for the purchase of stock.
Shares are held in trust as collateral for the loans, which are payable by
the participants for the plan over a period not to exceed ten years. The
plan also provided for participants to receive from the Company a matching
number of Common Shares of the Company, based upon a vesting schedule and
the participants' level of purchased shares. The plan terminated in 1994
with respect to new participation. The loans ($20 in 2000, $72 in 1999 and
$98 in 1998) and deferred compensation charges ($2 in 2000, $5 in 1999 and
$8 in 1998) associated with the plan are classified as a reduction of
shareholders' equity. The amortization of the deferred compensation charged
to expense was $3 in 2000, $3 in 1999 and $11 in 1998.
During 2000, the Company adopted the Discount Share Purchase Program for
certain key employees. Such program allowed certain key employees to
purchase the Company's common stock at a 15% discount. The Company issued
approximately 18 shares as of June 30, 2000. Such plan was discontinued in
2000.
13. SHAREHOLDER RIGHTS PLAN
The Company has a shareholder rights plan for the purpose of deterring
coercive or unfair takeover tactics and encouraging a potential acquirer to
negotiate with the Board of Directors before attempting to gain control of
the Company. Under the terms of the plan, rights to purchase additional
Common Shares were distributed as a dividend to shareholders of record on
May 6, 1988, and are also distributed with respect to shares that were
issued after May 6, 1988. The rights are attached to each issued and
outstanding share and were to expire on April 15, 1998. The Plan was amended
in January 1998 to extend expiration date to April 15, 2008. At issuance,
the rights are not exercisable and are not detachable from Common Shares.
Accordingly, the rights do not provide any immediate value to shareholders.
The Company may redeem the rights for one cent per right at any time prior
to becoming exercisable. The rights become exercisable ten days after public
disclosure that a person acquired 20% or more, or commenced a tender offer
or exchange offer for 30% or more, of the issued and outstanding Common
Shares, unless such acquisition or tender offer was approved in advance by
the disinterested directors of the Company. Thereafter, the rights will
trade separately from the Common Shares, and separate certificates
representing the rights will be issued. Each right grants an eligible holder
the right to purchase for $40 additional Common Shares of the Company, or in
the event of certain mergers or business combinations, additional shares of
the survivor's Common Shares. The number of Common Shares to be issued upon
exercise of a right is based upon the then current market value of the
Common Shares, subject to certain adjustments.
14. SIGNIFICANT CUSTOMER
The Company had sales of approximately $14,000 to Customer A, $11,000 to
Customer B and $10,000 to Customer C in 2000 and $8,400 to Customer A in
1999. No sales to a single customer exceeded 10% of total sales in 1998.
15. EMPLOYEE HEALTH INSURANCE PLAN
The Company maintains a self-insurance program for that portion of health
care costs not covered by insurance. The Company's costs are limited to $100
a person each calendar year, with an aggregate annual limitation, for the
plan year ending December 31, 2000 of $900.
D-31
<PAGE>
16. BUSINESS SEGMENT AND FOREIGN SALES
The Company operates within the electronic connectors segment of the
electronic industry. Products are sold throughout the world for use by
manufacturers of computers, telecommunications equipment, automobiles,
industrial controls, medical instrumentation, and a wide variety of other
products to interconnect components of electronic systems. During 2000, the
Company had manufacturing operations located in the United States, Mexico,
Scotland, Belgium, and Malaysia.
<TABLE>
<CAPTION>
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
SALES
United States
Domestic .......................... $ 53,649 $ 44,042 $ 46,955
Export:
Europe ............................ 78
Asia .............................. 7
Rest of World ..................... 4,576 2,296 1,653
--------- --------- ---------
Total sales to customers ......... 58,225 46,338 48,693
Intercompany ....................... 8,336 4,950 7,342
--------- --------- ---------
Total United States .............. 66,561 51,288 56,035
--------- --------- ---------
Europe
Domestic .......................... 25,363 17,486 18,472
--------- --------- ---------
Total sales to customers ......... 25,363 17,486 18,472
Intercompany ....................... 5,847 3,024 3,806
--------- --------- ---------
Total Europe ..................... 31,210 20,510 22,278
--------- --------- ---------
Asia
Domestic .......................... 9,251 6,168 6,981
--------- --------- ---------
Total sales to customers ......... 9,251 6,168 6,981
Intercompany ....................... 9,410 3,763 4,128
--------- --------- ---------
Total Asia ....................... 18,661 9,931 11,109
--------- --------- ---------
Eliminations ....................... (23,593) (11,737) (15,276)
--------- --------- ---------
Consolidated ..................... $ 92,839 $ 69,992 $ 74,146
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
IDENTIFIABLE ASSETS
United States ........................ $ 47,933 $ 39,990 $ 36,274
Europe ............................... 20,916 14,568 14,544
Asia ................................. 6,601 3,843 3,417
Eliminations ......................... (17,383) (11,775) (11,933)
--------- --------- ---------
Consolidated ........................ $ 58,067 $ 46,626 $ 42,302
========= ========= =========
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(Benefit) United States ............... $ 4,070 $ 422 $ (6,298)
Europe ............................... 1,030 (249) (2,217)
Asia ................................. 791 (85) 73
--------- --------- ---------
Consolidated ........................ $ 5,891 $ 88 $ (8,442)
========= ========= =========
</TABLE>
Intercompany sales of finished products were generally priced to "share"
profits based upon current market conditions. Items requiring further
processing were priced at cost plus a fixed percentage.
D-32
<PAGE>
17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 2000 SEPT. 30, 1999 DEC. 31, 1999 MAR. 31, 2000 JUNE 30, 2000 TOTAL
-------------------------------- ---------------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net sales ..................... $20,950 $22,778 $23,985 $25,126 $92,839
Gross profit .................. 5,562 6,469 6,968 7,010 26,009
Net income .................... 784 880 1,226 1,740 4,630
Net income per common share:
Basic ........................ 0.16 0.18 0.25 0.35 0.93
Dilutive ..................... 0.16 0.17 0.23 0.32 0.88
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 1999 SEPT. 30, 1998 DEC. 31, 1998 MAR. 31, 1999 JUNE 30, 1999 TOTAL
-------------------------------- ---------------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net sales ..................... $14,914 $17,502 $18,657 $18,919 $69,992
Gross profit .................. 2,828 3,877 4,808 4,825 16,338
Net income (loss) ............. (1,317) 39 508 1,160 390
Net income (loss) per common
share, basic and dilutive .... (0.27) 0.01 0.10 0.24 0.08
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 1998 SEPT. 30, 1997 DEC. 31, 1997 MAR. 31, 1998 JUNE 30, 1998 TOTAL
-------------------------------- ---------------- --------------- --------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Net sales ..................... $18,543 $19,576 $19,658 $16,369 $74,146
Gross profit .................. 3,386 3,524 2,929 1,750 11,589
Net loss ...................... (132) (232) (3,288) (2,529) (6,181)
Net loss per common share,
basic and dilutive ........... (0.03) (0.05) (0.67) (0.52) (1.26)
Dividends per common share .... 0.03 0.03 0.03 0.03 0.12
</TABLE>
Net income (loss) per share amounts are calculated independently for each of
the periods presented. The sum of the quarters may not equal the full year
net income (loss) per share amounts.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements with the Company's independent auditors on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, or any reportable events.
D-33
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Bylaws of the Company provide for ten directors, divided into two
classes of three persons and one class of four persons, each of whom is to be
elected for a three-year term.
The following table sets forth information with respect to each member of
the Board of Directors of the Company as of June 30, 2000:
<TABLE>
<CAPTION>
SERVED AS TERM OF
POSITIONS HELD DIRECTOR OFFICE
NAME AGE WITH THE COMPANY SINCE EXPIRES
-------------------- --- ------------------------------------- --------- -------
<S> <C> <C> <C> <C>
Patrick C. Duffy 63 Chairman of the Board of Directors 1991 2001
Samuel C. Robinson 68 Director 1955 2000
James W. Robinson 66 Director 1955 2001
Larry W. Burke 60 President and Chief Executive Officer 1990 2002
and Director
Richard L. Mattox 66 Secretary and Director 1964 2001
Jerrol Z. Miles 60 Director 1974 2000
Richard W. Strain 59 Director 1991 2000
Donald C. Neel 55 Director 1997 2002
Ben M. Streepey 44 Director 1997 2002
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
Except as described below, the principal occupations of the directors have
not changed during the past five years.
Patrick C. Duffy was elected Chairman of the Board of Directors on January
23, 1998. He has been a management consultant since 1988 to various businesses
with emphasis on system management and electronics research, development and
manufacturing. Prior to 1988, Mr. Duffy was president of Chrysler Corporation
Space Division. Chrysler Corporation Space Division designed, manufactured and
performed launch operations for the Apollo space program. Mr. Duffy also
diversified the Space Division into the electrical/electronic automotive field
by initiating automotive wire harness design and production in Cape Canaveral,
Florida, and Juarez, Mexico. He established an electronics design and
manufacturing facility in Louisiana that supplied test equipment to automotive
outlets in the U.S. and Europe. He was the President and owner of Switches,
Inc., an Indiana company that designed and manufactured electronics for the
automotive industry. Mr. Duffy is a former Chairman of the Board of Acordia
Southeast, an insurance brokerage firm covering Florida, Georgia and Louisiana,
with headquarters in Clearwater, Florida.
Samuel C. Robinson retired as Chief Executive Officer of the Company on
June 30, 1985, and retired as Chairman of the Board on January 23, 1998.
James W. Robinson served as Executive Vice President and Treasurer of the
Company until June 30, 1985, at which time he was elected as Chairman of the
Board. He served as Chairman of the Board of the Company until his resignation
on January 29, 1987. Mr. Robinson is active in various independent investments
unrelated to the activities of the Company. He is also a director of Caldwell
Group Ltd., Caldwell Energy & Environmental Inc., Caldwell Tanks, Inc.,
Community Bank of Southern Indiana, StemWood Corp., CT Services Corp., SCI
Broadcasting, Inc., Community Bank Shares of Indiana, Inc., Sunnyside
Communications, Inc., Neimco Fabricators, Inc., and 16th St. Associates, Inc.,
all of which are located in the Louisville, Kentucky metropolitan area.
D-34
<PAGE>
Larry W. Burke has served as President and Chief Executive Officer of the
Company since March 6, 1990. He served as Executive Vice President of the
Company from April 1986 to March 1990. He also serves as the Chairman of the
Board of Advisors of Indiana University Southeast, New Albany, Indiana.
Richard L. Mattox is a partner in the law firm of Mattox, Mattox and Wilson
in New Albany, Indiana and acted as legal counsel to the Company during fiscal
2000.
Jerrol Z. Miles is a Senior Vice President of National City Bank, Kentucky,
located in Louisville, Kentucky, where his primary responsibility is management
of commercial loans and special credit departments.
Donald C. Neel is President and CEO of Health Network International (HNI).
HNI develops software and services in the field of personal health management.
He was formerly an executive at Eli Lilly and Company holding a variety of
global positions in finance, information systems and general management. Mr.
Neel is a member of Ball State University's Advisory Board for the Center for
Information and Communication Sciences, and Chairman of Young Audiences of
Indiana, a not for profit arts education organization.
Ben M. Streepey is Vice President & General Manager of Lexmark Electronics
for Lexmark International located in Lexington, Kentucky. Lexmark Electronics is
an integrated business unit providing worldwide contract electronic
manufacturing services.
Richard W. Strain has held a variety of positions with Eli Lilly and
Company. From July 1984 until 1990, he served as President of the Medical
Instrument Systems Division; and from 1990 to April 1992, he served as Vice
President for Business Development and Pricing. In May 1992, Mr. Strain was
elected as President/CEO of Heart Rhythm Technologies, and in December 1993 he
returned to Eli Lilly and Company headquarters. Since his retirement from Eli
Lilly and Company, Mr. Strain has been President/CEO of a biotech company,
participated in healthcare consulting, and serves on several boards.
FAMILY RELATIONSHIPS
Samuel C. Robinson and James W. Robinson are brothers. There is no other
family relationship among the directors and executive officers of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors of the Company to file initial reports of ownership and reports of
changes in ownership of the Common Shares of the Company. The officers and
directors are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms filed by them.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all reports required by Section 16(a) of the Securities
Exchange Act of 1934 related to market transactions in the Common Shares of the
Company were timely filed.
ITEM 11. EXECUTIVE COMPENSATION.
COMPENSATION OF DIRECTORS
In 1999, members of the Board of Directors who were not employees of the
Company received annual remuneration in the amount of $8,000 per year, plus an
additional $1,200 for each meeting of the Board of Directors attended. Patrick
C. Duffy received, for his services as Chairman of the Board of Directors,
$2,000 per quarter and $1,700 per meeting. In 1999 Director compensation for
annual remuneration and meeting fees was changed from the payment in cash, to a
grant of the Company's Common Shares. The number of shares granted during 2000
was established by dividing the quarterly compensation amount by the closing
market price of the Company's Common Shares as of November 4, 1999. Board
members receive reimbursement of expenses in cash. In 2001, the value of the
annual
D-35
<PAGE>
remuneration will increase to $10,000 per year, plus and additional $1,200 for
each meeting of the Board of Directors attended. Mr. Duffy will receive $1,700
per meeting. This remuneration will continue to be paid in Common Shares. The
number of shares granted will be calculated utilizing the closing market price
of the Company's Common Shares as of July 28, 2000. Members of the Board of
Directors who are employees of the Company receive no separate remuneration for
their service as directors.
Audit and Compensation Committee members receive a minimum of $400 per
meeting attended plus $200 per hour for attendance beyond two hours. Directors
serving on the Ad-hoc committees, established at the April 1998 board meeting,
receive $200 per hour for attendance during meetings of these committees with a
minimum of $600 per meeting, and an additional $150 per hour for attendance
beyond three hours, plus reimbursement of expenses. The Chairpersons of the
Audit and Compensation Committees receive $500 for their services in such
capacities.
Mr. Duffy receives $1,200 per day, plus reimbursement of expenses, for
days spent working on Robinson Nugent business.
On July 28, 2000, the Board of Directors approved and awarded $10,000
performance bonuses for all non-employee directors. Mr. Duffy was awarded an
additional $40,000 for his contributions to The Company's performance and
profitability. Mr. Neel was awarded and additional $10,000 for his work in the
Information Technology area of the Company.
Under the provisions of the 1993 Employee and Non-Employee Director Stock
Option Plan approved by the shareholders in November, 1993, Non-Employee
directors were granted non-qualified stock options (NQSOs) annually to purchase
4,000 Common Shares of the Company at the then current market price. Such
options were granted to non-employee directors on September 13, 1993, September
13, 1994, September 13, 1995, September 13, 1996, September 13, 1997, September
13, 1998 and September 13, 1999, at an exercise price of $8.75, $6.00, $8.625,
$4.75, $7.375, $4.25 and $4.75 per Common Share, respectively.
The 1993 Employee and Non-Employee Director Stock Option Plan was amended
by the Board of Directors on July 28, 2000 to make certain changes to the
provisions related to NQSOs and to increase the non-discretionary grants to
non-employee directors. Under the Plan, as amended, on July 28, 2000, all
non-employee members of the Board of Directors received stock option grants for
6,000. The chairmen of the Audit Committee and the Compensation and Stock Option
Committee received additional stock option grants for 1,000. The chairman of the
Board of Directors received additional stock option grants for 4,000. Such
options were granted under the Plan, as amended, on July 28, 2000. These stock
option grants have an exercise price of $14.00 (closing price as of July 28,
2000) per common share. All of these options are exercisable as to one-half the
shares after the first anniversary of the date of grant and as to all the shares
after the second anniversary of the date of grant and expire ten years after
date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2000, none of the members of the Compensation Committee
served nor have they previously served as officers of the Company or any
subsidiary, and none of the Company's executive officers serve as directors of,
or in any compensation-related capacity for, companies with which members of the
Compensation Committee are affiliated.
D-36
<PAGE>
EXECUTIVE COMPENSATION
GENERAL
The following Summary Compensation Table sets forth certain information
with respect to the aggregate compensation paid during each of the last three
years to the Company's President and Chief Executive Officer and each of the
other top four executive officers of the Company whose salary and bonus exceeded
$100,000 during fiscal 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- --------------------------------------------
RESTRICTED
OTHER ANNUAL STOCK OPTIONS/ ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) SAR's COMPENSATION
YEAR ($) ($) $(1) ($) # OF SHARES(2) ($)(3)
------ --------- -------- -------------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Larry W. Burke, 2000 233,899 67,600 946 -- 15,000 65,075
President and Chief 1999 208,028 -- 2,614 -- -- 62,578
Executive Officer 1998 216,477 -- 4,012 -- 16,500 61,701
Raymond T. Wandell, 2000 216,922 36,000 -- -- 3,000 3,225
Vice President, Sales 1999 50,769 -- -- -- 30,000 --
North America 1998 -- -- -- -- -- --
W. Michael Coutu 2000 173,483 73,000 -- -- 30,000 14,363
Vice President 1999 162,184 -- -- -- -- 11,967
Information Technology 1998 142,837 10,000 -- -- 9,020 12,255
Leong Chun Kin, 2000 213,482 -- -- -- 5,000 73,776(4)
Managing Director, 1999 215,013 -- -- -- -- --
Asia Pacific Operation 1998 198,137 -- -- -- 8,800 --
Dennis I. Smith, 2000 238,574 36,000 -- -- 3,000 3,225
Vice President, 1999 50,135 -- -- -- 30,000
Global Marketing 1998 -- -- -- -- -- --
</TABLE>
--------------------
(1) Represents imputed interest attributable to interest-free loans authorized
by the Board of Directors in connection with the purchase of Common Shares
of the Company under the 1993 Employee Stock Purchase Plan.
(2) Represents options granted under the 1993 Employee and Non-Employee
Director Stock Option Plan.
(3) Includes contributions by the Company on behalf of the named persons and
the group to the Company's Retirement Plan and 401(k) Plan, and pursuant to
deferred compensation agreements. Effective May 10, 1990, the Company
entered into a deferred compensation agreement with Mr. Burke. The deferred
compensation agreement provides for payments of $50,000 per year to a trust
administered by Strong Retirement Plan Services, Menomonee Falls,
Wisconsin, as supplemental retirement income benefits to Mr. Burke.
(4) Represents the compensation Mr. Leong received from the cash free exercise
of stock options in the current year.
Each of the officers listed in the Summary Compensation Table serves for a
term of one year.
D-37
<PAGE>
STOCK OPTIONS
There were 91,943 stock options exercised by the named executive officers
of the Company in fiscal 2000.
The following table sets forth the number of unexercised options held at
June 30, 2000 by each of the Company's executive officers named in the Summary
Compensation Table, and the related values of such options at June 30, 2000. The
value of unexercised options at June 30, 2000 is based upon a market value at
June 30, 2000 of $12.50 per Common Share.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY
AT JUNE 30, 2000 (# OF SHARES) OPTIONS AT JUNE 30, 2000 ($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Larry W. Burke 72,650 15,000 $363,806 $125,625
W. Michael Coutu 40,820 30,000 $203,084 $251,250
Leong Chun Kin -- 5,000 -- $ 41,875
Raymond T. Wandell 15,000 18,000 $127,500 $152,625
Dennis I. Smith 15,000 18,000 $127,500 $152,625
</TABLE>
--------------------
(1) Value is calculated by (i) subtracting the exercise price per share from
the fiscal year-end market value of $12.50 per share and (ii) multiplying
by the number of shares subject to the option. Options that have an
exercise price equal to or greater than the fiscal year-end market value
are not included in the value calculation.
In November of 1999, the Board of Directors adopted the Robinson Nugent,
Inc., Discounted Share Purchase Program for Certain Key Employees ("Discounted
Share Purchase Program") to enable certain key employees of the Company to
purchase Common Shares of the Company at a 15% discount. The Discounted Share
Purchase Program is available only to employees of the Company who, on or after
October 1, 1999, are awarded a Board-approved bonus in a gross amount (i.e.,
before any deductions for applicable taxes) of $1,500 or more in any given
fiscal quarter. The Discounted Share Purchase Program is not designed to comply
to the tax-qualified stock purchase programs within the meaning of Section 423
of the Internal Revenue Code. As a result, the 15% discount on the purchase of
Common Shares under the program is taxable to the employee.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
The Compensation Committee and Stock Option Committee of the Board of
Directors has responsibility for the Company's executive compensation program.
The Committee is currently comprised solely of Non-Employee directors. The
Committee is chaired by Mr. Jerrol Z. Miles. The other Committee members are Mr.
Donald C. Neel and Mr. James W. Robinson. The following report is submitted by
the members of the Compensation Committee and the Stock Option Committee.
* * *
The Company's executive compensation program is designed to align executive
compensation with financial performance, business strategies and Company values
and objectives. The Company's compensation philosophy is to ensure that the
delivery of compensation, both in the short- and long-term, is consistent with
the sustained progress, growth and profitability of the Company and acts as an
inducement to attract and retain qualified individuals. This program seeks to
enhance the profitability of the Company, and thereby enhance shareholder value,
by linking the financial interests of the Company's executives with those of its
long-term shareholders. Under the guidance of the Company's Compensation
Committee of the Board of Directors, the Company has developed and implemented
an executive compensation program to achieve these objectives while providing
executives with compensation opportunities that are competitive with companies
of comparable size in related industries.
D-38
<PAGE>
The Company's executive compensation program has been designed to implement
the objectives described above and is comprised of the following fundamental
three elements:
* a base salary that is determined by individual contributions and
sustained performance within an established competitive salary range.
Pay for performance recognizes the achievement of financial goals,
accomplishment of corporate and functional objectives, and performance
of individual business units of the Company.
* an annual incentive cash bonus that is directly tied to corporate and
business unit performance measures
* a long-term incentive program that rewards executives when shareholder
value is created through increase in the market value of the Company's
Common Shares. Stock option grants focus executives on managing the
Company from the perspective of an owner with an equity position in
the business.
BASE SALARY. The salary, and any periodic increase thereof, of the
President and Chief Executive Officer was and is determined by the Board of
Directors of the Company based on recommendations made by the Compensation
Committee. The salaries, and any periodic increases thereof, of the other
executive officers were and are determined by the Board of Directors based on
recommendations made by the President and Chief Executive Officer and approved
by the Committee.
The Company, in establishing base salaries, levels of incidental and/or
supplemental compensation, and incentive compensation programs for its officers
and key executives, assesses periodic compensation surveys and published data
covering the electrical/electronics industry and industry in general. The level
of base salary compensation for officers and key executives is determined by
both their scope and responsibility and the established salary ranges for
officers and key executives of the Company. Periodic increases in base salary
are dependent on the executive's proficiency of performance in the individual's
position for a given period, and on the executive's competency, skill and
experience.
BONUS PAYMENTS. The bonus compensation program for the Company's officers
is subject to annual review by the Compensation Committee and requires annual
approval of the Board of Directors.
Under the bonus plan for executive officers and key employees for fiscal
year 2000, executive officers were eligible for a bonus award provided the
consolidated pretax income of the Company and subsidiaries for fiscal year 2000
exceeded 90% of the amount specified in fiscal year 2000 financial plan, in an
amount equal to 10% of that excess (up to the plan amount). When pretax income
exceeded the amount specified in the fiscal year 2000 financial plan, an amount
equal to 20% of that excess was added to the bonus pool.
Under the bonus plan for executive officers and key employees for fiscal
2001, if consolidated pretax income exceeds the amount specified in the 2001
financial plan, an amount equal to 10% of that excess, will be available for the
payment of bonuses. The bonus amount payable to each of the executive officers
and key employees will be determined by the President and Chief Executive
Officer of the Company.
LONG-TERM INCENTIVE PLANS. The Company's long-term incentive compensation
program is intended to align executive interest with the long-term interests of
shareholders by linking executive compensation with enhancement of shareholder
value. In addition, the program motivates executives to improve long-term stock
market performance by allowing them to develop and maintain a significant
long-term equity ownership position in the Company's Common Shares.
Currently, the only long-term incentive plan of the Company is its 1993
Employee and Non-Employee Director Stock Option Plan. This Plan was adopted by
the Board of Directors on September 13, 1993, and approved by the shareholders
of the Company at the 1993 annual meeting of the shareholders held on November
4, 1993. Pursuant to this Plan, 500,000 Common Shares were made available for
the grant of stock options to Non-Employee Directors of the Company and key
employees of The Company and its subsidiaries as determined by the Stock Option
Committee. An amendment authorizing an additional 500,000 Common Shares to be
made available for grants of
D-39
<PAGE>
stock options under the 1993 Employee and Non-Employee Director Stock Option
Plan was adopted by the Board of Directors and approved by the shareholders in
1997.
On May 28, 1992, the Board of Directors adopted the 1993 Employee Stock
Purchase Plan to provide executive officers and other key employees with the
opportunity to purchase Common Shares and thereby establish or increase their
equity position in the Company. As an added incentive to participants in this
plan, the Company awarded a matching number of Common Shares in proportion (not
more than 50%) to the Common Shares purchased and provided interest-free loans
to the participants, subject to the discretion of the Board of Directors. The
Company's matching shares vest with the participants who remain in the
employment of the Company in three equal annual installments starting in
September 1994. Loans to employees are payable over periods not to exceed ten
years. Participation in the Plan was completed in fiscal 1993 and the Plan
expired with respect to new participation on November 10, 1993.
SUBMITTED BY THE COMPENSATION AND STOCK OPTION COMMITTEES
Mr. Donald C. Neel
Mr. James W. Robinson
Mr. Jerol Z. Miles
D-40
<PAGE>
STOCK PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Shares with the cumulative
total return of the Nasdaq market composite (U.S. Companies) and the Peer Group
Index for the six years ending June 30, 2000. The Peer Group consists of Methode
Electronics, Inc., Molex Incorporated and Thomas & Betts Corporation. The Peer
Group consists of publicly-held companies, all of which participate in the
electronic connector industry in varying degrees with respect to their total
sales volume. All of these companies are significantly larger than the Company
in terms of sales and assets. The comparison assumes that $100 was invested on
June 30, 1994, in the Company's Common Shares and in each of the foregoing
indices and assumes reinvestment of dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ROBINSON NUGENT, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX, AND A PEER GROUP
[PLOT POINTS CHART]
* $100 INVESTED ON 6/30/95 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
ROBINSON NUGENT, INC. (RNIC)
<TABLE>
<CAPTION>
% PEER GROUP
WEIGHTED CUMULATIVE TOTAL RETURN MARKET CAP
PEER GROUP CUMULATIVE TOTAL RETURN --------------------------------------------------- -------------
(WEIGHTED AVERAGE BY MARKET VALUE) 6/95 6/96 6/97 6/98 6/99 6/00 6/30/2000
------------------------------------ ------ ------ ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peer Group Weighted Average: ....... 100 111 155 139 170 191
Methode Electrs Inc ................ METHA 100 132 156 123 185 314 12.5%
Molex Inc .......................... MOLX 100 103 148 127 188 306 44.78%
Thomas & Betts Corp ................ TNB 100 113 163 156 154 64 42.72%
</TABLE>
D-41
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain data with respect to those persons
known by the Company to be the beneficial owners of five percent or more of the
outstanding Common Shares of the Company as of August 8, 2000 and also sets
forth such data with respect to each director of the Company, each officer
listed in the Summary Compensation Table, and all directors and executive
officers of the Company as a group. Except as otherwise indicated in the notes
to the table, each beneficial owner possesses sole voting and investment power
with respect to the shares indicated.
NUMBER OF PERCENT
SHARES(1) OF CLASS
------------ --------
PRINCIPAL SHAREHOLDERS
Samuel C. Robinson 1,137,258(2) 20.8%
226 Barefoot Beach Blvd.
Bonita Springs, Florida 34134
ROI Capital Management, Inc. 574,855(3) 10.5%
17 E. Sir Francis Drake Blvd.
Suite 225
Larkspur, California 94939
Lawrence Mazey 360,329(13) 6.6%
Declaration of Trust
140 Commodore Drive
Juniper, Florida 33477
James W. Robinson 302,741(4) 5.5%
7527 State Road 62
Lanesville, Indiana 47136
Dimensional Fund Advisors, Inc. 294,700(3) 5.4%
1299 Ocean Avenue
Santa Monica, California 89491
DIRECTORS AND EXECUTIVE OFFICERS
Samuel C. Robinson 1,137,258(2) 20.8%
James W. Robinson 302,741(4) 5.5%
Larry W. Burke 242,601(5) 4.4%
Patrick C. Duffy 89,099(6) 1.6%
W. Michael Coutu 53,206(8) 1.0%
Richard L. Mattox 55,947(4) 1.0%
Jerrol Z. Miles 32,417(4) *
Donald C. Neel 42,137 *
Ben M. Streepey 18,637(7) *
Richard W. Strain 29,137(14) *
Raymond T. Wandell 22,080(9) *
Leong Chun Kin 14,442(10) *
Dennis I. Smith 19,000(11) *
All directors and executive officers 2,120,479(12) 38.9%
as a group (16 persons)
----------------------
* Less than 1%.
(1) The table includes certain shares owned of record by the Company's 401(k)
Plan and the 1993 Employee Stock Purchase Plan. The participants in these
Plans, as noted in the following footnotes, have voting rights but no
rights of disposition with respect to the shares allocated to their
respective accounts.
D-42
<PAGE>
(2) Includes 16,398 shares owned of record by Mr. Robinson's wife, as to which
she possesses sole voting and investment power, and 5,500 shares owned of
record by National City Bank, Southern Indiana, as trustee for the benefit
of a child, as to which Mr. Robinson and the trustee share voting and
investment power. Mr. Robinson disclaims any beneficial interest in these
shares.
(3) The shareholder certified in Schedule 136 filed with the Securities and
Exchange Commission that these shares were acquired in the ordinary course
of business and were not acquired for the purpose of and do not have the
effect of changing or influencing the control of the Company, and were not
acquired in connection with or as a participant in any transaction having
such purpose or effect.
(4) Includes 22,000 shares which each named individual may acquire upon
exercise of stock options granted to non-employee members of the Board of
Directors under the 1993 Employee and Non-Employee Director Stock Option
Plan.
(5) Includes 6,354 shares owned of record by Mr. Burke's wife, as to which he
disclaims any beneficial interest; 80,150 shares subject to immediately
exercisable options granted pursuant to the Company's Employee Stock Option
Plans; and 68,050 shares allocated to Mr. Burke's account pursuant to the
Company's 401(k) Plan and the 1993 Employee Stock Purchase Plan.
(6) Includes 52,000 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(7) Includes 6,000 shares subject to immediately exercisable options granted to
non-employee members of the Board of Directors under the 1993 Employee and
Non-Employee Director Stock Option Plan.
(8) Includes 50,820 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(9) Includes 16,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(10) Includes 2,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(11) Includes 16,500 shares subject to immediately exercisable options granted
pursuant to the Company's 1993 Employee and Non-Employee Stock Option Plan.
(12) Includes in the aggregate 343,420 shares subject to immediately exercisable
options granted pursuant to the Company's 1993 Employee and Non-Employee
Stock Option Plan held by non-employee directors and executive officers,
and 68,050 shares allocated to the accounts of executive officers pursuant
to the Company's 401(k) Plan and the 1993 Employee Stock Purchase Plan.
(13) Mr. Mazey died on February 16, 1999. The Company has been advised that
these shares are currently owned by Richard M. Mazey, Janice M. Weiss and
Sally M. Wilder, as successor co-trustees under the Lawrence Mazey
Declaration of Trust dated January 26, 1993.
(14) Includes 1,000 shares owned of record by Mr. Strain's wife, as to which he
disclaims any beneficial interest, and 22,000 shares subject to immediately
exercisable options granted pursuant to the Company's 1993 Employee and
Non-Employee Stock Option Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN TRANSACTIONS
Richard L. Mattox, Secretary, Corporate Counsel and a member of the Board
of Directors of the Company, is a partner in the law firm of Mattox, Mattox &
Wilson with offices in New Albany, Indiana. That firm was retained by the
Company as legal counsel during fiscal 2000, and it is anticipated that such
relationship will continue in the current fiscal year.
Jerrol Z. Miles, a director of the Company, is a Senior Vice President of
National City Bank, Kentucky, with which the Company maintains a commercial
banking relationship including a $10,000,000 credit facility. The Company
utilized this loan facility during fiscal 2000 and incurred interest charges of
$687,153 on borrowed funds. In fiscal 2000, the Company made periodic
investments in short-term securities administered by National City Bank,
Kentucky, and the Company received interest payments of approximately $19,340
thereon.
In February 2000, the Company sold the New Albany facility to a limited
liability company, owned two-thirds by Samuel C. Robinson and one-third by
James W. Robinson, for approximately $2.2 million in cash. The purchase price
was determined in relation to the net book value of the property, and was
confirmed by an appraisal by an independent third party. This transaction was
approved by the Board of Directors. Mr. Samuel C. Robinson and Mr. James W.
Robinson did not participate in this vote. This facility was simultaneously
leased back by the Company for $220,000 per year, under a two year,
D-43
<PAGE>
triple-net lease. The gain on such sale, which was insignificant, was deferred
and is being amortized over the life of the related lease.
The Board of Directors believes that the transactions described above were
on terms no less favorable to the Company than would have been available in the
absence of the relationships described.
In September 1992, pursuant to the terms of the Company's Employee Stock
Purchase Plan, Mr. Burke borrowed $165,000 from the Company to purchase Common
Shares of the Company. These loans are non-interest bearing and are payable over
a period not to exceed ten years. At June 30, 1999, the principal balance of the
loan to Mr. Burke was $8,859.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) DOCUMENTS FILED AS A PART OF THIS REPORT.
(1) FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheets as of June 30, 2000, 1999 and 1998
Consolidated Statements of Operations and Comprehensive Income
for the years ended June 30, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity for the years
ended June 30, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended June
30, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
(2) FINANCIAL STATEMENT SCHEDULE
Schedule for the years ended June 30, 2000, 1999, and 1998:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
(3) EXHIBITS
3.1 Articles of Incorporation of Robinson Nugent, Inc.
(Incorporated by reference to Exhibit 3.1 to Form S-1
Registration Statement No. 2-62521.)
3.2 Articles of Amendment of Articles of Incorporationof
Robinson Nugent, Inc. filed September 1, 1978
(Incorporated by reference to Exhibit B(1) to Form
10-K Report for year ended June 30, 1980.)
3.3 Articles of Amendment of Articles of Incorporation of
Robinson Nugent, Inc. filed November 14, 1983
(Incorporated by reference to Exhibit 3.3 to Form 10-K
Report for year ended June 30, 1984.)
3.4 Amended and Restated Bylaws of Robinson Nugent, Inc.
adopted November 7, 1991. (Incorporated by reference
to Exhibit 19.1 to Form 10-K Report for year ended
June 30, 1992).
4.1 Specimen certificate for Common Shares, without par
value. (Incorporated by reference to Exhibit 4 to Form
S-1 Registration Statement No. 2-62521.)
D-44
<PAGE>
4.2 Rights Agreement dated April 21, 1988 between Robinson
Nugent, Inc. and Bank One, Indianapolis, NA.
(Incorporated by reference to Exhibit I to Form 8-A
Registration Statement dated May 2, 1988.)
4.3 Amendment No. 1 to Rights Agreement dated September
26, 1991. (Incorporated by reference to Exhibit 4.3 to
Form 10-K Report for year ended June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement dated June 11,
1992. (Incorporated by reference to Exhibit 4.4 to
Form 8-K Current Report dated July 6, 1992.)
4.5 Amendment No. 3 to Rights Agreementdated February 11,
1998 (Incorporated by reference to Exhibit 4.5 to Form
10-Q Report for the period ended December 31, 1998.)
10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive *
Stock Option Plan. (Incorporated by reference to
Exhibit 10.1 to Form 10-K Report for year ended June
30, 1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax-Qualified Incentive *
Stock Option Plan. (Incorporated by reference to
Exhibit 10.2 to Form 10-K Report for year ended June
30, 1983.)
10.3 1993 Robinson Nugent, Inc. Employee and Non-Employee *
Director Stock Option Plan. (Incorporated by reference
to Exhibit 19.1 to Form 10-K Report forthe year ended
June 30, 1993.)
10.4 Summary of The Robinson Nugent, Inc. Employee Stock *
Purchase Plan. (Incorporated by reference to Exhibit
19.2 to Form 10-K Report for the year ended June 30,
1993.)
10.5 Deferred compensation agreement dated May 10, 1990 *
between Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer. (Incorporated
by reference to Exhibit 19.1 to Form 10-K Report for
the year ended June 30, 1990.)
10.6 Trust Agreement dated July 1, 1999 between Robinson *
Nugent, Inc. and Strong Retirement Plan Services,
related to the deferred compensation agreement between
Robinson Nugent, Inc. and Larry W. Burke, President
and Chief Executive Officer (Incorporated by reference
to Exhibit 10.6 to Form 10-K Report for the year ended
June 30, 1999.)
10.7 Summary of the 1993 Robinson Nugent, Inc. Employee and *
Non-employee Director Stock Option Plan, as amended.
(Incorporated by reference to Exhibit 10.7 to Form
10-K Report for the fiscal year ending June 30, 1998).
10.8 Summary of Robinson Nugent, Inc. Bonus Plan for fiscal
year ended June 30, 2001.
16.0 No exhibit.
21.0 Subsidiaries of the registrant.
27.0 Financial Data Schedule.
* Management contracts or compensatory plans
(b) REPORTS ON FORM 8-K
None.
D-45
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROBINSON NUGENT, INC.
Date: 8/24/00 By: /s/ Larry W. Burke
----------------------- -------------------------------------
Larry W. Burke
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: 8/24/00 By: /s/ Samuel C. Robinson
------------------ -------------------------------------
Samuel C. Robinson, Director
Date: 8/24/00 By: /s/ Larry W. Burke
------------------ -------------------------------------
Larry W. Burke, Director,
President and Chief Executive Officer
(Principal Executive Officer)
Date: 8/24/00 By: /s/ Patrick C. Duffy
------------------ -------------------------------------
Patrick C. Duffy, Director
Date: 8/24/00 By: /s/ Richard L. Mattox
------------------ -------------------------------------
Richard L. Mattrox, Director
Date: 8/24/00 By: /s/ Jerrol Z. Miles
------------------ -------------------------------------
Jerrol Z. Miles, Director
Date: 8/24/00 By: /s/ James W. Robinson
------------------ -------------------------------------
James W. Robinson, Director
Date: 8/24/00 By: /s/ Richard W. Strain
------------------ -------------------------------------
Richard W. Strain, Director
Date: 8/24/00 By: /s/ Ben M. Streepey
------------------ -------------------------------------
Ben M. Streepey, Director
Date: 8/24/00 By: /s/ Donald C. Neel
------------------ -------------------------------------
Donald C. Neel, Director
Date: 8/24/00 By: /s/ Robert L. Knabel
------------------ -------------------------------------
Robert L. Knabel, Vice President,
Treasurer and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
D-46
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
JUNE 30, 2000, 1999, AND 1998
Financial Statement Schedule for the years ended June 30, 2000, 1999, and
1998 is included herein:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is inapplicable or
the information is presented in the consolidated financial statements or related
notes.
D-47
<PAGE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ROBINSON NUGENT, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
------ ------------ -------------------------- -------------- -----------
ADDITIONS
--------------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND ACCOUNTS DEDUCTIONS END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
----------- ------------ ------------ ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED JUNE 30, 2000
Deducted from asset accts
Allowance for doubtful accounts ... $ 581 $ 253 $ -- $ 250(A) $ 584
Allowance for inventory
obsolescence & valuation ......... 1,185 1,425 -- 1,564(B) 1,046
------ ------ ---- -------- ------
Total ............................ $1,766 $1,677 $ -- $ 1,814 $1,629
====== ====== ==== ======== ======
YEAR ENDED JUNE 30, 1999
Deducted from asset accts
Allowance for doubtful accounts ... $ 571 $ 33 $ -- $ 23(A) $ 581
Allowance for inventory
obsolescence & valuation ......... 1,243 640 -- 698(B) 1,185
------ ------ ---- -------- ------
Total ............................ $1,814 $ 643 $ -- $ 721 $1,766
====== ====== ==== ======== ======
YEAR ENDED JUNE 30, 1998
Deducted from asset accts
Allowance for doubtful accounts ... $ 564 $ 72 $ -- $ 65(A) $ 571
Allowance for inventory
obsolescence & valuation ......... 1,565 1,212 -- 1,534(B) 1,243
------ ------ ---- -------- ------
Total ............................ $2,129 $1,284 $ -- $ 1,599 $1,814
====== ====== ==== ======== ======
</TABLE>
See footnotes on following page.
D-48
<PAGE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C> <C>
(A) Summary of activity in Column D follows:
Reduction of requirements in allowance for doubtful accounts .......... $ -0- $ -0- $ -0-
Uncollectible accounts written off, net of recoveries ................. 249 23 52
Currency Translation -- losses ........................................ 1 -0- 13
------ ----- ------
$ 250 $ 23 $ 65
====== ===== ======
(B) Summary of activity in Column D follows:
Discontinued and obsolete inventory written off,
net of recoveries .................................................... $1,536 $ 697 $1,919
Currency translation -- (gains)/losses ................................ 28 1 (385)
------ ----- ------
$1,564 $ 698 $1,534
====== ===== ======
</TABLE>
D-49
<PAGE>
ROBINSON NUGENT, INC.
FORM 10-K FOR FISCAL YEAR
ENDED JUNE 30, 2000
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER SEQUENTIAL
ASSIGNED IN NUMBERING SYSTEM
REGULATION S-K PAGE NUMBER
ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT
-------------- -------------------------------------------------------------- ----------------
<S> <C> <C>
(3) 3.1 Articles of Incorporation of Robinson Nugent, Inc.
(Incorporated by reference to Exhibit 3.1 to Form S-1
Registration Statement No. 2-62521.)
3.2 Articles of Amendment of Articles of Incorporation of
Robinson Nugent, Inc. filed September 1, 1978
(Incorporated by reference to Exhibit B(1) to Form 10-K
Report for year ended June 30, 1980.)
3.3 Articles of Amendment of Articles of Incorporation of
Robinson Nugent, Inc. filed November 14, 1983
(Incorporated by reference to Exhibit 3.3 to Form 10-K
Report for year ended June 30, 1984.)
3.4 Amended and Restated Bylaws of Robinson Nugent, Inc.
adopted November 7, 1991. (Incorporated by reference to
Exhibit 19.1 to Form 10-K Report for year ended June 30,
1992).
(4) 4.1 Specimen certificate for Common Shares, without par
value. (Incorporated by reference to Exhibit 4 to Form
S-1 Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988 between Robinson
Nugent, Inc. and Bank One, Indianapolis, NA.
(Incorporated by reference to Exhibit I to Form 8-A
Registration Statement dated May 2, 1988.)
4.3 Amendment No. 1 to Rights Agreement dated September 26,
1991. (Incorporated by reference to Exhibit 4.3 to Form
10-K Report for year ended June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement dated June 11, 1992.
(Incorporated by reference to Exhibit 4.4 to Form 8-K
Current Report dated July 6, 1992.)
4.6 Amendment No. 3 to Rights Agreement dated February 11,
1998 (Incorporated by reference to Exhibit 4.5 to Form
10-Q Report for the period ended December 31, 1998.)
(9) No exhibit.
(10) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive Stock *
Option Plan. (Incorporated by reference to Exhibit 10.1
to Form 10-K Report for year ended June 30, 1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax-Qualified Incentive *
Stock Option Plan. (Incorporated by reference to Exhibit
10.2 to Form 10-K Report for year ended June 30, 1983.)
</TABLE>
D-50
<PAGE>
<TABLE>
<CAPTION>
NUMBER SEQUENTIAL
ASSIGNED IN NUMBERING SYSTEM
REGULATION S-K PAGE NUMBER
ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT
-------------- -------------------------------------------------------------- ----------------
<S> <C> <C>
10.3 1993 Robinson Nugent, Inc. Employee and Non-Employee *
Director Stock Option Plan. (Incorporated by reference
to Exhibit 19.1 to Form 10-K Report for the year ended
June 30, 1993.)
10.4 Summary of The Robinson Nugent, Inc. Employee Stock *
Purchase Plan. (Incorporated by reference to Exhibit
19.2 to Form 10-K Report for the year ended June 30,
1993.)
10.5 Deferred compensation agreement dated May 10, 1990 *
between Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer. (Incorporated by
reference to Exhibit 19.1 to Form 10-K Report for year
ended June 30, 1990.)
10.6 Trust Agreement dated July 1, 1999 between Robinson *
Nugent, Inc. and Strong Retirement Plan Services,
related to the deferred compensation agreement between
Robinson Nugent, Inc. and Larry W. Burke, President and
Chief Executive Officer. (Incorporated by reference to
Exhibit 10.6 to Form 10-K Report for the year ended June
30, 1999.)
10.7 Summary of the 1993 Robinson Nugent, Inc. Employee and *
Non-employee Director Stock Option Plan, as amended.
(Incorporated by reference to Exhibit 10.7 to Form 10-K
Report for the fiscal year ending June 30, 1998).
10.8 Summary of Robinson Nugent, Inc. Bonus Plan for fiscal
year ended June 30, 2001.
(11) No exhibit.
(12) No exhibit.
(16) No exhibit.
(18) No exhibit.
</TABLE>
D-51
<PAGE>
<TABLE>
<CAPTION>
NUMBER SEQUENTIAL
ASSIGNED IN NUMBERING SYSTEM
REGULATION S-K PAGE NUMBER
ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT
--------------- --------------------------------------------- -----------------
<S> <C> <C>
(21) 21.0 The subsidiaries of the registrant are:
JURISDICTION
NAME OF ORGANIZATION
---- ---------------
Cablelink, Incorporated Indiana
RNL, Inc. Indiana
Robinson Nugent-Dallas, Inc. Texas
Robinson Nugent S.a.r.l. France
Robinson Nugent GmbH Germany
Robinson Nugent Ltd. Great Britain
Nihon Robinson Nugent K.K. Japan
Robinson Nugent dba Cablelink Malaysia
(Malaysia) Sdn. Bhd.
Robinson Nugent Malaysia
(Malaysia) Sdn. Bhd.
Robinson Nugent S.A. Switzerland
Robinson Nugent (Scotland) Limited Scotland
Robinson Nugent International, Inc. Virgin Islands
Robinson Nugent (Europe) B.V. The Netherlands
Robinson Nugent (Belgium) B.V.B.A. Belgium
Robinson Nugent (Asia Pacific) Pte. Ltd. Singapore
Robinson Nugent Nordic, filial-till Sweden
Robinson Nugent (Europe) B.V.
The Netherlands
Robinson Nugent S. de R.L. de C.V. Mexico
Robinson Nugent Interconnect Malaysia
(Malaysia) Sdn. Bhd.
(22) No exhibit.
(23) No exhibit.
(24) No exhibit.
(27) 27.0 Financial Data Schedule.
(28) No exhibit.
* Management contracts or compensatory plans
</TABLE>
D-52
<PAGE>
EXHIBIT 10.8
ROBINSON NUGENT, INC.
SUMMARY OF ROBINSON NUGENT, INC.
BONUS PLAN FOR FISCAL YEAR ENDING JUNE 30, 2001
The Board of Directors has adopted a bonus plan for executive officers and
key employees for fiscal year 2001. Under the bonus plan for executive officers
and key employees for fiscal 2001, if consolidated pretax income exceeds the
amount specified in the 2001 financial plan, an amount equal to 10% of that
excess will be available for payment of bonuses. The bonus amount payable to
each of the executive officers and key employees will be determined by the
President and Chief Executive Officer of the Company.
D-53
<PAGE>
ANNEX E
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 2000
--------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File Number 0-9010
---------------------------------------------------------
ROBINSON NUGENT, INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
INDIANA 35-0957603
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
800 East Eighth Street, New Albany, Indiana 47151-1208
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (812) 945-0211
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No _____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date: As of November 9, 2000, the
registrant had outstanding 5,919,686 common shares without par value.
The Index to Exhibits is located at page 13 in the sequential numbering
system. Total pages: 14.
E-1
<PAGE>
ROBINSON NUGENT, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. Financial Information:
Item 1. Financial Statements
Consolidated balance sheets at September 30, 2000,
September 30, 1999 and June 30, 2000 ............................................. 3
Consolidated statements of operations and comprehensive income for the three
months ended September 30, 2000 and September 30, 1999 ........................... 5
Consolidated statements of cash flows for the three months ended September 30,
2000 and September 30, 1999 ...................................................... 6
Notes to consolidated financial statements ....................................... 7
Item 2. Management's discussion and analysis of financial condition and results of
operations ................................................................. 8
PART II. Other Information ........................................................... 11
</TABLE>
E-2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30
--------------------- JUNE 30,
2000 1999 2000
ASSETS: --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ............... $ 1,627 $ 1,147 $ 2,114
Accounts receivable, net ................ 17,295 14,373 17,949
Inventories:
Raw materials .......................... 1,103 1,039 1,072
Work in process ........................ 7,644 6,490 8,479
Finished goods ......................... 9,511 3,858 9,434
------- ------- -------
Total inventories ..................... 18,258 11,387 18,985
Other current assets .................... 2,269 1,791 2,378
------- ------- -------
Total current assets ................... 39,449 28,698 41,426
Property, plant & equipment, net ......... 15,965 17,968 15,989
Other assets ............................. 147 152 652
------- ------- -------
Total assets ............................ $55,561 $46,818 $58,067
======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
E-3
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30
----------------------------- JUNE 30,
2000 1999 2000
LIABILITIES AND SHAREHOLDERS' EQUITY -------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Current liabilities:
Current installments of long-term debt ...................... $ 410 $ 462 $ 441
Accounts payable ............................................ 7,880 7,164 9,329
Accrued expenses ............................................ 5,724 4,771 7,375
--------- --------- ---------
Total current liabilities .................................. 14,014 12,397 17,145
Long-term debt, excluding current installments ............... 11,918 8,667 11,779
Other liabilities ............................................ 860 985 750
--------- --------- ---------
Total liabilities .......................................... 26,792 22,049 29,674
--------- --------- ---------
Shareholders' equity:
Common shares without par value
Authorized shares 15,000; issued 7,018 shares at
September 30, 2000, 6,851 shares at September 30, 1999,
and 6,978 shares at June 30, 2000 .......................... 21,752 20,950 21,562
Retained earnings ........................................... 20,470 15,614 19,535
Equity adjustment from foreign currency translation ......... (945) 990 (134)
Employee stock purchase plan loans and deferred
compensation ............................................... (9) (65) (22)
Less cost of common shares in treasury; 1,886 shares at
September 30, 2000, 1,919 shares at September 30, 1999,
and 1,894 shares at June 30, 2000 .......................... (12,499) (12,720) (12,548)
---------- --------- ---------
Total shareholders' equity ................................. 28,769 24,769 28,393
---------- --------- ---------
Total liabilities and shareholders' equity .................. $ 55,561 $ 46,818 $ 58,067
========== ========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
E-4
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
-----------------------
2000 1999
---------- ----------
(UNAUDITED)
<S> <C> <C>
Net Sales .................................................... $23,356 $20,950
Cost of sales ................................................ 17,002 15,388
------- -------
Gross profit ................................................ 6,354 5,562
Selling, general and administrative expenses ................. 4,677 3,998
Special and unusual expenses ................................. 172 230
------- -------
Operating income ............................................ 1,505 1,334
------- -------
Other income (expense):
Interest income ............................................. 6 14
Interest expense ............................................ (240) (176)
Currency gain (loss) ........................................ 59 (75)
Royalty income .............................................. 4 --
------- -------
(171) (237)
------- -------
Income before income taxes ................................... 1,334 1,097
Income taxes ................................................. 455 313
------- -------
Net income ................................................... $ 879 $ 784
------- -------
Other comprehensive income:
Foreign currency translation ................................ (811) 498
------- -------
Comprehensive income ......................................... $ 68 $ 1,282
======= =======
Per Share Data:
Basic net income per common share ............................ $ .17 $ .16
======= =======
Weighted average number of common shares outstanding ......... 5,114 4,931
======= =======
Diluted net income per common share .......................... $ .16 $ 16
======= =======
Adjusted weighted average number of common shares,
assuming dilution ........................................... 5,485 4,985
======= =======
Dividends per common share ................................... $ -- $ --
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
E-5
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
-------------------------
2000 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income ................................................... $ 879 $ 784
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ............................... 1,065 1,120
Disposal of capital assets .................................. 34 93
Issuance of shares as compensation .......................... 237 27
Changes in assets and liabilities:
Receivables ................................................. 654 (1,549)
Inventories ................................................. 727 (755)
Other assets ................................................ 604 861
Accounts payable and accrued expenses ....................... (2,990) 179
-------- --------
Net cash provided by operating activities ................... 1,210 760
-------- --------
Cash flows from investing activities:
Capital expenditures ......................................... (1,283) (927)
Proceeds from sale of fixed assets ........................... -- 326
-------- --------
Net cash used in investing activities ....................... (1,283) (601)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt ................................. 250 500
Repayments of long-term debt ................................. (58) (884)
Repayments of employee stock purchase plan loans ............. 13 9
Proceeds from exercised stock options ........................ 58 --
-------- --------
Net cash provided by (used in) financing activities ......... 263 (375)
-------- --------
Effect of exchange rate changes on cash ....................... (677) 518
-------- --------
Increase (decrease) in cash and cash equivalents .............. (487) 302
Cash and cash equivalents at beginning of period .............. 2,114 845
-------- --------
Cash and cash equivalents at end of period .................... $ 1,627 $ 1,147
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
E-6
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2000, AND 1999, AND JUNE 30, 2000
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments necessary (all of
which are normal and recurring) to present fairly the financial position of
the Company and its subsidiaries, results of operations, and cash flows in
conformity with generally accepted accounting principles. The results of
operations for the interim period are not necessarily an indication of
results to be expected for the entire year.
2. Reference is directed to the Company's consolidated financial statements
(Form 10-K) for the year ended June 30, 2000, and management's discussion
and analysis included in Part I, Item 2 in this report.
3. On October 2, 2000, The Company and Minnesota Mining and Manufacturing
Company (3M) entered into a definitive merger agreement under which 3M will
acquire Robinson Nugent for approximately $115 million, including the
assumption of debt. The merger is structured as a tax-free, stock-for-stock
transaction, in which each outstanding Robinson Nugent common share will be
exchanged for $19 of 3M common stock. If the average closing trading price
of 3M Common Stock is between $82 and $100 per share, as described in the
merger agreement, the exchange ratio outside the collar will be fixed. The
transaction will be accounted for as a purchase.
The transaction has been approved by the boards of directors of both
companies and is subject to approval by the shareholders of Robinson
Nugent, Inc., customary closing conditions, and regulatory reviews. The
transaction is expected to close in late 2000 or in early 2001. Upon
completion of the merger, Robinson Nugent, Inc., will become a wholly owned
subsidiary of 3M.
3M also entered into a voting and stock option agreement with four Robinson
Nugent, Inc., stockholders, owning approximately 31% of the outstanding
Company common shares on a fully diluted basis, under which the
shareholders have agreed to vote their shares in favor of the merger and 3M
has the option in certain circumstances to acquire the shares for cash at
$19 per share.
4. The Company recorded special and unusual expenses of $172,000, before
taxes, in the quarter ending September 30, 2000 and $230,000, before taxes,
in the first quarter of the prior year. These expenses are presented
separately as a component of the operating income in the consolidated
statements of operations. The special and unusual expenses in the current
quarter include personnel costs, professional fees and other costs related
to the negotiations, due diligence and preparations associated with the
definitive merger agreement between 3M and Robinson Nugent. The prior year
expenses are related to personnel costs incurred to design and implement a
new information and enterprise resource planning system for North American
and European operations. This new system was designed and implemented to
satisfy year 2000 requirements, enhance management and control systems,
improve customer service and vendor communications.
5. The Financial Accounting Standards Board has issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for hedging activities and
for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives). It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. RN adopted the new standard on July 1, 2000. The
effect on the results of operations of adopting this new standard is
insignificant.
The Security and Exchange Commission Staff Accounting Bulletin No. 101
"Revenue Recognition" establishes account and reporting standards for the
recognition of revenues. The Company adopted the new bulletin on July 1,
2000. The effect on the results of operations of adopting this bulletin is
insignificant.
E-7
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Statements made in this quarterly report with respect to Robinson Nugent's
(The Company) current plans, estimates, strategies and beliefs and other
statements that are not historical facts are forward-looking statements about
the future beliefs in light of the information currently available to it and
therefore you should not place undue reliance on them. The Company cautions you
that a number of important factors could cause actual results to differ
materially from those discussed in the forward-looking statements.
Customer orders for the first quarter ended September 30, 2000, amounted to
$31.6 million, up 16% from orders of $27.2 million in the same quarter of the
prior year. This increase reflected a 35% increase in the United States, a 51%
decrease in Europe and a 228% increase in Asia. In addition, the Company's
backlog of unshipped orders increased in the current quarter to $31.6 million,
an increase of 64% compared to $19.2 million at September 30, 1999. The
Company's backlog in the United States increased 95% due primarily to increased
orders of connectors for applications such as servers, routers, hubs and other
telecommunication equipment. The European backlog decreased 32% due to a
reduction in orders from the Company's largest European customer. The Asian
backlog increased 33% due primarily to the shift of orders from contract
manufacturing customers from North America and Europe to this region. Worldwide
customer orders were $27.1 million in the fourth quarter of the prior year, and
the backlog of unshipped orders at June 30, 2000, was $23.4 million.
Net sales increased 11.4% in the quarter to $23.4 million compared to $21
million in the first quarter of the prior year. Customer sales in the United
States increased 10.4% to $15.9 million compared to $14.4 million in the first
quarter of the prior year. The Company continues to experience higher levels of
incoming orders and sales activity on its more profitable backplane connectors,
and its high-density, surface mount, fine pitch board-to-board interconnect
systems. These types of connectors are used in communication and networking
components utilized to support the infrastructure of the Internet.
European customer sales decreased 11.5% to $4.3 million compared to $4.9
million in the first quarter of the prior year. This sales decrease is due
primarily to a reduction in sales of connectors to the Company's largest
European customer. The connectors sold to this customer are used primarily in
major communication and digital satellite receiver applications in Europe. The
Company expects the demand for these types of products to improve in the coming
quarters.
Customer sales in Asia, which includes sales generated from operations in
Japan, Malaysia and Singapore, were $3.1 million in the quarter compared to $1.6
million in the first quarter of the prior year. This increase is due primarily
to the movement of sales to contract manufacturers in this region. Most of these
sales are not new business for The Company. They are a direct result of the
relocation by customers of various sales programs from North America and Europe
to Asia.
E-8
<PAGE>
Comparative sales by geographic territory for the respective periods
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30
-----------------------
2000 1999
---------- ----------
($000 OMITTED)
<S> <C> <C>
United States:
Domestic ............................ $ 14,490 $ 13,909
Export to rest of world ............. 1,430 532
-------- --------
Total sales to customers ........... 15,920 14,441
Intercompany ........................ 2,766 1,536
-------- --------
Total United States ................ 18,696 15,977
-------- --------
Europe:
Domestic sales to customers ......... 4,335 4,894
Intercompany ........................ 1,249 1,158
-------- --------
Total Europe ....................... 5,584 6,052
-------- --------
Asia:
Domestic sales to customers ......... 3,101 1,615
Intercompany ........................ 1,754 1,100
-------- --------
Total Asia ......................... 4,855 2,715
-------- --------
Eliminations ......................... (5,779) (3,794)
-------- --------
Consolidated ......................... $ 23,356 $ 20,950
======== ========
</TABLE>
Gross profits in the quarter ended September 30, 2000, amounted to $6.4
million or 27.2 percent of net sales, compared to $5.6 million or 26.5 percent
of net sales in the prior year. Gross profits are net of engineering charges
associated with new product development, which amounted to $1.2 million or 5.1
percent of net sales in the current quarter compared to $1.2 million or 5.8
percent of net sales in the prior year. The increase in gross profits in the
quarter compared to the prior year reflects higher gross margins on sales and
improved plant utilization. Gross profits continue to be favorably impacted by
the effect of manufacturing cost reduction programs.
Selling, general and administrative expenses of $4.7 million for the three
months ended September 30, 2000 increased 18% compared to expenses of $4 million
in the first quarter of the prior year.
The Company recorded special and unusual expenses of $0.2 million before
taxes, in the first quarter of the current and prior year. The current quarter
expenses include personnel costs, professional fees and other costs related to
the negotiations, due diligence and preparations associated with the definitive
merger agreement between 3M and Robinson Nugent. The expenses in the prior year
include personnel costs incurred to design and implement the new information and
enterprise resource planning system in Europe and North America. The
implementation of this system was completed in the prior year.
Other income and expense for the three months ended September 30, 2000,
reflect expenses of $171,000 compared to $237,000 for the comparable three-month
period in the prior year. Other income and expense reflected a currency gain of
$59,000 in the current quarter and a currency loss of $75,000 in the first
quarter of the prior year. Interest expense increased from $176,000 in the prior
period to $240,000 in the current period due primarily to an increase in long
term debt. Currency gains in the quarter were generated primarily in Southeast
Asia and Europe.
The provision for income taxes was provided using the appropriate effective
tax rates for each of the tax jurisdictions in which the Company operates. The
Company maintains a valuation allowance for tax benefits of prior period net
operating losses in several jurisdictions. At such time as management is able to
project the probable utilization of all or part of these net operating loss
carryforward provisions, the valuation allowances for these deferred tax assets
will be reversed.
The net income in the quarter ended September 30, 2000, amounted to $0.9
million or 16 cents per share, compared to $0.8 million or 16 cents per share in
the first quarter of the prior year.
E-9
<PAGE>
Operations in the United States and Asia generated net income in the current
quarter of $957,000 and $202,000 respectively. Operations in Europe resulted in
a $280,000 net loss in the current quarter.
FINANCIAL CONDITION AND LIQUIDITY
Working capital at September 30, 2000, amounted to $25.4 million compared
to $16.3 million at September 30, 1999 and $24.3 million at June 30, 1999. The
current ratio was 2.8 to 1 at September 30, 2000 compared to 2.3 to 1 at
September 30, 1999. The increase in working capital, compared to the prior year,
primarily reflects a $2.8 million increase in accounts receivable and a $6.9
million increase in inventories. Long-term debt excluding current installments
was $11.9 million as of September 30, 2000, and represented 41 percent of
shareholders' equity at September 30, 2000, compared to $8.7 million or 35
percent of shareholders' equity at September 30, 1999.
The Company believes future working capital and capital expenditure
requirements can be met from cash provided by operating activities, existing
cash balances, and borrowings available under the existing credit facilities.
E-10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Not applicable.
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. Not applicable.
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) See Index to Exhibits.
(b) No reports on Form 8-K were filed during the quarter ended September
30, 2000.
E-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBINSON NUGENT, INC.
----------------------------------------
(Registrant)
Date 11/13/00 /s/ Larry W. Burke
----------------------- ----------------------------------------
Larry W. Burke
President and Chief Executive Officer
Date 11/13/00 /s/ Robert L. Knabel
----------------------- ----------------------------------------
Robert L. Knabel
Vice President, Treasurer and Chief
Financial Officer
E-12
<PAGE>
FORM 10-Q
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER OF SEQUENTIAL
ITEM NUMBERING
ASSIGNED IN SYSTEM
REGULATION S-K PAGE NUMBER
ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT
--------------- ------------------------------------------------------------ -----------
<S> <C> <C> <C>
(2) Not applicable.
(4) 4.1 Specimen certificate for Common Shares, without par value.
(Incorporated by reference to Exhibit 4 to Form S-1
Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988 between Robinson
Nugent, Inc. and Bank One, Indianapolis, N.A.
(Incorporated by reference to Exhibit I to Form 8-A
Registration Statement dated May 2, 1988.)
4.3 Amendment No. 1 to Rights Agreement dated
September 26, 1991 (Incorporated by reference to
Exhibit 4.3 to Form 10-K Report for year ended June 30,
1991.)
4.4 Amendment No. 2 to Rights Agreement dated June 11,
1992. (Incorporated by reference to Exhibit 4.4 to Form 8-K
Report dated July 6, 1992.)
4.5 Amendment No. 3 to Rights Agreement dated February 11,
1998 (Incorporated by reference to Exhibit 4.5 to
Form 10-Q Report for the Period ended December 31,
1998.)
(10) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive Stock
Option Plan. (Incorporated by reference to Exhibit 10.1 to
Form 10-K Report for year ended June 30, 1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax-Qualified Incentive
Stock Option Plan. (Incorporated by reference to
Exhibit 10.2 to Form 10-K Report for year ended June 30,
1983.)
10.3 1993 Robinson Nugent, Inc. Employee and Non-Employee
Director Stock Option Plan. (Incorporated by reference to
Exhibit 19.1 to Form 10-K Report for year ended June 30,
1993.)
10.4 Summary of the Robinson Nugent, Inc. Employee Stock
Purchase Plan (Incorporated by reference to Exhibit 19.2 to
Form 10-K Report for year ended June 30, 1993.)
10.5 Deferred compensation agreement dated May 10, 1990
between Robinson Nugent, Inc. and Larry W. Burke,
President and Chief Executive Officer. (Incorporated by
reference to Exhibit 19.1 to Form 10-K Report for year
ended June 30, 1990.)
</TABLE>
E-13
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SEQUENTIAL
ITEM NUMBERING
ASSIGNED IN SYSTEM
REGULATION S-K PAGE NUMBER
ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT
--------------- ----------------------------------------------------------- -----------
<S> <C> <C> <C>
10.6 Trust Agreement dated July 1, 1999 between Robinson
Nugent, Inc. and Strong Retirement Plan Services, related
to the deferred compensation agreement between Robinson
Nugent, Inc. and Larry W. Burke President and Chief
Executive Officer. (Incorporated by reference to
Exhibit 10.6 to Form 10-K Report for year ended June 30,
1999.)
10.7 Summary of the 1993 Robinson Nugent, Inc. Employee and
Non-Employee Director Stock Option Plan, as amended.
(Incorporated by Reference to Exhibit 10.7 to Form 10-K
Report for year ended June 30, 1998.)
10.8 Summary of Robinson Nugent, Inc. Bonus Plan for the
fiscal year ended June 30, 2001. (Incorporated by reference
to Exhibit 10.8 to Form 10-K Report for year ended
June 30, 2000.)
10.9 Contract for purchase and sale/leaseback between Robinson
Nugent, Inc., and Sam & JB, LLC dated February 22, 2000.
(Incorporated by reference to Exhibit 10.9 to
Form 10-K/A-1 for the year ended June 30, 2000.)
10.10 Lease between Sam & JB, LLC and Robinson Nugent, Inc.,
dated February 22, 2000. (Incorporated by reference to
Exhibit 10.10 to Form 10-K/A-1 for the year ended June 30,
2000.)
(11) Not applicable.
(15) Not applicable.
(18) Not applicable.
(19) Not applicable.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Financial Data Schedule
</TABLE>
E-14
<PAGE>
PART II
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145(a) of the Delaware corporate law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, other than
an action by or in the right of the corporation, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
Section 145(b) of the Delaware corporate law provides that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he or she acted in any of the capacities set forth above, against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection with the defense or settlement of such action or suit if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the court in which such action or suit was brought shall
determine that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
Section 145 of the Delaware corporate law further provides that to the
extent a director or officer of a corporation has been successful in the defense
of any action, suit or proceeding referred to in subsections (a) and (b) or in
the defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by him or her in connection therewith; that indemnification provided
for by Section 145 shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled; and that the corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
enterprise against any liability asserted against him or her or incurred by him
or her in any such capacity or arising out of his or her status as such, whether
or not the corporation would have the power to indemnify him or her against such
liabilities under Section 145.
Section 102(b)(7) of the Delaware corporate law provides that a certificate
of incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) under Section 174 of the Delaware corporate law;
or (iv) for any transaction from which the director derived an improper personal
benefit.
Article Fourteenth of 3M's certificate of incorporation states that the
liability of 3M's directors will be eliminated to the fullest extent permitted
by the Delaware corporate law.
Article 34 of 3M's bylaws provides that 3M will indemnify, to the full
extent permitted by law, any person made or threatened to be made a party to any
action, suit, or proceeding, whether criminal, civil, administrative, or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director, officer, or employee of 3M or serves or
served at the request of 3M in any other enterprise as a director, officer, or
employee. Expenses incurred by that person in defending
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any such action, suit, or proceeding will be paid or reimbursed by 3M promptly
upon receipt by it of an undertaking of that person to repay such expenses if it
ultimately is determined that such person is not entitled to be indemnified by
3M. The rights provided to any person by the bylaws will be enforceable against
3M by that person who will be presumed to have relied upon it in serving or
continuing to serve as a director, officer, or employee. Section 15 of 3M's
bylaws also provides that the indemnification provided by the bylaws will not be
deemed exclusive of any other rights to which those indemnified may be entitled
by any section of the bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity and as
to action in another capacity while holding office, and will continue as to a
person who has ceased to be a director, officer, or employee and will inure to
the benefit of the heirs, executors, and administrators of such a person.
Section 36 provides that 3M will have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
3M, or is or was serving at the request of the Corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against any liability asserted against him or her and
incurred by him or her in any such capacity or arising out of his or her status
as such, whether or not 3M would have the power to indemnify him or her against
such liability under the provisions of the bylaws. Reference is made to 3M's
Restated Certificate of Incorporation and Bylaws incorporated by reference into
this proxy statement/prospectus as Exhibits 3.1 and 3.2.
3M has insured its directors and officers against losses arising from any
claim against them as such for wrongful acts or omission, subject to certain
limitations.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated as of October 2, 2000,
among Minnesota Mining and Manufacturing Company, Barbados
Acquisition, Inc. and Robinson Nugent, Inc. (included in
this proxy statement/prospectus as Annex A)
*3.1 Certificate of Incorporation, as amended as of May 19, 2000
**3.2 Bylaws, as amended as of November 11, 1996
***4.1 Medium-term notes
#5.1 Opinion of Gregg M. Larson, Assistant General Counsel of 3M,
as to the legality of the securities being registered and
consent to the use of the opinion in this registration
statement
8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson
regarding certain federal income tax consequences described
in the proxy statement/prospectus
9.1 Voting and Stock Option Agreement among 3M, Robinson Nugent,
Inc., Samuel C. Robinson, James W. Robinson, Patrick C.
Duffy and Larry W. Burke, dated October 2, 2000 (included in
this proxy statement/prospectus as Annex B)
+10.1 1997 Management Stock Ownership Program
++10.2 Profit sharing plan, performance unit plan and other
compensation arrangements
#15 Awareness letter from PricewaterhouseCoopers LLP,
independent auditors for Minnesota Mining and Manufacturing
Company, regarding unaudited interim consolidated financial
information
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Deloitte & Touche LLP (independent auditors for
Robinson Nugent, Inc.)
23.3 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in exhibit 8.1)
24 Power of Attorney
99.1 Form of proxy for the Special Meeting of Shareholders of
Robinson Nugent, Inc.
--------------------
* Incorporated by reference to 3M's Current Report on Form 8-K, filed with the
SEC on July 27, 2000, as amended.
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<PAGE>
** Incorporated by reference to 3M's Current Report on Form 8-K filed with the
SEC on November 20, 1996.
*** Incorporated by reference to 3M's Registration Statement on Form S-3 filed
with the SEC on June 15, 1999. (Registration No. 33-29329)
+ Incorporated by reference to 3M's Registration Statement on Form S-8 filed
with the SEC on July 2, 1997.
++ Incorporated by reference in written description contained in 3M's
Definitive Proxy Statement on Form 14A filed with the SEC on March 27, 2000.
# Previously filed on November 13, 2000.
ITEM 22. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement,
or the most recent post-effective amendment thereof,
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered, if
the total dollar value of securities offered would not
exceed that which was registered, and any deviation from
the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) under the
Securities Act, if, in the aggregate, the changes in
volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment will be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(B) The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement
will be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(C) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of
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<PAGE>
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of
such issue.
(D) The undersigned Registrant hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of
the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415,
will be filed as part of an amendment to the registration
statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be initial bona fide offering
thereof.
(3) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13
of this Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the
request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and 3M being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Paul, and State of Minnesota, on the 11th day of
January, 2001.
MINNESOTA MINING AND MANUFACTURING
COMPANY
By: /s/ GREGG M. LARSON
-------------------------------------
Name: Gregg M. Larson
Title: Assistant General Counsel,
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1993, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates as indicated.
SIGNATURE TITLE
--------- -----
* Chairman of the Board, Chief Executive
------------------------------------- Officer and Director
W. James McNerney Jr.
* Vice President, Principal Financial and
------------------------------------- Accounting Officer
Robert J. Burgstahler
* Director
-------------------------------------
Linda G. Alvarado
* Director
-------------------------------------
Ronald O. Baukol
* Director
-------------------------------------
Edward M. Liddy
* Director
-------------------------------------
Aulana L. Peters
* Director
-------------------------------------
Rozanne L. Ridgway
* Director
-------------------------------------
Frank Schrontz
* Director
-------------------------------------
F. Alan Smith
*By: /s/ GREGG M. LARSON
--------------------------------
Gregg M. Larson
Attorney-in-fact
Date: January 11, 2001
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<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
-------------- ------------------------------------------------------------
2.1 Agreement and Plan of Merger, dated as of October 2, 2000,
among Minnesota Mining and Manufacturing Company, Barbados
Acquisition, Inc. and Robinson Nugent, Inc. (included in
this proxy statement/prospectus as Annex A)
*3.1 Certificate of Incorporation, as amended as of May 19, 2000
**3.2 Bylaws, as amended as of November 11, 1996
***4.1 Medium-term notes
#5.1 Opinion of Gregg M. Larson, Assistant General Counsel of 3M,
as to the legality of the securities being registered and
consent to the use of the opinion in this registration
statement
8.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson
regarding certain federal income tax consequences described
in the proxy statement/prospectus
9.1 Voting and Stock Option Agreement among 3M, Robinson Nugent,
Inc., Samuel C. Robinson, James W. Robinson, Patrick C.
Duffy and Larry W. Burke, dated October 2, 2000 (included in
this proxy statement/prospectus as Annex B)
+10.1 1997 Management Stock Ownership Program
++10.2 Profit sharing plan, performance unit plan and other
compensation arrangements
#15 Awareness letter from PricewaterhouseCoopers LLP,
independent auditors for Minnesota Mining and Manufacturing
Company, regarding unaudited interim consolidated financial
information
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Deloitte & Touche LLP (independent auditors for
Robinson Nugent, Inc.)
23.3 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in exhibit 8.1)
24 Power of Attorney
99.1 Form of proxy for the Special Meeting of Shareholders of
Robinson Nugent, Inc.
------------------
* Incorporated by reference to 3M's Current Report on Form 8-K, filed with the
SEC on July 27, 2000, as amended.
** Incorporated by reference to 3M's Current Report on Form 8-K filed with the
SEC on November 20, 1996.
*** Incorporated by reference to 3M's Registration Statement on Form S-3 filed
with the SEC on June 15, 1999. (Registration No. 33-29329)
+ Incorporated by reference to 3M's Registration Statement on Form S-8 filed
with the SEC on July 2, 1997.
++ Incorporated by reference in written description contained in 3M's
Definitive Proxy Statement on Form 14A filed with the SEC on March 27, 2000.
# Previously filed on November 13, 2000.
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