<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1994 COMMISSION FILE NO. 1-4290
ANTHONY INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-2077125
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
4900 SOUTH EASTERN AVENUE
LOS ANGELES, CALIFORNIA 90040
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER: (213) 724-2800
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
--------------------
Common Stock, par value $1 New York Stock Exchange
Pacific Stock Exchange
Series A Preferred Stock Purchase Rights New York Stock Exchange
Pacific Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
INDICATE BY AN "X" WHETHER THE REGISTRANT 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, AND HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE
PAST 90 DAYS. YES X.
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. [X]
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK OF THE REGISTRANT HELD BY
NONAFFILIATES WAS APPROXIMATELY $126,731,000 AS OF MARCH 15, 1995.
The computation includes as affiliates Myron P. Anthony, Bernard I. Forester
and the Employee Stock Ownership Plan of the registrant, described in the proxy
statement referred to below, without prejudice to a determination that such
persons are nonaffiliates of the registrant for any other purpose under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES
OF COMMON STOCK AS OF MARCH 15, 1995.
Common Stock, par value $1 11,874,128 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the Annual Meeting of Shareholders to
be held May 4, 1995 are incorporated by reference in Part III.
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<PAGE>
FORM 10-K ANNUAL REPORT
PART I
ITEM 1. BUSINESS:
SUMMARY DESCRIPTION AND CHARACTERISTICS
Anthony Industries, Inc. ("Anthony" or the "Company") is a diversified
manufacturer and distributor of brand name sporting goods, specialty active
apparel, and other recreational products. In addition, the Company manufactures
and distributes selected industrial products. For financial information and a
geographic breakdown regarding the recreational and industrial segments, see
Note 11 of Notes to Consolidated Financial Statements, "Segment Data," in Part
II, Item 8 of this Form 10K.
The Company, headquartered in Los Angeles, California, was founded in 1946 as
Anthony Pools, Inc. The Company's common stock was first offered to the public
in 1959 and is currently traded on the New York and Pacific Stock Exchanges
(symbol: ANT). Set forth below is a description of the recreational and
industrial businesses of the Company.
RECREATIONAL PRODUCTS
Anthony's Recreational Products segment consists of three product classes:
outdoor sporting goods, active & sporting apparel and home recreational
products. Total sales for the segment were $332.1 million, $285.5 million and
$266.6 million for the years 1994, 1993 and 1992, respectively.
OUTDOOR SPORTING GOODS. Anthony's outdoor sporting goods are used in a wide
variety of sports and sporting activities and are marketed under the following
brand names:
<TABLE>
<CAPTION>
BRAND PRODUCT
----- -------
<S> <C>
K2(R) alpine skis
K2(R) snowboards
K2(R) in-line skates
Olin(R) alpine skis
Shakespeare(R) fishing rods, reels, and fishing kits and combos
Stearns(R) personal flotation devices, wetsuits, rainwear
and snorkeling equipment
ProFlex(R) full-suspension mountain bikes
Girvin(R) flex-stems
Dana Design(R) backpacks
Wilderness Experience(R) backpacks, apparel
</TABLE>
Sales of outdoor sporting goods accounted for $224.6 million, $192.7 million
and $170.8 million during 1994, 1993 and 1992, respectively.
Skis, snowboards and in-line skates. The Company manufactures its alpine skis
in the United States and Norway for sale in North America, Europe and Japan
under the K2 and Olin names. K2 snowboards, introduced in 1987, are
manufactured by the Company in the United States for sale in the United States,
Europe and Japan. K2 in-line skates, introduced in 1994, are manufactured to
Company specifications by a vendor in Korea, although certain components, such
as wheels, are made in the United States. In-line skates are sold by the
Company in the United States, Europe and Japan. The Company manufactures cross-
country skis under the name Madshus for a retailer/distributor which owns the
name and sells the skis principally in Europe. K2 products are sold by
independent sales representatives in the United States, and through independent
distributors and/or Company-owned distributors in Europe, to specialty retail
shops and to sporting goods chains.
1
<PAGE>
Fishing Tackle. The Company sells fishing rods, reels, fishing line and
fishing kits and combos worldwide through the fishing tackle division of its
subsidiary Shakespeare Company ("Shakespeare"). Shakespeare fishing tackle is
manufactured principally in the People's Republic of China, although rod
components, including blanks for the Ugly Stick fishing rods, are made by the
Company in the United States. Certain other products are manufactured to the
Company's specifications by vendors in Asia. Shakespeare products are
distributed through an in-house marketing staff and through independent sales
representatives to mass merchandisers, single-store retailers, and chain
stores.
Water Safety Products. Stearns manufactures and sells flotation vests,
jackets and suits ("personal flotation devices"), cold water immersion
products, neoprene wetsuits, rainwear and snorkeling equipment, to the
recreational industries, the off-shore oil industry, commercial fishermen and
other commercial users, both domestically and internationally. Other than
rainwear, neoprene wetsuits and snorkeling equipment, which it purchases from
suppliers mainly in Asia, Stearns' products are manufactured by it in the U.S.
and distributed throughout the world by an in-house marketing staff and
independent sales representatives. The laws of the U.S. and most states require
that occupants of boats either wear or have available to them personal
flotation devices meeting Coast Guard standards. Stearns' personal flotation
devices are manufactured to those standards and are subject to rigorous testing
for certification by Underwriters Laboratories. International regulations
require merchant marine operators and commercial fishermen to equip their
fleets with cold water immersion suits, where appropriate. The Company believes
that Stearns is the largest manufacturer of personal flotation devices in the
United States.
Mountain Bikes. Girvin, acquired in 1993, designs and distributes full-
suspension mountain bikes and components under the Girvin(R), Girvin
Flexstem(R), Vector(R), and ProFlex(R) brand names in the United States,
Western Europe and Asia. Certain components, particularly front forks, are
manufactured by Girvin in the U.S. The mountain bikes are assembled to Girvin's
specifications by a vendor in Asia. Girvin distributes its products through an
in-house marketing staff and through independent sales representatives to
independent bicycle dealers in the U.S., and through distributors
internationally.
Outdoor products. Dana Design and Wilderness Experience ("Wilderness") were
acquired by the Company in February 1995 and December 1994, respectively, and
their operations have been combined. Dana Design and Wilderness design
manufacture and distribute backpacks and specialized outdoor apparel under the
Dana Design(R), Wilderness Experience(R) and Wild X(R) brand names
domestically. The products are distributed through independent sales
representatives to outdoor specialty dealers in the U.S.
ACTIVE AND SPORTING APPAREL. The Company's Active and Sporting Apparel
product class consists of Hilton active wear and K2 ski apparel. Sales of
Active and Sporting Apparel accounted for $40.1 million, $34.9 million and
$35.3 million during 1994, 1993 and 1992, respectively.
The Hilton Active Apparel division manufactures and distributes jackets,
shirts, fleece tops and other activewear, primarily for use in the screen print
and advertising specialty markets which supplies imprinted items (including
garments) primarily to corporate buyers. These garments are sold under the
Hilton(R) and USA(R) trademarks to advertising specialty customers,
embroiderers and screen printers throughout the United States. Hilton sales are
generated largely from Hilton Active Apparel's catalogs, through a direct sales
force and independent sales representatives. K2 ski apparel is manufactured to
K2's specifications by various suppliers, located in Europe and Asia. These
garments are sold under the K2 trademark mainly to European dealers and
distributors.
HOME RECREATIONAL PRODUCTS. The Company's Home Recreational Products consist
of Anthony pools, pool equipment and Poolsaver swimming pool covers. Sales of
Home Recreational Products accounted for $67.4 million, $57.9 million and $60.5
million during 1994, 1993 and 1992, respectively.
2
<PAGE>
Anthony Pools constructs and remodels residential gunite swimming pools sold
directly to consumers, or indirectly through home builders, in five regions in
or near major cities in California, Texas, and the eastern seaboard. The
division also distributes swimming pool equipment, such as filters and
heaters, which are installed on swimming pools built by Anthony or sold to
gunite or concrete pool builders under an authorized dealership program in
markets not served by Anthony. Replacement parts and equipment are sold by
authorized service centers. The Company believes that Anthony Pools is one of
the two largest builders of residential gunite swimming pools in the United
States. Poolsaver manufactures and installs motorized and hand-operated
swimming pool covers sold directly to consumers and pool builders. Sales are
made through branches in or near major cities in California and the eastern
seaboard and through distributors and dealers in markets in which Poolsaver
does not have offices. Poolsaver additionally provides service on existing
pool covers through its service organization.
Several of the trademarks used by the Company's recreational products
segment are believed to be recognizable by the consumer and therefore
important to facilitating the sales of these products. Such trademarks include
Ugly Stik(R) fishing rods, K2(R) skis, snowboards and in-line skates, Olin(R)
skis, Stearns(R) flotation devices, Anthony Pools(R), Poolsaver(R) pool
covers, Girvin Flexstems(R) and Proflex(R) mountain bikes, Hilton(R) active
apparel, and Dana Design(R) and Wilderness Experience(R) backpacks and
apparel.
INDUSTRIAL PRODUCTS
The Company's Industrial Products segment consists principally of extruded
thermoplastic monofilaments, fiberglass antennas and light poles and laminated
and coated paperboard products. Extruded thermoplastic monofilaments are used
by the paperweaving industry and for weed trimmer line applications.
Paperboard products are used in residential and commercial construction and
industrial packaging. Sales of Industrial Products accounted for $170.3
million, $146.1 million and $135.4 million during 1994, 1993 and 1992,
respectively.
Through the Monofilament division of Shakespeare, the Company manufactures
single strand extruded nylon or polymer monofilament in a variety of
diameters, tensile strengths and softnesses for use in various applications.
Specialized monofilament line is marketed to weavers who manufacture woven
"mats" for use by the paper industry in the United States, Europe and South
America. The European market is supplied primarily from its manufacturing
facility in the U.K. The Monofilament division also supplies weed trimmer line
to retailers and original equipment manufacturers in the lawn care market.
Fishing line is manufactured by Monofilament and is marketed by Fishing Tackle
throughout the United States to retailers and mass merchandisers.
The Electronics & Fiberglass division of Shakespeare manufactures fiberglass
products primarily for the United States market, consisting mainly of utility
and decorative light poles and radio antennas for citizen band, marine and
military applications. The Company also distributes marine radios and other
marine electronics under the Shakespeare brand which are manufactured in Asia
to the Company's specifications.
The Simplex Products division manufactures a wide range of laminated, coated
and reinforced paperboard products, which include insulative sheathing
marketed under the trademark Thermo-ply(R), container components for fibre
drums and flexible packaging paperboard products. These products are sold to
the residential and manufactured housing, container and industrial packaging
industries. Simplex also sells building products, such as Barricade(R)
building wrap principally to residential construction and Finestone(R)
coatings principally to the commercial construction industries. Simplex also
operates a paper recycling mill which produces chip paperboard primarily used
in the manufacture of Thermo-ply and secondarily sold to others in
nonconstruction related markets. Most Simplex products must meet rigid
performance specifications imposed by regulatory agencies and customers.
Insulative sheathing additionally requires national and local building code
approvals.
3
<PAGE>
Sales of industrial products are generally made either directly or through
distributors or sales representatives. Except for sales of fibre drum
container components and paperweaving monofilaments, sales of industrial
products are made to a large number of customers.
COMPETITION
Anthony believes that it has the leading market share in the United States
market for alpine skis, personal flotation devices, paperweaving monofilament,
weed trimmer line, fiberglass light poles, laminated and coated paperboard
insulative sheathing, marine antennas and full-suspension mountain bikes,
motorized pool covers and has one of the two largest market shares for
domestic residential gunite swimming pools. The Company also believes that it
has one of the leading market shares in fishing tackle in the United Kingdom
and Holland and has one of the top five market shares for skis in Germany and
Japan. Fewer than ten ski manufacturers and personal flotation device
manufacturers account for the majority of shipments worldwide. Six fishing
tackle manufacturers account for the majority of the domestic shipments of
fishing tackle. A large number of companies compete within the ad specialty
market, while five mountain bike manufacturers account for the majority of
sales to the independent bike dealers domestically.
The sporting goods markets are generally highly competitive, with
competition mainly centering on product performance, price and rapid delivery.
The ski market is also dependent on weather conditions in various geographic
regions in the United States, Europe and Japan and on the amount of
discretionary income available in the economy.
The Company's swimming pool business competes with many privately owned and
small franchised pool building operations. The swimming pool market is
dependent to a large extent on the amount of discretionary income available in
the economy, the level of consumer confidence, the availability of consumer
credit at reasonable interest rates and on the existence of favorable weather
during the pool building season. The pool cover business competes with five
manufacturers of pool covers and substitute products in competing industries.
The Company's industrial products are, in most instances, subject to price
competition, ranging from moderate in the marine antenna and monofilament
lines to intense for the commodity-type products. Sales growth and stability
are dependent to varying degrees upon favorable economic conditions in the
domestic housing, container and paper industries. Insulative sheathing
products and fiberglass light poles compete with substitute products used for
similar purposes.
RAW MATERIALS AND FOREIGN SOURCING
The recreational products segment has not experienced any substantial
difficulty in obtaining raw materials, parts or finished goods inventory.
Certain components and finished goods, however, are manufactured or assembled
abroad and therefore could be subject to interruption as a result of domestic
unrest, local economic changes or other conditions in those countries and as a
result of increased tariffs and trade difficulties between those countries and
other countries in which Company products are manufactured or sold. A major
portion of the Company's fishing rods, including its Ugly Stik line, and reels
are currently manufactured in the People's Republic of China which trades with
the United States under a Most Favored Nation ("MFN") trade status. While the
Company believes that alternative sources for its fishing tackle produced in
China could be found, maintaining its existing costs of such fishing tackle
will depend on these products continuing to be treated under MFN tariff rates,
which the U.S. from time to time has threatened to rescind. Early in 1995, the
United States threatened trade sanctions against certain products made in
China, including fishing rods. Shortly before such sanctions were to have
become effective, however, the U.S. agreed not to impose them based on certain
representations made by China relating to its future enforcement of
intellectual property laws.
4
<PAGE>
The industrial product segment has not experienced any substantial difficulty
in obtaining raw materials, although recycled corrugated scrap paper, a raw
material used in the production of insulative sheathing, has become materially
more expensive, a trend which the Company expects could continue. At some level
this increasing cost could have a material impact on the profitability of this
line.
SEASONALITY
The recreational products segment generally sells to highly seasonal markets.
Alpine ski and snowboard sales and sales of active apparel to the advertising
specialty markets are strongest in the third and fourth quarters. Sales of
personal flotation devices occur primarily in the first and second quarters,
whereas those of fishing tackle occur primarily in the first, second and fourth
quarters. Mountain bike sales occur primarily in the fourth and first quarters
and swimming pool sales occur primarily in the second and third quarters. In
fishing tackle, skiing, personal flotation devices and active apparel, the
rapid delivery requirements of customers and the seasonality of the business
require an investment in significant amounts of inventory in anticipation of
and through the selling seasons. Progress payments collected from customers
during the construction of swimming pools help avoid utilizing substantial
amounts of the Company's cash during the pool construction period. Extended
payment terms offered in the fishing tackle, ski, snowboard and personal
flotation device industries create seasonally large accounts receivable
balances.
The Company has observed an evolving change in the buying patterns of mass
merchant and other sporting goods customers, who are becoming more cautious
about pre-season inventories, preferring to accept delivery closer to their
retail selling seasons.
The Company's industrial products segment is mildly seasonal. Sales to the
domestic housing, lawn care and marine antenna markets occur more heavily in
the first two quarters of the year.
MAJOR CUSTOMERS
No one customer of the Company accounts for ten percent or more of its
consolidated annual net sales. While the Company believes that its customer
relationships are excellent, it has two large customers, and the loss of either
could have a material impact on the Company's sporting goods business.
RESEARCH AND DEVELOPMENT
The Company maintains at several of its manufacturing centers decentralized
research and development departments which are engaged in development of new
products and processes, new uses of raw materials and improvement of products
presently being manufactured. Expenditures for Company-sponsored research and
development activities at all locations amounted to approximately $6.3 million
in 1994, $4.3 million in 1993 and $3.5 million in 1992.
ENVIRONMENTAL FACTORS
The Company is among several potentially responsible parties named in certain
EPA matters involving discharge of hazardous materials at an old waste disposal
site. This action seeks primarily cleanup costs. The potential costs related to
such matters are not expected to have a material impact on the capital
expenditures, equity, earnings or the competitive position of the Company.
EMPLOYEES
At December 31, 1994 and 1993 the Company and its subsidiaries had
approximately 3,700 employees.
5
<PAGE>
ITEM 2. PROPERTIES
The corporate headquarters of the Company is located in 15,000 square feet of
leased office space in Los Angeles, California. The table below provides
information with respect to the principal production and distribution
facilities utilized by the Company as of December 31, 1994.
<TABLE>
<CAPTION>
OWNED FACILITIES LEASED FACILITIES
----------------- -----------------
GENERAL NO. OF SQUARE NO. OF SQUARE
LOCATION CHARACTER LOCATIONS FOOTAGE LOCATIONS FOOTAGE
-------- --------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
RECREATIONAL PRODUCTS
Alabama.................... Production 2 156,000
California................. Production 1 25,000
Illinois................... Distribution 1 76,000
Minnesota.................. Distribution
and production 1 290,000
Rhode Island............... Distribution
and production 1 50,000
South Carolina............. Distribution
and production 2 140,000
Washington................. Distribution
and production 1 160,000 1 37,000
Foreign.................... Distribution
and production 3 101,000 6 147,000
--- ------- --- -------
9 847,000 10 335,000
=== ======= === =======
INDUSTRIAL PRODUCTS
Florida.................... Production 1 73,000
Michigan................... Production 2 278,000
South Carolina............. Production 2 484,000
--- -------
5 835,000
=== =======
</TABLE>
The terms of the leases range from one to eight years, and many are renewable
for additional periods. The termination of any of the short-term leases would
not have a material adverse effect on the Company's operations.
The Company believes that, in general, its plants and equipment are
adequately maintained, in good operating condition and adequate for the
Company's present needs. The Company regularly upgrades and modernizes its
facilities and equipment and expands its facilities to meet customer
requirements.
ITEM 3. LEGAL PROCEEDINGS
Certain of the Company's products are used in relatively high risk
recreational settings and from time to time the Company is named as a defendant
in lawsuits asserting product liability claims relating to its sporting goods
and recreational products and, in particular, its swimming pools. To date none
of these lawsuits has had a material effect on the Company, and the Company
does not believe that any lawsuit now pending could reasonably be expected to
have such an effect. While the Company maintains product libility insurance
coverage, no assurances can be given that such insurance will continue to be
available at acceptable prices or that a significant product liability judgment
would be covered by such insurance or that such judgment would not exceed the
policy limits.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
6
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
Bernard I. Forester Chairman of the Board and Chief Executive Officer 67
Richard M. Rodstein President and Chief Operating Officer 40
Robert E. Doyle Senior Vice President of the Company and president of
Simplex Products 48
John J. Rangel Senior Vice President--Finance 41
Tony H. Chow Vice President and Director of Taxes 47
David G. Cook Vice President of the Company and president of Stearns 57
Woodrow P.
Greene Vice President--Quality and Process Improvement 50
David H. Herzberg Vice President of the Company and president of
Shakespeare Monofilament 52
Marilyn E. Lane Vice President and Treasurer 63
Franklin D. Leibow Vice President of the Company and president of
Hilton Active Apparel 45
L. Wayne Shealy Vice President of the Company and president of Shakespeare
Electronics & Fiberglass 44
Susan E. McConnell Secretary 51
</TABLE>
Mr. Forester has been Chairman of the Board and Chief Executive Officer for
more than the past five years.
Mr. Rodstein has been President and Chief Operating Officer of the Company
for more than the past five years.
Mr. Doyle has been a Senior Vice President of the Company and president of
Simplex Products for more than the past five years.
Mr. Rangel, a CPA, has been Senior Vice President--Finance for more than the
past five years.
Mr. Chow has been a Vice President of the Company for more than the past five
years.
Mr. Cook has been a Vice President of the Company and president of Stearns
for more than the past five years.
Mr. Greene has been Vice President--Quality and Process Improvement of the
Company since January 1, 1993 and Director of Quality and Process Improvement
of the Company from May 1991 to December 1992. For more than one year previous
to that, Mr. Greene was employed by QualPro, Inc., a quality and process
improvement consulting firm.
Mr. Herzberg has been a Vice President of the Company and president of
Shakespeare Monofilament for more than the past five years.
Mrs. Lane has been Vice President and Treasurer for more than the past five
years.
Mr. Leibow has been a Vice President of the Company since January 1, 1993 and
president of Hilton Active Apparel since October 1989.
Mr. Shealy has been a Vice President of the Company since January 1991 and
president of Shakespeare Electronics & Fiberglass since August 1989.
Mrs. McConnell, a California attorney, has been Secretary of the Company and
administrative assistant to the Chief Executive Officer for more than the past
five years.
Officers of the Company are elected for one year by the directors at their
first meeting after the annual meeting of shareholders and hold office until
their successors are elected and qualified.
7
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
PRINCIPAL MARKETS
The Common Stock of the Company is traded on the New York and Pacific Stock
Exchanges (symbol: ANT). At March 15, 1995 there were 1,893 holders of record
of Common Stock of the Company.
COMMON STOCK PRICES
The following table sets forth the high and low sales prices of the Common
Stock during the Company's two most recent fiscal years:
<TABLE>
<CAPTION>
DIVIDENDS PER SHARE
---------------------
HIGH LOW CLOSE CASH STOCK
------ ------ ------ ---------- ----------
<S> <C> <C> <C> <C> <C>
1994
Fourth......................... 17 3/8 16 16 $.11 5%
Third.......................... 16 7/8 14 3/8 16 1/4 .105
Second......................... 15 1/8 13 7/8 14 1/2 .105
First.......................... 17 1/2 14 15 1/8 .105
1993
Fourth......................... 15 1/4 13 3/8 15 1/4 $.105 5%
Third.......................... 14 7/8 11 7/8 13 3/4 .10
Second......................... 13 5/8 11 1/8 12 1/8 .10
First.......................... 12 1/2 10 7/8 12 3/8 .10
</TABLE>
--------
Prices and per share figures have been adjusted for stock dividends.
DIVIDENDS
Quarterly dividends of $.11 were declared on each share of Common Stock
during the two most recent years. A 5% stock dividend was declared in the
fourth quarter of each of the previous two years and the cash dividend was
subsequently paid on the higher number of shares outstanding. The Company is
subject to credit agreements which limit its ability to pay cash dividends. As
of December 31, 1994, $7.9 million was available for such payments. See Note 5
of Notes to Financial Statements in Part II, item 8 of this Form 10-K for
further description of the Company's credit facilities.
Trust Agent, Registrar and Dividend Disbursing Agent for Common Stock
Harris Trust Company of California
601 South Figueroa Street, Ste. 4900
Los Angeles, California 90017
8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
RELEVANT DATA HAS BEEN RETROACTIVELY ADJUSTED FOR STOCK DIVIDENDS AND STOCK
SPLITS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT FOR PER SHARE FIGURES)
<S> <C> <C> <C> <C> <C>
Net Sales................. $502,444 $431,640 $402,047 $370,256 $376,611
Income before extraordi-
nary item................ 13,033 11,121 8,521 6,605 2,723(a)
Extraordinary loss on
early extinguishment of
debt..................... (988)(b)
-------- -------- -------- -------- --------
Net Income................ $ 13,033 $ 11,121 $ 8,521 $ 6,605 $ 1,735
-------- -------- -------- -------- --------
Per share:
Income before extraordi-
nary item.............. $ 1.09 $ .94 $ .73 $ .57 $ .24
Net income.............. 1.09 .94 .73 .57 .15
Dividends
Cash--per share......... $ .425 $ .405 $ .385 $ .365 $ .348
Stock................... 5% 5% 5% 5% 5%
-------- -------- -------- -------- --------
Average Shares Outstand-
ing...................... 11,919 11,798 11,635 11,577 11,369
-------- -------- -------- -------- --------
At December 31............
Assets.................. $304,414 $257,279 $236,200 $221,650 $220,551
Short-term debt......... 21,259 13,012 20,840 33,208 27,606
Long-term debt, net of
current instalments.... 109,921 87,271 68,525 43,451 53,750
Shareholders' equity.... 98,996 88,656 83,598 80,663 78,137
</TABLE>
--------
(a) Reflects a restructuring charge of $1.8 million.
(b) Reflects the write-off of unamortized original issue discount, net of tax
benefit, relating to the redemption of convertible subordinated debentures.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
REVIEW OF OPERATIONS: COMPARISON OF 1994 TO 1993
Net income for 1994 rose 17% to $13.0 million, or $1.09 per share, from $11.1
million, or $.94 per share, in the prior year. Sales advanced 16% to $502.4
million from $431.6 million in 1993.
In the recreational products group, sales rose $46.6 million, or 16%, to
$332.1 million. Fifty percent of the improvement was attributable to the
successful introduction of K2's brand of Exotech in-line skates, increased
demand worldwide for the K2 snowboard line and inclusion for the full year of
the rapidly growing Proflex mountain bike business acquired in October 1993.
Growth was also achieved from product extensions and higher overall activity in
the swimming pool industry. Of particular significance were fifty-four styles
of Hilton jackets, activewear and accessories for the advertising specialty
market and new models of Stearns rainwear and wetsuits, all introduced within
the prior 24 months, along with several new models of Shakespeare fishing
reels, kit and combo series, which were introduced within the last 12 months in
the U.S. market. Unit sales of Anthony swimming pools in 1994 increased for the
first time since 1988, reflecting higher overall activity within the industry.
Sales also benefited from increases in swimming pool remodels. Partially
offsetting these gains were lower sales of skis to the economically depressed
European and Japanese markets.
In the industrial products group, sales increased $24.2 million, or 17% to
$170.3 million. Over half of the improvement was attributable to the Simplex
products business, which benefited from increased sales of Finestone commercial
coatings, expanded models of vapor barriers and from improved housing starts
and
9
<PAGE>
shipments into the Japanese market which drove sales of insulative sheathing to
a record level. Improved sales, particularly of fiberglass light poles and
composite products and paperweaving monofilaments in the United Kingdom,
generated the majority of the sales gains in the other two businesses of the
group.
Costs of goods sold, as a percent of sales, declined in 1994 as compared with
the prior year. The resulting improvement in gross profit margin was driven by
product mix and gains in efficiency from further applications of the Anthony
Improvement Process, particularly at Stearns, Hilton, Shakespeare Monofilament
and Simplex. Overall gross profit in dollars also improved despite the
significant cost of completing the conversion to cap skis and subsequent lower
margins realized in the sale of these higher-cost skis. Margin and gross profit
were also unfavorably impacted by the dramatic increase in the cost of recycled
corrugated scrap paper, a raw material used in the manufacture of insulative
sheathing by Simplex.
Selling expense increased $8.8 million although as a percent of sales it was
comparable to the year-ago period. The increase in selling expense resulted
primarily from volume-related increases in the pool business, by the inclusion
of the mountain bike business for a full year and increased spending in support
of new products in the in-line skate, mountain bike, snowboard and apparel
businesses.
General and administrative expenses increased $7.7 million from the prior
year. The increase reflects expenditures for new product development
(particularly at K2), a continuation of further investments in systems and
personnel to support the growth of the Company, and the inclusion of the
mountain bike business for a full year.
Interest expense increased $1.7 million in 1994. Domestic interest rates
accounted for $532,000 of the increase, and a $17.4 million higher level of
average borrowings, incurred to acquire and finance the mountain bike business
and support the working capital needs of several product lines which exhibited
growth in sales, accounted for the remainder.
Combined operating profit (before interest, corporate expenses and taxes)
increased $6.5 million over 1993. In the recreation products group, operating
profit rose $3.8 million, or 31%, to $16.0 million. The group benefited from
Shakespeare Fishing Tackle's introduction of several new fishing rods, reels
and kit and combo series in the U.S. which, combined with lower manufacturing
costs abroad, helped to produce record worldwide earnings for the fishing
tackle business for the second consecutive year. Sales-related earnings gains
also contributed to the group's improvement, particularly from the K2
snowboards and successful introduction of the previously described products of
Stearns and Hilton. Partially offsetting these profit gains were a loss
incurred by the swimming pool business and the impact of costs incurred in
converting the ski plant to the manufacture of cap skis, the resulting
increased cost to manufacture the cap skis and the impact of declining sales in
the European and Japanese ski markets.
In the industrial products group, operating profit rose $2.7 million, or 19%,
to $16.7 million. The improvement was mainly due to sales-related earnings and
efficiency gains at Shakespeare Monofilament and Simplex.
Income tax expense in 1994 included $600,000 relating to a reclassification
of state tax previously recorded as selling and general and administrative
expense (See Note 4 of Notes to Consolidated Financial Statements).
REVIEW OF OPERATIONS: COMPARISON OF 1993 TO 1992
Net income for 1993 rose 31%, to $11.1 million, or $.94 per share, from $8.5
million, or $.73 per share, in the prior year. Sales in 1993 increased 7%, to a
record $431.6 million, from the $402.0 million reported in 1992.
10
<PAGE>
Sales of the recreational products group increased $18.9 million, to $285.5
million for the 1993 year. Favorable weather conditions in the United States
and an improvement in the economy in certain regions of the country provided a
boost to sales of K2 skis. The popularity of K2 snowboards pushed sales of this
product up to nearly double prior years' levels. Sales of Shakespeare fishing
tackle in the United States benefited from an increased distribution of Ugly
Stik fishing rods, a growing acceptance of the new series of fishing reels
introduced and an increase in shipments of fishing line. Several new products
introduced by Stearns and Hilton in recent years have gained acceptance by
their customers. These include Stearns wetsuits and rainwear and new styles of
Hilton jackets and activewear for the ad specialty markets. A focused marketing
effort in the pool remodeling business produced attractive gains in this
segment of the swimming pool business. The Group also benefited from sales
reported by an October 1993 acquisition, Girvin, which distributes and designs
full suspension mountain bikes under the ProFlex brand name. Offsetting these
gains was the lingering impact of the recession in the Northeast and
California, which resulted in lower new pool and pool cover sales, and the
European recession and an oversupplied Japanese market, which unfavorably
impacted sales of fishing tackle and alpine skis in those markets.
Sales of the industrial products group increased to $146.1 million, from
$135.4 million in the prior year. Increased housing starts and a wider
distribution of building products sales in the United States and Japan produced
sales gains in Thermo-ply, Finestone and other building products. Sales of
fiberglass light poles and ornamental poles increased over the prior year as a
result of new product introductions, broader distribution in the marketplace
and improved product quality. Sales of monofilaments also contributed to the
Group's sales increase.
Gross profits as a percent of sales declined in 1993, from 26.4% to 25.6%,
largely because of the impact of significant costs incurred in the conversion
of virtually the entire K2 plant in Washington to cap ski production. These
costs are expected to continue into early 1994, until manufacturing
efficiencies improve and the converted plant is brought up to capacity
production levels. The gross profit percentage decline also reflects the
development cost of the K2 in-line skate which, along with the cap ski, is
scheduled for initial shipments in early 1994. Other factors affecting the
gross profit percentage were largely offsetting: significant cost reductions
attained through manufacturing process improvements at Simplex, Monofilament
and Electronics and Fiberglass, from which continued benefits are expected to
be derived, were offset by higher costs at our distribution businesses in
Europe, which arose from the devaluation of European currencies in 1993.
Selling expense as a percent of sales also declined from the prior year. This
resulted largely from the recession-related contraction of sales for fishing
tackle and skis in the European market. Partially offsetting this was spending
increases at the Hilton activewear business to increase its penetration in new
markets and better serve its customers.
General and administrative expenses increased $1.3 million from 1992. The
increase reflects performance-based compensation and the Company's investments
in personnel, training and systems for improving the quality of products and
services.
Interest expense declined by a net amount of $1.0 million in 1993. Lower
worldwide interest rates produced a benefit of $1.7 million, which was
partially offset by $700,000 of higher interest incurred domestically on a $12
million increase in average bank debt arising from higher sales of recreational
products.
Combined operating profit (before interest, corporate expenses and taxes)
increased $3.6 million from the prior year. The recreational products group,
which reported operating profit of $12.2 million, accounted for a $600,000
increase. Higher domestic sales of fishing tackle and continuing foreign
manufacturing cost economies produced record worldwide fishing tackle earnings.
Gains were also achieved at Anthony Pools, which significantly narrowed its
losses due to a robust aftermarket in remodeling and its ongoing quality and
process improvement program, and at Hilton Active Apparel, which benefited from
higher overall sales.
11
<PAGE>
Largely offsetting these gains were lower ski earnings resulting from costs
incurred in the conversion of the U. S. plant to cap ski production and the
development cost of the in-line skate program.
The industrial products group reported an improvement of $3.0 million in
operating profit to $14.0 million for the current year. Earnings of the
building products and light pole businesses improved due to increased volume
and cost reductions from improvements made in the manufacturing processes.
Paperweaving and cutting line earnings improved largely as a result of
increased volume.
LIQUIDITY AND SOURCES OF CAPITAL
The Company's operating activities used $15.7 million of cash during the
current year as compared with cash provided of $10.3 million in the prior year.
The decrease in cash was due primarily to financing higher levels of accounts
receivable and inventories arising from the growth in sales of in-line skates,
snowboards, rainwear, wetsuits, fishing tackle and full suspension mountain
bikes. In the industrial products group, cash was also used to purchase
additional inventories in anticipation of further raw material cost increases.
Net cash used for investment activities in 1994 decreased to $8.7 million
from $12.5 million in 1993. No material commitments for capital expenditures
existed at yearend.
The Company's principal long-term borrowing facility is a $70 million
unsecured bank revolving credit line due June 28, 1997. At December 31, 1994,
$68.0 million was outstanding under this line. Additionally, the Company had
several foreign and domestic short-term lines of credit totaling $40.7 million,
of which $18.3 million was outstanding at yearend. Under the long-term
facility, the Company is subject to a loan agreement which, among other things,
restricts amounts available for payment of cash dividends by the Company. As of
December 31, 1994, retained earnings of $7.9 million were free of such
restrictions. The Company also has $40 million of 8.39% unsecured senior notes
due in 2004, payable in nine equal annual principal payments beginning in 1996.
The notes are subject to agreements which are generally less restrictive than
the $70 million bank revolving credit line. For information regarding the
Company's interest rate swap agreements, see Note 5 of the Notes to
Consolidated Financial Statements.
The Company anticipates its cash needs in 1995 will be provided from
operations, existing credit lines, new borrowings or other public or private
market sources.
IMPACT OF INFLATION AND CHANGING PRICES
The inflation rate, as measured by the Consumer Price Index, has been
relatively low in the last few years, and therefore pricing decisions by the
Company have largely been influenced by competitive market conditions. The
Company uses the LIFO method of inventory pricing for 46% of its inventories,
which results in the most recent costs of LIFO-priced inventory being reflected
in the income statement. Current costs of the Company's inventories priced on a
FIFO basis are also reflected in the income statement because of the relatively
high turnover of these inventories.
Depreciation expense is based on the historical cost to the Company of its
fixed assets and therefore is considerably less than it would be if it were
based on current replacement cost. While buildings, machinery and equipment
acquired in prior years will ultimately have to be replaced at significantly
higher prices, it is expected that this will be a gradual process over many
years.
12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------
1994 1993 1992
-------------- -------------- --------------
(IN THOUSANDS EXCEPT FOR PER SHARE FIGURES)
<S> <C> <C> <C>
Net Sales......................... $ 502,444 $ 431,640 $ 402,047
Other Income...................... 1,578 1,305 1,159
-------------- -------------- --------------
504,022 432,945 403,206
Costs and expenses
Cost of products sold........... 370,902 321,366 296,006
Selling expenses................ 61,023 52,254 52,199
General and administrative ex-
penses......................... 44,283 36,605 35,313
Interest expense................ 7,481 5,759 6,777
-------------- -------------- --------------
483,689 415,984 390,295
-------------- -------------- --------------
Income before provision for income
taxes............................ 20,333 16,961 12,911
Provision for income taxes........ 7,300 5,840 4,390
-------------- -------------- --------------
Net Income........................ $ 13,033 $ 11,121 $ 8,521
============== ============== ==============
Per Share......................... $ 1.09 $ .94 $ .73
============== ============== ==============
</TABLE>
See notes to consolidated financial statements
13
<PAGE>
ANTHONY INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1994 1993
-------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................ $ 7,700 $ 5,860
Accounts receivable less allowances of $8,425 in 1994 and
$7,262 in 1993.......................................... 111,154 90,056
Inventories, net......................................... 101,742 82,375
Deferred taxes........................................... 7,928 6,392
Prepaid expenses and other current assets................ 4,324 3,073
-------- --------
Total current assets................................... 232,848 187,756
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements............................... 1,665 1,617
Buildings and leasehold improvements..................... 26,797 25,367
Machinery and equipment.................................. 99,138 92,356
Construction in progress................................. 3,859 2,745
-------- --------
131,459 122,085
Less allowance for depreciation.......................... 79,095 71,991
-------- --------
52,364 50,094
OTHER ASSETS
Intangibles, principally goodwill, net................... 15,825 15,829
Other.................................................... 3,377 3,600
-------- --------
Total Assets........................................... $304,414 $257,279
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Bank loans............................................... $ 18,341 $ 6,288
Accounts payable......................................... 26,858 25,144
Accrued payroll and related.............................. 18,697 17,442
Other accruals........................................... 15,788 14,378
Current portion of long-term debt........................ 2,918 6,724
-------- --------
Total current liabilities.............................. 82,602 69,976
Long-Term Debt............................................. 109,921 87,271
Deferred Taxes............................................. 12,895 11,376
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred Stock, $1 par value, authorized 12,500,000
shares, none issued
Common Stock, $1 par value, authorized 40,000,000 shares,
issued shares--12,322,851 in 1994 and 11,681,393 in
1993.................................................... 12,323 11,681
Additional paid-in-capital............................... 66,973 56,863
Retained earnings........................................ 28,994 30,895
Employee Stock Ownership Plan and stock option loans..... (3,937) (3,361)
Treasury shares at cost, 481,059 shares in 1994 and
469,681 shares in 1993.................................. (4,189) (3,993)
Cumulative translation adjustments....................... (1,168) (3,429)
-------- --------
Total Shareholders' Equity............................. 98,996 88,656
-------- --------
Total Liabilities and Shareholders' Equity............. $304,414 $257,279
======== ========
</TABLE>
See notes to consolidated financial statements
14
<PAGE>
ANTHONY INDUSTRIES, INC.
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------
1994 1993 1992
------- ------- -------
(THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income........................................ $13,033 $11,121 $ 8,521
Adjustments to reconcile net income to net cash
provided by (used in)
operating activities:
Depreciation.................................... 7,705 8,190 8,687
Amortization.................................... 929 893 966
Deferred taxes.................................. (17) 515 2,179
Changes in operating assets and liabilities:
Accounts receivable........................... (21,098) (10,858) (11,087)
Inventories................................... (19,367) (4,092) (6,838)
Prepaid expenses and other current assets..... (1,251) 884 (1,034)
Accounts payable.............................. 1,714 2,584 (800)
Payrolls and other accruals................... 2,666 1,093 (923)
------- ------- -------
Net cash provided by (used in) operating activi-
ties............................................. (15,686) 10,330 (329)
------- ------- -------
INVESTING ACTIVITIES
Property, plant and equipment expenditures........ (11,620) (8,715) (7,131)
Disposals of property, plant and equipment........ 1,924 304 310
Purchase of business, net of cash acquired........ (932)
Other items, net.................................. 1,068 (3,108) (2,260)
------- ------- -------
Net cash used in investing activities............. (8,628) (12,451) (9,081)
------- ------- -------
FINANCING ACTIVITIES
Borrowings under long-term debt................... 22,582 21,500 40,000
Payments of long-term debt........................ (3,738) (6,534) (10,078)
Net increase (decrease) in short-term bank loans.. 12,053 (5,004) (17,216)
Exercise of stock options......................... 267 629 222
Dividends paid.................................... (5,010) (4,733) (4,464)
------- ------- -------
Net cash provided by financing activities......... 26,154 5,858 8,464
------- ------- -------
Net increase (decrease) in cash and cash equiva-
lents.............................................. 1,840 3,737 (946)
Cash and cash equivalents at beginning of year...... 5,860 2,123 3,069
------- ------- -------
Cash and cash equivalents at end of year............ $ 7,700 $ 5,860 $ 2,123
======= ======= =======
</TABLE>
See notes to consolidated financial statements
15
<PAGE>
ANTHONY INDUSTRIES, INC.
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
-------------------------------------------------------------------------
EMPLOYEE STOCK
ADDITIONAL OWNERSHIP PLAN TREASURY CUMULATIVE
COMMON PAID-IN RETAINED AND STOCK SHARES TRANSLATION
STOCK CAPITAL EARNINGS OPTION LOANS AT COST ADJUSTMENTS TOTAL
------- ---------- -------- -------------- -------- ----------- -------
(IN THOUSANDS EXCEPT FOR PER SHARE FIGURES)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1,
1992................... $10,466 $41,727 $35,117 $(2,919) $(3,993) $ 265 $80,663
Net income for the
year 1992............ 8,521 8,521
Exercise of stock op-
tions................ 86 696 (560) 222
Cash dividends, $.385
per share............ (4,464) (4,464)
Stock dividends, 5%,
plus cash in lieu of
fractional shares.... 499 5,554 (6,062) (9)
Translation adjust-
ments................ (1,662) (1,662)
Employee Stock
Ownership Plan,
amortization and
partial loan
repayment............ 327 327
------- ------- ------- ------- ------- ------- -------
BALANCE AT DECEMBER 31,
1992................... 11,051 47,977 33,112 (3,152) (3,993) (1,397) 83,598
Net income for the
year 1993............ 11,121 11,121
Exercise of stock op-
tions................ 97 828 (296) 629
Cash dividends, $.405
per share............ (4,733) (4,733)
Stock dividends, 5%
plus cash in lieu of
fractional shares.... 533 8,058 (8,605) (14)
Translation adjust-
ments................ (2,032) (2,032)
Employee Stock Owner-
ship Plan, amortiza-
tion and
partial loan repay-
ment................. 87 87
------- ------- ------- ------- ------- ------- -------
BALANCE AT DECEMBER 31,
1993................... 11,681 56,863 30,895 (3,361) (3,993) (3,429) 88,656
Net income for the
year 1994............ 13,033 13,033
Exercise of stock op-
tions................ 78 764 (575) 267
Cash dividends, $.425
per share............ (5,010) (5,010)
Stock dividend, 5%,
plus cash in lieu of
fractional shares.... 562 9,348 (9,924) (14)
Translation adjust-
ments................ 2,261 2,261
Repurchase of shares
and stock option loan
repayments........... 2 (2) 303 (196) 107
Employee Stock
Ownership Plan,
amortization and
partial loan
repayment............ (304) (304)
------- ------- ------- ------- ------- ------- -------
BALANCE AT DECEMBER 31,
1994................... $12,323 $66,973 $28,994 $(3,937) $(4,189) $(1,168) $98,996
======= ======= ======= ======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements
16
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries, Shakespeare Company, K2 Corporation, Stearns
Manufacturing Company and Girvin Inc.
Cash Equivalents
Short-term investments (including any debt securities) that are part of the
Company's cash management portfolio are classified as cash equivalents and are
carried at amortized costs. These investments are highly liquid, are of limited
credit risk and have original maturities of three months or less. The carrying
amount of cash equivalents approximates market.
Accounts Receivable and Allowances
Accounts receivable are the result of the Company's worldwide sales
activities. Although the Company's credit risk is spread across a large number
of customers within a wide geographic area, periodic concentrations within a
specific industry occur due to the seasonality of its businesses. As of
December 31, 1994, the Company's receivables from the ski and snowboard
industry amounted to 46% of total receivables. The Company performs periodic
credit evaluations to manage its credit risk. Allowances include reserves for
volume-related discounts of $3,018,000 and $2,712,000 as of December 31, 1994
and 1993, respectively.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined on
the LIFO method with respect to approximately 46% and 49% of total inventories
at December 31, 1994 and 1993, respectively, Cost was determined on the FIFO
method for all other inventories.
Income Taxes
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." As permitted by
Statement No. 109, the Company has elected not to restate the financial
statements of any prior years. The cumulative effect of the change on the
Company's financial statements was not material. Income taxes have been
provided using the liability method. For years prior to 1993, the Company
accounted for income taxes in accordance with Accounting Principles Board
Opinion No. 11, "Accounting for Income Taxes," which provided for income taxes
using the income statement approach.
Property, Plant and Equipment
Property, plant and equipment is recorded at costs. Depreciation is provided
on the straight-line method based upon the estimated useful lives of the
assets.
Intangibles
Goodwill arising from acquisitions is amortized on a straight-line basis over
a period up to 40 years. Other intangibles are amortized on a straight-line
basis over 3 to 15 years. Accumulated amortization of intangibles as of
December 31, 1994 and 1993 amounted to $6,004,000 and $5,143,000, respectively.
The Company periodically reviews intangibles for impairment of value.
17
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Foreign Currency Translation
The functional currency for most foreign operations is the local currency.
Foreign currency financial statements are converted into United States dollars
by translating balance sheet accounts at the current exchange rate at yearend
and income statement items at the average exchange rate for the year, with the
resulting translation adjustment made to a separate component of shareholders'
equity. Transaction gains or losses, other than those related to items deemed
to be of a long-term nature, are included in net income in the period in which
they occur.
Advertising Costs
Advertising costs are generally expensed as incurred. Advertising costs for
the years ended December 31, 1994, 1993 and 1992 amounted to $12,943,000,
$11,050,000 and $11,263,000, respectively.
Research and Development
Research and development costs are charged to expense as incurred. Research
and development costs for the years ended December 31, 1994, 1993 and 1992
amounted to $6,298,000, $4,290,000 and $3,538,000, respectively.
Per Share Data
Earnings and cash dividends per share data have been retroactively adjusted
for stock dividends. Earnings per share were determined by dividing net income
by the average outstanding shares, including common stock equivalents and ESOP
shares, using the treasury stock method. Common stock equivalents include stock
options. Primary earnings per share approximate earnings per share on a fully
diluted basis.
NOTE 2--ACQUISITION OF BUSINESSES
On October 14, 1993, the Company purchased certain assets of Ocean State
International, Inc. ("Girvin"). Girvin is a distributor and manufacturer of
Proflex full-suspension mountain bikes and Girvin accessories for sale in the
U.S. and Europe. On February 4, 1995, the Company purchased Dana Design Ltd., a
small manufacturer and distributor of backpacks primarily in the U.S.
NOTE 3--INVENTORIES
Inventories at December 31 are:
<TABLE>
<CAPTION>
1994 1993
-------- -------
(THOUSANDS)
<S> <C> <C>
Finished goods................................................ $ 66,900 $55,322
Work in process............................................... 8,788 8,985
Raw materials................................................. 32,216 24,164
-------- -------
Total at lower of FIFO cost or market (approximates current
cost)........................................................ 107,904 88,471
Less LIFO valuation reserve................................... 6,162 6,096
-------- -------
$101,742 $82,375
======== =======
</TABLE>
18
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--INCOME TAXES
Pretax income for the years ended December 31 was taxed under the following
jurisdictions:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(THOUSANDS)
<S> <C> <C> <C>
Domestic................................................ $15,242 $13,631 $11,519
Foreign................................................. 5,091 3,330 1,392
------- ------- -------
$20,333 $16,961 $12,911
======= ======= =======
</TABLE>
Components of the income tax provision for the three years ended December 31
are:
<TABLE>
<CAPTION>
1994 1993 1992
---------------- ----------------- ----------------
CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED
------- -------- ------- -------- ------- --------
(THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Federal...................... $5,610 $(760) $5,575 $(1,095) $3,375 $ 95
State........................ 1,755 (85) 1,020 (85) 720 25
Foreign...................... 505 275 (5) 430 195 (20)
------ ----- ------ ------- ------ ----
$7,870 $(570) $6,590 $ (750) $4,290 $100
====== ===== ====== ======= ====== ====
</TABLE>
The principal elements accounting for the difference between the statutory
federal income tax rate and the effective tax rates for the three years ended
December 31 are:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(PERCENT)
<S> <C> <C> <C>
Statutory federal income tax rate............................. 35.0 35.0 34.0
State income tax effect....................................... 5.3 3.6 3.8
U.S. tax effects of foreign earnings.......................... (5.0) (4.5) (2.8)
Other......................................................... .6 .3 (1.0)
---- ---- ----
35.9 34.4 34.0
==== ==== ====
</TABLE>
Deferred tax assets and liabilities are comprised of the following at
December 31:
<TABLE>
<CAPTION>
1994 1993
------- -------
(THOUSANDS)
<S> <C> <C>
Depreciation.................................................... $ 7,031 $ 7,010
Trademark amortization.......................................... 207 167
Other........................................................... 5,657 4,199
------- -------
Long-term deferred tax liabilities, net....................... $12,895 $11,376
======= =======
Insurance accruals.............................................. 1,967 2,093
Bad debt reserve................................................ 1,021 922
Other........................................................... 4,940 3,377
------- -------
Current deferred tax assets, net.............................. $ 7,928 $ 6,392
======= =======
</TABLE>
Income taxes paid, net of refunds, in the years ended December 31, 1994, 1993
and 1992 were $6.7 million, $5.3 million and $2.2 million, respectively.
19
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 4--INCOME TAXES--(CONTINUED)
The income tax provision for the year ended December 31, 1994 includes
$600,000 relating to a reclassification of the provision for certain state
taxes which have historically been included in selling and general and
administrative expense. The Company has elected not to restate the financial
statements of any prior years, as such amounts were not material.
No provision for United States income taxes has been made on undistributed
earnings of foreign subsidiaries, since a substantial portion of these earnings
has been permanently reinvested. At December 31, 1994, the foreign subsidiaries
had unused operating loss carryforwards of approximately $7.5 million, of which
approximately $1.8 million expires in 2001 and the remainder carries forward
indefinitely. Since the use of these operating loss carryforwards is limited to
future taxable earnings of the related foreign subsidiaries, a valuation
allowance has been recognized to offset the deferred tax asset arising from
such carryforwards.
NOTE 5--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS
At December 31, 1994, the Company had several foreign and domestic short-term
lines of credit totaling up to $40.7 million. The foreign subsidiaries' lines
of credit generally have no termination date but are reviewed annually for
renewal and are denominated in the subsidiaries' local currencies. At December
31, 1994, amounts outstanding under such short-term lines of credit (bank
loans) were $18.3 million at interest rates ranging from 5.75% to 11.2%. The
weighted average interest rates on short-term lines of credit as of December
31, 1994 and 1993 were 6.5% and 7.1%, respectively.
The principal components of long-term debt at December 31 are:
<TABLE>
<CAPTION>
1994 1993
-------- -------
(THOUSANDS)
<S> <C> <C>
Notes payable due in nine equal annual principal instalments
beginning in 1996 through 2004 with semi-annual interest
payable at 8.39%............................................ $ 40,000 $40,000
$70 million three-year bank revolving credit line due June
28, 1997, quarterly interest payments due at LIBOR plus 3/4%
and a commitment fee of 3/8% on the unused portion of the
line through June 1997...................................... 68,000 50,500
Note payable due in monthly instalments through February 2001
with interest payable monthly at LIBOR plus 1 1/2% (7 1/2%
at December 31)............................................. 4,703
Secured note payable to bank in semi-annual instalments of
$211,300 including interest at 10% to January 2009--paid in
full in 1994................................................ 3,094
Other debt................................................... 136 401
-------- -------
112,839 93,995
Less--amounts due within one year............................ 2,918 6,724
-------- -------
$109,921 $87,271
======== =======
</TABLE>
The principal amount of long-term debt maturing in each of the four years
following 1995 is:
<TABLE>
<CAPTION>
(THOUSANDS)
-----------
<S> <C>
1996....................................... $ 4,853
1997....................................... 70,383
1998....................................... 4,916
1999....................................... 4,950
</TABLE>
Interest paid on short- and long-term debt for the years ended December 31,
1994, 1993 and 1992 was $7.5 million, $5.8 million and $6.8 million,
respectively.
20
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--BORROWINGS AND OTHER FINANCIAL INSTRUMENTS--(CONTINUED)
The $70 million revolving credit line is subject to an agreement which, among
other things, restricts amounts available for payment of cash dividends by the
Company. As of December 31, 1994, retained earnings of $7.9 million were free
of such restrictions. Interest rates on the revolving line at December 31, 1994
ranged from 6.375% to 7.125%.
The Company had $14.5 million of letters of credit outstanding as of December
31, 1994.
The Company has entered into interest rate swap agreements to manage its
interest rate exposure on the $40 million 8.39% notes payable. During 1993, the
Company converted the fixed rate to a variable rate by entering into an
interest rate swap with a maturity in 1996. The Company subsequently entered
into an offsetting swap effectively returning the debt to a fixed rate which
also matures in 1996. The remaining gain of $66,000 is being recognized over
the remaining life of the interest rate swap agreements. In 1994, the Company
also entered into an interest rate swap agreement effectively converting the
interest rate exposure on the $4.7 million bank loan described above to a fixed
rate of 6.97%. The interest rate swap agreement matures at the time the related
loan matures. The Company is exposed to credit loss in the event of
nonperformance by the banks, who are parties to these agreements. However, in
view of the substantial size and financial strength of these banks, the Company
believes that non-performance is remote.
The Company enters into forward exchange contracts to hedge certain
anticipated and firm sales and purchases commitments which are denominated in
foreign currencies. The purpose of the Company's foreign currency hedging
activities is to reduce the Company's risk to fluctuating exchange rates. At
December 31, 1994, the Company had foreign exchange contracts with maturities
of generally less than one year in the aggregate amount of $5.0 million, and
with unrealized losses of $205,000. The unrealized losses will be recognized in
earnings when realized and when the underlying transaction occurs. At December
31, 1994, the Company had no deferred realized gains or losses from forward
exchange contracts.
The carrying amounts for the short-term lines of credit and the long-term
bank revolving credit line approximate their fair value since floating interest
rates are charged which approximate market rates. The fair value of the $40
million 8.39% notes payable, based on quoted market prices, is $37.7 million as
compared to a carrying amount of $40.0 million, and the fair value of the $4.7
million note payable is $4.2 million as compared to a carrying amount of $4.7
million.
NOTE 6--COMMITMENTS AND CONTINGENCIES
Future minimum payments under noncancelable operating leases as of December
31, 1994, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31 (THOUSANDS)
----------- -----------
<S> <C>
1995.......................................................... $2,441
1996.......................................................... 2,058
1997.......................................................... 1,628
1998.......................................................... 1,493
1999.......................................................... 821
2000-2008..................................................... 651
------
$9,092
======
</TABLE>
Leases are primarily for rental of facilities, and about one-half of these
contain renewal rights to extend the terms from one to ten years.
Net rental expense, including those rents payable under noncancelable leases
and month-to-month tenancies, amounted to $3,837,000, $3,609,000 and $3,770,000
for the years ended December 31, 1994, 1993 and 1992, respectively.
21
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6--COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Company is subject to various legal actions and proceedings in the normal
course of business. While the ultimate outcome of these matters cannot be
predicted with certainty, and to the extent not previously provided, management
does not believe these matters will have a material adverse effect on the
Company's financial statements.
The Company is among several potentially responsible parties named in a
cleanup of a chemical waste disposal site in South Carolina under the
Comprehensive Environmental Response, Compensation and Liability Act. The
ultimate outcome of this matter cannot be predicted with certainty, however, to
the extent to which not previously provided, management does not believe this
matter will have a material adverse effect on the Company's financial
statements.
NOTE 7--PENSION PLANS AND OTHER BENEFIT PLANS
The Company sponsors several trusteed noncontributory defined benefit pension
plans covering most of its employees. Benefits are generally based on years of
service and the employee's highest compensation for five consecutive years
during the years of credited service. Contributions are intended to provide for
benefits attributable to service to date and service expected to be provided in
the future. The Company funds these plans in accordance with the Employee
Retirement Income Security Act of 1974 (ERISA).
The Company also sponsors defined contribution pension plans covering certain
domestic employees who are not covered by a defined benefit pension plan and
substantially all Stearns employees. Contributions by the Company are
determined as a percent of the amounts contributed by the respective employees.
The following table sets forth the defined benefit plans' funded status and
amounts recognized in the Company's consolidated balance sheet at December 31:
<TABLE>
<CAPTION>
1994 1993
--------------------------- ---------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS BENEFITS EXCEED ASSETS
------------- ------------- ------------- -------------
(THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value
of benefit obligations:
Accumulated benefit
obligation, including
vested benefits of
$26,202 in 1994 and
$28,994 in 1993...... $(26,510) $(2,347) $(28,469) $(2,216)
======== ======= ======== =======
Projected benefit
obligation for service
rendered to date....... $(32,631) $(2,347) $(36,200) $(2,216)
Plan assets at fair
value, primarily
publicly traded stocks,
bonds, and other fixed
income securities...... 35,018 37,278
-------- ------- -------- -------
Plan assets in excess of
(or less than) the
projected benefit
obligation............. 2,387 (2,347) 1,078 (2,216)
Unrecognized net loss... 1,145 93 3,167 292
Unrecognized prior serv-
ice cost............... (73) 385 55 312
Unrecognized net
transition (asset)
obligation at January
1, 1987, net of
amortization........... (1,706) 589 (1,981) 654
Adjustment required to
recognize minimum
liability.............. (1,067) (1,258)
-------- ------- -------- -------
Prepaid pension cost
(pension liability)
recognized in the con-
solidated balance
sheet.................. $ 1,753 $(2,347) $ 2,319 $(2,216)
======== ======= ======== =======
</TABLE>
22
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--PENSION PLANS AND OTHER BENEFIT PLANS--(CONTINUED)
Net pension cost consisted of the following at December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the period......... $1,495 $1,108 $1,038
Interest cost on the projected benefit obligation...... 2,829 2,607 2,326
Actual (gains) loss on plan assets..................... 360 (2,798) (2,028)
Net amortization and deferral.......................... (3,802) (525) (1,419)
------ ------ ------
Total net periodic pension cost (benefit) of funded de-
fined benefit plans................................... 882 392 (83)
Defined contribution plans............................. 435 517 505
------ ------ ------
Total pension plan cost................................ $1,317 $ 909 $ 422
====== ====== ======
</TABLE>
On January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pension." The adoption of Statement No. 106 had an immaterial effect on
the Company's financial statements.
In November 1992, the FASB issued Statement No. 112, "Employers' Accounting
for Postemployment Benefits," that requires accrual accounting for
postemployment benefits instead of recognizing an expense for those benefits
when paid. The Company has complied with the new rules beginning in 1994. The
adoption of the new standard has not had a material effect on the Company's
financial statements.
NOTE 8--QUARTERLY OPERATING DATA (UNAUDITED)
<TABLE>
<CAPTION>
NET GROSS NET NET INCOME
SALES PROFIT INCOME PER SHARE
------ ------ ------ ----------
(IN MILLIONS EXCEPT FOR PER
SHARE FIGURES)
<S> <C> <C> <C> <C>
1994
First quarter................................... $109.7 $ 26.7 $ .5 $ .04
Second quarter.................................. 131.8 36.4 5.0 .42
Third quarter................................... 127.9 34.5 4.5 .38
Fourth quarter.................................. 133.0 33.9 3.0 .25
------ ------ ----- -----
$502.4 $131.5 $13.0 $1.09
====== ====== ===== =====
1993
First quarter................................... $ 98.0 $ 24.7 $ .9 $ .08
Second quarter.................................. 112.9 30.0 4.0 .34
Third quarter................................... 113.9 30.4 3.8 .32
Fourth quarter.................................. 106.8 25.2 2.4 .20
------ ------ ----- -----
$431.6 $110.3 $11.1 $ .94
====== ====== ===== =====
</TABLE>
23
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9--STOCK OPTIONS
Under the Company's 1994 Incentive Stock Option Plan ("1994 Plan"), options
may be granted to eligible directors and key employees of the Company and its
subsidiaries at not less than 100% of the market value of the shares on the
dates of grant. No further options may be granted under the Company's 1988
Incentive Stock Option Plan ("1988 Plan").
The 1994 Plan permits the granting of options for terms not to exceed ten
years from date of grant. The options are exercisable on such terms as may be
established by the Compensation Committee of the Board of Directors at the
dates of grant.
The Company is authorized, at the discretion of the Compensation Committee,
to provide loans to key employees in connection with the exercise of stock
options under both the 1994 Plan and the 1988 Plan. The loans are
collateralized by the underlying shares of stock issued and bear interest at
the applicable rates published by the IRS. At December 31, 1994 and 1993, there
was a total of $2,440,000 and $2,167,000, respectively, of loans and accrued
interest outstanding which are due on various dates through December 1999. The
loan amounts have been deducted from shareholders' equity.
Further information regarding the Plans is shown below. The data has been
adjusted to reflect the 5% stock dividend in December 1994.
<TABLE>
<CAPTION>
1994 PLAN 1988 PLAN
---------------- ---------------
<S> <C> <C>
Status at December 31, 1994
Number of shares subject to options.......... 182,800 399,935
Exercise price per share..................... $15.00 to $17.25 $5.66 to $14.52
Number of shares exercisable................. 184,071
Available for grant.......................... 867,200
---------------- ---------------
Status at December 31, 1993
Number of shares subject to options.......... 504,995
Exercise price per share..................... $5.66 to $14.52
Number of shares exercisable................. 168,111
Available for grant.......................... 69,663
---------------
Information regarding the number of shares subject to options which were
exercised during the three years ended December 31, 1994 is shown below.
<CAPTION>
YEAR SHARES PRICE PER SHARE
---- ---------------- ---------------
<S> <C> <C>
1994......................................... 83,774 $5.66 to $14.52
1993......................................... 107,240 $5.66 to $ 8.77
1992......................................... 95,368 $5.66 to $ 8.86
---------------- ---------------
</TABLE>
During 1994, options for 182,800 shares were granted at $15.00 to $17.25 per
share, and options for 21,286 shares at $8.85 to $14.52 per share were
cancelled or expired. At December 31, 1994, 1,449,935 shares of common stock
were reserved for issuance under the Plans.
24
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--SHAREHOLDERS' EQUITY
Preferred Stock
Shares are issuable in one or more series, and the Board of Directors has
authority to fix the terms and conditions of each series.
Employee Stock Ownership Plan
The Company has an Employee Stock Ownership Plan (ESOP) which covers
substantially all of its domestic non-union employees with at least one year of
service. As of December 31, 1994, the trust was indebted to the Company in the
aggregate amount of $944,000 in connection with stock purchases made from 1982
through 1984 of which 260,415 shares with an aggregate market value of
$4,167,000 as of December 31, 1994 remained unallocated to participants. These
loans are repayable over the next eight to ten years with interest at prime
plus 1/2 %, not to exceed 18% and the unallocated shares will be released to
participants proportionately as these loans are repaid. Of the total dividends
received by the ESOP on its investment in the Company's common stock, dividends
on unallocated shares in the amount of $157,000 and $147,000 in 1994 and 1993,
respectively, were used to service these loans. Additionally, the trust was
indebted to the Company in the amount of $400,000 in connection with
distributions made to terminees. The loan carries no interest and is due June
30, 1995. It is anticipated the loan will be repaid through the sale of
unallocated shares.
Shareholders' equity has been reduced by the amount of the loans and any
payments made by the Company on behalf of the trust. The payments, which at
December 31, 1994 totaled $153,000, are being amortized to expense over the
lives of the loans.
The amount of the Company's annual contribution to the ESOP is at the
discretion of the Company's Board of Directors. For the three years 1994, 1993
and 1992 contributions were limited to amounts in excess of annual dividends,
net of debt service, of the ESOP necessary to fund obligations arising in each
of those years to retired and terminated employees. These amounts were
$1,016,000, $1,260,000 and $1,150,000, respectively. ESOP expense, including
amortization of the foregoing payments, was $1,014,000, $1,012,000 and
$1,321,000 in 1994, 1993 and 1992, respectively. Allocated shares as of
December 31, 1994 totaled 2,109,907 shares.
Preferred Stock Rights
Rights are outstanding which entitle the holder of each share of Common Stock
of the Company to buy one one-hundredth of a share of Series A preferred stock
at an exercise price of $51.712 per one one-hundredth of a share, subject to
adjustment. The rights are not separately tradable or exercisable until a party
either acquires, or makes a tender offer that would result in ownership of, at
least 20% of the Company's common shares. If a person becomes the owner of at
least 20% of the Company's outstanding common shares (an "Acquiring Person"),
each holder of a right other than such Acquiring Person and its affiliates is
entitled, upon payment of the then current exercise price per right (the
"Exercise Price"), to receive shares of Common Stock (or Common Stock
equivalents) having a market value of twice the Exercise Price. If the Company
subsequently engages in certain mergers, business combinations or asset sales
with the Acquiring Person, each holder of a right other than the Acquiring
Person and its affiliates is thereafter entitled, upon payment of the Exercise
Price, to receive stock of the Acquiring Person having a market value of twice
the Exercise Price. At any time after any party becomes an Acquiring Person,
the Board of Directors may exchange the rights (except those held by the
Acquiring Person) at an exchange ratio of one common share per right. Prior to
a person becoming an Acquiring Person, the rights may be redeemed at a
redemption price of one cent per right, subject to adjustment. The rights are
subject to amendment by the Board.
25
<PAGE>
ANTHONY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11--SEGMENT DATA
The Company and its subsidiaries are organized into the recreational products
and industrial products segments. The recreational products segment is composed
of the following lines of business: manufacture and sale of skis and
snowboards; sale of in-line skates; manufacture and sale of athletic jackets,
imprintable shirts and bowling shirts; manufacture and sale of personal
flotation devices; construction of residential concrete swimming pools;
manufacture and installation of swimming pool covers; manufacture and sale of
full-suspension mountain bikes and accessories; and manufacture and sale of
rods, reels and other fishing tackle items. The industrial products segment
consists of the manufacture and sale of extruded monofilament used by the
paperweaving industry and for cutting line, fishing line and sewing thread;
fiberglass marine antennas, communication and navigation equipment and light
poles; and laminated and coated paperboard products.
The following segment data is presented for the three years ended December
31, 1994. "Identifiable Assets" are as of December 31.
<TABLE>
<CAPTION>
NET SALES TO
UNAFFILIATED CUSTOMERS PRETAX INCOME
------------------------- -------------------
1994 1993 1992 1994 1993 1992
------- ------- ------- ----- ----- -----
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Recreational products.......................................... 332.1 285.5 266.6 16.0 12.2 11.6
Industrial products............................................ 170.3 146.1 135.4 16.7 14.0 11.0
------- ------- ------- ----- ----- -----
Net sales and operating profits................................ 502.4 431.6 402.0 32.7 26.2 22.6
======= ======= =======
Corporate
Interest and other income............................................................ .4 .9 1.0
Interest expense..................................................................... (7.5) (5.8) (6.8)
General expense...................................................................... (5.3) (4.3) (3.9)
----- ----- -----
Pretax income.......................................................................... 20.3 17.0 12.9
===== ===== =====
<CAPTION>
IDENTIFIABLE
ASSETS CAPITAL EXPENDITURES DEPRECIATION AMORTIZATION
----------------- -------------------- ------------------------- -------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
----- ----- ----- ------ ------ ------ ------- ------- ------- ----- ----- -----
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Recreational products... 216.6 177.0 162.3 7.0 6.0 3.7 3.4 3.7 4.3 .8 .8 .8
Industrial products..... 74.8 66.3 64.5 4.6 2.7 3.4 4.2 4.4 4.3 .1
----- ----- ----- ------ ------ ------ ------- ------- ------- ----- ----- -----
Total segment data.... 291.4 243.3 226.8 11.6 8.7 7.1 7.6 8.1 8.6 .8 .8 .9
Corporate............... 13.0 14.0 9.4 .1 .1 .1 .1 .1 .1
----- ----- ----- ------ ------ ------ ------- ------- ------- ----- ----- -----
Total Company........... 304.4 257.3 236.2 11.6 8.7 7.1 7.7 8.2 8.7 .9 .9 1.0
===== ===== ===== ====== ====== ====== ======= ======= ======= ===== ===== =====
<CAPTION>
TOTAL SEGMENT
UNITED STATES FOREIGN ELIMINATIONS DATA
----------------- -------------------- ------------------------- -------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992 1994 1993 1992
----- ----- ----- ------ ------ ------ ------- ------- ------- ----- ----- -----
(MILLIONS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales............... 421.4 363.1 336.8 99.8 87.1 86.0 (18.8) (18.6) (20.8) 502.4 431.6 402.0
Less--intergeographic
sales.................. 8.5 7.3 5.8 10.3 11.3 15.0 (18.8) (18.6) (20.8)
----- ----- ----- ------ ------ ------ ------- ------- ------- ----- ----- -----
Net sales to unaffili-
ated
customers.............. 412.9 355.8 331.0 89.5 75.8 71.0 502.4 431.6 402.0
----- ----- ----- ------ ------ ------ ----- ----- -----
Operating profit........ 25.9 21.7 18.7 6.8 4.5 3.9 32.7 26.2 22.6
----- ----- ----- ------ ------ ------ ----- ----- -----
Identifiable assets..... 241.4 208.9 189.8 50.0 34.4 37.0 291.4 243.3 226.8
----- ----- ----- ------ ------ ------ ----- ----- -----
Capital expenditures.... 9.7 7.3 5.3 1.9 1.4 1.8 11.6 8.7 7.1
----- ----- ----- ------ ------ ------ ----- ----- -----
Depreciation............ 6.4 6.9 7.3 1.2 1.2 1.3 7.6 8.1 8.6
----- ----- ----- ------ ------ ------ ----- ----- -----
Amortization............ .8 .8 .9 .8 .8 .9
===== ===== ===== ===== ===== =====
</TABLE>
26
<PAGE>
ANTHONY INDUSTRIES, INC.
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
Anthony Industries, Inc.
We have audited the accompanying consolidated balance sheets of Anthony
Industries, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
related statements of consolidated income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Anthony
Industries, Inc. and subsidiaries at December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
February 14, 1995
27
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as noted in the following paragraph the information called for by
Items 10, 11, 12 and 13 have been omitted because on or before April 29, 1995,
Registrant will file with the Commission pursuant to Regulation 14A a
definitive proxy statement. The information called for by these items set forth
in that proxy statement is incorporated herein by reference.
The information called for by Item 10 with respect to executive officers of
the Registrant appears following Item 4 under Part I of this Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
(a-1) Financial Statements (for the three years ended December 31, 1994
unless otherwise stated):
<TABLE>
<CAPTION>
PAGE REFERENCE
FORM 10-K
--------------
<S> <C>
Statements of consolidated income.................................. 13
Consolidated balance sheets at December 31, 1994 and 1993.......... 14
Statements of consolidated cash flows.............................. 15
Statements of consolidated shareholders' equity.................... 16
Notes to consolidated financial statements........................ 17-26
Report of Ernst & Young LLP, Independent Auditors.................. 27
(a-2) Consolidated financial statement schedule
II--Valuation and qualifying accounts............................. F-1
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes.
(a-3)Exhibits
(3) (a) Restated Certificate of Incorporation dated May 4, 1989, filed
as Exhibit (3)(a) to Form 10-K for the year ended December 31,
1989 and incorporated herein by reference
(b) By-Laws of Anthony Industries, Inc., as amended
(4) (a) Rights Agreement dated August 10, 1989 between the Company and
Harris Trust Company, filed as Item 6, Exhibit (a) to Form 10-Q
for the quarter ended September 30, 1989 and incorporated
herein by reference
28
<PAGE>
(10)Material contracts
(a) Credit Agreement dated as of June 28, 1993 among Anthony Industries,
Inc., the Banks party thereto and Bank of America National Trust and
Savings Association, as agent filed as Item 6, Exhibit (a)(10)(i) to
Form 10-Q for the quarter ended June 30, 1993 and incorporated
herein by reference
(i) First Amendment to the Credit Agreement dated as of June 28,
1993 between Anthony Industries, Inc., the Banks, and Bank of
America National Trust and Savings Association as a Bank and as
Agent for the banks filed as Item 6, Exhibit (a)10(i) to Form
10-Q for the quarter ended June 30, 1994 and incorporated herein
by reference
(b) Note Agreement Re: $40,000,000 8.39% Senior Notes due November 30,
2004 dated as of October 15, 1992, filed as Exhibit (10)(b) to Form
10-K for the year ended December 31, 1992 and incorporated herein by
reference
(c) Executive compensation plans and arrangements
(1)(i) Amended and restated employment agreement dated as of
December 31, 1991 between the Company and B. I. Forester,
filed as Exhibit (10)(a) to Form 10-K for the year ended
December 31, 1991 and incorporated herein by reference
(ii) Amendment dated October 20, 1994 to amended and related
employment agreement dated as of December 1991 between the
Company and B.I. Forester, filed as Item 6, Exhibit
(a)10(i) to Form 10-Q for the quarter ended September 30,
1994 and incorporated herein by reference
(2)(i) Special Supplemental Benefit Agreement between the Company
and Bernard I. Forester dated December 9, 1986, filed as
Exhibit (10)(g) to Form 10-K for the year ended December 31,
1986 and incorporated herein by reference
(ii) Amendment dated July 27, 1990 to Special Supplemental
Benefit Agreement between the Company and Bernard I.
Forester dated December 9, 1986, filed as Exhibit
(10)(f)(2) to Form 10-K for the year ended December 31,
1990 and incorporated herein by reference
(3) 1988 Incentive Stock Option Plan, filed as Exhibit A to the
Proxy Statement for the Annual Meeting of Shareholders held on
May 5, 1988 and incorporated herein by reference
(4) Anthony Industries, Inc. Non-Employee Directors' Benefit Plan
effective May 1, 1992, filed as Item 6, Exhibit (a)(28) of Form
10-Q for the quarter ended March 31, 1992 and incorporated
herein by reference
(5) Anthony Industries, Inc. Corporate Officers' Medical Expense
Reimbursement Plan, as amended through October 22, 1993,
effective August 15, 1974, filed as Exhibit (10)(c)(5) to Form
10-K for the year ended December 31, 1993 and incorporated
herein by reference
(6) Anthony Industries, Inc. Directors' Medical Expense
Reimbursement Plan, as amended through October 22, 1993,
effective January 1, 1983, filed as Exhibit (10)(c)(6) to Form
10-K for the year ended December 31, 1993 and incorporated
herein by reference
(7) Anthony Industries, Inc. Executive Officers' Incentive
Compensation Plan adopted August 5, 1993 filed as Item 6,
Exhibit (a)10(ii) to Form 10-Q for the the quarter ended June
30, 1993 and incorporated herein by reference
(8) 1994 Incentive Stock Option Plan, filed as Exhibit A to the
Proxy Statement for the Annual Meeting of Shareholders held on
May 5, 1994 and incorporated herein by reference
(11)Computation of earnings per share for three years ended December 31, 1994
(21)Subsidiaries
(23)Consent of Independent Auditors
(27)Financial Data Schedule
(b)REPORTS ON FORM 8-K
Not applicable
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
ANTHONY INDUSTRIES, INC.
(Registrant)
By /s/ B. I. Forester
_____________________________________
(B. I. Forester)
Chairman and Chief
Executive Officer
Date March 29, 1995
_____________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Director, Chairman of
the Board and
Chief Executive
Officer
/s/ B. I. Forester (principal executive
--------------------------------------------- officer)* March 29, 1995
(B. I. Forester)
Senior Vice
President--
Finance
(principal financial
/s/ John J. Rangel and accounting
--------------------------------------------- officer) March 29, 1995
(John J. Rangel)
/s/ Richard L. Goldberg Director* March 29, 1995
---------------------------------------------
(Richard L. Goldberg)
/s/ Hugh V. Hunter Director* March 29, 1995
---------------------------------------------
(Hugh V. Hunter)
/s/ John H. Offermans Director* March 29, 1995
---------------------------------------------
(John H. Offermans)
/s/ Sol S. Weiner Director* March 29, 1995
---------------------------------------------
(Sol S. Weiner)
</TABLE>
--------
*A majority of the directors of the registrant.
30
<PAGE>
ANTHONY INDUSTRIES, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
--------------------- ----------
CHARGED AMOUNTS
CHARGED TO OTHER CHARGED
BALANCE AT TO COSTS ACCOUNTS TO RESERVE BALANCE
BEGINNING AND (PRIMARILY NET OF AT END
DESCRIPTION OF PERIOD EXPENSES GROSS SALES) REINSTATEMENTS OF PERIOD
----------- ---------- -------- ------------ -------------- ---------
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1994
Allowance for doubtful
items................ $4,550 $1,929 $1,072 $5,407
Other (primarily sales
discounts)........... 2,712 $5,430 5,124 3,018
------ ------ ------ ------ ------
$7,262 $1,929 $5,430 $6,196 $8,425
====== ====== ====== ====== ======
Year ended December 31,
1993
Allowance for doubtful
items................ $3,492 $2,327 $1,269 $4,550
Other (primarily sales
discounts)........... 2,618 $4,563 4,469 2,712
------ ------ ------ ------ ------
$6,110 $2,327 $4,563 $5,738 $7,262
====== ====== ====== ====== ======
Year ended December 31,
1992
Allowance for doubtful
items................ $4,081 $2,018 $2,607 $3,492
Other (primarily sales
discounts)........... 1,338 $3,686 2,406 2,618
------ ------ ------ ------ ------
$5,419 $2,018 $3,686 $5,013 $6,110
====== ====== ====== ====== ======
</TABLE>
F-1
<PAGE>
EXHIBIT (11)
ANTHONY INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE (A)
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
(THOUSANDS EXCEPT FOR DOLLARS PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992
------- -------- -------
<S> <C> <C> <C>
Net income............................................ $13,033 $ 11,121 $ 8,521
======= ======== =======
Primary:
Average shares outstanding.......................... 11,800 11,703 11,575
Net effect of dilutive stock options under the trea-
sury stock method using average market price....... 119 95 60
------- -------- -------
Total............................................. 11,919 11,798 11,635
======= ======== =======
Per share amounts:
Net income........................................ $ 1.09 $ .94 $ .73
Fully Diluted:
Average shares outstanding.......................... 11,800 11,703 11,575
Net effect of dilutive stock options under the trea-
sury stock method using year end market price, if
higher than average market price................... 130 152 84
------- -------- -------
Total............................................. 11,930 11,855 11,659
======= ======== =======
Per share amounts:
Net income........................................ $ 1.09 $ .94 $ .73
</TABLE>
--------
(a) Retroactively adjusted for the 5% stock dividend paid in December 1994.
<PAGE>
EXHIBIT (21)
SUBSIDIARIES
<TABLE>
<CAPTION>
PERCENTAGE OF VOTING SECURITIES
OWNED OR SUBJECT TO VOTING
CONTROL BY
---------------------------------
COMPANY OTHER
---------------- ---------------
<S> <C> <C>
Shakespeare Company, a Delaware corporation... 100%
Subsidiaries of Shakespeare Company:
Shakespeare (Hong Kong) Ltd., a Hong Kong
corporation................................ 100%
Shakespeare (Aust) Pty. Ltd., an Australian
corporation................................ 100%
Shakespeare Hengelsport, B.V., a Dutch cor-
poration................................... 100%
Shakespeare International Ltd., a British
corporation................................ 100%
Subsidiaries of Shakespeare International
Ltd.:
Shakespeare Company (UK) Ltd., a British
corporation.............................. 100%
Shakespeare Monofilament U.K. Ltd., a
British corporation...................... 100%
Sitca Corporation, a Washington corporation... 100%
Subsidiaries of Sitca Corporation:
K2 Corporation, an Indiana corporation...... 100%
Subsidiary of K2 Corporation:
Madshus A.S., a Norwegian corporation..... 100%
K2 Ski Sport, und Mode, GmbH, a German
corporation.............................. 100%
SMCA, Inc., a Minnesota corporation........... 100%
Subsidiary of SMCA, Inc.:
Stearns Manufacturing Company, a Minnesota
corporation.............................. 100%
Girvin Inc., a Delaware corporation........... 100%
Dana Design Ltd., a Montana corporation....... 100%
</TABLE>
<PAGE>
EXHIBIT (23)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 dated October 14, 1988 and Form S-8 dated December 28, 1994)
pertaining to the 1988 Incentive Stock Option Plan and the 1994 Incentive Stock
Option Plan of Anthony Industries, Inc. of our report dated February 14, 1995,
with respect to the consolidated financial statements of Anthony Industries,
Inc. included in the Annual Report on Form 10-K for the year ended December 31,
1994.
Our audits also included the financial statement schedule of Anthony
Industries, Inc. listed in Item 14(a). This schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Ernst & Young LLP
Los Angeles, California
March 24, 1995
<PAGE>
EXHIBIT (A-3)(3)(B)
BY-LAWS
OF
ANTHONY INDUSTRIES, INC.
ARTICLE I
OFFICES
The Corporation shall maintain a registered office in the State of Delaware
as required by law. The Corporation may also have offices at other places,
within and without the State of Delaware.
ARTICLE II
STOCKHOLDERS
SECTION 1. Annual meetings of stockholders shall be held during the month of
May in each year, at such times and such places, within or without the State of
Delaware, as may be fixed from time to time by the Board of Directors.
SECTION 2. Except as otherwise required by statute or the Corporation's
Certificate of Incorporation, special meetings of stockholders may be called by
the Board of Directors or the Chairman of the Board. Special meetings of
stockholders shall be held on such dates and at such times and such places,
within or without the State of Delaware, as shall be stated in the notices of
such meetings. Notice of any special meeting shall state the purpose or
purposes for which the meeting is to be held and no other business shall be
transacted except as stated in such notice.
SECTION 3. The holders of a majority of the issued and outstanding shares of
the capital stock of the Corporation entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum for the transaction
of business at all meetings of stockholders.
SECTION 4. Except as otherwise required by statute, the Corporation's
Certificate of Incorporation or these By-Laws, all matters coming before any
meeting of stockholders shall be decided by the vote of the holders of a
majority of the shares of capital stock of the Corporation present in person or
represented by proxy at such meeting and voting thereon, a quorum being
present.
SECTION 5. The Board of Directors, or, if the Board shall not have made the
appointment, the chairman presiding at any meeting of stockholders, shall have
power to appoint two or more persons to act as inspectors, to receive, canvass
and report the votes cast by the stockholders at such meeting.
SECTION 6. The Chairman of the Board shall preside at all meetings of
stockholders; and in his absence, the Board of Directors may appoint a person
to act as chairman of the meeting.
SECTION 7. The Secretary or an Assistant Secretary shall act as secretary at
all meetings of stockholders; and in their absence, the chairman of the meeting
shall appoint a person to act as secretary of the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. The business and affairs of the Corporation shall be managed by or
under direction of the Board of Directors. The directors shall elect one of
their members to be Chairman of the Board, who shall perform such duties as are
provided in these By-Laws or are from time to time assigned by the Board. The
Chairman of the Board may, but need not be, an officer of the Corporation.
1
<PAGE>
SECTION 2. Regular meetings of the Board of Directors shall be held on such
dates and at such times and such places, within or without the State of
Delaware, as shall be fixed from time to time by the Board.
SECTION 3. Special meetings of the Board of Directors may be called by the
Chairman of the Board and shall be called by the Chairman of the Board or the
Secretary upon a request in writing by any four directors. Notice shall be
given of the date, time and place of each special meeting by mailing the same
at least three days before the meeting or by telephoning, telegraphing or
delivering personally the same before the meeting to each director. Except as
otherwise specified in the notice thereof, or as required by statute, any and
all business may be transacted at any special meeting of the Board of
Directors.
SECTION 4. The Chairman of the Board shall preside at all meetings of the
Board of Directors; and in his absence, the Board of Directors may appoint any
other person to act as chairman of the meeting. Less than a quorum of the Board
may adjourn any meeting from time to time until a quorum shall be present,
whereupon the meeting may be held, as adjourned, without further notice.
ARTICLE IV
COMMITTEES
SECTION 1. The Corporation shall have an Executive Committee and an Audit
Committee, which shall have such powers of the Board of Directors, not
prohibited by statute, as the Board shall from time to time authorize. The
Executive and Audit Committees shall consist of two or more directors.
SECTION 2. The Board of Directors may, by resolution passed by a majority of
the whole Board, designate from among its own members such other committees as
the Board may determine. Each such committee shall have such powers of the
Board of Directors, not prohibited by statute, as the Board shall from time to
time authorize.
SECTION 3. A majority of a committee shall constitute a quorum for the
transaction of business. Each committee shall keep regular minutes of its
meetings and shall report the same to the Board of Directors when requested.
The Board of Directors may discharge any committee or any member thereof either
with or without cause at any time.
SECTION 4. In the case of the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in place
of such absent or disqualified member.
ARTICLE V
OFFICERS
SECTION 1. The Board of Directors shall elect the following officers: Chief
Executive Officer, President, one or more Vice Presidents, Treasurer and
Secretary and such other officers as it may from time to time determine.
SECTION 2. The term of office of all officers shall be for one year and until
their respective successors are elected and qualified. The Board of Directors
may remove any officer either with or without cause at any time.
SECTION 3. The Chief Executive shall be the chief executive officer of the
Corporation and shall have such powers and duties as generally pertain to the
responsibilities of chief executive officer, including the management of the
business and affairs of the Corporation, subject only to the Board of
Directors. The
2
<PAGE>
President, subject and reporting to the Chief Executive Officer, shall be the
chief operating officer of the Corporation, and shall have such powers and
duties as generally pertain to the responsibilities of chief operating officer
as may be determined from time to time by the Chief Executive Officer. The
other officers of the Corporation, subject and reporting to the Chief Executive
Officer and/or the President, as determined from time to time by the Chief
Executive Officer, shall each have such powers and duties as generally pertain
to their respective offices. Any officer of the Corporation shall in addition
have such powers and duties as may be conferred by the Board of Directors.
SECTION 4. Unless otherwise ordered by the Board of Directors, the Chief
Executive Officer shall have full power and authority on behalf of the
Corporation to attend and to vote at any meetings of stockholders of any
corporation in which this Corporation may hold stock, and may exercise on
behalf of this Corporation any and all of the rights and powers incident to the
ownership of such stock at any such meeting, and shall have power and authority
to execute and deliver proxies, waivers and consents on behalf of the
Corporation in connection with the exercise by the Corporation of the rights
and powers incident to the ownership of such stock. The Board of Directors may
from time to time confer like powers upon any other person or persons.
ARTICLE VI
CAPITAL STOCK
SECTION 1. Certificates for stock of the Corporation shall be in such form as
the Board of Directors may from time to time prescribe.
SECTION 2. The Board of Directors shall have power to appoint one or more
transfer agents and/or registrars for the transfer and/or registration of
certificates for shares of stock of any class or series and may require that
stock certificates shall be countersigned and/or registered by one or more of
such transfer agents and/or registrars.
SECTION 3. Shares of capital stock of the Corporation shall be transferable
on the books of the Corporation only by the holder of record thereof in person
or by his duly authorized attorney, upon surrender and cancellation of
certificates for a like number of shares, with an assignment or power of
transfer endorsed thereon or delivered therewith, duly executed, and with such
proof of the authenticity of the signature and of authority to transfer, and of
payment of transfer taxes, as the Corporation or its agents may require.
SECTION 4. In case any certificate for the capital stock of the Corporation
shall be lost, stolen or destroyed, the Corporation may require such proof of
the fact and such indemnity to be given to it and/or to its transfer agent
and/or registrar, if any, as it shall deem necessary or advisable.
SECTION 5. The Corporation shall be entitled to treat the holder of record of
any share or shares of stock as the holder thereof in fact, and shall not be
bound to recognize any equitable to other claim to or interest in such shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise expressly provided by law.
ARTICLE VII
MISCELLANEOUS
SECTION 1. The seal of the Corporation shall be circular in form and shall
contain the name of the Corporation and the year and state of incorporation.
SECTION 2. The Board of Directors shall have the power to fix, and from time
to time to change, the fiscal year of the Corporation.
3
<PAGE>
ARTICLE VIII
AMENDMENT
The Board of Directors shall have the power to adopt, alter and repeal By-
Laws of the Corporation at any regular or special meeting of the Board, subject
to the power of the stockholders to alter or repeal any By-Law adopted or
altered by the Board of Directors. By-Laws may be adopted, altered or repealed
by the stockholders by the vote of the holders of a majority of the outstanding
shares entitled to vote thereon provided that notice of the proposed adoption,
alteration or repeal shall have been given in the notice of such meeting of
stockholders.
4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 7,700
<SECURITIES> 0
<RECEIVABLES> 119,579
<ALLOWANCES> (8,425)
<INVENTORY> 101,742
<CURRENT-ASSETS> 232,848
<PP&E> 131,459
<DEPRECIATION> 79,095
<TOTAL-ASSETS> 304,414
<CURRENT-LIABILITIES> 82,602
<BONDS> 0
<COMMON> 12,323
0
0
<OTHER-SE> 86,673
<TOTAL-LIABILITY-AND-EQUITY> 304,414
<SALES> 502,444
<TOTAL-REVENUES> 504,022
<CGS> 370,902
<TOTAL-COSTS> 370,902
<OTHER-EXPENSES> 103,210
<LOSS-PROVISION> 2,096
<INTEREST-EXPENSE> 7,481
<INCOME-PRETAX> 20,333
<INCOME-TAX> 7,300
<INCOME-CONTINUING> 13,033
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,033
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 1.09
</TABLE>
