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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 fiscal year ended April 30, 1994 Commission file number 1-5838
-------------- ------
NCH CORPORATION
- - ------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 75-0457200
- - ----------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
P.O. Box 152170
2727 Chemsearch Boulevard
Irving, Texas 75015
- - ----------------------------------- ---------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (214) 438-0211
--------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
COMMON STOCK, $1 PAR VALUE NEW YORK STOCK EXCHANGE
- - ----------------------------------- --------------------------------
Securities registered pursuant to Section 12(g) of the Act: NONE
------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. ( )
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
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Approximate Aggregate
Market Value* Total Shares
of Shares Held by Outstanding
Class Non-affiliates at June 22, 1994
- - -------------------------- ------------------- ----------------
COMMON STOCK, $1 PAR VALUE $ 244,693,400 8,277,540
- - -------------------------- -------------- ---------
*The approximate aggregate market value of the common stock held by
non-affiliates is based on the closing price of these shares on the
New York Stock Exchange on June 22, 1994.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's 1994 Annual Report to the Shareholders
and definitive Proxy Statement relating to the Registrant's 1994
Annual Shareholders Meeting are incorporated by reference in Parts II
and III of this Form 10-K.
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DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
PART II
Item 5 - Market for the Registrant's Page 32 of the 1994 Report
Common Equity and Related Shareholder to the Shareholders.
Matters.
Item 6 - Selected Financial Data. Page 18 of the 1994 Report
to the Shareholders.
Item 7 - Management's Discussion and Pages 18-20 of the 1994
Analysis of Financial Condition and Report to the Shareholders.
Operations.
Item 8 - Financial Statements and Pages 21-32 of the 1994
Supplementary Data. Report to the Shareholders.
PART III
Item 10 - Directors and Executive Pages 2-4 of the Company's
Officers of the Registrant. Proxy Statement dated June
22, 1994, in connection with
its Annual Meeting to be
held on July 28, 1994.
Item 11 - Executive Compensation. Pages 5-9 of the Company's
Proxy Statement dated June
22, 1994, in connection with
its Annual Meeting to be
held on July 28, 1994.
Item 12 - Security Ownership of Pages 11-12 of the Company's
Certain Beneficial Owners and Proxy Statement dated June
Management. 22, 1994, in connection with
its Annual Meeting to be
held on July 28, 1994.
Item 13 - Certain Relationships and Pages 3 & 9 of the Company's
Related Transactions. Proxy Statement dated June
22, 1994, in connection with
its Annual Meeting to be
held on July 28, 1994.
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PART I
Item 1. Business.
--------
NCH Corporation, a Delaware corporation, and its subsidiaries
(herein collectively referred to as the "Company" or "NCH" unless the
context requires differently) markets an extensive line of
maintenance, repair and supply products to customers throughout the
world. Products include specialty chemicals, fasteners, welding
supplies, plumbing and electronic parts, and safety supplies. These
products are marketed principally through the Company's own sales
force. There have been no significant changes in the kind of products
produced or marketed by the Company since the beginning of the last
fiscal year, although individual products are continually added to and
deleted from the product line. Sales are generally consistent
throughout the year, with no significant seasonal fluctuations.
Competitive conditions in the industry involved are severe and the
Company believes that no one enterprise or group of enterprises has a
dominant or preeminent position in the market. Further, the Company
believes that no enterprise has a significant percentage of the
market. No informative statement can be made as to the Company's rank
in its industry. Not only do other concerns compete in the broad
general range of maintenance, repair or supply products, but there are
also many competitors who produce one or more products which compete
with specific products sold by the Company. Competition in the
industry is primarily on the basis of price, service and product
performance. The Company's main emphasis is on service and product
performance rather than price. Sales of Company products are not
dependent upon a limited number of customers, and no particular
customer accounts for as much as 1/2% of sales.
Qualified sales representatives are crucial to the Company's
operations. In addition to industry competition, the Company competes
with the entire business community for qualified sales
representatives. This competition has been, and remains, severe. The
Company has a required formal training program for its sales
representatives consisting of in-house and field training. Turnover
of new sales representatives in the first year is estimated to be
approximately 83%, based on the Company's experience in the last three
years. The cost of recruiting and training sales representatives was
approximately $47.5 million, $46.2 million and $44.9 million for the
years ended April 30, 1994, 1993 and 1992, respectively.
The products that the Company markets are readily available from
numerous sources. The Company buys raw materials and finished
products from a large number of suppliers, none of whom would
materially impact the sales or earnings of the Company should they
cease to be a source of supply. In some foreign countries, licensees
manufacture specialty chemical products for marketing by the Company's
subsidiaries.
Patents, franchises and concessions have not played an important
role in the Company's business. Trademarks are extensively used on
products, and are useful but not of paramount importance.
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As of the end of its last fiscal year the Company employed 10,378
persons. The Company employs 74 professional or technical persons on
its laboratory staff ranging from Ph.D's to nongraduate chemical
technicians. Although the laboratory staff spends time on research
activities relating to the development of new products or services and
the improvement of existing products or services, the staff is also
engaged in quality control and customer service activities. Costs
cannot be broken down between these various activities. The
approximate amounts spent on laboratory operations in the years ended
April 30, 1994, 1993 and 1992, were $4.4 million, $3.9 million and
$3.4 million, respectively. All laboratory costs, including research
and development, are expensed as incurred.
The Company is subject to various federal, state and local laws and
regulations affecting businesses in general, including environmental
laws and regulations. Complying with all laws and regulations has not
materially affected the Company's competitive position, earnings or
capital expenditures. All laws and regulations are subject to change
and the Company cannot predict what effect, if any, changes might have
on its business.
International sales are conducted through subsidiaries in Europe,
Canada, Latin America, Australia and the Far East. Intercompany sales
and profits have been eliminated from the following schedule.
Corporate expenses are allocated between the geographic areas.
Identifiable assets are those identified with the operations in each
geographic area. Corporate assets includes portions of cash and cash
equivalents and marketable securities.
Financial information by geographic area, in thousands of dollars,
follows for the years ended April 30:
United Other
States Europe International Consolidated
-------- -------- ------------- ------------
1994
Net Sales $381,949 $222,214 $75,824 $679,987
Net Income (Loss) 20,474 12,818 (2,085) 31,207
Identifiable Assets 218,573 117,316 36,049 371,938
Corporate Assets 113,285
1993
Net Sales $336,471 $267,280 $76,186 $679,937
Net Income 19,030 16,952 1,631 37,613
Identifiable Assets 194,976 131,986 34,790 361,752
Corporate Assets 105,624
1992
Net Sales $313,256 $271,388 $86,161 $670,805
Net Income 17,332 20,721 1,382 39,435
Identifiable Assets 183,121 155,012 37,234 375,367
Corporate Assets 95,460
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Sales between geographic areas and export sales from the United
States are immaterial and are therefore not included in net sales
disclosed in the above table.
In the Company's experience, other than currency fluctuations, the
overall risk of international operations has not been appreciably
higher than domestic operations, although the risk of operations in any
one country may be greater than in the United States. The Company is
subject to the risks inherent in operating in foreign countries,
including government regulation, currency restrictions and other
restraints, risk of expropriation and burdensome taxes.
Item 2. Properties.
----------
The Company owns its world headquarters and domestic administrative
center complex in Irving, Texas, containing approximately 319,000
square feet.
The Company owns and operates 19 manufacturing facilities in 7
states and 10 foreign countries, located in Canada, Europe, Latin
America and the Far East, containing approximately 1,160,000 square
feet. These facilities also include related office and warehouse
space.
The Company owns and occupies a total of 15 office or
office/warehouse combinations in 5 states and 4 foreign countries,
located in Europe and Latin America, containing approximately 710,000
square feet.
In addition, the Company leases additional warehouse space,
manufacturing plants, and office space at various locations in the
United States and abroad, none of which is material in relation to the
Company's overall assets.
During the last fiscal year the Company made investments, net of
dispositions, of $13,124,000 ($14,219,000 gross) in capital property,
plant and equipment.
The plants and properties owned and operated by the Company are
maintained in good condition and are believed to be suitable and
adequate for the next several years.
Item 3. Legal Proceedings.
-----------------
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company or
any of its subsidiaries is a party or of which any of their property is
subject.
From time to time, the Company is named as a potentially responsible
party in proceedings involving compliance with environmental laws and
regulations. Management of the Company believes that an administrative
proceeding currently pending involving
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the Company's solvent recycling program will not have a material effect
on the Company's financial condition or results of operations and will
not result in monetary sanctions in excess of $100,000, if any.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
Executive Officers of the Registrant.
------------------------------------
The following are the executive officers of the Company as of
June 1, 1994:
Name Office Age
- - ---- ------ ---
Lester A. Levy Chairman of the Board;
Director 71
Milton P. Levy, Jr. Chairman of the Executive
Committee; Director 68
Irvin L. Levy President; Director 65
Earl Nicholson Senior Vice President 72
James A. Stone Senior Vice President 72
Joe Cleveland Vice President and Secretary 60
Tom Hetzer Vice President - Finance 57
Glen Scivally Vice President and Treasurer 53
Messrs. Lester A. Levy, Milton P. Levy, Jr. and Irvin L. Levy are
brothers. Each of the Company's executive officers has been an
executive officer of the registrant for more than five years as his
principal employment.
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PART II
Item 5. Market for the Registrant's Common Equity and Related
-----------------------------------------------------
Stockholder Matters.
-------------------
Market and Dividend Information, appearing on page 32 of the 1994
Report to the Shareholders, is incorporated by reference herein.
Item 6. Selected Financial Data.
-----------------------
Selected Financial Data, appearing on page 18 of the 1994 Report to
the Shareholders, is incorporated by reference herein.
Item 7. Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations.
---------------------------------------------
Management's Discussion and Analysis of Financial Condition and
Results of Operations, appearing on pages 18-20 of the 1994 Report to
the Shareholders, is incorporated by reference herein.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
The Financial Statements and Supplementary Data, appearing on pages
21-32 of the 1994 Report to the Shareholders, is incorporated by
reference herein.
Item 9. Changes in and Disagreements with Accountants on
------------------------------------------------
Accounting and Financial Disclosure.
-----------------------------------
None
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PART III
Item 10. Directors and Executive Officers of the Registrant.
--------------------------------------------------
Information on directors of the registrant, found on pages 2-4 of
the Company's Proxy Statement dated June 22, 1994, in connection with
its Annual Meeting to be held July 28, 1994, is incorporated by
reference herein.
Information on executive officers of the registrant, found on page 9
of this report, is incorporated by reference herein.
Item 11. Executive Compensation.
----------------------
Information on executive compensation and transactions, found on
pages 5-9 of the Company's Proxy Statement dated June 22, 1994, in
connection with its Annual Meeting to be held July 28, 1994, is
incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and
----------------------------------------------------
Management.
-----------
Information on security ownership of principal stockholders and
management, found on pages 11-12 of the Company's Proxy Statement dated
June 22, 1994, in connection with its Annual Meeting to be held on July
28, 1994, is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions.
-----------------------------------------------
Information on certain relationships and related transactions, found
on pages 3 and 9 of the Company's Proxy Statement dated June 22, 1994,
in connection with its Annual Meeting to be held on July 28, 1994, is
incorporated by reference herein.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
------------------------------------------------------------
8-K.
----
(a)(1) and (2): The response to this portion of Item 14 is submitted
as a separate section of this report on pages 15-16. The information
set forth on pages 15-16 of this report is incorporated by reference.
The consolidated financial statements set forth on page 15 of this
report are filed as part of this Form 10-K by incorporation by
reference to pages 21-32 of the 1994 Report to the Shareholders.
(a)(3) and (c): Exhibits. For a list of the exhibits filed as a part
of this report, see the Index to Exhibits on page 22 of this report,
which is incorporated by reference.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended April 30, 1994.
(d) Not applicable.
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SIGNATURES
The Issuer
- - ----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, NCH Corporation has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Irving, and the State of Texas, on this 10th day of June, 1994.
NCH CORPORATION, Registrant
By /s/ Irvin L. Levy
------------------------------
Irvin L. Levy, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of NCH
Corporation and in the capacities and on the date indicated.
Signature Capacity at Registrant Date
- - --------- ---------------------- -------------
Chairman of the Board;
/s/Lester A. Levy Director June 10, 1994
- - ---------------------------
Lester A. Levy
Chairman of the Executive
/s/Milton P. Levy, Jr. Committee; Director June 10, 1994
- - ---------------------------
Milton P. Levy, Jr.
President; Director
/s/Irvin L. Levy (Principal Executive Officer) June 10, 1994
- - ---------------------------
Irvin L. Levy
Vice President - Finance
/s/Tom Hetzer (Principal Accounting Officer) June 10, 1994
- - ---------------------------
Tom Hetzer
/s/Robert L. Blumenthal Director June 10, 1994
- - ---------------------------
Robert L. Blumenthal
/s/Rawles Fulgham Director June 10, 1994
- - ---------------------------
Rawles Fulgham
/s/Jerrold M. Trim Director June 10, 1994
- - ---------------------------
Jerrold M. Trim
/s/Thomas B. Walker Jr. Director June 10, 1994
- - ---------------------------
Thomas B. Walker Jr.
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NCH CORPORATION
AND SUBSIDIARY COMPANIES
FORM 10-K
ITEMS 8, 14(a)(1) and (2) and (a)(3) and (c)
INDEX OF FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
The following consolidated financial statements are filed as part of this
Form 10-K by incorporation by reference to pages 21-32 of the 1994 Report to
the Shareholders.
Consolidated Financial Statements:
Statements of Income, Years Ended April 30, 1994, 1993 and 1992
Balance Sheets, April 30, 1994 and 1993
Statements of Cash Flows, Years Ended April 30, 1994, 1993 and 1992
Statements of Stockholders' Equity, Years Ended April 30, 1994, 1993
and 1992
Notes to Consolidated Financial Statements
Independent Auditors' Report
Selected Unaudited Quarterly Data, Years Ended April 30, 1994 and 1993
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The following consolidated financial statement schedules of the registrant
and its subsidiaries are included in Item 14(a)(2):
Page
----
Consolidated Financial Statement Schedules
Independent Auditors' Report 17
I - Marketable Securities - Other Security Investments 18
V - Property, Plant and Equipment 19
VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment 20
VIII - Valuation and Qualifying Accounts 21
Schedules other than those listed above are omitted because they are not
required or are not applicable, the information required is immaterial in
relation to the registrant's consolidated financial statements, or the
required information is shown in the consolidated financial statements or
notes thereto. Columns omitted from schedules filed have been omitted because
the information is not applicable.
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INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
NCH Corporation:
Under date of June 2, 1994, we reported on the consolidated
balance sheets of NCH Corporation and subsidiaries as of April 30,
1994 and 1993, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the years in the
three-year period ended April 30, 1994, as contained in the 1994
Report to the Shareholders. These consolidated financial statements
and our report thereon are incorporated by reference in the annual
report on Form 10-K for the year ended April 30, 1994. In connection
with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial
statement schedules as listed in the accompanying index. These
consolidated financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these consolidated financial statement schedules based on our
audits.
In our opinion, such schedules, when considered in relation to
the basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick
Dallas, Texas
June 2, 1994
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<TABLE>
NCH CORPORATION AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES - OTHER SECURITY INVESTMENTS
AS OF APRIL 30, 1994
(In Thousands)
<CAPTION>
Market Value of Amount at
Name of Issue Principal Each Issue at Which Carried
and Title of Amount of Bonds Cost of Balance on the Balance
Each Issue (a) and Notes Each Issue Sheet Date(b) Sheet(b)
- - --------------------- --------------- ---------- --------------- --------------
<S> <C> <C> <C> <C>
U.S. Government
Securities $ 2,000 $ 1,076 $ 1,076 $ 1,076
State and Municipal
Securities 94,000 107,694 100,315 104,412
Certificates of Deposit 20,390 20,390 20,390 20,390
Other 9 9 9 9
-------- -------- -------- --------
Total Marketable Securities 116,399 129,169 121,790 125,887
Less Cash Equivalents 20,103 20,103 20,103 20,103
-------- -------- -------- --------
Marketable Securities
As Stated on Balance Sheets $ 96,296 $109,066 $101,687 $105,784
======== ======== ======== ========
(a) No individual security issue exceeds 2% of total assets.
(b) Includes accrued interest.
</TABLE>
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<TABLE>
NCH CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
(In Thousands)
<CAPTION>
Balance at Foreign Balance
Beginning Additions Currency at End of
Description of Period at Cost Retirements Translation Period
- - ---------------------------------- --------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Year Ended April 30, 1994
Land $ 12,098 $ - $ - $ (156) $ 11,942
Buildings and Improvements 72,724 3,400 578 (1,140) 74,406
Furniture and Fixtures 14,783 1,446 334 (564) 15,331
Machinery and Equipment 57,086 7,080 1,128 (564) 62,474
Automotive Equipment 14,029 3,223 2,914 (492) 13,846
-------- ------- ------ -------
$170,720 $15,149 $4,954 $(2,916) $177,999
======== ======= ====== ======= ========
Year Ended April 30, 1993
Land $ 10,771 $ 1,366 $ - $ ( 39) $ 12,098
Buildings and Improvements 67,810 6,559 264 (1,381) 72,724
Furniture and Fixtures 15,066 838 451 (670) 14,783
Machinery and Equipment 54,017 5,371 1,175 (1,127) 57,086
Automotive Equipment 14,199 3,954 3,243 (881) 14,029
-------- ------- ------ -------
$161,863 $18,088 $5,133 $(4,098) $170,720
======== ======= ====== ======= ========
Year Ended April 30, 1992
Land $ 10,408 $ 394 $ - $ ( 31) $ 10,771
Buildings and Improvements 65,083 3,776 307 (742) 67,810
Furniture and Fixtures 14,198 944 41 (35) 15,066
Machinery and Equipment 51,377 5,726 1,091 (1,995) 54,017
Automotive Equipment 14,095 3,478 2,765 (609) 14,199
-------- ------- ------ ------- --------
$155,161 $14,318 $4,204 $(3,412) $161,863
======== ======= ====== ======= ========
</TABLE>
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<TABLE>
NCH CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
(In Thousands)
<CAPTION>
Additions
Balance at Charged to Foreign Balance
Beginning Costs and Currency at End of
Description of Period Expenses Retirements Translation Period
- - ---------------------------------- --------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended April 30, 1994
Buildings and Improvements $29,325 $2,597 $ 526 $ (477) $30,919
Furniture and Fixtures 11,274 1,297 313 (525) 11,733
Machinery and Equipment 39,420 5,278 994 (382) 43,322
Automotive Equipment 7,560 2,691 2,121 (212) 7,918
------- ------- ------ ------- -------
$87,579 $11,863 $3,954 $(1,596) $93,892
======= ======= ====== ======= ==== ===
Year Ended April 30, 1993
Buildings and Improvements $27,455 $ 2,529 $ 34 $ (625) $29,325
Furniture and Fixtures 11,134 1,146 464 (542) 11,274
Machinery and Equipment 36,030 5,464 1,265 (809) 39,420
Automotive Equipment 7,248 3,334 2,414 (608) 7,560
------- ------- ------ ------- -------
$81,867 $12,473 $4,177 $(2,584) $87,579
======= ======= ====== ======= =======
Year Ended April 30, 1992
Buildings and Improvements $25,734 $ 2,323 $ 28 (574) $27,455
Furniture and Fixtures 10,007 1,237 76 (34) 11,134
Machinery and Equipment 32,927 4,786 901 (782) 36,030
Automotive Equipment 6,549 3,028 2,078 (251) 7,248
------- ------- ------ ------- -------
$75,217 $11,374 $3,083 $(1,641) $81,867
======= ======= ====== ======= =======
</TABLE>
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<TABLE>
NCH CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<CAPTION>
Balance at Charged to Foreign Deductions-- Balance
Beginning Costs and Currency Accounts at End of
Description of Period Expenses Translation Written-Off Period
- - --------------------------- --------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Reserves Deducted in the Balance
Sheet from Assets to Which They
Apply
Allowances for Doubtful Accounts
Year Ended April 30, 1994 $16,045 $8,568 $ (901) $7,243 $16,469
======= ====== ====== ====== =======
Year Ended April 30, 1993 $16,512 $8,663 $ (954) $8,176 $16,045
======= ====== ====== ====== =======
Year Ended April 30, 1992 $16,490 $8,441 $ (775) $7,644 $16,512
======= ====== ====== ====== =======
</TABLE>
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INDEX TO EXHIBITS
-----------------
Exhibit Sequentially
Number Exhibit Numbered Page
------ ------- -------------
Exhibit 3.1 (1) Restated Certificate of Incorporation
Exhibit 3.2 (1) Bylaws, as amended
Exhibit 10.1 (1) (3) Form of 1980 Non-Qualified Stock Option
Plan, as amended
Exhibit 10.2 (1) (3) Form of Non-Qualified Stock Option
Agreement
Exhibit 10.5 (1) (3) Forms of Deferred Compensation
Agreements with Messrs. Irvin, Lester,
and Milton Levy
Exhibit 10.7 (5) (3) Third Amendments to Deferred Compensation
Agreements with Messrs. Irvin, Lester,
and Milton Levy
Exhibit 10.8 (2) (3) Executive Committee Incentive Bonus Plan
Exhibit 13 (2) Report to the Shareholders for the year
ended April 30, 1994
Exhibit 21 (2) Subsidiaries of the Registrant
Exhibit 23 (2) Independent Auditors' Consent
Exhibit 99 (2) Definitive Proxy Statement regarding
the Company's 1994 Annual Meeting of
Stockholders
(1) Incorporated herein by reference to the exhibits with the same exhibit
number and designation in the Registrant's report on Form 10-K for the
fiscal year ended April 30, 1987, filed with the Securities and Exchange
Commission.
(2) Filed herewith.
(3) Management contract or compensatory plan or arrangement required to be
filed as an exhibit to this report pursuant to Item 14(c) of Form 10-K.
(4) Incorporated herein by reference to the exhibit with the same exhibit
number and designation in the Registrant's report on Form 10-K for the
fiscal year ended April 30, 1992, filed with the Securities and Exchange
Commission.
(5) Incorporated herein by reference to the exhibit with the same exhibit
number and designation in the Registrant's report on Form 10-K for the
fiscal year ended April 30, 1993, filed with the Securities and Exchange
Commission.
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NCH CORPORATION
EXHIBIT 10.8
EXECUTIVE COMMITTEE INCENTIVE BONUS PLAN
MINUTES OF THE MEETING
OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
OF
NCH CORPORATION
April 28, 1994
At a meeting held on April 28, 1994, the Compensation Committee considered the
proposal of Towers Perrin & Co. to adopt an incentive bonus plan for members of
the Executive Committee for fiscal year 1995.
Subject to stockholder approval, the Compensation Committee unanimously
adopted the following plan for the payment of bonuses to each member of the
Executive Committee (being Lester A. Levy, Milton P. Levy, Jr., and
Irvin L. Levy) based on the increase of net income of NCH Corporation, if any,
calculated before the calculation of any bonus pursuant to this plan, but after
taxes.
Percentage Increase In Dollar Amount
Net Income Before Bonus of Bonus
----------------------- ----------------
Less than 10% -0-
10% - less than 14% $ 225,000 each
14% - less than 16% $ 300,000 each
16% or more $ 375,000 each
The bonus plan may not be amended to increase the cost of the plan to NCH or
change the persons to whom bonuses will be paid without a vote of NCH's
stockholders. The Compensation Committee will be authorized to make other
amendments to the bonus plan.
The Compensation Committee members, being all of the independent directors
without a conflict of interest, authorize this proposal to be presented to the
stockholders for approval at the annual meeting of NCH Corporation to be held
the last Thursday in July, 1994. Each member of the Compensation Committee and
director, by his signature hereto, waives all formalities in connection with
this meeting and adopts the matter set forth in these minutes.
/s/ Thomas B. Walker, Jr.
-------------------------
Thomas B. Walker, Jr.
/s/ Rawles Fulgham
-------------------------
Rawles Fulgham
/s/ Jerrold M. Trim
-------------------------
Jerrold M. Trim
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NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 13
REPORT TO THE SHAREHOLDERS FOR THE YEAR ENDED APRIL 30, 1994
Selected Financial Data
NCH Corporation and Subsidiaries
(In Thousands Except Per Share Data)
Years Ended April 30,
=======================================================================
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
Net Sales $679,987 $679,937 $670,805 $677,687 $628,430
Net Income $ 31,207 $ 37,613 $ 39,435 $ 43,113 $ 39,809
Earnings Per Share $3.77 $4.53 $4.77 $5.19 $4.69
Current Ratio 3.6 to 1 3.7 to 1 3.2 to 1 2.9 to 1 2.7 to 1
Total Assets $485,223 $467,376 $470,827 $438,244 $394,403
Long-Term Debt $ 6,790 $ 8,795 $ 10,472 $ 8,189 $ 11,374
Retirement and
Deferred Compen-
sation Plans $ 83,986 $ 80,026 $ 78,628 $ 71,928 $ 63,443
Cash Dividends
Declared Per
Share $2.00 $2.00 $1.00 $.97 $1.06
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------------ ---------- --- -------- -- --------- --------- ---
RESULTS OF OPERATIONS
- - ------- -- ----------
Liquidity and Capital Resources
- - --------- --- ------- ---------
In the fiscal year ended April 30, 1994, working capital increased
to $262.4 million from $253.3 million at April 30, 1993. The current
ratio was 3.6 to 1 at April 30, 1994, compared to 3.7 to 1 at April 30,
1993. The total of cash, cash equivalents and marketable securities
increased by $1.0 million to $124.5 million at April 30, 1994. Net
cash flow from operations totaled $30.8 million. Principal uses of
cash consisted of net capital expenditures of $13.1 million, the
repurchase of 55,900 shares of the Company's stock for $3.4 million and
payment of dividends of $16.5 million. Additional funds were provided
by the borrowing of cash surrender values of company-owned life
insurance policies on key employees of $7.8 million and net additional
borrowings of $4.7 million. During the year ended April 30, 1994, the
Company purchased the assets of two small businesses amounting to $3.7
million. Management expects that operating cash flows will continue to
generate sufficient funds to finance operating needs, capital
expenditures and the payment of dividends. Long-term and short-term
indebtedness has usually been limited to the borrowing of local country
currencies by the Company's international subsidiaries to finance
working capital requirements, although the Company has incurred debt
domestically at various times when financially advantageous.
The Company's international subsidiaries operate on a fiscal year
ending on the last day of February. At February 28, 1994, the value of
the U.S. dollar had increased relative to most of the currencies in
which the Company's international subsidiaries operate. As a result,
the reported values of both assets and liabilities of the Company's
international subsidiaries decreased as a result of the change in the
Company's composite spot rate at February 28, 1994, compared to
February 28, 1993. This is reflected by the foreign currency
translation component of stockholders' equity, which changed from a
$17.0 million reduction of equity at April 30, 1993, to a $22.1 million
reduction of equity at April 30, 1994.
Accounts receivable increased by $3.2 million and inventories
increased by $11.4 million in the year ended April 30, 1994, as
measured in U.S. dollars and reported on the Consolidated Balance
Sheets. These changes include the addition of $.9 million of accounts
receivable and $.7 million of inventories acquired in the purchase of
the assets of two small businesses, as well as the effect of exchange
rate changes during the year. As stated above, the result of the
exchange rate deviations from the end of the prior year to the end of
fiscal 1994 was to decrease the reported U.S. dollar values of both
assets and liabilities. The change in accounts receivable and
inventories presented in the Consolidated Statements of Cash Flows is
exclusive of the effect of exchange rates on the reported asset values
and shows that accounts receivable increased by $6.0 million compared
to the end of the prior year, while inventories
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increased by $11.6 million in the same period. These amounts exclude
the accounts receivable and inventories acquired in the purchase of the
assets of two small businesses, which is shown separately in the
Consolidated Statements of Cash Flows as an investing activity. The
increase in accounts receivable was primarily the result of higher
sales in the domestic operations during the fourth quarter of the
current year compared to the previous year. Inventories increased
primarily as a result of higher inventories in the domestic operations,
where increased sales levels in the current year have resulted in
higher inventory requirements.
Accounts payable, accrued expenses and income taxes payable were
similarly affected by currency translation. These liabilities
increased by $3.3 million when measured exclusive of the effect of
exchange rate changes but increased by $2.8 million as reported on the
Consolidated Balance Sheets. Accounts payable and accrued expenses
increased primarily in the Company's domestic operations as a result of
increased domestic sales and increased inventory levels in the current
year as compared to the prior year. Income taxes payable were
relatively even, exclusive of the effect of exchange rate changes.
Net capital expenditures for property, plant and equipment,
excluding net assets acquired in the purchase of businesses, were $13.1
million for the year ended April 30, 1994. These consisted of normal
expenditures for data processing and operating equipment, and
completion of a manufacturing facility in the U.S. Property, plant and
equipment acquired in the purchase of the assets of two small
businesses amounted to $.9 million. As with the other assets and
liabilities, the effect of currency translation on the reported U.S.
dollar values of property, plant and equipment was to decrease those
reported values. Capital expenditures for the upcoming year are
anticipated to be approximately the same as prior year expenditures.
Total bank indebtedness, comprised of long-term debt, current
maturities of long-term debt and notes payable, increased exclusive of
the effect of exchange rate changes by $4.7 million, while the
Consolidated Balance Sheets show an increase of $4.3 million. During
the year, additional short-term borrowings were made, primarily in
Europe, offset by the annual debt repayment on domestic borrowings. Of
the $8.7 million in long-term debt and current maturities, $8.5 million
is currently domestic borrowing, principally a French Franc denominated
loan made in the U.S., for the purpose of hedging the Company's net
asset position in France, and an industrial revenue bond, for the
purpose of financing a domestic facility. The remaining $.2 million of
long-term debt and current maturities and all $9.7 million of notes
payable consist of international subsidiary borrowings in local country
currencies, used primarily to finance working capital requirements.
During fiscal year 1994, cash dividends paid amounted to $16.5
million ($2.00 per share) compared to $16.6 million in 1993 ($2.00 per
share). In addition to the regular quarterly dividend of $.25 per
share of Common Stock, on September 14, 1993, the directors of the
Company declared an extra cash dividend of $1.00 per share, which was
paid December 15, 1993. On April 13, 1994, the directors of the
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Company declared a regular quarterly cash dividend of $.25 per share of
Common Stock to be paid June 15, 1994, to shareholders of record June
1, 1994. As of both April 30, 1994 and 1993, dividends amounting to
$2.1 million had been declared, but not paid.
Operating Results
- - --------- -------
Net sales of $680.0 million in the current fiscal year were even
with net sales of $679.9 million in fiscal 1993. Net sales in fiscal
year 1993 were 1% higher than the $670.8 million reported in fiscal
year 1992. Domestic sales in 1994 increased 14% from 1993, while
domestic sales reported in 1993 were 7% higher than 1992. Sales from
international operations, other than hyper-inflationary countries,
decreased 3% in 1994 compared to 1993 when measured on a local currency
basis. Due to the strength of the U.S. dollar, however, sales from
international operations reflected a decrease of 14% as reported in
U.S. dollars. The decrease in sales on a local currency basis was
primarily the result of continued weak international economic
conditions. Sales in 1993 in those countries decreased 3% from 1992
when measured on a local currency basis and decreased 2% as reported in
U.S. dollars. As measured in U.S. dollars, sales in the
hyper-inflationary countries remained even in 1994 as compared to 1993.
Continued sales decreases in several Latin American countries were
offset by sales increases in operations in Central and Eastern Europe.
Sales in the hyper-inflationary countries decreased 25% in 1993 over
1992, as measured and reported in U.S. dollars. The majority of the
decrease in 1993 over 1992 in this group of subsidiaries occurred in
the Brazilian operations, due to deteriorating economic conditions.
In fiscal year 1994, operating expenses increased only 2% over
1993; but due to relatively flat sales in 1994, operating margins
decreased to 7.4% of net sales from 8.9% in the prior year.
Domestically, operating margins were approximately the same in 1994 as
compared to 1993. Internationally, operating margins were
significantly lower in 1994 as compared to 1993, due to a decrease in
net sales and higher operating expenses. Operating margins in 1993
were lower than the 9.9% in 1992, due primarily to decreased sales in
the Company's international operations.
In fiscal year 1994, the Company reported net interest income of
$2.0 million compared to net interest income of $5.0 million in 1993.
Gross interest income decreased, due to lower interest rates on new
investments. Gross interest expense was relatively even with the prior
year, as lower average debt in the Company's European subsidiaries
offset higher interest expense in the Company's Brazilian subsidiaries,
which had higher average debt during the year at extremely high
interest rates. The $5.0 million in net interest income in fiscal 1993
compared to net interest income of $1.9 million in 1992. Gross
interest expense decreased significantly in 1993 compared to 1992, due
to a lower average level of debt outstanding during the current year in
the Company's European and Brazilian subsidiaries.
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Loss on currency revaluation decreased to $.3 million in fiscal
year 1994 from $1.8 million in 1993. In both years, net foreign
exchange losses in the Company's European operations represented the
majority of the loss on currency revaluation. In the current year,
however, the net foreign exchange losses in the Company's European
operations were somewhat offset by net translation gains in the
Company's Brazilian operations. Changes in the average net financial
position of the Company's Brazilian subsidiaries resulted in net
translation gains in the Company's Brazilian operations for 1994. In
fiscal 1993, loss on currency revaluation decreased to $1.8 million
from $2.1 million in fiscal 1992, also due to changes in the average
net financial position of the Company's Brazilian subsidiaries during
1993. Downsizing of the Brazilian subsidiaries during 1993 resulted in
a smaller asset position and, therefore, reduced translation expense
for 1993 compared to 1992. Foreign exchange losses in various
countries and translation losses in hyper-inflationary countries other
than Brazil represented the balance of the loss on currency revaluation
in all three years.
Net income in fiscal year 1994 decreased 17% to $31.2 million from
$37.6 million in 1993. Net income in fiscal 1993 was 5% lower than the
$39.4 million reported in 1992. In addition to the effects of
operating income, net interest and loss on currency revaluation on
pre-tax income, net income is affected by the overall corporate tax
rate for the year, which was 40.1% of pre-tax income in fiscal 1994
compared to 40.8% in 1993 and 40.3% in 1992. A reconciliation of the
effective tax rates to U.S. statutory rates is contained in the Notes
to Consolidated Financial Statements. Earnings per share decreased 17%
to $3.77 per share in 1994 due to the decrease in net income. Earnings
per share in 1993 were $4.53, a 5% decrease from the $4.77 reported in
1992, due to lower net income in 1993.
On a geographic area basis, net income in the United States
increased 8% to $20.5 million in fiscal year 1994, primarily as a
result of the 14% increase in sales and a lower effective income tax
rate. Net income of $19.0 million in 1993 was higher than the $17.3
million reported in 1992, primarily due to increased sales and a lower
effective income tax rate in 1993 compared to 1992.
Net income in Europe decreased from $17.0 million in fiscal 1993
to $12.8 million in 1994. Net income in fiscal 1992 was $20.7 million.
The decrease in net income from 1993 to 1994 was primarily attributable
to a combination of lower sales volume, the adverse effects of
translation rates and reduced net interest income due to a significant
decrease in average funds invested. The decrease in net income from
1992 to 1993 was primarily attributable to a combination of lower sales
volume and higher effective tax rates.
Net income in the Other International operations decreased from
$1.6 million net income in 1993 to a $2.1 million net loss in 1994 due
to lower sales, higher operating expenses, higher net interest expense
and higher effective tax rates in the current year. Net income of $1.6
million was reported in fiscal 1993 compared to $1.4 million reported
in 1992. In 1992, the Company made a $1.8 million provision for
restructuring its Brazilian subsidiaries.
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The Financial Accounting Standards Board recently issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." This statement must be
adopted in the first quarter of fiscal 1995. Implementation of this
statement is not expected to have a material effect on the Company's
financial position or results of operations.
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<TABLE>
Consolidated Statements of Income
NCH Corporation and Subsidiaries
(In Thousands Except Per Share Data)
Years Ended April 30,
===============================================================================
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net Sales $679,987 $679,937 $670,805
-------- -------- --------
Operating Expenses
Cost of sales, including warehousing
and commissions 358,317 342,586 329,479
Marketing and administrative expenses 271,286 277,034 273,397
Provision for restructuring
Brazilian subsidiaries - - 1,750
-------- -------- --------
629,603 619,620 604,626
-------- -------- --------
Operating Income 50,384 60,317 66,179
Other (Expenses)Income
Loss on revaluation of foreign currencies (340) (1,792) (2,067)
Net interest income 2,046 5,014 1,943
-------- -------- --------
Income before Income Taxes 52,090 63,539 66,055
Provision for Income Taxes 20,883 25,926 26,620
-------- -------- --------
Net Income $ 31,207 $ 37,613 $ 39,435
======== ======== ========
Earnings Per Share $3.77 $4.53 $4.77
===== ===== =====
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
Consolidated Balance Sheets
NCH Corporation and Subsidiaries
(In Thousands Except Share and Per Share Data)
As of April 30,
=========================================================================
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 18,754 $ 28,620
Marketable securities 105,784 94,877
Accounts receivable (less allowance for doubtful
accounts of $16,469 and $16,045) 136,178 133,014
Inventories 83,634 72,191
Prepaid expenses 6,431 6,426
Deferred income taxes 12,990 10,451
-------- --------
Total Current Assets 363,771 345,579
-------- --------
Property, Plant and Equipment 177,999 170,720
Accumulated depreciation 93,892 87,579
-------- --------
84,107 83,141
-------- --------
Deferred Income Taxes 22,332 18,983
-------- --------
Other 15,013 19,673
-------- --------
Total $485,223 $467,376
======== ========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable to banks $ 9,745 $ 3,241
Current maturities of long-term debt 1,875 2,101
Accounts payable 46,775 45,374
Accrued expenses 22,784 21,330
Income taxes payable 18,117 18,127
Dividends payable 2,069 2,081
-------- --------
Total Current Liabilities 101,365 92,254
-------- --------
Long-Term Debt, less current maturities 6,790 8,795
-------- --------
Retirement and Deferred Compensation Plans 83,986 80,026
-------- --------
Stockholders' Equity
Common stock, par value $1 per share, authorized
20,000,000 shares. Issued 11,769,304 shares 11,769 11,769
Additional paid-in capital 6,369 6,065
Retained earnings 393,193 378,518
Foreign currency translation adjustment (22,100) (17,022)
-------- --------
389,231 379,330
Less treasury stock
(3,492,058 and 3,447,153 shares) 96,149 93,029
-------- --------
293,082 286,301
-------- --------
Total $485,223 $467,376
======== ========
The accompanying notes are an integral part of these financial
statements.
</TABLE>
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<TABLE>
Consolidated Statements of Cash Flows
NCH Corporation and Subsidiaries
(In Thousands)
Years Ended April 30,
==========================================================================================
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income $31,207 $37,613 $39,435
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,169 13,633 12,494
Provision for losses on accounts receivable 8,568 8,663 8,441
Deferred income taxes (4,576) (836) (2,772)
Retirement and deferred compensation plans 4,066 3,405 7,865
Change in assets and liabilities, excluding net
assets acquired in the purchase of businesses:
Accounts receivable (14,574) (6,787) (12,579)
Inventories (11,584) 1,678 1,074
Prepaid expenses (189) 415 (1,892)
Current liabilities (except short-term debt) 3,339 (5,488) 4,685
Other 1,376 700 115
------- ------- -------
Net cash provided by operating activities 30,802 52,996 56,866
------- ------- -------
Cash Flows from Investing Activities
Sales of property, plant and equipment 1,095 1,090 1,228
Purchases of property, plant and equipment (14,219) (17,986) (14,221)
Redemptions of marketable securities 39,874 43,818 24,466
Purchases of marketable securities (50,781) (51,670) (61,845)
Acquisitions of businesses (3,654) (1,129) (1,758)
Purchases of intangible assets (3,484) (3,265) (2,662)
Other (109) - (103)
------- ------- -------
Net cash used in investing activities (31,278) (29,142) (54,895)
------- ------- -------
Cash Flows from Financing Activities
Proceeds from notes payable 7,886 4,202 9,926
Payments of notes payable (1,184) (6,416) (11,026)
Additional long-term debt - 7 8,839
Payments of long-term debt (1,963) (4,630) (7,620)
Borrowing of cash surrender values 7,758 - -
Payments of dividends (16,544) (16,597) (8,262)
Purchases of treasury stock (3,422) - (6)
Proceeds from exercise of stock options 430 2,466 1,685
Other - - 137
------- ------- -------
Net cash used in financing activities (7,039) (20,968) (6,327)
------- ------- -------
Effect of Exchange Rate Changes on Cash and Cash Equivalents (2,351) (5,973) (3,233)
------- ------- -------
Net Decrease in Cash and Cash Equivalents (9,866) (3,087) (7,589)
Cash and Cash Equivalents at Beginning of Year 28,620 31,707 39,296
------- ------- -------
Cash and Cash Equivalents at End of Year $18,754 $28,620 $31,707
======= ======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
Consolidated Statements of Stockholders' Equity
NCH Corporation and Subsidiaries
(In Thousands Except Per Share Data)
<CAPTION> Foreign
Common Treasury Common Treasury Additional Currency
Stock Stock Stock Stock Paid-In Retained Translation
Shares Shares Amount Amount Capital Earnings Adjustment Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, April 30, 1991 11,769 (3,529) $11,769 $(95,230) $3,899 $326,350 $ 1,246 $248,034
Net income 39,435 39,435
Cash dividends on common
stock, $.75 per share (6,202) (6,202)
Dividend declared, but not
paid, $.25 per share (2,069) (2,069)
Treasury stock acquired - (6) (6)
Treasury stock sold under
stock option plans 33 895 790 1,685
Treasury stock issued under
stock participation plan
and stock bonuses 4 88 83 171
Foreign currency translation
adjustment (7,393) (7,393)
------ ------- ------- -------- ------ --------- --------- ---------
Balance, April 30, 1992 11,769 (3,492) 11,769 (94,253) 4,772 357,514 (6,147) 273,655
Net income 37,613 37,613
Cash dividends on common
stock, $1.75 per share (14,528) (14,528)
Dividend declared, but not
paid, $.25 per share (2,081) (2,081)
Treasury stock sold under
stock option plans 44 1,189 1,277 2,466
Treasury stock issued under
stock participation plan
and stock bonuses 1 35 16 51
Foreign currency translation
adjustment (10,875) (10,875)
------ ------- ------- --------- ------ --------- --------- ---------
Balance, April 30, 1993 11,769 (3,447) 11,769 (93,029) 6,065 378,518 (17,022) 286,301
Net income 31,207 31,207
Cash dividends on common
stock, $1.75 per share (14,463) (14,463)
Dividend declared, but not
paid, $.25 per share (2,069) (2,069)
Treasury stock acquired (56) (3,422) (3,422)
Treasury stock sold under
stock option plans 8 228 202 430
Treasury stock issued under
stock participation plan
and stock bonuses 3 74 102 176
Foreign currency translation
adjustment (5,078) (5,078)
------ ------- ------- --------- ------ --------- --------- ---------
Balance, April 30, 1994 11,769 (3,492) $11,769 $(96,149) $6,369 $393,193 $(22,100) $293,082
====== ======= ======= ========= ====== =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
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Notes to Consolidated Financial Statements
NCH Corporation and Subsidiaries
=========================================================================
1. Summary of Significant Accounting Policies
Principles of consolidation - The consolidated financial statements
include the accounts of NCH Corporation and its majority owned
subsidiaries (the "Company"). Significant intercompany transactions and
balances have been eliminated. A February fiscal year-end is used for
most international subsidiaries in order to meet reporting requirements.
Foreign currency translation - With the exception of hyper-
inflationary countries, all assets and liabilities of operations outside
the United States are translated into U.S. dollars at period-end exchange
rates, and income and expenses are translated at average rates for the
year. Gains and losses resulting from translation, as well as gains and
losses from foreign exchange contracts hedging the net assets of foreign
subsidiaries, are included in the foreign currency translation adjustment
component of stockholders' equity. Gains and losses from foreign exchange
contracts hedging specific intercompany foreign currency commitments are
deferred and accounted for as part of the hedged transaction. The hyper-
inflationary countries have been translated into U.S. dollar equivalents
as follows: current assets (except for inventories), current liabilities,
long-term debt and other liabilities at period-end exchange rates;
inventories, property, other assets, capital stock and retained earnings
at historical rates; income and expense items at average rates for the
year,except for cost of sales and depreciation expense, which are
translated at historical rates. Gains and losses resulting from
translation are recognized in the income statement as expense or income in
the current period. Exchange adjustments resulting from foreign currency
transactions are recognized as expense or income in the current period for
all countries.
Cash and cash equivalents and marketable securities - Cash and cash
equivalents include cash on hand, cash in banks and all highly liquid
investments with a maturity of three months or less at the time of
purchase. Cash equivalents and marketable securities are stated at
amortized cost plus accrued interest.
Inventories - Raw materials, sales supplies and purchased finished
goods are stated at a moving average cost, which approximates cost on a
first-in, first-out basis and is not in excess of market value.
Manufactured finished goods are stated at an amount approximating cost of
manufacturing, which is not in excess of net realizable value.
Property, plant and equipment - These assets are recorded at cost.
When these assets are disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss
is included in income during that year. The cost of maintenance and
repairs is charged to expense as incurred, whereas expenditures that
substantially increase the useful lives of plant or equipment are
capitalized.
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Depreciation - Depreciation on buildings and equipment is provided for
financial statement purposes using the straight-line method over the
estimated useful lives of the related assets. Depreciation on certain
buildings and equipment is provided for income tax purposes using
accelerated methods.
Research and development - Research and development costs, which are
included in the costs of laboratory operations, are charged to expense as
incurred. Research and development costs, however, cannot be separately
identified from the total laboratory costs. Total laboratory costs
amounted to approximately $4.4 million in 1994, $3.9 million in 1993 and
$3.4 million in 1992.
Income taxes - Effective May 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
This statement requires a change from the deferred method under APB
Opinion 11 to the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred income taxes are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Prior to the current year,
deferred income taxes were provided under the accounting rules then in
effect. State income tax has been included in the provision for income
taxes and income taxes payable.
Treasury stock - Treasury stock is stated at cost.
Retirement plans - The Company's policy is to fund its qualified
retirement type plans as accrued. The cost of these retirement benefits
for past service has been fully funded. Non-qualified retirement plans
are not funded, but provision for the estimated liabilities arising from
these plans has been made in the consolidated financial statements.
Postretirement benefits other than pensions - The Company charges to
expense the estimated future costs of retiree health care benefits during
the years that employees render service. The postretirement health care
benefit plan is not funded.
Stock options - The Company issues shares from its treasury as options
are exercised. When an option is exercised, treasury stock is credited
with the average cost of the treasury shares issued, and additional paid-
in capital is charged or credited for the difference between the option
price and the average cost of the treasury shares. No charge to income is
made in connection with the stock option plan.
Earnings per share - Earnings per share is computed by dividing net
income by the weighted average number of shares outstanding during each
year. The weighted average number of shares outstanding for the years
ended April 30, 1994, 1993 and 1992, was 8,278,000, 8,298,000 and
8,261,000 shares, respectively. Any dilution of earnings per share that
might result from the exercise of presently outstanding stock options is
not material.
Reclassifications - Certain prior year amounts have been reclassified
to conform to current year presentation.
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2. Consolidated International Subsidiaries
At April 30, 1994 and 1993, the parent Company's investment in
consolidated international subsidiaries amounted to $40,782,000 and
$37,923,000. The current year consolidated financial statements include
international subsidiaries' assets of $153,365,000, liabilities of
$67,221,000, and net income of $10,733,000, after allocation of corporate
expenses and excluding intercompany sales and profits. For the prior year
these subsidiaries had assets of $166,776,000, liabilities of $63,336,000,
and net income of $18,583,000.
3. Income Taxes
The following are the components of the provision for income taxes (in
thousands of dollars):
1994 1993 1992
-------- -------- --------
U.S. Federal
- - ------------
Current $ 9,896 $ 7,910 $ 8,570
Deferred (4,469) (721) (2,051)
Foreign
- - -------
Current 14,214 17,635 19,000
Deferred (107) (115) (721)
State 1,349 1,217 1,822
- - ----- ------- ------- -------
$20,883 $25,926 $26,620
======= ======= =======
Effective May 1, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." This
statement requires that deferred income taxes reflect the tax consequences
on future years of differences between the tax bases of assets and
liabilities and their financial reporting amounts. The effect of adopting
SFAS No. 109 was not material to the Company's financial position as of
May 1, 1993, or to the operating results for the year ended April 30,
1994. Under SFAS No. 109, deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred taxes of the change in the
U.S. federal income tax rate from 34% to 35% was not material to the
operating results for the year ended April 30, 1994.
The components of deferred tax assets and liabilities as of April 30,
1994 are as follows (in thousands of dollars):
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Deferred tax assets:
Allowance for doubtful accounts $ 4,098
Inventory related 2,820
Insurance related 1,893
Accrued expenses 3,549
Retirement and deferred compensation plans 27,378
Foreign operating loss carryforwards 739
Valuation allowance (243)
-------
40,234
-------
Deferred tax liabilities:
Depreciation 4,001
Other 911
-------
4,912
-------
Net deferred tax asset $35,322
=======
A valuation allowance has been provided for certain foreign net
operating loss carryforwards which are estimated to expire before they are
utilized.
Prior to 1994, deferred income taxes were provided under the
accounting rules then in effect. The deferred U.S. federal income tax
expense (benefit) on the income statement consisted of the following (in
thousands of dollars):
1993 1992
-------- --------
Employee benefit plans $(574) $(2,008)
Inventory (98) 183
Safe harbor leases - (372)
Depreciation (33) (43)
Other (16) 189
----- -------
$(721) $(2,051)
===== =======
The following is a reconciliation of the difference between the U.S.
statutory rate and the effective tax rate:
1994 1993 1992
-------- -------- --------
U.S. statutory rate 35.0% 34.0% 34.0%
Tax exempt interest (2.3) (1.7) (1.8)
Other .2 .5 .6
Effect of international
operations 5.6 6.8 5.8
Effect of state income
taxes 1.6 1.2 1.7
----- ----- -----
Effective tax rate 40.1% 40.8% 40.3%
===== ===== =====
<PAGE>
<PAGE>
The Company files a consolidated U.S. federal income tax return with
its domestic subsidiaries. International subsidiaries file tax returns in
countries of their incorporation. Certain of these subsidiaries have
operating loss carryforwards totaling approximately $2,559,000, which will
expire between 1995 and 2004. The accumulated undistributed earnings of
international subsidiaries not included in the consolidated U.S. federal
income tax return approximated $69,378,000 at April 30, 1994, $83,280,000
at April 30, 1993 and $89,285,000 at April 30, 1992. No provision is made
in the accompanying consolidated financial statements for the estimated
taxes that would result on distribution of the accumulated undistributed
earnings since the Company intends to invest indefinitely in the
operations of these subsidiaries. For 1994, 1993 and 1992, worldwide
income tax payments amounted to $24,176,000, $24,205,000 and $26,324,000,
respectively.
4. Inventories
A summary of inventories at April 30 follows (in thousands of
dollars):
1994 1993
-------- --------
Raw materials $13,849 $12,611
Finished goods 67,676 57,333
Sales supplies 2,109 2,247
------- ------
$83,634 $72,191
======= =======
5. Property, Plant and Equipment
Property, plant and equipment at April 30 consists of the following
(in thousands of dollars):
1994 1993
-------- --------
Land $ 11,942 $ 12,098
Buildings 74,406 72,724
Equipment 91,651 85,898
-------- --------
$177,999 $170,720
======== ========
Depreciation charged to income was $11,863,000, $12,473,000 and
$11,374,000 for each of the years ended April 30, 1994, 1993 and 1992,
respectively. The estimated useful life of buildings is 25 to 40 years;
equipment is 3 to 10 years.
6. Long-Term Debt
Long-term debt at April 30 consists of the following (in thousands of
dollars):
<PAGE>
<PAGE>
1994 1993
------- -------
Borrowed by domestic companies:
Variable interest industrial revenue bond, secured
by property, at 71.9% of prime. $ 4,700 $ 4,700
French Franc denominated loan secured by preferred
shares in a French subsidiary for the purpose
of hedging the Company's net asset position in
France, with annual installments to be paid
through 1996. 3,702 5,818
Other 80 43
------- -------
8,482 10,561
------- -------
Borrowed by international companies:
Other 183 335
------- -------
8,665 10,896
Less current maturities 1,875 2,101
------- -------
Long-term debt, less current maturities $ 6,790 $ 8,795
======= =======
Maturities of long-term debt for the years following April 30, 1994,
are as follows: 1995 - $1,875,000; 1996 - $1,917,000; 1997 - $29,000; 1998
- - - $29,000; 1999 and thereafter - $4,815,000.
Principal on the industrial revenue bond is due on December 30, 2005,
although the bondholder has an option to put the bond to the Company
annually beginning in 1995.
7. Employee Benefits
Retirement plans - The parent and its domestic subsidiaries have
various qualified retirement type plans covering substantially all
domestic employees. None of these plans have defined benefits. Some of
the international subsidiaries also have non-defined benefit retirement
plans. These plans are funded on a current basis, and the cost of
retirement benefits for past service has been fully funded.
In addition, the Company has non-qualified deferred compensation plans
for the primary purpose of providing retirement benefits. These plans are
not funded, but provision for the estimated liabilities arising from these
plans has been made in the consolidated financial statements.
Expenses for retirement plans, exclusive of interest expense, were
$8,343,000, $4,737,000 and $6,968,000 in the years ended April 30, 1994,
1993 and 1992, respectively.
Postretirement benefits other than pensions - The Company and several
of its domestic subsidiaries initiated a postretirement health care
benefit plan in fiscal 1993, covering substantially all domestic
employees. Eligible retirees receive a specific contribution from the
Company toward the cost of the health plan, which is a supplement to
Medicare. The amount of the contribution is based on years of service
with the Company at retirement. The plan is not funded; retiree health
benefits are paid as covered expenses are incurred. Provision has been
made in the accompanying consolidated financial statements for the net
<PAGE>
<PAGE>
postretirement benefit expense of this plan.
Net postretirement benefit expenses for the years ended April 30 are
as follows (in thousands of dollars):
1994 1993
------ ------
Service cost - benefits earned during the year $ 127 $ 161
Interest cost on accumulated
postretirement benefit obligation 162 160
Net amortization of prior service cost 176 176
------ ------
Net postretirement benefit expense $ 465 $ 497
====== ======
The reconciliation of the accumulated postretirement benefit
obligation to the recorded liability at April 30 is as follows (in
thousands of dollars):
1994 1993
------ ------
Accumulated postretirement benefit obligation
Retirees $ 174 $ 135
Fully eligible active plan participants 1,098 1,111
Other active plan participants 1,285 1,070
------ ------
Total 2,557 2,316
Unrecognized prior service cost (1,643) (1,838)
------ ------
Accrued postretirement benefit liability $ 914 $ 478
====== ======
Measurement of the accumulated postretirement benefit obligation is
based on a 7% assumed discount rate for 1994 and 8% for 1993.
In addition, certain of the Company's non-U.S. subsidiaries have
health care plans for retirees, although many retirees outside of the
United States are covered by government sponsored and administered
programs. Under SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," the effective date for adoption for plans
outside of the United States is no later than fiscal years beginning after
December 15, 1994. The Company has not yet determined when it will adopt
the standard for non-U.S. subsidiary plans, but estimates that its
implementation will not have a material effect on the Company's financial
position or results of operations.
Postemployment benefits - In November 1992, the Financial Accounting
Standards Board issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits." This statement requires recognition of a
liability for certain benefits provided to former or inactive employees
after employment but before retirement. This statement must be adopted no
later than the first quarter of fiscal 1995. Implementation of this
statement is not expected to have a material effect on the Company's
financial position or results of operations.
<PAGE>
<PAGE>
Other - The Company has some split dollar life insurance agreements,
whereby the Company pays a portion of the premiums. The Company has been
granted a security interest in the cash value and death benefit of each
policy, to the extent of the sum of premium payments made by the Company.
Premiums paid by the Company are charged to expense to the extent they
exceed the cash values of each policy.
8. Capital Stock and Options
None of the Company's authorized 500,000 shares of $1 par value
Preferred Stock has been issued.
On April 13, 1994, the directors of the Company declared a regular
quarterly cash dividend of $.25 per share of Common Stock to be paid June
15, 1994, to shareholders of record June 1, 1994.
At April 30, 1994, 1993 and 1992, 761,000, 769,000 and 813,000 shares
of the Company's Common Stock, respectively, were reserved for issuance
under a non-qualified stock option plan which grants options to key
employees and officers. The purchase price under the grant cannot be less
than the market value at the date of grant. The options under such plan
are exercisable in equal amounts at the beginning of the second, third and
fourth year of their lives and expire after five years. Information
relative to the non-qualified stock options for the three years ended
April 30, 1994, is as follows:
<TABLE>
<CAPTION>
(In Thousands Except Per Share Data)
Years Ended April 30,
-------------------------------------------------
1994 1993 1992
---------------- ---------------- --------------
Average Average Average
Number Price Number Price Number Price
of Per of Per of Per
Shares Share Shares Share Shares Share
------ ------ ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of period 154 $59.22 154 $52.83 142 $47.90
Granted 67 53.75 48 68.75 48 59.00
Exercised (8) 47.18 (44) 48.77 (33) 41.78
Canceled or expired (1) 56.65 (4) 44.17 (3) 37.97
----- ------ ----- ------ ---- ------
Outstanding at end
of period 212 $57.97 154 $59.22 154 $52.83
===== ====== ===== ====== ===== ======
</TABLE>
At April 30, 1994, 1993 and 1992, 20,000, 21,000 and 23,000 shares
of Treasury Stock, respectively, were reserved for issuance to employees
under a stock participation plan.
<PAGE>
<PAGE>
9. Interest Costs
During the years ended April 30, 1994, 1993 and 1992, interest costs,
including interest expense on non-funded retirement plans, amounting to
$5,115,000, $4,695,000 and $7,970,000, respectively, were expensed as
incurred. For the same periods, interest payments were $4,200,000,
$3,182,000 and $6,675,000, respectively.
10. Leases
At April 30, 1994, the Company and its subsidiaries had a number of
noncancellable leases for various office and warehouse facilities. The
majority of these agreements expire at various times through 1999, and
substantially all include renewal provisions. The amount of other
obligations assumed, such as payment of property taxes and maintenance, is
nominal. Total rent expense for 1994, 1993 and 1992 (including operating
leases on data processing equipment, trucks and trailers, and office
equipment) was approximately $8,538,000, $9,482,000 and $9,704,000,
respectively.
The minimum aggregate rentals under the terms of noncancellable
operating leases for future years are: 1995 - $6,353,000; 1996 -
$5,074,000; 1997 - $3,704,000; 1998 - $3,650,000; and a total of
$4,889,000 for 1999 and thereafter.
11. Contingent Liabilities
The Company and its subsidiaries are engaged in a variety of legal
proceedings arising in the ordinary course of business, including some
concerning environmental matters. In the opinion of Management, the
ultimate liabilities resulting from these proceedings will not have a
material adverse effect on the Company's financial position or operating
results.
At April 30, 1993, the Company had a forward exchange contract with a
notional amount of approximately $600,000. This contract had a maturity
of less than one year and the counterparty was a major domestic financial
institution. There were no such contracts at April 30, 1994. Gains or
losses resulting from contracts hedging net foreign currency positions
have been included in the foreign currency translation adjustment
component of stockholders' equity. Gains and losses from all other
contracts are included in the Consolidated Statements of Income. In
addition, at April 30, 1994, the Company had standby letters of credit
outstanding totaling $8,890,000, which guarantee payment to certain
insurance carriers.
12. Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, notes payable to
banks and current maturities of long-term debt approximate fair value,
because of the short maturities of these financial instruments. The fair
values of marketable securities are estimated based on the quoted market
prices obtained from brokers. The fair value of long-term debt, less
current maturities, is estimated based on the discounted value of future
cash flows, using the Company's current borrowing rate for loans of
comparable terms and maturities.
<PAGE>
<PAGE>
Using the above methods and assumptions, the estimated fair values of
the Company's financial instruments at April 30 are as follows (in
thousands of dollars):
1994 1993
-------------------- ------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ---------- -------- ---------
Assets:
Cash and cash equivalents $ 18,754 $ 18,754 $28,620 $28,620
Marketable securities 105,784 101,687 94,877 95,361
Liabilities:
Notes payable to banks 9,745 9,745 3,241 3,241
Current maturities
of long-term debt 1,875 1,875 2,101 2,101
Long-term debt,
less current maturities 6,790 5,595 8,795 7,685
13. Segment and Geographic Area Information
The Company's operations are predominantly within one business
segment, which includes specialty chemicals, fasteners, welding supplies,
plumbing and electronic parts, and safety supplies. Substantially all of
these products are sold for repair, maintenance or industrial supply use.
Financial information by geographic area, in thousands of dollars,
follows for the years ended April 30:
United Other Consoli-
States Europe International dated
------ ------ ------------- ---------
1994
Net Sales $381,949 $222,214 $75,824 $679,987
Net Income (Loss) 20,474 12,818 (2,085) 31,207
Identifiable Assets 218,573 117,316 36,049 371,938
Corporate Assets 113,285
1993
Net Sales $336,471 $267,280 $76,186 $679,937
Net Income 19,030 16,952 1,631 37,613
Identifiable Assets 194,976 131,986 34,790 361,752
Corporate Assets 105,624
1992
Net Sales $313,256 $271,388 $86,161 $670,805
Net Income 17,332 20,721 1,382 39,435
Identifiable Assets 183,121 155,012 37,234 375,367
Corporate Assets 95,460
Intercompany sales and profits have been eliminated from the above
schedule. Corporate expenses were allocated between the geographic areas.
Identifiable assets are those identified with the operations in each
geographic area. Corporate assets consist primarily of portions of cash
and cash equivalents and marketable securities.
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and Board of Directors
NCH Corporation:
======================================================================
We have audited the accompanying consolidated balance sheets of NCH
Corporation and subsidiaries as of April 30, 1994 and 1993, and the
related consolidated statements of income, stockholders' equity, and
cash flows for each of the years in the three-year period ended April
30, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of NCH Corporation and subsidiaries as of April 30, 1994 and 1993, and
the results of their operations and their cash flows for each of the
years in the three-year period ended April 30, 1994, in conformity with
generally accepted accounting principles.
/s/KPMG Peat Marwick
----------------------
Dallas, Texas
June 2, 1994
<PAGE>
<PAGE>
RESPONSIBILITY FOR FINANCIAL REPORTING
=========================================================================
The management of the Company is responsible for the financial
information and representations contained in the financial statements and
other sections of the annual report. The financial statements have been
prepared in conformity with generally accepted accounting principles, and
therefore include informed estimates and judgments.
The Company's system of internal control is designed to provide
reasonable, but not absolute, assurance as to the integrity, objectivity
and reliability of the financial records and the safeguarding of assets.
Management believes that, within a cost-effective framework, the
Company's accounting controls provide reasonable assurance that material
errors or irregularities are prevented or would be detected within a
relatively short period of time. The possibility exists, however, that
errors or irregularities may occur and not be detected. The Company has
a program of internal audits and follow-up, covering separate Company
operations and functions in the U.S. and its international subsidiaries.
The Board of Directors pursues its review of the audit function,
internal controls and the financial statements largely through its Audit
Committee, which consists solely of directors who are not employees of
the Company. The Audit Committee periodically meets with management, the
independent auditors and internal auditors with regard to their
respective responsibilities. Both KPMG Peat Marwick and the internal
auditors have full access to the Audit Committee. They meet with the
committee, without management present, to discuss the scope and results
of their examination, including internal control and financial reporting
matters.
Management also recognizes its responsibility for fostering a strong
ethical climate so that the Company's affairs are conducted according to
the highest standards of personal and corporate conduct. This
responsibility is characterized and reflected in the Company's code of
corporate conduct, which is publicized throughout the Company. The code
of conduct addresses, among other things, the necessity of ensuring open
communication within the Company; potential conflicts of interests;
compliance with all domestic and foreign laws, including those relating
to financial disclosure; and the confidentiality of proprietary
information. The Company maintains a systematic program to assess
compliance with these policies.
/s/ Irvin L. Levy /s/ Tom Hetzer
----------------------- -----------------------
Irvin L. Levy Tom Hetzer
Chief Executive Officer Chief Financial Officer
<PAGE>
<PAGE>
Selected Unaudited Quarterly Data
(In Thousands Except Per Share Data)
Years Ended April 30,
Quarter
---------------------------------------------
First Second Third Fourth
-------- -------- -------- --------
1994
Net Sales $169,649 $163,160 $170,615 $176,563
Operating Income 12,239 14,714 9,296 14,135
Net Income 7,561 9,267 5,726 8,653
Earnings Per Share $.91 $1.12 $.69 $1.05
1993
Net Sales $175,033 $169,431 $168,736 $166,737
Operating Income 18,171 15,697 12,551 13,898
Net Income 11,095 9,769 7,653 9,096
Earnings Per Share $1.34 $1.18 $.92 $1.09
Earnings per share for each period is calculated based on the
average number of shares outstanding during the period.
Market and Dividend Information
NCH Corporation stock is traded on the New York Stock Exchange. The
high and low prices by quarter are shown for the past two years in the
schedule below.
Cash dividends paid during the fiscal year ended April 30, 1994,
amounted to $16.5 million compared to $16.6 million and $8.3 million in
fiscal years 1993 and 1992, respectively. On April 13, 1994, a dividend
of $.25 per share was declared, payable June 15, 1994. A summary of the
quarterly dividends per share for the past two years is set forth in the
schedule below.
Common Stock Prices Dividends Per Share
----------------------------------- -------------------------
1994 1993 Declared Paid
--------------- --------------- ----------- ------------
Quarter High Low High Low 1994 1993 1994 1993
- - ------- ------ ------ ------ ------ ---- ---- ----- -----
First 68 59 1/2 68 1/8 62 1/2 $ .25 $ .25 $ .25 $ .25
Second 65 3/8 55 1/2 74 1/2 66 3/4 $ .25 $ .25 $ .25 $ .25
Third 61 52 1/8 74 62 $1.25 $1.25 $1.25 $1.25
Fourth 65 5/8 56 5/8 73 59 5/8 $ .25 $ .25 $ .25 $ .25
As of June 1, 1994, there were 728 holders of record of the
Company's Common Stock, which includes several brokerage firms that hold
shares of the Company's stock for an estimated 3,800 investors.
<PAGE>
<PAGE>
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
NCH Corporation is the parent company of numerous wholly-owned
subsidiaries engaged in the business of marketing an extensive line of
maintenance, repair and supply products. At the close of the last fiscal
year, seventeen of these subsidiaries were operating domestically and 115
in foreign countries. The Company is also the parent of several wholly-
owned subsidiaries that market various other products. All such
subsidiaries considered in the aggregate as a single subsidiary
would not constitute a significant subsidiary of NCH Corporation, and
therefore are not listed here.
As of the close of the last fiscal year, the following corporations
were not wholly-owned by NCH Corporation.
Immediate Parent and Jurisdiction
Name of Subsidiary Percentage of Ownership of Incorporation
- - ------------------ ----------------------- ----------------
NCH Hua Yang Ltd. 51% NCH Corporation People's Republic
of China
Sunco Chemicals Ltd. 51% NCH Corporation India
<PAGE>
<PAGE>
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
NCH Corporation:
We consent to the incorporation by reference in the registration
statements (No. 33-65206 and No. 2-78875) on Form S-8 of NCH
Corporation of our reports dated June 2, 1994, relating to the
consolidated balance sheeets of NCH Corporation and subsidiaries
as of April 30, 1994 and 1993, and the related consolidated
statements of income, stockholders' equity, and cash flows and
related schedules for each of the years in the three-year period
ended April 30, 1994, which reports appear or are incorporated by
reference in the April 30, 1994 Annual Report on Form 10-K of NCH
Corporation.
/s/ KPMG Peat Marwick
Dallas, Texas
July 19, 1994
<PAGE>
<PAGE>
NCH CORPORATION AND SUBSIDIARIES
EXHIBIT 99
DEFINITIVE PROXY STATEMENT
REGARDING THE COMPANY'S 1994 ANNUAL MEETING OF
STOCKHOLDERS
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NCH Corporation
- - ---------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NCH Corporation
- - ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11;*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, schedule or registration statement no.:
3) Filing party:
4) Date filed:
<PAGE>
<PAGE>
[LOGO]
2727 Chemsearch Boulevard
Irving, Texas 75062
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 28, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
NCH Corporation will be held in Gallery I of the Hotel Crescent Court (at
the corner of Pearl and Cedar Springs Streets), Dallas, Texas, on Thursday,
the 28th day of July, 1994, at 10:00 a.m., Central Daylight Time, for the
following purposes:
1. To elect two Class III directors of NCH to hold office until the next
annual election of Class III directors by stockholders or until their
respective successors are duly elected and qualified.
2. In accordance with the requirements of Section 162(m) of the Internal
Revenue Code, to approve an incentive bonus plan for members of the
Executive Committee of the Board of Directors.
3. To ratify the appointment of KPMG Peat Marwick, Certified Public
Accountants, to be the independent auditors of NCH for the fiscal
year ending April 30, 1995.
4. To transact such other business as may properly come before the
meeting or any adjournments of the meeting.
The Board of Directors has fixed the close of business on Wednesday,
June 1, 1994, as the record date for determining stockholders entitled to
vote at and to receive notice of the annual meeting.
Whether or not you expect to attend the meeting in person, you are
urged to complete, sign, and date the enclosed form of proxy and return it
promptly so that your shares of stock may be represented and voted at the
meeting. If you are present at the meeting, your proxy will be returned to
you if you so request.
/s/ Joe Cleveland,
Secretary
Dated: June 22, 1994
<PAGE>
<PAGE>
[LOGO]
2727 Chemsearch Boulevard
Irving, Texas 75062
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on July 28, 1994
Dated: June 22, 1994
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the management of, and on
behalf of, NCH Corporation, a Delaware corporation ("NCH"), to be voted at
the Annual Meeting of the Stockholders of NCH, to be held Thursday, July
28, 1994 (the "Meeting"), at the time and place and for the purposes set
forth in the accompanying Notice of Annual Meeting. When properly executed
proxies in the accompanying form are received, the shares represented
thereby will be voted at the Meeting in accordance with the directions
noted on the proxies; if no direction is indicated, then such shares will
be voted for the election of the directors and in favor of the proposals
set forth in the Notice of Annual Meeting attached to this Proxy Statement.
The enclosed proxy confers discretionary authority to vote with
respect to any and all of the following matters that may come before the
Meeting: (1) matters that NCH's Board of Directors does not know a
reasonable time before the Meeting are to be presented at the Meeting; and
(2) matters incidental to the conduct of the Meeting. Management does not
intend to present any business for a vote at the Meeting other than the
matters set forth in the accompanying Notice of Annual Meeting, and it has
no information that others will do so. If other matters requiring the vote
of the stockholders properly come before the Meeting, then, subject to the
limitations set forth in the applicable regulations under the Securities
Exchange Act of 1934, it is the intention of the persons named in the
attached form of proxy to vote the proxies held by them in accordance with
their judgment on such matters.
Any stockholder giving a proxy has the power to revoke that proxy at
any time before it is voted. A proxy may be revoked by filing with the
Secretary of NCH either a written revocation or a duly executed proxy
bearing a date subsequent to the date of the proxy being revoked. Any
stockholder may attend the Meeting and vote in person, whether or not such
stockholder has previously submitted a proxy.
In addition to soliciting proxies by mail, officers and regular
employees of NCH may solicit the return of proxies. Brokerage houses and
other custodians, nominees, and fiduciaries may be requested to forward
solicitation material to the beneficial owners of stock. This Proxy
Statement and the accompanying proxy are first being sent or given to NCH's
stockholders on or about June 24, 1994.
NCH will bear the cost of preparing, printing, assembling, and mailing
the Notice of Annual Meeting, this Proxy Statement, the enclosed proxy, and
<PAGE>
<PAGE>
any additional material, as well as the cost of forwarding solicitation
material to the beneficial owners of stock.
VOTING RIGHTS
The record date for determining stockholders entitled to notice of and
to vote at the Meeting is the close of business on June 1, 1994. On that
date there were 8,280,040 shares issued and outstanding of NCH's $1.00 par
value common stock ("Common Stock"), which is NCH's only class of voting
securities outstanding. Each share of NCH's Common Stock is entitled to
one vote in the matter of election of directors and in any other matter
that may be acted upon at the Meeting. Neither NCH's certificate of
incorporation nor its bylaws permits cumulative voting. The presence, in
person or by proxy, of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the Meeting is necessary to constitute
a quorum at the Meeting, but in no event will a quorum consist of less than
one-third of the shares entitled to vote at the Meeting. The affirmative
vote of a plurality of the shares of Common Stock represented at the
Meeting and entitled to vote is required to elect directors. All other
matters to be voted on will be decided by a majority of the shares of
Common Stock represented at the meeting and entitled to vote. Abstentions
and broker nonvotes are each included in determining the number of shares
present at the meeting for purposes of determining a quorum. Abstentions
and broker nonvotes have no effect on determining plurality, except to the
extent that they affect the total votes received by any particular
candidate. With respect to the proposal to approve an incentive bonus plan
for members of the Executive Committee of the Board of Directors,
abstentions have the effect of votes against the proposal and broker
nonvotes are not counted.
ELECTION OF DIRECTORS
NCH's Board of Directors consists of seven members, divided into three
classes: Class I (two directors), Class II (three directors), and Class
III (two directors). Only the Class III positions are due for nomination
and election at the Meeting. The Class I and Class II positions will be
due for nomination and election at the annual meetings of stockholders to
be held in 1995 and 1996, respectively.
The intention of the persons named in the enclosed proxy, unless such
proxy specifies otherwise, is to vote the shares represented by such proxy
for the election of Jerrold M. Trim and Irvin L. Levy as the Class III
directors. Messrs. Jerrold M. Trim and Irvin L. Levy have been nominated
to stand for re-election by the Board of Directors until their terms expire
or until their respective successors are duly elected and qualified.
Messrs. Jerrold M. Trim and Irvin L. Levy are presently directors of NCH.
Messrs. Irvin, Lester, and Milton Levy are brothers. Robert L. Blumenthal
is a first cousin of Messrs. Irvin, Lester, and Milton Levy. Certain
information regarding each nominee and director is set forth below. The
number of shares beneficially owned by each nominee is listed under
"Security Ownership of Principal Stockholders and Management."
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Class I Directors
J. Rawles Fulgham, Jr., 66, has been a director of NCH since 1981. Mr.
Fulgham was an executive director of Merrill Lynch Private Capital
Inc. from 1982 until 1989, when he assumed his current position as a Senior
Advisor to Merrill Lynch & Co., Inc. He is also a director of Dresser
Industries, Inc., Indresco, Inc., Republic Financial Services, Inc., and
BancTec, Inc., all of which are located in Dallas, Texas. Mr. Fulgham is a
member of the Audit Committee and the Compensation Committee.
Lester A. Levy, 71, has been a director and officer of NCH since 1947,
and since 1965 has served as Chairman of the Board of Directors of NCH. He
is either the president or a vice president of substantially all of NCH's
subsidiaries. Mr. Levy is also a director of A.H. Belo Corporation,
Dallas, Texas. Mr. Levy is a member of the Stock Option Committee and the
Executive Committee.
Class II Directors and Nominees
Robert L. Blumenthal, 63, has engaged in the practice of law since
1957. He is a partner at the Dallas law firm of Carrington, Coleman,
Sloman & Blumenthal, L.L.P., which serves as NCH's legal counsel.
Thomas B. Walker, Jr., 70, has been a director of NCH since 1987. He
was a general partner of Goldman, Sachs & Co. from 1968 until 1984 when he
assumed his current position as a limited partner of The Goldman Sachs
Group, L.P. Mr. Walker is also a director of Sysco Corporation, A.H. Belo
Corporation, and Central and South West Corporation. He is a member of the
Audit Committee and the Compensation Committee.
Milton P. Levy, Jr., 68, has been a director and officer of NCH since
1947, and since 1965 has served as Chairman of the Executive Committee of
NCH. He is either the president or a vice president of substantially all
of NCH's subsidiaries. Mr. Levy is also an advisory director of Texas
Commerce Bank, N.A. He is a member of the Stock Option Committee and the
Executive Committee.
Class III Directors
Jerrold M. Trim, 57, has been a director of NCH since 1980 and is the
president and majority shareholder of Windsor Association, Inc., which is
engaged primarily in investment consulting services. He is also a general
partner of Chiddingstone Management Company and The Penshurst Fund, which
are limited partnerships that invest in marketable securities. He is a
member of the Audit Committee and the Compensation Committee.
Irvin L. Levy, 65, has been a director and an officer of NCH since
1950, and has served as NCH's President since 1965. He is either president
or a vice president of substantially all of NCH's subsidiaries. Mr. Levy
is a member of the Stock Option Committee and the Executive Committee. Mr.
Levy is also a director of NationsBank of Texas, N.A.
If either of the above nominees for Class III directors should become
unavailable to serve as a director, then the shares represented by proxy
will be voted for such substitute nominees as may be nominated by the Board
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of Directors. NCH has no reason to believe that either of the above
nominees is, or will be, unavailable to serve as a director.
Meeting Attendance and Committees of the Board
NCH has audit, compensation, executive, and stock option committees of
the Board, whose members are noted above. During the last fiscal year, the
Board of Directors met on five occasions, the Compensation Committee met
twice, the Audit Committee met once, the Executive Committee met or acted
by consent at least 33 times, and the Stock Option Committee met once. NCH
does not have a standing nominating committee of the Board. Nominees to
the Board are selected by the entire Board.
The Audit Committee of the Board reviews the scope of the independent
auditors' examinations and the scope of activities of NCH's internal
auditors. Additionally, it receives and reviews reports of NCH's
independent auditors and internal auditors. The Audit Committee also meets
(without management's presence, if the Audit Committee so desires) with the
independent auditors and members of the internal auditing staff, receives
recommendations or suggestions for change, and may initiate or supervise
any special investigations it may choose to undertake.
The Compensation Committee recommends to the Board of Directors the
salaries of Messrs. Irvin, Lester, and Milton Levy.
The Executive Committee possesses all of the powers of the Board of
Directors between meetings of the Board.
The Stock Option Committee of the Board determines those employees of
NCH and its subsidiaries who will receive stock options and the amount of
such options.
PROPOSAL TO APPROVE EXECUTIVE COMMITTEE
INCENTIVE BONUS PLAN
Section 162(m), which was added to the Internal Revenue Code in August
1993, denies the deduction for compensation over $1 million per year paid
by a publicly traded company to the chief executive and the four other most
highly compensated officers. Compensation based on performance goals and
approved by the stockholders is excluded from the limitation on deductions
over $1 million. To qualify for the exclusion: (i) the compensation must
be paid solely for achieving performance goals; (ii) the performance goals
must be established by a compensation committee consisting of outside
directors; (iii) the terms under which the compensation will be paid,
including the performance goals, must be described to and approved by
stockholders; and (iv) prior to payment, the compensation committee must
certify that the performance goals and other terms were satisfied.
To qualify all compensation paid to the Executive Committee of the
Board of Directors as a deductible expense under Section 162(m) of the
Internal Revenue Code, on April 28, 1994, the Compensation Committee of the
Board of Directors adopted an incentive bonus plan (the "Bonus Plan"),
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subject to stockholder approval, for members of the Executive Committee.
The Bonus Plan provides a formula for determining the amounts of
annual bonuses to be paid to each member of the Executive Committee. Bonus
amounts will depend on the amount by which NCH's net income after taxes,
but before accrual for any bonus under the Bonus Plan, for a particular
fiscal year increases over its net income for the preceding fiscal year.
If net income increases less than 10%, then no bonus will be paid.
Increases from 10% to less than 14% will result in payment of a $225,000
bonus to each member of the Executive Committee. Increases from 14% to
less than 16% will result in payment of a $300,000 bonus to each Executive
Committee member. Increases of 16% or more will result in payment of a
$375,000 bonus to each member of the Executive Committee.
The Bonus Plan prohibits amendment of its terms to increase the cost
of the Bonus Plan to NCH or to change the persons to whom bonuses will be
paid under the Bonus Plan without a vote of NCH's stockholders.
The following table summarizes the amounts that would have been
received by or allocated to each member of the Executive Committee for the
last three completed fiscal years had the Bonus Plan been in effect.
NEW PLAN BENEFITS
Executive Committee Incentive Bonus Plan
Dollar
Name and Position Value ($)
----------------- ---------
Irvin L. Levy, President 0
Lester A. Levy, Chairman of the Board 0
Milton P. Levy, Jr., Chairman of the Executive Committee 0
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
Directors who are not executive officers of NCH receive compensation
of $25,000 per annum and $1,000 for each meeting of the Board of Directors
or Board committee attended. All other directors receive $1,000 for each
such meeting attended. Members of the Stock Option Committee and Executive
Committee are not compensated separately for their services on such
committees.
Report on Executive Compensation
Responsibility for Executive Compensation
Three outside directors, as the Compensation Committee of NCH
(Messrs. Fulgham, Trim, and Walker), have primary responsibility for
recommending to the Board the executive compensation program for Messrs.
Irvin, Lester, and Milton Levy. The Compensation Committee recommends to
the Board an annual aggregate base compensation for the Office of the
Executive Committee and, pending shareholder approval of the Executive
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Committee Bonus Plan, is responsible for administering and approving
incentive compensation for the Office of the Executive Committee. After
Board approval of the Compensation Committee's recommendation for aggregate
base compensation (with Messrs. Irvin, Lester, and Milton Levy abstaining),
the Messrs. Levy divide the compensation of the Executive Committee among
themselves. Messrs. Irvin, Lester, and Milton Levy are responsible for
administering the compensation program for all other officers of NCH.
Executive Compensation Strategy
With respect to compensation of all key executives other than
Messrs. Irvin, Lester, and Milton Levy, NCH's strategy is generally as
follows:
Attract and retain key executives by delivering a market
competitive rate of base pay. Market competitive rates of pay are
determined by reviewing compensation data from other companies
that resemble NCH in terms of lines of business, size, scope, and
complexity.
Provide salary increases to key executives based on their
individual effort and performance. In addition to the
individual's experience, job duties, and performance, annual
increases are influenced by NCH's overall performance.
Provide annual incentive opportunities based on objectives that
NCH feels are critical to its success during the year. Target
incentive levels are set on an individual basis and actual awards
are made at the Executive Committee's discretion.
Provide long-term incentives to key employees so that employees
are focused on activities and decisions that promote NCH's
long-term financial and operational success. To meet this
objective, NCH offers stock options to certain key employees.
Options are generally granted for a period of five years at a
price that is at least equal to the fair market value of the
Common Stock at the time of grant. Options vest in equal
increments over a three-year period from the time of grant.
Compensation of Messrs. Irvin, Lester, and Milton Levy
The Compensation Committee occasionally seeks assistance and relies
on compensation data supplied by an outside compensation consulting firm to
determine the competitiveness of NCH's compensation programs. Based on
survey and proxy analyses performed by the consulting firm, the
Compensation Committee believes that the aggregate compensation for the
Office of the Executive Committee to be at the 75th percentile of total
direct compensation (base salary plus annual incentives plus present value
of long-term incentives granted) in chemical companies and other industrial
companies of similar size. Given the tenure and depth of experience of the
Office of the Executive Committee, the Compensation Committee feels that
this is an appropriate competitive level of compensation. All of the
companies in the peer group in NCH's performance graph on page 10 of this
Proxy Statement are included in the proxy analysis performed by the
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consulting firm. NCH's performance in sales and earnings in the then
current economic and competitive environment, adjusted for currency
fluctuations, is considered in setting executive compensation, although no
formula or preset goal is used.
NCH has adopted a separate strategy with respect to the incentive
compensation of the Office of the Executive Committee (Messrs. Irvin,
Lester, and Milton Levy). Since these individuals are very significant
long-term stockholders of NCH, some of the typical approaches to executive
compensation that exist in the marketplace are not necessarily relevant at
NCH. Long-term incentive programs are implemented for senior executives to
create a link between the corporation's performance and the executive's own
personal wealth. In light of the shareholding of Messrs. Irvin, Lester,
and Milton Levy, they are already significantly impacted financially by
NCH's overall performance. The Compensation Committee generally feels that
in this situation any long-term incentive program should be tied to salary
or bonus.
In terms of short-term incentive compensation, NCH is submitting the
Executive Committee Bonus Plan for stockholder approval at the Meeting.
Since aggregate compensation for the Office of the Executive Committee
could result in a member receiving over $1 million in annual compensation,
NCH finds it necessary to comply with the provisions of Section 162(m) of
the Internal Revenue Code to qualify for tax deductibility all compensation
paid to the Executive Committee. NCH's policy is to qualify to the extent
practicable all compensation paid to its executive officers for tax
deductibility in accordance with Section 162(m). The stockholders must
approve the Bonus Plan before it goes into effect.
Conclusion
The Compensation Committee believes that current compensation
arrangements in place at NCH are reasonable and competitive given NCH's
size and status and the current regulatory environment surrounding
executive compensation. The base salary program allows NCH to attract and
retain management talent. In addition, for those employees who are
incentive eligible, such systems continue to provide the necessary link
between the attainment of NCH's performance objectives and the compensation
received by executives.
Executive Committee &
Compensation Committee Stock Option Committee
---------------------- ----------------------
J. Rawles Fulgham, Jr. Irvin L. Levy
Jerrold M. Trim Lester A. Levy
Thomas B. Walker, Jr. Milton P. Levy, Jr.
The report on executive compensation will not be deemed to be
incorporated by reference into any filing by NCH under the Securities Act
of 1933 or the Securities Exchange Act of 1934, except to the extent that
NCH specifically incorporates the above report by reference.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
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Messrs. Irvin, Lester, and Milton Levy are members of the Executive
Committee of NCH's Board of Directors, which committee determines most
salaries and promotions with respect to officers of NCH and its
subsidiaries, and of the Stock Option Committee, which determines those
employees of NCH and its subsidiaries who will receive stock options and
the amount of such options. Messrs. Irvin, Lester, and Milton Levy are
executive officers and employees of NCH.
NCH's Board of Directors (with the subject members abstaining)
determines the salaries of Messrs. Irvin, Lester, and Milton Levy after
recommendation of the Compensation Committee, whose members are J. Rawles
Fulgham, Jr., Jerrold M. Trim, and Thomas B. Walker, Jr.
Executive Compensation
The following table summarizes the compensation paid to Messrs. Irvin,
Lester, and Milton Levy, who together hold the office of the Executive
Committee, and to NCH's two other most highly compensated executive
officers (whose compensation exceeded $100,000 in fiscal 1994) for services
rendered in all capacities to NCH during the fiscal years ended April 30,
1994, 1993, and 1992.
SUMMARY COMPENSATION TABLE
Annual
Compensation(1)
Name and Fiscal ------------------ All Other
Principal Positions Year Salary(2) Bonus Compensation(3)
- - -------------------- ------ --------- ------- ---------------
Irvin L. Levy, President 1994 $ 815,734 $ - $6,016
1993 794,029 - 5,184
1992 778,029 - -
Lester A. Levy, Chairman 1994 822,635 - 5,316
of the Board 1993 748,082 - 5,184
1992 748,650 - -
Milton P. Levy, Jr., Chairman 1994 963,877 - 6,016
of the Executive Committee 1993 1,042,078 5,184
1992 975,808 - -
Thomas F. Hetzer, Vice 1994 153,410 5,725 3,416
President - Finance 1993 135,954 17,000 4,204
1992 125,005 16,000 -
Glen L. Scivally, Vice 1994 151,352 5,250 3,421
President and Treasurer 1993 134,124 15,750 4,571
1992 124,216 20,700 -
- - -------------------------------
(1) Certain of NCH's executive officers receive personal benefits in
addition to annual salary and bonus. The aggregate amounts of the
personal benefits, however, do not exceed the lesser of $50,000 or 10%
of the total of the annual salary and bonus reported for the named
executive officer.
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(2) Includes compensation for services as a director (other than Mr.
Hetzer and Mr. Scivally).
(3) The amounts included in this column were contributed to the accounts
of the executives included in the table under NCH's qualified profit
sharing and savings plan. Compensation that would otherwise be
included in this column for fiscal year 1992 has been omitted pursuant
to the phase-in provisions of the executive compensation rules
promulgated by the Securities and Exchange Commission.
Retirement Agreements
NCH has entered into retirement agreements with Messrs. Irvin, Lester,
and Milton Levy that provide for lifetime monthly payments and guarantee
120 monthly payments beginning at death, retirement, or disability.
Payments under these agreements will be $385,000 per year, subject to
adjustment each year after 1993 for increases in the United States Consumer
Price Index for the preceding year.
CERTAIN TRANSACTIONS
NCH has entered into split dollar life insurance agreements with the
sons of Lester A. Levy and Irvin L. Levy who are NCH employees and with
Lester A. Levy's daughter, concerning the purchase of life insurance
policies insuring Irvin L. Levy, Lester A. Levy, and Milton P. Levy, Jr.
The employee or daughter pays the "economic benefit" portion of the premium
(computed under Internal Revenue Code Rulings 55-747 and 66-110) and NCH
pays the rest of the premium. The premium averages approximately $570,000
per year for the remaining premium payment period, estimated to be 15
years. The impact of these policies on after-tax earnings was $98,000 in
fiscal 1994. Because of the cash value build up of the policies, they
should have either no material effect or a positive effect on earnings in
subsequent years. The insurance provides benefits to the above indicated
employees totalling $10,000,000 on the death of combinations of insureds.
NCH has been granted a security interest in the cash value and death
benefit of each policy to the extent of the sum of premium payments made by
NCH. These arrangements are designed so that if the assumptions made as to
mortality experience, policy earnings, and other factors are realized, then
NCH will recover all of its premium payments.
The purpose of the arrangement in addition to providing benefits to
the employees is to provide cash to the families of Messrs. Lester and
Irvin Levy at the approximate time of death of the senior Levys to avoid
their Common Stock being forced on to the market at a potentially
inappropriate time.
FIVE YEAR COMPARISON OF CUMULATIVE TOTAL RETURN
The following graph presents NCH's cumulative stockholder return
during the period beginning April 30, 1989, and ending April 30, 1994. NCH
is compared to the S&P 500 and a peer group consisting of companies that
collectively represent lines of business in which NCH competes. The
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companies included in the peer group index are Betz Laboratories, Inc., The
Dexter Corporation, Ecolab Inc., Lawson Products, Inc., Nalco Chemical
Company, National Service Industries, Inc., Petrolite Corporation, Premier
Industrial Corporation, Quaker Chemical Corporation, Safety-Kleen Corp.,
and Snap-On Tools Corporation. Each index assumes $100 invested at the
close of trading on April 30, 1989, and is calculated assuming quarterly
reinvestment of dividends and quarterly weighting by market capitalization.
[THE STOCK PERFORMANCE GRAPH IS PROVIDED UNDER COVER OF FORM SE]
The stock price performance depicted in the graph above is not
necessarily indicative of future price performance. The graph will not be
deemed to be incorporated by reference in any filing by NCH under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to
the extent that NCH specifically incorporates the graph by reference.
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SECURITY OWNERSHIP OF
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of NCH's Common Stock as of June 1, 1994, by: (i)
persons known to management to beneficially own more than 5% of NCH's
Common Stock; (ii) each director and nominee for director; (iii) the three
persons holding the office of the Executive Committee and NCH's two other
most highly compensated executive officers (whose compensation exceeded
$100,000 in fiscal 1994); and (iv) all directors and executive officers of
NCH as a group. Except as noted below, each person included in the table
has sole voting and investment power with respect to the shares that the
person beneficially owns.
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
----------------------- ----------------------- ----------
Robert L. Blumenthal 2,683 *
J. Rawles Fulgham, Jr. (1) 2,000 *
Thomas F. Hetzer 0 -
Irvin L. Levy (2)(3) 1,558,206 18.8%
Lester A. Levy (2)(4) 1,500,358 18.1%
Milton P. Levy, Jr. (2)(5) 1,121,930 13.5%
Glen L. Scivally 0 -
Jerrold M. Trim (6) 0 -
Thomas B. Walker, Jr. 10,000 *
All directors and executive 4,147,693 50.1%
officers as a group (12 people)
- - ------------------------------------
* Less than 1% of class.
(1) Of these shares, 700 are held by a Dallas bank in trust for the
retirement plan and benefit of Mr. Fulgham.
(2) The address of Messrs. Irvin, Lester, and Milton Levy is P.O. Box
152170, Irving, Texas 75015. The definition of beneficial ownership
under the rules and regulations of the Securities and Exchange
Commission requires inclusion of the same 29,000 shares held as
cotrustees by Messrs. Irvin, Lester, and Milton Levy for a family
trust in the totals listed above for each of Messrs. Irvin, Lester,
and Milton Levy.
(3) Irvin L. Levy owns a life estate interest in 1,000,000 shares included
in the table over which he has sole voting and investment power, and
his children own a remainder interest in such 1,000,000 shares. The
table includes the following shares, beneficial ownership of which
Irvin L. Levy disclaims: 25,633 shares held as trustee for his
grandnephews and grandniece over which he has sole voting and
investment power, and 29,000 shares held as cotrustee with his
brothers for a family trust over which he shares voting and investment
power.
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(4) Lester A. Levy owns a life estate interest in 625,194 shares included
in the table over which he has sole voting and investment power, and
his children own a remainder interest in such 625,194 shares. The
table includes the following shares, beneficial ownership of which
Lester A. Levy disclaims: 18,337 shares held as trustee for his
grandnieces over which he has sole voting and investment power, and
29,000 shares held as cotrustee with his brothers for a family trust
over which he shares voting and investment power.
(5) The table includes the following shares beneficial ownership of which
Milton P. Levy, Jr. disclaims: 34,448 shares owned by his wife over
which he has no voting or investment power, 29,000 shares held as
cotrustee with his brothers for a family trust over which he shares
voting and investment power, and 2,106 shares held as cotrustee with
his daughters for their benefit over which he shares voting and
investment power.
(6) Windsor Association, Inc., of which Mr. Trim is president, has a
corporate policy against its employees owning any publicly traded
securities.
SELECTION OF AUDITORS
The Board of Directors has appointed KPMG Peat Marwick, Certified
Public Accountants, to continue to be the principal independent auditors of
NCH, subject to stockholder ratification at the Meeting. A representative
of that firm has been requested to be present at the Meeting and will have
an opportunity to make a statement if the representative desires to do so
and to respond to appropriate questions.
PROPOSALS OF STOCKHOLDERS
Stockholders of NCH who intend to present a proposal for action at the
1995 Annual Meeting of Stockholders of NCH must notify NCH's management of
such intention by notice received at NCH's principal executive offices not
less than 120 days in advance of June 22, 1995, for such proposal to be
included in NCH's proxy statement and form of proxy relating to such
meeting.
ANNUAL REPORT
The Annual Report for the year ended April 30, 1994, is being mailed
to stockholders with this Proxy Statement. The Annual Report is not to be
regarded as proxy soliciting material. NCH will provide without charge to
each stockholder to whom this Proxy Statement and the accompanying form of
proxy are sent, on the written request of such person, a copy of NCH's
annual report on Form 10-K for the fiscal year ended April 30, 1994,
including the financial statements and the financial statement schedules,
required to be filed with the Securities and Exchange Commission. Requests
should be directed to NCH Corporation, Attention: Secretary, P. O. Box
152170, Irving, Texas 75015.
/s/ Irvin L. Levy,
President
Irving, Texas
Dated: June 22, 1994
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/X/ Please mark your votes as in this example.
FOR WITHHOLD AUTHORITY
1. Election of Directors / / / /
Nominees are:
Jerrold M. Trim and Irvin L. Levy
Instruction: To withhold authority to vote for all nominees, mark
the Withhold Authority box. To withhold authority to vote for any
individual nominee, write the nominee's name on the line above.
2. Proposal to approve the incentive bonus plan for members of
the Executive Committee of the Board of Directors as described in
the proxy statement for the 1994 annual meeting of stockholders:
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to ratify the appointment of KPMG Peat Marwick as
independent auditors of NCH Corporation:
FOR / / AGAINST / / ABSTAIN / /
4. In their discretion, the proxies are authorized to vote upon
any other matters that may properly come before the meeting or
any adjournment thereof, subject to the limitations set forth in
the applicable regulations under the Securities Exchange Act of
1934. FOR / / AGAINST / / ABSTAIN / /
SIGNATURE_____________________________DATE_________________, 1994
SIGNATURE IF HELD JOINTLY___________________________________
DATE__________________, 1994
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee, guardian, officer or partner, please
indicated full title and capacity.
SEE REVERSE SIDE
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PROXY
NCH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - JULY 28, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, revoking all prior proxies, hereby appoints
James H. Stone, Tom Hetzer, and Joe Cleveland, and any one or
more of them, proxy or proxies, with full power of substitution
in each, and hereby authorizes them to vote for the undersigned
and in the undersigned's name, all shares of common stock of NCH
Corporation (the "Company") standing in the name of the
undersigned on June 1, 1994, as if the undersigned were
personally present and voting at the Company's annual meeting of
stockholders to be held on July 28, 1994, in Dallas, Texas, and
at any adjournment thereof, upon the matters set forth on the
reverse side hereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. IF NO DIRECTION
IS MADE, THEN THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3,
AND IN THE PROXIES' DISCRETION ON ALL OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING, INCLUDING MATTERS
INCIDENT TO THE CONDUCT OF SUCH MEETING.
(Continued and to be signed on reverse side)
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