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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 12/31/93
Commission file number 1-8591
FIGGIE INTERNATIONAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 52-1297376
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4420 SHERWIN ROAD, WILLOUGHBY, OHIO 44094
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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Registrant's telephone number, including area code (216) 953-2700
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Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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10-3/8% Subordinated Debentures Pacific Stock Exchange Inc.
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Securities registered pursuant to Section 12(G) of the Act:
Class A Common Stock, Par Value $.10 Per Share
(TITLE OF CLASS)
Class B Common Stock, Par Value $.10 Per Share
(TITLE OF CLASS)
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. [ ]
STATE THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT. (THE AGGREGATE MARKET VALUE SHALL BE COMPUTED BY
REFERENCE TO THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE BID AND
ASKED PRICES OF SUCH STOCK, AS OF A SPECIFIED DATE WITHIN 60 DAYS PRIOR TO
THE DATE OF FILING.)
At 4/8/94 $126,312,104
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
Outstanding 4/8/94
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Class A Common Stock, Par Value $.10 Per Share 13,673,595
Class B Common Stock, Par Value $.10 Per Share 4,944,645
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DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-K INTO WHICH THE
DOCUMENT IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS; (2) ANY
PROXY OR INFORMATION STATEMENT; AND (3) ANY PROSPECTUS FILED PURSUANT TO
RULE 424 (b) OR (c) UNDER THE SECURITIES ACT OF 1933. (THE LISTED
DOCUMENTS SHOULD BE CLEARLY DESCRIBED FOR IDENTIFICATION PURPOSES.)
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Proxy Statement Re:1994 Annual Stockholders' Meeting (See Part III)
Certain documents incorporated from prior filings (See Part IV)
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Except as otherwise stated, the information contained in this Annual Report
is as of December 31, 1993.
PART I
Item 1. Business
During the 1993 fiscal year, there have been no material changes in the
manner in which the Registrant conducts its business operations. As used
herein, the "Company" or the "Registrant" means, unless the context
otherwise requires, Figgie International Inc., a Delaware corporation, its
predecessors and its subsidiaries and divisions.
The Company's operations can be grouped into five segments: (l)
consumer products, (2) fire protection, safety, and security products, (3)
machinery and allied products, (4) technical products and (5) services. The
Company's business is generally managed at the operating division and
subsidiary level. Centralized financial and budget controls and certain
other staff functions are performed at the corporate offices of the Company.
The Company has decided to dispose of various operations. See "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
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Consumer Products
Division Products and Services
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Fred Perry Sportswear Ltd. licensor of Fred Perry* tennis and
other products and casual clothing
Fred Perry Sportswear (U. K.) Ltd.tennis clothing and sports and
leisurewear
Interstate Engineering vacuum cleaners and single station
heat detectors
Rawlings Sporting Goods team sporting goods
Sherwood-Drolet Corp. Ltd. hockey sticks, hockey gloves, and
protective equipment
Taylor Environmental InstrumentsTaylor** and Tru-Temp* brand
consumer, industrial, and scientific
thermometers and related
environmental instruments
* See footnote on page 7.
** Registered trademark licensed to Figgie International Inc. by
Combustion Engineering, Inc.
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Fred Perry Sportswear Ltd. licenses Fred Perry* tennis and other
products and casual clothing in the United States and throughout the world.
Fred Perry Sportswear (U.K.) Ltd. designs, manufactures, and
distributes tennis and other sports apparel and leisurewear products.
Interstate Engineering manufactures Compact* and Tri-Star* vacuum
cleaners and non-electrical heat-activated home fire alarms. It also
operates an aluminum and zinc die cast facility.
Rawlings Sporting Goods manufactures and/or distributes baseballs,
baseball gloves, baseball equipment, baseball bats, basketballs, footballs,
football equipment, sports clothing, athletic uniforms, and other athletic
team equipment.
Sherwood-Drolet Corp. Ltd. designs, manufactures and distributes Sher-
Wood* and Chimo* hockey sticks, hockey gloves, and protective equipment.
Taylor Environmental Instruments manufactures thermometers, barometers,
and hygrometers for home use and temperature and environmental measuring
devices for use in food service, HVAC, and industrial applications as well
as in scientific laboratories, hospitals, and universities.
* Registered or common law trademarks and service marks of Figgie
International Inc. and its subsidiaries.
** Registered trademark licensed to Figgie International Inc. by
Combustion Engineering, Inc.
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Fire Protection, Safety, and Security Products
Division Products and Services
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Advance Security*** security officers, specialized
training, consulting, and
investigative services
American LaFrance** fire trucks and a service center
that performs major maintenance,
repair, and refurbishment on fire
trucks and aerial apparatus
"Automatic" Sprinkler design, installation, and service of
fire sprinkler and special hazard
protection systems
Figgie Fire Protection Systems automatic sprinkler, carbon dioxide,
halon, wet and dry chemical
extinguishing systems, devices,
consumer and industrial fire
extinguishers, brass and aluminum
fire equipment, and castings
Medcenter Management Services hospital management services
primarily in the orthopaedic implant
area
Safety Supply America hand, eye, hearing and head
protection products; respiratory
protective equipment; protective
clothing; industrial footwear; fire
equipment and services; fixed and
portable industrial hygiene
instrumentation; lumbar and other
support equipment; and first aid
items
Scott Aviation**** breathing equipment, self-contained
breathing apparatus, and aircraft
oxygen systems
Snorkel-Economy** aerial platforms, articulating and
telescoping water boom fire
apparatus, powered mobile work
platforms, and scissorlifts
* Registered or common law trademarks and service marks of Figgie
International Inc. and its subsidiaries.
** Revenues and Operating Profits are split between both Fire
Protection/ Safety/Security and Machinery and Allied Products
Segments.
*** The assets of the subsidiary were sold on February 25, 1994.
**** Revenues and Operating Profits are split between both Fire
Protection/Safety/Security and Technical Products Segments.
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Advance Security provides security personnel, conducts
investigations, and acts as a security consultant to businesses,
construction sites, hospitals, public buildings, and governmental
installations. The assets of this operation were sold on February 25, 1994
to U.S.A. Security Associates, a privately held firm.
American LaFrance manufactures fire trucks and operates a service
center that performs major maintenance, repairs, and refurbishment of fire
trucks and apparatus.
"Automatic" Sprinkler Corporation of America is one of the nation's
largest designers and installers of sophisticated fire protection systems
for commercial and industrial use and for special hazard facilities,
including power stations, petrochemical plants, and other facilities. The
retrofit market has expanded as stricter governmental, fire code, and
insurance requirements have resulted in the upgrading of fire protection
systems in many existing buildings.
Figgie Fire Protection Systems manufactures regular and special
hazard fire systems and devices employing various extinguishing agents under
ASCOA*, Chemetron*, Range Guard*, and Safety First* brand names. It also
manufactures fire protection sprinkler devices and is one of the nation's
largest manufacturers of industrial and consumer fire extinguishers for use
in homes, boats, automobiles, and industrial applications as well as
stainless steel liquid type extinguishers for industrial and commercial
buildings. Its broad line of hand-portable and wheeled extinguishers
include carbon dioxide, halon, water, and multi-purpose dry chemical
extinguishing agents. Brass products and fittings are produced for use in
standpipe and fire sprinkler systems and for fire engines and fire-fighting
equipment.
Medcenter Management Services manages the joint replacement
departments of hospitals in cooperation with physicians to reduce the cost
and improve the care and treatment of implant patients. The manufacture of
orthopaedic implant devices (under the name of Figgie Medical Systems) was
discontinued in January of 1994.
Safety Supply America is one of the nation's largest distributors of
personal and industrial protective and other safety equipment and industrial
hygiene equipment, operating nationally through a number of regional offices
with branches in most major metropolitan areas. It also manufactures lumbar
and other support devices.
Scott Aviation is the nation's largest manufacturer of protective
breathing and emergency oxygen equipment for use in commercial and military
aircraft. It also manufactures the Scott Air-Pak* for fire-fighting and for
personal protection against industrial contaminants. Its air purifying
products provide protection against environmental and safety hazards as
increasingly required under governmental regulations. Scott Aviation also
produces air and oxygen breathing masks, oxygen regulating devices,
canister-type gas masks, electronic gas detection instruments, and various
light aircraft accessories.
Snorkel-Economy manufactures powered mobile work platforms and
scissorlifts for use in construction and maintenance activities. It also
makes hydraulically activated aerial platforms and articulating booms that
are mounted on fire apparatus to deliver large quantities of water to fires
from elevated positions. This equipment is installed on new as well as on
existing fire trucks.
* Registered or common law trademarks and service marks of Figgie
International Inc. and its subsidiaries.
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Machinery and Allied Products
Division Products
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Alfa Packaging Equipment automated rotary wet glue, hot melt,
and pressure sensitive labeling
machinery as well as net-weight
fillers
Astro-Pneumatic GmbH air cylinders, valves, and pneumatic
equipment
Essick/Mayco Pump vibratory rollers, concrete and
plaster mixers, and concrete and
other material pumps
Figgie Material Handling Systemsindustrial conveyor, sortation
systems and baggage handling systems
(Acquired Glidepath New Zealand
companies in 1993)
Figgie Packaging Systems high-speed uncasing and packing,
capping, sorting, filling, and
sealing machines; material handling
systems; rotary piston fillers; and
can closing and inspection machines;
automatic bottling and canning,
product processing, and labeling
equipment
Figgie Power Systems bladder accumulators, piston
accumulators, surge and pulsation
controls and other fluid power
products, aluminum and steel
pneumatic, and hydraulic linear
actuators
Safway Steel Products scaffolding, shoring, and seating
products
S-P/Sheffer International precision workholding products,
rotary actuating cylinders and
dimensional control tooling systems
SpaceGuard Products woven wire partitions, ornamental
iron railings and columns, metal
spiral staircases, and steel folding
gates
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Alfa Packaging Equipment designs and manufactures automated rotary
wet glue, hot melt, and pressure sensitive labeling machinery as well as
net-weight fillers for a wide range of applications in the beverage, food,
distillery, pharmaceutical, cosmetic, chemical, and other industries.
Astro-Pneumatic GmbH manufactures and markets air cylinders, valves,
and pneumatic equipment for use in the chemical, mining, automotive,
material handling, food, and beverage industries.
Essick/Mayco Pump manufactures vibrating rollers, concrete and
plaster mixers, and concrete and material pumps for the construction
industry.
Figgie Material Handling Systems - which trades as Logan Fenamec
(U.K.) Limited, and Logan Glidepath, manufactures computer controlled, high-
speed sorting mini stacker cranes and package handling equipment for
warehouses, airports, post offices, and distribution terminals, as well as
custom-engineered and pre-engineered conveyor systems for factories,
warehouses, and terminals. The companies are established leaders worldwide
for airport baggage handling, industrial conveying and sortation equipment.
Figgie Packaging Systems produces high-speed uncasing and packing
machinery; material handling and packaging systems; automatic screw-type
capping, sorting, and sealing machinery; rotary piston fillers; and high
speed can closing and inspection machines. It provides processing equipment
for customers in the beverage, food, distillery, dairy, pharmaceutical,
chemical, cosmetic, and other industries. Its fully integrated and automated
high-speed systems include uncasing, cleaning, processing, filling, capping,
labeling, palletizing, conveying, inspecting, packing, and systems control
machinery. It offers full line turnkey capabilities and produces a wide
range of medium and high-speed labeling machinery.
Figgie Power Systems manufactures bladder accumulators, piston
accumulators, surge and pulsation control products, and other fluid power
products for applications in the industrial fluid power, mobile equipment,
petroleum and chemical processing, and water control markets. It also
designs and manufactures aluminum and steel pneumatic and hydraulic linear
actuators for automation and industrial applications.
Safway Steel Products manufactures and distributes tubular steel
scaffolding for sale or rental to building, industrial maintenance, and
demolition contractors; metal and wood bleachers and risers for sale or
rental to schools, auditoriums, coliseums, and others; and vertical shoring,
special order scaffolding, and certain other metal products.
S-P/Sheffer International designs and manufactures precision
workholding products primarily for the machine tool and metalworking
industries. Workholding product lines include collets/collet chucks,
diaphragm chucks, flexible power chucks and integrated quick change chucking
systems. It also manufactures rotary actuating cylinders and dimensional
control tooling systems.
SpaceGuard Products manufactures woven wire partitions for use in
securing areas such as tool cribs and stockrooms for industrial use. It
also manufactures ornamental iron railings and columns and metal spiral
staircases for both residential and commercial applications as well as steel
folding gates for commercial use.
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Technical Products
Division Products
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CASI-RUSCO computer-based CARDENTRY* access
control and monitoring systems, time
and attendance systems, and fuel
management systems
Hartman Electrical custom relays, contactors, and
electrical control devices
Interstate Electronics computer-based electronic systems
for weapon systems test and
evaluation support, satellite
communications modems, global
positioning and navigation systems,
and display systems
* Registered or common law trademarks and service marks of Figgie
International Inc. and its subsidiaries.
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CASI-RUSCO manufactures and sells computer-based CARDENTRY* access
control equipment and monitoring systems. These products are used for
security and parking control, personnel access, time, attendance, and fuel
management control at military and government sites, data centers, parking
areas, hospitals, universities, airports, and other commercial and
industrial locations.
Hartman Electrical designs and manufactures high-reliability
electrical components principally for use in commercial and military
aircraft, missiles, and space vehicles. These components include
contactors, power relays, protection relays, circuit breaker switches, and
automatic control panels used to switch electrical power and to protect the
electrical systems from power faults.
Interstate Electronics develops and produces sophisticated telemetry,
instrumentation, and data recording systems and GPS position measuring
systems for the U. S. Navy's Polaris/Poseidon, TRIDENT, and TRIDENT II
submarine fleet ballistic missile programs. It also designs and produces
precise Global Positioning Systems (GPS) for aircraft and turnkey test
ranges, commercial and business aircraft navigation and landing systems.
It also designs and produces plasma, liquid crystal, and cathode ray tube
display systems for a variety of shipboard and aircraft applications.
Additionally it develops sophisticated bandwidth-on-demand satellite
communications modems and terminals for both government and commercial
applications.
* Registered or common law trademarks and service marks of Figgie
International Inc. and its subsidiaries.
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Services
Division Services
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Figgie Financial Services commercial finance company and
leasing company for the Company and
outside clients
Figgie Natural Resources natural resources
Figgie Properties real estate
Waite Hill Holdings holding company for the Company's
insurance subsidiaries
Cardinal Casualty Co. insurance company for outside
clients
Colony Insurance Co. insurance company for outside
clients
Hamilton Insurance Co. insurance company for outside
clients
Waite Hill Assurance insurance company for the Company
and outside clients (non-operating)
Waite Hill Services claims investigation and safety
services
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Figgie Financial Services is engaged in providing asset-based
financing and vehicle management services. It leases automobiles and other
equipment to small and mid-sized commercial fleet customers, including the
Company's Divisions, and also leases products manufactured by the Company
to others.
Figgie Natural Resources is engaged in the business of acquiring,
exploring, and developing oil and gas properties by acquiring producing
properties and further exploring and developing them.
Figgie Properties is the real estate development division of Figgie
International Inc. and is active in the planning, development, construction,
and management of real estate throughout the United States. Its portfolio
includes office and industrial parks, recreational facilities, self-serve
storage units, retail/commercial centers, and residential communities.
Waite Hill Holdings is a holding subsidiary that owns Cardinal
Casualty, Colony Insurance, Hamilton Insurance, Waite Hill Assurance, and
Waite Hill Services.
Cardinal Casualty Co. is a property/casualty insurance company that
provides insurance to outside clients. It is licensed in the states
of Ohio, Florida, Georgia, Indiana, and the District of Columbia.
It is approved to do business in five additional states.
Colony Insurance Co. is a property/casualty insurance company that
provides insurance to outside clients. It is licensed in Virginia
and Washington State and is approved to do business in thirty-three
other states.
Hamilton Insurance Co. is a property/casualty insurance company that
provides insurance to outside clients. It is licensed in seventeen
states and is approved to do business in three additional states.
Waite Hill Assurance is a non-operating insurance company that
formerly provided insurance to the Company and outside clients.
Waite Hill Services performs claims investigation and other insurance
related services for the Company and outside clients.
<PAGE> 9
Customers
In 1993, no single customer accounted for more than 10% of the net
sales of any segment of the Company other than the U. S. Government, which
accounted for approximately 60.0% of the net sales of the Company's
Technical Products segment and approximately 16.5% of the Company's total
net sales. Approximately 60.0% of the Technical Products segment's net
sales for the next year are expected to come from U. S. Government
contracts. These net sales are subject to the standard government contract
clause that permits the Government to terminate such contracts at its
convenience. In the event of such termination, there are provisions to
enable the division to recover its costs plus a fee. The Company does not
at this time anticipate the termination of any of its major government
contracts.
Competition
All of the Company's divisions and subsidiaries are engaged in
industries characterized by substantial competition in the form of price,
service, quality, and design. In many instances they compete with companies
whose financial resources are greater and whose market position is stronger
than that of the particular division or subsidiary. The Company believes
that in the United States it is among the leading manufacturers of automatic
sprinkler devices and systems, elevated booms, portable fire extinguishers,
scaffolding, protective breathing apparatus, and consumer thermometers.
Patents and Trademarks
The Company owns and is licensed under a number of patents and
trademarks that it regards as sufficient for its operations. It believes
its business as a whole is not materially dependent upon any one patent,
trademark, or license or technologically related group of patents or
licenses.
Backlog of Orders
As of December 31, 1993 and 1992, the Company had a total backlog of
orders from continuing operations in the approximate amounts of $229 million
and $267 million, respectively. On these dates such backlog was believed
to be firm. Of the backlog on December 31, 1993, approximately 85% could
reasonably be expected to be filled during the twelve months commencing
January 1, 1994. However, final verification of the Company's backlog
estimates depends on, among other things, general economic and business
conditions in 1994 that cannot be predicted due to the many uncertainties
involved.
Raw Materials
The Company believes that the principal raw materials and purchased
component parts for the manufacture of its products are available from a
number of suppliers and are generally available in sufficient quantities to
meet its current requirements.
Effect of Environmental Compliance
At the present time, compliance with Federal, state, and local
provisions with respect to environmental protection and regulation has not
had a material impact on the Company's capital expenditures, earnings, or
competitive position.
Employees
As of December 31, 1993, the Company employed for continuing and
discontinued operations approximately 12,600 individuals. Approximately
10,700 of these were employed in the United States, of which approximately
6,600 were hourly paid employees and approximately 4,100 were salaried
employees. Approximately 1,900 employees are covered by collective
bargaining agreements with various unions. The Company has generally
enjoyed good relations with the unions representing its employees.
Substantially all of the Company's contracts with the several unions
representing its employees expire at various dates within the next three
years. Two major labor negotiations were completed during 1993. Two other
major union contracts are scheduled to expire in 1994.
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Research
During the fiscal year ending December 31, 1993, the Company's
research activities consisted principally of normal and customary operations
of each of its divisions and subsidiaries in the improvement of its
products. In 1993, approximately $26.9 million was spent on research and
development versus approximately $8.3 million in 1992.
Distribution
The Company's products and services are marketed through most normal
channels of distribution. These vary on a subsidiary and division-by-
division basis and include direct sales by company salesmen, sales through
independent distributors and dealers, sales through manufacturers' agents,
direct sales to government agencies, and the use of licenses and joint
ventures.
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Financial Information About the Company's Industry Segments*
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
(in thousands of dollars)
Year Ending December 31
1993 1992 1991
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Sales to Unaffiliated Customers:
Consumer $ 62,053$ 73,450 $ 75,896
Industrial
Fire protection/safety/security 229,404 241,564 246,370
Machinery and allied products 262,571 265,168 280,278
Total industrial 491,975 506,732 526,648
Technical 189,678 190,952 217,479
Services 24,936 21,275 22,696
Total sales $ 768,642$ 792,409 $ 842,719
Intersegment Sales:
Consumer $ 90$ 5 $ -
Industrial
Fire protection/safety/security 8,284 1,298 6,069
Machinery and allied products 509 486 350
Total industrial 8,793 1,784 6,419
Technical 1,438 1,341 -
Services 14,168 13,056 14,228
Total intersegment sales $ 24,489$ 16,186 $ 20,647
Income (Loss) Before Taxes on Income:
Consumer $ (4,512)$ 7,399$ 10,924
Industrial
Fire protection/safety/security 4,989 40,002 39,291
Machinery and allied products (107,145) 8,089 5,925
Total industrial (102,156) 48,091 45,216
Technical (27,434) 25,729 26,886
Services 2,176 3,122 5,067
Total segments (131,926) 84,341 88,093
General corporate expenses (83,695) (23,567) (33,276)
Interest expense, net (34,908) (35,257) (36,452)
Income (loss) before taxes on income$ (250,529)$ 25,517$ 18,365
Identifiable Assets:
Consumer $ 49,959$ 47,235 $ 51,484
Industrial
Fire protection/safety/security 127,302 110,758 99,861
Machinery and allied products 204,242 228,762 247,327
Total industrial 331,544 339,520 347,188
Technical 98,242 112,023 119,395
Services 204,507 182,305 163,422
Corporate 143,716 202,770 212,853
Net discontinued operation assets 170,435 192,072 180,327
Total assets $ 998,403$1,075,925 $1,074,669
* Reflects the Company's decision to treat certain operating units as discontinued
operations. See "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations."
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Financial Information About the Company's Industry Segments (continued)
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
(in thousands of dollars)
Year Ending December 31
1993 1992 1991
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Capital Expenditures:
Consumer $ 3,284 $ 1,438 $ 2,376
Industrial
Fire protection/safety/security 15,360 8,674 7,101
Machinery and allied products 48,357 45,604 21,522
Total industrial 63,717 54,278 28,623
Technical 3,779 3,913 6,023
Services 26,692 25,786 26,991
Corporate 9,560 4,493 29,487
Discontinued operations 2,525 10,446 2,770
Total capital expenditures $ 109,557 $ 100,354 $ 96,270
Depreciation and Amortization:
Consumer $ 1,148 $ 1,147 $ 952
Industrial
Fire protection/safety/security 4,724 5,338 5,373
Machinery and allied products 19,668 12,667 11,287
Total industrial 24,392 18,005 16,660
Technical 3,162 3,785 4,588
Services 8,535 10,000 9,942
Corporate 2,845 5,796 4,102
Discontinued operations 3,032 2,888 2,687
Total depreciation and amortization$ 43,114$ 41,621$ 38,931
Major Customer Sales:
U. S. Government-
Consumer $ 6 $ 13 $ 57
Industrial
Fire protection/safety/security 12,050 14,674 23,458
Machinery and allied products 656 1,097 722
Total industrial 12,706 15,771 24,180
Technical 113,885 110,663 128,322
Services - - -
Total sales to U. S. Government$ 126,597$ 126,447 $ 152,559
The accompanying Notes to Consolidated Financial Statements are an integral part of
this financial information.
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Financial Information About the Company's Geographical Segments
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
(in thousands of dollars)
Year Ending December 31
1993 1992 1991
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Sales to Unaffiliated Customers:
United States $ 674,936$ 677,621 $ 724,135
Europe 62,854 75,008 81,831
Other 30,852 39,780 36,753
Total sales $ 768,642$ 792,409 $ 842,719
Intersegment Sales between Geographic Areas:
United States $ 80,034$ 29,095 $ 24,296
Europe 2,962 1,822 2,600
Other - - -
Total intersegment sales
between Geographic Areas $ 82,996$ 30,917 $ 26,896
Income Before Taxes on Income:
United States $ (238,168)$ 20,521$ 13,400
Europe (11,430) 4,301 5,849
Other (931) 695 (884)
Income before taxes on income $ (250,529)$ 25,517$ 18,365
Identifiable Assets:
United States $ 709,455$ 768,824 $ 777,788
Europe 79,202 80,069 85,525
Other 39,311 34,960 31,029
Net discontinued operation assets 170,425 192,072 180,327
Total assets $ 998,403$1,075,925 $1,074,669
Export Sales - United States to:
Asia $ 38,025$ 12,933 $ 22,140
Canada 19,584 1,445 10,279
Europe 16,137 75,008 26,062
Other 14,614 25,413 46,654
Total U.S. export sales $ 88,360$ 114,799 $ 105,135
The accompanying Notes to Consolidated Financial Statements are an integral part of
this financial information.
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<PAGE> 14
Executive Officers of the Company
The following are the present executive officers of the Company who
serve in the positions indicated:
HARRY E. FIGGIE, JR., Chairman of the Board and Chief Executive Officer
of the Company since 1964 and served as President from 1982 to May 1989; age
70.
WALTER M. VANNOY, Vice Chairman of the Company since February 16, 1994,
a member of its Board of Directors since 1981, and President of Vannoy
Associates, a consulting firm, since December, 1988. Prior to his
retirement in 1988, he was Vice Chairman of McDermott International, the
corporate parent of Babcock & Wilcox, a diversified energy equipment and
services company; age 66.
VINCENT A. CHIARUCCI, President of the Company since May 1989 and Group
Vice President from June 1988 to May 1989. Prior to joining the Company, he
worked as a business consultant from 1986 to June 1988; age 64.
MARY C. CLEARY, Vice President-Assistant to the Chairman of the Board
since January 1987 and Administrative Assistant to the Chairman of the Board
from 1967 to 1978 and from 1984 to 1987; age 67.
LUTHER A. HARTHUN, Senior Vice President-International, General Counsel
and Secretary since April 1981; Vice President-International, General
Counsel and Secretary since May 1979; and Vice President, General Counsel
and Secretary of the Company since 1970; General Counsel since 1966; age 58.
MARCQ H. KAUFMANN, Corporate Vice President and President of the
Company's European Operations since September 1992 and President of the
Company's Packaging Systems division since January 4, 1994. Previously
served as President of the Company's Geo. J. Meyer Manufacturing division
from 1990 to 1992 and Managing Director of the Company's Alfa Costruzioni
Packaging Equipment division from 1988 to 1990; age 68.
JERRY L. LEATH, Vice President-Human Resources and Administration since
June, 1992. From 1984 to 1992 he was employed by Sabreliner Corporation,
where he held the position of Vice President-Administration; age 53.
CHARLES C. RIEGER, JR., Senior Vice President of the Company since
September 1993 and Group Vice President from 1982 to 1993; age 60.
LARRY G. SCHWARTZ, Vice President-Manufacturing since September 1989
and Director of Manufacturing when he joined the Company in December 1988.
From 1986 to 1988, he was Vice President and General Manager, New England
Operations, with the Robert E. Morris Company; age 45.
ALAN H. BENNETT, Vice President-Sales and Distribution since September
1993 and also President of the Company's Safety Supply America division
since May 1989. Previously served as President of Allied Industrial
Distributors, which was acquired by the Company on May 19, 1988; age 51.
KEITH V. MABEE, Vice President-Public and Government Affairs since
February 1994 and Director-Public and Government Affairs since July 1993.
Previously served as Vice President, Communications with Industrial
Indemnity, a commercial insurance company, from 1989 to 1993 and prior to
1989 he was Senior Vice President, Corporate Communications with Amfac Inc.,
a diversified services company; age 46.
C. WILLIAM EVERS, Vice President-Corporate Procurement since February
1994 and Director-Corporate Procurement since July 1992. Previously served
as Director of Purchasing with the Company's Badger-Powhatan division from
1977 to 1992; age 54.
GREGORY J. PATTON, Vice President-Operations Development/Compliance
since February 1994 and Director of Audit since June 1993. From 1989 to
1993 he was a senior manager in the manufacturing consulting practice of
Price Waterhouse and from 1987 to 1989 he served as Director of
Manufacturing Systems with Hercules Engines; age 39.
<PAGE> 15
Item 2. Properties
The Company operates numerous plants in various states and foreign
countries. The facilities in the United States have approximately 5,910,000
square feet of floor area for manufacturing, warehousing, and associated
administrative uses. Approximately 3,200,000 square feet of this area is
owned, and the balance is leased. At this time, the Company believes its
facilities are suitable for its purposes, having adequate productive
capacity for the Company's present and anticipated needs.
The properties owned and leased in the United States are located
primarily in New York (940,000 square feet), California (586,000 square
feet), Ohio (549,000 square feet), Missouri (521,000 square feet), Virginia
(467,000 square feet), South Carolina (280,000 square feet) and Georgia
(243,000 square feet).
<TABLE>
<CAPTION>
Principal Facilities
Approx.
Division or Floor Area
Subsidiary Location (Sq. Feet)Segment Ownership
<S> <C> <C> <C> <C>
Interstate
ElectronicsAnaheim, CA 412,000 Technical Products Owned
Scott AviationMonroe, NC 128,000 Fire Protection,
Safety, and Security
Products Owned
Geo. J. MeyerGoose Creek, SC 279,000 Machinery and Allied
Products Owned
</TABLE>
Item 3. Legal Proceedings
As reported under Item 3 "Legal Proceedings" in the Company's Form 10-K
Annual Report for the fiscal year ending December 31, 1992, the Company
appealed to the United States Court of Appeals for the Ninth Circuit from
a Federal District Court's summary judgement against the Company in a suit
brought by the Federal Trade Commission seeking consumer redress in
connection with the sale of heat detectors manufactured by the Company's
Interstate Engineering division. In a Per Curiam opinion filed on May 7,
1993, the Court of Appeals affirmed in part and vacated in part the
judgement of the District Court. The Court of Appeals held that the
District Court had committed error in ordering the Company to pay a minimum
amount of approximately $7,600,000 but held that the Company could be
required to pay refunds to those buyers who, after notification, can make
a valid claim for redress. The Company's subsequent petition for a writ of
certiorari to the United States Supreme Court was denied and the Company is
working with the Federal Trade Commission to implement a redress program.
In two separate suits, three stockholders of the Company filed
derivative complaints during 1993 in the Common Pleas Court of Lake County,
Ohio seeking recovery on behalf of the Company for alleged self-dealing,
waste of corporate assets, financial statement over-statements, gross
mismanagement and participation or acquiescence in such practices by
Directors of the Company, all of whom were named as defendants. The Court
has consolidated the two suits and the defendants have filed motions to
dismiss.
The Company is involved in ordinary routine litigation incidental to
its business. Management does not believe that the litigation in which the
Company is involved will have a materially adverse effect upon the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE> 16
PART II
Item 5. Market for the Company's Common Stock and Related Stockholder
Matters
The Company's Common Stock has been traded since July 19, 1983, on the
over-the-counter market and quoted in the National Association of Security
Dealers Automated Quotation National Market System (NASDAQ/NMS) under the
following symbols: Class A Common Stock "FIGIA" and Class B Common Stock
"FIGI". Prior to July 19, 1983, the Company's Common Stock was traded on
the New York Stock Exchange.
<TABLE>
<CAPTION>
The dividend paid with respect to the Company's Common Stock as well
as the high and low sales prices recorded on the NASDAQ/NMS System for each
quarterly period during the years 1993 and 1992 are set forth below.
1993 1992
Quarter Quarter
1st 2nd 3rd 4th 1st 2nd 3rd 4th
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends paid
per common share:
Class A Common $.125 $.125 $.125 $.06 $.125 $.125 $.125 $.125
Class B Common $.125 $.125 $.125 $.06 $.125 $.125 $.125 $.125
Sales price
Class A Common:
Low 16-1/4 16-1/2 16-3/4 11-3/4 12-3/4 17-1/2 13-3/4 14-1/2
High 21-1/2 19 18-1/4 17-1/2 21-1/4 21-1/2 18-1/4 17-1/4
Class B Common:
Low 17 16-1/2 16-1/2 12-1/2 19 21-1/2 17 17
High 21-1/2 20 21 20-3/4 24-1/2 26 26-1/2 20-1/2
</TABLE>
As of April 8, 1994, there were 6,670 holders of Class A Common Stock and
5,897 holders of Class B Common Stock.
<TABLE>
<CAPTION>
The high and low sales prices recorded on the NASDAQ/NMS for each class of
Common Stock for the period January 1, 1994 through April 8, 1994, are set
forth below:
High Low
<S> <C> <C>
FIGIA (Class A Common) $ 14-1/4$ 8
FIGI (Class B Common) $ 16 $ 8-1/4
</TABLE>
<PAGE> 17
<TABLE>
<CAPTION>
Item 6.
Summary of Selected Financial Data % Change Year Ending December 31
1989-93 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Financial Data (in thousands of dollars)
Net Sales -22% $768,642 $792,409 $842,719 $995,257 $981,221
Net Income (Loss) -386% (179,775) 28,299 30,069 39,662 62,926
Total Assets -6% 998,403 1,075,925 1,074,669 1,065,382 1,059,310
Key Working Capital (1) -46% 156,529 173,451 233,076 258,572 290,272
Total Debt (2) 13% 536,183 453,809 484,517 491,540 472,891
Per Share Data (in dollars)
Earnings (Loss) Per Common Share
on Net Income -433%$ (10.11)$ 1.61$ 1.72$ 2.28$ 3.04
Cash Dividends Per Common Share (3) A 9% .435 .50 .50 .50 .40
B 9% .435 .50 .50 .50 .40
Net Tangible Book Value Per
Common Share (3) -52% 5.97 16.35 15.44 14.42 12.47
OTHER DATA
Common Stock Outstanding (3) 18,739,370 18,523,70718,627,54918,701,64918,909,822
Holders of Common Stock 12,505 12,381 10,262 11,141 10,887
Number of Employees 12,600 13,200 13,700 16,000 17,000
(1) Key working capital consists of net trade receivables, plus net inventories less accounts payable.
(2) Total debt includes notes payable, current maturities of long-term debt, long-term debt classified
as current, and non-current long-term debt.
(3) In November 1989, the Company declared a three-for-one stock split effected as a 200% stock dividend
on its Class A and Class B Common Stock to stockholders of record on January 15, 1990, payable on
January 22, 1990. All share and per share amounts are reflected on a post-split basis.
</TABLE>
<PAGE> 18
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
OPERATIONS
Consolidated net sales from continuing operations in 1993 were $768.6
million, which is $23.8 million or 3.0% lower than the net sales from
continuing operations of $792.4 million in 1992. Net sales in 1992 were
$50.3 million lower than those in 1991. Price increases in 1993 averaged
approximately 3%.
The Company has elected to treat as discontinued operations certain of its
operating units as part of its current strategy to reorganize the Company
and restore profitability by focusing primarily on its core industrial and
technical businesses. The units to be discontinued include: Advance
Security, Rawlings Sporting Goods, Sherwood-Drolet, Safety Supply America,
Cardinal Casualty Co., Colony Insurance Co., Hamilton Insurance Co., Waite
Hill Services, American LaFrance, Medical Devices, and Huber/Essick/Mayco
Pump. As a group, these discontinued units represented sales volumes of
$379 million for 1993, $380 million for 1992, and $401 million for 1991, and
are excluded from the reported sales amounts. During the first quarter of
1994, the Company has concluded the sale of Advance Security to a privately
held corporation.
The Consumer products segment's net sales dropped $11.4 million or 15.5% in
1993 from net sales of $73.5 million in 1992. Reduced sales from Fred Perry
(U.K.) is the primary contributor, partially due to the deepening European
recession, particularly in Spain, Germany, and the U.K. as well as reduced
selling prices. The 1992 Consumer product net sales were $2.4 million or
3.2% lower than net sales in 1991, again due to reduced sales volume at Fred
Perry (U.K.).
Fire protection/safety/security products' 1993 net sales declined $12.2
million or 5.0% versus net sales of $241.6 million in 1992. Recessionary
impacts in the construction-related markets, along with decreased industrial
employment, have continued to adversely affect this segment. Automatic
Sprinkler, Fire Protection, and Scott Aviation (health and safety) have been
most affected. Construction-related activity in the Southeast appears to
be improving, while the West Coast is still slow, and mixed results are
being reported in the Northeast. In 1992, this segment's net sales
decreased by $4.8 million or 2.0% versus net sales in 1991.
Machinery and allied products' 1993 net sales declined $2.6 million or 1.0%
when compared with net sales of $265.2 million in 1992. Increased volumes
of elevating work platforms, despite the effects of the Midwest flood, were
more than offset by declines in the sales of scaffolding products and
material handling equipment. Sales drops in scaffolding products were
caused by the generally sluggish construction industry and to a lesser
degree by start-up disruptions associated with the modernization of Safway
Steel's production facilities. Sales of material handling equipment have
been slowed by the closing of selected operations and the weak European
export market. However, the Australian and Asian markets are showing some
signs of economic improvement. The 1992 net sales for this segment were
$15.1 million or 5.4% less than in 1991, due primarily to the recessionary
economy.
The Technical products segment's net sales declined $1.3 million or .7% in
1993 when compared to net sales of $191.0 million in 1992. The reduction
in sales is primarily a result of reduced billings on certain government
contracts. The 1992 net sales declined $26.5 million or 12.2% when compared
with 1991, also due to reduced billings on government contracts.
The Services segment's 1993 net sales increased $3.7 million or 17.2% when
compared to net sales of $21.3 million in 1992. Increased leasing activity
at the Financial Services subsidiary is responsible for this change. The
1992 net sales decreased $1.4 million or 6.3% when compared to net sales in
1991. Reduced sales from the Natural Resources division is responsible for
this decline.
<PAGE> 19
Other expense for 1993 was $16.3 million versus other income of $12.3
million in 1992 and other income of $.6 million in 1991. The major
contributors to the increased costs in 1993 were (1) amortization of
goodwill ($2 million), (2) litigation reserves ($13 million), and (3)
miscellaneous items for legal/professional costs, bank fees, and exchange
losses ($9 million). These items were partially offset by gains on sales
of assets, legal settlement recoveries, and royalty income of approximately
$8 million. Other income and expense accounts were favorably affected in
1992 by gains on sales of excess properties arising from consolidation
projects and realized gains on the sale of marketable securities. Also
contributing to these 1992 favorable results were payments received from the
U.S. Government as a result of a favorable decision by the Armed Services
Board of Contract Appeals resolving a dispute between the Department of the
Army and Scott Aviation concerning the termination of a mask contract.
Other income in 1991 was also favorably affected by payments received in
connection with the mask contract decision.
Consolidated cost of sales as a percentage of net sales was 87.6%, 74.4%,
and 75.8% for 1993, 1992, and 1991, respectively. Higher costs for
materials, purchased services, and employee compensation and fringe benefits
added approximately 3% to 4% to the cost of goods and services in 1993.
Average increases in these categories were approximately 3% to 4% in 1992
and 1991. Price adjustments generally offset these types of increases.
In 1993, cost of sales was unfavorably impacted by: (1) increased
expenditures, principally for new product development at Hartman Electrical,
Interstate Electronics, Scott Aviation, and Snorkel of approximately $19
million over 1992; (2) the liquidation of certain equity investments and
additional provisions for assets held for sale of $14 million; (3) a $7
million write-down of non-performing loans still subject to future
collection efforts or litigation; and (4) increased provisions for warranty
costs and inventory reserves of $12 million. Also during 1993 a number of
plants were in the transition phase of installing new machinery and computer
systems. This resulted in (1) a temporary need to purchase some materials
outside that were previously manufactured; (2) the hiring of additional
people and related costs associated with the transition; and (3) the
temporary maintenance of duplicate production facilities during the
transition. These costs were approximately $38 million in 1993 but are
expected to drop significantly in 1994.
Consolidated selling and general and administrative expenses are $163.6
million or 13.8% higher than in 1992. Higher expenses in 1993 are
attributed to increased sales efforts to penetrate U.S. and foreign markets,
increased advertising and market research costs to complement those selling
efforts, and increased legal and professional fees. The Company expects
legal and professional fees to be a significant expenditure in 1994 as a
result of the restructuring of its debt and the defense of two stockholder
derivative lawsuits filed in 1993.
Net interest expense for 1993 of $35.0 was relatively unchanged from the
$35.5 million and $36.5 million reported in 1992 and 1991, respectively.
Reduced interest rates offset the costs associated with the Company's
increased debt level due in part to the factory automation projects.
In 1990, the Company began a modernization program at its major facilities
that involved: (1) the replacement of existing manufacturing processes with
state-of-the-art machining centers, fabrication equipment, and robotic
welding and assembly; (2) the design and development of factory floor
computer systems, and complementary support systems and procedures; (3) the
re-training of personnel to schedule and run the newly automated shop floor
efficiently; and (4) the consolidation of smaller plants and operations into
larger, more efficient facilities to take advantage of the synergies of a
larger operation. To date, the Company has reduced Company-wide machine
tools from over 3,000 to approximately 280 and consolidated manufacturing
plants from 83 to 31 currently, while at the same time increasing capacity
by nearly 30 percent. This project was originally on a five-year timetable;
however, management elected to accelerate its implementation in late 1992.
Although efforts expended in 1993 reflect the largest portion of the
implementation, some additional costs are expected in 1994, but at a
significantly reduced level.
<PAGE> 20
Restructuring costs associated with the Company's modernization program were
$51.0 million, $8.8 million, and $5.9 million for 1993, 1992, and 1991,
respectively. These charges stem from: (1) various relocation costs of
employees and equipment; (2) consolidation-related costs such as provisions
for anticipated losses on sales of real estate, consulting fees to assist
with the development of strategic business plans, start-up costs in the new
locations; and (3) costs incurred in retooling the plants, such as first
production run samples and documenting new procedures and production
methods. The future benefits expected to be achieved as a result of this
modernization program include (1) cost savings associated with reduced
levels of personnel, lower operating costs with respect to fewer, more
efficient facilities and fewer machine tools, (2) enhanced quality, better
delivery times and better customer service, and (3) overall asset management
through reduced inventory levels and increased cash generation.
Factory automation costs associated with the Company's modernization program
included machinery and equipment, software, and outside consulting services.
These project costs have historically been deferred and amortized over
future periods commencing at the time the equipment is placed into service.
Due to a number of factors which arose in 1993, including deteriorating
operating results, reduced cash flow, and financing difficulties, the
Company adopted a change in accounting by expensing all project costs, as
incurred, other than those for the purchase of machinery and equipment. As
required by generally accepted accounting principles (GAAP), this accounting
change, resulting in a charge of $77 million, has been recorded as a change
in estimate and reflected in the results of operations for the fourth
quarter in 1993.
The Consumer products segment's operating profit margin reflects a loss of
$4.5 million for 1993 versus a profit of $7.4 million in 1992. Losses at
Fred Perry U.K. are responsible for the decline, primarily due to a
significant drop in sales, continued highly competitive market prices, and
reduced margins on the sale of seasonal and substandard quality merchandise.
In 1991 the operating profit margin was $10.9 million for this segment.
The Fire protection/safety/security segment's operating profit was $5.0
million in 1993, declining from $40.0 million in 1992. The decline in
operating profit has been caused by (1) a 5% drop in sales volume; (2) the
change in accounting estimate of approximately $10 million; (3)
restructuring charges of approximately $8 million; (4) miscellaneous
warranty costs, litigation, and legal and professional costs of
approximately $5 million; and (5) transition costs of approximately $7
million. The 1991 operating income was $39.2 million for this segment.
The Machinery and allied products segment's operating profit margin reflects
a 1993 loss of $107.2 million, versus income of $8.1 million in 1992. The
decline in operating profit has been caused by: (1) the change in accounting
estimate of approximately $36 million; (2) restructuring charges of
approximately $15 million; (3) miscellaneous warranty costs, litigation, and
legal and professional costs of approximately $7 million; (4) miscellaneous
costs for employee benefits, pension, insurance and inventory of
approximately $7 million; and (5) amortization costs of approximately $27
million. Operating results of Packaging Systems were substantially impacted
by the foregoing charges. The 1991 operating income was $5.9 million for
this segment.
In July of 1993, Snorkel Economy, which is part of the Machinery and allied
products segment, was severely affected by Midwest flooding. Prior to the
flood, the elevating platform business was well ahead of 1992 and appeared
to be heading for an excellent performance year. The plants were placed
back into production; however, momentum was lost. The Company has been
reimbursed by the insurance carrier for the majority of the physical damage
claim covering the buildings, machinery, fixtures, and inventory.
Negotiations on the business interruption coverage have not as yet been
fully concluded and the Company has not recognized any income in 1993
pertaining to this coverage. Known operating earnings lost during the first
nine months of 1993 due to flooding are a minimum of $7 million and will
most likely be significantly higher when finally determined for the full
year. Claims may also be filed for 1994.
The Technical products segment's operating profit margin reflects a loss of
$27.4 million, versus income of $25.7 in 1992. Declines in operating
margins are due to: (1) the change in accounting estimate of approximately
$11 million; (2) restructuring costs of approximately $5 million; (3)
increased R&D costs for product development of approximately $17 million;
and (4) losses at Hartman caused by production problems. The 1991 operating
income was $26.9 million for this segment.
<PAGE> 21
The Services segment's 1993 operating income was $2.2 million or $1.0
million less than the prior year. The primary reason for this decline was
a $5 million restructuring charge in 1993 relating to the provision for
anticipated loss on the sale of surplus properties that are associated with
the Company's consolidation and restructuring programs. In 1991 the
operating income for this segment was $5.1 million.
Increases in the cost of goods and services and increases in the prices of
the Company's goods and services in 1993, 1992, and 1991 have generally been
in line with the prevailing rate of inflation. Because the Company has been
able to pass on higher costs in the form of higher prices, inflation has had
relatively little impact on the Company's operating results.
The loss from continuing operations before provision for taxes on income was
$250.5 million, versus income from operations of $25.5 million and $18.4
million in 1992 and 1991 respectively.
The effective income tax rate from continuing operations was a benefit of
28.4% in 1993, versus provisions of 26.0% in 1992 and 18.4% in 1991. The
1993 benefit does not take into consideration various tax planning
strategies available to the Company.
The net loss before discontinued operations was $179.3 million, versus net
income of $18.9 million in 1992 and $15.0 million in 1991. The net loss
from discontinued operations was $6.3 million in 1993, versus net income of
$9.4 million and $15.1 million in 1992 and 1991, respectively.
In December 1990, the Financial Accounting Standards Board (FASB) issued
Statement No. 106, Accounting for Post Retirement Benefits Other Than
Pensions. In accordance with this new statement, the Company has adopted
and incorporated this new accounting principle into its 1993 financial
statements. Adoption of this statement did not have any effect on the
financial statements.
In February 1992, the Financial Accounting Standards Board (FASB) issued
Statement No. 109, Accounting for Income Taxes. This statement is intended
to supersede Accounting Principles Board Opinion No. 11 as well as FASB
Statement No.96. In accordance with this new statement, the Company has
adopted and incorporated this new accounting principle into its 1993
financial statements. The Company has not restated prior periods, and the
adoption of this statement has had a $5.8 million favorable effect on net
income in 1993.
The net loss for the Company was $179.8 million in 1993, versus net income
of $28.3 million and $30.1 million in 1992 and 1991, respectively.
<PAGE> 22
Liquidity and Capital Commitments
As discussed in the Notes to the Consolidated Financial Statements, the
Company was not in compliance as of December 31, 1993 with certain financial
covenants contained in certain debt agreements; however it has subsequently
received temporary waivers with respect to those financial covenants.
The Company is currently negotiating with banks party to its revolving
credit facility, other domestic and foreign banks, and other financial
institutions in an effort to finalize a satisfactory restructuring of its
debt. As part of its restructuring plan, the Company intends to dispose of
certain businesses under a divestiture plan designed to provide liquidity
to the Company and pay down debt through the use of proceeds upon sale. In
the absence of the finalization of a new long-term financing package, the
Company is required under generally accepted accounting principles to
classify substantially all of its long-term debt as a current liability as
of December 31, 1993. This results in negative working capital of $143.4
million.
During the year the Company reduced key working capital (accounts receivable
and inventory net of accounts payable) by $28.9 million and sold assets for
$74.0 million, which, along with depreciation and amortization of $43.1
million, the write-off of factory automation project costs of $77.3 million
and increased debt of $76.8 million, were used for capital expenditures of
$109.6 million, dividends of $8.0 million, net repurchase of Company stock
for $6.2 million, and fund a net loss of $179.8 million.
The Company's ability to continue to meet its liquidity requirements is
dependent upon its ability to successfully complete its restructuring
efforts - specifically, finalizing a new long-term financing package and
completion of its divestiture program. The Company continues to make
progress in building its cash position and in implementing actions aimed at
restoring profitability. Negotiations with certain of the Company's lenders
continue to take place in an effort to finalize a restructuring of its debt
facilities.
<PAGE> 23
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Stockholders,
Figgie International Inc.:
We have audited the accompanying balance sheets of Figgie International
Inc. (a Delaware corporation) and Subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ending
December 31, 1993. 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 consolidated 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 Figgie
International Inc. and Subsidiaries as of December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the three
years in the period ending December 31, 1993 in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As shown in the
accompanying consolidated financial statements, and as discussed in Note 2,
the Company incurred a significant net loss and decrease in net worth for
the year ending December 31, 1993, which resulted in violations of certain
covenants of certain of its debt agreements which permit its lenders to
accelerate the due date on its debt. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 2.
The accompanying financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
As explained in Note 1 to the consolidated financial statements,
effective January 1, 1993 the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109 "Accounting For Income Taxes".
In addition, as explained in Note 15 to the consolidated financial
statements, the Company changed its method of accounting for certain costs
associated with its factory automation project in the fourth quarter of
1993.
ARTHUR ANDERSEN & CO.
Cleveland, Ohio,
April 15, 1994.
<PAGE> 24
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992, AND 1991
(in thousands of dollars except for per share data)
1993 1992 1991
<S> <C> <C> <C>
SALES AND OTHER INCOME FROM CONTINUING OPERATIONS:
Net Sales $ 768,642$ 792,409$ 842,719
Other income/(expense) (16,272) 12,292 619
Total sales and other income 752,370 804,701 843,338
COSTS AND EXPENSES FROM CONTINUING OPERATIONS:
Cost of sales 673,116 589,273 638,638
Selling, general, and administrative expenses 163,623 143,776 141,229
Bad debt expense 2,864 1,901 2,791
Interest expense, net 34,998 35,458 36,452
Restructuring charges 51,005 8,776 5,863
Change in accounting estimate 77,344 - -
Total costs and expenses 1,002,950 779,184 824,973
MINORITY INTEREST 51 - -
INCOME/(LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR TAXES ON INCOME (250,529) 25,517 18,365
PROVISION FOR TAXES ON INCOME FROM
CONTINUING OPERATIONS:
Federal income taxes/(benefits) (65,053) 5,093 2,153
State income taxes/(benefits) (6,142) 1,546 1,219
NET INCOME/(LOSS) BEFORE DISCONTINUED
OPERATIONS AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES (179,334) 18,878 14,993
NET INCOME/(LOSS) FROM DISCONTINUED OPERATIONS (6,280) 9,421 15,076
NET INCOME/(LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR INCOME TAXES (185,614) 28,299 30,069
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES 5,839 - -
NET INCOME/(LOSS) $ (179,775)$ 28,299$ 30,069
EARNINGS (LOSS) PER COMMON SHARE FROM
CONTINUING OPERATIONS $ (10.09)$ 1.07$ 0.86
EARNINGS (LOSS) PER COMMON SHARE FROM
DISCONTINUED OPERATIONS $ (0.35)$ 0.54$ 0.86
EARNINGS PER COMMON SHARE FROM
CHANGE IN ACCOUNTING FOR INCOME TAXES $ 0.33$ -$ -
EARNINGS (LOSS) PER COMMON SHARE ON NET INCOME$ (10.11)$ 1.61$ 1.72
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
(in thousands of dollars)
1993 1992
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 6,833 $ 13,133
Marketable securities 27,314 33,493
Trade accounts receivable, less allowance for
uncollectible accounts of $1,376 in 1993 and
$107 in 1992 144,287 122,709
Finance receivables 5,715 2,244
Inventories 126,142 129,720
Prepaid expenses 16,499 15,684
Recoverable income taxes 36,283 13,144
Net assets related to discontinued operations 170,435 192,072
Total current assets 533,508 522,199
PROPERTY, PLANT, AND EQUIPMENT:
Land and land improvements 52,272 58,636
Buildings and leasehold improvements 91,130 97,250
Machinery and equipment 155,071 166,364
Rental equipment 39,800 85,327
Oil and gas properties 47,901 44,327
386,174 451,904
Accumulated depreciation and amortization (131,589) (156,105)
254,585 295,799
Property under capital leases, less accumulated
amortization of $14,825 in 1993 and $15,247 in 1992 12,540 17,825
Net property, plant, and equipment 267,125 313,624
OTHER ASSETS:
Investments in affiliates 10,321 10,342
Patents 1,425 1,502
Goodwill 58,532 57,924
Prepaid pension costs 10,591 8,422
Other 96,959 151,936
Long-term finance receivables 19,942 9,976
Total Assets $ 998,403 $1,075,925
The accompanying Notes to Consolidated Financial Statements are an integral part of
these balance sheets.
</TABLE>
<PAGE> 26
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
(in thousands of dollars)
1993 1992
<S> <C> <C>
LIABILITIES
Current Liabilities:
Notes payable $ 90,891 $ 47,747
Current maturities of long-term debt 109,674 40,939
Accounts payable 113,900 78,978
Accrued salaries and wages 14,910 15,476
Other accrued expenses 69,822 32,952
Insurance loss reserves 6,752 7,722
Accrued federal income taxes - 4,239
Long-term debt classified as current 270,952 -
Total current liabilities 676,901 228,053
LONG-TERM DEBT 64,666 365,123
DEFERRED FEDERAL INCOME TAXES 20,604 55,357
OTHER LONG-TERM LIABILITIES 32,563 32,628
Total Liabilities 794,734 681,161
MINORITY INTEREST 435 212
STOCKHOLDERS' EQUITY
Preferred stock - -
Common stock 1,874 1,852
Capital surplus 127,488 123,150
Retained earnings 124,020 315,698
Unearned compensation (31,003) (29,955)
Cumulative translation adjustment (18,956) (16,093)
Unrealized loss on investments (189) (100)
Total stockholders' equity 203,234 394,552
Total liabilities and stockholders' equity $ 998,403 $1,075,925
SUPPLEMENTAL STOCK INFORMATION
Shares Outstanding at Dec. 31
1993 1992
Preferred Stock - Authorized Shares 3,217,495 - -
Common Stock A - Authorized Shares 18,000,00013,750,86313,566,407
Common Stock B - Authorized Shares 18,000,0004,988,507 4,957,300
Par Value of Outstanding Shares
1993 1992
Preferred Stock - $1.00 par value $ - $ -
Common Stock A - $1.00 par value 1,375,086 1,356,641
Common Stock B - $1.00 par value 498,851 495,730
$1,873,937 $1,852,371
The accompanying Notes to Consolidated Financial Statements are an integral part of
these balance sheets.
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992, AND 1991
(in thousands of dollars)
Common Stock Capital Surplus Retained Unearned Gains
Class A Class B Class A Class B Earnings Compensation(Losses)(a)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1990 $1,359 $ 511 $110,034 $17,743 $279,696 $ (52,852) $ (409)
Net income 30,069
Dividends declared:
Common stock A, $.50 per share (6,794)
Common stock B, $.50 per share (2,515)
Other common stock transactions, net (3) (13) (135) (437) (2,107)
Restricted Stock Purchase Plan, net 5 4 (330) 101 32 3,155
Amortization of Unearned ESOP Compensation (1,382) (645) 600 7,447
Unrealized gain on investments 544
BALANCE, DECEMBER 31, 1991 $1,361 $ 502 $108,187 $16,762 $298,981$ (42,250) $ 135
Net income 28,299
Dividends declared:
Common stock A, $.50 per share (6,781)
Common stock B, $.50 per share (2,473)
Other common stock transactions, net (3) (6) (89) 1,511 (2,829)
Restricted Stock Purchase Plan, net (2) (1,283) (302) 4,848
Amortization of Unearned ESOP Compensation (1,116) (520) 501 7,447
Unrealized loss on investments (235)
BALANCE, DECEMBER 31, 1992 $1,356 $ 496 $105,699 $17,451 $315,698$ (29,955) $ (100)
Net (loss) (179,775)
Dividends declared:
Common stock A, $.435 per share (5,850)
Common stock B, $.435 per share (2,141)
Other common stock transactions, net (20) (17) (1,708) (605) (4,392)
Restricted Stock Purchase Plan, net 39 20 6,694 3,400 (8,493)
Amortization of Unearned ESOP Compensation (2,636) (807) 480 7,445
Unrealized loss on investments (89)
BALANCE, DECEMBER 31, 1993 $1,375 $ 499 $108,049 $19,439 $124,020$ (31,003) $ (189)
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
(a) Represents net unrealized gains or losses on marketable securities held by the insurance subsidiary.
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDING DECEMBER 31, 1993, 1992, and 1991
(in thousands of dollars)
1993 1992 1991
<S> <C> <C> <C>
Cash flows from operating activities:
Income from continuing operations $(179,334)$ 18,878 $ 14,993
Income from discontinued operations (6,280) 9,421 15,076
Cumulative effect of accounting change 5,839 - -
Adjustments to reconcile net income to net
cash provided by operating activities-
Change in accounting estimate 77,344 - -
Depreciation and amortization 43,114 41,621 38,931
Undistributed equity losses (485) 251 611
Amortization of unearned ESOP compensation 4,482 6,312 6,020
Net gain on sale of property, plant, and equipment(14,262)(2,496) (360)
Other, net 56,520 (3,436) 11,499
Changes in assets and liabilities, net of
effects from purchase of businesses-
(Increase) decrease in trade accounts receivable(19,088) 56,954 (8,497)
Increase (decrease) in allowance for doubtful
accounts 1,531 (682) (284)
(Increase) decrease in finance receivables (13,602) (11,220) (1,000)
(Increase) decrease in inventories 9,083 6,314 30,417
(Increase) decrease in prepaid expenses (2,568) (1,368) (443)
(Increase) decrease in prepaid pension cost (3,150) (1,804) (1,079)
(Increase) decrease in other assets (10,552) (37,652) (1,112)
Increase (decrease) in accounts payable 38,882 6,959 5,525
Increase (decrease) in accrued expenses 39,330 (9,642) (9,134)
Increase (decrease) in deferred and accrued taxes(62,131) 8,837 4,650
Increase (decrease) in insurance loss reserves 1,303 1,292 2,317
Increase (decrease) in other long-term liabilities(173) (3,453) 4,188
Increase (decrease) in unearned premiums 1,757 130 4,649
Net cash provided (used) by operating activities (32,440) 85,216 116,967
Cash flows from investing activities:
Capital expenditures (109,557) (100,354) (96,270)
Payment for purchases of businesses and
investments, net of cash acquired (5,661) (9,792) (8,332)
Proceeds from sale of property, plant, and equipment73,95274,756 19,487
Purchases of marketable securities, net 6,573 (13,159) (17,171)
Net cash provided (used) in investing activities (34,693) (48,549) (102,286)
Cash flows from financing activities:
Proceeds from long-term debt 12,104 34,782 70,692
Principal payments on long-term debt (38,147) (69,830) (79,150)
Net borrowing under(repayments of)notes payable,
net of effects from purchases of businesses 102,842 4,893 (319)
Dividends paid (7,991) (9,254) (9,309)
Common stock transactions, net (6,157) (3,091) (3,036)
Net cash provided by (used by) financing activities 62,651 (42,500) (21,122)
Net increase (decrease) in cash and equivalents (4,482) (5,833) (6,441)
Cash and equivalents at beginning of year 14,613 20,446 26,887
Cash and equivalents at end of year $ 10,131$ 14,613 $ 20,446
- Continuing operations $ 6,833$ 13,133 $ 11,956
- Discontinued operations $ 3,298$ 1,480 $ 8,490
Supplemental disclosures of cash flow information:
Cash paid during the year for -
Interest (net of amount capitalized) $ 36,781 $ 38,550 $ 39,532
Domestic federal income taxes 652 5,564 5,214
The accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
</TABLE>
<PAGE> 29
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
(1) Summary of Significant Accounting Policies:
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include the accounts of Figgie International Inc. and its majority-
owned subsidiaries (collectively the Company). All significant
intercompany transactions and accounts have been eliminated in
consolidation.
MARKETABLE SECURITIES. At December 31, 1993 and 1992, marketable
securities consisted primarily of marketable equity securities and U.S.
Treasury Notes and Bonds. The investments are carried at the lower of
cost or market value. There was no significant difference between cost
and market value at December 31, 1993 and 1992.
ACCOUNTS RECEIVABLE.
<TABLE>
<CAPTION>
Accounts receivable are comprised of the following:
(in thousands of dollars)
1993 1992
<S> <C> <C>
Receivables sold $ - $ 30,000
Less receipts - 30,000
Due from bank - -
Trade accounts receivable 145,663 122,816
Allowances for uncollectible accounts (1,376) (107)
$144,287 $122,709
Beginning in 1992, pursuant to the terms of a non-notification, non-
recourse financing program, the Company sold certain of its accounts
receivable to a bank on a pre-approved basis. A service charge is
assessed on receivables sold, and interest is charged on advances on
uncollected sold receivables at approximately the same rate as the
Company's revolving credit agreement. Total service charges for 1993
and 1992 were $241,238 and $71,000, respectively. Interest charges for
1993 and 1992 were $769,781 and $110,000, respectively. As of December
31, 1993, there were no balances outstanding under this program. The
carrying amount of accounts receivable approximates fair market value
due to their current nature.
The Company's finance receivables bear interest which approximates
current market rates and therefore the carrying amount approximates
fair market value.
</TABLE>
INVENTORIES. All inventories are carried at the lower of first-in first-
out (FIFO) cost or market value. It is impractical to segregate
inventories into major classes due to the nature of the items and the
businesses carried on by the Company and its subsidiaries.
CONTRACTS IN PROCESS. Contracts in process are generally accounted for
under the percentage-of-completion method, using costs incurred to date
in relation to estimated total costs of the contracts to measure the
stage of completion. The cumulative effects of revisions of estimated
total contract costs and revenues are recorded in the period in which
the facts requiring the revision become known. When a loss is
anticipated on a contract, the full amount thereof is provided
currently. Claims, including change orders, are recorded at estimated
recoverable amounts. The amounts of retainages and amounts
representing claims or other similar items subject to uncertainty
included in trade accounts receivable were not material. At December
31, 1993 and 1992, approximately $31,878,000 and $27,669,000,
respectively, were included in trade accounts receivable but had not
been billed due primarily to differences in the billing and production
cycles. Other long term contract costs included in trade accounts
receivable at December 31, 1992 amounted to $1,419,000. There were no
other long-term contract costs included in trade accounts receivable at
December 31, 1993. Included in trade accounts receivable at December
31, 1993 is $4,821,000, which is not expected to be collected within
the next year. The amount of contracts in process and progress
payments applied against contracts in process included in inventories
was $198,094,000 and $195,138,000, respectively, at December 31, 1993,
and $226,070,000 and $224,007,000, respectively, at December 31, 1992.
<PAGE> 30
PROPERTY, PLANT, AND EQUIPMENT. Property, plant, and equipment values
are stated at cost and depreciated over the estimated useful lives of
the assets, generally by the straight-line method. The principal rates
of depreciation are: Buildings, 2-1/2%; Machinery and Equipment, 8-
1/3%; Rental Equipment, 12-1/2% and 25%; Leasehold Improvements, life
of lease. Oil and gas properties are amortized on the unit of
production method.
CAPITALIZATION OF INTEREST. The Company capitalizes interest costs during
the development period of certain properties. Total interest
capitalized was approximately $608,288 in 1993, $2,577,000 in 1992, and
$2,872,000 in 1991.
INVESTMENTS. Investments in unconsolidated minority owned companies are
carried on the equity basis, which approximates the Company's equity in
their underlying net book value.
INTANGIBLES. Goodwill accounts, which represent costs in excess of net
assets of purchased businesses, are generally amortized over a 40-year
period. At December 31, 1993 and 1992, accumulated amortization was
$19,404,000 and $16,794,000, respectively. Management, which regularly
evaluates its accounting for goodwill considering principally
historical and projected operating results, believes that the asset is
realizable and the amortization period appropriate. Patents are
amortized over their statutory or estimated useful lives. As of
December 31, 1993 and 1992, accumulated amortization was $5,178,000 and
$5,054,000, respectively.
RESTRUCTURING CHARGES. Restructuring charges, included in the
accompanying consolidated statements of income, include costs
associated with the relocation and consolidation of various Company
facilities and operations, provisions for anticipated losses on sales
of real estate, consulting fees to assist with the development of
strategic business plans, and costs incurred in retooling its plants.
RESEARCH AND DEVELOPMENT COST. During 1993, 1992, and 1991, approximately
$26,897,000, $8,333,000, and $13,916,000, respectively, was included in
cost of sales for research and development.
FACTORY AUTOMATION COSTS. The Company has incurred certain costs directly
related to its factory automation project encompassing owned and leased
machinery, software, and outside consultant fees. The owned machinery
component of these project costs is depreciated in accordance with the
useful lives discussed above. All other project costs are expensed as
incurred. Prior to December 31, 1993, all other project costs were
deferred and amortized over a period not exceeding five years. See
Note 15, "Accounting Change".
INCOME TAXES. The provision (benefit) for income taxes is based upon
results from continuing operations before the cumulative effect of
change in accounting. Results from discontinued operations have been
disclosed net of tax.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109 "Accounting for Income Taxes", effective January 1, 1993. The
cumulative effect of such adoption was to increase earnings by
$5,839,000, or $.33 per share, for the year ended December 31, 1993.
This accounting standard was adopted prospectively in 1993; all prior
periods have not been restated.
The 1993 benefit for federal income taxes includes a charge of
$1,992,000 which represents the effect of the U.S. federal income tax
rate increase from 34% to 35% on net deferred tax liabilities.
Since it is not practicable to determine the tax effect of accumulated
unremitted foreign earnings as of January 1, 1993, the Company has
elected to prospectively provide deferred U.S. income taxes on foreign
earnings which are taxed at a rate below that of the U.S. statutory
rate of 35%. Management believes that any liability related to the
remittance of foreign earnings from continuing operations would not be
material to the financial statements.
<PAGE> 31
EARNINGS PER SHARE. Earnings per common share are based upon the weighted
average number of shares outstanding during each year (17,774,900 in
1993, 17,539,472 in 1992, and 17,451,099 in 1991). The unallocated
shares of the non-leveraged Employee Stock Ownership Plan are not
considered outstanding for earnings per share purposes. For 1993,
pursuant to the adoption of Statement of Position 93-6 "Employers'
Accounting for Employee Stock Ownership Plans", the unallocated shares
of the leveraged Employee Stock Ownership Plan are not considered
outstanding for earnings per share purposes. These shares were
considered outstanding for 1992 and 1991 earnings per share.
FOREIGN CURRENCY TRANSLATION.
<TABLE>
<CAPTION>
For most international operations, assets and liabilities are
translated at year-end exchange rates, and income statement items are
translated at average exchange rates prevailing during the year.
Translation adjustments are recorded as a separate component of
stockholders' equity. An analysis of this account follows:
(in thousands of dollars)
1993 1992 1991
<S> <C> <C> <C>
Balance at beginning of year $(16,093)$ (5,287)$ (3,875)
Translation adjustments (2,863) (10,806) (1,412)
Balance at end of year $(18,956)$(16,093)$ (5,287)
For international operations in hyperinflationary economies, certain
assets (principally inventory and depreciable equipment) and
liabilities and related income statement accounts are translated at
exchange rates in effect when the assets were acquired or the
liabilities were incurred. All other assets and liabilities are
translated at year-end exchange rates, and all other income and expense
items are translated at average exchange rates prevailing during the
year. These translation adjustments are included in income. Foreign
currency translation gains included in income in 1993, 1992, and 1991
were $924,000, $615,000, and $559,000, respectively.
</TABLE>
CASH AND CASH EQUIVALENTS. For purposes of the consolidated statements
of cash flows, the Company considers all highly liquid investments with
an original maturity of three months or less to be cash equivalents.
The carrying amount of cash equivalents approximates their fair market
value due to the short maturity of those investments. The effect of
foreign currency translation on cash held by foreign divisions is not
material.
OTHER ASSETS. Included in other assets in the accompanying balance sheet
are amounts representing the estimated net realizable value of net
assets of the Company's finance subsidiary, which continues to be held
for sale, approximating $38,157,000 and $62,192,000 as of December 31,
1993 and 1992, respectively.
SELF-INSURANCE PROGRAMS. The Company is self-insured for certain levels
of general liability and workers' compensation coverage. Estimated
costs of these self-insurance programs are accrued at present values
based on projected settlement dates for known and anticipated claims.
Any resulting adjustments to previously recorded reserves are reflected
in current operating results.
<PAGE> 32
RECLASSIFICATION OF AMOUNTS. Certain amounts for 1992 and 1991 have been
reclassified to reflect comparability with account classifications for
1993.
(2) Liquidity and Restructuring Plans:
As a result of 1993 operating results, the Company was not in
compliance as of December 31, 1993 with certain financial covenants
contained in certain debt agreements, which permit its lenders to
accelerate the due date on its debt; however the Company has
subsequently received temporary waivers with respect to those financial
covenants. Since permanent waivers or modifications of these covenants
have not been obtained, $271 million of long-term debt has been
classified as current.
The Company is currently negotiating with banks party to its revolving
credit facility, other domestic and foreign banks, and other financial
institutions in an effort to finalize a satisfactory restructuring of
its debt. As part of the restructuring plan, the Company intends to
dispose of certain businesses under a divestiture program designed to
pay down debt through the use of proceeds upon sale. See Note 3,
"Discontinued Operations".
The Company's consolidated financial statements have been presented on
the basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal
course of business. The Company's ability to continue as a going
concern is dependent upon its ability to successfully complete its debt
restructuring efforts. Until such debt restructuring is completed,
there is substantial doubt about the Company's ability to continue as
a going concern. The consolidated financial statements do not include
any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that may result
should the Company be unable to continue as a going concern.
(3) Discontinued Operations:
In December of 1993, the Company instituted a divestiture plan as part
of its debt restructuring efforts to dispose of certain businesses
through unrelated sales transactions. These entities represent
separate major lines of business, class of customers, or non-reportable
business segments and, accordingly, have been treated as discontinued
operations as required by generally accepted accounting principles. As
a result of this treatment, the accompanying consolidated financial
statements have been reclassified to report separately the net assets
and operating results of the following operations: Rawlings Sporting
Goods, Sherwood-Drolet Corp. Ltd., Advance Security, American Lafrance,
Safety Supply America, Medical Devices, Huber/Essick/Mayco Pump,
Cardinal Casualty Co., Colony Insurance Co., Hamilton Insurance Co.,
Waite Hill Services.
Net assets of the discontinued operations at December 31, 1993
consisted primarily of accounts receivable, inventory, and machinery
and equipment offset by insurance loss reserves related to the
insurance companies.
As a group, the discontinued operations represented sales volumes of
$379 million, $380 million, and $401 million for 1993, 1992, and 1991,
respectively, and are excluded from the reported sales amounts. Net
income from discontinued operations includes provisions for federal and
state taxes at the statutory rates for the applicable period.
No provision for loss on disposal of discontinued operations has been
provided as the Company expects its divestiture plan to result in a net
gain. During the first quarter of 1994, the Company sold Advance
Security to a privately held corporation. Although the transaction is
not closed, the Company is estimating a financial reporting gain of
approximately $21 million, subject to any adjustments pursuant to the
terms of the agreement.
<PAGE> 33
<TABLE>
<CAPTION>
(4) Income Taxes:
Income tax provision (benefit) consists of the following components:
(in thousands of dollars)
1993 1992 1991
<S> <C> <C> <C>
Current Provision (Benefit):
Domestic $ (31,689)$ (20,033) $ (4,035)
Foreign (660) 2,068 2,128
Total (32,349) (17,965) (1,907)
Deferred Provision (Benefit):
Domestic (29,576) 23,151 4,110
Foreign (3,128) (93) (50)
Total (32,704) 23,058 4,060
U.S. State Income Taxes (Benefit) (6,142) 1,546 1,219
Total from Continuing Operations (71,195) 6,639 3,372
Discontinued Operations (3,891) 6,283 9,799
Cumulative Effect of Change in Accounting (5,839) - -
Total Tax Provision (Benefit) $ (80,925)$ 12,922 $ 13,171
</TABLE>
<TABLE>
<CAPTION>
The following table contains a reconciliation of the actual tax provision
(benefit) to the U.S. federal income tax rate effective for each year for
continuing operations:
1993 1992 1991
<S> <C> <C> <C>
Statutory Federal Tax Rate (35.0) 34.0 34.0
Benefit and Insurance Plans - (6.0) (6.9)
Foreign Sales Corporation (0.3) (2.5) (5.0)
International Rate Differential - 1.1 2.2
Goodwill 0.3 2.4 3.0
Other (net) 3.3 (1.9) (5.1)
State Income Taxes (Net of
Federal Tax) (1.6) 4.0 4.4
Current Effect of Change in Federal Rate0.8 - -
Valuation Allowance (Net of Tax Credits) 4.1 (5.1) (8.2)
Net difference between effective rate and
U.S. statutory rate 6.6 (8.0) (15.6)
Effective Tax Rate (Benefit) (28.4) 26.0 18.4
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
The components of the net deferred tax liability as of December 31, 1993 are as
follows:
(in thousands of dollars)
1993
<S> <C>
Deferred Tax Assets:
Allowance for doubtful accounts $ 4,664
Deferred compensation plans 5,307
Insurance and other reserves 7,586
Contingency reserves 7,771
Factory automation 6,873
Inventory reserves 4,026
Operating losses and tax credit carryforwards (net)19,365
Other (net) 10,807
Foreign (net) 3,031
Total deferred tax assets 69,430
Deferred Tax Liabilities:
Property, plant and equipment (41,291)
Benefit plans (11,243)
Intangible drilling costs (5,029)
Other (net) (32,471)
Total deferred tax liabilities (90,034)
Net deferred tax liabilities $ (20,604)
As of December 31, 1993, the Company, for tax reporting purposes, has tax credit
carryforwards of $19,898,000 which will begin to expire in 1994, and operating
loss carryforwards of $31,791,000 which will begin to expire in 1996.
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
(5) Notes Payable:
At December 31, 1993 and 1992, the Company was obligated under various short-
term borrowings as follows:
(in thousands of dollars)
1993 (c) 1992
Balance Average Balance Average
Outstanding Rate Outstanding Rate
<S> <C> <C> <C> <C>
Lines of Credit (a) $ 8,029 9.34% $ 15,172 6.51%
Other (b) 82,862 5.12% 32,575 3.89%
Total $ 90,891 $ 47,747
(a) Unused Lines of Credit totaled $6,027,000 and $30,034,000 at December 31,
1993 and 1992, respectively.
(b) Unused other lines of credit, primarily uncommitted, totaled $0 and
$48,675,000 at December 31, 1993 and 1992, respectively.
(c) The carrying amount of short-term borrowings approximates their fair value
due to their short-term nature and variable interest rates.
The amounts which remain outstanding at December 31, 1993 are pursuant to demand
obligations. Subject to certain conditions, the Company has temporary
arrangements with the note holders pursuant to which amounts outstanding will
not be demanded, pending the outcome of the Company's debt restructuring
efforts.
</TABLE>
<TABLE>
(6) Debt:
Total debt at December 31, 1993 and 1992 consisted of the following:
(in thousands of dollars)
1993 1992
Financial Fair Financial
Reporting Value ValueReporting Value
<S> <C> <C> <C>
Notes and mortgages payable:
Revolving credit agreement $150,000 $150,000 $ 80,000
9.875% Notes due 1999 174,000 176,610 174,000
8.49% Notes due 1993 5,000
ESOP Note due 1996 10,000 10,000 10,000
4.25% Note due 1993 6,000
4.531% Note due 1993 2,000
8.0% Note due 1994 2,000
6.55% Note due 1995 5,000
5.97% Note due 1995 5,000
6.75% Note due 1995 15,000 15,000 25,000
3.94% Note due 1994 10,000 10,000
Mortgage notes payable at various
dates to 2009 with interest rates
ranging from 7.0% to 12.25% 64,666 64,666 68,174
Other debt and notes payable at
various dates to 2002 with
interest rates ranging from
3.0% to 12.0% 614 614 923
Total notes and mortgages payable424,280 426,890 383,097
Obligations under capital lease 10,012 10,012 11,751
Subordinated Debt:
10.375% Debentures due 1997 11,000 11,028 11,214
Total 445,292 $ 447,930 406,062
Less - current maturities 109,674 40,939
Less - Long-Term Debt classified
as current 270,952 -
Long-term debt $ 64,666 $ 365,123
The fair value of the Company's debt is estimated based on the quoted
market price for the same or similar issues or on the estimated current
rates available to the Company for debt of the same remaining
maturities.
</TABLE>
<PAGE> 36
The Company had available a Revolving Credit Agreement (Agreement) in the
amount of $150,000,000 provided by a group of nine banks, with interest
at either the Base Rate, Certificate of Deposit rates, or Eurodollar
rates, as defined in the Agreement, at the option of the Company. The
Agreement required the Company to pay a facility fee of 1/4 of 1% on
the entire commitment and a commitment fee of 1/8 of 1% on the unused
portion of the commitment. The outstanding balance in the amount of
$150,000,000 was converted to a two-year term loan effective December
31, 1993, requiring quarterly principal payments in equal amounts until
December 31, 1995 at the current interest rate of 6.25%. As a result
of the current year operating loss, the Company was not in compliance
as of December 31, 1993 with certain financial covenants contained in
the Agreement and did not make its first quarter scheduled principal
payment. The Company subsequently received a temporary waiver with
respect to the financial covenants and non-payment. Pending completion
of the Company's debt restructuring efforts, the entire balance of the
term loan is presented as long-term debt classified as current in the
accompanying consolidated balance sheet.
In October 1989, the Company completed the registration and sale of
$175,000,000 of 9.875% Senior Notes due October 1, 1999. During 1990,
$1,000,000 of the notes were repurchased on the open market. Interest
is payable semi-annually on April 1 and October 1, commencing April 1,
1990. The net proceeds of the offering, totaling approximately
$173,560,000, were used to reduce variable-rate debt that had been used
to finance operations, acquisitions, and repurchases of shares. While
the Company is in compliance with the Indenture Agreement, the amount
due under the Senior Notes has been classified as a current liability
in the accompanying consolidated balance sheet, pending completion of
the Company's debt restructuring efforts.
The ESOP Note is payable in equal annual installments through 1996. This
note bears interest at 85% of the lender`s base rate. The December 31,
1993 payment of $2,500,000 was waived pending restructuring of the
Company's total debt facility. Pending completion of the Company's
debt restructuring efforts, the ESOP Note is presented as long-term
debt classified as current in the accompanying consolidated balance
sheet.
The 10.375% subordinated debentures are redeemable at a premium prior to
1998. The Company is required to make annual payments of $1,500,000
into a sinking fund through 1997, with a $5,000,000 payment in 1998.
All required redemptions have been made. While the Company is in
compliance as of December 31, 1993 with the subordinated indenture
agreement, the amounts due under the subordinated debentures have been
presented as long-term debt classified as current in the accompanying
consolidated balance sheet pending completion of the Company's debt
restructuring efforts.
The Company was not in compliance, as of December 31, 1993, with certain
financial covenants contained in its 3.94% Notes; however, it has
subsequently received temporary waivers with respect to those financial
covenants. Pending completion of the Company's debt restructuring
efforts, the notes are presented as long-term debt classified as
current in the accompanying consolidated balance sheet.
While the Company was in compliance as of December 31, 1993 with the
covenants contained in the 6.75% Note Agreement, the amount due has
been presented as long-term debt classified as current in the
accompanying balance sheet pending completion of the Company's debt
restructuring efforts.
Mortgage notes payable are secured by real property and are non-recourse
to the Company. The Company was in compliance at December 31, 1993
with these mortgage notes. These mortgage notes payable are classified
as long-term debt in the accompanying consolidated balance sheet.
Excluding the effects of any final negotiations with its lender, the
scheduled principal payments on the long-term debt, excluding the
obligations under capital leases, are approximately as follows: 1994 -
$105.0 million; 1995 - $87.7 million; 1996 - $7.8 million; 1997 - $6.7
million; 1998 - $9.3 million; and $218.8 million thereafter.
<PAGE> 37
<TABLE>
<CAPTION>
(7) Leases:
The Company operates various facilities and equipment under lease arrange-
ments that are classified as capital leases. The following is a
summary of assets under capital leases:
(in thousands of dollars)
December 31
Classes of Property: 1993 1992
<S> <C> <C>
Buildings $ 75 $ 75
Machinery and equipment 27,290 32,997
Total 27,365 33,072
Less accumulated amortization 14,825 15,247
Net $ 12,540 $ 17,825
</TABLE>
<TABLE>
<CAPTION>
The following is a schedule by year of future minimum lease payments
under capital leases together with the present value of the net
minimum lease payments as of December 31, 1993:
(in thousands
of dollars)
Year Ending December 3l,
<S> <C>
1994 $ 5,188
1995 3,313
1996 1,639
1997 881
1998 and Later 226
Total minimum lease payments 11,247
Less amount representing interest 1,235
Present value of net minimum lease payments $ 10,012
</TABLE>
<PAGE> 38
<TABLE>
<CAPTION>
The Company leases various facilities and equipment under operating
lease arrangements. Rental commitments under noncancellable
operating leases, including the effects of the sale/leaseback
transactions discussed below, as of December 31, 1993, were as
follows:
(in thousands
of dollars)
Year Ending December 31,
<S> <C>
1994 $ 29,340
1995 28,212
1996 25,889
1997 24,090
1998 18,405
Later years 40,413
Total minimum payments required $166,349
In 1992, the Company completed a sale/leaseback of certain machinery and
equipment. The machinery and equipment were sold for $49 million
with the proceeds used to repay existing capital lease debt ($23.3
million), expenses of the transaction ($.7 million), and bank debt
($25 million). In 1993 the Company completed sale/leaseback
transactions of certain machinery and equipment with sales totaling
$6 million. The proceeds were used to repay bank debt. There were
no gains recognized from these transactions. On these and certain
other machinery and equipment operating leases, the Company has
guaranteed the lessors residual values of approximately 15% of the
original cost of the machinery and equipment at the end of the lease
terms.
In 1993, the Company completed sale/leaseback transactions of certain
rental equipment. The rental equipment was sold for $50 million with
the proceeds used to repay expenses of the transaction ($.7 million)
and bank debt ($49.3 million). Total deferred gain on these
transactions was $11.7 million, which will be recognized as income
over the applicable lease terms. During the terms of these leases,
the Company has the option to repurchase the lessor's rights in
specific equipment by replacing the equipment with equipment of
comparable value. On these and certain other rental equipment
operating leases, the Company has guaranteed the lessors residual
values of approximately 88% of the replacement cost, as defined, of
the rental equipment at the end of the lease terms.
Due to the 1993 operating results and the planned disposition of certain
businesses, the Company was in non-compliance with certain operating
lease covenants; however, it has received temporary waivers. Non-
compliance with these operating lease covenants beyond the current
or future waiver periods could prohibit the Company from exercising
renewal options and may require the re-negotiation of these operating
leases or result in the acceleration of the residual value
guarantees.
</TABLE>
Total operating lease expense was approximately $28,292,000 in 1993,
$21,666,000 in 1992, and $19,205,000 in 1991.
<PAGE> 39
(8) Contingent Liabilities:
As reported under Item 3 "Legal Proceedings", the Company appealed to
the United States Court of Appeals for the Ninth Circuit from a
Federal District Court's summary judgement against the Company in a
suit brought by the Federal Trade Commission seeking consumer redress
in connection with the sale of heat detectors manufactured by the
Company's Interstate Engineering division. In a Per Curiam opinion
filed on May 7, 1993, the Court of Appeals affirmed in part and
vacated in part the judgement of the District Court. The Court of
Appeals held that the District Court had committed error in ordering
the Company to pay a minimum amount of approximately $7,600,000 but
held that the Company could be required to pay refunds to those
buyers who, after notification, can make a valid claim for redress.
The Company's subsequent petition for a writ of certiorari to the
United States Supreme Court was denied and the Company is working
with the Federal Trade Commission to implement a redress program.
The Company has provided a reserve for the estimated liability
related to this matter.
In two separate suits, three stockholders of the Company filed
derivative complaints during 1993 in the Common Pleas Court of Lake
County, Ohio seeking recovery on behalf of the Company for alleged
self-dealing, waste of corporate assets, asset overstatements, gross
mismanagement and participation or acquiescence in such practices by
Directors of the Company, all of whom were named as defendants. The
Court has consolidated the two suits and the defendants have filed
motions to dismiss.
Additionally, the Company and its subsidiaries are defendants in various
lawsuits arising in the ordinary course of business. The Company has
provided a reserve for the estimated liability related to known
cases. In the opinion of management, any additional liability with
respect to these matters will not have a material effect on the
Company's financial statements. Costs incurred by the Company in the
performance of U.S. Government contracts are subject to audit. In
the opinion of management, the final settlement of these costs will
not result in significant adjustments to recorded amounts.
<PAGE> 40
(9) Pension and Employee Stock Ownership Plans
The Company has pension plans covering the majority of its employees.
The plan benefits for salaried employees are based on employees'
earnings during their years of participation in the plan. Hourly
employees' plan benefits are based on various dollar units multiplied
by the number of years of eligible service as defined in each plan.
The Company's policy has been to fund amounts as necessary on an
actuarial basis to comply with the Employee Retirement Income
Security Act of 1974. In addition, the Company has adopted a
nonqualified supplemental retirement plan covering certain officers
and senior executives.
<TABLE>
<CAPTION>
Net pension expense for continuing and discontinued operations included
the following components:
(in thousands of dollars) 1993 1992 1991
<S> <C> <C> <C>
Service cost-benefits earned
during period $ 3,399 $ 3,663 $ 3,510
Interest cost on projected
benefit obligation 5,145 4,673 4,271
Actual return on assets (6,788) (3,405) (7,397)
Net amortization and deferral 1,251 (1,605) 3,006
Net pension expense $ 3,008 $ 3,326 $ 3,390
</TABLE>
<TABLE>
<CAPTION>
The funded status of the Company's domestic and international plans in
1993 and 1992, along with the amounts recognized in the Company's
consolidated balance sheets, were as follows:
1993 1992
Assets Accum. Assets Accum.
Exceed Benefits Exceed Benefits
Accum. Exceed Accum. Exceed
(in thousands of dollars) Benefits Assets Benefits Assets
<S> <C> <C> <C> <C>
Accumulated
benefit obligations $ 55,637 $ 12,594 $ 23,114 $ 26,994
Vested benefit obligations $ 51,479 $ 11,805 $ 22,637 $ 24,131
Plan assets at fair value $ 64,417 $ 269 $ 38,490 $ 17,432
Projected benefit obligations (59,645) (14,374) (24,193) (33,104)
Assets over (under) projected
benefit obligation 4,772 (14,105) 14,297 (15,672)
Unrecognized net (assets)
liabilities at December 31 (5,715) 1,118 (6,301) 1,278
Unrecognized net (gain) loss 10,757 3,252 (94) 3,591
Prior service cost not yet
recognized 777 3,940 571 5,481
Adjustment required to
recognize minimum liability - (6,530) (51) (4,577)
Prepaid pension cost
(liability) at December 31$ 10,591 $(12,325) $ 8,422 $ (9,899)
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
projected benefit obligations were 7.5% and 5.0% for 1993 and 8.75% and
5.0% for 1992 and 1991. The expected long-term rate of return on assets
was 10% for all years. Prior service costs are being amortized over the
estimated remaining service lives of the participants.
</TABLE>
<PAGE> 41
The plans' assets consist primarily of listed common stocks, corporate and
government bonds, real estate investments, and cash and cash
equivalents. The plans' assets included 28,883 and 20,742 shares of the
Company's Class A Common Stock and 52,115 and 41,707 shares of the
Company's Class B Common Stock as of December 31, 1993 and 1992,
respectively.
The Company maintains two employee stock ownership plans: a leveraged plan
(the ESOP) and a non-leveraged plan (the New ESOP).
The ESOP holds a $20,000,000 note that is guaranteed by the Company and
bears interest at 85% of the lender's base rate. The note is currently
paying interest at a 5.1% rate, which, in management's opinion, fully
reflects the current market rate for a similar facility. The remaining
balance outstanding of $10,000,000 as of December 31, 1993 consists of
$2,500,000 past due, and the remaining $7,500,000 is payable in equal
annual installments of $2,500,000 through 1996. The ESOP used the
proceeds from the note to purchase 756,195 Class B shares, which are
allocated to active participant accounts each December 31 on a ratable
basis as the note is repaid. Contributions to fund the interest
requirements of the loan are reflected as interest expense in the
accompanying consolidated statements of income, approximating $365,000,
$290,000, and $756,000 (net of dividends of approximately $328,000 in
1993 and $374,000 in 1992 and 1991), were made by the Company during
1993, 1992, and 1991, respectively. During 1993, the Company elected to
prospectively account for the ESOP under the provisions of Statement of
Position 93-6, "Employers Accounting for Employee Stock Ownership
Plans." This election allows the Company to measure the compensation
expense based on the market value of the shares on the date of
allocation.
The New ESOP was established in 1989 by the transfer of surplus assets from
a terminated benefit plan. The New ESOP used the transferred funds to
directly and indirectly purchase 1,124,682 Class A and 440,796 Class B
shares. Under the terms of the New ESOP, no less than 12.5% of the
total shares are to be annually allocated to active participant accounts
based upon a formula utilizing salary and years of service. The
amortization to expense of the New ESOP unearned compensation is based
on the fair market value of the shares on the date of allocation.
Dividends on unallocated shares are charged to expense.
<TABLE>
<CAPTION>
Compensation expense associated with the allocation of ESOP and New ESOP
shares is as follows:
(in thousands of dollars) 1993 1992 1991
<S> <C> <C> <C>
ESOP $1,288 $2,500 $2,500
New ESOP 2,708 3,311 2,920
Dividends 486 501 600
$4,482 $6,312 $6,020
</TABLE>
The Company also maintains the Figgie International Inc. Stock Bonus Trust
and Plan (the Stock Plan). Under this Plan, shares of the Company's
Class B Common Stock are allocated to eligible employee accounts each
December 31 based on salary. The Company did not make contributions to
this plan in 1993, 1992, or 1991. The Stock Plan held 378,402 and
410,809 shares of the Company's Class B Common Stock as of December 31,
1993 and 1992, respectively.
In addition to providing pension benefits, the Company and its subsidiaries
provide certain health care and life insurance benefits for certain
retired employees. A small percent of the Company's employees become
eligible for these benefits paid by the Company if they reach retirement
age while working for the Company. For 1993, 1992, and 1991, those
premiums approximated $20,000 annually. Most of the Company's salaried
employees are eligible for medical benefits at retirement by paying the
full cost of the benefits.
The Company adopted FASB Statement No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" in 1993. Adoption of this
statement did not have any effect on the financial statements.
<PAGE> 42
(10) Capital Stock:
<TABLE>
<CAPTION>
The authorized, issued, and outstanding shares of each of the Company's
classes of capital stock were as follows:
CurrentlyIssued and Outstanding at December 31
Authorized 1993 1992 1991
<S> <C> <C> <C> <C>
Preference Stock,
$1 par value 3,217,495 - - -
Class A Common
Stock, 10 cents
par value 18,000,000 13,750,86313,566,40713,607,051
Class B Common
Stock, 10 cents
par value 18,000,000 4,988,507 4,957,3005,020,498
Each share of Class A Common Stock is entitled to one-twentieth of one
vote per share, while each share of the Class B Common Stock is
entitled to one vote per share, except, in each case, with respect to
shares beneficially owned by a Substantial Stockholder (as defined in
the Company's Restated Certificate of Incorporation, as amended), in
which case the voting rights of such stock will be governed by the
appropriate provisions of the Company's Restated Certificate of
Incorporation. It is the Company's current policy to declare and pay
dividends, if any, to holders of Class A Common Stock in an amount per
share equal to those paid to holders of Class B Common Stock.
</TABLE>
<PAGE> 43
(11) Restricted Stock Purchase Plan:
Under the 1993 Restricted Stock Purchase Plan for Employees (the "1993
Employees Plan"), up to 800,000 shares each of either Class A or Class
B Common Stock were authorized for issuance and executive officers and
other key employees were granted the right to purchase Common Stock at
prices substantially below market value. The purchase of Class A and
Class B Common Stock under this plan entitles the employee to full
voting and dividend rights, but the shares cannot be sold, transferred,
or pledged, and the certificates representing the shares are retained
in the custody of the Company. At the earliest of retirement, death,
or total disability of the employee, or termination of the plan, these
restrictions on transferring, pledging, or selling the shares expire,
and the employee or heirs take unrestricted custody of the stock. In
the event the employee leaves the Company prior to any of these
occurrences, the Company can repurchase the shares (or, in the case of
retirement, a portion of the shares) at the lower of the original
purchase price paid by the employee or the then prevailing market
price. At December 31, 1993, 402,833 shares of Class A Common Stock
and 156,877 shares of Class B Common Stock, respectively, subject to
the above restrictions, were outstanding under the 1993 Employees Plan.
At December 22, 1992, 442,978 shares of Class A Common Stock and 92,720
shares of Class B Common Stock, subject to similar restrictions, were
outstanding under the predecessor 1988 Restricted Stock Purchase Plan
for Employees (the "1988 Employees Plan"). On December 22, 1992, the
1988 Employees Plan was terminated and all restrictions on outstanding
shares lapsed.
Under the 1993 Restricted Stock Purchase Plan for Directors (the "1993
Directors Plan"), up to 75,000 shares of Class B Common Stock were
authorized for possible issuance and certain Directors of the Company
were granted the right to purchase shares of Class B Common Stock at
prices substantially below market value. The 1993 Directors' Plan
contains restrictions and other provisions similar to those of the 1993
Employees Plan. At December 31, 1993, 39,000 shares of Class B Common
Stock, subject to the above restrictions, were outstanding under the
Directors' Plan. At December 31, 1992, 42,000 shares of Class B Common
Stock, subject to similar restrictions, were outstanding under the
predecessor 1988 Restricted Stock Purchase Plan for Directors (the
"1988 Directors Plan"). On July 1, 1993, the 1988 Directors Plan
terminated and all restrictions on outstanding shares lapsed.
<TABLE>
<CAPTION>
The excess of the market price over the purchase price of the shares at
date of grant of $643,500 and $8,923,975 for the Directors' Plan and
the Employee's Plan, respectively, is deferred as Unearned Compensation
and is being amortized as compensation expense. Unamortized amounts
(unearned compensation) are shown as a reduction of stockholders'
equity. Under the various plans, the following amounts were amortized
to expense:
(in thousands of dollars)
1993
<S> <C>
1993 Employees Plan $ 885
1993 Directors Plan 64
Total $ 949
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
1988 Employees Plan $ - $4,690 $3,070
1988 Directors Plan 126 245 238
Total $ 126 $4,935 $3,308
</TABLE>
<PAGE> 44
(12) Land and Land Improvements:
The Company's real estate subsidiary develops land for recreational,
residential, and commercial purposes. Such investments in development
land were $50,238,000 and $57,433,000 at December 31, 1993 and 1992,
respectively. Related mortgage debt was $436,000 at December 31, 1993,
and $530,000 at December 31, 1992. Excess of investment over mortgage
debt was financed by the Company's Revolving Credit Agreement and
borrowings of the subsidiary under its own credit agreements.
(13) Purchase of Businesses:
In 1993 and 1992, the Company purchased businesses for a total cash
consideration of $5,892,000 and $2,913,000, respectively. All the
acquisitions are included in existing product groups.
All acquisitions were accounted for by the purchase method of accounting,
and the difference between the fair value of net assets acquired and
the purchase consideration has been allocated to goodwill. The results
of operations of these purchased businesses are not material to
consolidated totals and have been included in the accompanying consoli-
dated statements of income since the dates of acquisition.
Increases of $4,126,000 and $3,100,000 were recorded in goodwill relating
to the purchases of businesses in 1993 and 1992, respectively.
Additionally, in 1992 the Company purchased a 20% interest in a medical
products company for $7,432,000.
(14) Business Segment Data:
The Company's operations are conducted through five business segments.
These segments and the primary operations of each are described on
pages 2 through 9.
Pages 11 through 13 contain a summary of certain financial data for each
business segment for 1993, 1992, and 1991. Information concerning the
content of this financial data is as follows: Intersegment sales are
generally at current market prices. Operating profit is total revenue
less operating expenses and does not include general corporate
expenses, interest expense, interest income, or federal and state
income taxes. Identifiable assets are those assets used in the
Company's operation for each segment. Corporate assets are principally
cash and corporate property.
(15) Accounting Change:
In connection with its factory automation project, the Company has
incurred significant costs, including machinery and equipment,
software, and outside consulting fees. These project costs have
historically been deferred and amortized over future periods commencing
at the time the equipment is placed into service. Due to a number of
factors which arose in 1993, including deteriorating operating results,
cash flow and financing difficulties, the Company adopted a change in
accounting by expensing all project costs, other than machinery and
equipment, as incurred. As required by generally accepted accounting
principles, the accounting change, amounting to an after tax charge
approximating $50 million ($77 million pre-tax) or $2.80 per share, has
been recorded as a change in estimate and recorded in the results of
operations for the fourth quarter of 1993.
<PAGE> 45
<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA (UNAUDITED)
This information is required by the Securities and Exchange Commission and is unaudited.
First Second Third Fourth See
Quarter Quarter Quarter Quarter NOTE
(in thousands of dollars, except for per share data) B
<S> <C> <C> <C> <C>
1993 (As previously reported):
Net sales $281,809 $292,393 $272,995 $300,306
Gross profit 75,249 73,235 60,747 6,841
Net income (loss):
Net income (loss) before accounting change 6,285 3,482 (14,445) (180,936)
Cumulative effect of change in accounting
for income taxes 5,839 0 0 0
Net income (loss) 12,124 3,482 (14,445) (180,936)
Earnings (loss) per share:
Net income (loss) before accounting change 0.36 0.20 (0.80) (10.07)
Cumulative effect of change in accounting
for income taxes 0.33 - - -
Net income (loss) 0.69 0.20 (0.80) (10.07)
1993 (Restated) See NOTE A:
Net sales $181,068 $203,955 $189,362 $194,257
Gross profit 46,494 46,324 28,235 (25,527)
Net income (loss):
Continuing operations (365) (277) (16,462) (162,230)
Discontinued operations 4,179 782 (2,387) (8,854)
Cumulative effect of change in accounting
for income taxes 5,839 - - -
Net income (loss) 9,653 505 (18,849) (171,084)
Earnings (loss) per share:
Continuing operations (0.02) (0.01) (0.92) (9.03)
Discontinued operations 0.24 0.04 (0.13) (0.49)
Cumulative effect of change in accounting
for income taxes 0.33 - - -
Net income (loss) 0.55 0.03 (1.05) (9.52)
1992 (As restated) See NOTE A:
Net sales $200,096 $197,028 $194,906 $200,379
Gross profit 50,837 49,821 47,198 55,280
Net income (loss):
Continuing operations 5,063 2,898 3,856 7,061
Discontinued operations 3,900 1,662 608 3,251
Net income (loss) 8,963 4,560 4,464 10,312
Earnings (loss) per share:
Continuing operations 0.29 0.17 0.22 0.40
Discontinued operations 0.22 0.09 0.04 0.19
Net income (loss) 0.51 0.26 0.26 0.59
NOTE A:The previously reported quarters have been restated (1) to reflect the divestitures of certain
businesses as discontinued operations, and (2) with respect to 1993, to reflect, principally, the
recognition in the proper periods of certain consulting expenses, liquidation of certain equity
investments, and amortization of certain deferred costs.
NOTE B:Fourth quarter 1993 results from continuing operations include certain significant charges related
to (1) a change in accounting estimate to reflect the expensing of certain deferred costs
associated with the Company's factory automation program of approximately $50 million or $2.80 per
share, (2) a restructuring charge of approximately $23 million or $1.28 per share associated with
closing and consolidating facilities and provisions for losses on sales of surplus real estate,
(3) approximately $9 million or $.50 per share related to the writeoff of product development
costs, and (4) approximately $8 million or $.48 per share related to litigation reserves.
</TABLE>
<PAGE> 46
Item 9. Disagreements on Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors
Information with respect to the members of the Board of Directors
of the Company is set forth under the captions "Nominees for Election as
Directors to be Elected for a Term of Three Years" and "Directors Continuing
in Office" in the Company's definitive proxy statement to be filed pursuant
to Regulation 14A, which information is incorporated herein by reference.
(b) Identification of Executive Officers
Information with respect to the executive officers of the Company
is set forth under the caption "Executive Officers of the Registrant"
contained in Part I, Item 1 of this report, which information is
incorporated herein by reference.
(c) Compliance with Section 16(a)
Information with respect to compliance with Section 16(a) is set
forth under the caption "Compliance with Section 16(a) of the Exchange Act"
in the Company's definitive proxy statement to be filed pursuant to
Regulation 14A, which information is incorporated herein by reference.
Item 11. Executive Compensation
Information required by this Item is set forth under the captions
"Compensation of Directors" and "Executive Compensation" in the Company's
definitive proxy statement to be filed pursuant to Regulation 14A, which
information is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required by this Item is set forth under the captions
"Principal Stockholders" and "Stock Ownership of Directors and Officers" in
the Company's definitive proxy statement to be filed pursuant to Regulation
14A, which information is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information required by this Item is set forth under the caption
"Certain Transactions" in the Company's definitive proxy statement to be
filed pursuant to Regulation 14A, which information is incorporated herein
by reference.
<PAGE> 47
<TABLE>
<CAPTION>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Page
Reports on Form 8-K No.
<S> <C>
(a) Financial Statements, Schedules, and Exhibits:
1. Financial Statements
Included in Part II of this report:
Report of Independent Public Accountants 23
Consolidated Statements of Income
for the Years Ending December 31, 1993,
1992, and 1991 24
Consolidated Balance Sheets at December 31, 1993
and 1992 25-26
Consolidated Statements of Stockholders' Equity
for the Years Ending December 31, 1993, 1992, and 27
1991
Consolidated Statements of Cash Flows
for the Years Ending December 31, 1993, 1992, and 28
1991
Notes to Consolidated Financial Statements 29-44
Quarterly Financial Data (Unaudited) 45
2. Financial Statement Schedules
Included in Part IV of this report:
For the Three Years Ending December 31, 1993
Schedule IV - Loans to Officers, Employees,
Suppliers 52
Schedule V - Property, Plant, and Equipment 53-55
Schedule VI - Accumulated Depreciation and
Amortization of Property, Plant,56-58
and Equipment
Schedule VIII -Valuation and Qualifying
Accounts 59
Schedule IX - Short-term Borrowings 60
Schedule X - Supplementary Income Statement
Information 61
All schedules, other than those outlined above, are omitted as the
information is not required or is otherwise furnished.
<PAGE> 48
3. Exhibits Page
No.
(3) (a) The Restated Certificate of Incorporation of
the Company, as amended, as Exhibit 19 to the
Company's Quarterly Report on Form 10-Q for
the quarter ending June 30, 1987, File No. 1-
8591, is hereby incorporated herein by
reference.
(b) The Bylaws of the Company, as amended and
restated, included as Exhibit (19)(a) to the
Company's Quarterly Report on Form 10-Q for
the quarter ending June 30, 1989, is hereby
incorporated herein by reference.
(4) Instruments defining rights of security holders,
including indentures, for the following classes of
securities:
(a) Class A Common Stock, par value $.10 per
share, are contained in the Restated
Certificate of Incorporation, as amended, and
Bylaws, as amended, of the Company
incorporated by reference in Exhibit (3) above
and are incorporated herein by reference.
(b) Class B Common Stock, par value $.10 per
share, are contained in the Restated
Certificate of Incorporation, as amended, and
Bylaws, as amended, of the Company filed and
incorporated by reference in Exhibit (3) above
and are incorporated herein by reference.
(c) Indenture, dated as of October 1, 1989,
between Figgie International Inc. and
Continental Bank, National Association, as
Trustee, with respect to the 9.875% Senior
Notes due October 1, 1999, included as Exhibit
(4) (c) to the Company's Annual Report on Form
10-K for the year ending December 31, 1989, is
hereby incorporated herein by reference.
State Street Trust succeeded Continental Bank
as Trustee pursuant to an agreement dated as
of February 7, 1994, a copy of which is
attached hereto.
(d) Second Supplemental Indenture, dated as of
December 31, 1986, among Figgie International
Inc. and Marine Midland Bank, N.A., as
Trustee, with respect to the 10.375%
Subordinated Debentures due April 1, 1998,
included as Exhibit (4)(c) to the Company's
Annual Report on Form 10-K for the year ending
December 31, 1986, File No. 1-8591, and the
First Supplemental Indenture, dated as of July
18, 1983, among Figgie International Inc.,
Figgie International Holdings Inc., and Marine
Midland Bank, N.A., as Trustee with respect to
the 10-3/8% Subordinated Debentures due 1998,
along with the Original Indenture dated as of
April 1, 1978, included as Exhibit (3)(4)(f)
to the Company's Form 8-B filed October 19,
1983, (File No. 1-8591) with the Commission
are hereby incorporated herein by reference.
<PAGE> 49
3. Exhibits (continued) Page
No.
(10)(a)*The Company's Compensation Plan for Execu-
tives, included as Exhibit (3)(10)(b) to the
Company's Form 8-B filed October 19, 1983,
with the Commission is hereby incorporated
herein by reference.
(b)*The description of the Company's Performance
Incentive Bonus Program, included in the
Company's definitive Proxy Statement filed May
12, 1988, with the Commission, is hereby
incorporated herein by reference.
(c)*The Company's Senior Executive Benefits
Program, as amended, included as Exhibit (19)
to the Company's Quarterly Report on Form 10-Q
for the quarter ending September 30, 1988, is
hereby incorporated herein by reference.
(d)*The Company's 1983 Deferred Compensation
Agreement, included as Exhibit (3)(10)(f) to
the Company's Form 8-B filed October 19,
1983, with the Commission, is hereby
incorporated herein by reference.
(e)*The Company's 1982 Deferred Compensation
Agreement, included as Exhibit 10(g) to the
Company's Annual Report on Form 10-K for the
year ending December 31, 1984, File No. 1-
8591, is hereby incorporated herein by
reference.
(f)*The Company's Split Dollar Life Insurance
Plan, included as Exhibit 10(h) to the
Company's Annual Report on Form 10-K for the
year ending December 31, 1985, File No. 1-
8591, is hereby incorporated herein by
reference.
(g)*The Company's 1993 Restricted Stock Purchase
Plan for Employees, included as Exhibit A to
the Company's definitive Proxy Statement dated
May 25, 1993 is hereby incorporated herein by
reference.
(h)*The Company's 1993 Restricted Stock Purchase
Plan for Directors, included as Exhibit B to
the Company's definitive Proxy Statement dated
May 25, 1993, is hereby incorporated herein by
reference.
(i)*Employment Agreement, dated as of November 18,
1988, by and between Harry E. Figgie, Jr. and
Figgie International Inc., included as Exhibit
10 (k) to the Company's Annual Report on Form
10-K for the year ending December 31, 1988, is
hereby incorporated herein by reference.
(j)*Form of Agreement, dated as of May 1, 1989,
among the Company and corporate officers and
department heads who report to the Company's
Chief Executive Officer, included as Exhibit
10.1 to the Company's Quarterly Report on Form
10-Q for the quarter ending March 31, 1991, is
hereby incorporated herein by reference.
<PAGE> 50
3. Exhibits (continued) Page
No.
22.Subsidiaries of the Company. 78-79
24.Consent of experts. 80
(b) Reports on Form 8-K
The Company filed no current reports on Form
8-K during the fourth quarter of 1993.
* Management contracts or compensatory plans filed
pursuant to Item 14(c).
</TABLE>
<PAGE> 51
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Stockholders,
Figgie International Inc.:
We have audited in accordance with generally accepted auditing
standards, the financial statements of Figgie International Inc. and
Subsidiaries included in this Form 10K, and have issued our report
thereon dated April 15, 1994. Our report on the financial
statements includes an explanatory paragraph with respect to
substantial doubt about the Company's ability to continue as a going
concern, as discussed in Note 2 to the financial statements and an
explanatory paragraph with respect to the Company's adoption of the
provisions of SFAS No. 109 "Accounting for Income Taxes" in the
first quarter of 1993 (as discussed in Note 1 to the financial
statements) and to the change in the method of accounting for
certain costs associated with its factory automation project in the
fourth quarter of 1993 (as discussed in Note 15 to the financial
statements). Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The
financial statement schedules are presented for purposes of
complying with the Securities and Exchange Commission's rules and
are not part of the basic financial statements. These schedules
have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly state
in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN & CO.
Cleveland, Ohio,
April 15, 1994.
<PAGE> 52
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE IV
LOANS TO OFFICERS, EMPLOYEES, SUPPLIERS
(in whole dollars)
Balance, Deductions Balance, End of Period
Beginning Amounts Amounts
Name of Debtor of Period Additions CollectedWritten Off Current Not Current
<S> <C> <C> <C> <C> <C> <C> <C>
Year ending December 31, 1993:
H.E. Figgie, Jr. (1) $ - $ 186,996 $ 23,623 $ - $ 163,373 $ -
Ireneo Orlandi (2) 44,607 78,768 1,808 - 8,242 113,325
Total $ 44,607 $ 265,764 $ 25,431 $ - $ 171,615 $ 113,325
Year ending December 31, 1992:
Ireneo Orlandi (2) $ - $ 44,607 $ - $ - $ - $ 44,607
Year ending December 31, 1991:
$ - $ - $ - $ - $ - $ -
(1) Loan to H.E. Figgie, Jr. evidenced by an unsecured promissory note, dated August 25, 1993, for a term of
not more than six (6) months and bearing interest at a rate equal to the Bank of Boston's prime rate.
(2) Loan to Ireneo Orlandi evidenced by a secured note; effective September 25, 1992 and bearing interest at
a rate equal to the Bank of Boston's prime rate, adjusted quarterly. Principal payments plus accrued
interest begin October 15, 1993 and are due in sixty (60) equal quarterly installments. Collateral on this
note is comprised of 5% of the shares of Alfa Costruzioni Meccaniche SpA as per separate agreement.
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION> FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE V
PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEAR ENDING DECEMBER 31, 1991
(in thousands of dollars)
Balance, Purchase Balance,
Beginning Additions of Translation End of
Classification of Year at Cost Retirements Businesses Adjustment Other* Year
<S> <C> <C> <C> <C> <C> <C> <C>
Land $ 50,313 $ 3,470 $ (1,618) $ 0 $ (27) $ 491 $ 52,629
Land improvements 4,403 2,760 0 0 1 14 7,178
Buildings and leasehold
improvements 100,862 5,729 (4,968) 0 (195) 962 102,390
Machinery and equipment 78,251 4,730 (6,570) 0 (219) 8,343 84,535
Furniture and fixtures 22,847 826 (180) 0 (30) (135) 23,328
Transportation equipment 1,108 66 (59) 0 29 0 1,144
Rental equipment 82,265 15,915 (14,594) 0 0 0 83,586
Oil and gas properties 33,055 7,759 0 0 0 0 40,814
Construction in progress 16,018 21,988 (2,525) 0 0 8,741 44,222
389,122 63,243 (30,514) 0 (441) 18,416 439,826
Leased property under
capital leases:
Buildings 0 0 0 0 0 0 0
Machinery and equipment 54,560 28,948 (919) 0 0 (18,486) 64,103
Furniture and fixtures 3,689 354 (1,263) 0 (9) 2 2,773
Transportation equipment 550 955 (153) 0 3 10 1,365
58,799 30,257 (2,335) 0 (6) (18,474) 68,241
$ 447,921 $ 93,500 $ (32,849) $ 0 $ (447) $ (58) $ 508,067
Discontinued operations:
Property, Plant, & Equipment34,512 1,782 (593) 502 (398) 667 36,472
Capital Leases 3,115 988 0 0 0 (609) 3,494
$ 37,627 $ 2,770 $ (593) $ 502 $ (398) $ 58 $ 39,966
* Represents the reclassification of property, plant, and equipment from construction in progress and transfers to/from leased
property under capital leases.
</TABLE>
<PAGE> 54
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE V
PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEAR ENDING DECEMBER 31, 1992
(in thousands of dollars)
Balance, Purchase Balance,
Beginning Additions of Translation End of
Classification of Year at Cost Retirements Businesses Adjustment Other* Year
<S> <C> <C> <C> <C> <C> <C> <C>
Land $ 52,629 $ 2,261 $ (618) $ 0 $ 675 $ 628 $ 55,575
Land improvements 7,178 258 (11) 0 (4) (4,360) 3,061
Buildings and leasehold
improvements 102,390 2,190 (6,040) 0 (1,537) 247 97,250
Machinery and equipment 84,535 9,557 (22,925) 549 (509) 25,333 96,540
Furniture and fixtures 23,328 243 (15) 0 (310) (11,967) 11,279
Transportation equipment 1,144 51 (81) 0 (101) 0 1,013
Rental equipment 83,586 24,110 (20,483) 0 0 (1,886) 85,327
Oil and gas properties 40,814 3,513 0 0 0 0 44,327
Construction in progress 44,222 47,393 (2,437) 0 (200) (31,446) 57,532
439,826 89,576 (52,610) 549 (1,986) (23,451) 451,904
Leased property under
capital leases:
Buildings 0 0 0 0 0 75 75
Machinery and equipment 64,103 112 (56,714) 0 (514) 22,582 29,569
Furniture and fixtures 2,773 0 (389) 0 (1) (3) 2,380
Transportation equipment 1,365 220 (362) 0 (176) 1 1,048
68,241 332 (57,465) 0 (691) 22,655 33,072
$ 508,067 $ 89,908 $(110,075) $ 549 $ (2,677) $ (796) $ 484,976
Discontinued operations:
Property, Plant, & Equipment36,472 10,205 (1,566) 0 (420) (781) 43,910
Capital Leases 3,494 241 (56) 0 (9) (14) 3,656
$ 39,966 $ 10,446 $ (1,622) $ 0 $ (429) $ (795) $ 47,566
* Represents the reclassification of property, plant, and equipment from construction in progress and transfers to/from leased
property under capital leases.
</TABLE>
<PAGE> 55
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE V
PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEAR ENDING DECEMBER 31, 1993
(in thousands of dollars)
Balance, Purchase Balance,
Beginning Additions (1) of Translation End of
Classification of Year at Cost Retirements Businesses Adjustment Other* Year
<S> <C> <C> <C> <C> <C> <C> <C>
Land $ 55,575 $ (594) $ (6,622) $ 0 $ (36) $ 779 $ 49,102
Land improvements 3,061 60 (10) 0 (1) 60 3,170
Buildings and leasehold
improvements 97,250 2,889 (9,212) 1 (20) 222 91,130
Machinery and equipment 96,540 10,972 (20,524) 651 (985) 13,895 100,549
Furniture and fixtures 11,279 711 (313) 56 315 (427) 11,621
Transportation equipment 1,013 143 (63) 0 85 38 1,216
Rental equipment 85,327 24,698 (70,220) 0 0 (5) 39,800
Oil and gas properties 44,327 3,574 0 0 0 0 47,901
Construction in progress 57,532 52,436 (58,575) 0 (17) (9,691) 41,685
451,904 94,889 (165,539) 708 (659) 4,871 386,174
Leased property under
capital leases:
Buildings 75 0 0 0 0 0 75
Machinery and equipment 29,569 (1) (523) 0 (205) (3,099) 25,741
Furniture and fixtures 2,380 2 (2,048) 12 0 20 366
Transportation equipment 1,048 548 (390) 0 (21) (2) 1,183
33,072 549 (2,961) 12 (226) (3,081) 27,365
$ 484,976 $ 95,438 $(168,500) 720 $ (885) $ 1,790 $ 413,539
Discontinued operations:
Property, Plant, & Equipment43,910 2,531 (6,281) 0 (305) (1,309) 38,546
Capital Leases 3,656 (6) 1 0 (12) (145) 3,494
$ 47,566 $ 2,525 $ (6,280) $ 0 $ (317) $ (1,454) $ 42,040
* Represents the reclassification of property, plant, and equipment from construction in progress and transfers to/from leased
property under capital leases.
(1) Increase in retirements due to accounting change, see Note 15.
</TABLE>
<PAGE> 56
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEAR ENDING DECEMBER 31, 1991
(in thousands of dollars)
Additions
Balance, Charged to Purchase Balance,
Beginning Costs and of Translation End of
Classification of Year Expenses Retirements Businesses Adjustment Other* Year
<S> <C> <C> <C> <C> <C> <C> <C>
Land improvements $ 509 $ 116 $ 0 $ 0 $ 0 $ (2) $ 623
Building and leasehold
improvements 35,939 3,566 (222) 0 (54) 359 39,588
Machinery and equipment 56,870 4,952 (3,925) 0 (58) 627 58,466
Furniture and fixtures 15,723 1,273 (161) 0 (25) (200) 16,610
Transportation equipment 904 100 (39) 0 13 0 978
Rental equipment 30,859 12,906 (8,123) 0 0 0 35,642
Oil and gas properties 8,157 2,049 0 0 0 0 10,206
148,961 24,962 (12,470) 0 (124) 784 162,113
Leased property under
capital leases:
Buildings 0 6 0 0 0 3 9
Machinery and equipment 7,910 3,839 (258) 0 0 (767) 10,724
Furniture and fixtures 5,044 1,369 (1,263) 0 1 6 5,157
Transportation equipment 307 387 (120) 0 11 (1) 584
13,261 5,601 (1,641) 0 12 (759) 16,474
$ 162,222 $ 30,563 $ (14,111) $ 0 $ (112) $ 25 $ 178,587
Discontinued operations:
Property, Plant, & Equipment19,463 1,609 (204) 338 (166) 44 21,084
Capital Leases 1,645 271 0 0 1 (69) 1,848
$ 21,108 $ 1,880 $ (204) $ 338 $ (165) $ (25) $ 22,932
* Represents reclassification of buildings formerly reported as assets of discontinued operations.
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEAR ENDING DECEMBER 31, 1992
(in thousands of dollars)
Additions
Balance, Charged to Purchase Balance,
Beginning Costs and of Translation End of
Classification of Year Expenses Retirements Businesses Adjustment Other* Year
<S> <C> <C> <C> <C> <C> <C> <C>
Land improvements $ 623 $ 153 $ (8) $ 0 $ (6) $ (64) $ 698
Building and leasehold
improvements 39,588 3,540 (3,371) 0 (177) (580) 39,000
Machinery and equipment 58,466 5,419 (14,381) 0 (469) 3,299 52,334
Furniture and fixtures 16,610 1,280 (1,148) 0 (62) (642) 16,038
Transportation equipment 978 65 (81) 0 (64) (2) 896
Rental equipment 35,642 12,684 (11,892) 0 0 (973) 35,461
Oil and gas properties 10,206 2,383 0 0 0 (911) 11,678
162,113 25,524 (30,881) 0 (778) 127 156,105
Leased property under
capital leases:
Buildings 9 7 0 0 0 0 16
Machinery and equipment 10,724 4,762 (6,710) 0 156 25 8,957
Furniture and fixtures 5,157 1,060 (387) 0 0 (61) 5,769
Transportation equipment 584 250 (249) 0 (80) 0 505
16,474 6,079 (7,346) 0 76 (36) 15,247
$ 178,587 $ 31,603 $ (38,227) $ 0 $ (702) $ 91 $ 171,352
Discontinued operations:
Property, Plant, & Equipment21,084 1,623 (1,154) 0 (193) (1,675) 19,685
Capital Leases 1,848 388 (56) 0 (6) (7) 2,167
$ 22,932 $ 2,011 $ (1,210) $ 0 $ (199) $ (1,682) $ 21,852
* Represents the reclassification of property, plant, and equipment from construction in progress and transfers to/from
leased property under capital leases.
</TABLE>
<PAGE> 58
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE VI
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEAR ENDING DECEMBER 31, 1993
(in thousands of dollars)
Additions
Balance, Charged to Balance,
Beginning Costs and Translation End of
Classification of Year Expenses Retirements Adjustment Other* Year
<S> <C> <C> <C> <C> <C> <C>
Land improvements $ 698 $ 156 $ (5) $ 6 $ 15 $ 870
Building and leasehold
improvements 39,000 3,362 (2,317) (148) 51 39,948
Machinery and equipment 52,334 6,813 (11,259) (532) 4,786 52,142
Furniture and fixtures 16,038 1,078 (230) 146 (3,312) 13,720
Transportation equipment 896 99 (64) 50 2 983
Rental equipment 35,461 7,154 (32,556) 0 (61) 9,998
Oil and gas properties 11,678 2,250 0 0 0 13,928
156,105 20,912 (46,431) (478) 1,481 131,589
Leased property under
capital leases:
Buildings 16 6 0 0 0 22
Machinery and equipment 8,957 2,061 (177) (8) (889) 9,944
Furniture and fixtures 5,769 723 (2,044) 10 (62) 4,396
Transportation equipment 505 249 (136) (155) 0 463
15,247 3,039 (2,357) (153) (951) 14,825
$ 171,352 $ 23,951 $ (48,788) $ (631) $ 530 $ 146,414
Discontinued operations:
Property, Plant, & Equipment19,685 1,884 (395) (138) (88) 20,948
Capital Leases 2,167 346 0 (1) (106) 2,406
$ 21,852 $ 2,230 $ (395) $ (139) $ (194) $ 23,354
* Represents the reclassification of property, plant, and equipment from construction in progress and transfers to/from
leased property under capital leases.
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(in thousands of dollars)
Balance, Additions (Deductions) Balance,
Beginning Charged to Amounts End of
Description of Year Costs & Expenses Other (1) Charged Off Year
Allowance for uncollectible
trade accounts receivables-
<S> <C> <C> <C> <C> <C>
Year ending December 31, 1993 $ 107 $ 2,864 $ - $(1,595) $ 1,376
Year ending December 31, 1992 $ 1,074 $ 1,901 $ - $(2,868) $ 107
Year ending December 31, 1991 $ 1,572 $ 2,791 $ - $(3,289) $ 1,074
(1) These amounts represent the allowances for uncollectible accounts in connection with the purchase of businesses.
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE IX
SHORT-TERM BORROWINGS
(in thousands of dollars except for weighted average interest rates)
Maximum Amount Average Amount Weighted Avg.
Balance, Weighted Outstanding Outstanding Interest Rate
End Average During the During the During the
Short-term Notes Payable of Year Interest Rate (1) Year Year Year (2)
<S> <C> <C> <C> <C> <C>
Year ending December 31, 1993 $ 90,891 5.49% $136,502 $ 69,945 4.4%
Year ending December 31, 1992 $ 47,747 4.72% $172,630 $ 98,018 5.0%
Year ending December 31, 1991 $ 88,112 6.59% $174,164 $ 97,250 6.95%
(1) Represents the weighted average interest rate of short-term borrowings outstanding at year-end. The weighted
average interest rates were determined by dividing annual interest expense based on rates in effect on outstanding
balances at year-end by total short-term borrowings outstanding at year-end.
(2) The weighted average interest rates during the year were determined by dividing annual interest expense on short-
term borrowings by the average daily short-term borrowings outstanding.
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands of dollars)
Charged to Costs and Expenses
For the Years Ending December 31
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $ 12,407 $ 14,603 $ 16,266
</TABLE>
<PAGE> 62
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
FIGGIE INTERNATIONAL INC.
(Company)
By_S.J. BATTAGLIA_________________________________
Date: April 13, 1994S. J. Battaglia
Principal Accounting Officer
By__L.A. HARTHUN__________________________________
Date: April 13, 1994L. A. Harthun, Senior Vice President-International
General Counsel and Secretary
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on April 13, 1994 by the following persons on behalf
of the Company and in the capacities indicated.
<S> <S>
By_____________________________By____________________________
Harry E. Figgie, Jr., Principal F. R. McKnight, Director
Executive Officer & Director
By_____________________________By_____________________________
F. J. Brinkman, Director H. Nesbit, II, Director
By_____________________________By_____________________________
V. A. Chiarucci, Director C. B. Robertson, III, Director
By_____________________________By_____________________________
D. S. Coenen, Director G. K. Rugger, Director
By_____________________________By_____________________________
Dr. H. E. Figgie, III, Director H. B. Scott, Director
By_____________________________By_____________________________
A. V. Gangnes, Director A. A. Sommer, Jr., Director
By_____________________________By_____________________________
J. S. Lanahan, Director W. M. Vannoy, Director
By_____________________________
R. A. Weaver, Jr., Director
</TABLE>
<PAGE> 1
EXHIBIT INDEX
(3) (a) The Restated Certificate of Incorporation of
the Company, as amended, as Exhibit 19 to the
Company's Quarterly Report on Form 10-Q for
the quarter ending June 30, 1987, File No. 1-
8591, is hereby incorporated herein by
reference.
(b) The Bylaws of the Company, as amended and
restated, included as Exhibit (19)(a) to the
Company's Quarterly Report on Form 10-Q for
the quarter ending June 30, 1989, is hereby
incorporated herein by reference.
(4) Instruments defining rights of security holders,
including indentures, for the following classes of
securities:
(a) Class A Common Stock, par value $.10 per
share, are contained in the Restated
Certificate of Incorporation, as amended, and
Bylaws, as amended, of the Company
incorporated by reference in Exhibit (3) above
and are incorporated herein by reference.
(b) Class B Common Stock, par value $.10 per
share, are contained in the Restated
Certificate of Incorporation, as amended, and
Bylaws, as amended, of the Company filed and
incorporated by reference in Exhibit (3) above
and are incorporated herein by reference.
(c) Indenture, dated as of October 1, 1989,
between Figgie International Inc. and
Continental Bank, National Association, as
Trustee, with respect to the 9.875% Senior
Notes due October 1, 1999, included as Exhibit
(4) (c) to the Company's Annual Report on Form
10-K for the year ending December 31, 1989, is
hereby incorporated herein by reference.
State Street Trust succeeded Continental Bank
as Trustee pursuant to an agreement dated as
of February 7, 1994, a copy of which is
attached hereto.
(d) Second Supplemental Indenture, dated as of
December 31, 1986, among Figgie International
Inc. and Marine Midland Bank, N.A., as
Trustee, with respect to the 10.375%
Subordinated Debentures due April 1, 1998,
included as Exhibit (4)(c) to the Company's
Annual Report on Form 10-K for the year ending
December 31, 1986, File No. 1-8591, and the
First Supplemental Indenture, dated as of July
18, 1983, among Figgie International Inc.,
Figgie International Holdings Inc., and Marine
Midland Bank, N.A., as Trustee with respect to
the 10-3/8% Subordinated Debentures due 1998,
along with the Original Indenture dated as of
April 1, 1978, included as Exhibit (3)(4)(f)
to the Company's Form 8-B filed October 19,
1983, (File No. 1-8591) with the Commission
are hereby incorporated herein by reference.
<PAGE> 2
EXHIBIT INDEX - continued
(10)(a)*The Company's Compensation Plan for Execu-
tives, included as Exhibit (3)(10)(b) to the
Company's Form 8-B filed October 19, 1983,
with the Commission is hereby incorporated
herein by reference.
(b)*The description of the Company's Performance
Incentive Bonus Program, included in the
Company's definitive Proxy Statement filed May
12, 1988, with the Commission, is hereby
incorporated herein by reference.
(c)*The Company's Senior Executive Benefits
Program, as amended, included as Exhibit (19)
to the Company's Quarterly Report on Form 10-Q
for the quarter ending September 30, 1988, is
hereby incorporated herein by reference.
(d)*The Company's 1983 Deferred Compensation
Agreement, included as Exhibit (3)(10)(f) to
the Company's Form 8-B filed October 19,
1983, with the Commission, is hereby
incorporated herein by reference.
(e)*The Company's 1982 Deferred Compensation
Agreement, included as Exhibit 10(g) to the
Company's Annual Report on Form 10-K for the
year ending December 31, 1984, File No. 1-
8591, is hereby incorporated herein by
reference.
(f)*The Company's Split Dollar Life Insurance
Plan, included as Exhibit 10(h) to the
Company's Annual Report on Form 10-K for the
year ending December 31, 1985, File No. 1-
8591, is hereby incorporated herein by
reference.
(g)*The Company's 1993 Restricted Stock Purchase
Plan for Employees, included as Exhibit A to
the Company's definitive Proxy Statement dated
May 25, 1993 is hereby incorporated herein by
reference.
(h)*The Company's 1993 Restricted Stock Purchase
Plan for Directors, included as Exhibit B to
the Company's definitive Proxy Statement dated
May 25, 1993, is hereby incorporated herein by
reference.
(i)*Employment Agreement, dated as of November 18,
1988, by and between Harry E. Figgie, Jr. and
Figgie International Inc., included as Exhibit
10 (k) to the Company's Annual Report on Form
10-K for the year ending December 31, 1988, is
hereby incorporated herein by reference.
(j)*Form of Agreement, dated as of May 1, 1989,
among the Company and corporate officers and
department heads who report to the Company's
Chief Executive Officer, included as Exhibit
10.1 to the Company's Quarterly Report on Form
10-Q for the quarter ending March 31, 1991, is
hereby incorporated herein by reference.
<PAGE> 3
EXHIBIT INDEX - continued
22.Subsidiaries of the Company. 78-79
24.Consent of experts. 80
(b) Reports on Form 8-K
The Company filed no current reports on Form
8-K during the fourth quarter of 1993.
* Management contracts or compensatory plans filed
pursuant to Item 14(c).
<PAGE> 1
EXHIBIT (4)(c)
INSTRUMENT OF RESIGNATION, APPOINTMENT AND ACCEPTANCE, dated as of
February 7, 1994, among Figgie International, Inc., a Delaware
corporation, duly organized and existing under the laws of the State of
Delaware, having its principal office at 4420 Sherwin Road, Willoughby,
Ohio 44094 (the "Company"), Continental Bank, National Association, a
national banking association having its principal corporate trust office
at 231 South LaSalle Street, Chicago, Illinois 60697 (the "Resigning
Trustee") and State Street Bank and Trust Company, a Massachusetts
banking corporation, having its principal corporate trust office at 225
Franklin Street, Boston, Massachusetts 02101 (the "Successor Trustee").
RECITALS
A. There are presently issued and outstanding $174,000,000 of the
Company's 9-7/8% Senior Notes due October 1, 1999 issued under an
Indenture, dated as of October 1, 1989 (the "Indenture"), between the
Company and Continental Bank, National Association as Trustee.
B. The Resigning Trustee wishes to resign as Trustee, Registrar and
Paying Agent under the Indenture; the Company wishes to appoint the
Successor Trustee to succeed the Resigning Trustee as Trustee, Registrar
and Paying Agent under the Indenture, and the Successor Trustee wishes
to accept appointment as Trustee, Registrar and Paying Agent under the
Indenture.
NOW THEREFORE, the Company, the Resigning Trustee and the Successor
Trustee agree as follows:
ARTICLE ONE
THE RESIGNING TRUSTEE
Section 101. Pursuant to Section 6.08 of the Indenture, the Resigning
Trustee hereby notified the Company on January 14, 1994 that the
Resigning Trustee had resigned as Trustee under the Indenture.
Section 102. The Resigning Trustee hereby represents and warrants to the
Successor Trustee that:
(a)To the best of the knowledge of the Responsible Officers of the
Resigning Trustee assigned to its Corporate Trust Department, no
Event of Default and no event which, after notice or lapse of
time or both, would become an Event of Default, had occurred and
is continuing under the Indenture;
(b)No covenant or condition contained in the Indenture has been
waived by the Resigning Trustee or, to the best of the knowledge
of the Responsible Officers of the Resigning Trustee assigned to
its Corporate Trust Department, by the Holders of the percentage
in aggregate principal amount of the Securities required by the
Indenture to effect any such waiver; and
(c)There is no action, suit or proceeding pending or, to the best
of the knowledge of the Responsible Officers of the Resigning
Trustee assigned to its Corporate Trust Department, threatened
against the Resigning Trustee before any court or governmental
authority arising out of any action or omission by the Resigning
Trustee as Trustee under the Indenture.
Section 103. The Resigning Trustee hereby assigns, transfers, delivers
and confirms to the Successor Trustee all right, title and interest of
the Resigning Trustee in and to the trust under the Indenture and all the
rights, powers and trusts of the Trustee under the Indenture. The
Resigning Trustee shall execute and deliver such further instruments and
shall do such other things as the Successor Trustee may reasonably
require so as to more fully and certainly vest and confirm in the
Successor Trustee all the rights, trusts and powers hereby assigned,
transferred, delivered and confirmed to the Successor Trustee.
ARTICLE TWO
THE COMPANY
Section 201. The Secretary of the Company attesting to the execution of
this Instrument by the Company hereby certifies that the officer of the
Company executing this Instrument is authorized to, among other things:
(a) accept the Resigning Trustee's resignation as Trustee under the
Indenture; (b) appoint the Successor Trustee as Trustee under the
Indenture; and (c) execute and deliver such agreements and other
instruments as may be necessary or desirable to effectuate the succession
of the Successor Trustee as Trustee under the Indenture.
<PAGE> 2
Section 202. The Company hereby appoints the Successor Trustee as
Trustee under the Indenture and confirms to the Successor Trustee all the
rights, trusts and powers hereby assigned, transferred, delivered and
confirmed to the Successor Trustee.
ARTICLE THREE
THE SUCCESSOR TRUSTEE
Section 301. The Successor Trustee hereby represents and warrants to the
Resigning Trustee and to the Company that the Successor Trustee is
qualified and eligible under the provisions of Section 6.10 of the
Indenture.
Section 302. The Successor Trustee hereby accepts its appointment as
trustee under the Indenture and shall hereby be vested with all the
rights, powers, trusts and duties of the Trustee under the Indenture.
ARTICLE FOUR
MISCELLANEOUS
Section 401. Except as otherwise expressly provided or unless the
context otherwise requires, all terms used herein which are defined in
the Indenture shall have the meanings assigned to the Indenture.
Section 402. This Instrument and the resignation, appointment and
acceptance effected hereby shall be effective as of the opening of
business on the date first above written upon the execution and delivery
hereof by each of the parties hereto.
Section 403. Notwithstanding the resignation of the Resigning Trustee
effected hereby, the Company shall remain obligated under Section 6.07
of the Indenture to compensate, reimburse and indemnify the Resigning
Trustee in connection with its trusteeship under the Indenture.
Section 404. The Instrument shall be governed by and constructed in
accordance with the laws of the jurisdiction which govern the Indenture
and its construction.
Section 405. This instrument may be executed in any number of
counterparts each of which shall be an original, but such counterparts
shall together constitute but one and the same instrument.
<TABLE>
<CAPTION>
IN WITNESS WHEREOF, the parties hereby have caused this Instrument of
Resignation, Appointment and Acceptance to be duly executed and their
respective seals to be affixed hereto and duly attested all as of the day
and year first above written.
<S> <S>
Attest: Figgie International, Inc.
(the "Company")
By:
L.A. Harthun
Attest: Continental Bank National Association
(the "Resigning Trustee")
By:
Attest: State Street Bank and Trust Company
(the "Successor Trustee")
By:
Vice President
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION>
Subsidiaries of the Company (as of March 2, 1994) Exhibit 22
Percentage of
Jurisdiction of Securities Owned
Name Incorporation By the Company
<S> <C> <C>
Alfa Costruzioni Mecchaniche SpA Italy 85%
Omega SRL (in liquidation) Italy 80%
Allied Industrial Distributors California 100%
A-T-O Inc. Delaware 100%
"Automatic" Sprinkler Corporation of America Ohio 100%
ASCOA "Automatic" Sprinkler Nederland B.V. Netherlands 100%
"Automatic" Sprinkler Belgium Belgium 100%
Carter Controls (U.K.) Ltd. United Kingdom 100%
Carter Controls Gmbh Germany 100%
CASI-RUSCO Europe S.A.R.L. France 100%
Logan Fenamec (France) S.A.R.L. France 100%
CASI-RUSCO Inc. Florida 100%
CASI-RUSCO Inc. Texas 100%
Chemetronics Caribe, Inc. Delaware 100%
Economy Engineering Company Illinois 100%
Figgie Acceptance Corporation Delaware 100%
Cannon Bumpers, Inc. Texas 100%
Colonial Customs, Inc. Texas 100%
Sooner Hotel Corporation Delaware 100%
X.Z. Acquisition Corporation Delaware 100%
Figgie Asia Pte. Ltd. Singapore 100%
Figgie Canadian Holdings Ltd. Canada-Federal 100%
Adirondack-Sherwood Inc. Quebec 100%
Sherwood-Drolet Corp. Ltd. Canada-Federal 100%
Figgie Canada Inc. Canada-Federal 100%
Thermometer Corporation of Canada Ltd. Ontario 100%
Figgie Communications Inc. Ohio l00%
Figgie de Costa Rica, S.A. Costa Rica 100%
Figgie do Brasil Industria e Commercio Ltda. Brazil 100%
Figgie Foreign Sales Corporation Virgin Islands 100%
Figgie de Mexico, S.A. de C.V. Mexico 100%
Figgie (G.B.) Limited United Kingdom 100%
Figgie Material Handling Products (U.K.) LimitedUnited Kingdom100%
Figgie Packaging Systems Limited United Kingdom 100%
Fred Perry Sportswear (U.K.) Limited United Kingdom 100%
Wimbledon Shirt Company Limited United Kingdom 100%
Fred Perry Sportswear GmbH Germany 100%
Logan Fenamec (U.K.) Limited United Kingdom 100%
Figgie International de Mexico S.A. de C.V. Mexico 100%
Figgie International (H.K.) Ltd. Hong Kong l00%
Figgie International Real Estate Inc. Delaware 100%
Cafig Inc. Delaware 100%
Dusk Corporation Delaware 100%
Quire Corp. Delaware 100%
Figgie Investment Trustee Ltd. United Kingdom 50%
Figgie Leasing Corporation Delaware 100%
<PAGE> 2
Subsidiaries of the Company (as of March 2, 1994) Exhibit 22
Percentage of
Jurisdiction of Securities Owned
Name Incorporation By the Company
Figgie Licensing Corporation Delaware 100%
Figgie Packaging Systems Pty. Ltd. Australia 100%
Figgie Pension Trustee Ltd. United Kingdom 50%
Figgie Properties Inc. Delaware l00%
Chagrin Highlands Inc. Ohio 100%
Cudahy Self Storage, Inc. Wisconsin 100%
FGPI-1 Inc. Florida 100%
Virginia Center Inc. Virginia l00%
Figgie Security, Inc. Florida 100%
Logan/Glidepath Company Kansas 80%
Interstate Electronics Corporation California l00%
Kohol Incorporated Ohio 51%
Logan Glidepath Australia Pty. Ltd. South Australia 100%
Logan-Fenamec (N.Z.) Ltd. New Zealand 100%
Logan Fenamec Transporttechnik GmbH Germany 100%
Astro-Pneumatic GmbH Germany 90%
Logan Glidepath New Zealand Limited New Zealand 75%
Glidepath (U.K.) Limited United Kingdom 100%
Glidepath Australia Pty Limited (in liquidation)Australia 100%
Glidepath Asia Pte Limited (in liquidation)Singapore 100%
Logan Transportteknik Sweden AB Sweden 100%
Maquiladora TCA de Juarez, S.A. de C.V. Mexico 100%
Medcenter Management Services, Inc. Ohio 100%
Mojonnier de Mexico S de R.L. de C.V. Mexico 49%
Mojonnier do Brazil Industria e
Commercio de Equipamentos Ltda. Brazil 100%
Oden Corporation New York 49%
W. Payne & Company Limited United Kingdom l00%
Fred Perry Sportswear Limited United Kingdom 100%
FP Sportswear B.V. Netherlands 100%
Fred Perry Sportswear Inc. Delaware 100%
Fred Perry Sportswear U.K. Inc. New York 100%
Rawlings Sporting Goods Company Missouri 100%
Rawlings Japan Co., Ltd. (in liquidation) Japan 100%
Safeguard Industrial Corporation Delaware 100%
SP/Sheffer International Inc. Ohio 100%
Talon-Snorkel Limited New Zealand 100%
Talon/Snorkel Pty Limited Australia 100%
Waite Hill Holdings Inc. Delaware l00%
Colony Insurance Company Virginia l00%
Cardinal Casualty Co. Ohio l00%
Hamilton Insurance Company Virginia 100%
Waite Hill Assurance Ltd. Bermuda l00%
Waite Hill Services, Inc. Delaware l00%
</TABLE>
<PAGE> 1
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included in this Form 10-K, into the Company's
previously filed Registration Statements File No. 33-22445, File No. 33-
22446, File No. 33-26004, and File No. 33-33177.
ARTHUR ANDERSEN & CO.
Cleveland, Ohio,
April 15, 1994.
