<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ending March 31, 1994
Commission file number 1-8591
FIGGIE INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
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<CAPTION>
<S> <C>
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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(216) 953-2700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
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<CAPTION>
Class Outstanding at May 19, 1994
<S> <C>
Class A Common Stock, par value $.10 per share 13,672,445
Class B Common Stock, par value $.10 per share 4,943,495
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Total number of pages contained in this report 18.
<PAGE> 2
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FIGGIE INTERNATIONAL INC.
INDEX
Page No.
PART I. FINANCIAL INFORMATION
<S> <C>
Consolidated Statements of Income with Selected
Consolidating Data For the Three Months Ending
March 31, 1994 and 1993 3
Consolidated Balance Sheets with Selected
Consolidating Data March 31, 1994 and
December 31, 1993 4 - 5
Consolidated Statements of Cash Flow
For the Three Months Ending
March 31, 1994 and 1993 6
Notes to Consolidated Financial Statements 7 - 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 14
PART II. OTHER INFORMATION 15
EXHIBIT LIST 16
EXHIBIT 99 17 - 18
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<PAGE> 3
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<CAPTION>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1994 and 1993
(in thousands of dollars except for per share data)
(U N A U D I
ConsolidaConsolida
1994 1993
<S> <C> <C>
SALES AND OTHER INCOME FROM CONTINUING OPERATIONS:
Net Sales 181406 181068
Other income/(expense) -2668 2113
Total sales and other income 178738 183181
COSTS AND EXPENSES FROM CONTINUING OPERATIONS:
Cost of sales 152274 133331
Selling, general, and administrative expenses 45677 35497
Bad debt expense 604 519
Interest expense, net 10821 8635
Restructuring charges 547 5705
Total costs and expenses 209923 183687
MINORITY INTEREST 18 0
INCOME/(LOSS) FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR TAXES ON INCOME -31167 -506
PROVISION FOR TAXES ON INCOME FROM
CONTINUING OPERATIONS:
Federal income taxes/(benefits) -10246 -128
State income taxes/(benefits) -584 -13
NET INCOME/(LOSS) BEFORE DISCONTINUED
OPERATIONS AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING FOR INCOME TAXES -20337 -365
NET INCOME/(LOSS) FROM DISCONTINUED OPERATIONS 0 4179
NET INCOME/(LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING FOR INCOME TAXES -20337 3814
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
FOR INCOME TAXES 0 5839
NET INCOME/(LOSS) -20337 9653
WEIGHTED AVERAGE SHARES 17855702 17598831
EARNINGS (LOSS) PER COMMON SHARE FROM
CONTINUING OPERATIONS -1.14 -0.02
EARNINGS (LOSS) PER COMMON SHARE FROM
DISCONTINUED OPERATIONS 0.00 0.24
EARNINGS (LOSS) PER COMMON SHARE FROM
CHANGE IN ACCOUNTING FOR INCOME TAXES 0.00 0.33
EARNINGS (LOSS) PER COMMON SHARE ON NET INCOME -1.14 0.55
COMMON DIVIDENDS DECLARED
CLASS A - 0.125
CLASS B - 0.125
The accompanying Notes to Consolidated Financial Statements are an i
of these statements.
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FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 and DECEMBER 31, 1993
(in thousands of dollars)
(U N A U D I
ConsolidaConsolida
Mar 31, 1Dec 31, 1
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents 4961 6833
Marketable securities 63935 27314
Trade accounts receivable, less allowance for
uncollectible accounts of $1,676 at 3/31/94
and $1,376 at 12/31/93 143268 144287
Finance receivables 4146 5715
Inventories 123917 126142
Prepaid expenses 19543 16499
Recoverable income taxes 1317 36283
Net assets related to discontinued operations 163734 170435
Total current assets 524821 533508
PROPERTY, PLANT, AND EQUIPMENT:
Land and land improvements 51597 52272
Buildings and leasehold improvements 92052 91130
Machinery and equipment 163128 155071
Rental equipment 41889 39800
Oil and gas properties 48285 47901
396951 386174
Accumulated depreciation and amortization -137612 -131589
259339 254585
Property under capital leases, less accumulated
amortization of $12,736 at 3/31/94 and
$14,825 at 12/31/93 10577 12540
Net property, plant, and equipment 269916 267125
OTHER ASSETS:
Investments in affiliates 10345 10321
Patents 1398 1425
Goodwill 58163 58532
Prepaid pension costs 11217 10591
Other 95186 96959
Long-term finance receivables 14788 19942
Total Assets 985834 998403
The accompanying Notes to Consolidated Financial Statements are an i
these balance sheets.
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<PAGE> 5
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FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 and DECEMBER 31, 1993
(in thousands of dollars)
(U N A U D I
ConsolidaConsolida
Mar 31, 1Dec 31, 1
<S> <C> <C>
LIABILITIES
Current Liabilities:
Notes payable 115818 90891
Current maturities of long-term debt 109328 109674
Accounts payable 91808 113900
Accrued salaries and wages 16613 14910
Other accrued expenses 78185 69822
Insurance loss reserves 6834 6752
Accrued federal income taxes - -
Long-term debt classified as current 275606 270952
Total current liabilities 694192 676901
LONG-TERM DEBT 61008 64666
DEFERRED FEDERAL INCOME TAXES 12914 20604
OTHER LONG-TERM LIABILITIES 34807 32563
Total Liabilities 802921 794734
MINORITY INTEREST 429 435
STOCKHOLDERS' EQUITY
Preferred stock - -
Common stock 1869 1874
Capital surplus 126694 127488
Retained earnings 103803 124020
Unearned compensation -28380 -31003
Cumulative translation adjustment -19818 -18956
Unrealized loss on investments -1684 -189
Total stockholders' equity 182484 203234
Total liabilities and stockholders' equity 985834 998403
SUPPLEMENTAL STOCK INFORMATION
Shares Outstan
Mar 31, 1Dec 31, 1
Preferred Stock - Authorized Shares 3,217,495 - -
Common Stock A - Authorized Shares 18,000,000 13703131 13750863
Common Stock B - Authorized Shares 18,000,000 4988507 4988507
Par Value of Outst
1994 1993
Preferred Stock - $1.00 par value - -
Common Stock A - $0.10 par value 1370313 1375086
Common Stock B - $0.10 par value 498851 498851
1869164 1873937
The accompanying Notes to Consolidated Financial Statements are an i
these balance sheets.
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<PAGE> 6
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FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 1994 and 1993
(in thousands of dollars)
1994
<S> <C>
Cash flow from operating activites:
Loss from continuing operations -20337
Income from discontinued operations 0
Cumulative effect of accounting change 0
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 8538
Amortization of ESOP unearned compensation 1620
Other, net -2184
Changes in assets and liabilities, net of
effects from purchase of businesses-
(Increase)decrease in trade accounts receiva -9165
Increase(decrease) in allowance for doubtful 146
(Increase)decrease in finance receivables 6673
(Increase)decrease in inventories -7717
(Increase)decrease in prepaid expense -2837
(Increase)decrease in prepaid pension cost -398
(Increase)decrease in other assets -368
Increase(decrease) in accounts payable -20474
Increase(decrease) in accrued expense 8305
Increase(decrease) in deferred and accrued t 29170
Increase(decrease) in insurance loss reserve 1343
Increase(decrease) in other long-term liabil 1545
Increase(decrease) in unearned premiums -75
Net cash provided(used) by operating activities -6215
Cash flows from investing activities:
Capital expenditures -12330
Payment for purchases of businesses and
investments, net of cash acquired -24
Proceeds from sale of property, plant and equ 2655
Proceeds from sale of discontinued operations 25648
(Purchases)sales of marketable securities, net -38027
Net cash provided(used) in investing activities -22078
Cash flows from financing activities:
Proceeds from long-term debt 671
Principal payments on long-term debt -2101
Net borrowings under notes payable,
net of effects from purchases of businesses 27121
Dividends paid 0
Common stock transactions, net -142
Net cash provided(used) by financing activities 25549
Net (decrease) in cash and equivalents -2744
Cash and equivalents at beginning of year 10131
Cash and equivalents at MARCH 31 7387
- Continuing operations 4961
- Discontinued operations 2426
The accompanying Notes to Consolidated Financial Statements are an i
these statements.
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<PAGE> 7
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994 and 1993
The summarized financial information included herein has been prepar
the Company pursuant to the rules and regulations of the Securities
Exchange Commission and properly reflects all adjustments (consistin
normal recurring accruals) which are, in the opinion of management,
necessary to present a fair statement of the financial results for t
periods covered by this report. The results of operations for the t
months ending March 31, 1994 are not necessarily indicative of the r
to be expected for the entire year.
(1) Significant Accounting and Reporting Policies:
The Company's summarized financial information for the three mont
ending March 31, 1994 and 1993, included in this Form 10-Q Report
been prepared in accordance with the accounting policies describe
Note 1 of the Notes to Consolidated Financial Statements appearin
Figgie International Inc.'s Form 10-K for the year ending Decembe
1993. While Company management believes the procedures followed
preparing this summarized financial data are reasonable under the
circumstances, the accuracy of the amounts are in some respects
dependent upon facts that will exist, and procedures that will be
performed by the Company, later in the fiscal year.
(2)Inventories:
Inventories are stated at the lower of cost or market and include
of material, labor and overhead. The first-in, first-out method o
inventory accounting is used in the determination of cost of sale
The Company generally takes physical inventories of its raw mater
work in process and finished goods between September 30 and Decem
31. Management believes the cost of taking physical inventories
frequently would considerably exceed the benefits. Accordingly,
amounts shown for inventories at March 31, 1994 have been determi
under the Company's regular accounting system, and management bel
that no significant adjustments will arise when the next physical
inventories are taken.
It is impractical to segregate inventories into major classes due
the nature of the items and the businesses carried on by the Comp
and its subsidiaries.
(3)Federal Income Taxes:
The Company provides for Federal income taxes for interim reporti
purposes using applicable statutory tax rates and considering ava
tax credits. Effective January 1, 1993, the Company adopted SFAS
109, Accounting for Income Taxes. The effect of adopting SFAS 10
to increase first quarter 1993 net income $5.8 million.
<PAGE> 8
Notes to Consolidated Financial Statements - continued
(4) Commitments and Contingent Liabilities:
As reported under Item 3 "Legal Proceedings" in the Company's For
Annual Report for the fiscal year ending December 31, 1993, the C
appealed to the United States Court of Appeals for the Ninth Circ
from a Federal District Court's summary judgement against the Com
in a suit brought by the Federal Trade Commission seeking consume
redress in connection with the sale of heat detectors manufacture
the Company's Interstate Engineering division. In a Per Curiam o
filed on May 7, 1993, the Court of Appeals affirmed in part and v
in part the judgement of the District Court. The Court of Appeal
that the District Court had committed error in ordering the Compa
pay a minimum amount of approximately $7,600,000 but held that th
Company could be required to pay refunds to those buyers who, aft
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 Fede
Trade Commission to implement a redress program.
In a class action suit filed on April 18, 1994 in the U.S. Distri
Court for the Northern District of Ohio against the Company and t
former officers and directors, the plaintiff stockholder alleged
disseminated false and misleading information to the investing pu
concerning the Company's business, management, financial conditio
future prospects in violation of Section 10(b) and 20(a) of the
Securities Exchange Act of 1934. A separate class action suit wa
filed by another stockholder on May 11, 1994, in the same court a
the Company, certain former and present officers and directors, a
Company's auditing firm, setting forth similar allegations. Both
seek monetary damages and costs.
The Company and certain of its subsidiaries are defendants in var
other lawsuits arising in the ordinary course of business. In th
opinion of Company management, the outcome of the litigation will
have a material effect on the operations or financial position of
Company. 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 i
significant adjustments to recorded amounts.
(5) Reclassification of Amounts:
Certain amounts for 1993 have been reclassified to reflect
comparability with account classifications for 1994.
<PAGE> 9
Notes to Consolidated Financial Statements - continued
(6) Discontinued Operations:
In December of 1993, the Company instituted a divestiture plan as
of its debt restructuring efforts to dispose of certain businesse
through unrelated sales transactions. These entities represent
separate major lines of business, class of customers, or non-repo
business segments and, accordingly, have been treated as disconti
operations as required by generally accepted accounting principle
a result of this treatment, the accompanying consolidated financi
statements have been reclassified to report separately the net as
and operating results of the following operations: Rawlings Spor
Goods, Sherwood-Drolet Corp. Ltd., Advance Security, American Laf
Safety Supply America, Medical Devices, Huber/Essick/Mayco Pump,
Cardinal Casualty Co., Colony Insurance Co., Hamilton Insurance C
Waite Hill Services.
Net assets of the discontinued operations at March 31, 1994 and
December 31, 1993 consisted primarily of accounts receivable, inv
and machinery and equipment, offset by insurance loss reserves re
to the insurance companies.
As a group, the discontinued operations represented sales volumes
$90.4 million for the first three months of 1994 compared to sale
$100.7 million for the same period in 1993, and are excluded from
reported sales amounts. Net income from discontinued operations
includes provisions for federal and state taxes at the statutory
for the applicable period.
No provision for loss on disposal of discontinued operations has
provided as the Company expects its divestiture plan to result in
gain. During the first quarter of 1994, the Company sold Advance
Security to a privately held corporation.
(7) Liquidity and Restructuring Plans:
As a result of 1993 operating results, the Company was not in
compliance as of March 31, 1994 and December 31, 1993 with certai
financial covenants contained in certain debt agreements, which p
its lenders to accelerate the due date on its debt. However, the
Company has subsequently received temporary waivers with respect
those financial covenants. Since permanent waivers or modificati
these covenants have not been obtained, $276 million and $271 mil
of long-term debt has been classified as current for the periods
March 31, 1994 and December 31, 1993, respectively.
The Company is currently negotiating with banks party to its revo
credit facility, other domestic and foreign banks, and other fina
institutions in an effort to finalize a satisfactory restructurin
its debt. The Company has continued to receive temporary waivers
its banks. The latest series of waivers granted to the Company w
expire at the end of May, 1994.
<PAGE> 10
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Consolidated net sales in the first three months of 1994 were $181.4
million, which is $338 thousand more than net sales of $181.1 millio
reported in the first three months of 1993. Other Expense for the f
three months of 1994 was $2.7 million versus Other Income of $2.1 mi
for the same period last year. 1993 contained a $2.7 million recove
a cancelled mask contract with the U.S. government, while 1994 refle
$1.9 million in losses on sales of assets.
Costs of goods and services were $152.3 million (83.9% to sales) in
first three months of 1994 versus $133.3 million (73.6% to sales) du
same period in 1993. The major reasons for these variances to prior
are: (1) increased R&D expenses of approximately $1.0 million for n
product development at Scott Aviation, Fire Protection and Snorkel;
continued volume and production problems at Packaging Systems and Ha
of approximately $7.3 million, which are only now expected to begin
the effects of cost reduction efforts; (3) the revised accounting pr
adopted 12/31/93 of expensing project costs and world class conversi
as incurred of approximately $2.3 million; (4) expenses associated w
pre-production costs of several new products of $2.6 million; and (5
correction to contract cost estimates at Automatic Sprinkler of
approximately $2.9 million.
Selling and General and Administrative expenses were $45.7 million o
to sales for the first three months of 1994 versus $35.5 million or
to sales in 1993. Selling expenses were generally flat with the pri
period. General and Administrative expenses are up $10.5 million of
$7.5 million is directly attributed to legal and professional fees a
result of the debt restructuring and the defense of two stockholder
derivative lawsuits filed in 1993. Interest expense of $10.8 millio
the first three months of 1994 was $2.1 million more than that of th
three months of 1993 due to an increase in debt as well as an increa
variable interest rates.
As of 12/31/93, the Company reported restructuring costs associated
modernization of production facilities, equipment, and support syste
$51.0 million, $8.8 million, and $5.9 million for the years 1993, 19
1991, respectively. The Company completed the major portions of thi
conversion in prior years; however, some work is still continuing.
reflected in the first three months of 1994 are $547 thousand when c
to $5.7 million for the same period last year.
<PAGE> 11
Results of Operations - continued
The loss from continuing operations before provisions for taxes amou
$31.2 million in the first three months of 1994 versus a loss of $50
thousand for the same period in 1993. Income from discontinued oper
for the first three months of 1994, including the gain on the sale o
Advance Security, is being deferred on the balance sheet per general
accepted accounting principles. The Company expects overall gains o
disposal of the discontinued operations and, therefore, no provision
losses are required.
The sale of Advance Security is being concluded and the Company has
received a letter of intent for the purchase of Safety Supply Americ
addition, there has also been significant activity with all of the o
discontinued units. Rawlings Sporting Goods has filed an S-1 Regist
Statement in preparation for an initial public offering and is also
engaged in negotiations with private buyers. Numerous inquiries hav
been received on the remaining units which are all expected to resul
purchase offers.
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The Company's segment sales for the first three months of 1994 and 1
stated below:
Sales to Unaffiliated Customers
(in thousands except for percents)
Three Months Ending March 31
1994 Over Percent
1994 1993 (Under)1993Over (Under)
<S> <C> <C> <C> <C>
Consumer $ 15,900 $ 16,501 $ (601) (3.6%)
Industrial
Fire Protection/Safety/
Security 46,577 49,605 (3,028) (6.1%)
Machinery & Allied
Products 67,038 65,914 1,124 1.7%
Total Industrial 113,615 115,519 (1,904) (1.6%)
Technical 44,771 43,662 1,109 2.5%
Services 7,120 5,386 1,734 32.2%
Total Sales $ 181,406 $ 181,068 $ 338 0.2%
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The Consumer Products segment's net sales were $15.9 million during
first three months of 1994 versus net sales of $16.5 million during
period in 1993. Reduced sales and selling prices from Fred Perry du
primarily to the deepening European recessions continues to be the m
reason for the declines in this segment. Spain and Germany continue
very slow recovery, while the U.K. is starting to show some signs of
improvement. Increased sales volumes at Interstate Engineering (up
at Taylor Environment (up 17%) have partially offset the declines at
Perry.
<PAGE> 12
Results of Operations - continued
Fire Protection/Safety/Security Product segment's net sales declined
million or 6.1% during the first three months of 1994 when compared
sales for the same period last year. Increased sales volumes from S
health and safety products and from the Fire Protection division wer
than offset by sales declines at Automatic Sprinkler. The non-resid
construction market that require fire protection systems continues t
very soft and is a primary factor affecting Automatic Sprinkler.
The Machinery and Allied Products segment's net sales were $67.0 mil
the first three months of 1994 versus $65.9 million for the same per
year. The weak European economy and the closing of selected facilit
had an adverse effect on the sales of material handling equipment.
large distribution orders, earthquake related work in Los Angeles, a
several industrial maintenance contracts are responsible for increas
of scaffolding products. Increased sales of elevating work platform
contributed to this segment's overall sales growth.
The Technical Products segment's net sales were $44.8 million for th
three months of 1994 versus $43.7 million for the same period last y
This increase in sales is primarily due to increased shipments of In
Electronics' Global Positioning Systems.
The Service segment's net sales for the first three months of 1994 w
million versus sales of $5.4 million for the same period in 1993. T
change is due primarily to increased volume at the Financial Service
subsidiary which involves an increase in the vehicle fleet as well a
increases in equipment financing.
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The Company's segment operating income for the first three months of
and 1993 are stated below:
Operating Profits
(in thousands except for percents)
Three Months Ending March 31
1994 Over Percent
1994 1993 (Under)1993Over (Under)
<S> <C> <C> <C> <C>
Consumer $ 1,514 $ 1,024 $ 490 47.9%
Industrial
Fire Protection/Safety/
Security (1,236) 2,882 (4,118) (142.9%)
Machinery & Allied
Products (638) 4,365 (5,003) (114.6%)
Total Industrial (1,874) 7,247 (9,121) (125.9%)
Technical (2,380) 6,320 (8,700) (137.7%)
Services 464 1,172 (708) (60.4%)
Total Segments (2,276) 15,763 (18,039) (114.4%)
General Corporate Expenses(18,088) (7,634) (10,454) (136.9%)
Interest Expense, Net (10,821) (8,635) (2,186) (25.3%)
Income before Taxes
on Income $ (31,185) $ (506)$ (30,679) (6063.1%)
</TABLE>
<PAGE> 13
Results of Operations - continued
The Consumer Products segment's operating profits for the first thre
of 1994 were $1.5 million versus profits of $1.0 million for the sam
in 1993. The increase in profits is due partially to better perform
Fred Perry as a result of cost reduction efforts. In addition, Fred
experienced sales of substandard quality merchandise and seasonal it
1993 which occurred at a significantly reduced rate in 1994.
Fire and Safety Products segment operating losses were $1.2 million
first three months of 1994 compared to operating profits of $2.9 dur
same period in 1993. The drop in profits is due primarily to Automa
Sprinkler's volume drop, heavy competition among contractors for few
and a correction of contract cost estimates.
The Machining and Allied Products segment operating loss was $.6 mil
the first three months of 1994 versus operating income of $4.4 milli
the same period in 1993. Sales volume reductions and machinery conv
costs at Packaging Systems are primarily responsible for the decline
reduction efforts have been implemented and we expect to see these r
in the future reporting periods. Insurance proceeds from the flood
at Snorkel Economy have still not been received, but a settlement is
expected in the near future.
The Technical Products segment operating loss was $2.4 million for t
three months of 1994 versus an operating income of $6.3 for the same
in 1993. A volume reduction at Scott Aviation and mask contract rec
proceeds in 1993 contribute to the change in profits year over year.
Continued production problems at Hartman also contributed to reduced
profits; however, cost reduction efforts have been implemented and a
expected to result in future improvements.
The Services segment operating profits were $.5 million for the firs
months of 1994 compared to $1.2 million for the same period in 1993.
decline in profits is due primarily to a decline in oil prices at th
Natural Resources division.
General corporate expenses during the first three months of 1994 wer
million or $10.5 million over those of the same period last year. T
increase in Corporate expenses is primarily due to a $7.5 million in
in legal and professional fees as a direct result of debt restructur
defense of two stockholder derivative lawsuits. Interest expense is
million over the prior year due to an increase in debt as well as an
increase in variable interest rates.
The effective income tax benefit from continuing operations is 34.7%
first three months of 1994 versus a 27.9% tax benefit during the sam
last year.
<PAGE> 14
Liquidity and Capital Commitments
The Company continues to operate under temporary waivers from its le
in lieu of compliance with loan requirements. In the absence of the
finalization of a new long-term financing package, the Company is re
under generally accepted accounting principles to classify substanti
of its long-term debt as a current liability at March 31, 1994 and D
31, 1993.
The Company is continuing to negotiate with banks party to its revol
credit facility, other domestic and foreign banks, and other financi
institutions in an effort to obtain a satisfactory restructuring of
debt. As part of its restructuring plan, the Company intends to dis
certain businesses under a divestiture plan designed to provide liqu
to the Company and pay down debt through the use of proceeds upon sa
During the first quarter, the Advance Security Division was sold and
proceeds retained as marketable securities for debt paydown when an
agreement is reached with the banks.
During the three months ending March 31, 1994, the Company increased
debt by $25.5 million, realized a recovery of taxes, net of payments
$29.2 million, sold businesses and equipment of $28.3 million which,
with depreciation and amortization of $10.1 million and liquidation
million of finance receivables, were used to purchase marketable sec
of $38.0 million, increase key working capital (accounts receivable
inventory net of accounts payable) by $37.4 million, make capital
expenditures of $12.3 million and fund a net operating loss of $20.3
million.
The Company's ability to continue to meet its liquidity requirements
dependent upon its ability to successfully complete its restructurin
efforts - specifically, finalizing a new long-term financing package
completion of its divestiture program. The Company continues to mak
progress in implementing actions aimed at restoring profitability an
liquidity. Negotiations with certain of the Company's lenders conti
take place in an effort to finalize a restructuring of its debt faci
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
In two separate suits reported in the Company's 1993 Form 10-K
Annual Report, three stockholders of the Company filed derivative
complaints during 1993 in the Common Pleas Court of Lake County,
seeking recovery on behalf of the Company for alleged self-dealin
waste of corporate assets, financial statement over-statements, g
mismanagement and participation or acquiescence in such practices
Directors of the Company, all of whom were named as defendants.
Court consolidated the two suits and subsequently dismissed them
respect to all defendants. The plaintiffs have filed a Notice of
Appeal. See also Footnote (4) of Notes to Consolidated Financia
Statements.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
See Note (7) Liquidity and Restructuring Plans of Notes to Consol
Financial Statements.
ITEM 5 OTHER INFORMATION
A press release is attached as Exhibit 99.
ITEM 6(a) EXHIBITS
Exhibit 99 - Press Release dated May 18, 1994.
ITEM 6(b) REPORTS ON FORM 8-K
8-K filed March 17, 1994.
Item 7(c) Exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by
undersigned hereunto duly authorized.
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<CAPTION>
FIGGIE INTERNATIONAL INC.
<S> <C>
Date: May 23, 1994 /s/
A. C. Hays
(Principal financial and accounting
officer for purposes of this report)
Date: May 23, 1994 /s/
L. A. Harthun
Senior Vice President-International,
General Counsel and Secretary
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EXHIBIT LIST
99 - Press Release dated May 18, 1994.
<PAGE> 1
EXHIBIT 99
Keith Mabee
(216)953-2810 FOR IMMEDIATE RELEASE
FIGGIE INTERNATIONAL'S CHAIRMAN AND CEO RETIRES;
VANNOY NAMED SUCCESSOR; BOARD INITIATES CEO
SEARCH AND NEW STANDING COMMITTEES
WILLOUGHBY, OH, MAY 18, 1994 -- Figgie International Inc.
(NASDA/NMS: FIGIA AND FIGI) today announced that its founder,
Chairman and CEO Harry E. Figgie, Jr. is retiring and will be
succeeded by Vice Chairman Walter M. Vannoy in the Company's
two top leadership posts. Mr. Figgie also resigned from the
Board.
Mr. Figgie informed the Company's Board of Directors that: "In
light of my recent health difficulties, and after 30 years at
the helm, it is time for me to step aside so that I can spend
more time with my family and my wide-ranging personal
interests, and in order to facilitate a timely CEO succession
as the Company prepares itself for the future."
The Board acknowledged "Mr. Figgie's many contributions to the
growth and development of the Company over the three decades he
led its diversification into a major Fortune 500 company."
Mr. Vannoy, who has served as a Company director since 1981,
was named vice chairman in February and had previously served
as vice chairman of McDermott International, Inc. and president
and chief operating officer of its Babcock and Wilcox
subsidiary.
"I am deeply committed to leading Figgie International through
the strategic and management transition that the Board has
embarked upon," stated Mr. Vannoy. "We intend to build a
strong leadership team and a people- and results-driven
organization that can carry a more sharply focused core of
businesses to renewed and consistent profitability and growth."
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In related actions, the Figgie Board of Directors:
-Launched a comprehensive search for "an
exceptional chief executive officer candidate
with a strong track record" who would be brought
in to join the senior management team;
-Established three new standing committees of the
Board: Strategic Planning; Management Development
and Compensation; and Operations, the latter
which will oversee implementation of the
Company's major modernization and automation
programs;
-Intensified its efforts to develop a long-term
strategic focus consistent with optimizing
shareholder returns over time; and
-Accepted the resignation of Dr. Harry E. Figgie,
III, as a director of the Company. Dr. Figgie,
who had earlier resigned as an officer of the
Company, cited expanded business commitments at
the Figgie family-owned Clark-Reliance
Corporation and his father's departure from
Figgie International as the key factors
underlying his decision to resign from the Board.
"We are very appreciative of the consistently strong support
provided by our customers, employees, banks, trade creditors
and investors as we manage through these dynamic changes that
will position us for a more promising future," noted Mr.
Vannoy.
