<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 2
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1994
-------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
COMMISSION FILE NUMBER: 1-8591
--------
FIGGIE INTERNATIONAL INC.
----------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-1297376
- --------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4420 Sherwin Road
Willoughby, Ohio 44904
- --------------------------------- -----------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (216) 953-2700
---------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
10-3/8% Subordinated Debentures Pacific Stock Exchange Inc.
- ------------------------------- -----------------------------------------
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 the
filing requirements for at least 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. [X]
State the aggregate market value of the voting stock held by nonaffiliates 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.
(See the definition of affiliate in Rule 405.)
At 4/10/95 $150,108,773
- -------------------------------------------------------------------------------
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
- -------------------------------------------------------------------------------
Class A Common Stock, Par Value $0.10 Per share (13,670,916 shares outstanding
as of 4/10/95)
- -------------------------------------------------------------------------------
Class B Common Stock, Par Value $0.10 Per share (4,724,869 shares outstanding
as of 4/10/95)
- -------------------------------------------------------------------------------
<PAGE> 2
FIGGIE INTERNATIONAL INC.
Figgie International Inc, the registrant, hereby amends the following
items, exhibit index and exhibit of its Annual Report on Form 10-K for 1994 as
set forth in the pages attached hereto:
Items 8, 14
Exhibit Index
Exhibit 23
<PAGE> 3
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 consolidated balance sheets of Figgie
International Inc. (a Delaware corporation) and Subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1994. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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, 1994 and 1993, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1994 in conformity with generally accepted
accounting principles.
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 18 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 LLP
Cleveland, Ohio,
April 12, 1995.
<PAGE> 4
<TABLE>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
(in thousands, except per share data)
<CAPTION>
1994 1993 1992
--------- --------- --------
<S> <C> <C> <C>
CONTINUING OPERATIONS:
Net Sales $ 319,420 $ 287,153 $284,990
Costs of Sales 247,254 224,255 216,911
--------- --------- --------
Gross Profit on Sales 72,166 62,898 68,079
--------- --------- --------
Operating Expenses:
Selling, General and Administrative 68,484 69,732 54,680
Research and Development 18,500 18,023 7,319
--------- --------- --------
Total Operating Expenses 86,984 87,755 61,999
--------- --------- --------
Operating (Loss) Income (14,818) (24,857) 6,080
--------- --------- --------
Other Expense (Income):
Restructuring and Refinancing Costs 55,204 17,604 3,024
Change in Accounting Estimate - 33,948 -
Interest Expense 42,062 31,942 31,501
Interest Income (3,301) (874) (169)
Other, Net (550) (5,652) (9,869)
------- --------- --------
Loss before Income Tax Benefit (108,233) (101,825) (18,407)
Income Tax Benefit 22,986 19,480 9,207
--------- --------- --------
Loss before Discontinued Operations and
Change in Accounting Principle (85,247) (82,345) (9,200)
Discontinued Operations, net of tax:
(Loss) Income from Discontinued Operations (42,905) (103,269) 37,499
Loss on Disposal of Discontinued Operations (38,578) - -
--------- -------- --------
(81,483) (103,269) 37,499
(Loss) Income before Cumulative Effect of
Change in Accounting Principle (166,730) (185,614) 28,299
Cumulative Effect of Change in Accounting
for Income Taxes - 5,839 -
--------- --------- --------
Net (Loss) Income $(166,730) $(179,775) $ 28,299
========= ========= ========
Weighted Average Shares 17,723 17,775 17,539
Earnings Per Share
- ------------------
Loss before Discontinued Operations and $ (4.81) $ (4.63) $ (0.52)
Change in Accounting Principle
(Loss) Income from Discontinued Operations (4.60) (5.81) 2.13
Cumulative Effect of Change in Accounting for
Income Taxes - 0.33 -
--------- --------- --------
Net (Loss) Income $ (9.41) $ (10.11) $ 1.61
========= ========= ========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
4
<PAGE> 5
<TABLE>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(in thousands)
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 28,611 $ 26,954
Restricted cash 18,716 -
Trade accounts receivable, less allowance for
uncollectible accounts of $259 in 1994 and
$184 in 1993 44,994 37,401
Inventories 38,845 52,181
Prepaid expenses 3,225 5,958
Recoverable income taxes 8,108 36,283
Net assets related to discontinued operations 317,601 552,164
--------- ---------
Total Current Assets 460,100 710,941
--------- ---------
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 29,699 47,085
Buildings and leasehold improvements 46,024 54,589
Machinery and equipment 70,587 71,534
--------- ---------
146,310 173,208
Accumulated depreciation (42,385) (50,721)
--------- ---------
103,925 122,487
Property under capital leases, less accumulated
depreciation of $4,709 in 1994 and $9,818 in 1993 2,158 6,061
--------- ---------
Net Property, Plant and Equipment 106,083 128,548
--------- ---------
OTHER ASSETS
Prepaid pension costs 9,964 10,591
Prepaid rent on leased equipment 17,075 -
Intangible assets 20,244 21,043
Cash surrender value of insurance policies 10,576 19,246
Non-current receivables 5,920 8,607
Prepaid finance costs 8,291 4,307
Other 6,211 19,185
--------- ---------
Total Other Assets 78,281 82,979
--------- ---------
Total Assets $ 644,464 $ 922,468
========= =========
</TABLE>
5
<PAGE> 6
<TABLE>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(in thousands, except par value)
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Debt due within one year $ 171,641 $ 90,891
Accounts payable 55,398 54,162
Accrued insurance reserves 16,889 5,189
Accrued liabilities and expenses 64,706 50,018
Current maturities of long-term debt 7,179 110,576
---------- ----------
Total Current Liabilities 315,813 310,836
---------- ----------
Long-term debt 234,491 338,270
Deferred federal income taxes - 20,604
Other non-current liabilities 28,938 30,865
---------- ----------
Total Liabilities 579,242 700,575
---------- ----------
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par value; Authorized,
3,217 shares; Issued and Outstanding, none - -
Class A common stock, $.10 par value; 1,370 1,375
Authorized, 18,000 shares; Issued and
Outstanding 1994 - 13,695; 1993 - 13,751
Class B common stock, $.10 par value; 471 499
Authorized, 18,000 shares; Issued and
Outstanding 1994 - 4,715; 1993 - 4,989
Capital surplus 110,518 127,488
Retained (deficit) earnings (43,198) 124,020
Unearned compensation (3,829) (31,003)
Cumulative translation adjustment (110) (486)
--------- ----------
Total Stockholders' Equity 65,222 221,893
--------- ----------
Total Liabilities and Stockholders' Equity $ 644,464 $ 922,468
========= ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
6
<PAGE> 7
<TABLE>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(in thousands)
<CAPTION>
Common Stock Capital Surplus Retained
-------------- ----------------- Earnings Unearned
Class A Class B Class A Class B (Deficit) Compensation
------- ------- ------- ------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 $1,361 $502 $108,187 $ 16,762 $298,981 $(42,250)
Net Income 28,299
Dividends Declared:
Common Stock A, $.50 per share (6,781)
Common Stock B, $.50 per share (2,473)
Restricted Stock Purchase Plan, Net (2) (1,283) (302) 4,848
Other Common Stock Transactions, Net (3) (6) (89) 1,511 (2,829)
Amortization of Unearned ESOP Compensation (1,116) (520) 501 7,447
Translation Adjustments
------ ---- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1992 1,356 496 105,699 17,451 315,698 (29,955)
Net Loss (179,775)
Dividends Declared:
Common Stock A, $.435 per share (5,850)
Common Stock B, $.435 per share (2,141)
Restricted Stock Purchase Plan, Net 39 20 6,694 3,400 (8,493)
Other Common Stock Transactions, Net (20) (17) (1,708) (605) (4,392)
Amortization of Unearned ESOP Compensation (2,636) (807) 480 7,445
Translation Adjustments
------ ---- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1993 1,375 499 108,049 19,439 124,020 (31,003)
Net Loss (166,730)
Minimum Pension Liability (488)
Restricted Stock Purchase Plan, Net (5) (15) (1,931) (2,596) 4,790
Other Common Stock Transactions, Net (13) (1,371)
Amortization of Unearned ESOP Compensation (3,776) (7,296) 22,384
Translation Adjustments
------ ---- -------- -------- --------- --------
BALANCE, DECEMBER 31, 1994 $1,370 $471 $102,342 $ 8,176 $ (43,198) $ (3,829)
====== ==== ======== ======== ========= ========
<CAPTION>
Cumulative
Translation
Adjustment Total
----------- ---------
<S> <C> <C>
BALANCE, DECEMBER 31, 1991 $1,120 $ 384,663
Net Income 28,299
Dividends Declared:
Common Stock A, $.50 per share (6,781)
Common Stock B, $.50 per share (2,473)
Restricted Stock Purchase Plan, Net 3,261
Other Common Stock Transactions, Net (1,416)
Amortization of Unearned ESOP Compensation 6,312
Translation Adjustments (1,702) (1,702)
------ ---------
BALANCE, DECEMBER 31, 1992 (582) 410,163
Net Loss (179,775)
Dividends Declared:
Common Stock A, $.435 per share (5,850)
Common Stock B, $.435 per share (2,141)
Restricted Stock Purchase Plan, Net 1,660
Other Common Stock Transactions, Net (6,742)
Amortization of Unearned ESOP Compensation 4,482
Translation Adjustments 96 96
------ ---------
BALANCE, DECEMBER 31, 1993 (486) 221,893
Net Loss (166,730)
Minimum Pension Liability (488)
Restricted Stock Purchase Plan, Net 243
Other Common Stock Transactions, Net (1,384)
Amortization of Unearned ESOP Compensation 11,312
Translation Adjustments 376 376
------ ---------
BALANCE, DECEMBER 31, 1994 $ (110) $ 65,222
====== =========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
7
<PAGE> 8
<TABLE>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 and 1992
(in thousands)
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Operating Activities:
(Loss) from Continuing Operations $ (85,247) $ (82,345) $ (9,200)
(Loss) Income from Discontinued Operations (81,483) (103,269) 37,499
Cumulative Effect of Accounting Change - 5,839 -
Adjustments to Reconcile Net (Loss) Income to Net
Cash (Used) Provided by Operating Activities
Change in Accounting Estimate - 77,344 -
Depreciation and Amortization 41,633 40,833 36,434
Amortization of Unearned Compensation 5,791 5,557 11,247
Other, Net 9,917 41,773 (5,681)
Changes in Operating Assets and Liabilities
Trade Accounts Receivable 11,341 (19,088) 56,954
Allowance for Uncollectible Accounts 616 1,531 (682)
Finance Receivables 4,780 (13,602) (11,220)
Inventories 15,733 9,083 6,314
Prepaid Items (7,523) (5,718) (3,172)
Other Assets 37,116 (9,346) (37,400)
Accounts Payable (14,293) 38,882 6,959
Accrued Liabilities and Expenses 30,509 39,330 (9,642)
Deferred and Accrued Taxes 13,533 (62,131) 8,837
Other Liabilities 2,198 2,887 (2,031)
-------- -------- --------
Net Cash (Used) provided by Operating Activities (15,379) (32,440) 85,216
-------- -------- --------
Investing Activities:
Capital Expenditures (60,304) (109,557) (100,354)
Sale of Investments 7,862 - -
Businesses and Investments Acquired - (5,661) (9,792)
Proceeds from Sale of Property, Plant and Equipment 42,468 73,952 74,756
Proceeds from Business Divestitures 198,130 - -
(Purchases) Sales of Securities by Insurance Subs. (12,739) 1,202 (20,905)
-------- -------- --------
Net Cash Provided (Used) in Investing Activities 175,417 (40,064) (56,295)
-------- -------- --------
Financing Activities:
Proceeds from Debt 4,420 12,104 34,782
Principal Payments on Long-Term Debt (94,945) (38,147) (69,830)
(Repayments) Borrowing Under Notes Payable, Net (32,348) 102,842 4,893
Dividends Paid - (7,991) (9,254)
Common Stock Transactions, Net (2,681) (6,157) (3,091)
-------- -------- --------
Net Cash (Used) Provided by Financing Activities (125,554) 62,651 (42,500)
-------- -------- --------
Net Increase (Decrease) in Cash and Cash Equivalents 34,484 (9,853) (13,579)
Cash and Cash Equivalents at Beginning of Year 33,816 43,669 57,248
-------- -------- --------
Cash and Cash Equivalents at End of Year $ 68,300 $ 33,816 $ 43,669
======== ======== ========
- - Continuing Operations - Unrestricted $ 28,611 $ 26,954 $ 38,444
- - Continuing Operations - Restricted $ 18,716 $ - $ -
- - Discontinued Operations $ 20,973 $ 6,862 $ 5,225
Supplemental Disclosures of Cash Flow Information:
Cash Paid (Received) during the Year for -
Interest (Net of Amount Capitalized) $ 41,771 $ 36,781 $38,550
Domestic Federal Income Taxes $(35,856) $(24,232) $ 626
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
8
<PAGE> 9
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies:
-------------------------------------------
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include the accounts of Figgie International Inc. (referred to, with all its
consolidated subsidiaries and divisions and their predecessor entities, unless
the context otherwise requires, as the "Company".) All intercompany account
transactions have been eliminated in consolidation.
CASH. For purposes of the statements of cash flows, the Company
considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents. Cash equivalents are stated at cost
which approximates their fair market value. The effect of foreign currency
translation on cash held by foreign divisions is immaterial. Restricted cash
in the amount of $18.7 million represents collateral on letters of credit and
divestiture proceeds that have been escrowed for payment of expenses and taxes.
CONCENTRATION OF CREDIT RISK. The Company does not have any
concentrations of credit risk by major customer, geographic region or activity.
The Company generally does not require collateral.
INVENTORIES. Manufacturing inventories are stated at the lower of
first-in-first-out (FIFO) cost or market. Costs accumulated under government
contracts are stated at actual cost, (LIFO method as applicable) net of
progress payments, not in excess of realizable value.
LONG-TERM CONTRACTS. Government segment sales are principally under
long-term contracts and include cost-reimbursement and fixed-price contracts.
Sales under cost-reimbursement contracts are recognized as costs are incurred
and include a proportion of the fees expected to be realized equal to the ratio
of costs incurred to date to total estimated costs. Sales under fixed price
contracts are recognized as the actual cost of work performed relates to the
estimate at completion.
Cost or performance incentives, which are incorporated in certain contracts,
are recognized when realization is assured and amounts can be reasonably
estimated. Estimated amounts for contract changes and claims are included in
contract sales only when realization is probable. Assumptions used for
recording sales and earnings are adjusted in the period of change to reflect
revisions in contract value and estimated costs. In the period in which it is
determined that a loss will be incurred on a contract, the entire amount of the
estimated loss is charged to income.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment 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%; Leasehold
Improvements, life of lease.
9
<PAGE> 10
CAPITALIZATION OF INTEREST. The Company capitalizes interest costs during
the development period of certain properties. Total interest capitalized was
approximately $.8 million in 1994, $.6 million in 1993, and $2.5 million in
1992.
INTANGIBLES. Goodwill of $23.1 million at December 31, 1994 and 1993
represents costs in excess of net assets of purchased businesses, and is
generally amortized over a 40-year period. At December 31, 1994 and 1993,
accumulated goodwill amortization was $5.5 million and $4.9 million,
respectively. Management has evaluated goodwill by considering historical and
projected operating results, and believes that the asset is realizable and the
amortization period is appropriate. Patents of $3.9 million at December 31,
1994 and 1993 are amortized over their statutory or estimated useful lives. As
of December 31, 1994 and 1993, accumulated patent amortization was $1.3 million
and $1.1 million, respectively.
FACTORY AUTOMATION COSTS. The Company 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 18 "Change in Accounting
Estimate".
INCOME TAXES. In February 1992, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standard No. 109, "Accounting
for Income Taxes" ("Statement 109"). Under the asset and liability method of
Statement 109, deferred tax assets and liabilities are recognized for future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to be recovered or settled. Under Statement 109, the effect of
a change in tax rates on deferred tax assets and liabilities is recognized in
income in the period that includes the enactment date. 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 $5.8 million, or $.33 per share, for the
year ended December 31, 1993. As permitted under the Statement, this
accounting standard was adopted prospectively in 1993 and prior periods were
not restated.
EARNINGS PER SHARE. Earnings per common share are based upon the
weighted average number of shares outstanding during each year. The
unallocated shares of the non-leveraged Employee Stock Ownership Plan are not
considered outstanding for earnings per share purposes. The unallocated shares
of the 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". These shares were, however, considered outstanding for 1992 earnings
per share.
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 based on projected settlement dates
for known and anticipated claims. Adjustments to recorded reserves are
reflected in current operating results.
10
<PAGE> 11
RECLASSIFICATION OF AMOUNTS. Certain amounts for 1993 and 1992 have been
reclassified to reflect comparability with account classifications for 1994.
These reclassifications principally relate to the presentation of the
operations between continuing and discontinued, and reclassification of
long-term debt as of December 31, 1993.
(2) Restructuring and Refinancing Costs:
------------------------------------
<TABLE>
The 1994 Restructuring and Refinancing Costs are comprised of: (1)
restructuring costs related to revaluation and write-down of properties held
for sale to current realizable market value; (2) refinancing costs for
professional and lender fees related to the liquidity crisis of late 1993 and
the first half of 1994 and the resultant Override Agreement which restructured
$487 million of debt and leases on August 1, 1994; and (3) other various
nonrecurring expenses not associated with the ongoing operations of the
business.
The revaluation of properties results from the strategic business plan to focus
on manufacturing operations and to thereby limit the Company's active real
estate development activities. The Company will develop two key properties and
will market for orderly sale its other real estate holdings including
development land, headquarter complexes and former plants. These sales will
benefit the Company by reducing current carrying costs such as real estate
taxes, insurance and mortgage interest.
<CAPTION>
(in thousands)
<S> <C>
Asset Revaluation $23,516
Refinancing Fees to Professionals and Lenders 22,295
Other 9,393
-------
$55,204
=======
</TABLE>
In 1993 and 1992, restructuring charges associated with continuing operations
amounted to $17.6 million and $3.0 million. The costs were associated with the
relocation and consolidation of facilities and operations, provisions for
anticipated losses on sales of real estate, consulting fees to assist with the
development of strategic business plans, and retooling costs.
(3) Divestitures:
------------
In January of 1994, the Company commenced a divestiture program as part of its
immediate debt refinancing efforts. Certain business units were to be sold
through unrelated sales transactions to generate liquidity for working capital
and, ultimately, to pay lender debt. The following companies were sold during
1994: Advance Security, CASI-RUSCO, Waite Hill Insurance group (Cardinal
Casualty Co., Colony Insurance Co., Hamilton Insurance Co.), Rawlings Sporting
Goods, Safety Supply America, Sherwood Drolet Corp Ltd. and Huber-Essick/Mayco
Pump. The Company used the gross proceeds of $198.1 million from the sales to
repay $124.7 million of debt under the Override Agreement, operating leases,
bank fees, interest expense and for working capital.
11
<PAGE> 12
(4) Discontinued Operations:
-----------------------
On February 15, 1995, the Company announced that Board of Directors approved a
strategic business plan designed, effective December 31, 1994, to restore the
Company to profitability. Under the Plan, the Company will operate four
technology-driven manufacturing companies, aggressively cut corporate overhead,
and sell its fourteen other businesses in 1995 using sale proceeds to reduce
debt and operating lease obligations. The majority of these other businesses
were unprofitable and had revenue of $442.8 million in 1994.
<TABLE>
The entities to be sold are reported as discontinued operations at December 31,
1994, and the consolidated financial statements have been reclassified to
report separately their net assets and operating results. The Company's prior
year financial statements have been restated to reflect the continuing
operations, summarized as follows:
<CAPTION>
(in Thousands)
--------------
As Previously Discontinued
1993: Reported Operations As Restated
---------- ---------- -----------
<S> <C> <C> <C>
Net Sales $ 768,642 $(481,489) $287,153
========= ========= ========
Loss from Continuing Operations (179,334) 96,989 (82,345)
Loss from Discontinued Operations (6,280) (96,989) (103,269)
Cumulative Effect of Change in Accounting
for Income Taxes 5,839 - 5,839
--------- --------- ---------
Net Loss $(179,775) $ - $(179,775)
========= ========= =========
1992:
Net Sales $ 792,409 $(507,419) $ 284,990
========= ========= =========
Income (Loss) from Continuing Operations 18,878 (28,078) (9,200)
Income (Loss) from Discontinued Operations 9,421 28,078 37,499
--------- --------- ---------
Net Income (Loss) $ 28,299 $ - $ 28,299
========= ========= =========
</TABLE>
The $38.6 million estimated loss on disposal consists of an estimated loss on
the disposal of businesses of $4.0 million, a provision of $8.9 million for
anticipated operating losses until disposal, and income taxes of $25.7 million.
Net Assets Related to Discontinued Operations at December 31, 1994 and 1993
consist primarily of accounts receivable, finance receivables, contracts in
process, oil and gas interests, inventory, property, plant and equipment, and
significant, specialized machinery, net of current liabilities of these
businesses. Realization of these discontinued assets is based on management's
best estimate and is subject to market conditions, timing and negotiations.
12
<PAGE> 13
<TABLE>
(5) Income Taxes:
------------
Income tax provision (benefit) consists of the following components:
<CAPTION>
(in thousands)
Continuing Operations: 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Current Federal $ (8,108) $(35,856) $(19,507)
Deferred Federal (15,480) 22,518 10,656
State 602 (6,142) (356)
-------- -------- --------
Total from Continuing Operations $(22,986) $(19,480) $ (9,207)
Discontinued Operations:
Operations (20,174) (55,606) 22,129
Disposal 25,654 - -
Cumulative Effect of Change in Accounting - (5,839) -
-------- -------- --------
Total Tax Provision (Benefit) $(17,506) $(80,925) $ 12,922
======== ======== ========
</TABLE>
<TABLE>
A reconciliation of the actual tax provision (benefit) to the U.S. federal
income tax rate effective for each year for continuing operations is as follows:
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Statutory Federal Tax Rate (35.0)% (35.0)% (34.0)%
Benefit and Insurance Plans - 0.2 (8.3)
Foreign Sales Corporation (0.4) (0.8) (3.5)
International Rate Differential (0.4) - 1.5
Goodwill .3 0.6 3.4
Other (net) (0.7) 7.8 (7.6)
State Income Taxes (Net of
Federal Tax) .3 (3.9) 5.5
Current Effect of Change in Federal Rate - 2.0 -
Valuation Allowance (Net of Tax Credits) 14.7 10.0 ( 7.1)
----- ----- -----
Effective Tax Rate (Benefit) (21.2)% (19.1)% (50.1)%
===== ===== =====
</TABLE>
<TABLE>
The components of the net deferred tax liability as of December 31, 1994 and
1993 are as follows:
<CAPTION>
(in thousands)
1994 1993
---------- --------
<S> <C> <C>
Deferred Tax Assets:
Allowance for Doubtful Accounts $ 4,054 $ 4,664
Deferred Compensation Plans 5,234 5,307
Insurance and Other Reserves 7,586 7,586
Contingency Reserves 15,698 7,771
Factory Automation 6,873 6,873
Inventory Reserves 5,815 4,026
Operating Losses and Tax Credit Carryforwards (Net) 31,363 19,365
Other (Net) 10,685 10,807
Foreign (Net) 3,031 3,031
-------- --------
Total Deferred Tax Assets $ 90,339 $ 69,430
-------- --------
Deferred Tax Liabilities:
Property, Plant and Equipment $(44,192) $(41,291)
Benefit Plans (11,076) (11,243)
Intangible Drilling Costs (5,069) (5,029)
Other (Net) $(30,002) $(32,471)
-------- --------
Total Deferred Tax Liabilities (90,339) (90,034)
-------- --------
Net Deferred Tax Liabilities $ - $(20,604)
======== ========
</TABLE>
13
<PAGE> 14
As of December 31, 1994, the Company, for tax reporting purposes, has tax
credit carryforwards of $21.9 million which will begin to expire in 1995,
and operating loss deduction carryforwards of $104.6 million which will
begin to expire in 2006. To the extent these tax carryforward attributes of
approximately $58.5 million have exceeded the Company's Deferred Tax
Liabilities of $31.4 million, they have been fully reserved. Realization of
tax carryforwards is dependent on future taxable income and amounts realized
are subject to tax regulations and limitations by year and nature.
The 1993 benefit for federal income taxes includes a charge of $1.9 million
which represents the effect of the U.S. federal income tax rate increase
from 34% to 35% on net deferred tax liabilities.
Accumulated unremitted foreign earnings as of January 1, 1994, are not
material; accordingly the Company has elected to prospectively provide
deferred U.S. income taxes on foreign earnings which may be 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.
14
<PAGE> 15
<TABLE>
(6) Inventories:
-----------
Inventories are summarized as follows:
<CAPTION>
(in thousands)
1994 1993
--------- -------
<S> <C> <C>
Manufacturing Inventories:
Raw materials $21,509 $28,055
Work in process 6,138 8,703
Finished goods 11,219 15,121
Inventory reserves (1,532) (1,925)
-------- -------
Total manufacturing inventories 37,334 49,954
Inventories applicable to government contracts 207,632 196,959
Less: Progress payments (206,121) (194,732)
-------- --------
Net contracts in process 1,511 2,227
-------- -------
Total Inventories $ 38,845 $ 52,181
======== ========
</TABLE>
(7) Debt Refinancing:
----------------
On August 1, 1994, the Company executed an agreement ("Override Agreement")
with its significant unsecured institutional lenders to refinance
approximately $315 million in indebtedness, letters of credit and related
facilities ("Override Debt") of which $278 million was outstanding. At the
same time, the Company refinanced approximately $172 million in outstanding
operating leases. The Override Debt bears interest at a base rate plus 2%
(the 2% portion originally payable on June 30, 1995) and a restructuring fee
of 3 1/2% (2 1/4% payable on June 30, 1995). Mortgages, the 9-7/8% Notes,
the Subordinated Debentures and certain other debt and leases were not part
of the refinanced debt. The Override Agreement precludes the Company from
paying dividends and secures Override Debt with security interests in shares
of certain subsidiaries of the Company and substantially all of the
Company's accounts receivable, inventory, intellectual property and related
assets. Prior to the refinancing, the Company had divested certain
businesses and accumulated sale proceeds to effect the refinancing.
On August 1, 1994, the Company distributed $124.7 million in cash as
follows: $61.8 million to pay down Override Debt; $36.5 million to pay down
operating leases (of which $17.1 million represented prepayments and are
recorded as non-current assets); $7.0 million to pay bank fees, interest and
expenses of the transaction; and $19.4 million to establish escrow accounts
for income taxes and expenses associated with the divesture program. Between
August 1 and December 31, 1994, the Company made additional payments against
the Override Debt, including releases from escrow accounts, to its lenders
of $48.1 million. In December 1994, the Override Agreement was amended to
permit the Company to obtain additional letter of credit facilities.
15
<PAGE> 16
On March 31, 1995, debt outstanding under the Override Agreement amounted to
$135.4 million ($167.4 million outstanding at December 31, 1994 less $32.0
million payments through March 31, 1995). On March 31, 1995, the Override
Agreement was amended (the "Second Amendment"), to extend the expiration
date to January 1, 1996, set principal amortization payments throughout
1995, reset the net worth, cash flow and capital expenditure financial
covenants with amounts applicable to the Company's continuing operations and
to permit the Company to incur additional indebtedness, as defined, for
performance bonds and for additional letters of credit of up to $5 million,
each of which may be secured by a pledge of up to $2 million of cash,
respectively. Also effective March 31, 1995, the 2% interest payment
deferral was terminated and the amount due was paid. Fees due under the
original agreement and extension fees will require a refinancing cost of
$10.0 million in 1995.
Pursuant to the Second Amendment, the Company has agreed to repay in 1995 a
substantial portion of all of the remaining amounts outstanding under the
Override Agreement, with any remaining amounts due January 1, 1996. The
Company expects to fund these payments through the proceeds of the divesture
of those businesses whose net assets are presented in the Company's balance
sheet as Net Assets Related to Discontinued Operations; however, all Company
sources, including cash reserves, working capital generated, and short-term
facilities can be accessed for this purpose.
At December 31, 1994, all required restrictions and financial covenants have
been satisfied.
(8) Debt Due Within One Year:
<TABLE>
At December 31, 1994 and 1993, debt due within the following year was as
follows:
<CAPTION>
(in thousands)
1994 1993
-------------------------- ---------------------------
Balance Average Balance Average
Outstanding Rate Outstanding Rate
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Override Debt $ 167,364 10.50% $ 88,101 7.15%
Other Debt 4,277 9.85% 2,790 9.48%
----------- ------- ----------- -------
Total $ 171,641 $ 90,891
=========== ===========
</TABLE>
Additional terms of the Override Debt are discussed in Footnote 7. The fair
value of the Override Debt at December 31, 1994 is estimated at 92.125% based
on a sale of the debt between two lenders near year-end. At December 31, 1994,
the interest rate on the Override Debt was 10.5%
The Other Debt above represents amounts outstanding under short-term notes and
foreign lines at variable rates. Based on the short-term nature of the debt
and the variable rates it bears, its carrying value is estimated to approximate
its market value.
The Company has a receivable-based credit facility which permits borrowings of
up to $20.0 million based on the balances of certain divisions' receivables.
At December 31, 1994, $16.3 million was available under this facility. No
amounts were outstanding at December 31, 1994.
16
<PAGE> 17
(9) Long-Term Debt:
--------------
<TABLE>
Total long-term debt at December 31, 1994 and 1993 consisted of the
following:
<CAPTION>
(in thousands)
-------------------------------------------------------------
1994 1993
------------------------- --------------------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- -------- --------- --------
<S> <C> <C> <C> <C>
9.875% Senior Notes due 1999 $174,000 $143,550 $174,000 $176,610
10.375% Debentures due 1998 9,500 8,313 11,000 11,028
Override Debt - - 185,000 185,000
Mortgage notes 53,076 53,076 66,824 66,824
Obligations under capital lease 4,889 4,889 11,049 11,049
Other debt and notes 205 205 973 973
-------- -------- -------- --------
Total 241,670 $210,033 448,846 $451,484
======== ========
Less - current maturities (7,179) (110,576)
-------- --------
Long-term debt $234,491 $338,270
======== ========
</TABLE>
The fair value estimates were made as follows: the Senior Notes were based on
the market price at which the debt traded near year-end; the Debentures were
based on management's estimates; the mortgages were based on carrying value
given their collateralized nature.
The 9.875% Senior Notes are due October 1, 1999. Interest is payable
semi-annually on April 1 and October 1.
The 10.375% subordinated Debentures are callable at a premium prior to
maturity. Redemption prices (expressed as percentages of the principal
amount) during the 12-month period beginning April 1, 1995 are 101.093%,
which decrease to 100.547% on April 1, 1996. The Company is required to make
annual payments of $1.5 million into a sinking fund through 1997, with a $5.0
million payment in 1998. All required payments have been made.
Mortgage notes are secured by real property, are due at various dates through
2009 and bear interest at rates ranging from 7.0% to 12.25%.
The scheduled principal payments and sinking fund requirements for all
long-term debt, excluding the obligations under capital leases, are
approximately as follows: 1995 - $4.4 million; 1996 - $4.7 million; 1997 -
$6.1 million; 1998 - $8.6 million; 1999 - $177.8 million; and $35.2 million
thereafter.
17
<PAGE> 18
(10) Leases:
------
The Company leases a substantial amount of manufacturing equipment under
operating lease arrangements. The Company (through its now discontinued
leasing and scaffolding subsidiaries) also leases the vehicle fleet and
scaffolding equipment ("Vehicle and Scaffolding Leases") held for lease or
rental. All monthly rent and other payments due under all leases have been
made, and are current through December 31, 1994.
On August 1, 1994, and concurrently with entering into the Override Agreement,
the Company executed agreements with certain lessors to restructure leases with
balances of approximately $172 million. On March 31, 1995, the Company and
those lessors, except the lessors to the Vehicle and Scaffolding Leases,
amended or have agreed to amend the leases to conform certain financial
covenants of the leases to the financial covenants contained in the Second
Amendment to the Override Agreement, and to accelerate certain fees and to
amend other terms consistent with the Override Agreement. The Company is in
discussion with the lessors to the Vehicle and Scaffolding Leases to similarly
amend those leases.
<TABLE>
<CAPTION>
A progression of rental commitments under operating leases as of December 31,
1993 to those as of December 31, 1994 is as follows (in millions):
<S> <C>
Rental commitments under operating leases at
December 31, 1993 including $11.4 related to
discontinued operations $177.7
Commitments added as of August 1, 1994 through
the negotiated restructuring of the former non-
amortizing leases for specific amortization payments 60.0
Commitments added in December 1994 to finance
machinery and equipment 13.7
Payments to lessors, including prepaid rent (72.0)
Elimination of rental commitments through sale
of underlying assets or assignment of
leases to purchasers (23.7)
-------
Rental Commitments under operating leases at
December 31, 1994, including $120.6 million
related to discontinued operations $ 155.7
=======
</TABLE>
18
<PAGE> 19
<TABLE>
Rental commitments under non-cancelable operating leases as of December 31,
1994 were as follows (in thousands):
<CAPTION>
Discontinued Continuing
Operations Operations Total
---------- ---------- --------
<S> <C> <C> <C>
Year Ending December 31,
1995 $ 34,874 $ 9,111 $ 43,985
1996 37,185 8,226 45,411
1997 25,862 7,703 33,565
1998 13,999 7,014 21,013
1999 & Beyond 8,651 3,039 11,690
-------- ------- --------
Total minimum payments required $120,571 $35,093 $155,664
======== ======= ========
</TABLE>
Funds to pay the $120.6 million of lease obligations related to discontinued
operations are expected to be provided primarily through divestiture proceeds
of those businesses. As to machinery and equipment that is not purchased or is
presently not utilized or underutilized, the Company expects to satisfy the
rental payments through its internal funds until such equipment is sold,
subleased or assigned.
Operating lease expense for continuing operations was approximately $15
million, $16.5 million, and $7.9 million in 1994, 1993, and 1992 respectively.
In 1994, 1993 and 1992, the Company completed sale/leasebacks of certain
machinery and equipment for $13.7 million, $6.0 million and $49.0 million
respectively. Proceeds from the 1994 sale/leaseback were used to pay purchase
commitments entered into in 1993. The 1993 and 1992 proceeds were used to
repay debt.
In 1993, the Company completed, through its Vehicle and Scaffolding businesses,
sale/leasebacks for scaffolding and vehicle fleet for $35.0 million and $25.0
million respectively. Proceeds were used to repay debt. In connection with
those leases, in 1993, the Company entered into two interest rate swap
agreements with a bank. The swap agreements allow the Company to convert the
interest rates on $35 million and $25 million from LIBOR-based floating rates
to fixed rates. Effective March 29, 1995, those agreements were terminated and
the Company received $0.5 million.
<TABLE>
The Company operates equipment under lease arrangements that are classified as
capital leases. The following is a summary of assets under capital leases:
<CAPTION>
(in thousands)
December 31
-------------------------
1994 1993
-------- --------
<S> <C> <C>
Machinery and equipment $ 6,867 $ 15,879
Less accumulated amortization 4,709 9,818
-------- --------
Net $ 2,158 $ 6,061
======== ========
</TABLE>
19
<PAGE> 20
<TABLE>
Future minimum lease payments under capital leases and the present value of
the net minimum lease payments as of December 31, 1994 are as follows:
<CAPTION>
(in thousands)
<S> <C>
Year Ending December 31,
1995 $ 2,752
1996 1,296
1997 962
1998 211
-------
Total minimum lease payments 5,221
Less amount representing interest 332
-------
Present value of net minimum lease payments $ 4,889
=======
</TABLE>
(11) Contingent Liabilities:
-----------------------
The Company has been working with the Federal Trade Commission toward the
completion of a redress program. The Commission sought consumer redress in
connection with the sale of heat detectors manufactured by the Company's
Interstate Engineering division. The Court held that the Company could be
required to pay refunds to those buyers who, after notification, can make a
valid claim for redress. The Court required the Company to provide a bank
letter of credit initially in the amount of $7.6 million and reduced
currently to $4.0 million. The Company had established an accrual and,
based on the current amount of claims received by the Redress Administrator,
no additional material charge to earnings is anticipated.
In a class action suit filed on April 18, 1994, in the U.S. District Court
for the Northern District of Ohio against the Company and two former
officers and directors, the plaintiff stockholder alleged that the
defendants disseminated false and misleading information to the investing
public concerning the Company's business, management, financial condition,
and future prospects in violation of Section 10(b) and 20(a) of the
Securities Exchange Act of 1934. A separate class action suit was filed by
another stockholder on May 11, 1994, in the same court against the Company
and certain former and present officers and directors setting forth similar
allegations. Both suits seek monetary damages and costs and have been
consolidated into one case.
In two separate suits reported in the Company's 1993 Form 10-K Annual
Report, three stockholders of the Company filed derivative complaints on
October 13 and December 2, 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
consolidated the two suits and subsequently dismissed them with respect to
all defendants. The plaintiffs have appealed the Court's decision.
On October 11, 1994 Deloitte & Touche LLP filed suit against the Company in
the Cuyahoga County Common Pleas Court of Ohio alleging that the Company was
in breach of contract for failure to pay for consulting services rendered by
Deloitte & Touche in the approximate amount of $30 million plus interest.
On the same date, the Company filed in the same court its complaint against
Deloitte & Touche (and later against Deloitte & Touche LLP) alleging that in
connection with consulting services rendered to the Company, Deloitte &
Touche was liable for breach of contract, negligent misrepresentation,
breach of fiduciary duty, professional negligence and fraudulent inducement.
The Company seeks $250 million in compensatory damages as well as punitive
damages, declaratory relief and an accounting. The Company also filed a
counterclaim containing similar allegations, as well as claims of breach of
warranty and the unlicensed and unauthorized practice of engineering, in
response to the suit filed by Deloitte & Touche LLP. Deloitte & Touche LLP
has counterclaimed in the Company's action and the Court has now
consolidated the two cases.
20
<PAGE> 21
On December 19, 1994 the Company, its subsidiary Figgie Properties Inc. and
the Richard E. Jacobs Group filed an action against the City of Cleveland
seeking specific performance of a 1989 Master Development Agreement
pertaining to a proposed real estate project referred known as Chagrin
Highlands. The Company's complaint also seeks a declaratory judgment that
the Master Development Agreement is in full force and effect and asks for an
injunction preventing the City from interfering with the rights of the
plaintiffs under that Agreement as well as compensatory damages in the
amount of $100 million. The City of Cleveland has filed a motion to dismiss
the Company's complaint.
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 all 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.
(12) Pension and Retirement Benefits 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>
The components of net periodic pension expense and the assumptions used in
accounting for the benefit plans for the years ended December 31 are as
follows:
<CAPTION>
(in thousands) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 4,220 $ 3,399 $ 3,663
Interest cost on projected
benefit obligation 5,803 5,145 4,673
Actual loss (gain) on plan assets 2,680 (6,788) (3,405)
Net amortization and deferral of
actuarial (losses) gains (8,501) 1,251 (1,605)
-------- -------- --------
$ 4,202 $ 3,007 $ 3,326
======== ======== ========
Assumptions:
Weighted average discount rates 8.25% 7.50% 8.75%
Rate of increase in compensation
levels 5.00% 5.00% 5.00%
Expected long-term rate
of return on assets 10.00% 10.00% 10.00%
</TABLE>
21
<PAGE> 22
<TABLE>
The funded status of the Company's domestic and international plans, along with
the reconciliation to amounts reported in the consolidated balance sheets, were
as follows:
<CAPTION>
December 31, 1994 December 31, 1993
-------------------------- ---------------------------
Assets Accum. Assets Accum.
Exceed Benefits Exceed Benefits
Accum. Exceed Accum. Exceed
(in thousands) Benefits Assets Benefits Assets
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Accumulated
benefit obligations $ 54,682 $ 12,548 $ 55,637 $ 12,594
======== ======== ======== ========
Vested benefit obligations $ 50,462 $ 12,501 $ 51,479 $ 11,805
======== ======== ======== ========
Plan assets at fair value 60,720 119 64,417 269
Projected benefit obligations (59,187) (12,856) (59,645) (14,374)
-------- -------- -------- --------
Assets over (under) projected
benefit obligation 1,533 (12,737) 4,772 (14,105)
Unrecognized net (assets)
liabilities (5,173) 959 (5,715) 1,118
Unrecognized net (gain) loss 12,843 1,089 10,757 3,252
Unrecognized prior service cost 761 0 777 3,940
Adjustment required to
recognize minimum liability 0 (5,172) 0 (6,530)
-------- -------- -------- --------
Prepaid pension cost
(liability) $ 9,964 $(15,861) $ 10,591 $(12,325)
======== ======== ======== ========
</TABLE>
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 29,175 and 28,883 shares of the Company's Class
A Common Stock and 59,334 and 52,115 shares of the Company's Class B Common
Stock as of December 31, 1994 and 1993, respectively.
In addition to providing pension benefits, the Company provides 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 1994, 1993, and 1992, 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 had no
effect on the financial statements.
22
<PAGE> 23
(13) Employee Stock Ownership Plans:
-------------------------------
The Company maintains two employee stock ownership plans: a leveraged ESOP
and a non-leveraged ESOP.
Under the strategic business plan announced on February 15, 1995, divisions
representing a majority of ESOP participants have been discontinued. As
such, the Company elected to allocate all remaining shares as of December
31, 1994 for the leveraged ESOP. The Company's financial statements
reflect the compensation expense related to all shares.
The leveraged ESOP holds a $20 million note that is guaranteed by the
Company and bears interest at the rate provided for in the amended Override
Agreement. The balance outstanding as of December 31, 1994 is $6.2 million
and is expected to be fully paid in 1995 through the amortization required
in the Override Agreement. The leveraged ESOP used the proceeds from the
note to purchase 756,195 Class B shares. Contributions to fund the
interest requirements of the loan are reflected as interest expense in the
accompanying consolidated statements of income, approximately $545,000 in
1994, $365,000 in 1993 and 290,000 in 1992 (net of dividends of
approximately $328,000 in 1993 and $374,000 in 1992). During 1993, the
Company elected to prospectively account for the leveraged ESOP under the
provisions of Statement of Position 93-6, "Employers Accounting for
Employee Stock Ownership Plans." This election allows the Company to
measure compensation expense based on the market value of the shares on the
date of allocation.
The non-leveraged ESOP was established in 1989 by the transfer of surplus
assets from a terminated benefit plan. The transferred funds were used to
purchase 1,124,682 Class A and 440,796 Class B shares. Compensation
expense is based on the fair market value of the shares on the date of
allocation. To the extent the amount available for income tax benefits
exceeds the amount recognized as compensation expense, the additional tax
benefits are credited to additional paid-in-capital. During 1994, $6.0
million was credited to additional paid-in-capital. Dividends on
unallocated shares are charged to expense.
<TABLE>
Compensation expense associated with the allocation of plan shares is as
follows:
<CAPTION>
(in thousands) 1994 1993 1992
----------------------------------------------------------------
<S> <C> <C> <C>
Leveraged ESOP $1,739 $1,288 $2,500
Non-leveraged ESOP 3,614 2,708 3,311
Dividends - 486 501
------ ------ ------
$5,353 $4,482 $6,312
====== ====== ======
</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 1994, 1993, or 1992. The Stock Plan held 291,729 and 378,402
shares of the Company's Class B Common Stock as of December 31, 1994 and
1993, respectively.
23
<PAGE> 24
(14) Capital Stock:
-------------
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.
(15) Restricted Stock Purchase Plan:
------------------------------
Under the 1993 Restricted Stock Purchase Plan for Employees (the "1993
Employee Plan"), up to 800,000 shares each of either Class A or Class B
Common Stock were authorized for possible issuance and executive officers
and other key employees have been granted the right to purchase shares of
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, 1994, 346,385 shares of Class A Common Stock and 16,753
shares of Class B Common Stock, respectively, subject to the above
restrictions, were outstanding under the 1993 Employee Plan.
Under the 1993 Restricted Stock Purchase Plan for Directors (the "1993
Director Plan"), up to 75,000 shares of Class B Common Stock were
authorized for possible issuance and certain Directors of the Company have
been granted the right to purchase shares of Class B Common Stock at
prices substantially below market value. The 1993 Director Plan contains
restrictions and other provisions similar to those of the 1993 Employee
Plan. At December 31, 1994, 30,000 shares of Class B Common Stock,
subject to the above restrictions, were outstanding under the 1993
Director Plan.
The Company's 1988 Restricted Stock Purchase Plan for Employees and 1988
Restricted Stock Purchase Plan for Directors, which was similar in its
terms and conditions to the 1993 Employee Plan and 1993 Director Plan,
were terminated on December 31, 1992 and June 30, 1993, respectively.
24
<PAGE> 25
<TABLE>
The excess of market price over purchase price at date of grant for the
1993 Directors Plan and the 1993 Employees Plan, $.6 million and $8.9
million 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. The
following amounts were amortized to expense:
<CAPTION>
(in thousands)
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
1993 Employee Plan $ 245 $ 885 $ -
1993 Director Plan 193 64 -
1988 Employee Plan - - 4,690
1988 Director Plan - 126 245
------ ------ ------
Total $ 438 $1,075 $4,935
====== ====== ======
</TABLE>
(16) Stock Options:
-------------
In 1994, the shareholders approved a stock option plan (the "Plan") under which
the options and/or stock appreciation rights may be granted to key employees to
purchase common stock at prices not less than the fair market value at the time
of grant options vest over a three-year period from the date of grant. The
Plan calls for up to an aggregate of 1,500,000 shares of Class A common stock
to be available for issuance upon the exercise of options and stock
appreciation rights, which may be granted over a ten-year period ending October
19, 2004. No options or rights had been granted as of December 31, 1994.
Subsequent to December 31, 1994, 706,500 options were granted pursuant to the
Plan.
(17) Industry Segment Data:
---------------------
The Company's operations are conducted through three reportable business
segments. These segments are described in Part I, Item 1 on pages 2 and 3 of
this Form 10-K.
Page 8 contains a summary of certain financial data for each business segment
for 1994, 1993 and 1992. Information concerning the content of this financial
data is as follows: Intersegment and foreign sales are immaterial. Operating
profit is total revenue less operating expenses (cost of sales, SG&A expense
and R&D expense). Operating profit does not include restructuring and
refinancing costs, change in accounting estimate expense, 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, property and other assets.
25
<PAGE> 26
(18) Change in Accounting Estimate:
------------------------------
In connection with its factory automation project, the Company incurred
significant costs, including machinery and equipment, software, and outside
consulting fees. These project costs historically were deferred and amortized
over future periods commencing at the time the equipment was placed into
service. A number of factors arose in 1993 which changed management's estimate
of the period of future benefit. These factors included deteriorating
operating results, cash flow and financing difficulties. As a result, 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, was
recorded as a change in estimate and recorded in the results of operations for
the fourth quarter of 1993. The charge of $33.9 million was associated with
the continuing operations and $43.4 million was associated with businesses
discontinued in 1994 and included in the $103.3 million loss on discontinued
businesses.
26
<PAGE> 27
<TABLE>
QUARTERLY FINANCIAL DATA (UNAUDITED)
------------------------------------
This information is required by the Securities and Exchange Commission and is unaudited.
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- ---------
(in thousands except for per share data)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 Restated (See NOTE A):
- --------------------------
Net sales $ 73,111 $ 80,030 $ 79,792 $ 86,487 NOTE
Gross profit 16,725 18,871 18,324 18,246 C
Net income (loss):
Continuing Operations (16,253) (10,068) (10,848) (48,078)
Discontinued operations (4,084) (7,803) (4,995) (64,601)
-------- -------- -------- ---------
Net (loss) $(20,337) $(17,871) $(15,843) $(112,679)
======== ======== ======== =========
Earnings (loss) per share:
Continuing operations $ (0.91) $ (0.56) $ (0.61) $ (2.74)
Discontinued operations (0.23) (0.44) (0.28) (3.68)
-------- -------- -------- ---------
Net income (loss) $ (1.14) $ (1.00) $ (0.89) $ (6.42)
======== ======== ======== =========
- -----------------------------------------------------------------------------------------------------------------------------------
1993 Restated (See NOTE A):
- --------------------------
Net sales $ 66,374 $ 79,394 $ 67,292 $ 74,093 NOTE
Gross profit 17,610 23,443 5,533 16,312 B
Net income (loss):
Continuing operations (3,558) (1,667) (11,076) (66,044)
Discontinued operations 7,372 2,172 (7,773) (105,040)
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 $ (0.20) $ (0.09) $ (0.62) $ (3.67)
Discontinued operations 0.42 0.12 (0.43) (5.85)
Cumulative effect of change in accounting
for income taxes 0.33 - - -
-------- -------- --------- ---------
Net income (loss) $ 0.55 $ 0.03 $ (1.05) $ (9.52)
======== ======== ======== =========
<FN>
NOTE A: The previously reported quarters have been restated to reflect certain businesses as discontinued operations.
- ------
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 $22 million or $1.22 per share, (2) a restructuring charge of approximately
$11 million or $0.61 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.
NOTE C: Fourth quarter 1994 results from continuing operations included a $15.3 million or $0.87 per share charge for the
- ------ revaluation of certain assets.
</TABLE>
27
<PAGE> 28
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a) Financial Statements, Schedules, and Exhibits:
---------------------------------------------
Page
No.
------
1. Financial Statements
--------------------
Included in Part II of this report:
Report of Independent Public Accountants 23
Consolidated Statements of Income
for the Years Ended December 31, 1994,
1993, and 1992 24
Consolidated Balance Sheets at December 31, 1994
and 1993 26
Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1994, 1993, and 1992 28
Consolidated Statements of Cash Flows
for the Years Ended December 31, 1994, 1993, and 1992 29
Notes to Consolidated Financial Statements 30
Quarterly Financial Data (Unaudited) 48
2. Financial Statement Schedule
----------------------------
Included in Part IV
Schedule II - Valuation and Qualifying Accounts 54
All schedules, other than those outlined above, are omitted as the
information is not required or is otherwise furnished.
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 effective December
13, 1994.
28
<PAGE> 29
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,
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
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, which was included as Exhibit
(4)(c) to the Company's Annual Report on Form 10-K for the year
ending December 31, 1993, and is hereby incorporated herein by
reference.
(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.
10. (a)* The Company's Compensation Plan for Executives, 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.
29
<PAGE> 30
(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 the Company and Harry E. Figgie, Jr., 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, 1989, is hereby incorporated herein by
reference.
(k)* Employment agreement dated July 1, 1994, by and between the
Company and Steven L. Siemborski, included as Exhibit 10(b) to
the Company's Quarterly Report on Form 10Q for the quarter
ending September 30, 1994, is hereby incorporated by reference.
(l)* Override Agreement between the Company and various lenders,
dated as of June 30, 1994 included as Exhibit 10(a) to the
Company's Quarterly Report on Form 10Q for the quarter ending
September 30, 1994, is hereby incorporated by reference.
30
<PAGE> 31
(m) First Amendment dated as of December 5, 1994 to the Override
Agreement dated as of June 30, 1994 between the Company and
various lenders.
(n) Second Amendment dated as of March 31, 1995 to the Override
Agreement dated as of June 30, 1994 between the Company and
various lenders.
(o)* Employment Agreement, dated as of October 28, 1994, by and
between Walter M. Vannoy and the Company.
(p)* Employment Agreement, dated as of January 1, 1995, by and
between John P. Reilly and the Company.
21. Subsidiaries of the Company
23. Consent of Independent Public Accountants
27. Financial Data Schedule - Previously Filed
* Management contracts or compensatory plans filed pursuant to Item 14(c).
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on December 6, 1994.
31
<PAGE> 32
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 12, 1995. Our
report on the financial statements includes 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 18 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 schedule is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states 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 LLP
Cleveland, Ohio,
April 12, 1995.
32
<PAGE> 33
<TABLE>
FIGGIE INTERNATIONAL INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<CAPTION>
Balance, Balance,
Beginning Charged to Amounts End of
Description of Year Costs & Expenses Charged Off Year
- ----------------------------- --------- ---------------- ----------- --------
<S> <C> <C> <C> <C>
Allowance for uncollectible
trade accounts receivables-
Year ending December 31, 1994 $ 184 $263 $ 188 $ 259
======= ==== ======= =======
Year ending December 31, 1993 $ 254 $230 $ 300 $ 184
======= ==== ======= =======
Year ending December 31, 1992 $ 144 $169 $ 59 $ 254
======= ==== ======= =======
</TABLE>
33
<PAGE> 34
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this amendment to be signed on its behalf by the
undersigned, thereto duly authorized.
FIGGIE INTERNATIONAL INC.
(Company)
May 8, 1995 By: /s/ Steven L. Siemborski
-------------------------------
Steven L. Siemborski
Senior Vice President and
Chief Financial Officer
34
<PAGE> 35
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 effective
December 13, 1994.
(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,
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
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, which was included as Exhibit
(4)(c) to the Company's Annual Report on Form 10-K for the year
ending December 31, 1993, and is hereby incorporated herein by
reference.
(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.
(10) (a)* The Company's Compensation Plan for Executives, 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.
35
<PAGE> 36
(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 the Company and Harry E. Figgie, Jr., 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, 1989, is hereby incorporated herein by
reference.
(k)* Employment agreement dated July 1, 1994, by and between the
Company and Steven L. Siemborski, included as Exhibit 10(b) to
the Company's Quarterly Report on Form 10Q for the quarter
ending September 30, 1994, is hereby incorporated by
reference.
(l)* Override Agreement between the Company and various lenders,
dated as of June 30, 1994 included as Exhibit 10(a) to the
Company's Quarterly Report on Form 10Q for the quarter ending
September 30, 1994, is hereby incorporated by reference.
(m) First Amendment dated as of December 5, 1994 to the Override
Agreement dated as of June 30, 1994 between the Company and
various lenders.
(n) Second Amendment dated as of March 31, 1995 to the Override
Agreement dated as of June 30, 1994 between the Company and
various lenders.
(o)* Employment Agreement, dated as of October 28, 1994, by and
between Walter M. Vannoy and the Company.
(p)* Employment Agreement, dated as of January 1, 1995, by and
between John P. Reilly and the Company.
36
<PAGE> 37
(21) Subsidiaries of the Company
(23) Consent of Independent Public Accountants
(27) Financial Data Schedule
37
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Form 10-K/A, into the Company's previously filed
Registration Statements File No. 33-66208 and File No. 33-56705.
ARTHUR ANDERSEN LLP
Cleveland, Ohio,
May 8, 1995.
