SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT
For the fiscal year ended
December 31, 1994 Commission File Number: 1-8684
EXCEL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Indiana 35-1551685
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
1120 North Main Street, P.O. Box 3118, Elkhart, Indiana 46515-3118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (219) 264-2131
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Shares, without
par value American Stock Exchange
Securities registered under Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. (X)
The number of shares of the Registrant's Common Shares, no par value,
outstanding on February 16, 1995 was 10,689,424. The aggregate market value
of the Registrant's Common Shares held by nonaffiliates on March 10, 1995 was
$144,307,124.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Excel Industries, Inc. proxy statement for the 1995
annual meeting of shareholders are incorporated by reference into Part
III of this report.
<PAGE>
PART I.
Item 1. Business
General
The registrant, an Indiana corporation (hereinafter, the "Company"), is the
leading independent designer, manufacturer and supplier of window systems to
the combined automobile, light truck and van, bus, heavy truck and
recreational vehicle markets in North America. The Company's window systems
include various types of automotive windshields; rear, vent, quarter, push out
and sliding windows; and window regulator systems, latches, door frames and
related components. The Company also manufactures door systems for military
and recreational vehicles and injection molded thermoplastic products and
other products primarily for sale to the automotive industry. The Company's
products are sold to major North American transportation original equipment
manufacturers ("OEMs") including Ford, Chrysler, General Motors, AutoAlliance
International, Inc. (a joint venture between Ford and Mazda), Mitsubishi,
Nissan, Fleetwood, Winnebago, Navistar, Paccar (Peterbilt and Kenworth trucks)
and the manufacturers of virtually all of the intra and intercity buses in the
United States and Canada.
Business Strategy
The Company's business objective is to expand profitably its position as the
leading independent supplier of window systems to the combined automotive,
light truck and van, bus, heavy truck and recreational vehicle markets in
North America. It also intends to broaden its product offerings to these
markets, as well as expand its capabilities to complementary markets.
Continued focus on achieving recognition as a world class manufacturer is a
key component of this strategy. The Company continually strives for world
class status through technical innovation, quality excellence, cost
competitiveness and strategic alliances and acquisitions.
Technical Innovation. The Company's most significant innovative achievement
has been the development of reaction injection molded ("RIM") modular windows
in the mid-1980's. This value-added product resulted from a long internal
development effort and accounted for 35% of net sales in 1994. In recent
years, as automotive OEMs increasingly shifted design, innovation, quality and
product improvement responsibility to their suppliers, the Company increased
its research, engineering and development expenditures (from $2.7 million in
1989 to $10.9 million in 1994), including the addition of an advanced design
group and Company-wide computer-aided design capability. The Company has also
added more sophisticated program management and complex manufacturing
information systems. The Company's capabilities now include prototype and
product development, specification testing and manufacturing engineering
assistance. This has resulted in increased opportunities for the Company to
participate earlier in the product planning process and to add value by
furnishing engineering and design services and providing a broader range of
parts required for vehicle assembly.
Quality Excellence. The Company emphasizes a continuous improvement
philosophy to its employees on all facets of operations including product
quality. As a result of its commitment to quality, the Company has achieved
Q1 and Pentastar quality ratings at its key manufacturing plants from Ford and
Chrysler, respectively, and has received quality awards from Fleetwood (a
recreational vehicle OEM), Nissan and other OEMs. At the corporate technical
center, engineers examine the Company's and its competitors' products to
evaluate alternative designs, suggest marketing opportunities and solve
potential production problems, all of which serve to improve and maintain the
Company's stringent quality standards.
Competitive Cost. The Company strives to achieve a competitive cost to its
customers through its emphasis on quality excellence and its involvement in
the early stages of product development. The Company is a highly reliable and
timely supplier able to meet its customers' demanding delivery requirements,
while constantly focusing on reducing OEM inventory levels.
Strategic Alliances. In 1986, Ford entered into a supply agreement (the
"Supply Agreement") with the Company. Pursuant to the Supply Agreement, Ford
agreed to purchase from the Company at least 70% of the requirements by dollar
volume of Ford and Ford Canada for modular framed glass parts using RIM and
polyvinyl chloride ("PVC") technology, commencing with the 1990 model year.
Ford's purchase obligations are contingent upon the Company being competitive
as to technology, quality, service, price and delivery. The Supply Agreement,
which is currently scheduled to expire at the end of the 1998 model year, has
been complemented by a supply agreement between Ford and the Company dated
January 31, 1994 (the "1994 Supply Agreement"), which extends through the 1998
calendar year and which provides for Ford to purchase 100% of its requirements
for those parts currently supplied by the Company (including parts other than
modular windows), subject to specified annual price reductions. Since 1990,
the Company has and is continuing to supply at least 70% of Ford's
requirements for modular framed glass, which have predominately been modular
windows using RIM technology. The Company works closely with Ford during the
development and production by Ford of new products utilizing parts supplied by
the Company, and net sales to Ford have increased from $26.7 million in 1985
to $434.2 million in 1994.
The Company also benefits from an exclusive purchase and supply agreement with
H.S. Die & Engineering of Grand Rapids, Michigan. H.S. Die supplies the molds
(i.e., tooling) to the Company necessary to manufacture modular windows.
Working closely with OEMs and H.S. Die, the Company is able to move rapidly
from design to finished tooling for modular windows. As a result of this
alliance, preproduction lead-times on new programs have been decreased by more
than a year, which was demonstrated in Ford's development of the recently
introduced Mustang model.
Another strategic alliance links the Company with Schade KG, a modular and
conventional window and door systems supplier located in Plettenberg, Germany.
Pursuant to a Reciprocal Technology License and Cooperative Venture Agreement,
both companies have cooperated in developing new business proposals. Schade
helped the Company develop technical capabilities in PVC modular windows. The
Company commenced production of PVC modular windows in 1993 and currently
supplies PVC modular windows for several models. In addition, technology
acquired from the Company's alliance with Schade has enabled the Company to
supply door frames for General Motors' 1995 Saturn Coupe and Sedan.
In 1992, the Company formed a joint venture with Pollone S.A., a Brazilian
automotive parts supplier, for the purpose of supplying encapsulated window
assemblies to South American automakers. Located near Sao Paulo, Brazil, the
joint venture, Pollexco, is owned 49% by the Company and 51% by Pollone, S.A.
Production of products for Autolatina, a joint venture between Ford and
Volkswagen, began in late 1993.
Strategic Acquisitions. In acquisitions, the Company seeks processes,
products or markets which complement the Company's existing businesses. The
Company added high volume conventional window capacity to its product line as
a result of a 1986 acquisition from Irvin Industries. In the mid-1980's,
Ford--initially the Company's only RIM window customer--started its own
subsidiary to manufacture RIM windows in Fulton, Kentucky. In 1986, the
Company acquired Ford's RIM window subsidiary and manufacturing facility. In
1988, the Company acquired Nyloncraft, Inc., which manufactures injection
molded thermoplastic products primarily for the automotive industry.
Nyloncraft also supplies plastic components to six of the Company's
manufacturing facilities. In 1990, the Company acquired the window regulator
business operated by Hoover Universal, Inc., a subsidiary of Johnson Controls,
Inc. The Company's technical capabilities, in particular the corporate
technical center, have enabled it to redesign several products, reduce
operating expenses and improve overall operations in the window regulator
business.
Market Description and Industry Factors
Automotive Market
General. The overall market for new cars and light trucks in North America is
large and cyclical, with average annual growth of 1% to 2%. However,
considerable growth or decline routinely occurs within specific product
segments or model lines. In particular, light truck sales have grown rapidly
over the last 15 years as compared to the demand for cars. This growth in
light truck demand primarily reflects the increased use of mini-vans and sport
utility vehicles. The Company believes it will continue to be well-positioned
as a supplier of window systems to OEMs in this higher growth market segment.
Changing Supplier Policies. Several developments have substantially altered
the competitive environment for automotive suppliers, including consolidation
among suppliers and increased outsourcing of key components by OEMs. During
the 1980s, Ford, Chrysler and General Motors began to reduce their supplier
base, focusing on long-term sole-source contracts with more capable suppliers.
Increasingly, the criteria for selection include not only cost, quality and
responsiveness, but also certain full-service capabilities including design,
engineering and project management support. OEMs now have rigorous programs
for evaluating and rating suppliers which encompass quality, cost control,
reliability of delivery, new technology implementation, engineering
competence, continuous improvement programs and overall management. Under
these programs, each facility operated by a supplier is evaluated
independently. The suppliers who obtain superior ratings are favorably
considered for new business; those who do not may continue their existing
contracts, but normally do not receive additional business. As a result,
these new supplier policies have sharply reduced the number of component
suppliers. In the 1990's, OEM supply agreements have incorporated
productivity provisions which specify annual price reductions which may be
offset by product improvements, manufacturing improvements and/or various
other mutually agreed upon methods.
Transplants. Over the last ten years, Japanese manufactured vehicles have
gained an increasing share of the North American market. In addition, a
growing percentage of such vehicles are being made at North American
operations of Japanese manufacturers ("Transplants"). Transplants receive
component parts from a variety of sources including suppliers in Japan,
Japanese suppliers who establish U.S. facilities and existing U.S. component
suppliers. Because of the current market share of the Transplants, supplying
them is an attractive opportunity. To date, the Company has been selected to
supply window systems for certain Nissan, Mazda and Mitsubishi models
manufactured in North America. The Company has also been selected to supply
fixed vent windows for the new BMW model scheduled to be built in South
Carolina in 1995.
Non-Automotive Market
The market for heavy trucks in North America is cyclical, and the Company
believes it is well positioned to take advantage of supply opportunities which
arise as aging fleets are replaced with new models. The availability of
federally funded programs and the price of gasoline and diesel fuel are
factors which affect the demand for intracity buses purchased for municipal
mass transit systems. The market for recreational vehicles is influenced
significantly by the strength of the economy and the level of consumer
discretionary spending. Recent growth trends in the sale of recreational
vehicles have been positive.
Products
The Company designs, engineers, manufactures and supplies plastic and metal
framed window assemblies, manual and power glass regulator systems and
injection molded thermoplastic products principally for North American car,
light truck and van, heavy truck, bus, military and recreational vehicle OEMs.
The Company does not manufacture or sell primary glass.
Modular Window Systems. The Company's modular, plastic framed windows are
value-added parts because clips, weatherstripping and bright trim are attached
during the molding process. The module-manufacturing processes used by the
Company give the OEM designers great flexibility in window shape, sealing and
aerodynamics. The module supplied to the OEM also lowers its parts inventory,
reduces part weight and reduces assembly efforts. The Company produces
modular windshields and rear windows, as well as fixed quarter, sliding and
push out modular windows.
The Company utilizes RIM technology and also PVC injection molding technology
to manufacture modular windows. In RIM technology, liquids are mixed and fed
into a mold that holds glass, framing and fastening components. The mixture
polymerizes, and the completed module is removed, trimmed, cleaned, inspected
and packed for shipment. In PVC injection molding, solid plastic subjected to
high temperature and pressure flows in liquid form into the mold where it
reverts without chemical reaction to a solid.
Conventional Windows. The Company also produces conventionally framed window
assemblies utilizing painted cold-rolled steel, stainless steel, rubber and/or
aluminum. The glass or plastic glazed window assemblies supplied for mass
transit systems have durable aluminum frames and non-leak weatherstripping.
The Company supplies a wide variety of conventional windows to car, light
truck and heavy truck OEMs, including pivoting wing ventilator windows, fixed
and movable quarter windows and swing-out and sliding windows. The Company's
flush-mount recreational vehicle windows seal tightly and feature independent
sliding screens, removable storm windows and an anti-theft locking mechanism.
Window Regulator Systems. The Company supplies manual and electrically
powered versions of regulators (the mechanisms for lifting and lowering
windows) for front and rear side windows and tailgate windows. The Company
stresses safety, weight, glass stability, window system integration, parts
reduction and enhanced vehicle design flexibility in its window regulators.
Injection Molded Thermoplastic Products. The Company's Nyloncraft division
manufactures injection molded inside and outside door handles, door latch
components, fan shrouds, airspring pistons, window crank handles and a variety
of other custom engineered products. The Company molds parts from nylons,
polyesters, acetal and other engineered thermoplastic materials.
Door Systems. The Company designs and manufactures preassembled doors for
Class A motorhomes and ballistic door/window systems for the Hummer tactical
military vehicle. The Company's preassembled door systems improve the OEMs'
installation productivity and assist in design flexibility.
Customers and Marketing
The Company supplies its products primarily to Ford, Chrysler and General
Motors. Historical sales of the Company by customer group are set forth
below. The loss of Ford, Chrysler or General Motors as a customer would have
a material adverse effect on the Company.
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1993 1994
Net Net Net
Sales Percent Sales Percent Sales Percent
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C>
Ford $310,579 73% $373,116 72% $434,189 71%
Chrysler 36,944 9 56,445 11 69,881 12
General Motors 18,973 4 20,109 4 24,637 4
Other 60,377 14 66,011 13 78,476 13
Total $426,873 100% 515,681 100% $607,183 100%
</TABLE>
<PAGE>
Sales of the Company's products to OEMs are made directly by the Company's
sales and engineering personnel located at the Company's offices in the
Detroit area and Elkhart, Indiana. Through these sales and engineering
offices, the Company services its OEM customers and manages its continuing
programs of product design improvement and development.
The Company's customers award contracts that normally cover parts to be
supplied for a particular vehicle model. Such contracts typically extend over
the life of the model, which is generally four to seven years. The primary
risk to the Company is that an OEM will produce fewer units of a model than
anticipated. In addition, the Company competes for new business to supply
parts for successor models and therefore runs the risk that the OEM will not
select the Company to produce parts on a successor model. In order to reduce
its reliance on any one model, the Company produces parts for a broad cross-
section of both new and more mature models. The Company has been chosen as a
supplier on a variety of generally successful car, light truck and van models.
Based on its ability to service its OEM customers' needs effectively, the
Company believes it will be able to maintain its position on most existing
models, while also expanding into new models as further consolidation in the
OEM supplier base occurs. The Company believes that the presence of
Transplants represents an attractive growth opportunity over the next decade.
The Company is currently supplying products for Mazda, Nissan and Mitsubishi
models. The Company believes that it is favorably positioned to increase its
business with the Transplants because of the Company's reputation for
technical innovation, quality excellence, reliability and competitive cost.
In the non-automotive markets, the Company sells various types of conventional
window systems to North American OEMs of medium and heavy trucks, recreational
vehicles and buses. The Company is the dominant supplier of wing ventilator
windows for medium and heavy trucks manufactured in the United States and
Canada. The Company's customers include Navistar, Freightliner, Volvo GM
Heavy Truck Corp., Mack Truck, Paccar (Kenworth and Peterbilt models) and
Ford. The Company supplies aluminum framed window systems to Fleetwood and
Winnebago, the leading recreational vehicle OEMs in North America, as well as
a number of other recreational vehicle manufacturers. The Company is the
dominant supplier of metal framed window systems to intra and intercity bus
OEMs.
The Company also manufactures preassembled doors for certain recreational
vehicle OEMs and door systems for the Hummer tactical military vehicle.
The Company maintains separate sales and engineering groups at its corporate
offices in Elkhart, Indiana to service these non-automotive markets. The
Company has received "Supplier of the Year" and "Master of Quality" awards
from Fleetwood and Freightliner, respectively, as well as recognition for
quality and delivery accomplishments from other non-automotive OEMs. The
Company believes that its cost competitiveness, quality excellence and design
and engineering capabilities obtained in the automotive supply markets enable
it to compete effectively in non-automotive markets as well.
Competition
The Company operates in a highly competitive environment in each of its
markets. The number of the Company's competitors in the automotive markets is
expected to decrease due to the supplier consolidation resulting from changing
OEM policies. The Company's major competitors include Donnelly Corporation,
Libbey-Owens-Ford Co., Guardian Industries, Dura, Inc., Rockwell
International, Hehr International, OEM internal operations and a large number
of smaller operations.
The Company principally competes for new business both at the beginning of the
development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to four years
prior to the marketing of such models to the public. Once a producer has been
designated to supply parts to a new program, an OEM will generally continue to
purchase those parts from the designated producer for the life of the program.
Competitive factors in the market for the Company's products include product
quality, design and engineering competence, customer service, product mix, new
product innovation, cost and timely delivery. The Company believes that its
business strategy allows it to compete effectively in the markets for its
products.
The Company believes that it is well-positioned to succeed in this highly
competitive supplier environment. The Company's size, emphasis on quality,
customer service orientation, manufacturing expertise and technological
leadership all contribute to the Company's success in the transportation
supply industry.
Research, Engineering and Development
The Company expended approximately $7.3 million, $9.8 million and $10.9
million on research, engineering and development during 1992, 1993 and 1994,
respectively. (Amounts for 1992 and 1993 have been restated to include value
engineering expenses consistent with the 1994 classification.) These increased
expenditures have improved significantly the Company's capacity to provide
complete engineering and design services to support its product lines. The
Company also has a corporate technical center in Elkhart, Indiana for basic
research and development, as well as a large engineering and design staff in
the Detroit area which works closely with automotive OEMs during all phases of
new product development and production.
Foreign Operations
In addition to its domestic facilities described below, the Company owns a
manufacturing facility in Aurora, Ontario, Canada. The financial information
concerning the Canadian operations of the Company is set forth in Notes 9, 10
and 14 to the Company's Consolidated Financial Statements included elsewhere
herein. In June, 1994, the Company terminated its lease for a manufacturing
facility in Juarez, Mexico and consolidated its operations in Pikeville,
Tennessee.
Employees
The Company employs a total of approximately 4,100 persons, of whom
approximately 19% are covered by collective bargaining agreements. The
Company believes its relationship with its employees is good.
Environmental Matters
The Company believes it is in substantial compliance with federal, state,
local and foreign laws regarding discharge of materials into the environment
and does not anticipate any material adverse effect on its future earnings,
capital expenditures or competitive position as a result of compliance with
such laws.
For a discussion of potential environmental liabilities, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources" and Note 7 to the Company's Consolidated
Financial Statements included elsewhere herein.
Item 2. Properties
The Company operates 10 manufacturing facilities, all of which are in good
condition. The Company manufactures framed window assemblies at its Elkhart,
Jacksonville, LaGrange, Lawrenceburg, Fulton and Toledo manufacturing
facilities. Injection molded thermoplastic parts are manufactured at the
Bowling Green and Mishawaka facilities. Window regulator systems, latches and
related components are manufactured at the Jacksonville and Pikeville
facilities. Except as noted below, the Company owns all of these facilities.
Approximate
Building Size
Location (in square feet)
Elkhart 270,000 (1)
Jacksonville, Florida 260,000
LaGrange, Indiana 140,000
Lawrenceburg, Tennessee 150,000
Fulton, Kentucky 80,000 (2)
Bowling Green, Kentucky 32,000
Mishawaka, Indiana 120,000 (3)
Toledo, Ohio 61,000 (4)
Pikeville, Tennessee 101,900 (5)
Aurora, Ontario, Canada 140,000
_________________________________
(1) Approximately 35,000 square feet of this facility houses the Company's
executive offices and approximately 140,000 square feet of the facility
are used in manufacturing.
(2) The Company leases the Fulton, Kentucky facility pursuant to a lease
which expires in 1997. The Company is entitled to extend the term of
the lease for five (5) additional terms of three (3) years each and may,
at its option, purchase the facility at any time during the lease.
(3) The Company leases the Mishawaka, Indiana facility pursuant to a lease
which expires in 1998. The Company is entitled to extend the term of
such lease until 2003 and may, at its option, purchase such facility at
any time during the term of the lease.
(4) The Company leases the Toledo, Ohio facility pursuant to a lease which
expires on May 31, 1998.
(5) The Company leases the Pikeville, Tennessee facility pursuant to a Lease
Purchase Contract entered into as part of agreements for the issuance of
two series of industrial development bonds. Title to the facility will
be transferred to the Company for Ten Dollars ($10.00) on completion of
payment on the bond issues on July 1, 1999. Rent is payable semi-
annually with respect to the Series A bonds and is equal to the
principal and interest due on the bonds. Semi-annual principal payments
on the Series A bonds currently are $75,000.
Item 3. Legal Proceedings
On February 22, 1993, the United States filed a lawsuit in the United States
District Court for the Northern District of Indiana against the Company and
certain other parties. On July 20, 1993, the Indiana Department of
Environmental Management ("IDEM") joined the lawsuit. The lawsuit seeks
recovery of the costs of enforcement, prejudgment interest and an amount in
excess of $6.8 million, which represents costs incurred to date by the United
States Environmental Protection Agency ("EPA") and IDEM in connection with the
contamination of soil and groundwater on the Company's property in Elkhart,
Indiana, and a well field of the City of Elkhart in close proximity to the
Company's facility. The lawsuit also seeks a declaration that the Company and
the other defendants are liable for any future costs incurred by the EPA and
IDEM in connection with the site.
For further information, see "Management's Discussion and Analysis of Results
of Operations and Financial Condition" and Note 7 to the Company's
Consolidated Financial Statements included elsewhere herein.
Item 4. Submission of Matters to Vote of Security Holders
None
Executive Officers of the Company
The names and ages of all executive officers of the Company, all positions and
offices held by each of them and the period during which each such person has
served in these offices and positions is set forth below:
Name Age Position and Offices
James J. Lohman 53 Chairman of the Board
and Chief Executive Officer
James O. Futterknecht, Jr.48 President and Chief Operating Officer
Joseph A. Robinson 56 Secretary, Treasurer and Chief Financial
Officer
James E. Crawford 48 Vice President and Managing Director-Value
Management and Product Research and
Development
Louis R. Csokasy 47 Vice President and Managing Director-
Automotive Window and Door Systems
Terrance L. Lindberg 52 Vice President and Managing Director-RV,
Mass Transit and Heavy Truck Window and
Door Systems
Mr. Lohman has been the Chairman of the Board of Directors since 1985 and
Chief Executive Officer since 1983. He joined the Company in 1964 and was
Group Vice President from 1978 to 1981 and was President from 1981 to 1992.
He has been a director of the Company since 1978.
Mr. Futterknecht joined the Company in 1970, was Vice President - Corporate
Sales from 1976 until 1984, was Vice President - Automotive Products from 1984
until 1987, was Vice President - Automotive Sales and Engineering from 1987 to
1990, and was Executive Vice President from 1990 to 1992. He was elected as
President and Chief Operating Officer and was appointed as a director in 1992.
Mr. Robinson joined the Company as Secretary, Treasurer and Chief Financial
Officer in December 1991 and was appointed as a director in 1992. Prior to
that time, he was employed by the Standard Products Co., a manufacturer of
automotive parts as Vice President from 1990 to 1991 and as Vice President -
Finance from 1976 to 1990.
Mr. Crawford joined the Company in 1978, was Product Engineering Manager from
1979 until 1984, was Vice President - Engineering/Research from 1984 until
1987, Vice President - Modular Operations from 1987 to 1988, Vice President -
Group Operations/ Modular Products from 1988 to 1992, and Vice President -
Product Development and Value Engineering from 1992 to 1995. He is currently
Vice President and Managing Director - Value Management and Product Research
and Development.
Mr. Csokasy joined the Company in 1972. He was General Manager - Recreational
Vehicles from 1985 to 1987, Manager of Corporate Engineering from 1987 to
1990, Vice President - Engineering from 1990 to 1992, and Vice President -
Engineering and Quality from 1992 to 1995. He is currently Vice President and
Managing Director - Auto Window and Door Systems.
Mr. Lindberg joined the Company in 1983, was Manager of Mass Transit and Heavy
Truck Products from 1984 to 1987, was Manager of Group Operations from 1987
until 1990, was Vice President - Group Operation from 1990 to 1992. Mr.
Lindberg was Vice President - Specialty Products and General Manager -
Nyloncraft from 1992 to 1995. He is currently Vice President and Managing
Director - RV, Mass Transit and Heavy Truck Window and Door Systems.
PART II.
Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters
The Common Shares are traded on the American Stock Exchange under the symbol
EXC. The following table sets forth for the fiscal periods indicated the high
and low sale prices of the Common Shares, as reported by the American Stock
Exchange, and dividends declared per share.
Dividends
Share Prices Declared
High Low Per Share
Fiscal Year Ended December 31, 1993:
1st Quarter $18.250 $13.875 $.06
2nd Quarter 19.625 15.500 .08
3rd Quarter 21.000 16.375 .08
4th Quarter 19.875 15.750 .08
Fiscal Year Ended December 31, 1994:
1st Quarter 20.250 16.250 .08
2nd Quarter 19.250 14.875 .09
3rd Quarter 17.875 14.750 .09
4th Quarter 15.875 13.000 .11
As of March 10, 1995, there were 507 holders of record of the Common Shares.
The Company has paid cash dividends every quarter since becoming a public
company in April 1984. The Company intends to continue to pay quarterly cash
dividends on its Common Shares, but the payment of dividends and the amount
and timing of such dividends will depend upon the Company's earnings, capital
requirements, financial condition and other factors deemed relevant by the
Company's Board of Directors.
<PAGE>
Item 6. Selected Financial Data
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Amounts in thousands, except per share amounts)
The following table presents selected consolidated financial data of the
Company as of and for the five fiscal years ended December 31, 1994. The
selected consolidated financial data have been derived from audited
consolidated financial statements of the Company. Such selected consolidated
financial data should be read in conjunction with "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the
Consolidated Financial Statements of the Company and the notes thereto
included elsewhere herein. The comparability of the results for the periods
presented is significantly affected by certain events, as described in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--General."
<PAGE>
<TABLE>
Income Statement Data:
<CAPTION>
Year Ended December 31,
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Net sales $281,369 $352,268 $426,873 $515,681 $607,183
Cost of goods sold 245,027 321,058 383,258 463,943 545,817
Gross profit 36,342 31,210 43,615 51,738 61,366
Selling, administrative and
engineering expenses 23,336 25,205 28,262 30,054 32,723
Restructuring charge (1) --- --- 4,500 --- ---
Other income (expense), net 1,208 (216) 713 2,015 2,145
Interest expense 5,446 5,516 5,555 3,474 3,406
Income before income taxes and
cumulative effect of changes in
accounting 8,768 273 6,011 20,225 27,382
Income tax provision 3,560 122 2,434 7,785 10,131
Income before cumulative effect of
changes in accounting 5,208 151 3,577 12,440 17,251
Cumulative effect of adoption of
SFAS 106 and 109 --- --- 3,195 --- ---
Net income 5,208 151 382 12,440 17,251
Net income (loss) per share:
Before cumulative effect of
changes in accounting:
Primary .80 .02 .47 1.23 1.60
Fully diluted .80 .02 .47 1.15 1.46
Cumulative effect of adoption
of SFAS 106 and 109:
Primary --- --- (.42) --- ---
Fully diluted --- --- (.42) --- ---
Net income:
Primary .80 .02 .05 1.23 1.60
Fully diluted .80 .02 .05 1.15 1.46
Cash dividends per share .40 .24 .24 .30 .37
Average shares outstanding 6,459 6,488 7,553 10,122 10,805
</TABLE>
<PAGE>
<TABLE>
Balance Sheet Data:
<CAPTION>
December 31,
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Working Capital $ 44,203 42,517 60,331 94,761 96,145
Property, plant and equipment 50,305 48,445 42,064 49,746 62,876
Total assets 155,724 150,645 182,096 229,316 254,630
Short-term debt (includes current
portion of long-term debt) 4,247 4,025 1,561 1,553 1,358
Long-term debt (less current
portion) 50,728 46,743 34,592 35,094 33,578
Shareholders' equity 49,326 48,181 67,030 106,436 122,643
Book value per share 7.63 7.41 7.83 10.07 11.48
Long-term debt to total
capitalization 51% 49% 34% 25% 21%
____________
(1) In 1992, the Company provided a reserve of $4,500 for restructuring costs. See Note 14 to the
Company's Consolidated Financial Statements.
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
General
The Company was founded in 1928 and became a public company in April 1984.
Since 1984, the Company has expanded sales internally and through several
strategic acquisitions designed to complement the Company's businesses. In
January 1986, the Company acquired Irvin Industries, Inc.'s wing ventilator
window business operated in Jacksonville, Florida. Later in 1986, the Company
consummated a private placement of Common Shares to Ford in exchange for cash,
a long-term supply contract and a Ford subsidiary engaged in the manufacture
and sale of modular window systems. In 1988, the Company acquired Nyloncraft,
Inc. which manufactures injection molded thermoplastic products primarily for
the automotive industry. In 1990, the Company acquired the window regulator
business operated by Hoover Universal, Inc., a subsidiary of Johnson Controls,
Inc., which the Company now operates under the name "Excel Systems". The
comparability of the Company's results on a period-to-period basis is
significantly affected by such acquisitions.
Results of Operations
1994 Compared to 1993
Sales for the year ended December 31, 1994 totaled a record $607.2 million, an
increase of $91.5 million, or 18%, over the preceding year. This increase in
sales resulted from generally more favorable economic conditions in North
America as total light vehicle production increased 11% and light vehicle
production of Ford in North America also increased 11%. Specifically, sales
of Ford Explorer, Aerostar, Ford/Nissan mini-vans, Ford F-Series trucks,
Chrysler LH sedans and Dodge trucks, helped account for improved sales volume.
Gross profit totaled $61.4 million, or 10.1% of sales, as compared with $51.7
million, or 10.0% of sales for the prior year. Gross profit in dollars
improved as a result of the higher marginal contribution on increased sales.
Such marginal contribution was sufficient to offset the impact of price
reductions in accordance with supply agreements, the effect of start-up costs
on new programs and inflationary cost increases.
Selling, administrative and engineering expenses totaled $32.7 million for
1994, an increase of 9%, or $2.7 million, from 1993. 1994 expenses reflect
higher costs in the engineering and development areas consisting of additional
personnel, increased research and development activities and costs of support
facilities. As a percent of sales, selling, administrative and engineering
expenses declined to 5.4% in 1994 as compared to 5.8% in 1993.
Interest costs of $3.4 million for 1994 was similar to the $3.5 million
incurred in 1993, and other income of $2.1 million in 1994 was similar to the
$2.0 million in 1993. Interest income (included in other income) dropped from
$1.9 million in 1993 to $1.8 million in 1994 due to switching investments from
taxable to tax-free securities.
The income tax provision was 37% of pre-tax income in 1994, down from 38.5% in
the preceding year. The 1994 percentage reflected the impact of certain tax
credits and investing in tax-free securities.
In 1992, the Company provided an allowance of $4.5 million for restructuring
costs. This charge represented estimated costs to downsize its Excel
Metalcraft, Ltd. (Metalcraft) plant and relocate production of certain light
truck and van windows to other manufacturing plants of the Company. Totals of
$1.8 million in 1994, and $1.0 million in 1993 were incurred to relocate a
portion of the production and downsize this facility.
1993 Compared to 1992
Sales for the year ended December 31, 1993 totaled a record $515.7 million, an
increase of $88.8 million, or 21%, over the preceding year. This increase in
sales resulted from generally more favorable economic conditions in North
America as total light vehicle production increased 12% and light vehicle
production of Ford in North America increased 15%. Specifically, sales of new
programs, including Ford/Nissan mini-vans, Ford F-Series and Ranger trucks,
Chrysler LH sedans and Dodge trucks, helped account for improved sales volume.
Gross profit totaled $51.7 million, or 10.0% of sales, as compared with $43.6
million, or 10.2% of sales for the prior year. Gross profit in dollars
improved with the improved level of sales. Gross profit as a percent of sales
declined due to a change in product mix and start-up costs related to new
programs.
Selling, administrative and engineering expenses totaled $30.1 million for
1993, an increase of 6%, or $1.8 million, from 1992. The increase reflected,
among other items, an increase in engineering personnel costs, amounts for
outside consultants and an increase in the provision for incentive
compensation. As a percent of sales, selling, administrative and engineering
expenses declined to 5.8% in 1993 as compared to 6.6% in 1992.
Interest costs of $3.5 million for 1993 compared to the $5.6 million incurred
in 1992. The decline in interest expense reflected the reduction in interest
and the prepayment penalty incurred in 1992 related to Senior Notes which were
retired in 1992.
Other income in 1993 totaled $2.0 million, an increase of $1.3 million from
1992. Other income in 1993 included $1.9 million of interest income arising
from the investment of proceeds of the Company's Common Share offerings in
March 1993 and June 1992.
The income tax provision was 38.5% of pre-tax income in 1993, down from 40.5%
in the preceding year. The 1993 percentage reflected the impact of certain
tax credits and lower effective state tax rates.
Liquidity and Capital Resources
Working capital totaled $96.1 million as of December 31, 1994, and the current
ratio was 2.20 to 1. Cash and marketable securities totaled $39.7 million as
of December 31, 1994.
In 1994, cash flow from operations totaled $21.3 million, and a public
offering of Common Shares in March 1994 raised an additional $7.0 million.
Cash expenditures for capital equipment amounted to $25.5 million, and
dividends totaled $4.0 million. In addition, payments of long-term debt
totaled $1.7 million. Overall, cash and marketable securities decreased $6.9
million in 1994.
Long-term debt totaled $33.6 million as of December 31, 1994, or 21% of total
capitalization. Included in this amount is $30 million of Convertible Notes
issued in January 1990 to affiliates of CIGNA Corporation and Textron, Inc.
The principal balance of each Convertible Note is convertible, at the option
of the holder, into Common Shares at a current price of $13.214 per share.
Capital expenditures for 1995 are budgeted at $24.2 million. The Company's
cash balances, operating cash flows and short-term lines of credit are
expected to be adequate for anticipated operating requirements in 1995.
The Company entered into a 1994 Supply Agreement with Ford which requires the
absorption of the effects of inflation and requires specified price reductions
or productivity offsets to price reductions. The Company believes that this
type of agreement is typical in the automotive supply business, and the
Company's ability to maintain gross margins at or near their present levels
will be dependent on its ability to substantially offset the effects of this
and other such agreements through productivity improvements, cost reduction
programs and implementation of value analysis/value engineering programs,
which reduce part weight and system costs to the customer.
A chemical cleaning compound, trichloroethylene ("TCE"), has been found in the
soil and groundwater on the Company's property in Elkhart, Indiana, and, in
1981, TCE was found in a well field of the City of Elkhart in close proximity
to the Company's facility. The Company has been named as one of nine
potentially responsible parties ("PRPs") in the contamination of this site.
EPA and IDEM have conducted a preliminary investigation and evaluation of the
site and have undertaken temporary remedial action in the nature of air-
stripping towers. In early 1992, the EPA issued a Unilateral Order under
Section 106 of the Comprehensive Environmental Response, Compensation and
Liability Act which required the Company and other PRPs to undertake remedial
work. The Company and the other PRPs have reached an agreement regarding the
funding of groundwater monitoring and the operation of the air-strippers as
required by the Unilateral Order. The Company was required to install and
operate a soil vapor extraction system to remove TCE from the Company's
property. The Company has installed and is operating the equipment pursuant
to the Unilateral Order. In addition, the EPA and IDEM have asserted a claim
for reimbursement of their investigatory costs and the costs of installing and
operating the air-strippers on the municipal well field (the "EPA Costs"). On
February 22, 1993, the United States filed a lawsuit in the United States
District Court for the Northern District of Indiana against eight of the PRPs,
including the Company. On July 20, 1993, IDEM joined in the lawsuit. The
lawsuit seeks recovery of the costs of enforcement, prejudgment interest and
an amount in excess of $6.8 million, which represents costs incurred to date
by the EPA and IDEM, and a declaration that the eight defendant PRPs are
liable for any future costs incurred by the EPA and IDEM in connection with
the site.
The Company does not believe the annual cost to the Company of monitoring
groundwater and operating the soil vapor extraction system and the air-
strippers will be material. Each of the PRPs, including the Company, is
jointly and severally liable for the entire amount of the EPA Costs. Certain
PRPs, including the Company, are currently attempting to negotiate an agreed
upon allocation of such liability. The Company believes that adequate
provisions have been recorded for its costs and its anticipated share of EPA
Costs and that its cash on hand, unused lines of credit or cash from
operations are sufficient to fund any required expenditures.
The EPA has also named the Company as a PRP for costs at three other disposal
sites. It has also asked the Company for information about contamination at
other sites. The Company believes it either has no liability as a responsible
party or that adequate provisions have been recorded for any costs to be
incurred.
Inflation
The impact of inflation on operating results for the years 1994, 1993 and 1992
was not significant. Raw material costs during these periods have increased;
however, use of LIFO inventory methods by the Company has minimized any impact
from inflation. The majority of the Company's property, plant and equipment
is of recent purchase, and depreciation charges are based on historical cost.
Item 8. Financial Statements and Supplementary Data
Following are the consolidated financial statements of the Company and its
subsidiaries, the notes thereto, and the auditors' report.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
Excel Industries, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Excel
Industries, Inc. and its subsidiaries at 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. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in the notes to consolidated financial statements, effective
January 1, 1992, the Company changed its method of accounting for
postretirement health care benefits by adopting, on an immediate recognition
basis, Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." The Company also
changed its method of accounting for income taxes, effective January 1, 1992,
by adopting Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes."
PRICE WATERHOUSE LLP
South Bend, Indiana
February 16, 1995
<PAGE>
<TABLE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Amounts in thousands)
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 175 $ 6,767
Marketable securities 39,520 39,786
Accounts receivable-trade, less
allowances of $868 in 1994 and
$725 in 1993 78,420 70,653
Customer tooling to be billed 16,015 9,161
Inventories 33,576 29,867
Prepaid expenses 8,434 6,113
Total current assets 176,140 162,347
Property, plant and equipment:
Land 945 937
Buildings and improvements 22,741 21,902
Machinery and equipment 101,595 80,680
Accumulated depreciation (62,405) (53,773)
62,876 49,746
Goodwill, net of accumulated amortization
of $2,703 in 1994 and $2,356 in 1993 6,703 7,050
Deferred income taxes and other assets 8,911 10,173
$254,630 $229,316
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 52,459 $ 46,983
Accrued liabilities:
Salaries and wages 6,300 5,712
Income taxes 3,158 1,208
Other 16,720 12,130
Current maturities of long-term debt 1,358 1,553
Total current liabilities 79,995 67,586
Long-term debt 33,578 35,094
Other long-term liabilities, primarily
employee benefits 18,414 20,200
Commitments and contingent liabilities -- --
Shareholders' equity:
Preferred shares-no par value, 1,000 shares
authorized, none issued -- --
Common shares-no par value, 20,000 shares
authorized; issued 10,974 and 10,575,
respectively 94,831 87,537
Retained earnings 32,854 19,615
Unrecognized pension actuarial losses,
net of tax (587) (716)
Treasury shares, 290 at cost (4,455) --
Total shareholders' equity 122,643 106,436
$254,630 $229,316
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Amounts in thousands, except per share amounts)
<CAPTION>
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Net sales $607,183 $515,681 $426,873
Costs and expenses:
Cost of goods sold 545,817 463,943 383,258
Selling, administrative
and engineering expenses 32,723 30,054 28,262
Restructuring charge -- -- 4,500
Interest expense 3,406 3,474 5,555
Other income, net (2,145) (2,015) (713)
Total costs and expenses 579,801 495,456 420,862
Income before income taxes and
cumulative effect of changes
in accounting 27,382 20,225 6,011
Income tax provision 10,131 7,785 2,434
Income before cumulative effect
of changes in accounting 17,251 12,440 3,577
Cumulative effect of adoption of
SFAS 106 and 109 -- -- 3,195
Net income $ 17,251 $ 12,440 $ 382
Net income (loss) per share:
Before cumulative effect of
changes in accounting
Primary $ 1.60 $ 1.23 $ .47
Fully diluted 1.46 1.15 .47
Cumulative effect of adoption of
SFAS 106 and 109
Primary -- -- (.42)
Fully diluted -- -- (.42)
Net income
Primary 1.60 1.23 .05
Fully diluted 1.46 1.15 .05
Cash dividends per share $ .37 $ .30 $ .24
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Amounts in thousands)
_____________________________________________________________________________________________________________________________
<CAPTION>
Unrecognized
Common Pension Cumulative
Shares Common Retained Actuarial Translation Treasury
Outstanding Shares Earnings Losses Adjustment Shares Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991 6,502 $36,193 $11,891 $ (604) $ 701 $ -- $48,181
Net income 382 382
Dividends (1,927) (1,927)
Share offering 2,013 20,759 20,759
Share options exercised 29 200 200
Shares issued under employee stock
purchase plan 14 130 130
Unrecognized pension actuarial
losses, net of tax 6 6
Effect of exchange rate changes __________ _______ ________ __________ (701) _______ (701)
Balance at December 31, 1992 8,558 57,282 10,346 (598) -- -- 67,030
Net income 12,440 12,440
Dividends (3,171) (3,171)
Share offering 2,000 30,019 30,019
Share options exercised 8 51 51
Shares issued under employee stock
purchase plan 9 185 185
Unrecognized pension actuarial
losses, net of tax __________ _______ ________ (118) ___________ _______ (118)
Balance at December 31, 1993 10,575 87,537 19,615 (716) -- -- 106,436
Net income 17,251 17,251
Dividends (4,012) (4,012)
Share offering 380 7,032 7,032
Share options exercised 3 26 26
Shares issued under employee stock
purchase plan 16 236 236
Unrecognized pension actuarial
losses, net of tax 129 129
Treasury shares purchased (290) _______ ________ __________ ___________ (4,455) (4,455)
Balance at December 31, 1994 10,684 $94,831 $32,854 $ (587) $ -- $(4,455) $122,643
========= ======= ======== ========== =========== ======== =========
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
EXCEL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in thousands)
<CAPTION>
Year Ended December 31,
1994 1993 1992
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 17,251 $ 12,440 $ 382
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 11,931 10,145 10,082
Deferred income taxes (546) 548 (3,837)
Cumulative effect of changes in accounting -- -- 3,195
Other 2,170 3,443 2,661
Changes in current assets and liabilities
Accounts receivable and prepaid expenses (8,561) (13,418) (17,169)
Inventories and customer tooling (10,563) (6,395) 6,774
Accounts payable and accrued liabilities 9,604 3,454 19,067
Total adjustments 4,035 (2,223) 20,773
Net cash provided by operating activities 21,286 10,217 21,155
Cash flows from investing activities:
Purchase of property, plant and equipment (25,491) (18,104) (4,687)
Investment in marketable securities, net 266 (39,786) --
Other 231 ( 648) 461
Net cash used for investing activities (24,994) (58,538) (4,226)
Cash flows from financing activities:
Issuance of common shares 7,294 30,255 21,089
Payments of long-term debt (1,711) (2,001) (14,615)
Dividends (4,012) (3,171) (1,927)
Purchase of treasury shares (4,455) -- --
Issuance of long-term debt -- 2,495 --
Net cash provided by (used for) financing
activities (2,884) 27,578 4,547
Net change in cash and short-term investments (6,592) (20,743) 21,476
Cash and short-term investments at beginning of
period 6,767 27,510 6,034
Cash and short-term investments at end of period $ 175 $ 6,767 $ 27,510
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ 3,433 $ 3,308 $ 6,081
Income taxes, net of refunds 9,138 7,996 6,602
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Excel Industries, Inc. (Company) is engaged in the manufacture
and sale of a broad line of window assemblies, manual and
electric window regulators, upper door frames, and injection
molded thermoplastic parts. The Company's products are used in
the manufacture of automobiles, heavy and light trucks, buses and
recreational vehicles.
2. SIGNIFICANT ACCOUNTING PRINCIPLES
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany transactions, profits and balances are eliminated.
Net income per share
Primary net income per share is computed using the weighted
average number of shares outstanding during the period. Shares
used to compute primary net income per share were 10,805,000 for
1994, 10,122,000 for 1993, and 7,553,000 for 1992.
Fully diluted earnings per share assumes, when dilutive, the
conversion of the 10% convertible subordinated notes which were
issued on January 2, 1990.
Short-term investments and marketable securities
Short-term investments amounting to $121,000 at December 31, 1994
and $5,771,000 at December 31, 1993 consist of investments
generally in money market funds.
Marketable securities represent investments with maturities
generally longer than 90 days which are classified as "available
for sale" securities in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". All
securities mature prior to December 1995. Marketable securities
are carried at cost which approximates fair value and consist of
the following:
December 31,
1994 1993
(000 Omitted)
Government securities $18,917 $17,011
Tax-free municipal securities 17,403 12,773
Municipal fund par value
preferred shares 3,200 10,002
$39,520 $39,786
Other income includes interest income of $1,812,000 in 1994,
$1,916,000 in 1993, and $1,010,000 in 1992.
Inventories
Substantially all inventories are valued at the lower of cost or
market using the last-in, first-out (LIFO) cost method.
Customer tooling to be billed
Customer tooling to be billed represents costs incurred by the
Company on behalf of the customer and is generally covered by
purchase orders and recoverable during the next twelve months.
Properties
Plant and equipment are carried at cost and include expenditures
for new facilities and those which substantially increase the
useful lives of existing plant and equipment. Expenditures for
repairs and maintenance are expensed as incurred.
Depreciation
The Company provides for depreciation of plant and equipment
using methods and rates designed to amortize the cost of such
equipment over its useful life. Depreciation is computed
principally on accelerated methods for new plant and equipment
and the straight-line method for used equipment. The estimated
useful lives range from 10 to 40 years for buildings and
improvements and 2 to 20 years for machinery and equipment.
Goodwill
The excess of purchase price over the fair value of net assets of
acquired businesses (goodwill) is amortized on a straight-line
basis over 20 to 40 years.
Fair Value of Financial Instruments
The Company estimates the fair value of all financial instruments
where the face value differs from the fair value, primarily long-
term debt, based upon quoted amounts or the current rates
available for similar financial instruments. If fair value
accounting had been used at December 31, 1994, instead of the
historic basis accounting used in the financial statements, long-
term debt would exceed the reported level by approximately $1.5
million.
Income taxes
Deferred income taxes are provided using the liability method in
accordance with Statement of Financial Accounting Standards
(SFAS) No. 109, "Accounting for Income Taxes".
3. RESEARCH, ENGINEERING AND DEVELOPMENT
Research, engineering and development expenditures charged to
operations approximated $10,916,000 in 1994, $9,844,000 in 1993,
and $7,298,000 in 1992. Amounts for 1993 and 1992 have been
reclassified to include value engineering expenses consistent
with the 1994 classification.
4. INVENTORIES
Inventories consist of the following:
December 31,
1994 1993
(000 Omitted)
Raw materials $21,301 $17,948
Work in process and finished goods 13,037 12,378
LIFO reserve (762) (459)
$33,576 $29,867
Inventories not on LIFO were $819,000 at December 31, 1994 and
$1,759,000 at December 31, 1993.
5. PENSION AND OTHER EMPLOYEE BENEFIT PLANS
Pension and profit sharing plans
The Company and its subsidiaries provide retirement benefits to
substantially all employees through various pension, savings and
profit sharing plans. Defined benefit plans provide pension
benefits that are based on the employee's final average salary
for salaried employees and stated amounts for each year of
credited service for hourly employees. Contributions and costs
for the Company's various other benefit plans are generally
determined based on the employee's annual salary. Total
expense relating to the Company's various retirement plans
aggregated $3,291,000 in 1994, $2,199,000 in 1993, and $2,102,000
in 1992.
Components of net pension expense for all defined benefit pension
plans are as follows:
Year Ended December 31,
1994 1993 1992
(000 Omitted)
Service cost $1,622 $1,319 $1,312
Interest cost 1,457 1,344 1,245
Actual return on assets 133 (617) (1,242)
Net amortization and deferral (1,396) (582) 190
Net defined benefit pension
expense $1,816 $1,464 $1,505
<PAGE>
The funded status of defined benefit pension plans is as follows:
December 31,
1994 1993
(000 Omitted)
Plan assets at fair value $16,475 $15,844
Projected benefit obligations 20,068 20,421
(3,593) (4,577)
Unrecognized costs 1,080 1,862
Net accrued pension costs $(2,513) $(2,715)
Actuarial present value of:
Vested benefit obligations $15,764 $15,644
Accumulated benefit obligations $16,623 $16,655
Major assumptions:
Discount rate 8% 7.5%
Rate of increase in compensation 5% 5%
Expected rate of return on plan assets8% 8%
It is generally the Company's policy to fund the ERISA minimum
contribution requirement. Plan assets are invested primarily in
corporate equity securities and bonds and insurance annuity
contracts.
Supplemental and other postretirement benefits
In addition to providing pension benefits, the Company provides
certain health care benefits to substantially all active
employees and postretirement health care benefits to management
employees. The Company is primarily self-insured for such
benefits and prior to 1992 followed the practice of expensing
such benefits on a pay-as-you-go basis.
In 1992, the Company adopted the provisions of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions." The Company elected to immediately recognize the
Accumulated Postretirement Benefit Obligation (APBO) as of
January 1, 1992 in the amount of $6,447,000 (approximately
$4,000,000 after tax or 61 cents per share).
The Company plans to continue the policy of funding these
benefits on a pay-as-you-go basis. The components of net
periodic postretirement benefit cost are as follows:
Year Ended December 31,
1994 1993 1992
(000 Omitted)
Service costs, benefits attributed to
employee service during the year $ 909 $ 821 $ 750
Interest cost on accumulated
postretirement benefit obligation 599 578 510
Amortization of deferrals (15) -- --
Net periodic postretirement benefit
cost $1,493 $1,399 $1,260
Summary information on the Company's plan is as follows:
December 31,
1994 1993
(000 Omitted)
Accumulated postretirement
benefit obligation:
Retirees $ 1,171 $1,504
Retirement-eligible actives 753 968
Other active participants 5,089 6,077
Accumulated postretirement
benefit obligation: 7,013 8,549
Unrecognized prior service costs 1,048 --
Unrecognized net gain 2,286 407
Accrued postretirement
benefit costs $10,347 $8,956
The discount rate used in determining the APBO was 8.25% in 1994
and 7.75% in 1993. The 1994 assumed health care cost trend rate
used in measuring the accumulated postretirement benefit
obligation was 9.75% declining by .5% per year to a rate of 6%.
In 1993, the rate was 10.25% declining by 1% per year to a rate
of 6.25%. An increase of 1% in health care cost trend rate would
increase the accrued postretirement benefit cost at December 31,
1994 by $1,551,000 and the 1994 annual expense by $412,000.
6. LONG-TERM DEBT
Following is a summary of long-term debt of the Company:
December 31,
1994 1993
(000 Omitted)
10% Convertible subordinated notes $30,000 $30,000
Industrial Revenue Bonds 3,961 5,383
Capital lease obligations 975 1,264
34,936 36,647
Current maturities (1,358) (1,553)
$33,578 $35,094
The convertible notes are due on December 1, 2000 and require
aggregate prepayments of $8,000,000 in 1996, $7,000,000 in 1997,
$6,000,000 in 1998, $5,000,000 in 1999 and $4,000,000 in 2000.
The holders of the notes have the option to convert their notes
at any time into common shares of the Company at a current
conversion price of $13.214 per share. The Notes are subject to
prepayment at the option of the Company if the market value of
the Company's common shares equals or exceeds 150% of the
conversion price for a specified period. The note agreements
provide for maintaining a current ratio of 1.5 to 1, restrict the
amount of additional borrowings and limit the amount of dividends
that can be paid. Currently the Company has available for
payment of dividends $32,854,000 of retained earnings.
The Company has entered into an interest rate swap agreement
which effectively converts the interest rate on $25 million of
convertible notes from a fixed rate of 10% to a variable rate
equal to the LIBOR rate plus 2.67%. At December 31, 1994 the
variable interest rate under this swap agreement totaled 8.86%.
This swap agreement expires in February, 1997. The Company
estimates the fair value of this agreement to be insignificant.
The Industrial Revenue Bonds bear interest at rates of interest
tied to short-term Treasury rates. Certain plant and equipment
purchased with the proceeds of the bonds collateralize these
obligations.
During 1992, the Company prepaid the balance owing on its
guaranteed senior notes and was subject to a prepayment premium
of approximately $1.3 million. Such amount is included in the
accompanying income statement in 1992 in interest expense.
The Company had available unused lines of credit of approximately
$5,000,000 at December 31, 1994.
Long-term debt maturities are $1,358,000 in 1995, $9,557,000 in
1996, $8,072,000 in 1997, $6,580,000 in 1998, $5,369,000 in 1999
and $4,000,000 in 2000.
7. CONTINGENCIES
A chemical cleaning compound, trichlorethylene (TCE), has been
found in the soil and groundwater on the Company's property in
Elkhart, Indiana, and in 1981, TCE was found in a well field of
the City of Elkhart in close proximity to the Company's facility.
The Company has been named as one of nine potentially responsible
parties (PRPs) in the contamination of this site.
The United States Environmental Protection Agency (EPA) and the
Indiana Department of Environmental Management (IDEM) have
conducted a preliminary investigation and evaluation of the site
and have undertaken temporary remedial action in the nature of
air-stripping towers.
In early 1992, the EPA issued a Unilateral Order under Section
106 of the Comprehensive Environmental Response, Compensation and
Liability Act which required the Company and other PRPs to
undertake remedial work. The Company and the other PRPs have
reached an agreement regarding the funding of groundwater
monitoring and the operation of the air-strippers as required by
the Unilateral Order. The Company was required to install and
operate a soil vapor extraction system to remove TCE from the
Company's property. The Company has installed and is operating
the equipment pursuant to the Unilateral Order. In addition, the
EPA and IDEM have asserted a claim for reimbursement of their
investigatory costs and the costs of installing and operating the
air-strippers on the municipal well field (the EPA Costs). On
February 22, 1993, the United States filed a lawsuit in the
United States District Court for the Northern District of Indiana
against eight of the PRPs, including the Company. On July 20,
1993, IDEM joined in the lawsuit. The lawsuit seeks recovery of
the costs of enforcement, prejudgment interest and an amount in
excess of $6.8 million, which represents costs incurred to date
by the EPA and IDEM, and a declaration that the eight defendant
PRPs are liable for any future costs incurred by the EPA and IDEM
in connection with the site.
The Company does not believe the annual cost to the Company of
monitoring groundwater and operating the soil vapor extraction
system and the air-strippers will be material. Each of the PRPs,
including the Company, is jointly and severally liable for the
entire amount of the EPA Costs. Certain PRPs, including the
Company, are currently attempting to negotiate an agreed upon
allocation of such liability. The Company believes that adequate
provisions have been recorded for its costs and its anticipated
share of EPA Costs and that its cash on hand, unused lines of
credit or cash from operations are sufficient to fund any
required expenditures.
The EPA has also named the Company as a PRP for costs at three
other disposal sites. It has also asked the Company for
information about contamination at other sites. The Company
believes it either has no liability as a responsible party or
that adequate provisions have been recorded for any costs to be
incurred.
There are claims and pending legal proceedings against the
Company and its subsidiaries with respect to taxes, workers'
compensation, warranties and other matters arising out of the
ordinary conduct of the business. The ultimate result of these
claims and proceedings at December 31, 1994 is not determinable,
but, in the opinion of management, adequate provision for
anticipated costs has been made or insurance coverage exists to
cover such costs.
8. LEASES
The Company leases certain of its manufacturing facilities, sales
offices, transportation and other equipment. Total rental
expense was approximately $2,502,000 in 1994, $3,416,000 in 1993,
and $2,998,000 in 1992. Future minimum lease payments under
noncancellable operating leases are $1,284,000 in 1995,
$1,083,000 in 1996, $845,000 in 1997, $210,000 in 1998 and
$29,000 in 1999.
9. INCOME TAXES
Effective January 1, 1992, the Company adopted SFAS No. 109,
"Accounting for Income Taxes". This statement mandates the
liability approach for computing deferred income taxes similar to
SFAS No. 96 previously followed by the Company. The cumulative
effect of the change was to increase first quarter 1992 earnings
by $800,000 (12 cents per share). The change had no impact on
the 1992 income tax provision.
Pre-tax income (loss) reported by U.S. and foreign subsidiaries
was as follows:
Year Ended December 31,
1994 1993 1992
(000 Omitted)
United States $25,517 $17,933 $8,688
Foreign 1,865 2,292 (2,677)
$27,382 $20,225 $6,011
The provision (benefit) for income taxes is summarized below:
Year Ended December 31,
1994 1993 1992
(000 Omitted)
Current:
U.S. federal $ 8,713 $6,049 $5,007
Foreign 484 465 38
State 1,480 645 1,226
10,677 7,159 6,271
Deferred:
U.S. federal (947) (317) (1,922)
Foreign 132 941 (1,256)
State 269 2 (659)
(546) 626 (3,837)
$10,131 $7,785 $2,434
Deferred income taxes are provided for the temporary differences
between the financial reporting basis and tax basis of the
Company's assets and liabilities. At December 31, 1994, current
deferred income tax assets of $4,412,000 are classified as
prepaid expenses, long-term U.S. deferred income tax assets of
$4,728,000 are classified as other assets, and $299,000 of long-
term foreign deferred income tax liabilities are classified as
other long-term liabilities.
Deferred income taxes are comprised of the following at
December 31:
1994 1993
(000 Omitted)
Gross deferred tax liabilities
Property, plant and equipment $ 2,079 $2,257
Inventories 170 436
Other 585 680
2,834 3,373
Gross deferred tax assets
Pension and postretirement
benefit obligations 6,789 6,296
Restructuring reserve 687 1,103
Other accrued liabilities 3,895 3,708
Loss carryforwards 304 619
11,675 11,726
Net deferred tax assets $ 8,841 $ 8,353
The provision for income taxes computed by applying the Federal
statutory rate to income before income taxes is reconciled to the
recorded provision as follows:
Year Ended December 31,
1994 1993 1992
(000 Omitted)
Tax at United States
statutory rate $ 9,584 $7,079 $2,044
State income taxes, net of
federal benefit 1,137 421 374
Canadian rate differential on
income (losses) 170 344 (134)
Research and development tax
credits (250) (250) --
Non-taxable interest income (393) (188) (70)
Other (117) 379 220
$10,131 $7,785 $2,434
Provision has been made for U.S. and Canadian taxes on
undistributed earnings of the Company's Canadian subsidiary.
The Company possesses approximately $6,501,000 of U.S. state
income tax loss carryforwards. U.S. state loss carryforwards
expire to the extent of $1,691,000 in 2006, and $4,810,000 in
2007.
10. SEGMENT INFORMATION AND MAJOR CUSTOMERS
The Company operates in predominately one industry segment: the
design, engineering and manufacture of certain components sold to
manufacturers in the ground transportation industry.
The Company, through its subsidiaries, operates primarily in two
countries: the United States and Canada. The Company's Canadian
subsidiary had net sales of $20,494,000 in 1994, $36,074,000 in
1993, and $29,421,000 in 1992. Total assets of the Canadian
subsidiary were approximately $7,368,000 and $9,416,000 at
December 31, 1994 and 1993, respectively. Intercompany sales
were insignificant.
Sales to three major customers, Ford Motor Company, Chrysler
Corporation, and General Motors Corporation, were approximately
71%, 12%, and 4%, respectively, of the Company's net sales in
1994 as compared to 72%, 11% and 4% in 1993 and 73%, 9% and 4% in
1992. Accounts receivable from Ford Motor Company, Chrysler
Corporation, and General Motors Corporation approximated 88% of
trade accounts receivable at December 31, 1994 and 89% at
December 31, 1993. Sales to customers outside of the United
States and Canada were not significant.
11. COMMON SHARES
On May 5, 1994, the shareholders approved a new 1994 Stock
Compensation Plan (the "Plan"). The Plan reserves 500,000 common
shares for issuance to officers, other key employees and non-
employee directors. The Plan provides that options may be
granted at not less than fair market value and if not exercised,
expire ten years from the date of grant. Generally, the options
become exercisable at the rate of 25% per year commencing one
year from the date of grant.
In addition, the Company has outstanding under a 1984 Plan,
incentive stock options for 15,750 shares at an average exercise
price of $6.364. The 1984 Plan expired and no further options
may be granted under it.
The following table sets forth stock option activity for 1994.
Range of
Shares Prices
Stock options outstanding
at December 31, 1993 19,250 $ 5.227-$7.614
Options granted 279,000 16.125-18.125
Options exercised (3,500) 7.614
Options canceled (3,000) 18.125
Stock options outstanding
at December 31, 1994 291,750 $ 5.227-18.125
The Company has an employee stock purchase plan and has reserved
337,793 common shares for this purpose. The plan allows eligible
employees to authorize payroll withholdings which are used to
purchase common shares from the Company at ninety percent (90%)
of the closing price of the common shares on the date of
purchase. Through December 31, 1994, 112,207 shares had been
issued under the plan.
The Company has reserved 2,270,319 common shares for possible
future issuance in connection with its $30,000,000 convertible
notes issued on January 2, 1990.
12. RELATED PARTY TRANSACTIONS
On March 24, 1994, Ford Motor Company (Ford) and Ford Motor
Company Fund disposed of their combined 24% ownership in the
Company through a secondary public offering. Ford owned 24% of
the Company's common shares at December 31, 1993 and 30% at
December 31, 1992. Significant related party transactions are as
follows:
Year Ended December 31,
1993 1992
(000 Omitted)
Product sales $373,000 $311,000
Product purchases 124,000 77,000
December 31,
1993
(000 Omitted)
Accounts receivable $ 47,168
Accounts payable 9,700
<PAGE>
<TABLE>
13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following table sets forth in summary form the quarterly results of
operations for the years ended December 31, 1994 and 1993.
<CAPTION>
(Amounts in thousands except per share amounts)
1994
-------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales $151,972 $161,722 $144,060 $149,429
Gross profit 16,497 17,289 12,756 14,824
Net income 5,138 5,426 2,844 3,843
Net income per share
Primary $ .48 $ .50 $ .26 $ .36
Fully diluted .44 .45 .25 .33
======== ======== ======== ========
1993
-------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales $127,340 $138,875 $114,888 $134,578
Gross profit 14,295 16,044 10,015 11,384
Net income 3,422 4,491 1,650 2,877
Net income per share
Primary $ .39 $ .43 $ .16 $ .27
Fully diluted .35 .38 .16 .26
======== ======== ======== ========
</TABLE>
14. RESTRUCTURING CHARGE
In the fourth quarter of 1992, the Company provided an allowance
of $4,500,000 for restructuring costs. The charge reduced net
income by $2,900,000 or $.34 per share. This charge represented
estimated costs to downsize Excel Metalcraft Ltd., located in
Aurora, Ontario, Canada and relocate production of certain light
truck and van windows from Aurora to the Company's other
manufacturing plants. Total costs of $1,775,000 and $1,010,000
were incurred in 1994 and 1993 for transferring production and
downsizing.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the caption "ELECTION OF DIRECTORS" in
the Company's proxy statement for the 1995 annual meeting of
shareholders (the "Proxy Statement") is incorporated herein by
reference. The Proxy Statement has previously been filed with the
Securities and Exchange Commission.
Item 11. Executive Compensation
The information set forth under the captions "Compensation of
Directors," "Compensation Committee Interlocks and Insider
Participation," "Compensation of Executive Officers," "Summary
Compensation Table," "Options," "Pension Plan," and "Deferred
Compensation Plans" in the Proxy Statement is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the captions "Outstanding Shares,"
"Principal Shareholders," and "Security Ownership of Management" in the
Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information set forth under the captions "Board Meetings and
Committees" and "Compensation Committee Interlocks and Insider
Participation" in the Proxy Statement is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) (1) Financial Statements
The following consolidated financial statements of the Company and its
subsidiaries are included in Item 8 of this report.
Report of Independent Accountants
Consolidated Balance Sheet - December 31, 1994 and 1993
Consolidated Statement of Income - Years ended December 31, 1994, 1993
and 1992
Consolidated Statement of Shareholders' Equity - Years ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flows - Years ended December 31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedules
The following financial statement schedules are included with this
report:
Report of Independent Accountants on Financial Statement Schedules
II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes
thereto.
(a) (3) Exhibits
The list of exhibits contained in the Exhibit Index immediately
following the signature page of this Form 10-K is incorporated herein by
reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
EXCEL INDUSTRIES, INC.
March 22, 1995 By: /s/ James J. Lohman
James J. Lohman
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
March 22, 1995 /s/ James J. Lohman
James J. Lohman
Chairman of the Board and
Chief Executive Officer
March 22, 1995 /s/ Joseph A. Robinson
Joseph A. Robinson
Secretary-Treasurer and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
March 22, 1995 /s/ James O. Futterknecht, Jr.
James O. Futterknecht, Jr.
Director
March 22, 1995 /s/ John G. Keane
John G. Keane, Director
March 22, 1995 /s/ Richard A. Place
Richard A. Place, Director
March 22, 1995 /s/ James K. Sommer
James K. Sommer, Director
March 22, 1995 /s/ Ralph R. Whitney
Ralph R. Whitney, Jr., Director
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Excel Industries, Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 16, 1995 appearing on page 23 of the 1994 Annual Report to
Shareholders of Excel Industries, Inc. also included an audit of the Financial
Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion,
this Financial Statement Schedule presents fairly, in all material respects,
the information set forth therein when read in conjunction with the related
consolidated financial statements.
PRICE WATERHOUSE LLP
South Bend, Indiana
February 16, 1995
<PAGE>
<TABLE>
<CAPTION>
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II
Balance at Additions Balance at
beginning charged to end of
Classification of period expense Deductions* period
<S> <C> <C> <C> <C>
Year ended December 31, 1992:
Allowance for uncollectible
accounts receivable $738,000 $200,000 $(213,000) $725,000
Year ended December 31, 1993:
Allowance for uncollectible
accounts receivable $725,000 $167,000 $(167,000) $725,000
Year ended December 31, 1994:
Allowance for uncollectible
accounts receivable $725,000 $151,000 $( 8,000) $868,000
* Primarily reflects write-offs of uncollectible accounts, net of recoveries of amounts previously written off.
</TABLE>
<PAGE>
EXHIBIT INDEX
Page No.
Exhibit In Manually
Number Description of Exhibit Signed Copy
(3.1) The Amended Articles of Incorporation of the
Company were filed as Exhibit 3.1 to the
Registration Statement on Form S-1 filed on
February 27, 1987 (Reg. No. 33-12282) and
are incorporated herein by reference
(3.2) Amendment to the Code of By-Laws effective
August 18, 1994.....
(3.3) Amendment to the Code of By-Laws effective
October 20, 1994.....
(3.4) Amendment to the Code of By-Laws effective
December 15, 1994.....
(3.5) The Code of By-Laws of the Company as
amended effective March 15, 1995.....
(4.1) A specimen of the certificate
representing the Common Stock of the
Company was filed as Exhibit 4.1 to the
Company's Amendment No. 1 to the
Registration Statement on Form S-1 filed on
April 3, 1984 (Reg. No. 2-89521) and is
incorporated herein by reference
(4.2) Article VI, Section 3-5, Article VII
and Article XII, Section 1 of the Articles
of Incorporation of the Company are
included as part of Exhibit 3.1 above
(4.3) Articles X, XI, XV, XVI, XXIV of the Code of
By-Laws of the Company are included as part
of Exhibit 3.2 above
(9) Not Applicable
(10.1)* The Supplemental Major Medical Expense
Insurance Plan of the Company was filed as
Exhibit 10.7 to the Company's Registration
Statement on Form S-1 filed on February 17,
1984 (Reg. No. 2-89521) and is incorporated
herein by reference
(10.2) Purchase and Supply Contract between the
Company and Ford Motor Company dated
October 7, 1986, was filed as part of
Exhibit (e) (2) of the Company's Schedule
13E-4 filed on August 27, 1986, and is
incorporated herein by reference
(10.3) Lease Agreement between Modular Concepts,
Inc. and Fulton Industrial Development
Authority was filed as Exhibit 10.12 to the
Registration Statement on Form S-1 filed on
February 27, 1987 (Reg. No. 33-12282) and
is incorporated herein by reference
(10.4)* The Excel Industries, Inc. Stock Purchase
Plan and Trust was filed as Exhibit 4.4 to
Amendment No. 1 to the Company's
Registration Statement on Form S-8 filed on
June 9, 1987 (Reg. No. 33-14508) and is
incorporated herein by reference
(10.5) Commercial Lease and Option to Purchase
dated February 5, 1988, between the Company
and P-F-P Partnership, an Indiana general
partnership (for the Mishawaka facility)
was filed as Exhibit 10.16 to the Company's
Annual Report on Form 10-K filed on
March 24, 1988, and is incorporated herein
by reference
(10.6) Lease Agreement dated May 4, 1988 between
the Company and Willis Day Properties, Inc.
(for the Toledo, Ohio facility) was filed
as Exhibit 10.18 to the Company's Annual
Report on Form 10-K filed March 20, 1989,
and is incorporated herein by reference
(10.7)* The 1989 Deferred Compensation Plan of the
Company as amended effective October 1,
1991 was filed as Exhibit 10.12 to the
Company's Annual Report on Form 10-K filed
March 26, 1992 and is incorporated herein
by reference
(10.8) Lease Purchase Contract dated July 1, 1979
between The Industrial Development Board
for the City of Pikeville (the "Pikeville
Board") and Ferro Manufacturing Corporation
("Ferro") was filed as Exhibit 10.20 to the
Company's Annual Report on Form 10-K filed
March 27, 1991, and is incorporated herein
by reference
(10.9) First Amendment to Lease Purchase Contract,
dated January 1, 1983, between the
Pikeville Board and Ferro was filed as
Exhibit 10.21 to the Company's Annual
Report on Form 10-K filed March 27, 1991,
and is incorporated herein by reference
(10.10)* Supplemental Deferred Compensation Agreement
between the Company and James J. Lohman was
filed as Exhibit 10.20 to the Company's
Annual Report on Form 10-K filed March 26,
1992 and is incorporated herein by
reference
(10.11)* Excel Industries, Inc. and Subsidiaries
Incentive Compensation Plan was filed on
Exhibit 10.14 to the Company's Annual
Report on Form 10-K filed March 26, 1993,
and is incorporated herein by reference
(10.12) Lease Extension Agreement dated September
17, 1992 between the Company and Willis Day
Properties, Inc. (for the Toledo facility)
was filed on Exhibit 10.15 to the Company's
Annual Report on Form 10-K filed March 26,
1993, and is incorporated herein by
reference
(10.13) Purchase Agreement between the Company and
Ford Motor Company dated January 31,
1994 was filed on Exhibit 10.13 to the
Company's Annual Report on Form 10-K filed
March 29, 1994, and is incorporated herein
by reference
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(16) Not Applicable
(21) List of the Company's subsidiaries.....
(22) Not Applicable
(23) Consent of Independent Accountants.....
(24) Not Applicable
(27) Financial Data Schedule.....
(28) Not Applicable
* Management contract or compensation plan or
arrangement.
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF SECRETARY
OF
EXCEL INDUSTRIES, INC.
I, Joseph A. Robinson, certify that I am the duly
elected Secretary of Excel Industries, Inc. a
corporation organized and existing under the laws of
the State of Indiana (hereinafter the "Corporation"),
and that the following is a true and correct copy of
certain resolutions duly adopted by the Board of
Directors in accordance with law and the Code of By-
Laws of the Corporation on August 18, 1994, and that
such resolutions have not been rescinded or modified:
RESOLVED, That the Code of By-laws of the
Corporation is amended by adding a
new Section 3 to Article IX thereof
to read as follows:
"Section 3. No person shall be
eligible to be elected or re-
elected as a director, or to fill a
vacancy on the Board of Directors,
who at the time of such election or
appointment shall have attained the
age of seventy (70) years."
Dated this 18th day of August, 1994.
/s/ Joseph A. Robinson
Joseph A. Robinson
Secretary
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF SECRETARY
OF
EXCEL INDUSTRIES, INC.
I, Joseph A. Robinson, certify that I am the duly
elected Secretary of Excel Industries, Inc. a
corporation organized and existing under the laws of
the State of Indiana (hereinafter the "Corporation"),
and that the following is a true and correct copy of
certain resolutions duly adopted by the Board of
Directors in accordance with law and the Code of By-
Laws of the Corporation on October 20, 1994, and that
such resolutions have not been rescinded or modified:
RESOLVED, That the Code of By-laws of the
Corporation is amended as follows:
(i) Section 12 of Article VIII is
deleted in its entirety, and
Section 13 therein is renumbered as
Section 12, and (ii) Section 2 of
Article XI is deleted in its
entirety and the reference to
Section I therein is consequently
deleted.
Dated this 20th day of October, 1994.
/s/ Joseph A. Robinson
Joseph A. Robinson
Secretary
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF SECRETARY
OF
EXCEL INDUSTRIES, INC.
I, Joseph A. Robinson, certify that I am the duly
elected Secretary of Excel Industries, Inc. a
corporation organized and existing under the laws of
the State of Indiana (hereinafter the "Corporation"),
and that the following is a true and correct copy of
certain resolutions duly adopted by the Board of
Directors in accordance with law and the Code of By-
Laws of the Corporation on December 15, 1994, and that
such resolutions have not been rescinded or modified:
RESOLVED, That Article XIV of the Code of
Bylaws is amended to read as
follows:
"The fiscal year of this
corporation shall be the calendar
year consisting of 52/53 weeks with
the year ending on the weekend
closest to December 31."
Dated this 15th day of December, 1994.
/s/ Joseph A. Robinson
Joseph A. Robinson
Secretary
<PAGE>
EXHIBIT 3.5
CODE OF BY-LAWS
OF
EXCEL INDUSTRIES, INC.
(the "Corporation")
ARTICLE I
Officers
Section 1. The officers of the Corporation shall consist
of a Chairman of the Board, the President, one or more Vice
Presidents, the Secretary, the Treasurer, and such assistant
officers as the Board of Directors shall from time to time
designate and elect.
Section 2. Any two offices may be held by the same
person. The officers of the Corporation shall be elected by
the Board of Directors at such time and in such manner and for
such terms as the Board of Directors may prescribe. No
officer, other than the Chairman of the Board, need be a
Director of this Corporation.
ARTICLE II
Chairman of the Board of Directors
The Board of Directors shall choose from among its
members a Chairman of the Board who shall also serve as the
Chief Executive Officer of the Corporation. The Chairman of
the Board of Directors shall preside at all meetings of the
shareholders and directors. He shall perform all duties
incident to the office of the Chief Executive Officer and
shall perform any additional duties as from time to time may
be assigned to him by the Board of Directors.
ARTICLE III
President and Vice President
Section 1. The President shall be the Chief Operating
Officer of the Corporation and shall have management
responsibility for the operation of the Corporation. It shall
be his duty to preside at all meetings of the shareholders in
the absence of the Chairman of the Board of Directors and to
perform such other duties and render such other services for
and in behalf of the Corporation as may be assigned to him by
the Chairman of the Board.
Section 2. Each Vice President shall have such powers
and perform such duties as the Board of Directors may
prescribe or as the Chairman of the Board or the President may
delegate to him. At the request of the Chairman of the Board
or the President, any Vice President may temporarily act in
the Place of the President and may perform all of the duties
of the Presidency in his absence or during his disability.
ARTICLE IV
Secretary
Section 1. The Secretary shall prepare or cause to be
prepared the minutes of the meetings of the shareholders and
of the Board of Directors. He shall see that all notices are
duly given in accordance with the provisions of the Code of
By-Laws and as required by law. The Secretary shall be
custodian and responsible for the authentication of the
records and, in general, shall perform all duties incident to
the Office of Secretary. He shall have such other powers and
perform such other duties as this Code of By-Laws provides or
as may, from time to time, be assigned by the Board of
Directors.
Section 2. The Secretary shall procure all of the stock
certificates, stock books, stock transfer books, and other
similar records.
Section 3. The Secretary shall have the custody of and
affix the corporate seal whenever the same is required to be
affixed and shall perform such other duties and render such
other services as may be assigned to him from time to time by
the Board of Directors.
ARTICLE V
Treasurer
Section 1. The Treasurer shall be the Chief Financial
Officer of the Corporation. He shall procure and have custody
of the financial records of the Corporation and shall receive
and have custody of and safely keep all of the cash and
securities of the Corporation. He shall keep an accurate
record of all receipts and disbursements in books and records
belonging to the Corporation; shall deposit all moneys and
securities in the name and to the credit of the Corporation in
such banks, trust companies or other depositories as the Board
of Directors may designate from time to time as the
depositories of the Corporation; shall disburse the funds of
the Corporation as ordered by the Board of Directors; shall
render an account of all of his transactions as such Treasurer
and of the financial condition of the Corporation whenever
required by the Board of Directors; and, in general, shall
perform all the duties incident to the office of Treasurer.
Section 2. The Treasurer shall perform such other duties
and render such other services as may be assigned to him from
time to time by the Board of Directors.
ARTICLE VI
Additional Duties of Officers
In addition to the duties imposed upon the several
officers of the Corporation, they shall have the powers and
perform the duties usually had and possessed by the respective
officers of a like corporation. Assistant officers shall have
such powers and duties as the officers whom they are elected
to assist shall specify and delegate to them and such other
powers and duties as these By-Laws or the Board of Directors
may prescribe.
ARTICLE VII
Duties of Officers Delegated
In case of the absence or disability of any officer of
the Corporation, the Board of Directors may delegate the
powers and duties of any such officer of the Corporation for
such period of time as the Board of Directors may determine.
ARTICLE VIII
Meetings of Shareholders
Section 1. All meetings of the shareholders of the
Corporation shall be held at such place within or without the
State of Indiana as may be specified in the notice of the
meeting.
Section 2. The annual meeting of the shareholders of the
Corporation shall be held on the third Thursday of April of
each and every year. Failure to hold the meeting at the
designated time shall not work any forfeiture or a dissolution
of the Corporation or affect the validity of any corporate
action.
Section 3. A complete list of the shareholders entitled
to vote at any shareholders' meeting, arranged in alphabetical
order and containing the address and number of shares of stock
so held by each shareholder who is entitled to vote at said
meeting, shall be prepared by the Secretary and shall be open
to the examination of any shareholder at the office of the
Corporation at the time of the meeting and for five days prior
thereto.
Section 4. At all shareholders' meetings, a quorum shall
consist of a majority of all of the shares of the stock
outstanding and entitled by the Articles of Incorporation to
vote on the business to be transacted at said meeting, but a
meeting composed of less than a quorum may adjourn the meeting
from day to day thereafter or until some future time.
Section 5. At the annual meeting of the shareholders,
there shall be elected by plurality vote a Board of Directors
who shall hold office until the next annual meeting of
shareholders and until their successors have been elected and
have qualified.
Section 6. Except as otherwise provided by law or by the
provisions of the Articles of Incorporation, each outstanding
share of Common Stock is entitled to one vote on each matter
voted on at a shareholders' meeting.
Section 7. A shareholder may vote, either in person or
by proxy executed in writing by the shareholder or a duly
authorized attorney-in-fact. No proxy shall be valid after
eleven (11) months, unless a shorter or longer time is
expressly provided in the appointment form.
Section 8. Special meetings of the shareholders of the
Corporation may be called by the Chairman of the Board, the
President, by the Board of Directors, or by shareholders
holding not less than one-fourth (1/4) of all shares of stock
outstanding and entitled, by the Articles of Incorporation, to
vote on the business to be transacted at said special meeting,
and shall be called by the Chairman of the Board, the
President or a Vice President at the request of a majority of
the Board of Directors.
Whenever a special meeting of the shareholders shall be
called, the call shall be delivered to the Secretary who shall
issue the notice of said special meeting which is required to
be given.
Section 9. Written notice of each meeting of
shareholders shall be given by the Secretary, to each
shareholder of record who is entitled to vote at said meeting,
at least ten days prior to the time fixed for the holding of
said meeting, which said notice shall state the place, day and
hour and the purpose for which said meeting is called, and
said notice shall be addressed to the last known place of
residence of each shareholder, as shown on the records of the
Corporation; the ten days shall be computed from the date upon
which said notice is deposited in the mails.
Section 10. Notice of any shareholders' meeting may be
waived in writing by any shareholder if the waiver sets forth
in reasonable detail the purpose or purposes for which the
meeting is called and the time and place thereof.
Section 11. No shares of stock shall be voted at any
annual or special meeting of shareholders upon which any
installment is due and unpaid or which are owned by the
Corporation.
Section 12. Chapter 42 of the Indiana Business
Corporation Law (IND. CODE Sec. 23-1-42) shall not apply to
any control share acquisitions as defined in IND. CODE Sec.
23-1-42-2 by CIGNA Mezzanine Partners II, L.P., Connecticut
General Life Insurance Company, Life Insurance Company of
North America, The Paul Revere Life Insurance Company, The
Paul Revere Protective Life Insurance Company, Rhode Island
Hospital Investment Trust Fund B and Balboa Insurance Company
and their respective nominees, affiliates, successors and
assigns as a result of the sale and issuance by the
Corporation of certain 10% Convertible Subordinated Notes due
December 1, 2000 in the aggregate principal amount of
$30,000,000 (the "Notes") and any issuance of shares of the
common stock of the Corporation upon any subsequent conversion
of the Notes.
ARTICLE IX
DIRECTORS
Section 1. The property and business affairs of the
Corporation shall be managed and controlled by a Board of
Directors, none of whom need be a shareholder of the
Corporation. The Board of Directors shall consist of a
minimum of six and a maximum of eight members, the actual
number of directors to be fixed from time to time by
resolution of the Board of Directors. The members of the
Board of Directors shall be elected at the annual meeting of
the shareholders, shall hold office until the next annual
meeting of the shareholders and until their successors have
been elected and have qualified. In case of the failure to
hold the annual meeting on the date fixed herein for the same
to be held, the Directors shall hold over until the next
meeting of the shareholders for the purpose of electing
Directors.
Section 2. Vacancies in the Board of Directors, caused
by resignation, death or other incapacity or by increase in
the number of Directors, shall be filled for the unexpired
term by a majority vote of the remaining members of the Board
of Directors.
Section 3. No person shall be eligible to be elected or
re-elected as a director, or to fill a vacancy on the Board of
Directors, who at the time of such election or appointment
shall have attained the age of seventy (70) years.
ARTICLE X
Meeting of Directors
Section 1. Immediately following the annual meeting of
the shareholders, the annual meeting of the Board of Directors
shall be held, without notice, at the place at which the
annual meeting of the shareholders is held.
Section 2. Special meeting of the Board of Directors may
be called by the Chairman of the Board of Directors, by the
President, or by any two members of the Board of Directors, at
any place within or without the State of Indiana, upon twenty-
four hours' notice, specifying the date, time and place of the
meeting, given to each director, either personally, by
mailing, or by telegram.
Section 3. A majority of the whole Board of Directors
shall constitute a quorum for the transaction of any business
except the filling of vacancies, but a smaller number may
adjourn from time to time until a future date or until a
quorum is secured.
For the purpose only of filling a vacancy or vacancies in
the Board of Directors, a quorum shall consist of a majority
of the whole Board of Directors, less the vacancy or the
vacancies therein.
The act of a majority of the Directors present at a
meeting duly called at which a quorum is present shall be the
act of the Board of Directors.
Section 4. Notice of any special meeting of the Board of
Directors may be waived in writing by any Director, before or
after the date and time stated in the notice, if the waiver is
signed by the Director and filed with the Corporation's
minutes or records. In addition, a Director's attendance at
or participation in a meeting waives any required notice of
the meeting unless the Director at the beginning of the
meeting (or promptly upon his arrival) objects to holding the
meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
Section 5. Any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if a written consent
to such action is signed by all members of the Board of
Directors or such committee, as the case may be, and such
written consent is filed with the minutes of the proceedings
of the Board of Directors.
ARTICLE XI
Powers of Directors
The Board of Directors shall have all such powers as may
be exercised by the Corporation, subject to the provisions of
the statutes of the State of Indiana, the Articles of
Incorporation and these By-Laws, and subject to such further
regulations as may be, from time to time, made by the
shareholders.
ARTICLE XII
Compensation of Directors
and Members of Committees
The members of the Board of Directors and members of
committees of the Corporation, who are not salaried employees
of the Corporation, shall receive such compensation for their
services to be rendered for and in behalf of the Corporation
as may, from time to time, be fixed by the Board of Directors,
and the compensation so fixed shall continue to be payable
until the Board of Directors shall have thereafter fixed a
different compensation, which it may do at any regular or
special meeting.
ARTICLE XIII
Shares
Section 1. The shares of stock of the Corporation shall
be represented by certificates signed by the Chairman of the
Board or the President and the Secretary or an Assistant
Secretary of the Corporation and may be sealed with a seal of
the Corporation or a facsimile thereof. The signatures of the
officers upon a certificate may be facsimiles if the
certificate is countersigned by a Transfer Agent or registered
by a Registrar other than the Corporation itself or an
employee of the Corporation. In the event any officer who has
signed or whose facsimile signature has been placed upon a
certificate shall cease to be such officer before the
certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer at the time of
the issue of such certificate.
Section 2. The Board of Directors may, at its
discretion, appoint a Transfer Agent and a Registrar for the
shares of common stock of the Corporation. The Transfer Agent
shall be in charge of the issue, transfer, and cancellation of
shares of stock and shall countersign all stock certificates;
and, in the event the Transfer Agent and Registrar shall be
the same, then such stock certificates shall be countersigned
by it as Transfer Agent and Registrar. The Transfer Agent
shall maintain stock transfer books which shall include a
record of the shareholders, giving the names and addresses of
all shareholders and the number and class of shares held by
each; shall prepare voting lists for meetings of shareholders;
shall produce and keep open these lists at the meetings, and
shall perform such other duties as may be delegated by the
Board of Directors. The Registrar shall be in charge of
preventing the overissue of shares, shall register all stock
certificates, and shall perform such other duties as may be
delegated by the Board of Directors.
Section 3. The Corporation shall have a first lien on
all of the shares of the capital stock, and upon all dividends
declared upon the same, for any indebtedness of any character
or description owing to it from the respective holders of any
such share or shares.
Section 4. The shares of the Corporation shall be
transferable on the books of the Corporation upon surrender of
the certificate or certificates representing the same,
properly endorsed by the registered holder or by her/his duly
authorized attorney.
Section 5. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the
legal owner thereof and accordingly shall not be bound to
recognize any equitable claim to or interest in such share or
shares on the part of any other persons, whether or not it
shall have express or other notice thereof, save as expressly
provided by the laws of the State of Indiana.
ARTICLE XIV
Fiscal year
The fiscal year of this Corporation shall be the calendar
year consisting of 52/53 weeks with the year ending on the
weekend closest to December 31.
Article XV
Checks for Money
All checks, drafts or other orders for the payment of the
funds of the Corporation shall be signed by the Treasurer, or
by such other individual or individuals as may hereafter from
time to time be designated by the Board of Directors.
ARTICLE XVI
Dividends
Section 1. The Board of Directors may, at any annual or
special meeting, declare and authorize the distribution of a
dividend to the shareholders of the Corporation.
Section 2. When the Board of Directors declares a
dividend, it shall fix a date as the record date for the
determination of the shareholders who shall be entitled to
receive said dividend, and said dividend shall be paid only to
the shareholders of record on said record date as shown by the
books of the Corporation.
ARTICLE XVII
Compensation of Officers
The officers of the Corporation shall receive such
compensation for their services as may be, from time to time,
fixed by the Board of Directors, and the compensation so fixed
shall continue to be payable until the Board of Directors
shall have fixed a different compensation, which it may do at
any regular or special meeting.
ARTICLE XVIII
Execution of
Negotiable Instruments and Contracts
The promissory notes, debentures, certificates of
indebtedness, written contracts, and other similar instruments
which the Corporation may hereafter issue or execute, shall be
the valid obligations of the Corporation, if signed in its
behalf by the Chairman of the Board, the President, a Vice
President, the Secretary, the Treasurer, or any other officer
or agent designated and authorized by the Board of Directors.
<PAGE>
EXHIBIT 21
NAME OF SUBSIDIARY STATE OF INCORPORATION
Excel Corporation Indiana
Excel Metalcraft, Ltd. Canada
Excel Industries of Michigan, Inc. Michigan
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 2-91986) effective
July 19, 1984, the Registration Statement on Form S-8 (No. 33-
14508) effective June 11, 1987 and the Registration Statement
on Form S-8 (No. 33-53543) effective May 9, 1994 of Excel
Industries, Inc. of our report dated February 16, 1995
appearing on page 15 of this Form 10-K. We also consent to
the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 34 of this Form
10-K.
PRICE WATERHOUSE LLP
South Bend, Indiana
March 22, 1995
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