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 30, 1995
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 New York 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 15, 1996 was 10,708,320. The
aggregate market value of the Registrant's Common Shares held by
nonaffiliates on March 8, 1996 was $124,879,423.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Excel Industries, Inc. proxy statement for the
1996 annual meeting of shareholders are incorporated by reference
into Part III of this report.<PAGE>
<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 and door 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 ofautomotive 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 30% of net sales in 1995. 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 $12.9 million in
1995),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. The Company has
been designated a full services supplier for regulators by Ford and
expects this designation for windows soon. 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 $413.1 million in 1995. 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 latest 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 enabled the Company to supply door
frames for General Motors' 1995 and 1996 Saturn Coupe. 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 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 long-term 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 and to
supply fixed vent windows for the BMW model built in South
Carolina.
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.
<TABLE>
<CAPTION>
(Amounts in thousands)
Fiscal Year Ended
12/31/93 12/31/94 12/30/95
Net Net Net
Sales % Sales % Sales %
<S> <C> <C> <C> <C> <C> <C>
Ford $373,116 72% $434,189 71% $413,095 69%
Chrysler 56,445 11 69,881 12 65,104 11
General Motors 20,109 4 24,637 4 37,799 6
Other 66,011 13 78,476 13 80,016 14
Total $515,681 100% $607,183 100% $596,014 100%
/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., MackTruck, 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 $9.8 million, $10.9 million and
$12.9 million on research, engineering and development during 1993,
1994 and 1995, respectively. 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 1995, the Company sold its manufacturing facility in Aurora,
Ontario, Canada. The financial information concerning the Canadian
operations of the Company is set forth in Note 15 to the Company's
Consolidated Financial Statements included elsewhere herein. In
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 3,700 persons, of whom
approximately 18% 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 9 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)
[S] [C]
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)
(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
[S] [C] [C]
James O. Futterknecht, Jr.49 Chairman, President and Chief
Executive Officer
Joseph A. Robinson 57 Secretary, Treasurer and Chief
Financial Officer
James E. Crawford 49 Vice President and Managing
Director-Value Management and Product
Research and Development
Louis R. Csokasy 48 Vice President and Managing
Director-Automotive
Window and Door Systems
Terrance L. Lindberg 53 Vice President and Managing
Director-RV, Mass Transit and Heavy
Truck Window and Door Systems James M.
Krzyzewski 48 Vice President and Managing
Director-Plastic Products
Michael C. Paquette 54 Vice President, Corporate Human
Resources
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, was Executive
Vice President from 1990 to 1992, and was President and Chief
Operating Officer from 1992 to 1995. He was appointed as a
director in 1992 and elected as Chairman and Chief Executive
Officer in September of 1995.
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
- -Automotive 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.
Mr. Krzyzewski joined the Company in 1975, was General Manager of
the Belvedere division from 1984 to 1987, was Manager, Business
Strategy and Development from 1987 to 1990, and was Director,
Business Strategy and Development from 1990 to 1995. He is
currently Vice President and Managing Director, Plastic Products.
Mr. Paquette joined the Company in 1995 as Vice President,
Corporate Human Resources. Prior to that and since 1983, he was
Vice President of Human Resources for the Power Generation Group of
Cummins Engine Company, a Columbus, Indiana manufacturer of diesel
engines and related components.
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Shareholder Matters
The Common Shares were traded on the American Stock Exchange until
December 12, 1995 and thereafter on the New York 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 New York Stock Exchange and the American
Stock Exchange, as applicable, and dividends declared per
share.
Dividends
Share Prices Declared
High Low Per Share
Fiscal Year Ended December 31, 1994:
[S] [C] [C] [C]
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
Fiscal Year Ended December 30, 1995:
[S] [C] [C] [C]
1st Quarter 14.250 12.625 .11
2nd Quarter 14.500 12.625 .11
3rd Quarter 14.375 12.625 .11
4th Quarter 13.000 11.625 .11
As of February 23, 1996, there were 554 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>
<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
30, 1995. 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 ofOperations--General."
Income Statement Data:
<TABLE>
<CAPTION>
Fiscal Year Ended,
December 31, December 30,
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Net sales $352,268 $426,873 $515,681 $607,183 $596,014
Cost of goods
sold 321,058 383,258 463,943 545,817 540,716
Gross profit 31,210 43,615 51,738 61,366 55,298
Selling, administrative
and engineering
expenses 25,205 28,262 30,054 32,723 32,973
Restructuring
charge (1) --- 4,500 --- --- ---
Disposal of
Canadian
facility (1) --- --- --- --- 1,582
Other income
(expense), net (216) 713 2,015 2,145 3,805
Interest
expense 5,516 5,555 3,474 3,406 3,322
Income before income taxes and
cumulative effect of changes in
accounting 273 6,011 20,225 27,382 24,390
Income tax
provision 122 2,434 7,785 10,131 8,125
Income before cumulative effect
of changes
in accounting 151 3,577 12,440 17,251 16,265
Cumulative effect
of adoption of
SFAS 106
and 109 --- 3,195 --- --- ---
Net income 151 382 12,440 17,251 16,265
Net income (loss) per share:
Before cumulative effect
of changes in accounting:
Primary .02 .47 1.23 1.60 1.52
Fully diluted .02 .47 1.15 1.46 1.41
Cumulative effect of
adoption of
SFAS 106 and 109:
Primary --- (.42) --- --- ---
Fully diluted --- (.42) --- --- ---
Net income:
Primary .02 .05 1.23 1.60 1.52
Fully diluted .02 .05 1.15 1.46 1.41
Cash dividends
per share .24 .24 .30 .37 .44
Average shares
outstanding 6,488 7,553 10,122 10,805 10,690
Balance Sheet Data:
December 31, December 30,
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Working Capital$ 42,517 $ 60,331 $ 94,761 $ 96,145 $ 91,453
Property, plant
and equipment 48,445 42,064 49,746 62,876 68,997
Total assets 150,645 182,096 229,316 254,630 269,518
Short-term debt (includes
current portion of
long-term debt) 4,025 1,561 1,553 1,358 9,164
Long-term debt
(less current
portion) 46,743 34,592 35,094 33,578 24,021
Shareholders'
equity 48,181 67,030 106,436 122,643 134,317
Book value
per share 7.41 7.83 10.07 11.48 12.55
Long-term debt
to total
capitalization 49% 34% 25% 21% 15%
</TABLE>
(1) In 1992, the Company provided a reserve of $4,500 for
restructuring costs; and in 1995, the Company realized a gain on
the disposal of the Canadian facility. See Note 15 to the
Company's Consolidated Financial Statements.<PAGE>
<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
1995 Compared to 1994
Sales for the year ended December 30, 1995 totaled $596.0 million,
down $11.2 million or 2% from the preceding year. This decrease
occurred primarily in sales of modular windows for passenger cars
which were down 19%. North American light vehicle production for
1995 was down 1.3% when compared to 1994. The Company's largest
customer, Ford Motor Company, reported passenger car production in
1995 was 14% lower than the previous year.
Gross profit totaled $55.3 million, or 9.3% of sales, as
compared with $61.4 million, or 10.1% of sales for the prior year.
The decrease in 1995 compared to 1994 was due to the decreased
sales, a change in product mix, a shortfall of cost reductions
against customer productivity commitments and the adverse impact of
new program launch costs.
Selling, administrative and engineering expenses totaled $33.0
million for 1995, an increase of .8% or $.3 million, from 1994.
1995 expenses reflect higher costs in salaries and consulting fees
(for Employee Empowerment Training and Kaizen activities) being
offset by lower executive incentive compensation. As a percent of
sales, selling, administrative and engineering expenses increased
to 5.5% in 1995 as compared to 5.4% in 1994.
Interest costs of $3.3 million for 1995 were similar to the
$3.4 million incurred in 1994. Other income of $3.8 million in
1995 increased from $2.1 million in 1994 due to receiving $1.5
million in executive life insurance proceeds. Interest income
(included in other income) increased from $1.8 million in 1994 to
$2.1 million in 1995 due to higher interest rates.
The income tax provision was 33.3% of pre-tax income in 1995,
down from 37% in the preceding year. The 1995 percentage reflected
not only the impact of the non-taxable executive life insurance
proceeds but also the continuation of investing in tax-free
securities.
Included in 1995 is a gain on the disposition of Excel
Metalcraft, Ltd., located in Aurora, Ontario in the amount of
$1,582,000 which amounts to 9 cents per share after income taxes.
This gain includes the return to profits of $970,000 of the
restructuring reserve which was created in 1992. The final phase
of the restructuring was completed with the sale of the shares of
Metalcraft.
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 were 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.
Liquidity and Capital Resources
Working capital totaled $91.5 million as of December 30, 1995, and
the current ratio was 1.99 to 1. Cash and marketable securities
totaled $37.8 million as of December 30, 1995.
In 1995, cash flow from operations totaled $22.2 million.
Cash expenditures for capital equipment amounted to $21.7 million,
and dividends totaled $4.7 million. In addition, payments of long-
term debt totaled $1.8 million. Overall, cash and marketable
securities decreased $1.9 million in 1995.
Long-term debt totaled $24.0 million as of December 30, 1995,
or 15% of total capitalization. Included in this amount is $22
million of the 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 1996 are budgeted at $23.6 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 1996.
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.
On March 4, the Company signed a definitive agreement to
purchase 100% of the outstanding common stock of Anderson
Industries, Inc. (Anderson) for approximately $57,800,000 in cash,
and warrants. The warrants are for 381,000 shares of Excel common
stock and are exercisable at $13.25 per share for a period of five
years from the closing date of the purchase. Anderson, located in
Rockford, Illinois, is a holding company whose main asset is Atwood
Industries, Inc. Atwood Industries manufactures products for the
automotive, manufactured housing and recreational vehicle
industries and is headquartered in Rockford, Illinois. The Company
has negotiated a borrowing facility that becomes available
concurrent with the closing of the transaction. The transaction is
expected to close on or about March 31,1996.
Inflation
The impact of inflation on operating results for the years 1995,
1994 and 1993 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>
<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 30,1995 and December 31,1994, and the results of their
operations and their cash flows for each of the three fiscal years
in the period ended December 30, 1995, 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.
PRICE WATERHOUSE LLP
South Bend, Indiana
February 15, 1996, except for Note 16 which is dated March 4,
1996.<PAGE>
<PAGE>
Excel Industries, Inc.
Consolidated Balance Sheet
(Amounts in thousands)
<TABLE>
December 30, December 31,
1995 1994
<S> <C> <C>
Assets
Current assets:
Cash and short-term investments $ 391 $ 175
Marketable securities 37,416 39,520
Accounts receivable-trade, less allowances
of $725 in 1995 and $868 in 1994 85,751 78,420
Customer tooling to be billed 26,090 16,015
Inventories 27,298 33,576
Prepaid expenses 7,018 8,434
Total current assets 183,964 176,140
Property, plant and equipment:
Land 1,280 945
Buildings and improvements 21,726 22,741
Machinery and equipment 116,527 101,595
Accumulated depreciation (70,536) (62,405)
68,997 62,876
Goodwill, net of accumulated amortization
of $3,050 in 1995 and $2,703 in 1994 6,356 6,703
Deferred income taxes and other assets 10,201 8,911
$269,518 $254,630
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 57,811 $ 52,459
Accrued liabilities:
Salaries and wages 5,284 6,300
Income taxes 402 3,158
Other 19,850 16,720
Current maturities of long-term debt 9,164 1,358
Total current liabilities 92,511 79,995
Long-term debt 24,021 33,578
Other long-term liabilities,
primarily employee benefits 18,669 18,414
Commitments and contingent liabilities -- --
Shareholders' equity: Preferred shares-no par value, 1,000 shares,
none issued -- --
Common shares-no par value, 20,000 shares
authorized; issued 11,003 and 10,974,
respectively 95,157 94,831
Retained earnings 44,412 32,854
Minimum pension liability adjustment,
net of tax (659) (587)
Treasury shares at cost, 300 and 290 shares,
respectively (4,593) (4,455)
Total shareholders' equity 134,317 122,643
$269,518 $254,630
The accompanying notes are an integral part of this
statement./TABLE
<PAGE>
<PAGE>
Excel Industries, Inc.Consolidated Statement of Income
(Amounts in thousands, except per share amounts)
Fiscal Year Ended
December 30, December 31, December 31,
1995 1994 1993
Net sales $596,014 $607,183 $515,681
Cost and expenses:
Cost of goods sold 540,716 545,817 463,943
Selling, administrative and
engineering expenses 32,973 32,723 30,054
Disposal of Canadian
facility (1,582) -- --
Interest expense 3,322 3,406 3,474
Other income, net (3,805) (2,145) (2,015)
Total costs
and expenses 571,624 579,801 495,456
Income before
income taxes 24,390 27,382 20,225
Provision for
income taxes 8,125 10,131 7,785
Net income $ 16,265 $ 17,251 $ 12,440
Net income per share:
Primary $ 1.52 $ 1.60 $ 1.23
Fully diluted 1.41 1.46 1.15
Cash dividends per share$ .44 $ .37 $ .30
The accompanying notes are an integral part of this
statement.<PAGE>
<PAGE>
Consolidated Statement of Shareholders' Equity
(Amounts in thousands)
<TABLE>
<CAPTION>
Minimum
Common Pension
Shares Common Retained Liability Treasury
Outstanding Shares Earnings Adjustment Shares Total
<S> <C> <C> <C> <C> <C> <C> Minimum
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
Minimum pension liability adjustment,
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
Minimum pension liability adjustment,
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
Net income 16,265 16,265
Dividends (4,707) (4,707)
Share options exercised 7 57 57
Shares issued under employee stock
purchase plan 22 269 269
Minimum pension liability adjustment,
net of tax (72) (72)
Treasury shares purchased (10) (138) (138)
Balance at December 30, 1995 10,703 $95,157 $44,412 $ (659) $(4,593) $134,317
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
<PAGE>
Excel Industries, Inc.
Consolidated Statement of Cash Flows
(Amounts in thousands)
Fiscal Year Ended
December 30, December 31, December 31,
1995 1994 1993
[S] [C] [C] [C]
Cash flows from operating activities:
Net income $ 16,265 $ 17,251 $12,440
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and
amortization 13,720 11,931 10,145
Deferred income taxes (108) (546) 548
Gain on disposal of Canadian
facility (1,582) -- --
Gain on executive life
insurance (1,468) -- --
Other 334 2,170 3,443
Changes in current assets
and liabilities
Accounts receivable and
prepaid expenses (7,486) (8,561) (13,418)
Inventories and customer
tooling (4,802) (10,563) (6,395)
Accounts payable and
accrued liabilities 7,301 9,604 3,454
Total adjustments 5,909 4,035 (2,223)
Net cash provided by
operating activities 22,174 21,286 10,217 Cash
flows from investing activities:
Purchase of property, plant
and equipment (21,744) (25,491) (18,104)
Purchase of investments,
net (2,060) 266 (39,786)
Proceeds from disposal of
Canadian facility 6,306 -- --
Proceeds from executive
life insurance 1,841 -- --
Other (31) 231 (648)
Net cash used for
investing activities (15,688) (24,994) (58,538)
Cash flows from financing activities:
Issuance of common shares 326 7,294 30,255
Payments of long-term debt(1,751) (1,711) (2,001)
Dividends (4,707) (4,012) (3,171)
Purchase of treasury
shares (138) (4,455) --
Issuance of long-term debt -- -- 2,495
Net cash provided by
(used for) financing
activities (6,270) (2,884) 27,578 Net
change in cash
and short-term investments 216 (6,592) (20,743)
Cash and short-term investments at
beginning of period 175 6,767 27,510 Cash
and short-term investments
at end of period $ 391 $ 175 $ 6,767
Supplemental disclosures of cash flow information
Cash paid during the year for:
Interest $ 3,358 $ 3,433 $ 3,308
Income taxes,
net of refunds 10,380 9,138 7,996 The
accompanying notes are an integral part of this
statement.<PAGE>
<PAGE>
EXCEL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Excel Industries, Inc. 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 10,690,000 for 1995,
10,805,000 for 1994, and 10,122,000 for 1993.
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 $255,000 at December 30, 1995
and $121,000 at December 31, 1994 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 1996. Interest and dividends
on marketable securities are included in income as earned.
Realized gains or losses are determined on the specific
identification method. Marketable securities are carried at fair
value and consist of the following:
December 30, December 31,
1995 1994
(000 Omitted)
[S] [C] [C]
Government securities $ 7,203 $18,917
Tax-free municipal securities 23,713 17,403
Municipal fund par value
preferred shares 6,500 3,200
$37,416 $39,520
Other income includes interest income of $2,113,000 in 1995,
$1,812,000 in 1994, and $1,916,000 in 1993.
Inventories
Inventories in 1995 are valued at the lower of cost or market using
the last-in, first-out (LIFO) cost method. Canadian inventories
not on LIFO at December 31, 1994 were $819,000.
Customer tooling to be billed
Customer tooling to be billed represents costs incurred by the
Company on behalf of its customers 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 30, 1995, instead of the historic basis
accounting used in the financial statements, long-term debt would
exceed the reported level by approximately $1.1 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."
Fiscal Year
The Company's fiscal year was changed in 1995 to consist of 52 or
53 weeks ending on the Saturday nearest December 31.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. Research, Engineering and Development
Research, engineering and development expenditures charged to
operations approximated $12,897,000 in 1995, $10,916,000 in 1994,
and $9,844,000 in 1993.<PAGE>
<PAGE>
4. Inventories
Inventories consist of the following:
<TABLE>
December 30, December 31,
1995 1994
(000 Omitted)
<S> <C> <C>
Raw materials $16,911 $21,301
Work in process and finished goods 11,143 13,037
LIFO reserve (756) (762)
$27,298 $33,576
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. The Company also provides
supplemental retirement benefits for certain executives.
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 $3,947,000 in 1995, $3,868,000 in 1994, and
$3,663,000 in 1993.
Components of net pension expense for all defined benefit
pension plans are as follows:
</TABLE>
<TABLE>
Fiscal Year Ended
December 30, December 31, December 31,
1995 1994 1993
(000 Omitted)
<S> <C> <C> <C>
Service cost $1,642 $1,622 $1,319
Interest cost 1,585 1,457 1,344
Actual return on assets (3,001) 133 (617)
Net amortization
and deferral 1,583 (1,396) (582)
Net defined benefit
pension expense $1,809 $1,816 $1,464
<PAGE>
The funded status of defined benefit pension plans is as
follows:
December 30, December 31,
1995 1994
(000 Omitted)
Plan assets at fair value $19,855 $16,475
Projected benefit obligation 24,259 20,068
(4,404) (3,593)
Unrecognized costs 1,781 1,080
Net accrued pension costs $(2,623) $(2,513)
Actuarial present value of:
Vested benefit obligations $18,330 $15,764
Accumulated benefit
obligations $19,452 $16,623
Major assumptions:
Discount rate 7.5%-8.0% 8.0%
Rate of increase in compensation 5.0% 5.0%
Expected rate of return on plan
assets 8.0% 8.0%
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 healthcare benefits to substantially all active employees
and postretirement healthcare benefits to management employees.
The Company is primarily self-insured for such benefits.
The Company follows the provisions of SFAS No. 106,
"Employers'Accounting for Postretirement Benefits Other Than
Pensions" and funds these benefits on a pay-as-you-go basis. The
components of net periodic postretirement benefit cost are as
follows:(/TEXT>
</TABLE>
<TABLE>
Fiscal Year Ended
December 30, December 31, December 31,
1995 1994 1993
(000 Omitted)
<S> <C> <C> <C>
Service costs, benefits attributed to employee service during the
year $ 656 $ 909 $ 821
Interest cost on accumulated postretirement
benefit obligation 482 599 578
Amortization of
deferrals (189) (15) --
Net periodic postretirement
benefit cost $ 949 $1,493 $1,399
The decrease in net cost in 1995 is attributable to lower
actual claims and higher retiree contributions than projected.
Summary information on the Company's plan is as follows:
</TABLE>
<TABLE>
December 30, December 31,
1995 1994
(000 Omitted)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 1,079 $ 1,171
Retirement-eligible actives 868 753
Other active participants 5,587 5,089
Accumulated postretirement
benefit obligation 7,534 7,013
Unrecognized prior service costs 865 1,048
Unrecognized net gain 2,761 2,286
Accrued postretirement
benefit costs $11,160 $10,347
The discount rate used in determining the APBO was 7.75% in
1995 and 8.25% in 1994. The 1995 assumed health care cost trend
rate used in measuring the accumulated postretirement benefit
obligation was 9.25% declining by .5% per year to a rate of 6.0%.
In 1994, the rate was 9.75% declining by .5% per year to a rate of
6%. An increase of 1% in health care cost trend rate would
increase the accrued postretirement benefit cost at December 30,
1995 by $1,627,000 and the 1995 annual expenses by $278,000.
6. Long-term Debt
Following is a summary of long-term debt of the Company:
</TABLE>
<TABLE>
December 30, December 31,
1995 1994
(000 Omitted)
<S> <C> <C>
10% Convertible subordinated notes $30,000 $30,000
Industrial Revenue Bonds 2,879 3,961
Capital lease obligations 306 975
33,185 34,936
Current maturities (9,164) (1,358)
$24,021 $33,578
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 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 $44,412,000 of retained
earnings.
The Company has an interest rate swap agreement which
effectively converts the interest rate on $25 million of
convertible notes from a fixed rate of 10% to fixed rates ranging
from 5.59% to 10.0%. At December 30, 1995 the interest rate under
this swap agreement approximated 10%. 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.
The Company had available unused lines of credit of
approximately $5,000,000 at December 30, 1995.
Long-term debt maturities are $9,164,000 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, 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.
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. The remedial investigations
and feasibility studies have been completed, and the results of
those studies forwarded to the EPA. The studies indicated a range
of viable remedial approaches, but agreement has not yet been
reached with the EPA on the final remediation approach.
Furthermore, the PRPs for these sites have not reached an agreement
on the allocation of costs between the PRPs. The Company believes
it either has no liability as a responsible party or that adequate
provisions have been recorded for current estimates of the
Company's liability and estimated legal costs associated with the
settlement of these claims. It is reasonably possible that the
Company's recorded estimate of its obligation may change in the
near term.
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 30, 1995 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 $2,174,000 in 1995, $2,502,000 in 1994 and
$3,416,000 in 1993. Future minimum lease payments under
noncancellable operating leases are $1,136,000 in 1996, $888,000 in
1997, $226,000 in 1998 and $29,000 in 1999.
9. Income Taxes
Pre-tax income reported by U.S. and foreign subsidiaries was
as follows:
</TABLE>
<TABLE>
Fiscal Year Ended
December 30, December 31, December 31,
1995 1994 1993
(000 Omitted)
<S> <C> <C> <C>
United States $24,390 $25,517 $17,933
Foreign -- 1,865 2,292
$24,390 $27,382 $20,225
The provision (benefit) for income taxes is summarized below:
Fiscal Year Ended
December 30, December 31, December 31,
1995 1994 1993
(000 Omitted)
Current:
U.S. federal $7,213 $ 8,713 $ 6,049
Foreign -- 484 465
State 1,020 1,480 645
8,233 10,677 7,159
Deferred:
U.S. federal (142) (947) (317)
Foreign -- 132 941
State 34 269 2
(108) (546) 626
$8,125 $10,131 $ 7,785
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 30, 1995, current
deferred income tax assets of $4,434,000 are classified as prepaid
expenses, and long-term U.S. deferred income tax assets of
$4,371,000 are classified as other assets.<PAGE>
<PAGE>
Deferred income taxes are comprised of the following at
December 30, 1995 and December 31, 1994:
December 30, December 31,
1995 1994
(000 Omitted)
Gross deferred tax liabilities
Property, plant and equipment $ 2,407 $ 2,079
Inventories 524 170
Other 580 585
3,511 2,834
Gross deferred tax assets
Pension and postretirement
benefit obligations 7,227 6,789
Restructuring reserve -- 687
Other accrued liabilities 4,958 3,895
Loss carryforwards 131 304
Foreign tax credit carryforward 375 --
12,691 11,675
Valuation allowance (375) --
Net deferred tax assets $ 8,805 $ 8,841
During 1995, the Company recorded a valuation allowance equal to
the foreign tax credit carryforward generated by the sale of its
Canadian subsidiary.
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:
</TABLE>
<TABLE>
Fiscal Year Ended
December 30, December 31, December 31,
1995 1994 1993
(000 Omitted)
<S> <C> <C> <C>
Tax at United States
statutory rate $8,537 $ 9,584 $7,079
State income taxes,
net of federal
benefit 685 1,137 421
Canadian rate
differential on
income -- 170 344
Research and
development
tax credits (150) (250) (250)
Non-taxable interest
income (455) (393) (188)
Gain on executive
life insurance (514) -- --
Other 22 (117) 379
$8,125 $10,131 $7,785
The Company possesses approximately $2,982,000 of U.S.
state income tax loss carryforwards which expire in 2007. The
foreign tax credit carryforwards expire in 2000.
10. Segment Information and Major Customers
The Company operates in predominately one industry segment in the
United States: the design, engineering and manufacture of certain
components sold to manufacturers in the ground transportation
industry.
Sales to three major customers, Ford Motor Company, Chrysler
Corporation, and General Motors Corporation, were approximately
69%, 11%, and 6%, respectively, of the Company's net sales in 1995
as compared to 71%, 12% and 4% in 1994 and 72%, 11% and 4% in 1993.
Accounts receivable from Ford Motor Company, Chrysler Corporation,
and General Motors Corporation approximated 85% of trade accounts
receivable at December 30, 1995 and 88% at December 31, 1994.
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. At December 30, 1995, there were 244,500
shares reserved for future grants.
In addition, the Company has outstanding under a 1984 Plan,
incentive stock options for 8,250 shares at an average exercise
price of $5.227. The 1984 Plan expired and no further options may
be granted under it.
The following table sets forth stock option activity for
1995.
Range of
Shares Prices
Stock options outstanding
at December 31, 1994 291,750 $5.227-$18.125
Options granted 271,500 12.375
Options exercised (7,500) 7.614
Options canceled (292,000) 12.375-18.125
Stock options outstanding
at December 30, 1995 263,750 5.227-18.125
The Company has an employee stock purchase plan and has
reserved 316,255 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 30, 1995, 133,745 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.
In 1996, the Company will adopt SFAS No. 123, "Accounting for
Stock Based Compensation" through disclosure only. On December
21, 1995, the Company announced that its Board of Directors adopted
a shareholders' rights plan. The Company adopted the plan to
protect shareholders against unsolicited attempts to acquire
control of the Company that do not offer what the Company believes
to be an adequate price to all shareholders. The rights were
issued to shareholders of record on January 22,1996 and will expire
on January 22, 2006.
The plan provides for the issuance of one right for each
outstanding share of the Company's Common Stock. The rights will
become exercisable only if a person or group acquires or announces
a tender offer to acquire 20% or more of the Company's outstanding
voting stock. Each right entitles the holder to buy one
one-hundredth share of a newly authorized series of preferred stock
from the Company. Also, after such acquisition all rights holders
except the acquirer will be entitled to purchase common shares at
one-half of the then current market price of the common shares.
Any activity regarding this plan would have a dilutive effect on
earnings per share calculations.
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. Significant related
party transactions in 1993 included product sales of $373,000,000
and product purchases of $124,000,000.
13. Quarterly Results of Operations (Unaudited)
The following table sets forth in summary form the quarterly
results of operations for the fiscal years ended December 30, 1995
and December 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
(Amounts in thousands except per share amounts)
1995
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Net sales $161,989 $158,749 $126,867 $148,409
Gross profit 17,013 15,362 9,119 13,804
Net income 6,256 4,068 2,300 3,641
Net income per share
Primary $ .59 $ .38 $ .22 $ .34
Fully diluted .52 .35 .22 .32
1994
First Second Third Fourth
Quarter Quarter Quarter Quarter
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
</TABLE>
14. Executive Life Insurance Proceeds
Included in other income in the third quarter of 1995 is $1,468,000
for the net gain from executive life insurance.
15. Disposal of Canadian Facility
Included in the first quarter of 1995 is a gain on the disposition
of Excel Metalcraft, Ltd., (Metalcraft) located in Aurora, Ontario
in the amount of$1,582,000 which amounts to 9 cents per share after
income taxes. This gain includes the return to profits of $970,000
of the restructuring reserve which was created in 1992. The final
phase of the restructuring was completed with the sale of the
shares of Metalcraft. Metalcraft had net sales of $935,000 in
1995, $20,494,000 in 1994 and $36,074,000 in 1993. Total assets of
the Canadian subsidiary were approximately $7,368,000 at December
31, 1994.
16. Subsequent Event
On March 4, the Company signed a definitive agreement to purchase
100% of the outstanding common stock of Anderson Industries, Inc.
(Anderson) for approximately $57,800,000 in cash, and warrants.
The warrants are for 381,000 shares of Excel common stock and are
exercisable at $13.25 per share for a period of five years from the
closing date of the purchase. Anderson, located in Rockford,
Illinois, is a holding company whose main asset is Atwood
Industries, Inc. Atwood Industries manufactures products for the
automotive, manufactured housing and recreational vehicle
industries and is headquartered in Rockford, Illinois. The Company
has negotiated a borrowing facility that becomes available
concurrent with the closing of the transaction. The transaction is
expected to close on or about March 31, 1996.
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 1996 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 of Executive Officers," "Summary
Compensation Table," "Options,""Pension Plan," "Deferred
Compensation Plans" and "Executive Separation Agreements"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 caption "Board Meetings and
Committees" 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 30, 1995 and December 31,
1994
Consolidated Statement of Income - Fiscal years ended December
30, 1995, December 31, 1994 and 1993
Consolidated Statement of Shareholders' Equity - Fiscal years
ended December 30, 1995, December 31, 1994 and 1993
Consolidated Statement of Cash Flows - Fiscal years ended December
30, 1995, December 31, 1994 and 1993
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedule
The following financial statement schedule is included with this
report:
Report of Independent Accountants on Financial Statement
Schedule 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
30, 1995.<PAGE>
<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 27, 1996 By: /s/ James O. Futterknecht
James O. Futterknecht,
Chairman of the Board,
President 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 27, 1996 /s/ James O. Futterknecht
James O. Futterknecht,
Chairman of the Board,
President and Chief
Executive Officer
(Principal Executive
Officer)
March 27, 1996 /s/ Joseph A. Robinson
Joseph A. Robinson,
Secretary-Treasurer
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
March 27, 1996 /s/ John G. Keane
John G. Keane, Director
March 27, 1996 /s/ Richard A. Place
Richard A. Place, Director
March 27, 1996 /s/ James K. Sommer
James K. Sommer, Director
March 27, 1996 /s/ Ralph R. Whitney
Ralph R. Whitney, Jr.,
Director<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Excel Industries, Inc.
Our audits of the consolidated financial statements referred to in
our report dated February 15, 1996, except for Note 16 which is
dated March 4, 1996, appearing on page 19 of the 1995 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 15, 1996<PAGE>
<PAGE>
<TABLE>
<CAPTION>
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II
Balance at Additions Balance
beginning charged end of
Classification of period expense Deductions* period
<S> <C> <C> <C> <C>
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
Year ended December 30, 1995
Allowance for uncollectible
accounts receivable $868,000 $ 8,000 $(151,000) $725,000
</TABLE>
* Primarily reflects write-offs of uncollectible accounts,
net of recoveries of amounts previously written off.<PAGE>
<PAGE>
EXHIBIT INDEX
Page No.
Exhibit In Manually
Number Description of Exhibit Signed Copy
(3.1) Articles of Incorporation of the Company as
amended effective January 5, 1996....
(3.2) Clause (h) of Article VI, Section 2 of the
Articles of Incorporation of the Company as
added effective January 5, 1996....
(3.3) Amendment to the Code of By-Laws of the
Company effective December 21, 1995....
(3.4) The Code of By-Laws of the Company as
amended effective December 21, 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 2-5, 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 3.4 above
(4.4) Rights Agreement between the Company and
Chemical Mellon Shareholder Services
L.L.C., as Rights Agent, was filed as
Exhibit 4 to the Company's Current Report
on Form 8-K filed January 8, 1996 and is
incorporated herein by reference
(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)* 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.
(10.11) 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
(10.12) 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.
(10.13)* Form of Executive Separation Agreements
between the Company and the following
persons: James O. Futterknecht, Jr.,
Joseph A. Robinson, Louis R. Csokasy,
James E. Crawford, Terrance L. Lindberg,
Michael C. Paquette and James M.
Krzyzewski....
(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
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
EXCEL INDUSTRIES, INC.
(AS AMENDED EFFECTIVE JANUARY 5, 1996)
ARTICLE I
Name
The name of the Corporation is Excel Industries, Inc.
(hereinafter referred to as the "Corporation").
ARTICLE II
Purposes
The purposes for which the Corporation is formed are, and
include, the transaction of any and all lawful business for which
corporations may be incorporated under The Indiana General
Corporation Act (hereinafter referred to as the "Act") including
without limitation the power to enter into a partnership.
ARTICLE III
Term of Existence
The period during which the Corporation shall continue as a
corporation is perpetual.
ARTICLE IV
Principal Office and Resident Agent
The post office address of the principal office of the
Corporation is 1120 North Main Street, Elkhart, Indiana 46514; and
the name and post office address of its resident agent in charge of
such office is James J. Lohman, 1120 North Main Street, Elkhart,
Indiana 46514.
ARTICLE V
Number of Shares
The number of shares which the Corporation shall have
authority to issue is 21,000,000 shares without par value.
ARTICLE VI
Terms of Shares
Section 1. Designation of Classes and the Number of Shares of
Each Class. The shares of authorized capital stock shall be
divided into 1,000,000 shares of preferred stock, without par
value, as hereinafter provided, and 20,000,000 shares of
commonstock, without par value, as hereinafter provided.
Section 2. Preferred Stock. The preferred stock may be issued
from time to time in one or more series, in such amounts and for
such consideration and with such designations, relative rights,
preferences, qualifications, limitations and restrictions as the
Board of Directors may determine, the authority for the making of
which determination is hereby expressly vested in such Board with
such designations, relative rights, preferences, qualifications,
limitations and restrictions of any and each such series to be
determined and stated by resolution of the Board of Directors prior
to the issuance of such series. The authority of the Board of
Directors with respect to determining and stating such
designations, relative rights, preferences, qualifications,
limitations and restrictions of each such series of preferred stock
shall include, without limitation, the determination of any or all
of the following, and the shares of any such series may vary from
the shares of any other such series in the following respects:
Clause (a). Designation and Number. The number of shares
constituting such series and the designation thereof to distinguish
the shares of such series from the shares of all other series; and
Clause (b). Dividends. The source, rate and dates of any
dividends payable with respect to the shares of such series,
provided, however, that no dividends shall be payable in respect of
such shares: (i) out of the surplus due to or arising from
unrealized appreciation in value or from a revaluation of assets,
or (ii) if the Corporation is or is thereby rendered insolvent, or
(iii) if the stated capital of the Corporation is or thereby
becomes impaired; whether any such dividends which may be payable
with respect to shares of such series shall be cumulative and if
so, the date from which any such dividends shall accumulate; and
the preference or preferences, if any, to be accorded dividends
payable with respect to the shares of such series; and
Clause (c). Redemption. The redemption price or prices
for such series, if redeemable, and the terms and conditions of
such redemption; and
Clause (d). Sinking Fund. The terms and amount of a
sinking fund, if any, provided for the redemption of shares of the
series; and
Clause (e). Rights of Purchase. The rights, if any, of
the Corporation to purchase for retirement, other than by way of
redemption, shares of any such series, and the terms and conditions
of any such purchase rights; and
Clause (f). Liquidation Preference. The preference, if
any, of shares of such series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation; and
Clause (g). Conversion. Whether or not the shares of
such series shall be convertible into common shares, or into shares
of any other series or number of series or into any other
securities, and if so, the terms and conditions upon which such
conversion may be effected.
Clause (h).Designation of Series A Junior
Participating Preferred Shares.
(i) Designation and Amount. There shall be a series of
shares of preferred stock that shall be designated as "Series A
Junior Participating Preferred Shares," and the number of shares
constituting such series shall be 200,000.
(ii) Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of shares of preferred stock ranking
prior and superior to the Series A Junior Participating Preferred
Shares with respect to dividends, the holders of shares of Series
A Junior Participating Preferred Shares, in preference to the
holders of shares of any class or series of shares of the
Corporation ranking junior to the Series A Junior Participating
Preferred Shares, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the 15th
day of January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Shares, in an amount per
share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter
set forth, the Adjustment Number (as defined below) times the
aggregate per share amount of all cash dividends, and the
Adjustment Number times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than
a dividend payable in shares of common stock or a subdivision of
the outstanding the shares of common stock (by reclassification or
otherwise), declared on the shares of common stock of the
Corporation (the "Common Shares") since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Junior Participating
Preferred Shares. The "Adjustment Number" shall initially be 100.
In the event the Corporation shall at any time after December 21,
1995 (the"Rights Declaration Date") (i) declare any dividend on
Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Shares as provided
in paragraph (A) above immediately after it declares a dividend or
distribution on the Common Shares (other than a dividend payable in
Common Shares); provided that, in the event no dividend or
distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series A Junior Participating Preferred Shares shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding Series A Junior Participating Preferred Shares from the
Quarterly Dividend Payment Date next preceding the date of issue of
such Series A Junior Participating Preferred Shares, unless the
date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of Series A Junior Participating Preferred Shares entitled
to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the Series A Junior Participating Preferred
Shares in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro
rata on a share by share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of Series A Junior Participating Preferred
Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
(iii) Voting Rights. The holders of Series A Junior
Participating Preferred Shares shall have the following voting
rights:
(A) Each Series A Junior Participating Preferred Share shall
entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the
shareholders of the Corporation.
(B) Except as otherwise provided herein or by law, the
holders of Series A Junior Participating Preferred Shares and the
holders of the Common Shares shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein or as provided by law, holders
of Series A Junior Participating Preferred Shares shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of the
Common Shares as set forth herein) for taking any corporate action.
(iv) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating
Preferred Shares as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on Series A Junior
Participating Preferred Shares outstanding shall have been paid in
full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares ranking junior (either as
to dividends or upon liquidation, dissolution or winding up)
to the Series A Junior Participating Preferred Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Shares,
except dividends paid ratably on the Series A Junior
Participating Preferred Shares and all such parity shares on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration any shares ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Shares,
provided that the Corporation may at any time redeem,
purchase or otherwise acquire any such parity shares in
exchange for any shares of the Corporation ranking junior
(both as to dividends and upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred
Shares; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred
Shares, or any shares ranking on a parity with the Series A
Junior Participating Preferred Shares, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series
or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
(v) Reacquired Shares. Any Series A Junior Participating
Preferred Shares purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of preferred
stock and may be reissued as part of a new series of shares of
preferred stock.
(vi) Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to
the holders of shares ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Shares unless, prior thereto, the holders
of Series A Junior Participating Preferred Shares shall have
received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to
the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made
to the holders of Series A Junior Participating Preferred Shares
unless, prior thereto, the holders of Common Shares shall have
received an amount per share (the"Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) the Adjustment Number. Following the payment of
the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Shares and the Common Shares,
respectively, holders of Series A Junior Participating Preferred
Shares and holders of the Common Shares shall receive their ratable
and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such
Preferred Shares and the Common Shares, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other
series of shares of preferred stock, if any, that rank on a parity
with the Series A Junior Participating Preferred Shares, then such
remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably
to the holders of the Common Shares.
(vii) Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the Common Shares are exchanged for or changed
into other shares or securities, cash and/or any other property,
then in any such case the Series A Junior Participating Preferred
Shares shall at the same time be similarly exchanged or changed in
an amount per share equal to the Adjustment Number times the
aggregate amount of shares, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for
which each Common Share is changed or exchanged.
(viii) No Redemption. The Series A Junior Participating
Preferred Shares shall not be redeemable. Notwithstanding the
foregoing sentence of this Section, the Corporation may acquire
Series A Junior Participating Preferred Shares in any other manner
permitted by law, and these Articles of Incorporation.
(ix) Ranking. The Series A Junior Participating Preferred
Shares shall rank junior to all other series of the Corporation's
preferred stock as to the payment of dividends and the distribution
of assets, unless the terms of any such series shall provide
otherwise.
(x) Amendment. At any time that any Series A Junior
Participating Preferred Shares are outstanding, these Articles of
Incorporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Shares so as
to affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding Series A Junior
Participating Preferred Shares, voting separately as a class.
(xi) Fractional Shares. Series A Junior Participating
Preferred Shares may be issued in fractions of a share that shall
entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate
in distributions and to have the benefit of all other rights of
holders of Series A Junior Participating Preferred Shares.
Section 3. Common Stock. The rights, privileges, limitations
and restrictions of the common stock shall be as follows:
Clause (a). Designation and Issuance of Shares. The
shares of common stock may be issued by the Corporation, and such
shares as are reacquired by the Corporation from time to time and
not canceled may be sold or otherwise disposed of, for such
consideration and upon such terms and conditions as may from time
to time be determined and fixed by the Board of Directors. The
consideration received by the Corporation for such shares shall be
allocated to stated capital and to capital surplus by resolution of
the Board of Directors prior to, or within a period of sixty (60)
days after, the issuance of such shares. The stated capital of the
Corporation may be increased from time to time by resolution of the
Board of Directors directing a transfer from capital surplus or
earned surplus.
Clause (b). Dividends. The holders of shares of the
common stock of the Corporation shall be entitled to receive such
dividends as may be declared at the discretion of the Board of
Directors (after giving due consideration to the needs of the
Corporation for adequate reserves and working capital) to be paid
upon the common stock out of the unreserved and unrestricted earned
and/or capital surplus available for the payment of any such
dividends which may be payable in cash, in property or in shares of
the Corporation of any class or series; provided, however, that no
dividends shall be payable upon the shares of common stock of the
Corporation: (i) out of surplus due to or arising from unrealized
appreciation in value or from a revaluation of assets or (ii) if
the Corporation is, or is thereby rendered, insolvent, or (iii) if
the stated capital of the Corporation is, or thereby becomes,
impaired; or (iv) if the remaining net assets of the Corporation
would thereafter be below the aggregate preferential amount payable
in the event of voluntary liquidation to the holders of shares
having preferential rights to the assets of the Corporation upon
liquidation; or (v) in violation of any provisions with respect to
the preferred stock or any series thereof. In the computation of
earned surplus available for dividends, no deduction need be made
for the depletion by sale or lapse of time of wasting assets
intended for sale in the ordinary course of business or property
having a limited life.
Clause (c). Liquidation. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of the shares of common stock shall be
entitled, after payment of the debts and other liabilities of the
Corporation including without limitation all obligations to holders
of shares of stock having priority over the common stock in such
event, to share ratably in the net assets of the Corporation.
Section 4. No Preemptive Rights. The holders from time to
time of the common stock and, except as may be otherwise provided
by the Board of Directors in accordance with the provisions of
Section 2 of this Article VI, the holders of the preferred stock of
any series shall have no preemptive rights to subscribe to or
purchase any common stock, any series of preferred stock or any
other securities of the Corporation.
Section 5. Equitable Interests and Other Claims or Interests.
The Corporation, to the extent permitted by law, shall be entitled
to treat the person in whose name any share or right is registered
on the books of the Corporation as the owner thereof for all
purposes, and shall not be bound to recognize any equitable or any
other claim to, or interest in, such share or right on the part of
any other person, whether or not the Corporation shall have notice
thereof.
ARTICLE VII
Voting and Redemption Rights
Section 1. Voting Rights. Every holder of shares of the
capital stock, without regard to class, of the Corporation shall
have the right, at every shareholders' meeting, to one vote for
each share of common or preferred stock standing in his name on the
books of the Corporation, except only as otherwise provided in the
Act.
Section 2. Redemption Rights. Every holder of common stock
of the Corporation, other than a Controlling Person (as hereinafter
defined) or a transferee of the Controlling Person, shall have the
right, and the Corporation shall have the obligation, to redeem his
shares in accordance with the following terms and provisions:
Clause (a). Definitions. For purposes of this Article VII,
Section 2: (i) the term "shares" shall mean shares of the common
stock of the Corporation; (ii) the term "ownership interest" shall
mean and include any direct or indirect ownership of shares, any
right to vote or to control the voting of shares whether or not
owned, any contractual right to acquire any director indirect
ownership of shares and any contractual right to acquire any right
to vote or to control the voting of shares whether or not owned;
(iii) the term "person" shall mean and include any individual,
corporation, partnership, trust or other entity and if two or more
such persons are acting in concert for the purpose of acquiring
ownership interests in the shares, they shall jointly and severally
be included in the term "person"; (iv) the term "Controlling
Person" shall mean any person who has an ownership interest in 40%
or more of the outstanding shares of the Corporation and who has
acquired any of such shares as a result of a Unilateral Tender
Offer; (v) the term "outstanding shares" shall be deemed to include
any shares which the Controlling Person has a right to acquire from
the Corporation by reason of any option, conversion right, warrant
or other right but not to include any other authorized but unissued
shares; (vi) the term "Unilateral Tender Offer" shall mean any
tender offer to purchase shares for cash, securities or other
consideration excluding only tender offers which, prior to being
made or while pending, have been expressly recommended by the Board
of Directors of the Corporation for acceptance by the shareholders
of the Corporation and such recommendation has been communicated to
the shareholders prior to the expiration of such tender offer,
provided, however, that tender offers which are approved or
recommended by a Board of Directors controlled by a Controlling
Person shall not be excluded from the definition of a Unilateral
Tender Offer; (vii) with respect to any shares acquired by a
Controlling Person in a Unilateral Tender Offer pursuant to which
the consideration paid is, in whole or in part, something other
than cash, the term "cash value" shall mean such amount as is
attributed to such consideration by the Board of Directors of the
Corporation after taking such action as in its judgment the Board
of Directors deems appropriate in order to establish the true value
of such consideration, provided, however, that such amount shall
not be less than the cash value, if any, attributed to such
consideration by the Controlling Person; and (viii) the term
"market price" shall mean as to any particular trading day, the
highest sale price as may from time to time be published with
respect to any trading of the shares on the American Stock Exchange
or any other national exchange.
Clause (b). Events Creating Rights of Redemption. Every
holder of shares, other than a Controlling Person or a transferee
of a Controlling Person, shall have the right, and the Corporation
shall have the obligation, to redeem his shares in the manner and
at the price set forth in Clause (c) of this Article VII, Section
2, upon the occurrence of any of the following events ("Event(s) of
Redemption"): (i) in the event, and at such time as, any person
becomes a Controlling Person; (ii) in the event any Controlling
Person makes any further Unilateral Tender Offer or otherwise
acquires any additional ownership interest in shares; and (iii) in
the event any Controlling Person causes or permits the Board of
Directors or the management of the Corporation to adopt any
resolution or take any other action pursuant to which it is
proposed or intended to merge or consolidate the Corporation with
or to sell the Corporation's assets to another corporation or
entity which is or will be controlled by the Controlling Person.
Clause (c). Redemption Price and the Procedure for Exercising
Redemption Rights. The price at which each share maybe redeemed
pursuant to this Article VII, Section 2, shall be an amount equal
to the greater of (i) the highest price or cash value per share at
which outstanding shares were acquired or were offered to be
acquired by the Controlling Person pursuant to any Unilateral
Tender Offer regardless of when such shares were acquired or such
offer was made; or (ii) the highest market price during the
eighteen (18) months prior to the date on which the Event of
Redemption occurred; provided, however, that in no event shall the
redemption price be less than the book value per share as of the
last day of the fiscal year quarter immediately preceding the Event
of Redemption as determined in accordance with generally accepted
accounting principles applied on a consistent basis and, if
applicable, as reflected in the Corporation's last annual report to
shareholders as adjusted by subsequent quarterly reports. As soon
as practicable after the Corporation has knowledge or has good
reason to believe that an Event of Redemption has occurred, the
Corporation shall give written notice, by first class mail, postage
prepaid, at the address shown on the records of the Corporation, to
each holder of record of shares, other than a Controlling Person or
any transferee of a Controlling Person, and to every other person
known to have any rights to redeem shares pursuant to this Article
VII, Section 2. Such notice shall advise each such holder of shares
of his right to have his shares redeemed, the redemption price at
which the shares may be redeemed and the procedure the Board of
Directors of the Corporation has established for effectuating the
redemption of shares. Such notice may set forth a period of time
in which existing redemption rights must be exercised or forfeited,
provided, that such period of time shall not be less than thirty
(30) days. The giving of any such notice by the Corporation shall
not be a condition precedent to the valid exercise of the
redemption rights created pursuant to this Article VII, Section 2,
and in the event the Corporation does not give any notice pursuant
to this Clause (c) within a reasonable time after the Corporation
knows or should know that an Event of Redemption has occurred, then
any holder of shares who is entitled to have his shares redeemed
pursuant to this Article VII, Section 2, may give the Corporation
notice setting forth his exercise of his redemption right and the
procedure to be followed in effectuating such redemption. The
Corporation shall be obligated to comply with any such shareholder
notice provided that it is in accordance with this Article VII,
Section 2 and provided that it sets forth a reasonable procedure to
be followed. All shares which are redeemed by the Corporation
pursuant to this Article VII, Section 2, shall thereupon be
retired.
Clause (d). Other Provisions Governing the Rights of
Redemption Hereby Created. The rights of redemption created by
this Article VII, Section 2: (i) shall extend to the benefit of
any person who, as of the date on which an Event of Redemption
occurs, is a holder of a security convertible into shares or of any
option, warrant or other right to acquire shares; that is, any such
holder, other than a Controlling Person or a transferee of a
Controlling Person, may, following the conversion of such security
or the exercise of such option, warrant or other right, redeem the
shares thereby acquired in the manner provided in this Article VII,
Section 2; (ii) shall not be forfeited or terminated with respect
to any shares unless such forfeiture and termination results from
the failure of the holder of record as of the date of an Event of
Redemption or any transferee of such holder to exercise his right
of redemption after having received a notice from the Corporation
pursuant to Clause (c) of this Article VII, Section 2, specifying
a period of time, not less than thirty (30) days, in which such
redemption rights must be exercised or forfeited; and (iii) shall
not serve to preclude any shareholder of the Corporation from
pursuing any dissenting shareholder rights or any other rights
which he may have as a matter of law.
Clause (e). Limitation on Amendment, Alteration or
Repeal. In the event that any person has become a Controlling
Person and thereafter, for so long as there continues to be a
Controlling Person, this Article VII, Section 2 shall not be
amended, altered or repealed except upon the affirmative vote of
85% of the outstanding shares of the Corporation, provided,
further, that no amendment, alteration or repeal of this Article
VII, Section 2, shall in any manner adversely affect any rights of
redemption then in existence.
Clause (f). Severability. In the event any court
determines that any provision of this Article VII, Section 2, is
invalid or in any way unenforceable, such determination shall not
serve to invalidate any other provision of this Article VII,
Section2.
ARTICLE VIII
Stated Capital
The stated capital of the Corporation is Two Hundred
Forty-Eight Thousand Two Hundred Fifty Dollars ($248,250.00).
ARTICLE IX
Data Respecting Directors
Section 1. Number. The number of directors constituting the
Board of Directors of the Corporation shall be four (4). The
number of directors may from time to time be fixed by the By-Laws
of the Corporation at any number not less than three (3) nor more
than fifteen (15). If and whenever the Code of By-Laws does not
contain a provision specifying the number of directors of the
Corporation, the number shall be four (4).
Section 2. Qualifications. Directors need not be
shareholders of the Corporation. A majority of the directors at
any time shall be citizens of the United States.
ARTICLE X
Further Data Respecting Directors
The names and post office addresses of the Board of Directors
of the Corporation are as follows:
Number, Street
Name or Building City & State
Ralph R. Whitney, Jr. 346 E. Lancaster Ave. Wynnewood, PA
Apt. 304 19096
Robert J. Kennedy One Warwick Circle Springfield, NJ
07081
James J. Lohman 54556 Homeland Rd. Elkhart, IN
46514
Gerald G. Fellows O.F. Mossberg & Sons, Inc.North Haven, CT
Box 497 06473
ARTICLE XI
Officers
The names and post office addresses of the President and
Secretary of the Corporation are:
Number, Street
Name or Building City & State
James J. Lohman, 54556 Homeland Rd. Elkhart, IN
President 46514
William M. Gude, 54144 Laguna Dr. Bristol, IN
Secretary 46507
ARTICLE XII
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 1. Meetings of Shareholders. 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
respective notices, or waivers of notice, thereof. Any action
which may be taken at a meeting of the shareholders may be taken
without a meeting if, prior to such action, a consent in writing,
setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter
thereof, and such written consent is filed with the minutes of the
proceedings of the shareholders.
Section 2. Meetings of Directors. Meetings of the directors
of the Corporation shall be held at such place, without or without
the State of Indiana, as may be specified in the respective
notices, or waivers of notice, thereof. 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 of prior
to such action a written consent thereto is signed by all members
of the Board or of such committee, as the case may be, and such
written consent is filed with the minutes of such Board or
committee. Any or all members of the Board of Directors or of a
committee designated by the Board may participate in a meeting of
the Board or of any such committee by means of a conference
telephone or similar communications equipment by which all persons
participating in the meeting can communicate with each other, and
participation in this manner constitutes present in person at the
meeting.
Section 3. Code of By-Laws. The Board of Directors of the
Corporation shall have power, without the assent or vote of the
shareholders, to make, alter, amend or repeal the Code of By-Laws
of the Corporation, but the affirmative vote of a majority of the
members of the Board of Directors, for the time being, shall be
necessary to effect any alteration, amendment or repeal. If the
Code of By-Laws for the time being in force so provides, the Board
of Directors may designate two or more of its number to constitute
an Executive Committee, which Committee, to the extent provided in
the Code of By-Laws, shall have and exercise all the authority of
the Board of Directors in the management of the Corporation, and
have power to authorize the execution of all papers or documents
which may require it.
Section 4. Interest of Directors in Contracts. Any contract
or other transaction between the Corporation and one or more of its
directors, or between the Corporation and any firm of which one or
more of its directors are members or employees, or in which they
are interested, or between the Corporation and any corporation or
association of which one or more of its directors are stockholders,
members, directors, officers or employees, or in which they are
interested, shall be valid for all purposes,not withstanding the
presence of such director or directors at the meeting of the Board
of Directors which acts upon, or in reference to, such contract or
transaction and notwithstanding his or their participation in such
action, if the fact of such interest shall be disclosed or known to
be the Board of Directors and the Board of Directors shall
authorize, approve and ratify such contract or transaction by a
vote of a majority of the directors present, such interested
director or directors to be counted in determining whether a quorum
is present, and to be counted in calculating the majority of such
quorum necessary to carry such vote. This Section of this Article
shall not be construed to invalidate any contract or other
transaction with should otherwise be valid under the common and
statutory law applicable thereto.
Section 5. Additional Powers of Directors. In addition to
the powers and authorities hereinabove or by statute expressly
conferred, the Board of Directors is hereby authorized to exercise
all such powers and do all such acts and things as may be exercised
or done by a corporation organized and existing under the
provisions of the Act.
Section 6. Limitation of Liability and Indemnification of
Officers and Directors. No officer or director of the Corporation
shall be liable to the Corporation for any loss or damage suffered
by it on account of any action taken or omitted to be taken by him
as a director, officer or employee of the Corporation in good faith
if such person:
(i) exercised or used the same degree of care
and skill as a prudent man would have exercised or used
under the circumstances in the conduct of his own affairs;
or
(ii) took or omitted to take such action in
reliance upon the advice of counsel for the Corporation or
upon statements made or information furnished by officers
or employees of the Corporation which he had reasonable
grounds to believe, or upon a financial statement of the
Corporation prepared by an officer or employee of the
Corporation in charge of its accounts, or a public
accountant or firm of public accountants; or
(iii) in good faith considered the assets to be of
their book value or followed what he believed to be sound
accounting and business practice.
The Corporation shall indemnify any person against whom there
is instituted or threatened any claim, action, suit or proceeding,
whether civil or criminal, by reason of the fact that he, his
testator or intestate is or was a director, member of an executive
committee or officer of the Corporation, or of any corporation
which he served as such at the request of the Corporation, against
any and all liability, reasonable expenses and costs of any nature
(excluding only accounts paid in settlement and including without
limitation any and all attorneys' fees, judgments, fines, penalties
and court costs) actually incurred by him in connection with the
defense of such claim, action, suit or proceeding, or in connection
with any appeal therein, except in relation to matters as to which
it shall be finally adjudged in such action, suit or proceeding
that such person, his testator or intestate is liable for gross
negligence or willful misconduct in the performance of his duties.
The Corporation may also reimburse to any such person any amount
paid in settlement of any such claim, action, suit or proceeding,
if it shall be found by a majority of a committee composed of the
directors not involved in the matter in controversy (whether or not
a quorum) that it is in the interests of the Corporation that such
settlement be made and that such person, his testator or intestate
was not guilty of gross negligence or willful misconduct.
If several claims, issues or matters of action are involved,
any such person may be entitled to indemnification as to some
matters even though he is not so entitled as to others. The
Corporation may advance expenses to, or where appropriate may at
its expense undertake the defense of, any such person upon receipt
of an undertaking by or on behalf of such person to repay such
expenses if it should ultimately be determined that he is not
entitled to indemnification under this Article.
The provisions of this Section shall be in addition to and not
in limitation of any other right of indemnification and
reimbursement or limitations of liability to which any director,
member of an executive committee or officer may be entitled as a
matter of law. The provisions of this Section shall apply whether
or not at the time of reimbursement the person reimbursed is then
a director, member of an executive committee or officer of the
Corporation. Notwithstanding any repeal of this Section or other
amendment thereof, its provisions shall be binding upon the
Corporation (subject only to the exceptions hereinabove set forth)
as to all actions, suits or proceedings and expenses connected
therewith, judgments and settlements thereof, as above provided,
arising out of matters which occur during or are referable to the
period prior to any such repeal or amendment of this Section.
By vote of the Board of Directors, the Corporation may assent
to the adoption of a by-law or charter provision, having
substantially the provisions of this Section, by any subsidiary,
whether or not wholly owned.
Section 7. Amendment of Articles of Incorporation. Subject to
the express provisions of these Articles of Incorporation, the
Corporation reserves the right to amend, alter, change or repeal
any provisions contained in these Articles of Incorporation in the
manner now or hereafter prescribed by the provisions of The Indiana
General Corporation Act, as amended, or any other pertinent
enactment of the General Assembly of the State of Indiana; and all
rights and powers conferred hereby on shareholders, directors or
officers are subject to this reserved power.
ARTICLE XIII
Former Articles
These Articles of Incorporation, as amended, supersede and
take the place of the heretofore existing Articles of Incorporation
EXHIBIT 3.2
Clause (h). Designation of Series A Junior
Participating Preferred Shares.
(i) Designation and Amount. There shall be a series ofshares
of preferred stock that shall be designated as "Series A Junior
Participating Preferred Shares," and the number of shares
constituting such series shall be 200,000.
(ii) Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of shares of preferred stock ranking
prior and superior to the Series A Junior Participating Preferred
Shares with respect to dividends, the holders of shares of Series
A Junior Participating Preferred Shares, in preference to the
holders of shares of any class or series of shares of the
Corporation ranking junior to the Series A Junior Participating
Preferred Shares, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the 15th
day of January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Shares, in an amount per
share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter
set forth, the Adjustment Number (as defined below) times the
aggregate per share amount of all cash dividends, and the
Adjustment Number times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than
a dividend payable in shares of common stock or a subdivision of
the outstanding the shares of common stock (by reclassification or
otherwise), declared on the shares of common stock of the
Corporation (the "Common Shares") since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Junior Participating
Preferred Shares. The "Adjustment Number" shall initially be 100.
In the event the Corporation shall at any time after December 21,
1995 (the "Rights Declaration Date") (i) declare any dividend on
Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Shares as provided
in paragraph (A) above immediately after it declares a dividend or
distribution on the Common Shares (other than a dividend payable in
Common Shares); provided that, in the event no dividend or
distribution shall have been declared on the Common Shares during
the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series A Junior Participating Preferred Shares shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding Series A Junior Participating Preferred Shares from the
Quarterly Dividend Payment Date next preceding the date of issue of
such Series A Junior Participating Preferred Shares, unless the
date of issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of Series A Junior Participating Preferred Shares entitled
to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the Series A Junior Participating Preferred
Shares in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro
rata on a share by share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of Series A Junior Participating Preferred
Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
(iii) Voting Rights. The holders of Series A Junior
Participating Preferred Shares shall have the following voting
rights:
(A) Each Series A Junior Participating Preferred Share shall
entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the
shareholders of the Corporation.
(B) Except as otherwise provided herein or by law, the
holders of Series A Junior Participating Preferred Shares and the
holders of the Common Shares shall vote together as one class on
all matters submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein or as provided by law, holders
of Series A Junior Participating Preferred Shares shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of the
Common Shares as set forth herein) for taking any corporate action.
(iv) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating
Preferred Shares as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on Series A Junior
Participating Preferred Shares outstanding shall have been paid in
full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Shares;
(ii) declare or pay dividends on or make any other
distributions on any shares ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Shares,
except dividends paid ratably on the Series A Junior
Participating Preferred Shares and all such parity shares on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration any shares ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Shares,
provided that the Corporation may at any time redeem,
purchase or otherwise acquire any such parity shares in
exchange for any shares of the Corporation ranking junior
(both as to dividends and upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred
Shares; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred
Shares, or any shares ranking on a parity with the Series A
Junior Participating Preferred Shares, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result
in fair and equitable treatment among the respective series
or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
(v) Reacquired Shares. Any Series A Junior Participating
Preferred Shares purchased or otherwise acquired by the Corporation
in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of preferred
stock and may be reissued as part of a new series of shares of
preferred stock.
(vi) Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to
the holders of shares ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Shares unless, prior thereto, the holders
of Series A Junior Participating Preferred Shares shall have
received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to
the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made
to the holders of Series A Junior Participating Preferred Shares
unless, prior thereto, the holders of Common Shares shall have
received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) the Adjustment Number. Following the payment of
the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Shares and the Common Shares,
respectively, holders of Series A Junior Participating Preferred
Shares and holders of the Common Shares shall receive their ratable
and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such
Preferred Shares and the Common Shares, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other
series of shares of preferred stock, if any, that rank on a parity
with the Series A Junior Participating Preferred Shares, then such
remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably
to the holders of the Common Shares.
(vii)Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the Common Shares are exchanged for or changed
into other shares or securities, cash and/or any other property,
then in any such case the Series A Junior Participating Preferred
Shares shall at the same time be similarly exchanged or changed in
an amount per share equal to the Adjustment Number times the
aggregate amount of shares, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for
which each Common Share is changed or exchanged.
(viii) No Redemption. The Series A Junior Participating
Preferred Shares shall not be redeemable. Notwithstanding the
foregoing sentence of this Section, the Corporation may acquire
Series A Junior Participating Preferred Shares in any other manner
permitted by law, and these Articles of Incorporation.
(ix) Ranking. The Series A Junior Participating Preferred
Shares shall rank junior to all other series of the Corporation's
preferred stock as to the payment of dividends and the distribution
of assets, unless the terms of any such series shall provide
otherwise.
(x) Amendment. At any time that any Series A Junior
Participating Preferred Shares are outstanding, these Articles of
Incorporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series A Junior Participating Preferred Shares so as
to affect them adversely without the affirmative vote of the
holders of a majority or more of the outstanding Series A Junior
Participating Preferred Shares, voting separately as a class.
(xi) Fractional Shares. Series A Junior Participating
Preferred Shares may be issued in fractions of a share that shall
entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate
in distributions and to have the benefit of all other rights of
holders of Series A Junior Participating Preferred
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
December 21, 1995, and that such resolutions have not been
rescinded or modified:
RESOLVED, That Article XIII of the Code of By-Laws of
the Corporation is hereby amended by
adding a new Section 6 thereto to read as
follows:
Section 6. The provisions of that
certain Rights Agreement dated
December 21, 1995, by and between
the Corporation and Chemical
Mellon Shareholder Services L.L.C.
are incorporated in and made a part
of this Code of By-Laws as if set
forth in full herein.
Dated this 21st day of December, 1995.
/s/ Joseph A.Robinson
Joseph A.Robinson
EXHIBIT 3.4
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
ofsuch 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 andshall
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.
Section 6. The provisions of that certain Rights Agreement
dated December 21, 1995, by and between the Corporation and
Chemical Mellon Shareholder Services L.L.C. are incorporated in and
made a part of this Code of By-Laws as if set forth in full herein.
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
EXHIBIT 10.13
Form of Executive Separation Agreement
The Company has entered into Executive Separation Agreements
in the following form with each of the following officers:
James O. Futterknecht, Jr.
Joseph A. Robinson
James E. Crawford
Louis R. Csokasy
Terrance E. Lindberg
Michael C. Paquette
James M. Krzyzewski<PAGE>
<PAGE>
EXECUTIVE SEPARATION AGREEMENT
THIS AGREEMENT, dated and effective as of the ____ day
of__________________, ____, is made and entered into by and between
EXCEL INDUSTRIES, INC., an Indiana corporation ("Excel"),
and_________________________________ (the "Executive").
RECITALS
A. The Executive has made and is expected to make a major
contribution to the profitability, growth and financial strength of
Excel.
B. Excel considers the continued services of the Executive
to be in the best interests of Excel and its shareholders and
desires to assure the continued services of the Executive on behalf
of Excel on an objective and impartial basis and without
distraction or conflict of interest in the event of an attempt to
change control of Excel.
C. The Executive is willing to remain in the employ of Excel
upon the understanding that Excel will provide him with income
security upon the terms and subject to the conditions reflected
herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties
hereto agree as follows:
Section 1. Payment of Amounts to Executive. Excel will pay
to the Executive the benefits described in Section 2 hereof in the
event that: (a) a Change in Control (as defined in Section 3
hereof) of Excel occurs and (b) the Executive's employment with
Excel is terminated within two years after the Change in Control
occurs either (i) by Excel for any reason other than Serious
Executive Misconduct (as defined in Section 4 hereof), death,
normal retirement or total and permanent disability within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"), or (ii) by the Executive for Good Reason
(as defined in Section 5 hereof).
Section 2. Benefits to be Paid to Executive. If required
pursuant to the terms of Section 1 of this Agreement, Excel will
pay to the Executive the benefits in the time and manner described
as follows:
Section 2.01. Salary and Bonus. Excel will pay to the
Executive within ten days of the termination of his employment any
amount of salary and bonus or incentive compensation due, and any
portions thereof earned or accrued but not yet due, to the
Executive at the time of the termination of his employment. In
addition, with respect to any bonus or incentive compensation based
upon performance goals for a fiscal year or another period of time
which has not then expired, Excel shall, within sixty (60) days
following the expiration of such fiscal year or other period of
time, pay to the Executive the pro rata portion of any such bonus
or incentive compensation applicable to the portion of such fiscal
year or the period of time prior to the termination of employment.
Excel will also pay to the Executive as severance compensation
in a lump-sum payment within thirty (30) days of the termination of
his employment an amount equal to 2.95 times the Executive's
average annual compensation paid by Excel which was includible in
the gross income of the Executive for federal income tax purposes
for the most recent five taxable years of the Executive ending
before the date on which the Change in Control occurred or if the
Executive did not perform personal services for Excel for all of
such five-year period, such portion of such five-year period during
which the Executive performed personal services for Excel.
Section 2.02. Retirement Plans. Until the earlier of the date
which is three years after the termination of the Executive's
employment or the date of death of the Executive, Excel will
maintain in full force and effect for the continued benefit of the
Executive each employee pension benefit plan (as such term is
defined in Section 1002 ofTitle 29 of the United States Code, as
amended) in which the Executive is entitled to participate
immediately prior to the date of his termination; provided,
however, that if the Executive is a participant in Excel's 1989
Deferred Compensation Plan (as amended, the "Deferred Compensation
Plan") at the time the Executive receives a lump-sum payment
pursuant to the second paragraph of Section 2.01 of this Agreement,
the Executive may not elect early retirement under the Deferred
Compensation Plan prior to the date which is three years after the
date of the Executive's termination of employment. If the terms of
any such plan of Excel do not permit continued participation by the
Executive, Excel will arrange to provide the Executive a benefit
substantially similar to and at least as favorable as the
incremental benefit which the Executive would have been entitled to
receive under such Excel plan had the participation by the
Executive in such plan continued from the date of the Executive's
termination of employment until a date three years thereafter,
calculated by assuming that the Executive's annual earnings during
such three-year period are equal to Executive's annual earnings for
the last full calendar year ending before the date of the
Executive's termination of employment. Benefits under the
preceding sentence may not be paid prior to the earlier of (i) the
date which is three years after the date of the Executive's
termination of employment or (ii) the date the Executive attains
normal retirement age under such plan.
Section 2.03. Disability and Medical Insurance Benefits.
Until the earlier of the date which is three years after the
termination of the Executive's employment or the date of death of
the Executive, Excel will maintain in full force and effect all
disability and medical insurance policy, plan or program coverage
benefits for the Executive which the Executive was entitled to
immediately prior to the date of his termination. If the terms of
any disability or medical insurance policy, plan or program
maintained by Excel do not permit the continued coverage of and
participation by the Executive, then Excel will arrange to provide
to the Executive a benefit substantially similar to and at least as
favorable as, the incremental benefit which the Executive would
have been entitled to receive under any such Excel policy, plan or
program had the coverage and participation by the Executive in such
policy, plan or program continued from the date of the Executive's
termination of employment until a date three years thereafter.
The Executive shall also have the option, in lieu of the
continuation of benefits for a three year period as described
above, to have assigned to him at no cost and with no apportionment
of prepaid premiums any assignable disability or medical insurance
policy specifically relating to the Executive which is owned by
Excel.
Section 3. Definition of Change in Control. For purposes of
this Agreement, the term "Change in Control" shall mean the
occurrence of any of the following: (a) the consummation of a
merger or consolidation of Excel with any other entity
("Reorganization"); (b) the sale, lease, exchange or transfer of
all or substantially all of Excel's assets ("Asset Transfer"); (c)
the approval by the shareholders of Excel of any plan or proposal
for the liquidation or dissolution of Excel; (d) the acquisition
(whether in one transaction or a series of transactions) by any
person, other than a trustee of any employee benefit plan of Excel,
of thirty percent (30%) or more of the outstanding voting power of
Excel's securities unless such acquisition was approved by the
Board of Directors before the acquiring person became the
beneficial owner of ten percent (10%) or more of the outstanding
voting power of Excel securities; or (e) individuals who are
members of the Board of Directors of Excel on the date hereof
("Incumbent Directors") cease for any reason to constitute a
majority of the members of the Board of Directors, provided that
any new director whose election to the Board of Directors is
approved by at least two-thirds (2/3) of the Incumbent Directors
then in office shall thereafter be considered an Incumbent
Director. The foregoing notwithstanding, the following events
shall not constitute a Change in Control:
(x) any acquisition of securities by any person directly
from Excel;
(y) any acquisition of securities by Excel; and
(z) any Reorganization or Asset Transfer if, following
such Reorganization or Asset Transfer (i) more than
fifty percent (50%) of the voting power of the
resulting corporation (whether Excel or
another corporation) or transferee is beneficially
owned by the beneficial owners of the voting shares
of Excel immediately prior to such transaction,
excluding shares received by such Excel
shareholders as a result of their interests in other
entities party to such transaction; (ii) no person
beneficially owning less than thirty
percent (30%) of the outstanding voting shares of
Excel immediately prior to such transaction,
beneficially owns more than thirty percent (30%) of
the voting power of the resulting
corporation or the transferee; and (iii) at least
a majority of the members of the board of directors
of the resulting corporation or the transferee were
Incumbent Directors at the time of the execution
of the agreement providing for such transaction.
Section 4. Definition of Serious Executive Misconduct. For
purposes of this Agreement, the term "Serious Executive Misconduct"
shall mean an act or acts by the Executive which: (a) would
constitute a felony under Indiana law; or (b) were dishonest and
which resulted or were intended by the Executive to result directly
or indirectly in the personal enrichment of the Executive at
Excel's expense.
Section 5. Definition of Good Reason. For purposes of this
Agreement, the Executive shall have "Good Reason" to terminate his
employment with Excel if:
(a) the Executive is assigned any duties or responsibilities
which are inconsistent with his position, authority,
duties, responsibilities or status on the date of this
Agreement, or his reporting responsibilities or titles in
effect at such time are changed, in either case resulting
in a diminution of the Executive's position, authority,
duties, responsibilities or status;
(b) the Executive's base compensation is reduced or he
experiences in any year a reduction in the ratio of his
incentive and bonus compensation to his base
compensation in excess of the reduction which would have
occurred under the incentive and bonus formula in effect
immediately prior to the Change in Control; or
(c) the Executive is transferred to a principal work location
which would reasonably require a change in the
Executive's residence.
Section 6. Term. The term of this Agreement (the "Term")
shall begin on the date of this Agreement and shall continue until
December 31, 1998, and thereafter, this Agreement shall be
automatically renewed for successive one-year terms unless
terminated by either party giving the other written notice of
termination at least ninety (90) days prior to the expiration of
such original term or any such renewal term; provided, however,
that if a Change in Control occurs on or before December 31, 1998
or on or before the expiration of any renewal term, the Term of
this Agreement shall continue until the date which is three years
after the anniversary date of this Agreement immediately following
the date on which a Change in Control occurs.
Section 7. Enforcement of Agreement. Excel is aware that
upon the occurrence of a Change in Control the Board of Directors
or a shareholder of Excel may then cause or attempt to cause Excel
to refuse to comply with its obligations under this Agreement, or
make, cause or attempt to cause Excel to institute, or may
institute litigation seeking to have this Agreement declared
unenforceable, or may take or attempt to take other action to deny
the Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated.
It is the intent of Excel that the Executive not be required to
incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because
the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be
bound to negotiate any settlement of his rights hereunder under
threat of incurring such expenses.
Accordingly, if following a Change in Control it should appear
to the Executive that Excel has failed to comply with any of its
obligations under this Agreement or in the event that Excel or any
other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from the Executive the
benefits entitled to be provided to the Executive hereunder, and
provided that Executive has complied with all of his obligations
under this Agreement, then: (a) Excel irrevocably authorizes the
Executive from time to time to retain counsel of his choice at the
expense of Excel as provided in this Section 7 to represent the
Executive in connection with the initiation or defense of any
litigation or other legal action whether by or against Excel or any
Director, officer, shareholder, or other person affiliated with
Excel, in any jurisdiction notwithstanding any existing or prior
attorney-client relationship between Excel and such counsel; and
(b) Excel irrevocably consents to the Executive entering into an
attorney-client relationship with such counsel.
The reasonable fees and expenses of counsel selected from time
to time by the Executive as hereinabove provided, and all other
costs and expenses (including court costs) incurred by the
Executive as a result of any claim, action or proceeding arising
out of, or challenging the validity, admissibility or
enforceability of this Agreement or any provision hereof, shall be
paid or reimbursed to the Executive by Excel on a regular, periodic
basis upon presentation by the Executive of a statement or
statements prepared by his counsel in accordance with such
counsel's customary practices, up to a maximum aggregate amount of
$400,000.
Section 8. Severance Pay; No Duty to Mitigate. All amounts
payable to the Executive under this Agreement shall not be treated
as damages but as severance compensation to which the Executive is
entitled by reason of termination of his employment in the
circumstances contemplated by this Agreement. The Executive shall
not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or
otherwise. Excel shall not be entitled to set off against the
amounts payable to the Executive any amounts earned by the
Executive in other employment after termination of his employment
with Excel, or any amounts which might have been earned by the
Executive in other employment had he sought such other employment.
Section 9. Continued Employment of Executive After Potential
Change in Control. The Executive agrees that, unless a Change in
Control has occurred and the Executive has Good Reason to terminate
his employment, the Executive will remain in the employ of Excel
for a period of at least one (1) year following the occurrence of
a Potential Change in Control. For purposes of this Agreement, a
"Potential Change in Control" shall be deemed to have occurred if:
(a) Excel enters into an Agreement the consummation of which would
result in the occurrence of a Change in Control within the meaning
of Section 3 of this Agreement; (b) if any person, including Excel,
publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control
within the meaning of Section 3 of this Agreement; (c) if any
person becomes the beneficial owner, directly or indirectly, of
securities representing twenty percent (20%) or more of the voting
power of Excel's then outstanding voting shares; or (d) the Board
of Directors of Excel adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
Section 10. Reduction in Benefits Under Certain
Circumstances.
Section 10.01. General. Notwithstanding anything in
this Agreement to the contrary, in the event that the accounting
firm which was serving as the independent auditors for Excel
immediately prior to the Change in Control (the "Auditors")
determines that any payment or distribution by Excel to or for the
benefit of the Executive, whether paid or payable (or distributed
or distributable) pursuant to the terms of this Agreement or
otherwise (a "Payment"), would not be deductible by Excel for
federal income tax purposes because of Section 280G of the Code,
then the aggregate present value of the amounts payable or
distributable to or for the benefit of the Executive pursuant to
this Agreement (the "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this Section
10.01, the "Reduced Amount" shall be an amount expressed in present
value which maximizes the aggregate present value of Agreement
Payments without causing any Payment to be non-deductible by Excel
because of Section 280G of the Code.
Section 10.02. Reduction of Payments. If the Auditors
determine that any Payment would not be deductible by Excel because
of Section 280G of the Code, then Excel shall promptly give the
Executive both notice to that effect and a detailed calculation
thereof and of the Reduced Amount. The Executive may then elect,
in his sole discretion, which and how much of the Agreement
Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Agreement Payments
equals the Reduced Amount) and shall advise Excel in writing of his
election within ten days of his receipt of notice. If no such
election is made by the Executive within such ten-day period, then
Excel may elect which and how much of the Agreement Payments shall
be eliminated or reduced (as long as after such election the
aggregate present value of the Agreement Payments equals the
Reduced Amount) and shall notify the Executive promptly of such
election. For purposes of this Section 10, present value shall be
determined in accordance with Section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Section 10 shall be
binding upon Excel and the Executive and shall be made within
thirty (30) days of the Executive's termination of employment.
As promptly as practicable following such determination and the
elections hereunder, Excel shall pay or distribute to or for the
benefit of the Executive such amounts as are then due to him under
this Agreement and shall promptly pay to or distribute for the
benefit of the Executive in the future such amounts as may become
due to him under this Agreement.
Section 10.03. Underpayment. As a result of the uncertainty
in the application of Section 280G of the Code at the time of the
initial determination by the Auditors hereunder, it is possible
that additional Agreement Payments which will not have been made by
Excel should have been made (an "Underpayment"), consistent with
the calculation of the Reduced Amount hereunder. In the event that
the Auditors, based upon controlling precedent, determine that any
Underpayment has occurred, such Underpayment shall promptly be paid
by Excel to or for the benefit of the Executive, together with
interest at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code.
Section 10.04. Overpayment.
(a) In the event it shall be determined that any Agreement
Payment made is subject to the excise tax imposed by
Section 4999 of the Code, or any interest or
penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with
any such interest and penalties are collectively
referred to herein as the "Excise Tax"), Excel will pay
the Executive an amount (a "Gross-Up Payment") such that
after payment by the Executive of all
taxes (including, without limitation, income taxes
and Excise Tax) imposed on the Gross-Up Payment, the
Executive retains a portion of the Gross-Up Payment equal
to the Excise Tax imposed on such
Agreement Payment.
(b) The Executive shall notify Excel in writing of any claim
by the Internal Revenue Service that, if successful,
would require the payment by Excel of a Gross-Up Payment.
Such notification shall be given as soon as practicable
but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise
Excel of the nature of such claim and the date on which
such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day
period following the date on which he gives such notice
to Excel (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due).
If Excel notifies the Executive in writing prior to the
expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give Excel any information reasonably requested by
Excel relating to such claim,
(ii) take such action, at the expense of Excel, in
connection with contesting such claim as Excel shall
reasonably request in writing from time to time,
including, without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by Excel,
(iii)cooperate with Excel in good faith in order
effectively to contest such claim, and
(iv) permit Excel to participate in any proceedings
relating to such claim; provided, however, that
Excel shall bear and pay directly all costs and
expenses (including additional interest and
penalties) incurred in connection with such contest
and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income
tax (including interest and penalties with respect
thereto) imposed as a result of such representation
and payment of costs and expense. Without
limitation on the foregoing, Excel shall control all
proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings
and conferences with the taxing authority in
respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed
and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before
any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate
courts, as Excel shall determine; provided, however,
that if Excel directs the Executive to pay
such claim and sue for a refund, Excel shall advance
the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any
imputed income with respect to such advance; and
further provided that any extension of the
statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect
to which such contested amount is claimed to be
due is limited solely to such contested amount.
Furthermore, Excel's control of the contest shall be
limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by
the Internal Revenue Service or any other taxing
authority.
(c) If, after the receipt by the Executive of an amount
advanced by Excel pursuant to Section 10.04(b), the
Executive receives any refund of Excise Tax paid with the
amount advanced, the Executive shall (subject to Excel's
complying with the requirements of Section 10.04(b))
promptly pay to Excel the amount of such refund (with any
interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of any
amount advanced by Excel pursuant to Section 10.04(b), a
final determination is made that the Executive shall not
be entitled to any refund with respect to such claim,
then such advance shall be forgiven and shall
not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
(d) Notwithstanding the foregoing, if it is determined by the
Auditors, based upon controlling precedent, that no
Excise Tax will be due if a portion of an Agreement
Payment is treated for all purposes as a loan to the
Executive, the smallest portion of the Agreement Payment
necessary to eliminate the Excise Tax (the "Loan Amount")
shall be so treated, and the Executive shall promptly
repay to Excel the Loan Amount, together with
interest thereon from the date the Agreement Payment was
received by the Executive at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code, and no
Gross-Up Payment will be made.
Section 11. Other provisions.
Section 11.01. Assignment. No right, benefit or interest
hereunder shall be subject to assignment, anticipation, alienation,
sale, encumbrance, charge, pledge, hypothecation or set off in
respect of any claim, debt or obligation, or to execution,
attachment, levy or similar process; provided, however, that the
Executive may assign any right, benefit or interest hereunder if
such assignment is permitted under the terms of any plan or policy
of insurance or annuity contract governing such right, benefit or
interest.
Section 11.02. Modification. This Agreement may not be
amended, modified, supplemented or canceled except by written
agreement of the parties.
Section 11.03. Waiver. No provision of this agreement may be
waived except by a writing signed by the party to be bound thereby.
Section 11.04. Severability. In the event that any provision
or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest
extent permitted by law.
Section 11.05. Binding on Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
Executive (and his personal representatives, heirs and assigns).
This Agreement shall also be binding upon and inure to the benefit
of Excel and any successor organization or organizations which
shall succeed to substantially all of the business and property of
Excel, whether by means of merger, consolidation, acquisition of
substantially all of the assets of Excel or otherwise, including by
operation of law.
Section 11.06. References to Law. References in this
Agreement to statutes or regulations shall include any amendment
thereto and any successor statute or regulation.
Section 11.07. Notices.
(a) Except as otherwise specifically set forth in this
Agreement, all notices and other communications shall be
delivered or mailed addressed as follows:
If to Excel: Excel Industries, Inc.
1120 North Main Street
Elkhart, Indiana 46514
Attn: Secretary/Treasurer
If to Executive:________________________________
________________________________
________________________________
(b) Any communication provided for herein shall be deemed to
have been duly given, made and received (i) when hand
delivered or (ii) on the date noted upon the receipt for
registered or certified mail.
Section 11.08. Entire Agreement. This Agreement sets forth
the entire agreement and understanding of the parties hereto with
respect to the matters covered hereby. All representations,
promises and prior or contemporaneous understandings between the
parties are merged into and expressed in this Agreement.
Section 11.09. Governing Law. This Agreement has been made
pursuant to, and shall be governed and construed in accordance
with, the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
EXCEL INDUSTRIES, INC.
By __________________________________
___________________________________
Printed Name and Title
EXECUTIVE
_____________________________________
_____________________________________
EXHIBIT 21
NAME OF SUBSIDIARY STATE OFINCORPORATION Excel
Corporation Indiana
Excel International, Inc. Virgin Islands
Excel Industries of Michigan, Inc. Michigan
Excel-Schade, Inc. Indiana
Pollexco Industria e Comercio S.A. Brazil
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 15, 1996 appearing on page 15 of this
Form 10-K, except for Note 16 which is dated March 4, 1996. 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, 1996
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<NET-INCOME> 16,265
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.41
</TABLE>
