<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended December 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File Number 0-5610
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PAXAR Corporation
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(Exact name of registrant as specified in its charter)
New York 13-5670050
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
105 Corporate Park Drive, White Plains, New York 10605
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 697-6800
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class: on which registered:
Common Stock, New York Stock Exchange, Inc.
par value $.10 per share
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
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(Title of Class)
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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.
X
--- ---
Yes 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 aggregate market value of the Registrant's Common Stock held by
non-affiliates of the Registrant as of March 22, 1996 was approximately
$282,993,218. On such date, the closing price of the Registrant's Common Stock,
as quoted on the New York Stock Exchange was $16.125.
The Registrant had 22,225,322 shares of Common Stock outstanding as of March 22,
1996.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on Form 10-K is herein incorporated by
reference from the Registrant's Definitive Proxy Statement to be filed with the
Securities and Exchange Commission with respect to the Registrant's Annual
Meeting of Shareholders scheduled to be held in April 1996. In addition, certain
exhibits to this Annual Report on Form 10-K are herein incorporated by reference
from the Registrant's Annual Reports on Form 10-K for the 1980, 1985 and
1987-92 fiscal years and from the Registrant's Current Reports on Form 8-K dated
March 30, 1994 and June 29, 1995.
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PART I
Item 1. Description of Business
(a) General Development of Business
PAXAR Corporation ("PAXAR" or the "Company") is a fully integrated
manufacturer and distributor of label systems, bar code systems, labels, tags
and related supplies and services for apparel manufacturers and retailers. The
Company's products are manufactured in North America, Europe and Asia and
distributed in over 50 countries. Label systems, consisting mainly of hot-stamp
printers and related supplies and services, are sold to Company customers for
in-plant label printing. Bar code systems, consisting of electronic printers and
related supplies, print data on labels and tags to provide accurate product,
inventory and point of sale information for integration with sophisticated data
systems. Labels and tags are attached to apparel by manufacturers and retailers
to identify and promote their products, allow automated data collection and
provide brand identification and consumer information such as size, fabric
content and care instructions. Labels are attached to garments early in the
manufacturing process and must withstand all production processes and remain
legible through washing and dry cleaning by the end user. To a limited extent,
the Company's products also include tags and labels for sheets, towels, pillow
cases and other white goods.
In May 1994, the Company acquired the corporate capital of Collitex
S.r.l. ("Collitex") and the corporate capital of Astria S.r.l. ("Astria"), two
related Italian companies in the woven label business. The Collitex and Astria
acquisition provided the Company with European-based woven label manufacturing
capability.
In October 1994, the Company acquired the corporate capital of Orvafin
S.r.l. ("Orvafin"), an Italian company engaged in the production and
distribution of inks and coated fabrics for labeling systems. The Orvafin
acquisition provided the Company with additional manufacturing capacity for
these products as well as access to a complementary distribution network.
In January 1996, the Company acquired all of the outstanding stock of
Brian Pulfrey Limited ("Brian Pulfrey"). Brian Pulfrey is located in Nottingham,
England where it manufactures printed labels and tags. In addition, Brian
Pulfrey sells woven labels and operates a service bureau for quick response to
its customer's needs for labels and tags with variable information. The
acquisition of Brian Pulfrey is expected to enhance the Company's goal of
replicating its United States capabilities as a one-stop source for apparel and
textile identification products in Europe.
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Joint Venture for Monarch Marking Systems, Inc.
On June 29, 1995, the Company invested $15 million to acquire a 49.5%
interest in Monarch Marking Systems, Inc. and related companies ("Monarch") from
Pitney Bowes Inc. The other purchasers of Monarch were Odyssey Partners, L.P.
("Odyssey"), which acquired a 49.5% interest, and Thomas Loemker, a Director of
the Company and Chairman of the Board of Monarch, who acquired a 1% interest. In
1995, the interests of the Company and Odyssey were each reduced to 49% as a
result of stock issued to Monarch's Chief Executive Officer. The interests of
the Company and Odyssey in Monarch may be reduced further to 45% as a result of
options granted to such person and other members of Monarch's senior management.
In connection with the acquisition of Monarch, the Company and Odyssey executed
a Stockholders' Agreement (the "Stockholders' Agreement"). The Stockholders'
Agreement governs the composition of Monarch's Board of Directors, all
significant corporate actions and future dispositions of Monarch's stock owned
by the Company and Odyssey, including puts and calls by the Company and puts by
Odyssey, through 1999.
Monarch manufactures, markets and distributes (i) tabletop label
dispensers and handheld, mechanical labeling guns which print pressure-sensitive
(i.e., adhesive-backed) price and other identification labels and affix them
onto merchandise for retailers (collectively, "conventional labelers"), and (ii)
electronic bar code printers ("bar code printers"), which are used in a wide
range of retail and industrial applications, including inventory management and
distribution systems. Monarch also manufactures and markets supplies used in
both its conventional labelers and bar code printers and provides extensive
service to its installed base of machines. The breadth of Monarch's machine,
supplies and service offerings allows it to meet most of its customers' marking
needs. Monarch is the leading manufacturer and marketer of retail price marking
equipment and supplies in the United States. Monarch also sells, directly and
through distributors in 75 other countries around the world.
(b) Financial Information about Industry Segments
The Company engages in only one industry segment: the design,
development, manufacture and sale of apparel and textile identification
materials. Whether the end-use product is manufactured by the Company or the
Company provides the customer with the bar code or label system and related
supplies is dependent upon the individual customer preference or need. The
Company believes that all of its products and services, including printed and
woven labels, in-plant bar code and label systems, coated fabrics and ink foils
fall within one class of similar products and services, in that the end-use
product is similar. All products are marketed and sold through a centralized
distribution system in the United States, with a similar centralized
distribution systems in Europe.
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(c) Narrative Description of Business
Products
The Company is vertically integrated in its major product lines which
permits it to better serve its customers, control quality, reduce costs and
speed delivery of products. It designs and builds most of its systems equipment,
develops most of the operating software and all of the application software for
its systems. The Company also formulates coatings and inks, coats fabrics,
weaves narrow label fabrics, dyes and finishes fabrics and designs and prints
tags and labels.
Tag and Label Systems
The Company's tag and label systems consist primarily of bar code tag
systems and hot-stamp label printers. These systems include complete hardware
and software packages that enable customers to print, cut and batch large
volumes of labels and tags in their plants. The sale of a system to a customer
generally results in ongoing sales of inks, fabrics, tags and other supplies to
the customer. In 1995 and 1994, tag and label systems, supplies and related
services accounted for approximately 54% and 53%, respectively, of the Company's
sales. Manufacturers may use both a hot-stamp printing system and a bar code
system, since the systems provide complementary functions.
Bar Code Systems
The Company has experienced substantial growth in its bar code systems
business in the United States. Such systems have not reached the same stage of
widespread use in Europe. Apparel retailers require bar coded tags on their
products to permit more accurate tracking of the products in stores which, in
turn, allows retailers to better monitor consumer demand and more effectively
control inventories. PAXAR's bar code tags and in-plant bar coding systems
enable manufacturers to accommodate retailers' demands in a rapid and
cost-effective manner.
Bar codes consist of a series of lines or bars printed on a contrasting
background. By varying the width of the bars and the spaces between bars, the
bar code is encoded with information to identify an item, which enables the
user's data system to provide the user with relevant information about that
item, such as its location, cost, selling price and manufacturer. Bar codes are
read by a fixed or hand-held scanning device, which transmits information to
data collection systems, including computers, electronic cash registers and
portable data collection devices. The Company has specialized in producing
clearly readable and accurate tags, from which a variety of bar code readers can
capture accurate data.
The bar code tag systems manufactured by the Company include personal
computers, electronic bar code printers, thermal
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ink, pre-printed tag stock and supporting software. The printers are controlled
by computers and print variable information on tags, including bar codes and
garment sizes. Data can be input to the bar code printer through simple
stand-alone keyboards with a built-in display, personal computers with PAXAR's
application software or downloading from the manufacturer's central computer.
Hot-Stamp Printing Systems
Hot-stamp printing systems include hot-stamp printers, fabrics,
inks and printing accessories, which are used by manufacturers for in-plant
printing of care labels and labels that carry brand logo, size and other
information for the retail customer. Such systems provide manufacturers with the
flexibility to imprint labels quickly in response to production order
specifications.
Tags and Labels
The Company designs and produces tags and woven and printed labels
in its various manufacturing facilities in the United States, England, Italy and
Hong Kong and ships them to domestic and foreign manufacturers. The Company's
labels are printed on a wide range of fabrics and other materials. Its woven
labels consist of jacquard, multi-color labels woven on broad looms and needle
looms. They are primarily used to build brand identification for apparel and to
provide information to consumers. The Company's multi-color printed labels are
printed on coated fabrics and narrow woven fabrics using various types of
high-speed equipment and are used primarily for product identification and
consumer information on apparel. These labels are produced in large runs with
few changes. Merchandise tags are multi-color printed tags and bar code price
tags used primarily for promotion and customer information and inventory
control.
Sales and Marketing
The Company employs salespersons who are compensated on a salary
and bonus basis. These salespersons are located in leased offices across the
United States, at the Company's Canadian branch, and at subsidiary companies in
the United Kingdom, Germany, Belgium, Italy, Poland, Spain, Mexico, Hong Kong
and Singapore. In addition, there are non-exclusive manufacturer's
representatives located throughout the United States who sell the Company's
products on a commission basis, as well as international and export distributors
and commission agents, located in Europe, Africa, the Far East and Latin
America. Sales promotion activities include direct mail campaigns, publication
of brochures, participation in trade shows, publicity and advertising
principally in trade journals. The business of the Company is not highly
seasonal in nature.
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Sources and Availability of Raw Materials
The Company purchases fabrics, inks, chemicals, yarns and other
raw materials from major suppliers located throughout the United States and
abroad. The Company believes that such materials are in good supply and are
available from multiple sources.
Patents, Trademarks and Licenses
The Company relies upon trade secrets and confidentiality to
protect the proprietary nature of its technology. The Company owns a trademark
for the name FASCO in the United States and in certain foreign countries. The
Company holds certain patents and trademarks which the Company does not deem to
be material to its operations.
Working Capital Practices
The Company does not engage in unusual practices regarding
inventories, receivables or other items of working capital.
Customers
The Company has more than 10,000 customers, including major
retailers and apparel manufacturers such as Levi Strauss, Sears, J.C. Penney,
The Limited, Liz Claiborne, Fruit-of-the-Loom, Sara Lee, Jockey, Land's End, The
Lee Co. and L.L. Bean. For the fiscal year ended December 31, 1995, Levi Strauss
represented approximately 12% of the Company's total sales.
Backlog
The Company's total backlog of orders at December 31, 1995 was
approximately $15.7 million, as compared with $20.4 million at December 31,
1994. Management estimates that more than fifty percent (50%) of annual sales
are comprised of orders which the Company typically fills within one month of
receipt. The balance of orders are for products which are ordered to individual
customer specifications and are for delivery within two to six months.
Competitive Conditions
The Company competes in both the domestic and international
markets by means of price, product quality, innovation and customer services.
The Company competes with a large number of independent, often family-owned,
companies and a division of a large corporation. This large corporation
possesses greater financial resources than the Company.
Environmental Compliance
Environmental aspects of the Company's business are regulated
primarily by the ordinances of the localities where the
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Company's properties are situated. See "Item 3 - Legal Proceedings."
Employees
As of December 31, 1995, the Company employed worldwide 1,923
persons. Approximately 261 production persons of the Company in several
locations in the United States are covered by four different union contracts,
which expire at various times from July 1997 to October 1998. The Company has no
recent history of material labor disputes. The Company believes that it has good
employee relations.
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(d) Financial Information about Foreign and Domestic Operations
and Export Sales
Certain financial information for operations in the United States,
Europe and Asia is set forth below.
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------------
1995 1994 1993
---------------------------------------
(in thousands)
<S> <C> <C> <C>
Sales to Unaffiliated
Customers:
United States
- Domestic $ 130,371 $ 117,647 $ 103,572
- Export 8,359 9,347 7,709
Europe 42,653 26,685 17,038
Asia 20,053 12,933 10,528
--------- --------- ---------
$ 201,436 $ 166,612 $ 138,847
========= ========= =========
Operating Income:
United States
- Domestic $ 18,012 $ 15,364 $ 13,988
- Export 2,347 2,570 2,141
Europe 6,912 3,372 1,621
Asia 4,993 3,126 3,071
--------- --------- ---------
32,264 24,432 20,821
Corporate Expenses (9,127) (6,451) (5,871)
--------- --------- ---------
$ 23,137 $ 17,981 $ 14,950
========= ========= =========
Assets Employed:
United States and Export $ 96,054 $ 75,803 $ 70,536
Europe 47,591 43,807 8,775
Asia 13,495 9,093 6,182
--------- --------- ---------
$ 157,140 $ 128,703 $ 85,493
========= ========= =========
</TABLE>
- --------------------
United States assets employed are used to manufacture products sold to domestic
U.S. customers, export customers and in certain situations to non-U.S.
intercompany customers.
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Item 2. Properties
The Company utilizes the following facilities as of the date
hereof:
<TABLE>
<CAPTION>
Square Owned/ Lease
Location Footage Leased Expiration Used for
- -------- ------- ------ ---------- --------
<S> <C> <C> <C> <C>
White Plains, 29,538 Leased 2003 Executive
New York and Adminis-
trative
Offices
Sayre, 36,000 Leased Month- Manufacturing
Pennsylvania to-
Month
Sayre, 58,000 Owned Administrative
Pennsylvania and
Manufacturing
Orangeburg, 60,000 Owned Manufacturing
New York
Milan, Italy 1,937 Leased 1998 Office space
Milan, Italy 3,767 Leased 1997 Warehouse
Ancarano, Italy 86,368 Owned Administrative
and
Manufacturing
Pero, Italy 2,691 Leased 2000 Warehouse
Carpi, Italy 18,837 Leased 2004 Manufacturing
Nottingham, England 17,000 Owned Administrative
and
Manufacturing
Runcorn, England 37,237 Leased 2005 Administrative
and
Manufacturing
Runcorn, England 23,131 Leased 2011 Manufacturing
Paterson, 53,833 Owned Administrative
New Jersey and
Manufacturing
Hillsville, 39,144 Owned Manufacturing
Virginia
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Lenoir, 120,000 Owned Administrative
North Carolina and
Manufacturing
Lenoir, 17,180 Leased 1997 Warehouse
North Carolina
Lenoir, 11,600 Leased 1996 Warehouse
North Carolina
Warsaw, Poland 1,800 Leased 1996 Administrative
and
Manufacturing
Lohne, 8,910 Leased 2002 Warehouse and
West Germany office space
Vandalia, Ohio 40,590 Leased 2001 Administrative
and
Manufacturing
Troy, Pennsylvania 60,000 Owned Unoccupied
Canton,
North Carolina 32,665 Owned Manufacturing
Rock Hill, 56,000 Owned Manufacturing
South Carolina
Hong Kong 26,536 Leased 1996 Administrative
and
Manufacturing
Hong Kong 3,195 Leased 1996 Office space
Hong Kong 5,625 Leased 1997 Warehouse
Hong Kong 5,262 Leased 1997 Warehouse
</TABLE>
In addition to the facilities described above, the Company has, as
of March 1, 1996, thirteen sales offices located in Huntington Beach, CA; San
Francisco, CA; Mission Viejo, CA; Greensboro, NC; Paletine, IL; Dallas, TX; New
York, NY; Canton, GA; Singapore; Montreal, Canada; Mexico City, Mexico;
Barcelona, Spain; and Ghent, Belgium. These offices are subject to leases
expiring between June 1996 and February 2001.
The Company believes that its facilities are adequate to maintain
its existing business activities.
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Item 3. Legal Proceedings
The Company is one of numerous parties to a consent order with the
U.S. Environmental Protection Agency (the "EPA") that provides for the clean up
of alleged contamination of a site in Carlstadt, New Jersey. In August 1989, the
Company was also joined as one of a large number of defendants in a related
action brought by potentially responsible parties in the United States District
Court for the District of New Jersey. Management of the Company believes that
its potential liability in connection with the clean up and litigation relating
to the Carlstadt site and two other sites will not have a material adverse
effect on the financial condition or the results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the shareholders of the
Company during the fourth quarter of the fiscal year ended December 31, 1995.
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PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters
(a) The Company's Common Stock has been traded on the New York
Stock Exchange using the symbol "PXR." The following table sets forth the 1995
and 1994 high, low and closing sales prices of the Company's Common Stock as
reported on the New York Stock Exchange for the periods indicated, as adjusted
to reflect any stock splits or stock dividends effectuated by the Company.
<TABLE>
<CAPTION>
Calendar Year 1995 Sales Prices
High Low Closing
---- --- -------
<S> <C> <C> <C>
First Quarter 10 1/8 7 5/8 9 7/8
Second Quarter 15 7/8 9 5/8 14 3/8
Third Quarter 16 1/8 11 5/8 13 3/4
Fourth Quarter 15 1/4 11 3/8 13 1/4
Calendar Year 1994
First Quarter 10 1/8 7 7/8 7 7/8
Second Quarter 9 3/8 7 7/8 8 1/4
Third Quarter 9 8 5/8 9 1/4
Fourth Quarter 9 1/2 7 3/4 8
</TABLE>
(b) As of March 1, 1996, there were approximately 919 record
holders of the Company's Common Stock.
(c) The Company has never paid any cash dividends on its Common
Stock and has no present intention of doing so. The Company intends to retain
all of its earnings for use in its business.
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Item 6: Selected Consolidated Financial Data
The selected consolidated financial data as of and for the five-year period
ended December 31, 1995 have been derived from the Company's Consolidated
Financial Statements audited by Arthur Andersen LLP, independent public
accountants. This data should be read in conjunction with Consolidated Financial
Statements and related Notes for the year ended December 31, 1995, and the
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Results
Sales $201,436 $166,612 $138,847 $132,556 $ 88,860
Gross profit 73,024 59,219 50,622 47,557 30,755
Operating income 23,137 17,981 14,950 14,706 7,051
Net income 15,709 11,601 9,358 8,374 3,442
Earnings per share (a) $ 0.70 $ 0.53 $ 0.43 $ 0.42 $ 0.20
Financial Condition
Working capital $ 46,679 $ 38,972 $ 30,213 $ 28,235 $ 17,172
Current ratio 2.9 2.6 2.7 3.0 2.3
Property, plant and
equipment, net $ 53,856 $ 50,047 $ 36,215 $ 28,269 $ 19,546
Total assets 157,140 128,703 85,493 72,756 51,139
Long-term debt 23,121 13,796 718 2,107 10,243
Shareholders' equity 95,196 77,853 62,457 52,801 24,953
Debt as a percent of
total capital 19.5% 15.0% 1.1% 3.8% 29.1%
Financial Statistics
Gross profit as a
percent of sales 36.3% 35.6% 36.5% 35.9% 34.6%
SG&A as a percent of
sales 24.8% 24.8% 25.7% 24.8% 26.7%
Operating income as a
percent of sales 11.5% 10.8% 10.8% 11.1% 7.9%
Net income as a
percent of sales 7.8% 7.0% 6.7% 6.3% 3.9%
Effective income tax
rate 28.9% 32.0% 35.3% 39.8% 42.2%
Return on
shareholders' equity 18.2% 16.5% 16.2% 21.5% 15.0%
Other Data
Operating cash flow $ 23,052 $ 16,443 $ 11,671 $ 7,583 $ 7,000
Capital expenditures 12,328 11,218 11,937 9,228 5,252
Depreciation and
amortization 8,138 6,781 4,810 3,740 2,900
Stock dividends 25% 25% 25% 25% 25%
Additional stock
dividend -- -- -- 25% --
Cash dividends None None None None None
Number of employees 1,923 1,891 1,477 1,492 969
Weighted average
shares outstanding(a) 22,422 21,938 21,779 20,213 17,157
Shares outstanding(a) 22,208 21,945 21,491 21,395 17,008
Book value per share(a) $ 4.29 $ 3.55 $ 2.91 $ 2.47 $ 1.47
</TABLE>
(a) Retroactively adjusted to reflect stock dividends.
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Item 7.: Management's Discussion and Analysis of Financial Condition and
Results of Operations
OPERATING RESULTS:
The following table shows each element of the income statement as a percent of
sales for the years indicated:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales 100.0% 100.0% 100.0%
Cost of sales 63.7 64.4 63.5
----- ----- -----
Gross Margin 36.3 35.6 36.5
Selling, general and
administrative expense 24.8 24.8 25.7
----- ----- -----
Operating income 11.5 10.8 10.8
Equity in net income of
affiliate 0.3 -- --
Interest expense, net (0.8) (0.5) (0.4)
----- ----- -----
Income before taxes 11.0 10.3 10.4
Taxes on income 3.2 3.3 3.7
----- ----- -----
Net income 7.8% 7.0% 6.7%
===== ===== =====
</TABLE>
1995 COMPARED WITH 1994
Sales in 1995 increased by 21% over 1994 reaching a record $201.4 million.
Domestic sales increased $12.7 million or 11%; European sales increased $16.0
million or 60%; and Asian sales increased $7.1 million or 55%. Total non-U.S.
and export sales were $71.1 million in 1995 or 35% of consolidated sales, up
from $49.0 million or 29% in 1994. Acquisitions made in 1994 contributed $19.4
million in 1995 and $8.9 million in 1994 to European sales. In 1995, the
Company's apparel identification products business grew 20% and its systems
business grew 22%, as compared with 1994.
The gross profit for the year 1995 increased to $73.0 million compared to $59.2
million for 1994, an increase of 23%. The gross margin increased to 36.3% for
the year 1995 compared to 35.6% for the year 1994.
Selling, general and administrative ("SG&A") expenses increased to $49.9 million
for the year 1995, compared to $41.2 million for the 1994 period, an increase of
21%. As a percent of sales, SG&A was 24.8% for the years 1995 and 1994.
Operating income increased 29% to $23.1 million (11.5% of sales) for the year
1995 compared to $18.0 million (10.8% of sales) for the year 1994.
Equity in net income of affiliate was $592,000 for the year ended December 31,
1995, reflecting the Company's investment in Monarch Marking Systems, Inc.
(Monarch) effective June 1995. (See Note 3 of Notes to Consolidated Financial
Statements.)
Interest expense, net increased to $1.6 million in 1995 compared to $0.9 million
in 1994. The increase was attributable to higher levels of bank borrowings
arising from the acquisitions in May and October 1994 and the $15.0 million
invested in Monarch.
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Income before taxes increased to $22.1 million (11.0% of sales) for the year
1995, as compared with $17.1 million (10.3% of sales) for the year 1994. The
increase in pretax profit for the year 1995 compared to the year 1994 is
summarized as follows:
<TABLE>
<CAPTION>
(in millions)
<S> <C>
Sales increase, net of increased SG&A expenses $ 4.0
Improvement in gross margin 1.1
Equity in net income of affiliate 0.6
Increased interest expense, net (0.7)
------
Net increase $ 5.0
======
</TABLE>
The effective income tax rate was 29% for the year ended December 31, 1995
compared to 32% for the year 1994. The overall effective tax rate is impacted by
many factors including different statutory rates on foreign income. The lower
rate is mainly attributable to lower rates on income derived from foreign
sources, particularly from Hong Kong and in Italy where the companies acquired
in 1994 receive special tax abatement incentives which expire from 1996 through
1999.
Net income for the year ended December 31, 1995 increased 35% to $15.7 million
(7.8% of sales) from $11.6 million (7.0% of sales) in 1994. Income per share was
$0.70 in 1995, up from $0.53 in 1994.
1994 COMPARED WITH 1993
Sales in 1994 increased by 20% over 1993 reaching a record $166.6 million.
Acquisitions made during 1994 added $8.9 million or 6% to the growth in sales
for the year, while the Company's base business increased by 14% over the prior
year. Market conditions improved considerably in the United States beginning in
the second quarter; the European marketplace was soft throughout 1994, but began
to show signs of improvement in the fourth quarter; and sales in Asia increased
following an expansion of the Company's manufacturing capabilities in Hong Kong.
Domestic sales increased $14.1 million or 14%; European sales (exclusive of the
gains attributable to acquisitions) increased $0.7 million or 4%; and Asian
sales increased $2.4 million or 23%. Total non-U.S. and export sales were $49.0
million in 1994 or 29% of consolidated sales, up from $35.3 million or 25% in
1993. In 1994, the Company's apparel identification products grew 28% and its
systems business grew 13%, as compared with 1993.
The gross margin for the year ended December 31, 1994 decreased to 35.6% from
36.5% in 1993. The decline primarily reflects materials cost increases stemming
from both the need to out source certain semi-finished products pending
expansion of manufacturing capacity and inflationary cost increases on purchased
raw materials. The Company is adjusting selling prices where possible to recover
the margin lost to the increased prices being charged by its suppliers. Of the
net increase in gross profit for the year 1994 of $8.6 million, an increase of
$9.9 million resulted from
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sales increases and a decrease of $1.3 million resulted from the margin decline.
SG&A expenses were $41.2 million for the year ended December 31, 1994, compared
to $35.7 million for the 1993 period, an increase of 16%. In addition to
volume-related increases, the increase reflects the expenses of the acquired
companies, the addition of Company-operated businesses in Canada, Mexico and
Spain, and expenditures to strengthen the Company's infrastructure in the United
States and Hong Kong. As a percent of sales, SG&A declined to 24.8% for the year
ended December 31, 1994 from 25.7% in 1993.
Operating income was $18.0 million in 1994 as compared with $15.0 million in
1993. Operating income was 10.8% of sales in both 1994 and 1993.
Interest expense, net, was $0.9 million in 1994 compared to $0.5 million in 1993
due principally to a higher level of outstanding indebtedness related to the
current year acquisitions.
Income before taxes increased to $17.1 million (10.3% of sales) in 1994 as
compared with $14.5 million (10.4% of sales) in 1993. As previously noted,
operating income as a percent of sales was identical in both years at 10.8%;
however, interest expense, net, was 0.5% of sales in 1994 versus 0.4% in 1993.
The increase in pretax profit for the year 1994 compared to the year 1993 is
summarized as follows:
<TABLE>
<CAPTION>
(in millions)
<S> <C>
Sales increase, net of increased SG&A expenses $ 4.3
Decrease in gross margin (1.3)
Increased interest expense, net (0.4)
------
Net increase $ 2.6
======
</TABLE>
The effective income tax rate was 32% for the year ended December 31, 1994,
compared to 35% in 1993. The lower rate in 1994 is mainly attributable to the
increasing percentage of pretax income derived from non-U.S. subsidiaries with
tax rates below the 34% statutory rate in the United States.
For the reasons discussed above, net income increased 24% to a record $11.6
million (7.0% of sales) in 1994 from $9.4 million (6.7% of sales) in 1993.
Income per share was $0.53 in 1994, up from $0.43 in 1993.
-17-
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES:
The table below presents summary cash flow information for the years indicated:
<TABLE>
<CAPTION>
(in millions)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net cash provided by
operating activities $ 23.1 $ 16.5 $ 11.7
Net cash used by
investing activities (31.0) (28.4) (12.1)
Net cash provided by
financing activities 8.2 14.5 0.8
------- ------- -------
Total change in cash (a) $ 0.3 $ 2.6 $ 0.4
======= ======= =======
</TABLE>
(a) Before exchange rate effects.
OPERATING ACTIVITIES
Cash provided by operating activities continues to be the Company's primary
source of funds to finance operating needs and internal growth opportunities.
The net cash provided by operating activities increased to $23.1 million in
1995, up $6.6 million or 40% as compared to 1994. Cash provided in 1994 was
$16.5 million, an increase of $4.8 million or 41% from $11.7 million in 1993.
Depreciation and amortization was $8.1 million in 1995 compared to $6.8 million
in 1994. The increase is due mainly to increased capital expenditures and
increased amortization of goodwill as a result of 1994 acquisitions.
INVESTING ACTIVITIES
In 1995, cash provided by operating activities was used to fund capital
expenditures of $12.3 million. These expenditures were made to expand the
Company's printed label operations, its woven label operation in Italy and its
systems business with the completion of a plant in Rock Hill, S.C., as well as
for general upgrading and replacement of productive capacity throughout its
businesses. Other than projects for employee safety and environmental
improvement, all new capital projects are carefully analyzed and are required to
make a positive contribution on a net present value basis, generating an
attractive internal rate of return on invested capital. Capital expenditures
were $11.2 million in 1994. Management anticipates capital expenditures of $15.0
million for 1996.
The Company invested $15.0 million on June 29, 1995, for a 49% interest
(initially 49.5%) in a new joint venture company which acquired Monarch Marking
Systems, Inc. from Pitney Bowes. (See Note 3 of Notes to Consolidated Financial
Statements.) On January 22, 1996, the Company through its United Kingdom
subsidiary, purchased the outstanding capital stock of Brian Pulfrey Limited.
(See Note 2 of Notes to Consolidated
-18-
<PAGE> 19
Financial Statements.) The Company intends to continue its growth, in part by
acquisitions of other complementary or related businesses, and believes that
further acquisitions outside the United States would be of important strategic
value.
FINANCING ACTIVITIES
The table below shows the components of total capital for the years indicated:
<TABLE>
<CAPTION>
(in millions)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Long-term debt $ 23.1 $ 13.8 $ 0.7
Shareholders' equity 95.2 77.9 62.5
-------- ------- -------
Total capital $ 118.3 $ 91.7 $ 63.2
======== ======= =======
Total debt as a percent
of total capital 19.5% 15.0% 1.1%
======== ======= =======
</TABLE>
Long-term debt increased by $9.3 million during 1995 to $23.1 million from $13.8
million in 1994 in order to finance the Company's investing activities described
above. At December 31, 1995, long-term debt as a percent of total capital was
19.5% as compared to 15.0% at December 31, 1994.
The Company has a revolving credit agreement allowing it to borrow up to $43.0
million. At December 31, 1995, there was $22.1 million available under the
revolving credit agreement. The revolving credit agreement provides for the
reduction of the commitment at the rate of $1.25 million per quarter commencing
on March 30, 1996. Any remaining balance outstanding will be due March 30, 1999.
At December 31, 1995, the Company was in compliance with all provisions of the
loan agreement.
The Company expects that cash from operations and available credit facilities
will continue to be sufficient to meet the future needs of its business.
Item 8: Financial Statements and Supplementary Data
The financial information required by Item 8 is included elsewhere in this
report. (See Part IV, Item 14).
Item 9: Changes in and Disagreements with Accountants on Accounting and on
Financial Disclosure
None.
-19-
<PAGE> 20
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on April 24, 1996.
Item 11. Executive Compensation
Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on April 24, 1996.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on April 24, 1996.
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference to the Company's Definitive Proxy
Statement with respect to the Company's Annual Meeting of Stockholders scheduled
to be held on April 24, 1996.
-20-
<PAGE> 21
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents
1. Financial Statements -
Report of Independent Public Accountants F-1
Consolidated Balance Sheets
December 31, 1995 and 1994 F-2
Consolidated Statements of Income
Years ended December 31, 1995, 1994 and 1993 F-3
Consolidated Statements of Shareholders' Equity
Years ended December 31, 1995, 1994 and 1993 F-4
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993 F-5
Notes to Consolidated Financial Statements F-6 to F-17
2. Financial Statement Schedule -
Schedule II - Valuation and Qualifying F-18
Accounts
Notes:
All other schedules called for under Regulation S-X are not
submitted because they are not applicable or not required, or because the
required information is included in the financial statements or notes thereto.
Separate financial statements of the Registrant have been omitted
because the Registrant is primarily an operating company. All subsidiaries
included in the consolidated financial statements are totally owned, and none of
the subsidiaries have indebtedness which is not guaranteed by the Registrant.
3. Exhibits
3.1 Amended and Restated Certificate of Incorporation. (H)
10.1 Lease, dated October 1, 1974, for executive offices of
Registrant in Pearl River, New York. (A)
-21-
<PAGE> 22
10.2 Employment Agreement, dated as of December 16, 1986,
between Registrant and Arthur Hershaft. (C)
10.3 Employment Agreement, dated February 13, 1989, between
Registrant and Victor Hershaft. (D)
10.4 Stock Purchase Agreement, by and between Arthur Hershaft
and Registrant, dated as of December 19, 1989. (E)
10.5 Registrant's 1981 Incentive Stock Option Plan. (B)
10.6 Registrant's 1990 Employment Stock Option Plan. (F)
10.7 Shareholders Agreement dated November 11, 1974 and
amendment thereto, dated March 12, 1992. (G)
10.8 Amended and Restated Stock Purchase Agreement, by and
between Arthur Hershaft and the Registrant. (H)
10.9 Multi-Currency Revolving Credit Agreement, dated March 30,
1994 (I)
10.10 Omnibus Purchase and Sale Agreement dated June 6, 1995 by
and between Pitney Bowes Inc., Monarch Marking Systems,
Inc., Pitney Bowes Marking Systems Ltd., Pitney Bowes
International Holdings Inc., Pitney Bowes France S.A. and
Monarch Acquisition Corp. (J)
10.11 Stockholders' Agreement dated June 29, 1995 among Monarch
Acquisition Corp., Paxar Corporation and Odyssey Partners,
L.P. (J)
11.1 Statement re Computation of Per Share Earnings
21.1 List of Subsidiaries of Registrant.
-22-
<PAGE> 23
23.1 Consent of Independent Public Accountants.
27 Financial Data Schedule
(A) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1980.
(B) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1985.
(C) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1987.
(D) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1988.
(E) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1989.
(F) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1990.
(G) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1991.
(H) Incorporated herein by reference from Exhibits to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1992.
(I) Incorporated herein by reference from Exhibits to the
Registrant's Current Report on Form 8-K dated March 30, 1994.
(J) Incorporated herein by reference from Exhibits to Registrant's
Current Report on Form 8-K dated June 29, 1995.
(b) Reports on Form 8-K
None.
-23-
<PAGE> 24
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Paxar Corporation:
We have audited the accompanying consolidated balance sheets of Paxar
Corporation (a New York corporation) and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1995. 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 in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Paxar Corporation and
subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as whole. The schedule listed in the index of
financial statements is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
February 14, 1996
F-1
<PAGE> 25
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
(in thousands,
except share amounts)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,466 $ 3,136
Short-term investments 3,219 1,365
Receivables, less allowance for doubtful
accounts of $585 in 1995 and $506 in
1994 31,321 28,880
Inventories 29,322 27,045
Other current assets 3,082 2,780
Deferred income taxes 527 803
--------- ---------
Total current assets 70,937 64,009
--------- ---------
Property, plant and equipment, at cost 83,918 73,580
Accumulated depreciation (30,062) (23,533)
--------- ---------
Net property, plant and equipment 53,856 50,047
--------- ---------
Investment in affiliate 15,969 --
Goodwill 15,802 14,010
Other assets 576 637
--------- ---------
$ 157,140 $ 128,703
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to banks $ 2,991 $ 5,344
Current maturities of long-term debt 529 641
Accounts payable and accrued liabilities 19,143 18,253
Accrued taxes on income 1,595 799
--------- ---------
Total current liabilities 24,258 25,037
--------- ---------
Long-term debt 23,121 13,796
Deferred income taxes 11,136 10,391
Other liabilities 3,429 1,626
Shareholders' equity:
Preferred Stock, $0.01 par value,
5,000,000 shares authorized, none
issued and outstanding -- --
Common Stock, $0.10 par value,
30,000,000 shares authorized,
22,207,820 and 17,556,061 shares
issued and outstanding in 1995 and
1994, respectively 2,221 1,756
Paid-in capital 36,723 35,432
Retained earnings 57,002 41,742
Foreign currency translation adjustments (750) (1,077)
--------- ---------
Total shareholders' equity 95,196 77,853
--------- ---------
$ 157,140 $ 128,703
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
F - 2
<PAGE> 26
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(in thousands, except per
share amounts)
<S> <C> <C> <C>
Sales $ 201,436 $ 166,612 $ 138,847
Cost of sales 128,412 107,393 88,225
--------- --------- ---------
Gross profit 73,024 59,219 50,622
Selling, general and
administrative expenses 49,887 41,238 35,672
--------- --------- ---------
Operating income 23,137 17,981 14,950
Equity in net income of affiliate 592 -- --
Interest expense, net (1,628) (921) (490)
--------- --------- ---------
Income before taxes 22,101 17,060 14,460
Taxes on income 6,392 5,459 5,102
--------- --------- ---------
Net income $ 15,709 $ 11,601 $ 9,358
========= ========= =========
Weighted average shares
outstanding 22,422 21,938 21,779
========= ========= =========
Earnings per share $ 0.70 $ 0.53 $ 0.43
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
F - 3
<PAGE> 27
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands, except share amounts)
<TABLE>
<CAPTION>
Foreign
Currency
Common Stock Paid-in Retained Translation
Shares Amount Capital Earnings Adjustments
------ ------ ------- -------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1992 10,954,479 $ 1,095 $ 31,286 $ 21,419 $ (999)
Net income -- -- -- 9,358 --
Stock split 2,744,937 275 -- (284) --
Tax benefit from
exercise of stock
options -- -- 485 -- --
Exercise of stock
options 54,907 5 174 -- --
Translation
adjustments -- -- -- -- (357)
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1993 13,754,323 $ 1,375 $ 31,945 $ 30,493 $ (1,356)
Net income -- -- -- 11,601 --
Stock split 3,473,958 347 -- (352) --
Tax benefit from
exercise of stock
options -- -- 207 -- --
Stock issued -
acquisitions 225,000 23 2,737 -- --
Exercise of stock
options 77,320 8 249 -- --
Employee stock
purchase plan 25,460 3 294 -- --
Translation
adjustments -- -- -- -- 279
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1994 17,556,061 $ 1,756 $ 35,432 $ 41,742 $ (1,077)
Net income -- -- -- 15,709 --
Stock split 4,427,860 443 -- (449) --
Tax benefit from
exercise of stock
options -- -- 53 -- --
Exercise of stock
options 173,147 17 536 -- --
Employee stock
purchase plan 50,752 5 702 -- --
Translation
adjustments -- -- -- -- 327
---------- ---------- ---------- ---------- ----------
Balance, December 31,
1995 22,207,820 $ 2,221 $ 36,723 $ 57,002 $ (750)
========== ========== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F - 4
<PAGE> 28
PAXAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
------------- ------------- -------------
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 15,709 $ 11,601 $ 9,358
Depreciation and amortization 8,138 6,781 4,810
Deferred income taxes 1,021 2,398 1,124
Equity in net income of affiliate (592) -- --
Changes in assets and liabilities, net
of businesses acquired in 1994:
Receivables (2,441) (1,811) (4,112)
Inventories (2,277) (2,511) (688)
Other current assets (302) (51) (407)
Accounts payable and accrued liabilities 1,197 (268) 3,036
Taxes on income 796 (547) (1,450)
Other liabilities 1,803 851 --
-------- -------- --------
7,343 4,842 2,313
-------- -------- --------
Net cash provided by operating
activities 23,052 16,443 11,671
-------- -------- --------
INVESTING ACTIVITIES:
Purchases of short-term investments, net (1,854) (1,365) --
Purchases of property, plant and equipment (12,328) (11,218) (11,937)
Investment in affiliate (15,377) -- --
Acquisitions, excluding $2,760 of stock
issued in 1994, net of cash acquired (2,226) (15,957) --
Other 876 129 (141)
-------- -------- --------
Net cash used in investing activities (30,909) (28,411) (12,078)
-------- -------- --------
FINANCING ACTIVITIES:
Increase (decrease) of short-term debt (2,465) 2,853 1,549
Additions of long-term debt 21,603 22,163 9,550
Reductions of long-term debt (12,278) (11,271) (10,939)
Exercise of stock options/stock
purchase plan 1,313 761 664
Cash paid in lieu of fractional shares (6) (5) (9)
-------- -------- --------
Net cash provided by financing
activities 8,167 14,501 815
-------- -------- --------
OTHER ACTIVITIES:
Effect of exchange rate on cash 20 (134) (1)
-------- -------- --------
Increase in cash 330 2,399 407
Cash, at beginning of year 3,136 737 330
-------- -------- --------
Cash, at end of year $ 3,466 $ 3,136 $ 737
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
F - 5
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
Dollars in thousands, except share data.
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation:
The consolidated financial statements include those of Paxar Corporation (the
"Company") and its wholly-owned subsidiaries. The effects of all significant
intercompany transactions have been eliminated.
Short-term investments:
Short-term investments consist of foreign lending institution and government
bonds pledged as collateral against foreign debt, as well as certain other
foreign financial institution commercial paper.
Inventories:
Inventories are stated at the lower of cost or market. The cost of all U.S.
inventory is determined using the last-in, first-out (LIFO) method. The cost of
all foreign inventories of $9,049 and $7,578 as of December 31, 1995 and 1994,
respectively, is determined using the first-in, first-out (FIFO) method.
Property, plant and equipment:
Property, plant and equipment is stated at cost, and is depreciated by the
straight-line method over the estimated useful lives of the assets. Upon
retirement or other disposition, the cost and accumulated depreciation are
removed from the asset and accumulated depreciation accounts, and the net gain
or loss is reflected in income. Beginning with 1993 additions, the Company
adopted the composite method of depreciation, and accordingly, the cost of
property retired or disposed, reduced by net salvage proceeds, will be charged
against accumulated depreciation and no gain or loss will be recognized.
Expenditures for maintenance and repairs are charged against income as incurred.
Significant expenditures for betterments and renewals are capitalized.
Income taxes:
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." The Company had previously
been accounting for income taxes under SFAS No. 96. There was no material effect
on the Company's financial position or results of operations as a result of the
adoption of this new accounting principle. Deferred income taxes result from
temporary differences between the time certain items of income and expense are
recognized for financial reporting purposes and when the items are reported for
income tax purposes. The classification of deferred tax assets and liabilities
corresponds with the classification of the underlying assets and liabilities
giving rise to the temporary difference.
Revenue recognition:
Revenue is recognized when title passes to the customer, generally upon
shipment.
F - 6
<PAGE> 30
Earnings per share:
Primary earnings per share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during each year. Earnings
per share for 1995, 1994 and 1993 includes the dilutive effect (320,000, 248,000
and 349,000 shares, respectively) of outstanding stock options. Primary and
fully diluted earnings per share are the same. Earnings per share for 1994 and
1993 have been adjusted to reflect additional shares issued in connection with
the stock dividends declared in 1995 (Note 10).
Financial instruments:
All financial instruments of the Company are carried at cost, which approximates
fair value, with the exception of interest rate swaps.
During 1995, the Company entered into two notional value interest rate swap
transactions to manage its exposure to interest rate fluctuations. At December
31, 1995, the Company has interest rate swaps with a notional amount of $19.5
million, which it uses to convert variable rates based on 1-month and 3-month
London Interbank Offered Rates to a weighted average fixed interest rate of 6.6%
on certain of its revolving bank debt. The weighted average remaining duration
of the swaps is approximately two years. Net receipts or payments under the
agreements are recognized as an adjustment to interest expense. Fair value
estimates of interest rate swaps are based on the difference in the present
value of variable rate future receipts and fixed rate future payments. At
December 31, 1995, the net fair value of the Company's interest rate swaps was a
loss of approximately $372.
Goodwill:
Goodwill represents the excess of the cost of acquired companies over the sum of
identifiable net assets. Goodwill is being amortized on a straight-line basis
over periods up to forty years. Subsequent to acquiring goodwill, the Company
continually evaluates whether events and circumstances, including anticipated
future operating results, indicate the remaining estimated useful life of
goodwill may warrant revision. Based upon its most recent analysis, the Company
believes that no material impairment of goodwill exists at December 31, 1995.
Amortization charged to operations amounted to $574, $377 and $136 for 1995,
1994 and 1993 respectively.
Foreign currency translation:
Assets and liabilities of the Company's foreign subsidiaries are translated into
U.S. dollars using the exchange rate in effect at the balance sheet date.
Results of operations are translated using the average exchange rate prevailing
throughout the period. The effects of exchange rate fluctuations on translating
foreign currency assets and liabilities into U.S. dollars are included in
shareholders' equity as foreign currency translation adjustments. Gains and
losses resulting from foreign currency transactions are included in net income
and were not significant in the past three years.
F - 7
<PAGE> 31
Use of Estimates:
The preparation of these consolidated financial statements required the use of
certain estimates and assumptions by management in determining the Company's
assets, liabilities, revenues and expenses. Actual results could differ from
those estimates.
Reclassifications:
Certain reclassifications have been made to prior year amounts to conform to the
current year presentation.
Newly Issued Accounting Standards:
In March 1995, Statement of Financial Accounting Standards (SFAS) No.121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", was issued. The Company plans to adopt SFAS No. 121 in 1996,
and believes that this accounting standard will not have a material impact on
the Company's financial position and its results of operations.
In October 1995, Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation" was issued. The Company plans to adopt
SFAS No. 123 in 1996. The Company currently does not plan to change its method
of accounting for stock-based compensation, however, SFAS No. 123 will require
additional footnote disclosures relating to the effect of using a fair
value-based method of accounting for stock-based compensation.
NOTE 2: BUSINESS ACQUISITIONS
On May 2, 1994, the Company acquired, through its wholly-owned subsidiaries,
ownership of Collitex, S.r.l. and its affiliates (the Collitex Group), an
Italian company. The total purchase price, net of cash acquired, was
approximately $12.6 million, which included issuance of 156,250 shares of the
Company's common stock valued at $8.96 per share (share amounts adjusted for
subsequent stock split) and $619 due in April 1997. In addition, up to $1.5
million of additional consideration may be paid in April 1997, if the average
earnings of the Collitex Group in the 1994-96 period exceeds a stipulated base
level. The Company believes such payments are assured based on the earnings of
Collitex through 1995 and, accordingly, has accrued the additional purchase
price of $1.5 million as of December 31, 1995. This resulted in an increase to
goodwill and other long-term liabilities.
On October 10, 1994, the Company acquired, through its wholly-owned
subsidiaries, Orvafin S.r.l. and its affiliates (Orvac), an Italian company. The
total purchase price, net of cash acquired, was $6.1 million, which included
issuance of 156,250 shares of the Company's common stock, valued at $8.70 per
share (share amounts adjusted for subsequent stock split) and $761 which was
paid in October 1995.
These acquisitions are being accounted for as purchases with assets acquired and
liabilities assumed recorded at their estimated fair values at the date of
acquisition. The excess of the purchase price and transaction costs over the
fair value of net assets acquired is recorded as goodwill.
F - 8
<PAGE> 32
The operating results of the Collitex Group and Orvac are included in the
accompanying consolidated statements of income beginning May 2, 1994 and October
10, 1994, respectively.
The following unaudited proforma results of operations assumes the acquisitions
occurred at the beginning of 1993. These proforma results do not purport to be
indicative of the results of operations which may result in the future.
<TABLE>
<CAPTION>
Years Ended December 31
(Unaudited)
1994 1993
---- ----
<S> <C> <C>
Sales $175,643 $155,346
Net income $ 12,753 $ 10,700
Earnings per share $ 0.58 $ 0.49
</TABLE>
In January 1996, the Company, through its United Kingdom subsidiary, purchased
the outstanding capital stock of Brian Pulfrey Limited (Pulfrey). The purchase
price was approximately $4.3 million and is subject to adjustment for changes in
shareholders' equity, as defined. Pulfrey manufactures printed labels and tags
principally for U.K. apparel and retail companies. The Pulfrey acquisition is
not expected to have a material effect on the Company's financial statements.
NOTE 3: INVESTMENT IN AFFILIATE
On June 29, 1995, the Company invested $15.0 million in a new joint venture
company, which simultaneously acquired Monarch Marking Systems, Inc. and related
companies (Monarch). Monarch manufactures and markets marking equipment and
supplies in the U.S., United Kingdom, Germany, France, Mexico, Canada, Hong Kong
and Australia, and sells and distributes marking equipment and supplies in 75
other countries around the world. The Company's investment, which represents a
49% interest (initially 49.5%) is being accounted for using the equity method.
As of December 31, 1995, the Company's investment in Monarch represents the
initial investment, together with related costs and expenses, plus the Company's
equity in Monarch's net income for the period June 29, 1995 to December 31,
1995.
The following unaudited proforma results of operations assume the investment and
acquisition occurred at the beginning of 1994, and include the proforma results
of the Collitex and Orvac acquisitions discussed in Note 2 above. The Monarch
purchase price allocation is not complete, and adjustments, which are not
expected to be material to the Company's share of Monarch's net income, may be
necessary. In the 1995 period, Monarch's results include $6.1 million of
non-recurring charges for adjustments to operating items and accordingly, the
proforma results shown below reflect the Company's share of these charges. These
proforma results do not purport to be indicative of the results of operations
which may result in the future.
F - 9
<PAGE> 33
<TABLE>
<CAPTION>
Years Ended December 31,
(Unaudited)
1995 1994
---- ----
<S> <C> <C>
Sales $201,436 $175,643
-------- --------
Net income $ 14,537 $ 14,771
-------- --------
Earnings per share $ 0.65 $ 0.67
-------- --------
</TABLE>
Following is condensed financial information for Monarch as of December 31, 1995
and for the period from the June 29, 1995 acquisition date through December 31,
1995.
<TABLE>
<CAPTION>
<S> <C>
Income Statement Data:
Net revenues $128,123
--------
Gross profit $ 49,115
--------
Net income $ 1,209
--------
Balance Sheet Data:
Current assets $107,203
Non-current assets 86,642
--------
$193,845
========
Current liabilities $ 57,877
Long-term debt 100,000
Other long-term liabilities 6,014
Shareholders' equity 29,954
--------
$193,845
========
</TABLE>
Monarch's ability to pay dividends is restricted under the terms of its
revolving bank credit agreement.
NOTE 4: INVENTORIES
The components of inventories are set forth below:
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
Raw materials $16,603 $13,484
Work-in-Process 2,850 3,267
Finished goods 9,869 10,294
------- -------
$29,322 $27,045
======= =======
</TABLE>
If all inventories were reported on a FIFO basis, inventories would be
approximately $1,070 and $648 higher at December 31, 1995 and 1994,
respectively.
F - 10
<PAGE> 34
NOTE 5: PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment is set forth below:
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
Machinery and equipment $ 65,328 $ 58,408
Buildings and building improvements 17,148 14,023
Land 1,442 1,149
-------- --------
83,918 73,580
Accumulated depreciation (30,062) (23,533)
-------- --------
$ 53,856 $ 50,047
======== ========
</TABLE>
Estimated useful lives are principally:
Buildings and building improvements 10 to 40 years
Machinery and equipment 10 years
NOTE 6: DUE TO BANKS
A summary of amounts due to banks is set forth below:
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
Unsecured bank line of credit (a) $ -- $1,000
Bank overdraft 1,623 1,035
Foreign bank loan (b) 1,355 2,860
Other foreign 13 449
------ ------
$2,991 $5,344
====== ======
</TABLE>
(a) In June 1994, the Company entered into an unsecured line of credit with a
bank which provides for a maximum of $5.0 million of borrowings. The
Company has the option of electing the lending bank prime rate (8.5% at
December 31, 1995 and 1994) or the London Interbank Offering Rate plus .65%
- 1.15% depending on the fixed charge coverage ratio of the Company at the
date of the borrowings, as defined by the credit agreement (6.8% at
December 31, 1994). The bank requires the Company to remain in compliance
with the provisions of the unsecured revolving bank facility described in
Note 7 below. The average outstanding debt for the years ended 1995 and
1994 was $573 and $940, respectively, with average interest rates of 7.2%
and 6.0%, respectively.
(b) The foreign bank loan represents a borrowing incurred in October 1994 to
finance a portion of the acquisition of Orvac. The loan bears interest at
the lending bank prime rate (11.75% and 9.5% at December 31, 1995 and 1994,
respectively). The average outstanding debt for the years ended 1995 and
1994 was $1.7 million and $1.9 million, respectively, with average interest
rates of 11.9% and 9.5%, respectively.
F - 11
<PAGE> 35
NOTE 7: LONG-TERM DEBT
A summary of long-term debt is set forth below:
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
Unsecured revolving bank facility (a) $20,900 $11,100
Secured and unsecured loans on foreign
property, plant and machinery (b) 2,309 2,795
Other 441 542
------- -------
23,650 14,437
Less current maturities 529 641
------- -------
$23,121 $13,796
======= =======
</TABLE>
Maturities of long-term debt for the five years subsequent to December 31, 1995
are: $529, $589, $647, $21,313, $168 and $403 thereafter.
(a) The unsecured revolving bank facility provides for a maximum of $43.0
million (up to $30.0 million to finance acquisitions) of borrowings and
expires in 1999. On borrowings under this revolver, the Company has the
option of electing the lending bank prime rate (8.5% at December 31,
1995 and 1994) or the London Interbank Offering Rate plus .75% - 1.25%
(6.4% and 6.9% at December 31, 1995 and 1994, respectively), depending
on the fixed charge coverage ratio of the Company at the date of the
borrowings, as defined by the credit agreement. At December 31, 1995
and 1994, there was $22.1 million and $31.9 million available under
this facility. The credit agreement provides for the reduction of the
commitment at the rate of $1.25 million per quarter commencing in
March, 1996. There is a commitment fee of .25% - .375% on the average
unused portion.
The agreement requires the Company, among other things, to maintain
working capital of no less than $31.0 million and tangible net worth
(as defined) of no less than $70.0 million from December 31, 1995
through December 30, 1996; a current ratio of no less than 2.0 to 1;
and a ratio of total liabilities to net worth of no greater than 1 to
1. The Company is in compliance with all covenants as of December 31,
1995 and believes that the covenants will not restrict its future
operations.
(b) The balances outstanding at December 31, 1995 and 1994 are payable by
the Collitex Group, bear interest at rates ranging from 4.75% - 13.5%,
mature serially through 2003 and are secured by property, plant,
machinery and lending institution bonds.
F - 12
<PAGE> 36
NOTE 8: INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal
Current $ 3,042 $ 2,480 $ 2,584
Deferred 974 1,165 903
Foreign
Current 1,850 831 933
Deferred (117) 214 (25)
State 643 769 707
------- ------- -------
$ 6,392 $ 5,459 $ 5,102
======= ======= =======
</TABLE>
The cumulative amounts of each temporary difference that comprise the net
deferred tax liability are as follows:
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Depreciation and other property basis
differences $ 11,042 $ 10,391 $ 4,689
Costs capitalized to inventory for
income tax purposes (424) (470) (483)
Accrued liabilities and allowances not
currently deductible (56) (333) (390)
Other 47 -- --
-------- -------- --------
$ 10,609 $ 9,588 $ 3,816
======== ======== ========
</TABLE>
An analysis of the differences between the federal statutory income tax rate and
the effective tax rate is set forth below:
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 34.0% 34.0%
State income tax, net of federal income
tax benefit 1.9 2.9 3.2
Foreign taxes less than Federal rate (10.5) (6.5) (4.2)
All other, net 2.5 1.6 2.3
----- ---- ----
28.9% 32.0% 35.3%
===== ==== ====
</TABLE>
Collitex and Orvac currently benefit from tax incentives in Italy which
significantly reduce the companies' effective tax rate. These incentives expire
from 1996 through 1999.
F - 13
<PAGE> 37
United States income taxes have not been provided on undistributed foreign
earnings of $27.2 million since the Company intends to permanently reinvest such
earnings in expanding foreign operations. The unrecognized U.S. tax liability on
the undistributed earnings is approximately $4.1 million at December 31, 1995.
Total foreign based pre-tax income was approximately $11.5 million, $6.3 million
and $4.4 million for 1995, 1994 and 1993, respectively.
NOTE 9: COMMITMENTS AND CONTINGENT LIABILITIES
A manufacturing facility in Sayre, Pennsylvania, owned beneficially by the
principal shareholders of the Company, is leased at an annual rental of $108
through 1996. An office building in Pearl River, New York, also owned
beneficially by the principal shareholders, was leased at an annual rental of
$100 through 1995.
Total rental expense for all operating leases amounts to $2,373 in 1995, $1,934
in 1994 and $1,700 in 1993. Minimum rental commitments for all noncancelable
operating leases for the years 1996-2000 are: $2,274, $1,639, $1,326, $1,225 and
$1,157, respectively. The minimum total rental commitment for all years
subsequent to 2000 is $4,120.
The Company accrues severance expense for employees of its Italian subsidiaries,
as required by Italian statute, and these amounts are included in other
liabilities in the accompanying financial statements.
The Company has been named a potentially responsible party related to
contamination which occurred at certain superfund sites. Management believes the
ultimate outcome of settling these contingencies is not likely to exceed $100.
In the ordinary course of business, the Company and its subsidiaries are
involved in certain disputes and litigation, none of which will in the opinion
of management, have a material adverse effect on the Company's financial
position or results of operations.
NOTE 10: SHARES OUTSTANDING AND SHAREHOLDERS' EQUITY
On April 24, 1990, the Company's shareholders approved the 1990 Employee Stock
Option Plan under which 1,997,660 shares of common stock, as adjusted for
subsequent stock dividends, are reserved for issuance upon the exercise of
options to be granted to key employees and directors. The plan provides for such
issuances in the form of qualified or non-qualified stock options, and stock
appreciation rights may be granted in tandem with non-qualified stock options.
The option price per share of qualified stock options cannot be less than 100%
of the market value at the date of grant. The option price per share of
non-qualified stock options and stock appreciation rights are determined by the
Board of Directors at its sole discretion.
F - 14
<PAGE> 38
The following is a summary of outstanding stock options:
<TABLE>
<CAPTION>
Number of Shares(a) Option Price(a)
------------------- ---------------
<S> <C> <C>
1993
- ----
Granted 168,355 $ 8.96 - 9.86
Exercised 54,907 2.66 - 6.32
Canceled 7,813 6.31 - 16.27
Outstanding and exercisable,
end of year 653,776 1.38 - 10.30
1994
- ----
Granted 93,750 $ 8.80
Exercised 77,320 2.35 - 5.01
Canceled 8,986 11.20 - 13.87
Outstanding and exercisable,
end of year 661,220 1.38 - 10.30
1995
- ----
Granted 275,125 $ 8.00 - 12.10
Exercised 173,147 1.51 - 11.20
Canceled 1,911 1.50
Outstanding and exercisable,
end of year 761,287 1.38 - 12.10
</TABLE>
(a) Adjusted for subsequent stock splits.
On August 9, 1995, August 15, 1994 and August 10, 1993, the Board of Directors
declared 25% stock splits, effected in the form of stock dividends. All per
share information presented in the accompanying financial statements has been
adjusted to reflect these stock dividends.
NOTE 11: EMPLOYEE SAVINGS PLAN
The Company maintains a voluntary employee savings plan adopted pursuant to
Section 401(k) of the Internal Revenue Code. Pursuant to the Plan, the Company,
at its option, contributes 40% of employee savings up to 4% of salary. The
Company's contribution under the Plan was $339, $320 and $274 during 1995, 1994
and 1993, respectively. The Company does not provide post-retirement or
post-employment benefits.
NOTE 12: BUSINESS SEGMENTS
The Company operates as a one-segment business, engaged in the design,
development, manufacture and distribution of label systems, bar code systems,
labels, tags and related supplies and services for apparel manufacturers,
retailers and other soft goods industries. The Company's manufacturing
facilities are located in North America (principally the U.S.), Europe
(principally Germany, Italy and the United Kingdom) and Asia (principally Hong
Kong). Included in the Company's consolidated balance sheet at December 31, 1995
are the net assets of the Company's European and Asian operations of
approximately $29.6 million and $11.8 million, respectively.
F - 15
<PAGE> 39
The following presents financial information for domestic, foreign and export
operations:
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales to unaffiliated customers:
United States - Domestic $ 130,371 $ 117,647 $ 103,572
- - Export 8,359 9,347 7,709
Europe 42,653 26,685 17,038
Asia 20,053 12,933 10,528
--------- --------- ---------
Total $ 201,436 $ 166,612 $ 138,847
========= ========= =========
Operating income:
United States - Domestic $ 18,012 $ 15,364 $ 13,988
- - Export 2,347 2,570 2,141
Europe 6,912 3,372 1,621
Asia 4,993 3,126 3,071
--------- --------- ---------
32,264 24,432 20,821
Corporate expenses (9,127) (6,451) (5,871)
--------- --------- ---------
Total $ 23,137 $ 17,981 $ 14,950
========= ========= =========
Assets employed:
United States $ 96,054 $ 75,803 $ 70,536
Europe 47,591 43,807 8,775
Asia 13,495 9,093 6,182
--------- --------- ---------
Total $ 157,140 $ 128,703 $ 85,493
========= ========= =========
</TABLE>
United States assets employed are used to manufacture products sold to domestic
U.S. customers, export customers and, in certain situations, to non-U.S.
intercompany customers.
During 1995, 1994 and 1993, one customer represented 12%, 11% and 12%,
respectively, of the Company's total sales.
NOTE 13: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
A summary of accounts payable and accrued liabilities is set forth below:
<TABLE>
<CAPTION>
Dec. 31, 1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
Accounts payable $ 9,984 $ 9,551
Accrued payroll costs 4,729 3,838
Other accrued liabilities 4,430 4,864
------- -------
$19,143 $18,253
======= =======
</TABLE>
F - 16
<PAGE> 40
NOTE 14: SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes is set forth below:
<TABLE>
<CAPTION>
Years Ended December 31
1995 1994 1993
<S> <C> <C> <C>
Interest $1,507 $ 690 $ 129
Income taxes 4,600 2,444 4,002
</TABLE>
Cash paid and stock issued for business acquisitions and the fair value of
assets acquired and liabilities assumed is set forth below:
<TABLE>
<CAPTION>
Dec. 31, 1994
-------------
<S> <C>
Fair value of assets acquired,
including goodwill
of $13,627 in 1994 $ 30,835
Liabilities assumed (12,118)
--------
Purchase price 18,717
Stock issued for acquisition (2,760)
--------
Cash paid, net of cash acquired $ 15,957
========
</TABLE>
At December 31, 1995, the goodwill relating to assets acquired in 1994 was
increased by an additional $2.2 million. This increase represents contingent
payments (including any additional costs associated with these transactions)
required under the purchase agreements (Note 2).
NOTE 15. CONDENSED QUARTERLY FINANCIAL DATA
(Unaudited)
<TABLE>
<CAPTION>
(in thousands, except per share)
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
1995
Sales $50,524 $52,899 $49,307 $48,706
Gross Profit 18,492 19,362 17,974 17,196
Operating income 6,114 6,736 5,549 4,738
Net income 3,941 4,408 3,631 3,729
------- ------- ------- -------
Earnings per share $ 0.17 $ 0.20 $ 0.16 $ 0.17
======= ======= ======= =======
1994
Sales $35,982 $42,462 $41,006 $47,162
Gross profit 12,584 15,722 14,126 16,787
Operating income 3,398 5,523 4,157 4,903
Net income 2,178 3,410 2,739 3,274
------- ------- ------- -------
Earnings per share $ 0.10 $ 0.15 $ 0.13 $ 0.15
======= ======= ======= =======
</TABLE>
Earnings per share have been adjusted to reflect stock dividends.
F - 17
<PAGE> 41
PAXAR CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
Additions
Charged
Balance at (credited) to
Beginning Costs and Balance at
Description of Year Expenses Other Charges Deductions End of Year
----------- ---------- ------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1995
Allowance for doubtful
accounts $ 506 $ 252 $ -- $173 (2) $ 585
Year ended December 31, 1994
Allowance for doubtful
accounts $ 411 $ (24) $476 (1) $357 (2) $ 506
Year ended December 31, 1993
Allowance for doubtful
accounts $ 372 $ 332 $ -- $293 (2) $ 411
</TABLE>
(1) Allowance established related to acquisitions.
(2) Write-off of uncollectible accounts, net of recoveries and other.
F - 18
<PAGE> 42
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.
PAXAR CORPORATION
By:/s/ Arthur Hershaft
---------------------------
Arthur Hershaft, Chairman
of the Board of Directors,
and Chief Executive Officer
Dated: March 27, 1996
24
<PAGE> 43
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.
By: /s/ Arthur Hershaft By: /s/ Jack Plaxe
----------------------------- ---------------------------
Arthur Hershaft, Chairman Jack Plaxe, Chief Financial
of the Board of Directors, Officer and Secretary
and Chief Executive Officer (Principal Financial and
(Principal Executive Officer) Accounting Officer)
Dated: March 27, 1996 Dated: March 27, 1996
By: /s/ Victor Hershaft By: /s/ Leo Benatar
----------------------------- ---------------------------
Victor Hershaft, Leo Benatar, Director
President, Chief Operating
Officer and Director
Dated: March 27, 1996 Dated: March 27, 1996
By: /s/ Jack Becker By: /s/ Robert Laidlaw
----------------------------- ---------------------------
Jack Becker, Director Robert Laidlaw, Director
Dated: March 27, 1996 Dated: March 27, 1996
By: /s/ Robert T. Puopolo By: /s/ Sidney Merians
----------------------------- ---------------------------
Robert T. Puopolo, Sidney Merians, Director
Director
Dated: March 27, 1996 Dated: March 27, 1996
By: /s/ David E. McKinney By: /s/ Walter W. Williams
----------------------------- ---------------------------
David E. McKinney, Walter W. Williams, Director
Director
Dated: March 27, 1996 Dated: March 27, 1996
By: /s/ Thomas R. Loemker
-----------------------------
Thomas R. Loemker,
Director
Dated: March 27, 1996
25
<PAGE> 44
EXHIBIT INDEX
Exhibit No. Description
- ---------- ----------------------------------------------
EX-11.1 Statement re Computation of Per Share Earnings
EX-21.1 List of Subsidiaries of Registrant
EX-23.1 Consent of Independent Public Accountants
EX-27 Financial Data Schedule
<PAGE> 1
Exhibit 11.1
PAXAR CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
(In thousands, except per
share amounts)
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income $15,709 $11,601 $ 9,358
======= ======= =======
Earnings per share $ 0.70 $ 0.53 $ 0.43
======= ======= =======
Earnings per share assuming full dilution $ 0.70 $ 0.53 $ 0.43
======= ======= =======
Weighted average number of common shares
outstanding 22,102 21,690 21,430
Common stock equivalents:
Add: Net shares assumed to be issued for
dilutive stock options 320 248 349
------- ------- -------
Total weighted average common and common
equivalent shares outstanding 22,422 21,938 21,779
======= ======= =======
Weighted average number of common shares
outstanding 22,102 21,690 21,430
Common stock equivalents, assuming full
dilution:
Add: Net shares assumed to be issued for
dilutive stock options 363 248 369
------- ------- -------
Total weighted average number of shares
outstanding assuming full dilution 22,465 21,938 21,799
======= ======= =======
</TABLE>
<PAGE> 2
EXHIBIT 21.1
PAXAR CORPORATION
SUBSIDIARIES
Company Jurisdiction of Organization
- ------- ----------------------------
North Middletown Road Netherlands
Holdings, B.V.
Packaging Systems International, U.S. Virgin Islands
Incorporated
North America:
- -------------
Paxar Capital Corporation New York
Woven Label Holdings, Inc. New York
Systems Holdings, Inc. New York
Paxar Latin America, S.A. de C.V. Mexico
Europe:
- ------
Paxar Europe Limited England
Collitex S.r.l. Italy
Tessitura Italiana Etichette S.r.l. Italy
Astria S.r.l. Italy
Orvac S.r.l. Italy
Orvac Sud S.r.l. Italy
Paxar Italia S.r.l. Italy
Paxar Deutschland, GmbH Germany
Paxar Polska Sp.zo.o. Poland
Paxar Iberia S.A. Spain
Paxar Benelux BVBA Belgium
Brian Pulfrey, Ltd. England
Asia:
- ----
Paxar Far East Ltd. Hong Kong
Paxar (Singapore) Pte Ltd. Singapore
<PAGE> 1
EXHIBIT 21.1
PAXAR CORPORATION
SUBSIDIARIES
Company Jurisdiction of Organization
- ------- ----------------------------
North Middletown Road Netherlands
Holdings, B.V.
Packaging Systems International, U.S. Virgin Islands
Incorporated
North America:
- -------------
Paxar Capital Corporation New York
Woven Label Holdings, Inc. New York
Systems Holdings, Inc. New York
Paxar Latin America, S.A. de C.V. Mexico
Europe:
- ------
Paxar Europe Limited England
Collitex S.r.l. Italy
Tessitura Italiana Etichette S.r.l. Italy
Astria S.r.l. Italy
Orvac S.r.l. Italy
Orvac Sud S.r.l. Italy
Paxar Italia S.r.l. Italy
Paxar Deutschland, GmbH Germany
Paxar Polska Sp.zo.o. Poland
Paxar Iberia S.A. Spain
Paxar Benelux BVBA Belgium
Brian Pulfrey, Ltd. England
Asia:
- ----
Paxar Far East Ltd. Hong Kong
Paxar (Singapore) Pte Ltd. Singapore
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report, dated February 14, 1996, on the consolidated financial statements and
schedule of Paxar Corporation included in this Form 10-K, into the Company's
previously filed registration statements.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
March 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000075681
<NAME> PAXAR CORPORATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,466
<SECURITIES> 0
<RECEIVABLES> 31,321
<ALLOWANCES> 0
<INVENTORY> 29,322
<CURRENT-ASSETS> 70,937
<PP&E> 83,918
<DEPRECIATION> 30,062
<TOTAL-ASSETS> 157,140
<CURRENT-LIABILITIES> 24,258
<BONDS> 0
0
0
<COMMON> 2,221
<OTHER-SE> 92,975
<TOTAL-LIABILITY-AND-EQUITY> 157,140
<SALES> 201,436
<TOTAL-REVENUES> 201,436
<CGS> 128,412
<TOTAL-COSTS> 128,412
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,628
<INCOME-PRETAX> 22,101
<INCOME-TAX> 6,392
<INCOME-CONTINUING> 15,709
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,709
<EPS-PRIMARY> .70
<EPS-DILUTED> 0
</TABLE>
