<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1994
Commission file number 0-685
PETROLITE CORPORATION
Incorporated in the State of Delaware
Employer Identification No. 43-0617572
369 Marshall Avenue, St. Louis, MO 63119
Telephone 314/961-3500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to
Section 12(g) of the Act:
Title of Class:
Capital Stock without par value
Exhibits Index is on page 16
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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, 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]
As of January 6, 1995, 11,328,778 shares of Capital Stock
were outstanding. The aggregate market value of the voting shares
held by non-affiliates of the registrant (based upon the closing
bid price of the Registrant's Capital Stock on January 6, 1995 of
$27.50 per share) was approximately $163 million.
Documents Incorporated by Reference:
1. Portions of Petrolite Corporation 1994 Annual Report
(Part I, II, III and IV of this Report.)
2. Portions of Petrolite Corporation Notice of Annual
Meeting and Proxy Statement for the Registrant's Annual
Meeting of Stockholders to be held March 6, 1995, which
Proxy Statement shall be filed wihin 120 days of the end
of the Registrant's fiscal year. (Part III of this
Report)
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PART I
ITEM 1. BUSINESS
(a) General Development of Business. The general development
--------------------------------
of the registrant's business for the fiscal year ended October 31,
1994, is set out in the registrant's 1994 Annual Report to
Stockholders on pages 1 through 5 and is incorporated by reference
herein. No material changes in the registrant's mode of doing
business occurred during the five years ended October 31, 1994.
(b) Financial information about Industry Segments. Industry
----------------------------------------------
segment data is set out in the registrant's 1994 Annual Report to
Stockholders on pages 13-14 under the caption "1994 Operating
Results", page 17 under the caption "Industry Segment Data", page
18 under the caption "Worldwide Operations" and page 28 under the
caption "Segment Information", and is incorporated by reference
herein.
(c) Narrative Description of Business.
----------------------------------
1) Specialty Chemical Segment. Specialty chemicals are
---------------------------
produced primarily from petrochemicals and petroleum derived raw
materials, and include demulsifiers, corrosion inhibitors, drilling
fluids, polymers and waxes, water treating chemicals, and fuel and
other additives. Sales for the three major product groupings
within the specialty chemical segment (oil field chemicals,
industrial chemicals, and industrial polymers and waxes) for the
three fiscal years through October 31, 1994, are summarized in the
1994 Annual Report to Stockholders on page 17 under the caption
"Industry Segment Data" and is incorporated by reference herein.
Registrant markets its products and services primarily to
producers and transporters of crude oil and natural gas, related
service companies and petroleum refineries throughout the world
through the registrant's own field staff and a limited number of
agents and distributors. The registrant also serves other major
markets such as adhesives, agribusiness, coatings, packaging,
petrochemicals, plastics fabrication, power utilities, and printing
inks.
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During the fiscal year ended October 31, 1994, there were no
material changes in the kinds of products or services rendered, or
in the markets or methods of distribution by registrant. It is the
continuing nature of the business for a number of new or improved
products to be introduced annually; typically, no individual new
product or service is immediately material to sales or earnings.
Registrant's joint business alliance with Energy BioSystems
Corporation (EBC) continues to make steady progress in its efforts
to commercialize a breakthrough biocatalytic desulfurization (BDS)
process for hydrocarbons. Registrant's participation will include
22% of EBC's worldwide gross profits from biodesulfurization unit
sales and fees. In return, registrant will provide development
resources, separation technology, engineering know-how and ongoing
customer service for all BDS units worldwide.
Registrant is dependent on the availability of petrochemicals
and petroleum-derived raw materials and supplies, which have been
available in the past in adequate quantities. In the past year,
registrant's operations were not affected materially by any raw
material shortages. Registrant presently does not foresee any
shortage of materials in the near future.
Registrant has numerous patents, patent applications, and
licenses under patents, of various durations which, in the
aggregate, are material to the operation of the registrant. The
registrant, however, does not believe that expiration of any
particular patent or group thereof would have a material adverse
effect upon its business as a whole.
The specialty chemical business is not considered to be
seasonal.
The registrant traditionally has carried sufficient inventory
at various stages of production in order to respond quickly to the
needs of its customers. Accounts receivable generally are due
within thirty days of invoicing, and letters of credit are employed
when deemed appropriate. The registrant believes that its
practices are consistent with industry standards.
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Registrant's customers are located throughout the world and no
one customer constitutes more than 10% of the registrant's
business.
Foreign operations account for a significant portion of the
registrant's specialty chemical business. Non-U.S. revenues were
approximately 32% to 33% of total specialty chemical revenues
during each of the last three years.
Orders from customers for specialty chemical products
generally are filled from stock or manufactured within a few days
or weeks after receipt of the order and, as a result, backlog of
orders is not significant in relation to total annual dollar volume
of sales.
The registrant's specialty chemical product lines, oil field
chemicals, industrial chemicals, and industrial polymers and waxes
are in competition with a number of manufacturers. Competitive
companies vary in size from large international companies to small
companies which may compete with the registrant in the sale of one
product or a line of products. All aspects of this business are
considered to be very competitive. Registrant is recognized as a
leader in providing services and products to the oil field chemical
market. In the registrant's opinion, registrant's overall
competitive position in the market has not changed materially in
the past fiscal year, although registrant is unable to predict the
extent to which its business may be affected by future competition
or by consolidations within the industry. Information on
acquisitions, joint ventures, and alliances made by the registrant
is set out in the registrant's 1994 annual report on page 15 under
the caption "Acquisitions, Joint Ventures, and Alliances" and is
incorporated by reference herein.
2. Equipment Segment - The equipment segment designs,
-----------------
installs and services processing equipment for petroleum,
petrochemical and electrical power generating industries. Products
and services are marketed both domestically and in foreign
countries through the registrant's own field staff and a limited
number of agents and distributors.
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During the past year the registrant has not had, and in the
foreseeable future does not anticipate, any shortage of raw
materials.
Certain products of the equipment segment are covered under
patents, patent applications, and licenses under patents.
Registrant does not believe that expiration of any particular
patent or group thereof would have a material adverse effect upon
its business as a whole.
The equipment segment business is not seasonal, but is subject
to the business cycles of the industries which it serves.
This segment primarily produces processing equipment upon
order from customers. Accounts receivable generally are due within
thirty days of invoicing, and letters of credit are employed when
deemed appropriate. The registrant believes that its practices are
consistent with industry standards.
Registrant's equipment customers are located throughout the
world and no one customer constitutes a significant portion of the
registrant's business on a continuing basis. However, one or
several equipment contracts may represent a significant portion of
the equipment segment revenues in a particular year.
Foreign operations account for a significant portion of the
registrant's equipment business. Non-U.S. revenues ranged from 43%
to 69% of total equipment revenues during the last three years.
The amount of backlog orders for the equipment segment at
October 31, 1994, approximates $11.1 million. Substantially all of
these orders are expected to be completed in fiscal 1995. Backlog
orders as of October 31, 1993 were $11.5 million.
The equipment segment is in competition with similar equipment
and services offered by other competitors. Although, in
registrant's opinion, registrant's competitive position in its
equipment business has not changed materially in the past year, the
registrant is unable to predict the extent to which its business
may be affected by future competition.
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3. Registrant's Business in General - The registrant expended
--------------------------------
$12,737,000, $13,587,000, and $12,224,000, in fiscal years 1994,
1993 and 1992, respectively, on research activities relating to
development of new products and services, and on improvement of
existing products and services. During the last three years,
approximately 94% to 96% was applicable to the registrant's
specialty chemical products segment. The registrant also continued
its strong commitment to technology by continuing to increase its
emphasis on field applications support which, when combined with
the research and development amounts, resulted in total technology
expenditures of $23,267,000, $24,444,000, and $21,764,000 in fiscal
years 1994, 1993 and 1992, respectively. The registrant directly
sponsors substantially all of its research activities.
The registrant is subject to various federal, state and local
laws and regulations concerning environmental matters. The
registrant maintains a separate Safety, Health and Environmental
Affairs Department charged with the responsibility of monitoring
compliance with these various laws and regulations. For fiscal
year 1994, these efforts did not result in any material capital
expenditure or material charges to income, and it is not likely
that these efforts will result in any material capital expenditure
or material charges to income during fiscal year 1995.
Approximately 1,780 persons are employed worldwide by
registrant and its subsidiaries.
(d) Financial Information About Foreign and Domestic
------------------------------------------------
Operations and Export Sales. Information under this caption is
- ----------------------------
included in the registrant's 1994 Annual Report to Stockholders for
each of the three years ended October 31, 1994, 1993, and 1992,
respectively, on page 18 under the caption "Worldwide Operations"
and is incorporated by reference herein.
Substantially all of the registrant's non-U.S. sales are made
to major international companies, national oil companies and
utilities, and contractors and distributors of long standing.
Letters of credit are required when and where appropriate. The
risk attendant to the foreign business conducted by registrant
and its subsidiaries is believed to be
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greater than the risk involved in doing business within the United
States. The registrant protects itself from potential losses due to
foreign currency fluctuations through pricing adjustments, maintenance
of offsetting asset and liability balances, and utilization of foreign
currency futures contracts when deemed appropriate.
ITEM 2. PROPERTIES
<TABLE>
Principal properties of the registrant and its subsidiaries
are set forth in the following table:
<CAPTION>
Type of Industry Segment
Facility User
------------- ------------------
<S> <C> <C>
Petrolite Corporation -
Barnsdall, Oklahoma Manufacturing Specialty Chemical
La Porte, (Bayport) Texas Manufacturing Specialty Chemical
Brea, California Real Estate Corporate
Houston, Texas Sales Office Specialty Chemical
Kilgore, Texas Manufacturing Specialty Chemical
Rancho Dominguez, California Sales Office and Specialty Chemical
Warehouse
Midland, Texas Blending and Warehouse Specialty Chemical
Tulsa, Oklahoma Administrative Specialty Chemical
Webster Groves, Missouri Manufacturing, Specialty Chemical/
Research and Corporate
Administrative
Houston, Texas Manufacturing, Equipment
Engineering and
Administrative
Pasadena, Texas Manufacturing Specialty Chemical
Consolidated Subsidiaries -
Luzzato & Figlio (France) S.A. Sales Office Specialty Chemical
(Paris, France)
Petrolite Canada Inc. Blending Specialty Chemical
(Nisku, Alberta Canada)
Petrolite Limited Manufacturing and
(Kirkby, England) Administrative Specialty Chemical
Petrolite Pacific Pte. Ltd. Blending Specialty Chemical
(Singapore)
Petrolite Saudi Arabia Ltd. Blending Specialty Chemical
(Dammam, Saudi Arabia)
P.T. Petrolite Indonesia Manufacturing Specialty Chemical
Patrama (Batam, Indonesia)
Petrolite Suramericana, S.A. Manufacturing Specialty Chemical
(Barcelona, Venezuela) and Administrative
</TABLE>
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All properties are owned by the registrant, except for the
following:
Registrant sold the Pasadena, Texas specialty chemical
manufacturing facility on December 15, 1994.
Sales office facilities located at 16010 Barker's Point Lane,
Houston, Texas, are leased under an agreement which expires April
14, 1997.
Petrolite Saudi Arabia Ltd. blending facilities are located on
leased properties with the lease expiring 2002.
Petrolite Pacific Pte. Ltd. blending facilities are located on
leased properties with the lease expiring 2009.
P.T. Petrolite Indonesia Patrama manufacturing facilities are
located on leased property with the lease expiring in October,
2015.
In addition to the foregoing properties, the registrant and
its subsidiaries occupy a number of small general and sales offices
under short-term leases and its subsidiaries occupy a number of
distribution warehouses located on small sites owned in fee.
Although facilities are of varying ages, the registrant
considers them generally to be well maintained, equipped with
modern and efficient equipment, and in good operating condition.
Current productive capacity is adequate to meet demands for the
immediate future.
ITEM 3. LEGAL PROCEEDINGS
Various claims, lawsuits and other legal and administrative
proceedings arising in the ordinary course of business are pending
against the registrant. Management and legal counsel are of the
opinion that any sum the registrant may be required to pay in
connection with the ultimate disposition of such proceedings in
excess of the amounts recorded or disclosed in the financial
statements of the registrant will not have a material adverse
effect on its financial condition or results of operations.
The registrant has been named a potentially responsible party
(PRP) under the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 with
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respect to three "Superfund" sites. The registrant has not owned or
operated any of the sites and other PRPs also have been so designated
with respect to all such sites. Although this law technically imposes
joint and several liability on each responsible party at each site,
the extent of the registrant's expected financial contribution is
expected to be limited based on the number of other PRPs and the
relative volumes and types of materials involved at each site that may
be attributable to the registrant. The registrant also is involved in
remedial response and voluntary environmental cleanup, in some
cases under the direction of governmental agencies, at other
locations which are not the subject of the Superfund law. Subject
to the difficulty in estimating future environmental costs, the
registrant expects that any sums it may be required to pay in
connection with such environmental matters in excess of the amounts
recorded in the financial statements of the registrant will not
have a material adverse effect on its financial condition or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders,
through the solicitation of proxies or otherwise, during the fourth
quarter of fiscal 1994.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Information regarding registrant's capital stock appears on
page 16 of the registrant's 1994 Annual Report to Stockholders
under the caption "Stockholders' Equity/Capital Stock" and is
incorporated by reference herein. As of January 6, 1995 the
registrant had 2,194 stockholders of record.
ITEM 6. SELECTED FINANCIAL DATA
A summary of selected financial data for the five years ended
October 31, 1994 appears on pages 30 and 31 of the registrant's
1994 Annual Report to Stockholders under the caption "11-Year
Summary", and is incorporated by reference herein.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information under this caption is in the registrant's 1994
Annual Report to Stockholders on pages 13 through 18, under the
caption "Financial Review", and on page 24 under the captions
"Short-Term Borrowings and Lines of Credit", and "Long-Term Debt" and
is incorporated by reference herein.
During the fourth quarter, the registrant announced its plan
to complete its program to cease manufacturing at its Webster
Groves, Missouri facility by October 31, 1995. For additional
information, see the caption "Reorganization" on page 26 of the
registrant's 1994 Annual Report to Stockholders.
During fiscal 1994, inflation for both North America and the
United Kingdom, which represent a significant part of the
registrant's worldwide operations, approximated 2 1/2%. Inflation in
other countries of less significance to the registrant generally
ranged from 1 1/2% to 9%, except for certain countries in Latin
America which experienced much higher inflation rates. Raw
material price increases experienced by the registrant approximated
the inflation rate in North America and increased only nominally in
the United Kingdom over the prior year. The downturn in the North
American oilfield marketplace resulted in intense competitive
pressures in 1994. These competitive pressures led to flat sales
prices throughout the year. Changes in revenues were primarily a
result of product volume and product mix rather than sales price
adjustments.
During the first quarter of fiscal 1994, the registrant
adopted Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes." The cumulative effect of
implementing this new standard was a one-time, non-cash tax credit
of $2.0 million, or $0.18 per share.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements of the registrant and its
subsidiaries, and the Notes to Consolidated Financial Statements,
together with the report thereon of Price Waterhouse LLP dated
November 30, 1994, appearing on pages 19 through 29, the "Quarterly
Results" on page 14, "Industry Segment Data" on page 17, and
"Worldwide Operations" information on page 18 in the registrant's
1994 Annual Report to Stockholders, are incorporated by reference
herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the registrants three most recent fiscal years there
were no changes in or disagreements with the registrants
independent accountants on accounting or financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a) Directors of registrant - Information regarding
-----------------------
identification of directors, in the registrant's Notice of Annual
Meeting and Proxy Statement for the registrant's Annual Meeting of
Stockholders to be held March 6, 1995, which Proxy Statement shall
be filed within 120 days of the end of the registrant's fiscal
year, hereby is incorported by reference. Also see information on
page 32 of the registrant's Annual Report to Stockholders under the
caption "Corporate Organization" which is incorporated by reference
herein.
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<TABLE>
b) Executive officers of registrant - Executive officers of
the registrant, their ages and positions held, are as follows:
<CAPTION>
Date elected to Age at
Name Title present office Oct. 31, 1994
- ------------------- ---------------------------- --------------- -------------
<S> <S> <C> <C>
John M. Casper Vice President and 02/14/94 49
Chief Financial Officer
Ralph J. Churchill Vice President, 08/09/89 50
General Manager,
Tretolite Division
Toby R. Graves Vice President; 06/08/88 48
General Manager,
Polymers Division
William F. Haberberger Controller 03/04/91 44
John F. McCartney Vice President, General Counsel 08/09/90 58
Charles R. Miller Corporate Secretary, 08/12/92 39
Associate General Counsel
William E. Nasser Chairman, President and 05/19/88 55
Chief Executive Officer
Derek Redmore Vice President, 12/08/93 56
Technology
Steven F. Schaab Treasurer 01/01/93 42
Richard J. Seidel Vice President; 04/08/85 53
General Manager,
Petreco Division
J.S. Titone Group Vice President, 09/15/82 53
Chemicals
James M. Zemenick Vice President, 06/01/82 47
Administration and
Corporate Development
</TABLE>
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c) Identification of certain significant employees - Mr.
------------------------------------------------
Stuart Monro joined the registrant in January, 1978. After having
served in various sales and managerial positions within
international operations, in March of 1989 he was appointed
Managing Director of Petrolite Ltd. In June 1991, he was also
appointed to the position of General Manager of the newly created
EuroChem Division. He holds various diplomas and degrees including
a Licentiate in Chemistry and an M.B.A. degree in Management from
the City University in London.
Mr. David Winslett joined Petrolite in December of 1982 with
15 years of refinery and speciality chemical experience. From 1982
to 1989 Winslett was Operations Manager for the European Industrial
Chemicals business based in Kirkby, England. Since 1989, he has
served in various capacities in Petrolite's St. Louis office,
including Vice President in the Industrial Chemicals Division. On
June 16, 1993, he was promoted to General Manager of the Industrial
Chemicals Division. Winslett is a graduate of the University of
Wales with a B.Sc. (Honors) in Chemistry.
Mr. Francis X. Foran joined Petrolite in April, 1993 when the
company acquired the business and certain of the assets of Welchem,
Inc. Foran had served at Welchem as head of international
operations, and before that he served in various management
positions during his 28 years' experience in the oil service
industry worldwide. Foran is a graduate of University College
Dublin.
d) Business experience - Information regarding business
-------------------
experience of directors in the registrant's Notice of Annual
Meeting and Proxy Statement for the registrant's Annual Meeting of
Stockholders to be held March 6, 1995, which Proxy Statement shall
be filed within 120 days of the end of the registrant's fiscal
year, hereby is incorporated by reference.
Officers are elected to serve until removed or until a
successor has been elected or appointed. Except as noted below,
each of the officers in Item 10 (b) has served in his present
office for at least five years. The following is a brief
description of past positions
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of those officers who were elected to their present position within
the last five years.
Mr. John M. Casper joined the registrant in February, 1994 as
Vice President and Chief Financial Officer. He has 25 years
experience in financial and operations management, most recently as
Executive Vice President with Mitek, Inc., where he was Chief
Financial Officer and responsible for overseas operations in
Southeast Asia, Japan, Australia/New Zealand, Africa and Canada.
He holds a B.S. degree from Drexel Institute of Technology and an
M.B.A. from Oklahoma State University.
Dr. Ralph J. Churchill returned to the registrant July 1, 1989
as Vice President-Corporate Development. In June 1990, he became
Vice President of Technology and in January 1993, he also was named
to the position of Vice President, Marketing. In December, 1993,
he was appointed Vice President-Special Projects and in June, 1994,
he was appointed vice president and general manager of the
Tretolite Division. He served the registrant in various research
and management positions before leaving in 1981 to head his own
management consulting firm. He holds a Ph.D. in sanitary
engineering.
Mr. William F. Haberberger joined the Registrant in October
1977, as an internal auditor. Since 1980, he has served in various
financial managerial positions of the registrant's international
operations until his election to Controller on March 4, 1991. He
holds a B.S. degree in Business from the University of Missouri -
St. Louis and is a certified public accountant.
Mr. John F. McCartney has served as Assistant General Counsel
since joining the registrant in 1973, managing legal aspects of the
registrants international operations, primarily working to
establish subsidiaries, affiliates and joint venture companies
worldwide. He was named Vice President in August 1989. During
July 1992, he also assumed responsibility for the administration of
the Law Department and now is Vice President, General Counsel.
Mr. Charles R. Miller joined the registrant in May 1990, as an
attorney, and was elected Secretary on August 12, 1992. His title
now is Corporate Secretary, Associate
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General Counsel. He has fifteen years experience in the public and
private practice of law, most recently as an attorney in the executive
branch of Missouri state government.
Mr. William E. Nasser has been an employee of the registrant
since 1962. He served as Vice President and General Manager of
Petrolite's Specialty Polymers from March 1980 until May 1988, when
he was elected President and Chief Operating Officer. In February
1992, he also was elected Chairman of the Board and Chief Executive
Officer.
Dr. Derek Redmore joined Petrolite as a research chemist in
1965 and was promoted to group Leader in 1966. From 1972 to 1993,
he held various managerial positions with increasing responsibility
in Research and Development, most recently Director of Technology
Support. In December 1993, he was elected Vice President,
Technology. Redmore earned his B.Sc. and Ph.D. degrees in Organic
Chemistry at the University of Nottingham.
Mr. Steven F. Schaab joined the registrant in November 1992,
and was elected Treasurer effective January 1, 1993. He has 19
years of experience in financial and treasury management, most
recently with Peabody Holding Company, Inc. A certified public
accountant, he holds a B.S.B.A. degree in accounting from the
University of Missouri-Columbia.
e) Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
Information regarding compliance with Section 16(a) of the Exchange
Act is in the registrant's Notice of Annual Meeting and Proxy
Statement for the registrant's Annual Meeting of Stockholders to be
held March 6, 1995, which Proxy Statement shall be filed within 120
days of the end of the registrant's fiscal year, hereby is
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding Compensation of Executive Officers,
Retirement Benefits, and Compensation of Directors is in the
registrant's Notice of Annual Meeting and Proxy Statement for the
registrant's Annual Meeting of Stockholders to be held March 6,
1995, which Proxy Statement shall be filed within 120 days of the
end of the registrant's fiscal year,
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hereby is incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information regarding Security Ownership of Certain Beneficial
Owners and Management is in registrant's Notice of Annual Meeting
and Proxy Statement for the registrant's Annual Meeting, to be held
March 6, 1995, which Proxy Statement shall be filed within 120 days
of the end of the registrant's fiscal year, hereby is incorporated
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding Certain Transactions is in registrant's
Notice of Annual Meeting and Proxy Statement for the registrant's
Annual Meeting, to be held March 6, 1995, which Proxy Statement
shall be filed within 120 days of the end of the registrant's
fiscal year, hereby is incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
The consolidated financial statements and supplementary
information of the registrant have been incorporated by reference
under Item 8. With the exception of the aforementioned
information, and the information incorporated specifically in Items
1, 5, 6, 7, 8, 10, and 14, the Petrolite Corporation 1994 Annual
Report is not to be deemed filed as part of this report. Financial
statement schedules listed below should be read in conjunction with
financial statements in the 1994 Annual Report to Stockholders.
Financial statement schedules not included in this Form 10-K Annual
Report have been omitted because they are not applicable or because
the required information is shown in the financial statements or
notes thereto.
a) Documents filed as a part of this report:
Financial Statements previously incorporated by reference
under Item 8 herein above.
Consolidated statements of earnings for the years ended October 31,
1994, 1993 and 1992.
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Consolidated balance sheets at October 31, 1994 and 1993.
Consolidated statements of cash flows for the years ended
October 31, 1994, 1993 and 1992.
Consolidated statements of stockholders' equity for the years ended
October 31, 1994, 1993 and 1992.
Notes to consolidated financial statements.
Report of independent accountants
<TABLE>
Exhibit Index (Listed by numbers corresponding to the Exhibit
Table of Item 601 in Regulation S-K)
<CAPTION>
Exhibit No.
<C> <S>
3.1 - Restated Certificate of Incorporation of the
Registrant (Incorporated from the definitive Proxy
Statement dated January 21, 1987, Exhibit B
and the definitive Proxy Statement dated
February 3, 1984, Exhibit A).
3.2 - Bylaws of the Registrant, as adopted and restated
December 14, 1994.
4.1 - Note Purchase Agreement dated as of September 3,
1993, between the Registrant and Equity Life
Assurance Society of the United States, Aid
Association for Lutherans,The Canada Life Assurance
Company, Canada Life Insurance Company of America
(CLICA), Provident Mutual Life Insurance Company-
CALIC, Provident Mutual Life and Annuity Company
of America, Provident Mutual Life Insurance Company
of Philadelphia-SPDA filed as Exhibit 4 to the
Registrant's Annual Report on Form 10-K for the year
ended October 31, 1993, and hereby incorporated by
reference herein.
4.2 - Rights Agreement dated as of March 25, 1994,
between the Registrant and Society National Bank, as
Rights Agent, filed as Exhibit 4 to the Registrant's
current report or Form 8-K filed April 16, 1994,
and hereby incorporated by reference herein.
10.1 - 1987 Stock Incentive Plan filed as an
Exhibit to the Registrant's Form 10-K Annual Report for
the year ended October 31, 1987, and hereby incorporated
by reference herein.<F*>
10.2 - Petrolite 1993 Stock Incentive Plan, as amended on
August 8, 1994.<F*>
10.3 - Form of Executive Agreement between the Registrant
and certain executives of the Registrant,
entered into on various dates in August and
September, 1994.<F*>
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10.4 - Agreement for sale and purchase of assets dated
April 5, 1993 between Welchem, Inc. and the
Registrant, filed as Exhibit 2.1 to the Registrant's
current report on Form 8-K filed April 28, 1993,
and hereby incorporated by reference.
13.1 - Annual Report to Stockholders
21.1 - Subsidiaries of the Registrant
23.1 - Consent of Independent Accountants
24.1 - Power of Attorney
27.1 - Financial Data Schedule.
<FN>
<F*> Indicates a management contract or compensatory plan or
agreement.
</TABLE>
b) No reports on Form 8-K were filed with the SEC during the
fourth quarter of fiscal 1994.
Individual financial statements of the registrant's
subsidiaries have been omitted since the registrant is primarily an
operating registrant and the operating subsidiaries included in the
consolidated financial statements, in the aggregate, do not have
minority equity interest and/or indebtedness to any person other
than the registrant or its consolidated subsidiaries in amounts
which together exceed 5 percent of total consolidated assets at
October 31, 1994. Separate financial statements of subsidiaries
not consolidated, and 50% or less owned entities (accounted for by
the equity method) have been omitted because, if considered in the
aggregate, they would not constitute a significant subsidiary.
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.
PETROLITE CORPORATION
---------------------
(Registrant)
By s/ John M. Casper
-------------------------
John M. Casper
Vice President and
Chief Financial Officer
Dated: January 26, 1995
---------------------------------------
-19-
<PAGE> 20
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.
<TABLE>
<CAPTION>
<S> <S>
By s/ William E. Nasser By s/ John M. Casper
------------------------------------ ------------------------------------
William E. Nasser John M. Casper
Principal Executive Officer Principal Financial Officer
and Director
Dated: January 26 , 1995 Dated: January 26 , 1995
-------------------------- --------------------------
By s/ Paul F. Cornelsen<F*> By s/ William F. Haberberger
------------------------------------ ------------------------------------
Paul F. Cornelsen, Director William F. Haberberger
Principal Accounting Officer
Dated: January 26 , 1995 Dated: January 26 , 1995
-------------------------- --------------------------
By s/ Andrew B. Craig<F*> By s/ Louis Fernandez<F*>
------------------------------------ ------------------------------------
Andrew B. Craig, Director Louis Fernandez, Director
Dated: January 26 , 1995 Dated: January 26 , 1995
-------------------------- --------------------------
By s/ Paul H. Hatfield<F*> By s/ William E. Maritz<F*>
------------------------------------ ------------------------------------
Paul H. Hatfield, Director William E. Maritz, Director
Dated: January 26 , 1995 Dated: January 26 , 1995
-------------------------- --------------------------
By s/ James E. McCormick<F*> By s/ Richard L. O'Shields<F*>
------------------------------------ ------------------------------------
James E. McCormick, Director Richard L. O'Shields, Director
Dated: January 26 , 1995 Dated: January 26 , 1995
-------------------------- --------------------------
<FN>
By s/ Thomas P. Reidy<F*> <F*> By
------------------------------------ ----
Thomas P. Reidy, Director Charles R. Miller, Attorney in Fact
Dated: January 26 , 1995
--------------------------
</TABLE>
-20-
<PAGE> 1
BY-LAWS
OF
PETROLITE CORPORATION
---------------------
ARTICLE I
OFFICES
-------
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware, and the name
of the resident agent in charge thereof is The Corporation Trust
Company.
Section 2. The Corporation may also have offices at such
other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the business
of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. All meetings of the stockholders shall be held at
such place either within or without the State of Delaware as shall
be designated from time to time by the Board of Directors and
stated in the notice of the meeting.
Section 2. An annual meeting of stockholders shall be held
on the first Monday in March in each year, if not a legal holiday,
and if a legal holiday, then on the next business day following, at
APPROVED AND ADOPTED 12/13/94 PAGE 1 OF 29
<PAGE> 2
11:00 a.m. or at such other date and time and at such place as may
be determined from time to time by resolution adopted by the Board
of Directors, when they shall elect by a plurality vote a Board of
Directors, and transact such other business as may properly be
brought before the meeting.
Section 3. A majority of the stock issued and outstanding
and entitled to vote at any meeting of stockholders, the holders of
which are present in person or represented by proxy, shall
constitute a quorum for the transaction of business except as
otherwise provided by law, by the Certificate of Incorporation, or
by these By-Laws. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, a majority of the
voting stock represented in person or by proxy may adjourn the
meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. If the
adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote thereat.
Section 4. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any question
APPROVED AND ADOPTED 12/13/94 PAGE 2 OF 29
<PAGE> 3
brought before such meeting, unless the question is one upon which
by express provision of the statutes, or the Certificate of
Incorporation, or these By-Laws, a different vote is required in
which case such express provision shall govern and control the
decision of such question.
Section 5. At each meeting of the stockholders, each
stockholder having the right to vote may vote in person or may
authorize another person or persons to act for him by proxy
appointed by an instrument in writing subscribed by such
stockholder and bearing a date not more than three (3) years prior
to said meeting, unless said instrument provides for a longer
period. All proxies must be filed with the Secretary of the
Corporation at the beginning of each meeting in order to be counted
in any vote at the meeting. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual
signature, typewriting, facsimile, telegraphic transmission or
otherwise) by the stockholder or the stockholder's attorney in
fact. Each stockholder shall have one vote for each share of stock
having voting power, registered in his name on the books of the
Corporation on the record date set by the Board of Directors as
provided in Article V, Section 6 hereof. All elections shall be
had and all questions decided by a plurality vote.
Section 6. Special meetings of the stockholders, for any
purpose, or purposes, unless otherwise prescribed by statute or by
the Certificate of Incorporation, may be called at any time by the
APPROVED AND ADOPTED 12/13/94 PAGE 3 OF 29
<PAGE> 4
Board of Directors, or by a majority of the members of the Board of
Directors, or by a committee of the Board of Directors which has
been duly designated by the Board of Directors and whose power and
authority, as provided in a resolution of the Board of Directors or
in the By-Laws, includes the power to call such meetings. Special
meetings of stockholders of the Corporation may not be called by
any other person or persons. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in
the notice.
Section 7. Notice of any meeting of stockholders shall be
given either personally or by mail or telegraphic or other written
communication, charges and postage prepaid, addressed to the
stockholder at the address of such stockholder appearing on the
books of the Corporation or given by the stockholder to the
Corporation for the purpose of notice. Notice shall be deemed to
have been given at the time when delivered personally or deposited
in the mail or sent by telegram or other means of written
communication.
If any notice addressed to a stockholder at the address of
such stockholder appearing on the books of the Corporation is
returned to the Corporation by the United States Postal Service
marked to indicate that the United States Postal Service is unable
to deliver the notice to the stockholder at such address, all
future notices shall be deemed to have been duly given without
further mailing if the same shall be available to the stockholder
upon written demand of the stockholder at the principal executive
APPROVED AND ADOPTED 12/13/94 PAGE 4 OF 29
<PAGE> 5
office of the Corporation for a period of one (1) year from the
date of the giving of such notice.
Section 8. Attendance of a person at a meeting shall
constitute a waiver of notice to such person of such meeting,
except when the person objects at the beginning of the meeting to
the transaction of any business because the meeting is not lawfully
called or convened, or objects to the consideration of matters not
included in the notice of the meeting.
Section 9. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours,
for a period of at least ten (10) days prior to the meeting, either
at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
APPROVED AND ADOPTED 12/13/94 PAGE 5 OF 29
<PAGE> 6
Section 10. Action may be taken by stockholders either at an
annual or special meeting of stockholders, or stockholders may act
by written consent.
Section 11. Before any meeting of stockholders, the Board of
Directors may appoint any persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment.
If no inspectors of election are so appointed, the chairman of the
meeting may appoint inspectors of election at the meeting. The
number of inspectors shall be either one (1) or two (2). If any
person appointed as inspector fails to appear or fails or refuses
to act, the chairman of the meeting may appoint a person to fill
such vacancy.
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting,
the existence of a quorum, and the authenticity, validity and
effect of proxies;
(b) Receive votes or ballots;
(c) Hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(d) Count and tabulate all votes;
(e) Determine the result; and
(f) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
APPROVED AND ADOPTED 12/13/94 PAGE 6 OF 29
<PAGE> 7
ARTICLE III
DIRECTORS
---------
Section 1. The business and property of this Corporation
shall be managed and controlled by its Board of Directors, nine (9)
in number. Unless the Board of Directors shall otherwise
determine, no Director shall stand for re-election after he has
attained the age of seventy-two (72) years. Directors need not be
stockholders.
Section 2. The Board of Directors, by majority vote of its
members, may at any time and from time to time, appoint one or more
Advisory Directors who shall advise and counsel the Board of
Directors. Advisory Directors may attend meetings of said Board
but without the right to vote on any matter that may come before
the Board for consideration. Advisory Directors shall hold office
at the pleasure of the Board of Directors; provided, however, that
the term of office of any Advisory Director shall expire in any
event at the Annual Stockholders' Meeting next following his
appointment as an Advisory Director. No Advisory Director shall be
appointed or reappointed after he has attained the age of seventy-
five (75) years.
Section 3. The Directors shall be elected at the Annual
Meeting of the Stockholders, except as provided in Section 4 of
this Article, and each Director elected shall hold office until his
successor is elected and qualified.
APPROVED AND ADOPTED 12/13/94 PAGE 7 OF 29
<PAGE> 8
Section 4. Vacancies on the Board of Directors by reason of
death, resignation, retirement, disqualification, removal from
office, or otherwise, and newly created directorships resulting
from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, although less
than a quorum, or by a sole remaining director. The directors so
chosen shall hold office until the next annual election of
directors and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner
provided by statute.
Section 5. The property and business of the Corporation
shall be managed by or under the direction of its Board of
Directors. In addition to the powers and authorities by these By-
Laws expressly conferred upon them, the Board may exercise all such
powers of the Corporation and do all such lawful acts and things as
are not by statute or by the Certificate of Incorporation or by
these By-Laws directed or required to be exercised or done by the
stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
Section 6. The directors may hold their meetings and have
one or more offices, and keep the books of the Corporation outside
of the State of Delaware.
APPROVED AND ADOPTED 12/13/94 PAGE 8 OF 29
<PAGE> 9
Section 7. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to
time be determined by the Board.
Section 8. Special meetings of the Board of Directors may be
called by the Chairman of the Board, the President, any Vice
President or the Secretary on forty-eight (48) hours' notice to
each director, either personally or by mail, telephone, telegram or
facsimile. Special meetings shall be called by the Chairman of the
Board, the President or the Secretary in like manner and on like
notice on the written request of three directors unless the Board
consists of only one director, in which case special meetings shall
be called by the Chairman of the Board, the President or Secretary
in like manner or on like notice on the written request of the sole
director.
Section 9. At all meetings of the Board of Directors a
majority of the authorized number of directors shall be necessary
and sufficient to constitute a quorum for the transaction of
business, and the vote of a majority of the directors present at
any meeting at which there is a quorum, shall be the act of the
Board of Directors, except as may be otherwise specifically
provided by statute, by the Certificate of Incorporation or by
these By-Laws. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. If
APPROVED AND ADOPTED 12/13/94 PAGE 9 OF 29
<PAGE> 10
only one director is authorized, such sole director shall
constitute a quorum. A meeting at which a quorum is initially
present may continue to transact business notwithstanding the
withdrawal of directors, if any action is approved by at least a
majority of the required quorum for such meeting.
Section 10. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, 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 all members of
the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, members of the Board of Directors,
or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at
such meeting.
COMMITTEES OF DIRECTORS
-----------------------
Section 12. The Board of Directors may at any time and from
time to time, create from its membership such committees as the
APPROVED AND ADOPTED 12/13/94 PAGE 10 OF 29
<PAGE> 11
Board may desire. Any such committee, to the extent provided in
the resolution of the Board of Directors, shall have and may
exercise such powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, as the
Board of Directors at any time and from time to time may delegate.
Section 13. There shall be a permanent committee of the Board
of Directors, which shall be known as the "Executive Committee".
Section 14. The Executive Committee shall consist of not more
than seven (7) members of the Board of Directors of Petrolite
Corporation. The Executive Committee may, at any time, and from
time to time, by the affirmative vote of a majority of its members,
invite any other member of the Board of Directors to meet with the
Committee when the advice and counsel of such other Board member is
required or deemed desirable. The Chairman of the Executive
Committee shall be designated by the Board of Directors. The
Secretary of the Corporation shall be the Secretary of the
Executive Committee ex-officio.
Section 15. The members of the Executive Committee shall be
elected by the Board of Directors at the first meeting of the Board
of Directors following the regular Annual Meeting of Stockholders,
and shall serve for a period of one (1) year from the date of such
election, and until their respective successors are elected and
shall qualify; provided, that any member of the Executive Committee
shall be subject to removal at any time by a majority vote of the
APPROVED AND ADOPTED 12/13/94 PAGE 11 OF 29
<PAGE> 12
whole Board of Directors.
Section 16. The Board of Directors may fill vacancies in the
Executive Committee by election at any regular or special meeting.
Section 17. During the interval between the meetings of the
Board of Directors the Executive Committee shall possess and may
exercise all the powers of the Board of Directors in such
management, direction and affairs of the business of the
Corporation. The Committee shall not have power or authority in
reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially
all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a
dissolution, amending the By-Laws, filling newly created
directorships and vacancies on the Board or the Committee, or
(unless expressly authorized by resolution of the Board) declaring
a dividend or authorizing the issuance of stock.
Section 18. Meetings of the Executive Committee may be held
as often as may be necessary on call of the Chairman or of any two
members of the Committee. Two days' previous notice of any special
meeting shall be given to all members, unless waived in writing by
all members of the Committee. Notice may be given by telephone,
telegram, facsimile or by mail.
APPROVED AND ADOPTED 12/13/94 PAGE 12 OF 29
<PAGE> 13
Section 19. Four (4) members of the Executive Committee shall
constitute a quorum for the transaction of business, if the
Committee consists of seven (7) members. If the Executive
Committee consists of six (6) members or less, then three (3)
members of the Committee shall constitute a quorum. Each member of
the Executive Committee shall be entitled to one vote on all
matters that may come before the Committee.
Section 20. All proceedings of the Executive Committee shall
be promptly recorded by the Secretary, and a full report thereof
made to each member of the Board of Directors. All proceedings of
the Executive Committee shall be subject to review, revision and
alteration by the Board of Directors; provided, however, that no
rights or acts of third parties shall be affected by any such
review, revision or alteration.
Section 21. The Executive Committee may fix its own rules of
procedure.
Section 22. The Chairman of the Executive Committee shall
preside at all meetings of the Committee, but in his absence any
member selected by the Committee shall preside as Temporary
Chairman.
Section 23. The Secretary of the Corporation shall keep the
records and minutes of the Executive Committee, and shall in
general perform all the duties usually incident to the office of
APPROVED AND ADOPTED 12/13/94 PAGE 13 OF 29
<PAGE> 14
the Secretary of any Executive Committee.
COMPENSATION OF DIRECTORS
-------------------------
Section 24. Unless otherwise restricted by the Certificate of
Incorporation or these By-Laws, the Board of Directors shall have
the authority to fix the compensation of directors. The directors
may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors or any committee thereof and may be paid
a fixed sum for attendance at each meeting of the Board of
Directors or any Committee thereof, and a stated salary as
director. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation
therefor.
INDEMNIFICATION
---------------
Section 25. (a) The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Corporation) by reason of
the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in
APPROVED AND ADOPTED 12/13/94 PAGE 14 OF 29
<PAGE> 15
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no such
indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty
APPROVED AND ADOPTED 12/13/94 PAGE 15 OF 29
<PAGE> 16
to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of the Corporation shall be successful on the merits or otherwise
in defense, of any action, suit or proceeding referred to in
paragraphs (a) and (b), or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification under paragraphs (a) and (b) (unless
ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is
proper in the circumstances because he has met the applicable
standard of conduct set forth in paragraphs (a) and (b). Such
determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a
quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in
a written opinion, or (3) by the stockholders.
APPROVED AND ADOPTED 12/13/94 PAGE 16 OF 29
<PAGE> 17
(e) Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding
as authorized by the Board of Directors in the manner provided in
paragraph (d) upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount unless it
shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Section 25.
(f) The indemnification provided by this Section 25 shall not
be deemed exclusive of any other rights to which those indemnified
may be entitled under any statute, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such
a person.
(g) The Board of Directors may authorize, by a vote of a
majority of a quorum of the Board of Directors, the Corporation to
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under
APPROVED AND ADOPTED 12/13/94 PAGE 17 OF 29
<PAGE> 18
the provisions of this Section 25.
(h) For the purposes of this Section 25, references to "the
corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Section with
respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate
existence had continued.
ARTICLE IV
OFFICERS
--------
Section 1. The officers of the Corporation shall be a
Chairman of the Board, a President, one or more Vice President(s)
(any one or more of whom may be designated as Executive, Senior or
Group Vice President), a Secretary, a Treasurer and a Controller,
all of whom shall be appointed by the Board of Directors. The same
person may hold more than one office. The Board of Directors may
also designate a chief executive officer and a chief operating
officer of the Corporation.
APPROVED AND ADOPTED 12/13/94 PAGE 18 OF 29
<PAGE> 19
Section 2. The officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of
Section 3 or Section 5 of this Article, shall be chosen by the
Board of Directors, and each shall serve at the pleasure of the
Board, subject to the rights, if any, of any officer under any
contract of employment.
Section 3. The Board of Directors may appoint, and may
empower the Chairman of the Board to appoint, such other officers
as the business of the Corporation may require, each of whom shall
hold office for such period, have such authority and perform such
duties as are provided in the By-Laws or as the Board of Directors
may from time to time determine.
Section 4. Any officer may be removed, either with or
without cause, by the Board of Directors, at any regular or special
meeting thereof, or, except in case of an officer chosen by the
Board of Directors, by any officer upon whom such power of removal
may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to
the Corporation. Any such resignation shall take effect on receipt
or at any later time specified therein. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary
to make it effective. Any such resignation is without prejudice to
the rights, if any, of the Corporation under any contract to which
the officer is a party.
APPROVED AND ADOPTED 12/13/94 PAGE 19 OF 29
<PAGE> 20
Section 5. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be
filled in the manner prescribed in these By-Laws for regular
appointments to such office.
Section 6. The Chairman of the Board shall, if present,
preside at all meetings of the Board of Directors and of the
stockholders, and shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the
business and affairs of the Corporation and shall exercise and
perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by the
By-Laws.
Section 7. The President shall exercise and perform such
powers and duties as may be from time to time assigned to him by
the Board of Directors or the Chairman of the Board.
Section 8. In the absence or disability of the Chairman of
the Board, the President shall perform all of the duties of the
Chairman of the Board, and when so acting, shall have all of the
powers of, and be subject to all of the restrictions upon, the
Chairman of the Board. In the absence or disability both of the
Chairman of the Board and of the President, and until the Board of
Directors designates otherwise, the Vice Presidents, if any, shall
perform all of the duties of the President, and when so acting
shall have all of the powers of, and be subject to all of the
APPROVED AND ADOPTED 12/13/94 PAGE 20 OF 29
<PAGE> 21
restrictions upon, the President. The Vice Presidents shall have
such other powers and perform such other duties as from time to
time may be prescribed for them respectively by the Board of
Directors, the Chairman of the Board, the President or the By-Laws.
Section 9. The Secretary shall keep or cause to be kept, at
the principal office or such other place as the Board of Directors
may order, a book of minutes of all meetings and actions of
directors, committees of directors and stockholders, with the time
and place of holding, whether regular or special, and, if special,
how authorized, the notice thereof given, the names of those
present at directors and committee meetings, the number of shares
present or represented at stockholders meetings, and the
proceedings thereof.
The Secretary shall keep, or cause to be kept, at the
principal office or at the office of the Corporation's transfer
agent or registrar, a share register, or a duplicate share
register, showing the names of all stockholders and their
addresses, the number and classes of shares held by each, the
number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for
cancellations.
The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors required
by the By-Laws or by law to be given, and he shall keep the seal of
the Corporation, if one be adopted, in safe custody, and shall have
such other powers and perform such other duties as may be
APPROVED AND ADOPTED 12/13/94 PAGE 21 OF 29
<PAGE> 22
prescribed by the Board of Directors or by the By-Laws.
Section 10. The Treasurer and the Controller shall each have
such powers and perform such duties as from time to time may be
prescribed for him by the Board of Directors, the Chairman of the
Board, the President or by the By-Laws.
ARTICLE V
CERTIFICATES OF STOCK
---------------------
Section 1. Every holder of stock of the Corporation shall be
entitled to have a certificate signed by, or in the name of the
Corporation by, the Chairman or Vice Chairman of the Board of
Directors, or the President or a Vice President, and by the
Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer of the Corporation, certifying the number of
shares represented by the certificate owned by such stockholder in
the Corporation.
Section 2. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer,
transfer agent, or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were
such officer, transfer agent, or registrar at the date of issue.
APPROVED AND ADOPTED 12/13/94 PAGE 22 OF 29
<PAGE> 23
LOST, STOLEN OR DESTROYED CERTIFICATES
--------------------------------------
Section 3. The Board of Directors, the Secretary and the
Treasurer each may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore
issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may require the owner of such
lost, stolen or destroyed certificate or certificates or his legal
representative to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
TRANSFERS OF STOCK
------------------
Section 4. Upon surrender to the Corporation or the transfer
agent of the Corporation, of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the duty of the Corporation to
issue a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books.
FIXING RECORD DATE
------------------
Section 5. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of the
stockholders, or any adjournment thereof, or entitled to receive
APPROVED AND ADOPTED 12/13/94 PAGE 23 OF 29
<PAGE> 24
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date
which shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting, nor more than sixty (60) days
prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
REGISTERED STOCKHOLDERS
-----------------------
Section 6. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any
equitable or other claim or interest in such share on the part of
any other person, whether or not it shall have express or other
notice thereof, save as expressly provided by the laws of the State
of Delaware.
ARTICLE VI
GENERAL PROVISIONS
------------------
DIVIDENDS
---------
Section 1. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors at
APPROVED AND ADOPTED 12/13/94 PAGE 24 OF 29
<PAGE> 25
any regular or special meeting pursuant to law. Dividends may be
paid in cash, in property, or in shares of capital stock, subject
to the provisions of the Certificate of Incorporation.
Section 2. Before payment of any dividend there may be set
aside out of any funds of the Corporation available for dividends
such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other
purpose as the directors shall think conducive to the interests of
the Corporation, and the directors may abolish any such reserve.
CHECKS
------
Section 3. All checks, drafts or other orders for payment of
money, notes or other evidences of indebtedness, issued in the name
of or payable to the Corporation shall be signed by such officer or
officers as the Board of Directors, the Chairman of the Board, the
President or any Vice President may from time to time designate.
Section 4. To the extent authorized by the Board of
Directors or otherwise provided in these By-Laws:
(a) The President, any Vice President, the Secretary or
the Treasurer may enter into contracts and execute instruments
on behalf of the Corporation;
(b) The Board of Directors, the Chairman of the Board,
the President or any Vice President may authorize any officer
APPROVED AND ADOPTED 12/13/94 PAGE 25 OF 29
<PAGE> 26
or officers, and any employee or employees or agent or agents
of the Corporation or any of its subsidiaries, to enter into
any contract or execute any instrument in the name of and on
behalf of the Corporation, and such authority may be general
or confined to specific instances.
FISCAL YEAR
-----------
Section 5. The fiscal year of the Corporation shall be
November 1 through October 31, unless otherwise fixed by resolution
of the Board of Directors.
SEAL
----
Section 6. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the
words "Seal, Delaware". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or
otherwise.
NOTICES
-------
Section 7. Whenever, under the provisions of the statutes or
of the Certificate of Incorporation or of these By-Laws, notice is
required to be given to any director or stockholder, it shall not
be construed to require personal notice, but such notice may be
given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be
deemed to be given at the time when the same shall be deposited in
APPROVED AND ADOPTED 12/13/94 PAGE 26 OF 29
<PAGE> 27
the United States mail. Notice to directors may also be given by
telegram or facsimile.
Section 8. Whenever any notice is required to be given under
the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent
thereto.
ANNUAL STATEMENT
----------------
Section 9. The Board of Directors shall present at each
annual meeting, and at any special meeting of the stockholders when
called for by vote of the stockholders, a full and clear statement
of the business and condition of the Corporation.
DELEGATION OF AUTHORITY
-----------------------
Section 10. Pursuant to Section 141 of the General
Corporation Law of the State of Delaware, the Board of Directors
hereby delegates, subject to such limitations as the Chairman of
the Board or the President may impose, to the officers of the
Corporation the management of the day-to-day business and affairs
of the Corporation, including authority, provided the transaction
is in the ordinary course of the Corporation's business:
(1) To sell or otherwise dispose of real or personal
property for such consideration as deemed proper;
APPROVED AND ADOPTED 12/13/94 PAGE 27 OF 29
<PAGE> 28
(2) To purchase or otherwise acquire real or personal
property for such consideration as deemed proper;
(3) To enter into leases of real and personal property
as lessor or lessee, subject to the limitation below regarding
financing arrangements, and to enter into contracts,
obligations and other agreements;
(4) To enter into any instrument in the name and on
behalf of the Corporation;
(5) To open, maintain, and close checking, savings and
other banking accounts, brokerage and other investment
accounts, and to deposit, transfer, invest and withdraw funds
to, in and from said accounts, which accounts shall be
maintained in the name and on behalf of the Corporation; and
(6) To do all other such acts and things as are
necessary to effectuate the foregoing and to exercise all
powers which are necessary or useful to carry on the business
of the Corporation.
The officers shall not, without approval of the Board of
Directors of this Corporation:
(a) Incur indebtedness for borrowed money or otherwise
enter into financing arrangements;
(b) Dispose of any of the Corporation's divisions,
subsidiaries or principal product lines, or in any one
transaction assets having a value in excess of two percent
(2%) of the disposing Corporation's total assets;
(c) Acquire any corporation, partnership or other entity
if the fair value of the consideration paid is in excess of
APPROVED AND ADOPTED 12/13/94 PAGE 28 OF 29
<PAGE> 29
two percent (2%) of the acquiring corporation's total assets;
or
(d) Take any action which would cause this Corporation
to be in default of its debt obligations.
ARTICLE VII
AMENDMENTS
----------
Section 1. These By-Laws may be altered, amended or
rescinded or new By-Laws may be adopted by the Board of Directors.
Section 2. These By-Laws may not be altered, amended or
rescinded and new By-Laws may not be adopted by the stockholders of
the Corporation except by the vote of the holders of not less than
seventy-five percent (75%) of the total shares of stock of the
Corporation entitled to vote in the election of directors.
- ----------
APPROVED AND ADOPTED 12/13/94 PAGE 29 OF 29
<PAGE> 1
PETROLITE 1993 STOCK INCENTIVE PLAN
-----------------------------------
ARTICLE I
General
1.1 PURPOSE. The purpose of this Stock Incentive Plan (the
"Plan") is to associate more closely the interests of the
management and directors of Petrolite Corporation and its
subsidiaries (collectively referred to as the "Company") with the
shareholders by relating capital accumulation with increases in
shareholder value, encouraging management success by providing
capital accumulation as an incentive, maintaining competitive
management compensation levels, and providing an incentive to
management for continuous employment with the Company.
1.2 ADMINISTRATION. (a) Except for the provisions for directors
described in Article V, the Plan shall be administered by a
Committee of disinterested persons appointed by the Board of
Directors of Petrolite Corporation, as constituted from time to
time (the "Committee"). The Committee shall consist of at least
three members of the Board, none of whom shall be, while serving on
the Committee, or shall have been within one year prior to
commencement of service on the Committee, eligible for selection as
a person to whom stock may be allocated (except as provided in
Article V below), or to whom stock options may be granted under the
Plan or any other plan of the Company under which participants are
entitled to acquire stock or stock options of the Company.
Advisory directors may not be members of the Committee.
(b) The Committee shall have the authority, in its sole
discretion and from time to time: (i) to designate the employees or
classes of employees eligible to participate in the Plan; (ii) to
grant awards provided in the Plan in such form and amount as the
Committee may determine; (iii) to impose such limitations,
restrictions and conditions upon any such award as the Committee
may deem appropriate; and (iv) to interpret the Plan, to adopt,
amend and rescind rules and regulations relating to the Plan, and
to make all other determinations, and take all other action,
necessary or advisable for the implementation and administration of
the Plan.
(c) Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and shall be
conclusive. No member of the Committee shall be liable for any
action taken or decision made in good faith relating to the Plan or
any award thereunder.
1.3 ELIGIBILITY FOR PARTICIPATION. (a) Except for the directors
described in Article V, participants shall be selected by the
Committee from the executive officers and other key employees of
the Company who occupy responsible managerial or professional
positions, and who have the capability of making a substantial
contribution to the success of the Company. In making this
selection, and in determining the form and amount of awards, the
Committee shall give consideration to the functions and
responsibilities of the individual, past and potential
contributions to profitability and sound growth, the value of the
employee's services to the Company, and any other factors deemed
relevant by the Committee.
(b) Advisory directors, who are selected by the Board to advise
and counsel, but not vote, at meetings of the Board are eligible to
receive stock options, as the Committee may determine; provided,
that such advisory directors previously shall have served as a
member of the Board of Directors of Petrolite Corporation and shall
not have been granted any Stock Options on account of such prior
service.
1.4 TYPES OF AWARDS UNDER PLAN. Awards under the Plan may be in
the form of any one or more of the following:
Amended Effective 8/8/94 Page 1 of 8
<PAGE> 2
(i) Stock Options ("Options"), as described in Article II;
(ii) Restricted Stock Units, as described in Article III;
(iii) Non-employee director Stock Options, as described in
Article V.
1.5 AGGREGATE LIMITATION ON AWARDS. (a) Shares of stock which
may be issued under the Plan shall be authorized and unissued or
treasury shares of Capital Stock of Petrolite Corporation ("Capital
Stock"). The maximum number of shares of Capital Stock which may be
issued under the Plan pursuant to the exercise of stock options and
the payment of restricted stock units shall be 800,000, and for
purposes of this Section 1.5, all Restricted Stock Units shall be
treated as payable exclusively in shares of Capital stock.
(b) Any shares of Capital Stock with respect to which an Option
or Restricted Stock Unit is terminated unexercised, expires or
otherwise is forfeited shall be available again for issuance under
the Plan.
1.6 EFFECTIVE DATE AND TERM OF PLAN. (a) The Plan shall become
effective on the date approved by the holders of a majority of the
shares of Capital Stock present in person or by proxy and entitled
to vote at the 1993 Annual Meeting of Shareholders of Petrolite
Corporation.
(b) No awards shall be made under the Plan after October 31,
1998; provided, however, that the Plan and all awards made under
the Plan prior to such date shall remain in effect until such
awards have been satisfied or terminated in accordance with the
Plan and the term of such awards.
1.7 PRIOR PLANS. Effective on October 31, 1992, no further
awards shall be made under the Petrolite Corporation Incentive
Stock Option Plan adopted on March 2, 1987; provided, however, that
any rights theretofore granted under that plan shall not be
affected.
ARTICLE II
Stock Options
2.1 AWARD OF STOCK OPTIONS. From time to time, and subject to
the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, the Committee may grant to any
participant in the Plan (except Article V Optionees) one or more
Options to purchase the number of shares of Capital Stock allotted
by the Committee. The date an Option is granted shall mean the date
selected by the Committee on which the Committee allots a specific
number of shares to a participant pursuant to the Plan.
2.2 OPTION AGREEMENTS. The grant of an Option shall be evidenced
by a written Stock Option Agreement executed by the Company and the
holder of an Option ("optionee"), stating the number of shares of
Capital Stock subject to the Option evidenced thereby, and in such
form as the Committee may determine from time to time.
2.3 OPTION PRICE. The purchase price per share of Capital Stock
("option price") deliverable upon the exercise of an Option shall
be 100% of the fair market value of a share of Capital Stock on the
date the Option is granted.
2.4 TERM AND EXERCISE OF OPTIONS. Except as provided in Section
2.9, and unless determined otherwise by the Committee, each Option
granted under the Plan, subject to the specific terms thereof, may
be exercised
Amended Effective 8/8/94 Page 2 of 8
<PAGE> 3
at any time or from time to time as to any part or all of
the shares which shall be covered thereby. Options granted
under the Plan shall be exercisable during such period or periods
as the Committee shall determine; provided, however, that no Option
shall be exercisable more than 10 years after the date of grant
thereof. No option shall be exercisable as to fractional shares.
2.5 MANNER OF PAYMENT. Each Stock Option Agreement shall set
forth the procedure governing the exercise of the Option granted
thereunder and shall provide that, upon such exercise in respect of
any Capital Stock subject thereto, the optionee shall pay to the
Company, in full, the option price for such shares with cash or
mature shares of Company Capital Stock valued at fair market value
on the date of exercise of the option, or a combination of cash and
mature shares. Mature shares are shares that have been held by the
optionee for a period of six months. As soon as practicable after
receipt of such payment, the Company shall cause a certificate or
certificates for such shares of Capital Stock to be delivered to
the optionee.
2.6 DEATH OF OPTIONEE. Upon the death of the optionee any
rights, to the extent exercisable on the date of the optionee's
death, may be exercised by the optionee's estate; provided, that
such exercise must occur within 12 months after the optionee's
death or termination of employment by the optionee, whichever
occurs first. In no event may any such option be exercised more
than ten years after the date of the grant thereof.
2.7 DISABILITY OR RETIREMENT. Upon termination of the optionee's
employment by reason of permanent disability (as determined by the
Committee) or retirement, any rights to the extent exercisable on
such date of termination by reason of permanent disability or
retirement may be exercised by the optionee; provided, that such
exercise occurs within 12 months after such termination of
employment by the optionee. In no event may any such option be
exercised more than ten years after the date of the grant thereof.
2.8 TERMINATION FOR OTHER REASONS. Except as provided in
Sections 2.6, 2.7 and 2.9 or except as determined otherwise by the
Committee, all Options granted under the Plan shall terminate upon
the termination of the optionee's employment. Options granted to
an advisory director shall terminate thirty days after the advisory
director's resignation, removal or failure to be re-elected as an
advisory director.
2.9 ACCELERATION OF OPTIONS. (a) Except as provided
specifically in agreements evidencing Options granted thereunder,
and except as an optionee and Petrolite may agree specifically to
the contrary in writing, each outstanding Option shall become
exercisable immediately and fully if any entity, person or Group,
other than Petrolite Corporation or a subsidiary of Petrolite
Corporation, acquires shares of Petrolite Corporation in a
transaction or series of transactions that results in such entity,
person or Group directly or indirectly owning beneficially fifty-
one percent (51%) or more of the outstanding shares of Petrolite
Corporation, or if any such entity, person or Group acquires
substantially all of the assets of Petrolite Corporation.
As used in this Plan, "Group" shall mean persons who act in
concert as described in Sections 13(d)(3) and/or 14(d)(2) of the
Securities Exchange Act of 1934, as amended.
(b) In the event that an outstanding Option becomes exercisable
pursuant to this Section 2.9, each outstanding Option will be
exercisable in full for a period of 12 months following the date of
occurrence of such event; provided, however, that no such Option
shall be exercised more than 10 years after the date of the grant
thereof.
Amended Effective 8/8/94 Page 3 of 8
<PAGE> 4
ARTICLE III
Restricted Stock Units
3.1 AWARD OF RESTRICTED STOCK UNITS. From time to time, and
subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, the Committee may grant
Restricted Stock Units to any participant under the Plan except for
Article V Optionees and advisory directors. At the time it grants
any Restricted Stock Units, the Committee shall determine whether
or not the payment of such Restricted Stock Units shall be
conditioned upon the participant's continued employment with the
Company throughout a time period specified by the Committee (the
"Restriction Period") or upon the attainment of certain performance
targets within the Restriction Period, or both.
3.2 RESTRICTED STOCK UNIT AGREEMENTS. Restricted Stock Units
granted under the Plan shall be evidenced by written agreements in
such form as the Committee may determine from time to time.
3.3 NUMBER OF RESTRICTED STOCK UNITS. Upon making an award, the
Committee shall determine (and the Restricted Stock Unit Agreement
shall state) the number of Restricted Stock Units granted to the
participant. The initial number of Units granted may be adjusted by
a performance factor, in accordance with Section 3.7, to be applied
at the conclusion of the Restriction Period to determine the final
number of Restricted Stock Units to be paid. No payment by a
participant to the Company shall be required either as a result of
a grant of Restricted Stock Units to the participant or of the
payment of shares of the Company's Capital Stock to the
participant.
3.4 LENGTH OF RESTRICTION PERIOD. Upon making an award, the
Committee shall determine (and the Restricted Stock Unit Agreement
shall state) the length of the Restriction Period. Restriction
Periods normally will be for a period of three years; however, the
Committee may establish other time periods in its sole discretion.
3.5 PAYMENT OF RESTRICTED STOCK UNITS. (a) Payment in respect of
Restricted Stock Units conditioned solely upon the participant's
continued employment with the Company shall be made within 90 days
after the Restriction Period for such Units has ended.
(b) Payment in respect of Restricted Stock Units conditioned
upon the attainment of performance targets shall be made in two
equal installments, the first installment to be within 90 days
after the Restriction Period for such Units has ended, and the
remaining installment to be on the first anniversary of the end of
such Restriction Period.
3.6 FORM OF PAYMENT. Payment for Restricted Stock Units shall be
made in cash, in shares of Capital Stock, or partly in cash and
partly in shares of Capital Stock, as the Committee shall determine
in its sole discretion. To the extent that payment is made in cash,
the amount shall be determined by multiplying the number of
Restricted Stock Units by the fair market value of a share of
Capital Stock as of the close of business on the day the
Restriction Period has ended. To the extent that payment is made in
Capital Stock, the number of shares paid shall be equal to the
number of Restricted Stock Units awarded.
3.7 PERFORMANCE TARGETS. (a) Upon an award of Restricted Stock
Units, the Committee may establish (and the Restricted Stock Unit
Agreement shall state) the performance targets to be attained
within the Restriction Period as a condition of such Units being
paid to the participant. Performance targets may be based entirely
on the participant's business unit goals, or partially on business
unit goals and partially on corporate goals, or entirely on
corporate goals. Goals may include qualitative as well as
quantitative measures. Performance
Amended Effective 8/8/94 Page 4 of 8
<PAGE> 5
targets may be adjusted during the Restriction Period, at the
Committee's sole discretion, to reflect extraordinary events beyond
the participant's control.
(b) Attainment by the participant of performance targets in
respect of a Restriction Period will result in 100% of the
Restricted Stock Units being paid to the participant (at those
times and subject to those conditions set out elsewhere in the
Plan) with payment to be as provided in Section 3.5 of the Plan.
Attainment of performance below the performance targets in respect
of a Restriction Period may result in a proportionate amount of the
value of the Units (on a scale from 0 to 100%) being paid, as
determined by the Committee, and with payment to be as provided in
Section 3.5 of the Plan.
(c) The committee, in its sole discretion, shall determine
whether, and to what extent, any performance target has been
attained. Decisions and determinations of the committee shall be
conclusive.
3.8 TERMINATION OF EMPLOYMENT. Except as provided in Sections
3.9 and 3.10, or except as determined otherwise by the Committee,
the right to receive payment for Restricted Stock Units granted to
a participant under the Plan shall terminate upon termination of
the participant's employment with the Company prior to any such
payment applicable to such Restricted Stock Units, and in such
event the participant thereafter shall not be entitled to receive
any payment in respect thereof.
3.9 DEATH, DISABILITY OR RETIREMENT. In the event that the
employment of a participant who has been granted Restricted Stock
Units under the Plan shall terminate prior to the participant
receiving full payment of such Restricted Stock Units by reason of
death, permanent disability (as determined by the Committee), or
retirement, such participant may be entitled, in the sole
discretion of the Committee, to receive full payment in respect of
said Restricted Stock Units; provided, however, that if such
termination of employment is prior to the end of the Restriction
Period, such Units shall be adjusted by multiplying the amount
thereof by a fraction, the numerator of which shall be the number
of full and partial calendar months between the date of award of
the Restricted Stock Units and the date that employment terminated,
and the denominator of which shall be the number of full and
partial calendar months from the date of award to the end of the
Restriction Period.
3.10 ACCELERATION OF RESTRICTED STOCK UNITS. Except as provided
specifically in agreements evidencing Restricted Stock Units
granted thereunder, and except as an awardee and Petrolite may
agree specifically to the contrary in writing, if there is an
acquisition of the Company as described in Section 2.9, all
outstanding Restricted Stock Units shall be payable to the
participant within 90 days after such acquisition, regardless of
whether the applicable Restriction Period has expired and
regardless of whether the applicable performance targets have been
met.
ARTICLE IV
Miscellaneous
4.1 GENERAL RESTRICTION. Each award under the Plan shall be
subject to the requirement that if the Committee shall determine,
at any time, that (i) the listing, registration or qualification of
the shares of Capital Stock subject or related thereto on any
securities exchange or under any state or Federal law, or (ii) the
consent or approval of any government regulatory body, or (iii) an
agreement by the participant of an award with respect to the
disposition of shares of Capital Stock, is necessary or desirable
as a condition of, or in connection with, the granting of such
award, or the issue or purchase of shares of Capital Stock
thereunder, such award may not be consummated in whole or in part
unless such listing, registration,
Amended Effective 8/8/94 Page 5 of 8
<PAGE> 6
qualification, consent, approval or agreement shall have been effected
or obtained free of any conditions not acceptable to the Committee.
4.2 NON-ASSIGNABILITY. No award under the Plan shall be
assignable or transferable by the recipient thereof, except by will
or by the laws of descent and distribution. During the life of the
recipient, such award shall be exercisable only by such person or
by such person's guardian or legal representative.
4.3 WITHHOLDING TAXES. Whenever the Company proposes, or is
required, to issue or transfer shares of Capital Stock under the
Plan, the Company shall have the right to require the grantee to
remit to the Company an amount sufficient to satisfy any Federal,
state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.
Whenever payments are to be made under the Plan in cash, such
payments shall be net of an amount sufficient to satisfy any
Federal, state and/or local withholding tax requirements.
4.4 RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any
participant the right to continue in the employment of the Company
or affect any right which the Company may have to terminate the
employment of such participant.
4.5 NON-UNIFORM DETERMINATIONS. The Committee's determinations
under the Plan (including without limitation determinations of the
persons to receive awards, the form, amount and timing of such
awards, the terms and provisions of such awards and the agreements
evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive,
awards under the Plan, whether or not such persons are similarly
situated.
4.6 RIGHTS AS A SHAREHOLDER. The recipient of any award under
the Plan shall have no rights as a shareholder with respect thereto
unless and until certificates for shares of Capital Stock are
issued to the recipient.
4.7 DEFINITIONS. (a) As used in the Plan, the term "subsidiary"
means any corporation of which, at the time, more than 50% of the
shares entitled to vote generally in an election of directors are
owned directly or indirectly by Petrolite Corporation, or any
subsidiary thereof.
(b) As used in the Plan, the term "fair market value" as of any
date, and in respect of any Share of Capital Stock, means the then
most recent closing price of a share of Capital Stock reflected in
the consolidated trading tables of The Wall Street Journal or any
other publication selected by the Committee.
4.8 LEAVES OF ABSENCE. The Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate
under the Plan in respect of any leave of absence taken by a
participant. Without limiting the generality of the foregoing, the
Committee shall be entitled to determine (i) whether or not any
such leave of absence shall constitute a termination of employment
within the meaning of the Plan and (ii) the impact, if any, of any
such leave of absence on awards under the Plan theretofore made to
any participant who takes such leave of absence.
4.9 NEWLY ELIGIBLE EMPLOYEES. The Committee shall be entitled to
make such rules, regulations, determinations and awards as it deems
appropriate in respect of any employee who becomes eligible to
participate in the Plan or any portion thereof after the
commencement of an award or incentive period.
4.10 ADJUSTMENTS. In the event of any change in the outstanding
Capital Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination, ex-
change of shares or the like, the Committee may adjust
appropriately the number of Restricted Stock Units and the number of
Amended Effective 8/8/94 Page 6 of 8
<PAGE> 7
shares of Capital Stock which may be issued under the Plan, the
number of shares of Capital Stock subject to Options theretofore
granted under the Plan, the option price of Options theretofore
granted under the Plan, the amount of Restricted Stock Units
theretofore awarded under the Plan, the performance targets
referred to in Section 3.7, and any and all other matters deemed
appropriate by the Committee.
4.11 AMENDMENT OF THE PLAN. At any time and from time to time,
the Committee may terminate, modify or amend the Plan in any
respect; except that, without shareholder approval, the Committee
may not (i) increase the maximum number of shares of Capital Stock
which may be issued under the Plan (other than increases pursuant
to Section 4.10), (ii) extend the period during which any award may
be granted or exercised, (iii) extend the term of the Plan, or (iv)
change the provisions of Article V of the Plan governing the award
or price of Options to be granted to non-employee directors;
provided, that in no event shall Article V of the Plan be amended
more than once every six months, other than to comport with changes
in the Internal Revenue Code, the Employees' Retirement Income
Security Act, or the rules thereunder. The termination or any
modification or amendment of the Plan shall not, without the
consent of a participant, affect rights under an award previously
granted.
4.12 GENDER. Wherever used in the Plan, the masculine gender
includes the feminine.
4.13 NONEXCLUSIVITY OF THE PLAN. The adoption of the Plan by the
Company shall not be construed as creating any limitations on the
power of the Board of Directors to adopt such other incentive
arrangements as it may deem desirable.
4.14 GOVERNMENT AND OTHER REGULATIONS. (a) The obligation of the
Company to sell and deliver shares of Capital Stock under options
or restricted stock units granted under the Plan shall be subject
to all applicable laws, rules and regulations and the obtaining of
all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Board of Directors of the Company.
(b) The Plan is intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934. Any provision inconsistent with
such Rule shall be inoperative and shall not affect the validity of
the Plan.
ARTICLE V
Non-Employee Director
Stock Options
5.1 ELIGIBILITY. Participants under Article V ("Article V
Optionees") shall be those persons who are not employees of the
Company and who have been members of the Company's Board of
Directors for at least six (6) months.
5.2 AWARD OF STOCK OPTIONS. Each Article V Optionee will receive
an option to purchase 2,000 shares of the Company's Capital Stock
on account of his or her election as a member of the Board by the
stockholders at an annual meeting of the Company. Each Article V
Optionee who is re-elected to the Board of Directors at subsequent
annual meetings of the Company will receive an option to purchase
an additional 2,000 stock options at the time of each such re-
election, subject to the term of the Plan.
5.3 OPTION PRICE. The purchase price per share of Capital Stock
("option price") deliverable upon the exercise of an Option shall
be 100% of the fair market value of a share of Capital Stock on the
date the Option is granted.
Amended Effective 8/8/94 Page 7 of 8
<PAGE> 8
5.4 TERM AND EXERCISE OF OPTIONS. Each Option granted under the
Plan may be exercised at any time or from time to time as to any
part or all of the shares covered thereby. No Options shall be
exercisable more than 10 years after the date of grant thereof.
5.5 MANNER OF PAYMENT. Each Stock Option Agreement shall set
forth the procedure governing the exercise of the Option granted
thereunder and shall provide that, upon such exercise in respect of
any Capital Stock subject thereto, the Article V Optionee shall pay
to the Company, in full, the option price for such shares with cash
or mature shares of Company Capital Stock valued at fair market
value on the date of exercise of the option, or a combination of
cash and mature shares. Mature shares are shares that have been
held by the optionee for a period of six months. As soon as
practicable after receipt of such payment, the Company shall
deliver to the optionee a certificate or certificates for such
shares of Capital Stock.
5.6 DEATH OF OPTIONEE. Upon the death of the Article V Optionee,
any rights to the extent exercisable on the date of death may be
exercised by the Optionee's estate; provided, that such exercise
must occur within 12 months after the optionee's death. In no
event may any such option be exercised more than ten years after
the date of the grant thereof.
5.7 TERMINATION FOR OTHER REASONS. All Options granted under
this Article V of the Plan shall terminate thirty (30) days after
the Article V Optionee's resignation, removal, or failure to be re-
elected to the Board of Directors. In no event may any such option
be exercised more than ten years after the date of the grant
thereof.
5.8 ACCELERATION OF OPTIONS. (a) Notwithstanding any provisions
to the contrary in agreements evidencing Options granted under this
Article V, each outstanding Option shall become exercisable
immediately and fully if any entity, person or Group, other than
Petrolite Corporation or a subsidiary of Petrolite Corporation
acquires shares of Petrolite Corporation in a transaction, or
series of transactions, that results in such entity, person or
Group directly or indirectly owning beneficially fifty-one percent
(51%) or more of the outstanding shares of Petrolite Corporation,
or if any such entity, person or Group acquires substantially all
of the assets of Petrolite Corporation.
(b) In such event, each outstanding Option will be exercisable
in full for a period of 12 months following the date of occurrence
of such event; provided however, that no such Option shall be
exercised more than 10 years after the date of the grant thereof.
- ------------
Amended Effective 8/8/94 Page 8 of 8
<PAGE> 1
EXECUTIVE AGREEMENT
-------------------
THIS EXECUTIVE AGREEMENT (the "Agreement") is made and
entered into this [Date] , 1994, by and between
-----------------
Petrolite Corporation, a Delaware corporation with an office at
369 Marshall Avenue, St. Louis, Missouri 63119, herein referred
to as "Petrolite" or the "Company", and [Executive's Name] ,
------------------------------
residing at [Executive's Address] , hereinafter
--------------------------------
sometimes referred to as "Executive".
WHEREAS, Executive is employed by Petrolite as an executive
with important management responsibilities, and in such capacity
will have access to confidential and proprietary information and
trade secrets of Petrolite (hereafter defined as "Confidential
Information") and, in the opinion of Petrolite and the Board of
Directors of Petrolite, growth of the Company's business in its
highly technical and competitive field can be enhanced by a
written agreement between the Executive and the Company; and
WHEREAS, Petrolite has determined that Executive's ability
to perform Executive's responsibilities and utilize Executive's
talents for the benefit of Petrolite, and Petrolite's ability to
retain Executive as an employee, will be significantly enhanced
if Executive is provided with fair and reasonable protection from
the risks of a change in ownership or control of Petrolite.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein set forth, it is
understood and agreed by and between the parties hereto as
follows:
1. Employment. Petrolite hereby agrees to employ or to
----------
continue to employ Executive on the terms hereinafter set forth.
2. Nature of Duties. During his employment hereunder,
----------------
Executive shall serve in such capacities and have such other or
further duties and responsibilities as may be assigned to
Executive directly or indirectly from time to time by the Board
of Directors of Petrolite.
3. General Covenants of Executive. Executive hereby
------------------------------
accepts such employment and agrees to all of the terms and
provisions of this Agreement. Executive further covenants and
agrees to devote his full time and attention and best efforts to
the performance of such services.
4. Compensation and Related Arrangements. As full
-------------------------------------
consideration for all services Executive shall render to
Petrolite hereunder, Petrolite shall compensate Executive as
follows:
A. Annual Base Salary. Petrolite shall pay Executive
------------------
an annual base salary of not less than the Executive's
annual base salary on the date of this Agreement, such
annual base salary to be payable in installments as paid on
the date of this Agreement. The annual base salary may be
increased by Petrolite as the Board of Directors may
determine from time to time in its discretion.
<PAGE> 2
B. Fringe Benefits. Executive shall receive such
---------------
fringe benefits as Petrolite from time to time may provide
to its executive personnel generally, subject to any
eligibility and vesting requirements and waiting periods, or
as may be specifically agreed upon between Executive and
Petrolite.
C. Incentive Compensation. The Company may, but is
----------------------
not required to, designate the Executive as a participant in
one or more of the incentive compensation or stock incentive
plans maintained by the Company. After the Executive's
designation as a participant in any such plan the
Executive's participation shall be subject to the terms of
the respective plan or plans.
5. Termination of Employment.
-------------------------
A. Termination by Petrolite. Petrolite may terminate
------------------------
the employment of Executive with or without cause at any
time.
B. Termination by Petrolite "For Cause". If
------------------------------------
Petrolite terminates the employment of Executive "For
Cause", all further obligations of Petrolite under this
Agreement, other than for payment of the Executive's annual
base salary accrued through the date of termination, shall
terminate automatically. As used herein, the term "For
Cause" means: acts of theft, unethical conduct or
dishonesty affecting the assets, properties or business of
Petrolite, willful misconduct, material dereliction of duty,
or violation of any of the covenants set forth in Section 6A
or 6B below.
C. Termination by Petrolite other than "For Cause".
-----------------------------------------------
If Petrolite terminates the employment of Executive during
the term of this Agreement for any reason other than "For
Cause", Petrolite's sole obligation to Executive shall be to
pay Executive's annual base salary accrued through the date
of termination and to pay Executive a severance amount (the
"Severance Amount") equal to 100% of the Executive's annual
base salary in effect on the termination date, payable in
installments pursuant to Petrolite's normal payroll
practices and commencing on the termination date; provided,
however, as a condition precedent to Petrolite's payment of
the Severance Amount Executive shall execute and deliver a
General Release to be provided by Petrolite substantially in
the form attached hereto as Exhibit A, and payment of the
Severance Amount shall not begin until seven (7) days after
Executive shall have executed and delivered such General
Release without having revoked same. If, after notice of
termination, Executive fails to execute and deliver the
General Release to Petrolite within fifty (50) days after
being provided with the same, Petrolite shall have no
further obligations to Executive other than for payment of
Executive's annual base salary accrued through the date of
termination. Petrolite may cease payment of the Severance
Amount if Executive violates any of the
- 2 -
<PAGE> 3
covenants set forth in Section 6A or 6B below. Alternatively,
Petrolite may terminate the employment of Executive other than "For
Cause" by giving Executive one (1) year's advance notice of such
termination, in which case Executive shall not be entitled
to the payment of any Severance Amount and all obligations
of Petrolite under this Agreement shall terminate on the
date of such termination; provided, that Petrolite may
terminate Executive "For Cause" within such notice period
and have no further obligations to Executive other than for
payment of Executive's annual base salary accrued through
such date of termination "For Cause". Petrolite may waive
any requirement of service from Executive during such period
of notice.
D. Termination by Executive. If Executive terminates
------------------------
his employment with Petrolite voluntarily for any reason, if
Executive dies, or if Executive becomes disabled from
performing Executive's customary duties for six (6)
consecutive months or more, or for shorter periods
aggregating 180 days in any period of 240 consecutive days,
Petrolite shall have no further obligations to Executive
under this Agreement.
6. Special Covenants by Executive.
------------------------------
A. Covenant Not to Compete. Executive acknowledges
-----------------------
expressly that Petrolite has developed and established a
valuable and extensive worldwide trade in its products and
that its customers, which have been established and
maintained at substantial expense, are of great value to the
Company. In consideration of Executive's employment and the
covenants and agreements of Petrolite herein set forth,
Executive covenants to Petrolite that neither he nor any
corporation, partnership, business firm or entity in which
he may now or hereafter have an equity interest (excepting a
publicly-traded corporation in which he has a less than 1%
interest for investment purposes), or by which he may be
employed or otherwise affiliated as an employee,
representative, consultant, or otherwise, nor any person
subject to his control or direction will, during the entire
"Period of this Covenant" as hereafter defined, within the
"Trade Area" hereafter specified, directly or indirectly:
i. Conduct, engage in, be connected with, have
any interest in, consult for, or aid or assist in any
manner any person, firm or business entity (whether a
corporation, partnership, proprietorship or otherwise)
in engaging in the development, manufacture,
distribution, sale or application of services or
products like or similar to any services or products
now being developed, manufactured, marketed or
distributed by Petrolite or any of its affiliates, or
which may be developed, manufactured, marketed or
distributed by Petrolite or any of its affiliates at
any time during Executive's
- 3 -
<PAGE> 4
employment with Petrolite or any of its affiliates; or
ii. In any way, directly or indirectly, solicit,
divert, take away or interfere with any of the
business, customers, trade or patronage of Petrolite or
its subsidiaries or affiliates; or
iii. Seek to employ any person who was an
employee of Petrolite or any of its affiliates during
the twelve (12) months immediately preceding
Executive's termination.
The "Period of this Covenant" contained in this
Section 6A shall commence on the date of this Agreement and
shall terminate automatically eighteen (18) months from and
after the date that Executive shall no longer be employed by
Petrolite.
The "Trade Area" contained in this Section 6A shall be
deemed to encompass the world, it being expressly declared
and acknowledged by Executive that Executive will, in the
course of his responsibilities, acquire active personal
knowledge of Petrolite's Confidential Information and
confidential business affairs throughout said Trade Area
and, by reason of his supervisory and administrative duties
as one of its principal executive officers, will acquire and
possess intimate knowledge of the marketing and distribution
of Petrolite services and products throughout the aforesaid
Trade Area.
Executive further acknowledges and agrees that the
"Period of this Covenant" is the minimum period of time, and
that the "Trade Area" hereinabove specified is the minimum
and reasonable area necessary, to protect Petrolite
reasonably and adequately in its business operations.
B. Secrecy Covenant. Executive further covenants and
----------------
agrees that he will not, at any time either during or after
Executive's employment with Petrolite, reveal or otherwise
communicate to any person or entity any Confidential
Information to which he will or may have access, except as
such communication may be necessarily incidental to the
performance of his duties with Petrolite under this
Agreement. For purposes of this Agreement "Confidential
Information" shall mean all confidential and proprietary
information and trade secrets of Petrolite including, but
not limited to, financial and accounting information and
procedures, product pricing data and product formulae,
identity of customers, customer requirements, sales data,
marketing information, manufacturing processes, inventions,
know-how, technology, special processes and techniques, and
distribution methods of Petrolite or any of its subsidiaries
or affiliates, but shall not include Confidential
Information that is in the public domain or becomes part of
the public domain other than through
- 4 -
<PAGE> 5
the fault of Executive.
C. Breach of Covenants. Executive has consulted with
-------------------
Executive's legal adviser concerning this Agreement,
understands the nature, term and effects of the covenants of
Executive set forth in Sections 6A and 6B above, and
acknowledges and agrees that such covenants are reasonable
and necessary for the protection of Petrolite and its
business operations. Executive further acknowledges and
agrees that monetary damages could not and cannot adequately
compensate Petrolite in the event of the violation or breach
of any of the covenants of Executive set forth in Sections
6A and 6B above and that, irrespective of any other
provision of this Agreement, injunctive relief would be
essential for the protection of Petrolite. Executive does
hereby agree, therefore, that Petrolite may have such
injunctive relief without any requirement for a bond, upon
due notice and hearing, as will be necessary to provide full
and ongoing protection to Petrolite with respect to the
matters hereinabove set forth, in addition to such further
or other relief as may appertain at equity or law. Suit for
injunctive relief (and for such monetary damages as may be
proved as a result of breach of the aforesaid covenants) may
be filed in an appropriate Federal or State court having
general trial jurisdiction in any political subdivision
(i) in Missouri or (ii) in any State in which Executive
may then be found or (iii) in any State in which a breach
or violation of any of the aforesaid covenants is alleged to
have occurred, and Executive consents to the jurisdiction of
any such court in which such suit is instituted and further
agrees that service of process upon Executive by certified
or registered mail shall be valid and sufficient and shall
be deemed to have the same legal effect as if personal
service had been made upon Executive in the jurisdiction in
which such suit has been initiated.
D. Limitations. If and to the extent that any of the
-----------
covenants set forth in Section 6A or 6B above shall be
deemed by the court in which suit is brought to be
unenforceable as written by reason of its scope in terms of
area or length of time, but may be made enforceable by
adjusting the area or period of time applicable to such
covenant, Executive and Petrolite stipulate and agree that
such covenant shall be deemed automatically to be amended
for purposes of such suit so as to incorporate the aforesaid
reduction in area or duration of time, or both, to the end
that such covenant, as modified in connection with such
suit, shall be enforceable to the fullest extent permissible
under the laws and public policies of the State of Missouri,
the State under which this contract is governed.
E. Survival. The provisions of this Section 6 of
--------
this Agreement shall survive any termination of employment
by the
- 5 -
<PAGE> 6
Executive.
7. Withholding. Petrolite may, to the extent required by
-----------
law, withhold applicable federal, state and local income and
other taxes from any payments due to Executive hereunder.
8. Change of Control Benefits. If Executive's employment
--------------------------
with Petrolite is terminated voluntarily by Executive at any time
within the one (1) year immediately following a Change of Control
or by Petrolite Without Cause (as defined in Section 5 of this
Agreement) at any time within the six (6) months immediately
preceding or the two (2) years immediately following a Change of
Control (the effective date of either such termination hereafter
referred to in this Section 8 as the "Termination Date"),
Executive shall be entitled to the benefits provided in this
Section 8 in lieu of the Severance Payment provided in Section 5
of this Agreement; provided, however, as a condition precedent to
Petrolite's obligation to make any payments or provide any
benefits under this Section 8, Executive shall execute and
deliver a General Release in the form attached hereto as
Exhibit A or if, within ten (10) days of the Termination Date
Petrolite provides an alternative form of General Release
substantially in the form attached hereto as Exhibit A, Executive
shall execute and deliver such alternative release. If Executive
fails to execute and deliver such a General Release to Petrolite
within fifty (50) days of the Termination Date, or if, within ten
(10) days after the Termination Date, Petrolite provides an
alternative form of General Release substantially in the form
attached hereto as Exhibit A, within fifty (50) days after
provision of such alternative General Release, Petrolite shall
have no obligation to Executive other than for payment of
Executive's annual base salary accrued through the Termination
Date. Petrolite shall not be obligated to provide any benefits
under this Section 8 until seven (7) days after Executive shall
have executed and delivered such a General Release to Petrolite
without having revoked the same.
A. Severance Benefits. Not sooner than seven (7)
------------------
business days, but not less than ten (10) business days,
after Executive's execution and delivery of a General
Release to Petrolite as provided in this Section 8 Petrolite
shall pay Executive a lump sum amount, in cash, equal to two
(2) times the sum of Executive's Annual Base Salary and
Executive's Target Incentive Payment.
B. Continued Welfare Benefits. Until the earlier of
--------------------------
eighteen (18) months following the Termination Date or the
date on which Executive becomes employed by a new employer
Petrolite shall, at its expense (less applicable Employee
contributions and subject to any deductibles), provide
Executive with medical, dental, life insurance, disability
and accidental death and dismemberment benefits at the
highest level for which Executive and his or her dependents
were enrolled during the period beginning immediately prior
to the
- 6 -
<PAGE> 7
Change of Control and ending on the Termination Date;
provided, however, that if Executive becomes employed by a
new employer that maintains a major medical plan (or its
equivalent) that either
i. does not cover Executive with respect to a
pre-existing condition which was covered under the
Petrolite medical plan, or
ii. does not cover Executive for a designated
waiting period,
Executive's coverage under the Petrolite medical plan shall
continue (but shall be limited in the event of non-coverage
due to a pre-existing condition to the pre-existing
condition itself) until the earlier of the end of the
applicable period of non-coverage under the new employer's
plan or the end of the eighteenth month following the
Termination Date.
C. Effect on Existing Plans.
------------------------
i. Except as provided specifically in
Section 8C(ii) of this Agreement, all Change of Control
provisions applicable to Executive and contained in any
plan, program, agreement or arrangement maintained by
Petrolite (including, but not limited to, any stock
option plan) shall remain in effect through the date of
a Change of Control, and for such period thereafter as
is necessary to carry out such provisions and provide
the benefits payable thereunder, and may not be altered
in a manner which adversely affects Executive without
Executive's prior written approval. No benefits shall
be paid to Executive, however, under any severance plan
maintained generally for the employees of Petrolite if
Executive is eligible to receive benefits under this
Section 8.
ii. If Executive has entered into one or more
stock option agreements (an "Option Agreement") with
Petrolite prior to the date of this Agreement,
Executive agrees that each such Option Agreement hereby
is amended so that, with respect to that portion of the
option that either becomes exercisable, or becomes
exercisable earlier than provided in the Option
Agreement, solely because of a change in control as
such term is defined in the Petrolite stock option plan
pursuant to which the option was granted, the number of
shares subject to such accelerated exercisability shall
be subject to the adjustment provided in Section 8D of
this Agreement.
D. Excise Tax Provision.
--------------------
i. Petrolite's principal independent accounting
- 7 -
<PAGE> 8
firm immediately prior to the date of this Agreement
(the "Accountant") shall determine if any payment made
pursuant to this Agreement, and any other payment or
benefit, including the value of stock options, received
or deemed to be received by Executive from Petrolite or
any of its subsidiaries and affiliates or from any
pension, employee welfare, incentive compensation or
other plans sponsored by Petrolite or any of its
subsidiaries and affiliates (collectively, the
"Payment"), is or will become subject to any excise tax
under section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), or any similar tax
payable under any federal, state, local or other law
(collectively, the "Excise Taxes"). The Accountant
shall base its determination on its understanding of
Sections 280G and 4999 of the Code, any regulations
promulgated thereunder, and any relevant rulings or
judicial decisions relative thereto. The Accountant's
determinations and computations shall be final and
binding on all parties, subject to the Executive's
stated preference as to the allocation of any reduction
in the Payment as provided in Section 8D(ii) of this
Agreement. All determinations hereunder shall be made
in adequate time to permit the Executive to prepare and
file the Executive's tax returns in a timely fashion.
ii. If the Accountant determines that any
Payment is or will become subject to any Excise Taxes
the Accountant then shall determine if the payment of
the Excise Taxes, in addition to any federal, state,
local or other income, excise or other taxes ("Other
Taxes") payable by the Executive with respect to the
Payment to be received, will cause the Executive to pay
an aggregate amount of Excise and Other Taxes such that
the net amount of the Payment the Executive will
receive after payment of all Excise and Other Taxes on
such Payment is less than the net amount of the Payment
the Executive would receive if the Payment was reduced
to the maximum amount payable without imposition of any
Excise Taxes ("Economic Detriment"). If the Accountant
determines that the Executive will incur an Economic
Detriment as a result of the receipt of the full
Payment, the Payment shall be reduced so that the total
Payment is the maximum possible Payment that can be
paid to the Executive without him incurring any
Economic Detriment. The Accountant shall consult with
the Executive in reducing the Payment and shall, as may
be reasonably possible, comply with any stated
preference of the Executive with respect to the
allocation of any such reduction in the Payment.
iii. In determining whether the Payment is
subject to Excise Taxes, the Accountant may exercise
its reasonable judgment to conclude that certain items are
- 8 -
<PAGE> 9
neither subject to Excise Taxes nor to be counted
in determining whether the Payment is subject to Excise
Taxes, or may be considered to be reasonable
compensation for personal services (all such items
hereinafter referred to as "Non-Included Items"). If
it is determined at a later date (pursuant to final
regulations or published rulings of the Internal
Revenue Service, final judgment of a court of competent
jurisdiction or, if so requested by the Executive,
pursuant to an opinion of a nationally recognized
accounting or tax law firm) that any of the Non-
Included Items are subject to Excise Taxes, are to be
counted in determining whether all or any portion of
the Payment is subject to Excise Taxes, or are not
considered to be reasonable compensation for personal
services, with the result that the Executive will incur
an Economic Detriment, Petrolite shall, immediately
upon such determination, pay the Executive an amount
equal to the sum of (a) any such Excise Taxes, plus
(b) any interest, fines, penalties, expenses and other
costs incurred by the Executive and resulting from the
Executive having taken a position that the Payment or a
portion of the Payment is not subject to Excise Taxes
in accordance with a determination made pursuant to
Section 8D(i) above, plus (c) the amount necessary to
reimburse the Executive for any federal, state, local
or other income taxes payable by the Executive with
respect to the amounts of (x) the Excise Tax
reimbursement provided in clause (a) above, (y) the
reimbursement for interest, fines, penalties and other
amounts paid provided in clause (b) above, plus
(z) the amount paid to the Executive as reimbursement
of any federal, state, local or other income, excise or
other taxes (as determined for clauses (x), (y) and (z)
hereof) in accordance with the formula set forth on
Exhibit B, which is attached hereto and incorporated by
reference herein.
E. Costs of Proceedings. Petrolite shall pay all
--------------------
costs and expenses, including attorneys' fees and
disbursements, at least monthly, of Executive in connection
with any legal proceeding (including arbitration), whether
or not instituted by Petrolite or Executive, relating to the
interpretation or enforcement of any provision of Section 8
of this Agreement, except that if Executive instituted the
proceeding and the judge, arbitrator or other individual
presiding over the proceeding affirmatively finds that
Executive instituted the proceeding in bad faith, Executive
shall pay all costs and expenses, including attorneys' fees
and disbursements, of Executive. Petrolite shall pay
prejudgment interest on any money judgment obtained by
Executive as a result of such proceeding, calculated at the
prime rate of interest as reported in The Wall Street
Journal on the day judgment is entered.
- 9 -
<PAGE> 10
F. Definitions. As used in this Section 8 of this
-----------
Agreement, and unless the context requires a different
meaning, the following terms, when capitalized, have the
meaning indicated:
i. "Annual Base Salary" means Executive's
annual rate of base salary in effect on the date of the
Change of Control or the Termination Date, whichever is
higher.
ii. "Target Incentive Payment" means the amount
payable to Executive under the Petrolite Annual
Incentive Plan and any other incentive plan of
Petrolite in effect for the fiscal year in which a
Change of Control occurs, calculated on the assumption
that Executive and Petrolite, or those entities or
business units within Petrolite on whose performance
Executive's annual or other incentive payment depends,
achieve the applicable target performance goals
established under the applicable incentive plan with
respect to the applicable incentive period. If no
target performance goals for the year in which the
Change of Control occurs have been set prior to the
Change of Control, the Target Incentive Payment shall
be determined by utilizing the fiscal year immediately
prior to the fiscal year in which a Change of Control
occurs.
iii. "Change of Control" means the first to occur
of any of the following dates:
a. The date the Petrolite Board of
Directors votes to approve and recommends a
stockholder vote to approve:
(i) any consolidation or merger of
Petrolite in which Petrolite is not the
continuing or surviving corporation;
(ii) any consolidation or merger of
Petrolite in which shares of Petrolite
capital stock would be converted into cash,
securities or other property, other than
(x) any consolidation or merger of
Petrolite in which the direct or indirect
holders of Petrolite capital stock
immediately prior to the consolidation or
merger have the right to receive the same
direct or indirect proportionate ownership
of voting stock of the surviving corporation
immediately after the consolidation or
merger or, (y) any consolidation or merger
of Petrolite with another corporation which
owns Petrolite capital stock pursuant to
which merger all of the Petrolite capital
stock owned by such
- 10 -
<PAGE> 11
corporation would be canceled or redeemed and
Petrolite capital stock would be issued to the
stockholders of such corporation;
(iii) any sale, lease, exchange or other
transfer (in one transaction or a series of
related transactions) of all, or
substantially all, of the assets of
Petrolite, other than any sale, lease,
exchange or other transfer to any
corporation where Petrolite owns, directly
or indirectly, at least eighty percent (80%)
of the outstanding voting securities of such
corporation after any such transfer; or
(iv) any plan or proposal for the
liquidation or dissolution of Petrolite;
b. The date any person (as such term is
used in Section 13(d) of the Securities Exchange
Act of 1934, hereinafter the "1934 Act"), other
than Wm S. Barnickel & Company or one or more
trusts established by Petrolite for the benefit of
employees of Petrolite or its subsidiaries, shall
become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act of 1934) of
twenty percent (20%) or more of Petrolite's
outstanding Capital Stock; or
c. The date Wm. S. Barnickel & Company
shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act of
1934) of more than forty-eight percent (48%) or
more of Petrolite's outstanding Capital Stock; or
d. The date the Board of Directors of
Petrolite or any affiliate of Petrolite (within
the meaning of Rule 12b-2 under the Exchange Act
of 1934) authorizes and approves any transaction
which has either a reasonable likelihood or the
purpose of causing, whether directly or
indirectly:
(i) Petrolite's Capital Stock to be
held of record by fewer than 300 persons; or
(ii) Petrolite's Capital Stock to be
neither listed on any national securities
exchange nor authorized to be quoted on an
inter-dealer quotation system of any
registered national securities association;
or
e. The date, during any period of
- 11 -
<PAGE> 12
twenty-four (24) consecutive months, on which
individuals who at the beginning of such period
constitute the entire Board of Directors of
Petrolite shall cease for any reason to constitute
a majority thereof unless the election, or the
nomination for election by Petrolite's
stockholders, of each new director comprising the
majority was approved by a vote of at least a
majority of the Continuing Directors, as
hereinafter defined, in office on the date of such
election or nomination for election of the new
director. For purposes hereof, a "Continuing
Director" shall mean:
(i) any member of the Board of
Directors of Petrolite at the close of
business on the date of this Agreement;
(ii) any member of the Board of
Directors of Petrolite who succeeds any
Continuing Director described in
Section 8F(iii)(e) above if such successor
was elected, or nominated for election by
Petrolite's stockholders, by a majority of
the Continuing Directors then still in
office; or
(iii) any director elected, or nominated
for election by Petrolite's stockholders, to
fill any vacancy or newly-created
directorship on the Board of Directors of
Petrolite by a majority of the Continuing
Directors then still in office.
9. Mitigation. Executive shall not be required to
----------
mitigate the amount of any payment provided under this Agreement
by seeking other employment or otherwise, and compensation earned
from such employment or otherwise shall not reduce the amounts
otherwise payable under this Agreement. No amounts payable under
Section 8 of this Agreement shall be subject to reduction or
offset in respect of any claims which Petrolite (or any other
person or entity) may have against Executive.
10. Indemnification; Director's and Officer's Liability
---------------------------------------------------
Insurance. After any termination of employment Executive shall
- ---------
retain all rights to indemnification under applicable law or
under the Petrolite Certificate of Incorporation or By-Laws, as
they may be amended or restated from time to time. In addition,
Petrolite shall maintain Director's and Officer's liability
insurance on behalf of Executive, at the level in effect
immediately prior to the date of termination, for the two (2)
year period following the date of termination and throughout the
period of any applicable statute of limitations.
- 12 -
<PAGE> 13
11. Situs. This Agreement has been entered into in the
-----
State of Missouri and is a Missouri contract. Accordingly, its
terms and provisions shall be governed by, and construed and
enforced in accordance with, the law of the State of Missouri
without application of any Missouri principles of conflict of
laws.
12. Headings. Section headings are for purposes of
--------
reference only and shall not be utilized in interpreting or
construing the provisions of this Agreement.
13. Modifications Must be in Writing. This Agreement
--------------------------------
constitutes the full and complete understanding and agreement of
the parties, supersedes all prior understandings and agreements,
and cannot be changed or terminated orally.
14. Scope and Binding Effect of Agreement. This Agreement
-------------------------------------
shall be binding upon, and inure to the benefit of, Petrolite and
its successors (including successors by merger) and assigns, and
Executive, his heirs, executors, administrators and legal
representatives. It is expressly agreed that the rights and
obligations of Executive hereunder may not be assigned or
delegated by Executive, but that Petrolite may assign this
Agreement to any successor to Petrolite's business provided that
such Assignee assumes Petrolite's obligations hereunder without
Petrolite being relieved therefrom. It is expressly understood
that all references herein to Petrolite shall be deemed to
include the surviving corporation in any merger involving
Petrolite.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
PETROLITE: PETROLITE CORPORATION
By ---------------------------
EXECUTIVE: [Executive's Name]
-------------------
------------------------------
- 13 -
<PAGE> 14
EXHIBIT A
SAMPLE GENERAL RELEASE
----------------------
For good and valuable consideration, the receipt and
sufficiency of which is acknowledged hereby, the undersigned,
with the intention of binding himself/herself and his/her heirs,
executors, administrators and assigns, does hereby release,
remise, acquit and forever discharge Petrolite Corporation, a
Delaware corporation, ("Petrolite"), and its present and former
officers, directors, executives, agents, employees, affiliated
companies, divisions, subsidiaries, successors, predecessors and
assigns (collectively the "Released Parties"), of and from any
and all claims, actions, causes of action, demands, rights,
damages, debts, sums of money, accounts, financial obligations,
suits, expenses, attorneys' fees and liabilities of whatever kind
or nature in law, equity or otherwise, whether now known or
unknown, suspected or unsuspected, which the undersigned,
individually or as a member of a class, now has, owns or holds,
or has at any time heretofore had, owned or held, against any
Released Party arising out of or in any way connected with the
undersigned's employment relationship with Petrolite, its
subsidiaries, predecessors or affiliated entities, or the
termination thereof, including without limitation, any claims for
severance or vacation benefits, unpaid wages, salary or incentive
payment, breach of contract, wrongful discharge, impairment of
economic opportunity, reimbursement for fines paid, intentional
infliction of emotional harm or other tort, or employment
discrimination under any applicable federal, state or local
statute, provision, order or regulation including, but not
limited to, any claim under Title VII of the Civil Rights Act
("Title VII"), the Federal Age Discrimination in Employment Act
("ADEA") and any similar or analogous state statute excepting
only:
A. those obligations of Petrolite under that certain
Executive Agreement between Petrolite and the undersigned dated
- -------------------- (the "Agreement"), pursuant to which this
General Release is being executed and delivered;
B. any rights to indemnification the undersigned may have
under applicable corporate law, the by-laws or certificate of
incorporation of any Released Party or as an insured under any
Director's and Officer's liability insurance policy now or
previously in force; and
C. any claims under any applicable workers' compensation
statute which arose prior to the date of the Executive's
termination from employment.
The undersigned acknowledges and agrees that neither the
Agreement nor this General Release is to be construed in any way
as an admission of any liability whatsoever by any Released Party
under Title VII, ADEA or any other federal or state statute or
the principles of common law, any such liability having been
expressly denied.
- 14 -
<PAGE> 15
The undersigned further declares and represents that he/she
has carefully read and fully understands the terms of this
General Release and the Agreement, that he/she has been given not
less than forty-five (45) days to consider this General Release,
that he/she has been advised to seek, and has had the opportunity
to seek, the advice and assistance of counsel with regard to this
General Release and the Agreement, and that he/she knowingly and
voluntarily, of his/her own free will, without any duress, being
fully informed and after due deliberate thought and action,
accepts the terms of and signs the same as his/her own free act.
------------------------------
Employee
STATE OF ---------- )
) SS.
COUNTY OF --------- )
On this ----- day of ------------, 1994, before me
personally appeared [Executive's Name] , to me known to
----------------------------
be the person described in and who executed the General Release
and acknowledged that he/she executed the same as his/her free
act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand and
affixed my official seal in the County and State aforesaid, the
day and year first above written.
------------------------------
Notary Public
My Commission Expires:
- 15 -
<PAGE> 16
EXHIBIT B
GROSS-UP FORMULA
----------------
Any payment made pursuant to Section 8D(iii) of the
Agreement (a "Gross-up Payment") shall be calculated as follows:
A. The Gross-up Payment shall be the product of
(i) the amount of the Excise Taxes, any interest, fines,
penalties, expenses, and other costs relating to Excise
Taxes incurred by the Executive times (ii) a fraction the
numerator of which is 1, and the denominator of which is 1
minus the combined total rates expressed as a fraction,
determined in accordance with paragraph B of this Exhibit B,
of all federal, state, local and other income and other
taxes and any Excise Taxes applicable to such Gross-up
Payment.
B. For purposes of determining the denominator of the
fraction set forth in clause (ii) of paragraph A of this
Exhibit B, the rates of federal, state, local and other
income and other taxes and Excise Taxes shall be the rates
set forth in the table below:
Federal Income Tax The Executive's highest
marginal federal income tax
rate in effect for the
applicable year, including the
effective rate resulting from
the phaseout of the personal
exemptions ("Federal Income
Tax Rate")
State and Local Income Tax The Executive's highest
marginal state and local
income tax rates in effect for
the applicable year
Excise Tax 20% (or if Section 4999 of the
Code is amended, the excise
tax rate in effect after the
amendment)
All Other Taxes Actual Net Tax Rate
- 16 -
<PAGE> 1
1 9 9 4 A N N U A L R E P O R T
PETROLITE
Successfully
Serving
the Needs
of Growing
Global
Markets
<PAGE> 2
PETROLITE AT A GLANCE
Our mission: To be the best provider of services in our markets via people,
technologies and products while growing and optimizing profitability.
Petrolite Corporation is a highly integrated technology company serving
customers the world over, especially in energy-related industries. Among the
products and services we supply are chemical treatment programs, performance-
enhancing additives, proprietary polymers, and related process equipment and
engineering services.
Our chemical program and equipment design services are individually tailored
to enhance customers' profitability. In the oil and gas industry, for
instance, we serve every segment from exploration and production to refining
and finished product distribution.
Our polymers are used by customers in a wide range of industries, worldwide,
to maximize the performance of their products and processes. Adhesives,
graphic arts, plastics processing, and personal-care products are just a few
of the industries that benefit.
Regardless of the market or the application, our 1,800 employees are driven to
provide real value to our customers and to provide it for the long term.
These efforts increasingly involve our long-standing commitment to help
customers reach their safety, health and environmental goals. Reflective of
this commitment is our participation in the Chemical Manufacturers
Association's Responsible Care(R) program.
With our mission statement as our guide, our company expects to continue its
75-plus-year tradition as a leader in the markets it serves the world over.
..............................................................................
Just as infinity has no end, so too Petrolite's commitment to working closely
with customers worldwide to provide solutions to their problems is ongoing
and without limit.
[CONSOLIDATED REVENUE GRAPH]
[GROSS PROFIT PERCENTAGE GRAPH]
<PAGE> 3
PETROLITE CORPORATION
<TABLE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(Dollars in thousands, except per share data) Increase
For Years Ended October 31 1994 1993 (Decrease)
....................................................................................................................................
<S> <C> <C> <C> <C>
Operating Results: Net revenues $369,227 $351,779 5%
Net earnings:
Before reorganization and accounting changes 19,503 20,546 (5)
Reorganization of chemical operations (12,496)
Accounting changes<F*> 2,037 (6,500)
Net earnings 9,044 14,046 (36)
Capital expenditures, net 21,825 18,923 15
....................................................................................................................................
Financial Position: Working capital $ 61,028 $ 58,060 5%
Total assets 314,939 301,145 6
Total borrowings 46,124 49,920 (8)
....................................................................................................................................
Per Share Data: Earnings (loss):
Before reorganization and accounting changes $ 1.73 $ 1.82 (5)%
Reorganization of chemical operations (1.11)
Accounting changes<F*> .18 (.58)
Earnings per share .80 1.24 (36)
Dividends 1.12 1.12
...........................................................................................................
<FN>
<F*>Reflects effect of adopting SFAS 109 related to income taxes in 1994 and SFAS 106 related to
postretirement benefits in 1993
</TABLE>
[EARNINGS FROM OPERATIONS GRAPH]
[NET EARNINGS PER SHARE GRAPH]
[PERCENT RETURN ON AVERAGE STOCKHOLDERS' EQUITY GRAPH]
[CAPITAL EXPENDITURES GRAPH]
1
<PAGE> 4
TO OUR SHAREHOLDERS
"We have taken aggressive, strategic steps to capitalize on these market
opportunities and challenges, aiming Petrolite for renewed growth and greater
profitability in the years ahead."
William E. Nasser
Chairman and
Chief Executive Officer
Two powerful, yet contrary, market forces shaped Petrolite's performance in
fiscal 1994: One was a growing international marketplace for our products and
services; the other, a continuing contraction and reconfiguration of the oil
industry in North America. The net effect was a decline in our earnings after
several years of growth. More importantly, we have taken aggressive, strategic
steps to capitalize on these market opportunities and challenges, aiming
Petrolite for renewed growth and greater profitability in the years ahead.
We completed a reorganization of our Chemicals Group that was focused on
returning our U.S. and Canadian oil field businesses to a positive earnings
track. This reorganization, derived from a year-long reengineering study,
resulted in new management, sales and service organizations for our Tretolite
Division, geared to providing services more highly valued by its customers. It
also enabled us to reduce staffing in our North American oil field businesses
and corporate support groups - resulting in an estimated annualized savings of
$10 million - and pinpoint underutilized facilities and earmark them for
closure or sale.
In addition, we formed a strategic global alliance with the Drew Industrial
Division of Ashland Chemical Company to serve a larger share of the process
and water treatment markets within the petroleum refining industry, worldwide.
We agreed with Pennzoil Products Co. to form a partnership aimed at providing
a broad line of wax products to domestic and international purchasers of
paraffin, microcrystalline and related synthetic waxes.
We completed construction of a $6.0 million international technology center at
our EuroChem Division headquarters in Liverpool, England.
We introduced the XTEND Continuous Protection Program(SM), a new oil field
service based on breakthrough
2
<PAGE> 5
technology, that brings a host of new benefits to our customers and, we
believe, the potential for increased business to Petrolite.
Short-Term Earnings Impact
As a result of the reorganization, we took a $12.5 million after-tax charge
against earnings in the fourth quarter. Of the total, $8.0 million related to
severance costs and $4.5 million, to the costs of closing certain facilities
and the sales of underutilized assets.
Net income for the year before the reorganization charge and an accounting
change adopted in the first quarter amounted to $19.5 million, or $1.73 per
share, compared with $20.5 million, or $1.82 per share in fiscal 1993.
Including the $12.5 million reorganization charge and a one-time, non-cash tax
credit of $2.0 million, income for the 12 months totalled $9.0 million, or
$0.80 per share.
Strong International Market Demand
Our EuroChem Division posted its fourth consecutive year of record sales and
earnings, generated by strong demand for products and services in refineries
throughout Europe and in oil fields in the North Sea, the former Soviet Union
and the Middle East.
Our $6.0 million investment in the new international technology center to
expand customer service from Liverpool is the strongest evidence of our
continued confidence in the growth of our international energy markets. It
also defines our continuing commitment to service our major customers wherever
in the world they choose to operate. Increasingly, that service is provided in
the far corners of the world in response to the increased energy demands from
rapidly developing economies.
International demand for our equipment design services strongly contributed to
a year of record sales and earnings by our Petreco Division. Crude oil
dehydrators and desalters were ordered by clients in the Middle East, Europe
and South America, while Fueltec turbine fuel treating systems were sold and
delivered to the Middle East and Far East. We also saw a resurgence of orders
from U.S. refiners, seeking process system upgrades.
Our Polymers Division this year turned in a strong double-digit increase in
earnings by reducing its volume of low-profit commodity business and focusing
instead on higher-margin specialty markets. Sales of high-performance polymers
used in paraffin modification, leather finishing and graphic arts showed
strength, while sales of polymer additives for plastics increased, especially
in Asia.
The Chemicals Group, as already mentioned, underwent a reorganization focused
on its Tretolite Division. In so doing, the division consolidated product
lines, streamlined business practices, and dramatically reshaped some field
operations to more efficiently serve the domestic oil field industry, which
has been racked by business consolidations.
The intent of the reorganization, however, was not simply to strip excess
costs from its operations, but to achieve greater customer satisfaction as
well, by providing a more integrated, team selling and service approach to the
business. Full implementation of these initiatives will be achieved during
fiscal 1995.
The Group's International Division posted a strong sales and earnings
improvement in Southeast Asia, especially in Indonesia and Thailand. Business
in Venezuela and Mexico, however, continued soft in the wake of currency
devaluations and political unrest.
The Industrial Chemicals Division continued as the Group's strongest
performer, posting a hefty double-digit increase in sales and earnings with
good performance in all areas. Sales of fuel performance and refinery fuel
additives were up once again, consistent with our positive
3
<PAGE> 6
trend of the last several years. Innovative programs to mitigate hydrogen
sulfide problems also showed increased customer acceptance.
Investing In Our Future
We continued to invest in research and development efforts to benefit our
customers through improved products and services. An outstanding example of an
R&D effort turned commercial success is our new XTEND Continuous Protection
Program(SM), which we rolled out this fall.
This program is revolutionary in the way that it protects oil wells against
corrosion, scale and solids buildup. Using our fleet of specially outfitted
treater trucks, we now service individual oil wells with periodic batch
treatments that provide the characteristics and benefits of continuous
chemical treatment. This is achieved via a patented time-release feature
developed by our research staff. As a result, our customers receive superior
well protection and other benefits, while we are able to lower fleet operating
costs.
Our joint business alliance with Energy BioSystems Corporation continues to
make headway in its efforts to commercialize a breakthrough biocatalytic
desulfurization process for hydrocarbon fuels and feedstocks. Though still
experimental, the process could take a step forward in early 1995, when we
will install and begin operating a biocatalytic desulfurization pilot plant.
At our Bayport, Texas, plant, we completed work on a $3.5 million flare
system, designed to capture and incinerate volatile organic compounds and
other potential pollutants. We also have nearly completed construction there
of a $3.0 million automated washing system for our PetroCare(TM) and I-Pak(TM)
chemical handling containers. These specially built containers have found
strong favor with our refinery and oil field customers who want to minimize
their use of drums and add advanced protection against airborne emissions and
spills.
We also successfully continued our quest for company-wide certification as a
quality supplier under the most rigorous international standards - ISO 9001.
Our Petreco Division, Industrial Chemicals Division and Chemicals Group
support operations earned certification this year from DNV of the Netherlands,
a certified quality auditing firm. They join our EuroChem and Polymers
divisions in having earned this elite status.
New Directors Strengthen Board
We are pleased that Paul H. Hatfield, president and chief executive officer of
Protein Technologies International, a Ralston Purina company, and Richard L.
O'Shields, retired chairman of the board of Panhandle Eastern Pipe Line
Company, joined our board of directors in March. They have contributed notably
to our efforts this past year.
Also in March, the board adopted a stockholder rights plan granting capital
stock purchase rights to Petrolite stockholders under certain circumstances.
Similar to plans adopted by more than 1,500 publicly traded companies
nationwide, Petrolite's plan is designed to deter coercive or unfair takeover
tactics aimed at gaining control of the company without paying all
stockholders a full and fair price.
Favorable Outlook
Our expanding global markets will continue to set our future course. By the
year 2000, a clear majority of our revenues and earnings should be derived
from international business. Our EuroChem Division continues to flourish in
established European, African and Middle Eastern oil field and refining
markets and is at the forefront of penetrating new markets. In Russia,
Kazakhstan and other areas in Eurasia, we have been very successful in
introducing both old and new customers to the full range of our resources and
services.
4
<PAGE> 7
Similarly, our business should remain vigorous in the Far East, where we
recently opened an office in China, registered for business in Vietnam, and
continue ongoing negotiations on several new business alliances in existing
markets.
Prospects for our Polymers Division remain equally bright. Its Corporate
Development Program, which offers clients customized products derived from our
core technologies, should continue to find strong favor with customers. Our
partnership with Pennzoil, to be called Bareco Products, is scheduled to
begin operations in Rock Hill, South Carolina, on April 1, 1995. By combining
resources as equal partners in this venture, our Polymers Division and
Pennzoil bring together noncompeting, highly complementary products and
technologies, which will be of solid benefit to customers. It also should
generate strong synergies to enable more effective and profitable competition
in traditional wax markets.
Similarly, our global, strategic alliance with Drew Industrial Division of
Ashland Chemical positions us to offer an integrated approach to water and
process treatment management to refinery customers worldwide. Petrolite
provides the leadership role in the management of crude oil through its
specialty chemicals and desalter equipment. Drew adds strength to the alliance
through its unique understanding of refinery utility systems, its extensive
water treatment products and services, and its access to state-of-the-art
refinery research and development.
Our Petreco Division, meantime, has a near-record backlog of equipment orders
that should continue its strong revenue and earnings performance.
In our North American oil field businesses, we are aiming for significantly
improved performance as a result of the strong action taken this past year.
Moreover, we believe that customer-supplier alliances will continue to be a
dominant trend and that our pioneering efforts in these business relationships
will continue to benefit us.
At year-end fiscal 1994, Amoco - our single largest customer - conferred on
our Tretolite Division the special status of "Approved Supplier of Production
Chemicals" in recognition of their highly successful working relationship. We
believe our corporate-wide, total-service commitment to companies like Amoco
is one key to our long-term growth.
In summary, we have taken decisive action to capitalize on worldwide business
opportunities and have worked aggressively to rectify shortfalls in our
domestic oil field businesses. As the benefits of these actions are realized,
we can truly begin to leverage the advantage we hold as a leader in the
markets we serve. Quite simply, we believe that our employees are the best in
the world at what they do, and with the proper support and resources, they can
outperform any competitor, anywhere.
For all of these reasons, we believe fiscal 1995 holds the promise of renewed
strength in all of our businesses with improved operating earnings to match.
/s/ William E. Nasser
William E. Nasser
Chairman and
Chief Executive Officer
December 27, 1994
Subsequent to year-end, we announced on December 9, 1994, that Petrolite
Corporation had signed a letter of intent to acquire substantially all of the
assets of Wm. S. Barnickel & Company, its largest stockholder, in a tax-free
reorganization between the two companies. We believe this letter of intent,
which is summarized on page 15 of this report, represents another significant,
positive milestone in our company's growth.
5
<PAGE> 8
In our quest to achieve total customer satisfaction, Petrolite personnel the
world over provide real added value - that something extra - through their
dedicated hard work and sophisticated use of the company's core technology,
products and services. On the following pages, we describe how their efforts
create that added value as they provide routine and not-so-routine service to
customers operating in different parts of the world.
6
<PAGE> 9
innovative technology
When a major North Sea oil producer needed to comply with new, more stringent
environmental regulations governing offshore production, Petrolite responded
with innovative technology - a unique "green" corrosion control program.
The North Sea is one of the most challenging areas on earth to produce oil and
gas: It is remote, hostile and, for oil field equipment, a highly corrosive
environment. It's also ecologically sensitive and protected - especially in
the Norwegian sector - by tough environmental regulations that are slated to
become even more stringent in the years ahead. One producer, which operates
offshore platforms there, wanted to ensure that its operations would remain in
compliance with those regulations without sacrificing the corrosion protection
afforded by existing treatment programs. This would be a tall order for any
oil field chemical and services supplier. Petrolite, however, simply set in
motion a technical task force which formulated a totally new approach to
providing superior corrosion control.
Petrolite's "green" team included scientists from the United States and
England who screened existing corrosion-control chemistries to find the best
candidates for further research. "We focused on three parameters," explained
Senior Research Fellow Richard Martin, "toxicity, biodegradability and
corrosion protection." In less than a year, the team had formulated a totally
new kind of product. "It's been such a resounding success that word is getting
around the industry," Martin said. "Offshore producers in Southeast Asia, the
Arabian Gulf, the Gulf of Mexico and elsewhere have shown interest and for
good reason. This technology offers a combination of superior corrosion
control and environmental protection that's hard to beat." The next step is to
apply the technical lessons learned to other oil field product lines.
7
<PAGE> 10
rapid response
In a remarkably short span of time, Petrolite used its worldwide resources to
fully commercialize a new product in rapid response to an unusual and costly
sulfur problem faced by a major oil producer operating in Kazakhstan.
Mercaptans are naturally occurring, sulfur-based, organic compounds that are
highly corrosive and very foul-smelling. They're rarely significant
contaminants in crude oil but, when they are, they can make the oil unsalable
if pipeline companies won't accept it. That's exactly what happened to Chevron
and its Kazakh partners operating in the Tengiz field. Their options at first
seemed limited and costly: Construct a desulfurizing plant and, in the
meantime, blend the contaminated oil with clean oil produced elsewhere to
reduce the mercaptan concentration - drastically reducing production from
their own field in the process. The most value-added solution was to call in
Petrolite, with its leading-edge technology and resources in the management of
sulfur problems in hydrocarbon applications.
Since no off-the-shelf solution existed for this problem, a Petrolite research
team quickly synthesized a product to do the job. With Chevron's
encouragement, Petrolite personnel in Kirkby, England, and St. Louis then
expedited development work, including pilot plant experiments, toxicology and
corrosion studies, performance testing and more. Chevron pitched in, too,
refining samples of treated oil at one of its U.S. refineries to ensure that
it wouldn't adversely affect downstream operations. With arrival of the first
commercial product shipment in Tengiz, Petrolite began a 30-day trial. "Before
long," said Petrolite Limited Managing Director Stuart Monro, "Chevron had
doubled its oil production and without a hint of the mercaptan problem - all
the result of a new product and application technology commercialized in just
six months' time."
8
<PAGE> 11
best value
Following an intense competition with four other suppliers in the Middle East,
Petrolite won a major oil-treating account by offering the best value - a
combination of superior service, technology and cost competitiveness which was
clearly unmatched in terms of overall performance.
Crude production in the giant oil fields of the Middle East is becoming
increasingly "wet." That is, greater quantities of water and sediment are now
produced with every barrel of oil and that percentage of water will steadily
increase as these fields mature. The oil fields in Oman are no exception. The
use of chemical demulsifiers there continues to be one of the most cost-
effective means of removing these impurities, which can cause a host of
process problems in downstream transportation and refining operations. In one
major field, the producer was looking to replace a supplier of five years with
one offering an all-important benefit - assistance in increasing operating
profits for the long term.
As a leading supplier of oil-treating chemical programs in the Middle East for
decades, Petrolite was among five companies invited to submit a proposal for
the field. One of Petrolite's most experienced field technologists was
immediately dispatched. Before long, he had analyzed the entire field and
determined that a customized blend of several intermediate demulsifiers would
provide the very best oil-water separation. A team of Petrolite specialists
then charted a treating regimen that keyed on the lowest chemical injection
rates, the optimum injection points, and a monitoring program to ensure that
the desired results were achieved. "We were awarded this business," explained
a confident Dr. George Makar, Petrolite's Middle East operations manager,
"because we fielded the best people, to provide the best service program, at
the best price." That's a proven formula for business success anywhere in the
world.
9
<PAGE> 12
total quality
For an international, personal-care products company seeking a global supplier
of a performance additive for a product to be manufactured and distributed
initially in Southeast Asia, total quality in every aspect of the supply chain
was a must.
Gaining a decisive performance edge in a consumer product market is critically
important to sales success and, once achieved, it must be vigorously
protected. That means that additive and raw material suppliers must provide
products of uncompromising quality and consistency - and if delivered
overseas, through fail-safe channels of distribution. This particular
manufacturer also needed a supplier focused on service, one that could fine
tune its products when necessary to maximize their performance. Finally, the
manufacturer wanted a supplier that would protect its proprietary formulations
and technology. For all of these reasons and more, this company chose
Petrolite's Polymers Division.
"Providing companies the world over with this consistency of quality and
service is what's rapidly building our business," said International Sales
Manager Jeff Simmons. With distribution centers in Asia Pacific, Europe, Latin
America and the United States, the Polymers Division has become a resource
that clients trust, and its certification to international quality standard
ISO 9001 adds to their confidence. "As many of our own, unique products are
based on proprietary processes, we are mindful of the need to guard our
clients' technology," added Division General Manager Toby Graves. "In all, we
maintain secrecy agreements with more than a hundred major corporate
customers" - among them, this personal-care products company which now orders
the division's additive for more than 20 of its plants in Southeast Asia,
Europe and Latin America.
10
<PAGE> 13
dependability
A major fuel marketer and refiner serving the eastern United States wanted to
offer a new premium diesel fuel, which would require a high-performance
additive package. In choosing an additive supplier, dependability was a
critical factor.
In a market where success is built on customer confidence, Star Enterprise
Inc. wanted to be sure that its new diesel fuel would consistently deliver the
highest quality performance - trouble-free engine operation whether in
blistering heat or blizzard cold. So any additive supplier would not only have
to meet demanding product performance specifications, but be capable of
helping to solve the inevitable technical problems that crop up in the course
of a major fuel marketing effort. Thirty-four fuel terminals would be involved
in the rollout - from Bangor, Maine, to Corpus Christi, Texas - and in every
customer tankful of Star premium diesel there would have to be a star
performer.
Following an intensive review and selection process, Star chose Petrolite to
be its additive supplier for this new premium fuel. "What's really
gratifying," said Petrolite sales manager Ken Berlanti, "is that Star selected
us even though we were by no means the low-bid supplier. We were, instead, the
company that offered the experience, the commitment to total service, and the
proven dependability to assure them that their needs would be met whenever and
wherever they arose." The new additive package formulated exclusively for Star
provides fuel stability, corrosion protection, cetane enhancement, lubricity,
detergency and more. "We're looking forward to building on this partnership,"
added Berlanti, "and helping them any way we can to improve their business."
11
<PAGE> 14
proactive efforts
Unfavorable economics has made it increasingly difficult for major oil
producers to operate profitably in the United States. Through its proactive
efforts in an alliance with Amoco, however, Petrolite is helping to extend the
production life of one of the nation's oldest oil fields.
The Salt Creek field in central Wyoming was first drilled in 1889. Through the
decades, daily production has steadily declined from 97,000 barrels at its
peak in the 1920s to just over 7,000 barrels today. Production costs,
meantime, have steadily climbed. Amoco's continued operation of this field
hinged on its ability to increase its profitability and that meant working in
partnership with its suppliers to solve problems. With Petrolite's help, Amoco
determined that one of its most costly problems was downhole corrosion -
responsible not only for oil well tubing and rod failures but the production
of an inordinate amount of "bad oil," that is, oil contaminated with
unacceptably high levels of emulsion and solids.
Working as a close-knit team, Amoco and Petrolite personnel structured a
totally new corrosion control program, one that took into account its total
effects, field-wide, to provide the best overall financial return. After the
first year of operation, the results were impressive: Tubing failures had
declined by more than 50 percent, rod failures, by 75 percent, and bad oil
production had been virtually eliminated. "This is just one of many problems
we've solved together," said Petrolite field sales representative Mike Briggs.
As one who daily shares an office and on-line computer information with Amoco
operations personnel, Briggs emphasized that his involvement is not limited to
chemical program management. "I'm encouraged to make a positive difference
wherever I can," he said, "and that's something I take great pride in doing."
12
<PAGE> 15
FINANCIAL REVIEW
- -----------------------------------------------------------------------------
1994 OPERATING RESULTS
<TABLE>
Consolidated Revenues, Net Earnings and Earnings per Share
<CAPTION>
(Dollars in thousands,
except per share data) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Revenues $369,227 $351,779 $317,950
Net earnings-
Before reorganization and
accounting changes 19,503 20,546 16,479
Reorganization of chemical
operations (12,496)
Accounting changes 2,037 (6,500)
Net earnings 9,044 14,046 16,479
Earnings per share-
Before reorganization and
accounting changes 1.73 1.82 1.45
Reorganization of chemical
operations (1.11)
Accounting changes .18 (.58)
Earnings per share .80 1.24 1.45
..............................................................................
</TABLE>
Revenues rose 5% in 1994 to $369,227,000 on the strength of the company's
international operations, while North American revenues were down 4% from
1993.
Excluding the reorganization of the chemical segment operations and
accounting changes, net earnings decreased by $1,043,000 from 1993 to
$19,503,000. The decline resulted from the weak performance of the company's
North American oil field chemical operations which were affected by the
continuing weakness in the domestic oil field markets. All other divisions
showed improved profits and continued to perform well, especially those
serving the international markets.
During 1994, the company charged pretax earnings for $20,025,000 to provide
for a reorganization of its chemical segment operations. In addition, the
company adopted Statement of Financial Accounting Standards No. 109 relating
to accounting for income taxes, which resulted in a nonrecurring, non-cash,
benefit of $2,037,000 or $0.18 per share. In 1993, the company adopted
Statement of Financial Accounting Standards No. 106 related to medical and
other postretirement benefits, which resulted in a nonrecurring, non-cash,
after-tax charge of $6,500,000, or $0.58 per share. Considering these
accounting changes and the reorganization charge for the chemical segment
operations, net earnings decreased $5,002,000 in 1994 to $9,044,000.
<TABLE>
Revenues
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Specialty Chemical Products $344,846 $332,512 $301,484
Equipment 24,381 19,267 16,466
..............................................................................
Total $369,227 $351,779 $317,950
..............................................................................
..............................................................................
</TABLE>
Revenues from sales of Specialty Chemical Products increased $12,334,000 in
1994 representing a 4% gain. Tretolite Division revenues were lower reflecting
the weakness in the domestic oil field market. Sales of oil field chemicals
outside of North America showed continued solid growth, particularly in
Europe, the Middle East and Southeast Asia. Sales of refinery process services
and fuel performance additives were also higher in 1994 after posting good
growth in 1993. Polymers Division revenues were comparable to 1993 as
elimination of some very low margin commodity wax business in Europe was
offset by realized gains in other international markets.
Revenues from equipment sales were $24,381,000, up 27% from 1993. Equipment
design business revenues were boosted by several large contracts involving
overseas sales of turbine fuel treatment systems and oil field dehydrators and
a resurgence of orders from U.S. refiners seeking system upgrades. The
division will also carry a strong backlog of contracts forward into fiscal
1995.
<TABLE>
Earnings from Operations
<CAPTION>
(Dollars in thousands) 1994 1993 1992
.........................................................................................
<S> <C> <C> <C>
Specialty Chemical Products $26,172 $29,714 $24,410
Reorganization costs (20,025)
Equipment 3,278 1,851 1,343
Loss on disposition of subsidiary's assets (2,618)
Gain on termination of subsidiary's pension plan 1,262
.........................................................................................
Total $ 9,425 $31,565 $24,397
.........................................................................................
.........................................................................................
</TABLE>
Operating earnings of Specialty Chemical Products declined 12% from 1993 due
to the weak performance of the North American oil field business. Operating
earnings of all other Specialty Chemical operations increased over 1993
levels. The Polymers Division improved its margins as a result of a reduction
in lower margin sales being replaced with higher margin products. Both the
Industrial Chemicals Division and the EuroChem Division recorded improvements
on last year's profitability due to an increased sales base and leveraging
their operating expenses accordingly.
The Equipment segment earnings increased 77% due to stronger contract
revenues, both domestically and overseas, and by effectively controlling its
operating expenses which were up only nominally over the prior year.
The company has charged pretax earnings with $20,025,000 to cover a
reorganization of its Chemical segment operations. This reorganization, which
results from a reengineering study of the oil field operations and a decision
to exit the manufacturing of microcrystalline waxes, will result in the
elimination of approximately 290 jobs, and the discontinuance of all chemical
manufacturing operations at Webster Groves, Missouri, and Clear Lake, Texas,
discontinuance of ethoxylation activities at Barcelona, Venezuela, and
discontinuance of the microcrystalline wax manufacturing process at Kilgore,
Texas, and Barnsdall, Oklahoma. (See the reorganization footnote for
additional information.)
13
<PAGE> 16
<TABLE>
Interest (Expense) Income, Net
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Interest and dividend income $ 850 $ 828 $1,324
Interest expense (3,371) (1,475) (936)
..............................................................................
Interest (expense) income, net $(2,521) $ (647) $ 388
..............................................................................
..............................................................................
</TABLE>
Interest expense increased during 1994 due to a full year of interest on the
$40 million private placement concluded in September 1993.
<TABLE>
QUARTERLY RESULTS
Condensed quarterly unaudited summaries of financial results during fiscal
1994 and 1993, which total to the annual results, are as follows:
<CAPTION>
(Dollars in thousands, except per share data)
..............................................................................
Net Earnings
Three Months Gross Earnings (Loss)
Ended Revenues Profit (Loss) per Share
..............................................................................
<S> <C> <C> <C> <C>
1994
..............................................................................
January 31
Before effect of
accounting change $91,796 $38,101 $5,414 $.48
After effect of
accounting change 91,796 38,101 7,451 .66
April 30 90,556 37,381 4,330 .38
July 31 90,223 38,673 3,767 .34
October 31 96,652 39,589 (6,504) (.58)
..............................................................................
1993
..............................................................................
January 31
Before effect of
accounting change $80,163 $33,843 $4,826 $.43
After effect of
accounting change 80,163 33,843 (1,674) (.15)
April 30 85,944 36,864 5,197 .46
July 31 92,597 38,900 5,223 .46
October 31 93,075 40,505 5,300 .47
..............................................................................
..............................................................................
</TABLE>
Colder temperatures throughout North America during the first quarter boosted
demand for our new chemical cold flow improvers for refinery process
feedstocks and finished fuels. Demand for hydrogen sulfide abatement programs
also increased.
A steep decline in the price of crude oil in the early part of the year
triggered cost cutting moves by major and independent producers in North
America that severely impacted our second and third quarters.
While the domestic and Canadian oil field business remained sluggish, the
international business continued its strong performance resulting in the
fourth quarter earnings rebounding to $0.53 per share before the
reorganization charge (as previously mentioned). The charge amounted to $1.11
per share in the fourth quarter.
During the first quarter of fiscal 1994 and 1993, the company adopted
accounting changes consisting of a one-time, non-cash tax credit of $2.0
million or $0.18 per share in 1994 and a nonrecurring, non-cash, after-tax
charge of $6.5 million, or $0.58 per share to cover medical and other
postretirement benefits in 1993.
<TABLE>
FOREIGN CURRENCY EXCHANGE AND TRANSLATION
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Earnings statement: (loss) gain-
Pretax $ (322) $ 51 $ 514
After-tax (252) 33 357
Balance sheet-
Net change in cumulative
translation adjustment $5,090 $(3,096) $(3,394)
..............................................................................
..............................................................................
</TABLE>
The company's exchange gains and losses were attributable principally to the
effects of changes in value of the U.S. dollar-denominated asset and liability
accounts of its foreign subsidiaries and closing of foreign currency futures
contracts. The company uses several measures to protect returns on its foreign
subsidiary net assets from significant changes in the value of the dollar
versus foreign currencies. These measures include pricing adjustments,
maintenance of offsetting asset and liability balances, and investment in
foreign currency futures contracts. There were no significant contracts
outstanding at year-end. Balance sheet changes in the cumulative translation
adjustment reflect the general fluctuation in the value of the U.S. dollar
versus foreign currencies in all three years.
<TABLE>
FOREIGN INVESTMENTS
Petrolite's net investments in its foreign subsidiaries and affiliates as of
October 31 are identified below by geographic area:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Europe $42,657 $35,391 $37,540
Far East 16,620 15,224 13,423
Canada 8,718 8,177 5,112
Middle East 6,651 6,096 5,404
Latin America 2,429 4,169 3,270
..............................................................................
Total $77,075 $69,057 $64,749
..............................................................................
..............................................................................
</TABLE>
The increase in Petrolite's investment in Europe is due to the positive
earnings contributions from the European operations this past year and to a
strengthening in general of the European currencies against a weakening U.S.
dollar.
<TABLE>
LIQUIDITY/CAPITAL RESOURCES
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Working capital-
Cash and marketable securities $20,564 $ 8,799 $ 17,852
Other 45,705 49,261 39,122
Debt-
Short-term 6,124 9,920 13,582
Long-term 40,000 40,000
Ratios-
Current 1.83:1 1.79:1 1.98:1
Long-term debt/total
capitalization .19:1 .20:1
..............................................................................
..............................................................................
</TABLE>
The company's primary sources of liquidity are cash provided by operating
activities and $26 million of unsecured lines of credit. Working capital
increased to $66 million at October 31, 1994, up from $58 million at October
31, 1993, with the current ratio increasing slightly to 1.83:1 from 1.79:1.
The improvement of the debt-to-capital ratio was due to an increase in
shareholders' equity and a decrease in debt.
14
<PAGE> 17
The company's strong financial position and adequate credit availability
provide a high degree of flexibility in obtaining additional funds on
competitive terms. Historically, the company has relied on internally
generated funds to finance the growth in its asset base. With our strategic
change to a more aggressive acquisition program, the need for additional
external financing in the future will be likely. Detailed information on the
company's cash flows is presented in the Consolidated Statements of Cash
Flows.
<TABLE>
CAPITAL EXPENDITURES AND DEPRECIATION
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Capital expenditures, net $21,825 $18,923 $18,295
Depreciation 19,326 16,765 15,957
..............................................................................
..............................................................................
</TABLE>
Major capital expenditures were made in 1994 for the new customer service
center and technology laboratory in Kirkby, England, replacement of the
company aircraft, continued investment in containers that are more
environmentally safe to replace 55-gallon drums, and upgrading of our Bayport
manufacturing facility, including the construction of a new semi-bulk
distribution facility and emission control improvements.
For 1995, major projects will include the continued expansion and upgrade of
the Bayport and Kirkby chemical manufacturing plants, additional investment in
containers that are more environmentally safe, upgrading the Nisku, Canada,
blending and distribution facilities, and modification of contract treating
trucks.
The company expects 1995 capital expenditures to be slightly higher than
1994 expenditures.
ACQUISITIONS, JOINT VENTURES, AND ALLIANCES
During fiscal 1994, the company agreed to acquire the 50% of Petrolite
Suramericana, S.A. that it did not own in exchange for shares of Petrolite
stock. The balance sheet effect of this transaction resulted in additional
assets of approximately $2,750,000, assumed liabilities of $2,250,000 and the
issuance of $500,000 in Petrolite stock.
The company announced a partnership between its Polymers Division and
Pennzoil Wax Partner Company to market a broad line of wax products to
purchasers of paraffin, microcrystalline and related synthetic waxes,
worldwide. Previously, the two companies manufactured and sold noncompeting wax
products. Pursuant to the partnership agreement, the company will discontinue
manufacturing microcrystalline waxes.
The Chemical Group entered into a strategic global alliance with Ashland
Chemical Company's Drew Industrial Division to integrate water and process
treatment management worldwide, resulting in greater administrative and
operating efficiencies.
In 1993, the company acquired certain assets and liabilities of Welchem,
Inc., a wholly owned subsidiary of Amoco Chemical Holding Company. The
consideration paid by the company was $33,140,000 less certain post-closing
adjustments. The company also purchased Sulfa-Scrub(R) patents and technology
from Quaker Chemical Corporation in 1993. These patents are being amortized
over 15 years on a straight-line basis. During the last quarter of 1993, the
company acquired certain assets of Chemical Specialties Corporation of
Louisiana to better serve oil and gas producers, especially those operating off
the U.S. Gulf Coast.
WM. S. BARNICKEL & COMPANY
On December 9, 1994 the company announced that it had signed a letter of
intent pursuant to which the company would acquire substantially all of the
assets of Wm. S. Barnickel & Company ("Barnickel Company"), its largest
stockholder, in a tax-free reorganization between the two companies. The
Petrolite shares owned by Barnickel Company comprise about 47% of the
outstanding shares of Petrolite capital stock. The following is a brief
summary only. The letter of intent is described in more detail in a current
report for Form 8-K filed December 12, 1994.
In exchange for substantially all of the assets of Wm. S. Barnickel &
Company, which consist primarily of 5,337,360 shares of the company's capital
stock, the company would issue to Barnickel Company an equal number of new
shares of its capital stock. The company also would issue a small number of
additional shares of its capital stock, not likely to exceed 200,000 shares, to
acquire all or some of the oil and gas properties owned by Barnickel Company and
would assume certain Barnickel Company liabilities for fees and expenses
associated with the proposed transaction, and certain reorganization taxes, in
the aggregate amount of $9.0 million.
The contemplated transaction would include dissolution of Barnickel Company
and distribution of the company's capital stock to the trusts that own
Barnickel Company stock and, thereafter, to the beneficiaries of one of the
trusts; a Stockholder Agreement containing specified limitations on the
purchase and sale of Petrolite shares, and associated standstill provisions
and voting rights limitations on the trust beneficiaries who will receive the
majority of the company's capital stock issued in the transaction; a
Registration Rights Agreement providing specified registration rights to
certain recipients of the Petrolite shares; and expansion of the company's
Board of Directors to eleven members, with the additional two members to be
proposed initially by Barnickel Company.
The transaction remains subject to a number of contingencies, including
execution of a definitive agreement and the receipt of certain favorable
rulings from the Internal Revenue Service regarding the tax treatment of the
transaction.
Barnickel Company and the company are in the process of preparing and
negotiating the terms of a definitive agreement. Upon the closing of the
transaction, the company expects to take a charge against earnings of
approximately $10.5 million, or $0.93 per share, reflecting the designated
liabilities of Barnickel Company assumed by the company and other expenses of
the company associated with the transaction.
15
<PAGE> 18
<TABLE>
STOCKHOLDERS' EQUITY/CAPITAL STOCK
<CAPTION>
(Dollars in thousands, except per share data) 1994 1993
..............................................................................
<S> <C> <C>
At October 31-
Stockholders' equity $165,589 $163,137
Number of shares outstanding 11,325 11,289
Stockholders' equity per share $ 14.62 $ 14.45
Return on average stockholders' equity-
Before reorganization and
accounting changes 11.9% 12.5%
After reorganization and
accounting changes 5.5% 8.6%
..............................................................................
..............................................................................
</TABLE>
Petrolite has stock option and incentive plans which are described in detail
in the Notes to Consolidated Financial Statements on page 27. The company also
has contributory employees' savings plans, which include an option for
investment in Petrolite stock which is partially funded by the company. These
plans are administered by an independent trustee that purchases shares on the
open market on a current basis.
In 1994, Petrolite agreed to acquire the 50% of Petrolite Suramericana, S.A.,
that it did not own in exchange for $500,000 of Petrolite stock.
Dividends Per Share
Petrolite paid quarterly dividends of $0.28 per share for a total annual
dividend of $1.12 per share in both fiscal 1994 and 1993. Petrolite has paid
dividends every year since its incorporation in 1930 and has maintained or
increased its dividends per share every year since 1946.
<TABLE>
Capital Stock Prices
The high and low bid prices for 1994 and 1993 are shown in the following table
compiled from published sources:
<CAPTION>
1994 1993
................ ................
Quarter Ending High Low High Low
..............................................................................
<S> <C> <C> <C> <C>
January 31 $40 1/4 $30 3/4 $34 $24
April 30 37 1/2 29 3/4 33 3/4 27 3/4
July 31 37 29 3/4 39 1/4 28 1/4
October 31 33 3/4 28 40 1/4 32
..............................................................................
..............................................................................
</TABLE>
Petrolite Corporation's capital stock is included in the NASDAQ National
Market System of over-the-counter securities. The company's capital stock is
traded under the symbol PLIT. As of October 31, 1994, Petrolite had 2,181
shareholders of record.
PRIOR YEARS' OPERATING RESULTS
1993 vs. 1992
Petrolite's revenues rose 11% in fiscal 1993 to $351,779,000. All of the
company's operating divisions participated in the revenue improvement. About
50% of the increase came from the acquisition of the assets and business of
Welchem, Inc., a subsidiary of Amoco Chemical Holding Company, which was
completed in April 1993.
Net earnings in fiscal 1993, before effect of a change in accounting
principle, increased 25% to $20,546,000, or $1.82 per share, compared with
$16,479,000, or $1.45 per share, in the prior period. All operating divisions
also shared in the earnings improvement.
During 1993, Petrolite adopted Statement of Financial Accounting Standards
No. 106 related to medical and other postretirement benefits, which resulted in
a nonrecurring, non-cash, after-tax charge of $6,500,000, or $0.58 per share.
This charge reduced reported fiscal 1993 earnings to $14,046,000, or $1.24 per
share.
Revenues from sales of Specialty Chemical Products were $332,512,000 in
fiscal 1993, a 10% increase over fiscal 1992. New business gained as a result
of the Welchem acquisition accounted for approximately 60% of the improvement.
The largest revenue increase was realized by the Tretolite Division principally
due to the Welchem acquisition. New revenue sources also included the hydrogen
sulfide management programs added to Petrolite's service offerings through
purchase of Sulfa-Scrub(R) patents and technology from Quaker Chemical
Corporation.
The Industrial Chemicals Division also benefitted from acquiring the Welchem
customer base. In addition, there was continued strong demand for fuel
additives and the division's basic refinery product base. Oil field and
industrial chemical sales also showed good improvement in Latin American
markets and the Pacific Rim.
Major sales volume gains were realized by the EuroChem Division, although a
general decline in the value of European currencies versus the dollar diluted
the comparative revenue effect. Larger revenue gains were in the Middle East,
Northern Europe and Africa. The Polymers Division also posted higher revenues
in international markets which offset the impact of sluggish demand in
domestic markets.
Equipment revenues were $19,267,000, a 17% increase over fiscal 1992.
Petreco Division equipment contract activity accelerated significantly,
particularly in Europe and the Pacific Rim. The Division also enjoys a healthy
backlog of contracts to be realized in fiscal 1994.
Operating earnings of Petrolite's Specialty Chemical Products business
segment improved 22% to $29,714,000 in fiscal 1993. All divisions contributed
to the improvement. Operating margins of the Tretolite and Industrial Chemicals
divisions were higher due to more favorable product mix, stable raw material
costs and the beneficial impact of higher sales volumes on fixed operating
costs. There were also improved contributions from Latin America and the Far
East.
The EuroChem Division significantly improved its profitability, despite the
effect of generally weaker currencies on revenues. Operating earnings of the
Polymers Division improved on higher revenues, while margins were tested by
intense competition in several product lines.
The company's Equipment segment generated operating earnings of $1,851,000,
representing a 38% gain over the prior year. Stronger Equipment revenues
produced by the company's European subsidiaries were a major factor in the
improvement.
1992 vs. 1991
Petrolite's fiscal 1992 revenues were $317,950,000, a 2% decrease from fiscal
1991. EuroChem Division's revenues were higher in the period. Revenues of the
other operating
16
<PAGE> 19
divisions were slightly lower than those established in fiscal 1991, which was
the company's record revenue year.
Net earnings in fiscal 1992 rose 12% to $16,479,000, or $1.45 per share, an
increase of $1,722,000, or $0.15 per share, from fiscal 1991. The EuroChem
Division realized the greatest earnings improvement while the Polymers and
Industrial Chemicals divisions also registered higher profits. The Tretolite
and Petreco divisions' earnings were lower for the period.
The year's results were affected by two nonrecurring items in the first
quarter. These included a charge of $2,618,000, $0.15 per share, from the sale
of assets of an unprofitable subsidiary, partially offset by a gain of
$1,262,000, $0.06 per share, from the termination of a subsidiary's pension
plan that was replaced by an improved benefit plan.
Net revenues from sales of Specialty Chemical Products were $301,484,000,
approximately the same as fiscal 1991. The major revenue gain was recorded by
the EuroChem Division, where sales to the Middle East and Africa were
exceptionally strong. Tretolite Division's revenues were lower, reflecting
softness in domestic oil field markets. Oil field chemical sales in Pacific
Rim countries showed good improvement. The rate of decline in domestic
revenues of the Tretolite Division was less than the overall decline in the
domestic market for oil field chemicals.
Revenues of the Industrial Chemicals and Polymers divisions were comparable
to fiscal 1991 while realizing some gains in target markets. The Industrial
Chemicals Division was adversely affected by the slowdown in U.S. refinery
activity. Polymers Division's revenues reflected generally slow economic
conditions but showed an encouraging upturn in the latter months of the year.
Equipment revenues were $16,466,000, 13% lower than fiscal 1991. The year-
end backlog of equipment contracts and other accelerated Petreco Division
activities, particularly in Europe and the Pacific Rim, indicate a turnaround
in fiscal 1993.
Operating earnings of Petrolite's Specialty Chemical Products business
segment improved 10% to $24,410,000 in fiscal 1992. EuroChem Division operating
results rose significantly due to a 7% increase in revenues and continuing
effects of significant cost reduction actions taken in fiscal 1991.
The Industrial Chemicals Division and the Polymers Division realized higher
operating earnings with comparable revenues due to improvements in product
mix. Tretolite Division operating earnings were lower due to lower revenues.
All Specialty Chemical Products operating divisions benefitted from improved
stability of raw material costs in fiscal 1992.
The company's Equipment segment generated an operating profit of $1,343,000
in fiscal 1992 compared with $2,174,000 in the prior year. The decline was
attributed to lower contract revenues which are expected to turn around in
fiscal 1993.
INDUSTRY SEGMENT DATA
Petrolite's business is classified into two industry segments: Specialty
Chemical Products and Equipment. The Specialty Chemical Products segment
includes development, manufacture, distribution and marketing of oil field and
industrial chemicals, and industrial polymers and waxes. The Equipment segment
includes development, assembly, distribution and marketing of specialized
lines of equipment for a variety of major industries.
Following is a summary of net revenues, earnings from operations and other
financial data by industry segment. Earnings from operations are defined as
earnings before investment income, equity in net earnings of affiliated
companies, foreign exchange gains and losses, other nonoperating income and
expense, and the provision for income taxes.
<TABLE>
Industry Segment Information<F*>
<CAPTION>
(Dollars in thousands)
For Years Ended October 31 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Net revenues:
Specialty Chemical Products $344,846 $332,512 $301,484
Equipment 24,381 19,267 16,466
..............................................................................
369,227 351,779 317,950
..............................................................................
..............................................................................
Earnings (loss) from operations:
Specialty Chemical Products 26,172 29,714 24,410
Reorganization costs (20,025)
Equipment 3,278 1,851 1,343
Loss on disposition of
subsidiary's assets (2,618)
Gain on termination of
subsidiary's pension plan 1,262
..............................................................................
9,425 31,565 24,397
..............................................................................
..............................................................................
Identifiable assets:
Specialty Chemical Products 260,953 271,401 210,144
Equipment 13,750 10,780 9,221
Investments in affiliated companies 9,223 9,309 7,710
Corporate 31,013 9,655 13,916
..............................................................................
314,939 301,145 240,991
..............................................................................
..............................................................................
Other related disclosures:
Specialty Chemical Sales by
product group-
Oil Field Chemicals 208,673 199,847 180,691
Industrial Chemicals 67,828 63,249 56,028
Specialty Polymers and Waxes 68,345 69,416 64,765
..............................................................................
344,846 332,512 301,484
..............................................................................
..............................................................................
Depreciation:
Specialty Chemical Products 18,814 16,325 15,584
Equipment 436 404 348
Corporate 76 36 25
..............................................................................
19,326 16,765 15,957
..............................................................................
..............................................................................
Capital expenditures, net:
Specialty Chemical Products 16,674 18,239 19,483
Equipment 547 635 (899)
Corporate 4,604 49 (289)
..............................................................................
$ 21,825 $ 18,923 $ 18,295
..............................................................................
..............................................................................
<FN>
<F*>The financial statements and related notes thereto on pages 19 to 28 should
be read in conjunction with this data.
</TABLE>
17
<PAGE> 20
WORLDWIDE OPERATIONS
Petrolite's worldwide operations are summarized below. Inter-area net revenues
include sales from one Petrolite unit to another located in a different
geographic area. Earnings from operations include total company earnings on
sales to unaffiliated customers.
<TABLE>
Worldwide Operations Information<F*>
<CAPTION>
Net Revenues
........................ Earnings Capital
Unaffiliated from Identifiable Expenditures
For Years Ended October 31 (Dollars in thousands) Customers Inter-area Operations Assets Net
.........................................................................................................................
<S> <C> <C> <C> <C> <C>
1994
.........................................................................................................................
United States $237,579 $ 33,503 $(8,218) $170,581 $ 9,057
Europe 87,957 5,242 12,751 69,944 7,345
Canada/Latin America 21,861 1,118 7 10,815 20
Middle East/Far East 21,830 4,885 23,363 874
Investments in affiliated companies 9,223
Corporate 31,013 4,529
Eliminations (39,863)
.........................................................................................................................
$369,227 $ -- $ 9,425 $314,939 $21,825
.........................................................................................................................
.........................................................................................................................
1993
.........................................................................................................................
United States $231,544 $ 30,576 $15,947 $195,827 $14,227
Europe 83,271 4,692 11,856 54,168 2,016
Canada/Latin America 18,969 444 1,069 10,689 2,245
Middle East/Far East 17,995 2,693 21,497 386
Investments in affiliated companies 9,309
Corporate 9,655 49
Eliminations (35,712)
.........................................................................................................................
$351,779 $ -- $31,565 $301,145 $18,923
.........................................................................................................................
.........................................................................................................................
1992
.........................................................................................................................
United States $213,813 $ 23,652 $11,849 $137,109 $15,119
Europe 75,574 2,959 8,020 57,629 1,628
Canada/Latin America 14,693 365 2,897 5,929 967
Middle East/Far East 13,870 1,631 18,698 142
Investments in affiliated companies 7,710
Corporate 13,916 (289)
Eliminations (26,976)
.........................................................................................................................
$317,950 $ -- $24,397 $240,991 $17,567
.........................................................................................................................
.........................................................................................................................
</TABLE>
<TABLE>
Export revenues included in the United States net revenues to unaffiliated customers were as follows:
<CAPTION>
For Years Ended October 31 (Dollars in thousands) 1994 1993 1992
....................................................................................................
<S> <C> <C> <C>
Geographic Areas:
Far East $16,167 $10,358 $13,334
Canada/Latin America 11,590 12,602 12,040
Europe 228 152 76
Africa 5,162 4,272 4,127
Middle East 3,378 3,415 9,180
....................................................................................................
$36,525 $30,799 $38,757
....................................................................................................
....................................................................................................
<FN>
<F*>The financial statements and related notes thereto on pages 19 to 28 should be read in conjunction
with this data.
</TABLE>
18
<PAGE> 21
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
- ---------------------------------------------------------------------------------------------------
<CAPTION>
For Years Ended October 31
(Dollars in thousands, except per share data) 1994 1993 1992
...................................................................................................
<S> <C> <C> <C>
Net Revenues $369,227 $351,779 $317,950
Cost of Products Sold and Other Direct Costs 215,483 201,667 187,592
...................................................................................................
Gross profit 153,744 150,112 130,358
...................................................................................................
Expenses:
Selling 88,272 80,750 71,385
Research 12,737 13,587 12,224
General and administrative 23,285 24,210 20,996
Loss on disposition of subsidiary's assets 2,618
Gain on termination of subsidiary's pension plan (1,262)
Reorganization of chemical operations 20,025
...................................................................................................
144,319 118,547 105,961
...................................................................................................
Earnings from operations 9,425 31,565 24,397
Other Income (Expense):
Equity in earnings (loss) of affiliates 925 (127) (625)
Interest expense (3,371) (1,475) (936)
Other, net 1,527 1,469 2,013
...................................................................................................
Earnings before income taxes and effect of
changes in accounting principles 8,506 31,432 24,849
...................................................................................................
Provision for U.S. and Foreign Income Taxes:
Current 6,458 11,489 8,487
Deferred, net (4,959) (603) (117)
...................................................................................................
1,499 10,886 8,370
...................................................................................................
Net Earnings before effect of changes in accounting principles 7,007 20,546 16,479
Effect of changes in accounting for income taxes
(1994) and postretirement benefits (1993) 2,037 (6,500)
...................................................................................................
Net Earnings $ 9,044 $ 14,046 $ 16,479
...................................................................................................
...................................................................................................
Earnings per share before effect of changes
in accounting principles $ .62 $ 1.82 $ 1.45
Effect of changes in accounting for income taxes
(1994) and postretirement benefits (1993) .18 (0.58)
...................................................................................................
Earnings per share $ .80 $ 1.24 $ 1.45
...................................................................................................
...................................................................................................
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
19
<PAGE> 22
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
October 31 (Dollars in thousands) 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Assets
........................................................................................
Current Assets:
Cash and equivalents $ 19,801 $ 8,036
Marketable securities 763 763
Accounts receivable, less estimated doubtful
accounts of $1,306 and $1,285, respectively 68,733 71,978
Inventories 43,863 44,146
Other current assets 12,557 6,492
........................................................................................
Total current assets 145,717 131,415
........................................................................................
Investment in Affiliated Companies 9,223 9,309
........................................................................................
Other Assets:
Patents and other intangibles, less accumulated
amortization of $2,848 and $1,964, respectively 17,767 18,755
Other 15,169 17,565
........................................................................................
Total other assets 32,936 36,320
........................................................................................
Properties:
Buildings 68,027 66,754
Machinery and equipment 223,500 205,703
Construction in progress 6,489 8,498
Accumulated depreciation (178,437) (164,266)
........................................................................................
119,579 116,689
Land 7,484 7,412
........................................................................................
127,063 124,101
........................................................................................
$ 314,939 $ 301,145
........................................................................................
........................................................................................
LIABILITIES AND STOCKHOLDERS' EQUITY
........................................................................................
Current Liabilities:
Short-term borrowings $ 6,124 $ 9,920
Accounts payable 42,114 42,183
Income taxes payable 9,047 9,383
Accrued vacation payable 3,910 4,070
Reorganization reserve 8,667
Other current liabilities 9,586 7,799
........................................................................................
Total current liabilities 79,448 73,355
........................................................................................
Other Liabilities:
Long-term debt 40,000 40,000
Retiree medical benefits 12,513 10,750
Other 4,295 2,341
........................................................................................
Total other liabilities 56,808 53,091
........................................................................................
Deferred Income Taxes, Net 13,094 11,562
........................................................................................
Stockholders' Equity:
Capital stock, without par value-
Authorized--35,000,000 shares
Issued--12,215,697 and 12,196,497 shares, respectively 9,248 8,694
Reinvested earnings 177,404 181,101
Cumulative translation adjustment (2,319) (7,409)
........................................................................................
184,333 182,386
Less treasury stock, at cost (890,518 and 907,326 shares,
respectively) (18,744) (19,249)
........................................................................................
165,589 163,137
........................................................................................
$ 314,939 $ 301,145
........................................................................................
........................................................................................
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
20
<PAGE> 23
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------
<CAPTION>
For Years Ended October 31 (Dollars in thousands) 1994 1993 1992
...................................................................................................
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 9,044 $ 14,046 $ 16,479
...................................................................................................
Adjustments to reconcile net earnings to net cash
provided by operations:
Depreciation and amortization 21,291 17,396 15,957
Effect of changes in accounting for income taxes (1994) and
postretirement benefits (1993) (2,037) 6,500
Reorganization of chemical operations 20,025
Gain on sale of assets (783) (648) (683)
Loss on disposition of subsidiary's assets 2,618
Changes in assets and liabilities:
Accounts receivable 3,245 (16,510) (5,721)
Inventories 639 (9,562) 3,207
Accounts payable and accrued liabilities 3,849 16,276 (3,386)
Other, net (4,367) (3,799) 901
...................................................................................................
41,862 9,653 12,893
...................................................................................................
Net cash provided by operating activities 50,906 23,699 29,372
...................................................................................................
Cash Flows From Investing Activities:
Capital expenditures, net (21,825) (18,923) (18,295)
Welchem assets acquired (25,148)
Other, net (1,125) (4,422) 382
...................................................................................................
Net cash used in investing activities (22,950) (48,493) (17,913)
...................................................................................................
Cash Flows From Financing Activities:
Long-term borrowings 40,000
Short-term borrowings (repayments), net (4,009) (3,583) 996
Dividends paid (12,741) (12,638) (12,720)
Sales (purchases) of common stock 559 (1,930)
Other 239 198
...................................................................................................
Net cash used in financing activities (16,191) 24,018 (13,456)
...................................................................................................
Net Increase (Decrease) in Cash and Equivalents 11,765 (776) (1,997)
Cash and Equivalents at Beginning of Year 8,036 8,812 10,809
...................................................................................................
...................................................................................................
Cash and Equivalents at End of Year $ 19,801 $ 8,036 $ 8,812
...................................................................................................
...................................................................................................
Interest Paid $ 1,459 $ 1,187 $ 223
Income Taxes Paid $ 6,432 $ 8,123 $ 9,394
...................................................................................................
...................................................................................................
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
21
<PAGE> 24
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Capital Stock Cumulative Total
.................. Reinvested Translation Treasury Stockholders'
(Amounts in thousands, except per share data) Shares Amount Earnings Adjustment Stock Equity
...................................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
October 31, 1991 12,182 $8,314 $175,934 $ (919) $(17,376) $165,953
Net earnings 16,479 16,479
Dividends paid $1.12 per share (12,720) (12,720)
Foreign currency translation adjustments (3,394) (3,394)
Exercise of stock under options and
restricted stock awards 8 184 14 198
Purchase of treasury stock (1,930) (1,930)
...................................................................................................................................
October 31, 1992 12,190 8,498 179,693 (4,313) (19,292) 164,586
Net earnings 14,046 14,046
Dividends paid $1.12 per share (12,638) (12,638)
Foreign currency translation adjustments (3,096) (3,096)
Exercise of stock under options and
restricted stock awards 6 196 43 239
...................................................................................................................................
October 31, 1993 12,196 8,694 181,101 (7,409) (19,249) 163,137
Net earnings 9,044 9,044
Dividends paid $1.12 per share (12,741) (12,741)
Foreign currency translation adjustments 5,090 5,090
Exercise of stock options 20 554 5 559
Issuance of treasury stock for acquisition 500 500
...................................................................................................................................
October 31, 1994 12,216 $9,248 $177,404 $(2,319) $(18,744) $165,589
...................................................................................................................................
...................................................................................................................................
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
22
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated statements include the accounts of the company, its
subsidiaries and its unconsolidated 50%-owned corporate affiliate, Toyo-
Petrolite Co. Ltd., which is accounted for using the equity method. All
significant intercompany accounts and transactions have been eliminated.
Translation of Foreign Currencies
Foreign currency translations and financial statements are translated in
accordance with Statement of Financial Accounting Standards No. 52. Under this
standard all assets and liabilities of operations outside the United States,
except for operations in highly inflationary economies, are translated into
U.S. dollars at exchange rates in effect at the end of the period. Operating
results are translated at a weighted average of exchange rates in effect
during the year. Net unrealized gains and losses on translation of foreign
currency financial statements, other than those in highly inflationary
economies, are recorded in stockholders' equity, as a cumulative translation
adjustment, and will be included in income only upon sale or liquidation of
the underlying asset. Realized gains and losses resulting from completed
transactions are included in net earnings.
Cash Equivalents
Cash equivalents are comprised of highly liquid debt instruments with a
maturity of three months or less.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
under the last-in, first-out (LIFO) method for most domestic inventories of
Specialty Chemical Products. The remainder is stated at standard cost, which
approximates actual cost, or at actual cost. Standard costs are determined on
a fully absorbed basis.
Intangibles
Patents and other intangibles are amortized on a straight-line basis over
periods ranging from 4 to 15 years.
Properties and Depreciation
Properties are carried at cost and include expenditures for new facilities and
those which substantially extend the useful lives of existing capital assets.
Maintenance, repairs and minor renewals are expensed as incurred. Upon
disposal or retirement of properties, the related cost and accumulated
depreciation are removed from the accounts and any profit or loss on
disposition is recorded in income. Depreciation is generally provided on a
straight-line basis at rates based on estimated useful lives of the properties
(buildings 5 to 50 years, machinery and equipment 3 to 20 years). Included in
properties are land and certain assets which are being held for sale. The net
book value of these assets at October 31, 1994 approximates $12.8 million.
Income Taxes
The company follows the practice of providing for income taxes based on
financial statement earnings. Consolidated income taxes include provisions for
additional taxes or tax refunds on repatriation of income earned abroad and
also reflect the deferred tax effect of accelerated depreciation and other
temporary differences in reporting income and deductions for tax purposes.
Capital Stock
Proceeds from sales of capital stock issued under stock option and incentive
plans, and tax benefits to the company resulting from early disposition of
stock acquired by the employees under options are credited to capital stock.
Proceeds in excess of cost from sales of treasury stock are also credited to
capital stock.
Revenue Recognition
The company follows the practice of reporting income from equipment contracts
on the percentage-of-completion method. Revenue, other than equipment
contracts, is recorded based on shipment date.
Earnings per Share
Net earnings per share is based on the weighted average number of shares of
capital stock outstanding during the respective year.
Financial Statement Reclassification
Selected prior-year information has been reclassified to conform with 1994
annual report presentation.
SUMMARY OF OTHER FINANCIAL DATA
Concentration of Credit Risk
The company sells a majority of its products to customers in the oil and gas
industry. While most of the company's business activity is with customers
located within North America, the company also services customers in Europe,
Africa, the Middle East, Far East, and South America. The company performs
ongoing credit evaluations of its customers and generally does not require
collateral. When appropriate, the company requires letters of credit or other
similar guarantees particularly in international transactions. The company
maintains reserves for potential credit losses and such losses have been
within management's expectations. As of October 31, 1994, the company had no
significant concentrations of credit risk.
Financial Instruments
The fair value of financial instruments is determined by reference to various
market data and other valuation techniques as appropriate. Unless otherwise
disclosed, the fair values of financial instruments approximate their recorded
values. Marketable securities are stated at their approximate market value.
23
<PAGE> 26
Accounting for Investments
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards
No. 115 - "Accounting for Certain Investments in Debt and Equity Securities."
This Statement will be adopted in the first quarter of fiscal 1995, and the
effect will be insignificant to the company.
INVENTORIES
<TABLE>
Inventories at October 31 are summarized as follows:
<CAPTION>
(Dollars in thousands) 1994 1993
..............................................................................
<S> <C> <C>
Raw materials, parts and supplies $ 28,174 $ 26,731
Finished goods 33,051 34,435
Less reserve for revaluation of inventories
to LIFO cost (17,427) (17,017)
..............................................................................
43,798 44,149
Equipment contracts in progress 1,026 575
Less advance billings (961) (578)
..............................................................................
Inventories, net $ 43,863 $ 44,146
..............................................................................
..............................................................................
</TABLE>
The increase in raw materials in fiscal 1994 is due to increased international
business and the timing of year-end purchases. Equipment contracts in progress
were higher at year-end 1994 due to the continual change in mix of jobs in
progress at the respective year-end dates.
Approximately 70% and 75% of total inventories (exclusive of equipment
contracts in progress) were accounted for on a last-in, first-out (LIFO) basis
at October 31, 1994 and 1993, respectively.
SHORT-TERM BORROWINGS AND LINES OF CREDIT
Short-term funds for certain international operations are obtained through
unsecured overdraft facilities and short-term notes payable with local banks
and totalled $6,124,000, at October 31, 1994. Domestic short-term funds are
obtained through unsecured lines of credit with two banks totalling
$26,000,000 authorizing borrowings bearing interest at a fluctuating rate
below prime determined by the banks' cost of funds. At October 31, 1994, the
amount available and unused under these lines of credit aggregated
$26,000,000.
LONG-TERM DEBT
In September 1993, the company entered into a Note Purchase Agreement with
several institutional investors providing for the private placement of its
5.90% Series A Senior Notes due 2000 and 6.39% Series A Senior Notes due 2003
in aggregate principal amounts of $10,000,000 and $30,000,000, respectively.
Proceeds from the sale of these unsecured notes, which were issued in November
1993, were used to retire short-term borrowings.
The Note Purchase Agreement contains certain restrictive covenants including
limitations on additional borrowings and disposition of assets, and the
maintenance of minimum net worth. Long-term debt maturities are (in millions):
fiscal 1995 and 1996 - $0; 1997 - $2.0; 1998 - $6.3; 1999 - $6.3.
Based on borrowing rates currently available to the company for loans with
similar terms and average maturities, the fair value of long-term debt is
$36,600,000 (1993 - $40,000,000).
INCOME TAXES
<TABLE>
Below is a comparative summary of income taxes for each of the three years in
the period ended October 31:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Current
U.S. $ 2,838 $ 6,898 $4,331
Foreign 3,200 3,791 3,506
State 420 800 650
Deferred
U.S. (4,261) (467) 135
Foreign (220) (136) (252)
State (478)
..............................................................................
Total $ 1,499 $10,886 $8,370
..............................................................................
..............................................................................
</TABLE>
<TABLE>
Pretax earnings related to domestic and foreign operations are summarized
below:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Domestic $(1,550) $21,765 $16,925
Foreign 10,056 9,667 7,924
..............................................................................
Total $ 8,506 $31,432 $24,849
..............................................................................
..............................................................................
</TABLE>
<TABLE>
A reconciliation of income taxes at the U.S. statutory rate to the company's
reported effective tax rate follows:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
..............................................................................
<S> <C> <C> <C>
Income taxes computed at the U.S.
statutory rate 35.0% 34.8% 34.0%
State income taxes net of federal
tax benefit (0.4) 1.7 1.7
Tax benefit - U.S. export sales (10.7) (2.7) (3.5)
Net (income) loss of foreign affiliates (3.8) 0.1 0.9
Foreign tax rate less than domestic
tax rate (2.5)
Other, net 0.7 0.6
..............................................................................
Effective tax rate 17.6% 34.6% 33.7%
..............................................................................
..............................................................................
</TABLE>
Effective November 1, 1993, the company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which
requires an asset and liability approach for financial accounting and
reporting for deferred income taxes. The cumulative effect of adopting this
accounting change was a one-time gain of $2,037,000 or $0.18 per share. Prior-
year financial statements have not been restated to reflect the provisions of
SFAS No. 109.
24
<PAGE> 27
<TABLE>
The deferred tax assets and deferred tax liabilities recorded on the balance
sheet as of October 31, 1994 are as follows:
<CAPTION>
Deferred Tax
........................
(Dollars in thousands) Assets Liabilities
.....................................................................
<S> <C> <C>
Current
Intercompany profit in inventory $ 1,530 $
Accrued liabilities 2,896
Plant closing expenses 2,720
Other items 1,181 113
.....................................................................
8,327 113
.....................................................................
Non-current
Depreciation 15,621
Other property basis difference 1,123
Postretirement benefits other than pension 4,818
Research and development expense 2,031
Accrued liabilities 1,298
Other items 1,118 1,553
.....................................................................
7,234 20,328
.....................................................................
Total deferred taxes $15,561 $20,441
.....................................................................
.....................................................................
</TABLE>
United States federal income tax returns for all years through 1991 have been
settled with the Internal Revenue Service.
SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
In October 1994 the company acquired the remaining 50% of Petrolite
Suramericana, S.A. in exchange for $500,000 of Petrolite stock. At the same
time, the company changed the method of accounting for its investment in
Petrolite Suramericana from the equity method to consolidation. These
activities resulted in the following non-cash transaction:
<CAPTION>
(Dollars in thousands) Amount
.....................................................................
<S> <C>
Current assets $ 536
Equity in affiliate (3,630)
Fixed assets, net 4,724
Current liabilities (1,130)
Treasury stock (500)
.....................................................................
.....................................................................
</TABLE>
PENSION BENEFITS
The company has a noncontributory final average pay defined benefit plan
covering all eligible U.S. employees. Certain benefit improvements under the
plan were initiated for current employees as of November 1, 1991, and for
most retirees as of January 1, 1992. The company contributes funds to
trustees as necessary to provide for current service and for any unfunded
prior service costs over a reasonable period. To the extent that these
requirements are fully covered by assets on hand, a contribution may not be
made in a particular year. Plan assets consist principally of common stocks
and fixed income securities. Pension costs for non-U.S. plans are not
material in the aggregate and are not included in these disclosures.
<TABLE>
The funded status of the U.S. plan at October 31 was as follows:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
...............................................................................
<S> <C> <C> <C>
Actuarial present value of:
Vested benefits $(65,831) $(62,338) $(52,446)
Nonvested benefits (4,497) (4,440) (4,242)
...............................................................................
Accumulated benefit obligation (70,328) (66,778) (56,688)
Effect of future salary increases (14,219) (18,799) (18,269)
...............................................................................
Projected benefit obligation (84,547) (85,577) (74,957)
Plan assets at fair value 121,480 121,868 104,752
...............................................................................
Excess of assets over projected
benefit obligation 36,933 36,291 29,795
Unamortized net transition asset (10,180) (11,203) (12,226)
Unrecognized net gain (26,627) (22,319) (15,298)
Unrecognized prior service cost 4,529 5,260 5,728
...............................................................................
Prepaid pension cost
at October 31 $ 4,655 $ 8,029 $ 7,999
...............................................................................
...............................................................................
</TABLE>
<TABLE>
The net pension expense (credit) included the following components:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
...............................................................................
<S> <C> <C> <C>
Service cost -
Benefits earned during
the period $ 3,183 $ 2,881 $ 2,710
Interest cost on projected
benefit obligation 6,422 6,307 5,868
Return on plan assets (3,727) (21,240) (7,860)
Net amortization and deferral (6,596) 12,022 (134)
...............................................................................
Net pension (credit) expense $ (718) $ (30) $ 584
...............................................................................
...............................................................................
</TABLE>
In addition to the net pension credit, net losses of $4.1 million were
recorded in fiscal 1994 due to a voluntary work-force reduction program
associated with reorganization efforts. The net loss is comprised of the cost
of special termination benefits of $5.6 million and a curtailment gain of
$1.5 million. (See reorganization footnote for additional information.)
The projected benefit obligation was determined using a discount rate of
8.25% for fiscal 1994, 7.5% for fiscal 1993, and 8.25% for fiscal 1992. The
assumed long-term rate of return on plan assets is 8.5% and the assumed long-
term rate of compensation increases is 5.0% for fiscal 1994 and 1993 and 6.0%
for fiscal 1992. The net transition asset at November 1, 1985 is being
amortized over 19 years.
Consolidated pension (income) expense was $(313,000) for 1994, $506,000 for
1993, and $364,000 for 1992.
POSTRETIREMENT BENEFITS
The company implemented Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," effective for fiscal 1993. The company elected to immediately
recognize its transition obligation of $9,660,000 as the effect of a change
in method of accounting. SFAS 106 requires recognition during employees'
active service periods of the expected cost of providing postretirement
benefits (primarily health benefits). The company's previous practice was to
expense
25
<PAGE> 28
these costs as they were paid. Postretirement health benefits are
provided to current and former employees and their spouses who retire at or
after age 55 with 10 years of service. The postretirement health care plans
are contributory, based upon service at retirement, and are subject to
deductibles and co-payments. The company reserves the right to change or
terminate the benefits at any time. The plan is funded as claims are paid.
<TABLE>
The status of the plan at October 31 was as follows:
<CAPTION>
(Dollars in thousands) 1994 1993
....................................................................
<S> <C> <C>
Accumulated postretirement benefit
obligation (APBO):
Retirees $ (7,997) $ (5,206)
Fully eligible plan participants (676) (1,050)
Other plan participants (3,778) (4,645)
....................................................................
Total APBO (12,451) (10,901)
Unrecognized net loss -- 151
....................................................................
Accrued postretirement benefit cost $(12,451) $(10,750)
....................................................................
....................................................................
</TABLE>
<TABLE>
The net periodic postretirement benefit cost was as follows:
<CAPTION>
(Dollars in thousands) 1994 1993
....................................................................
<S> <C> <C>
Service cost-
Benefits earned during the period $ 329 $ 268
Interest cost on APBO 866 793
Net amortization and deferral 50 --
....................................................................
Net periodic postretirement benefit cost $1,245 $1,061
....................................................................
....................................................................
</TABLE>
In addition to the net periodic postretirement benefit cost for fiscal 1994,
the company recorded a net loss of $1.4 million representing the net effect of
special termination benefits and a curtailment gain due to a voluntary work-
force reduction program associated with reorganization efforts. (See
reorganization footnote for additional information.)
Under the former practice of expensing postretirement benefits when paid,
expense would have been $900,000 in fiscal 1994, $750,000 in fiscal 1993 and
$603,000 in fiscal 1992.
For measurement purposes, a health care cost trend of 12.0% was assumed for
fiscal 1994 declining gradually over the next six years to 6.0% and remaining
at that level thereafter. For fiscal 1993, the health care cost trend rate
assumption was 13.0% declining to 6.0% over a seven-year period. The health
care cost trend rate affects the accumulated postretirement benefit obligation
and net periodic cost for health benefits. A one-percentage-point increase in
the assumed health care cost trend rates would increase the accumulated
postretirement benefit obligation for health benefits at October 31, 1994 by
$105,000 and would increase the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for health benefits for
fiscal 1994 by $11,000. The discount rate used in determining the accumulated
postretirement benefit obligation at October 31, 1994 and 1993 was 8.25% and
7.5%, respectively.
POSTEMPLOYMENT BENEFITS
In November 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 112 - "Employers' Accounting for
Postemployment Benefits." This statement requires the company to accrue the
cost of certain benefits, including severance, worker's compensation, and
health coverage, over an employee's service life. The effect of adopting this
statement during the first quarter of fiscal 1995 will be insignificant to the
company.
REORGANIZATION
In the fourth quarter of 1994, the company recorded a $20 million pretax
charge for reorganization of its Specialty Chemicals segment operations.
Reorganization actions are the result of an oil field operations reengineering
study and a decision to discontinue manufacturing microcrystalline waxes.
Reorganization actions through October 31, 1994 include the early retirement
or voluntary severance of approximately 125 employees. Other actions taken as
part of the reorganization include the elimination of approximately 165
additional job positions by the end of fiscal year 1995. The pretax
reorganization charge included $12.9 million of early retirement, severance
and employee-related costs. A portion of this charge reduced the company's
prepaid pension asset by $4.5 million for the cost of special termination
benefits net of curtailment gains. The charge also included $1.4 million
related to SFAS 106 and a severance accrual of $7.0 million. At October 31,
$6.8 million of the severance accrual was recognized as a liability on the
company's balance sheet.
The reorganization also included the discontinuance of all chemical
manufacturing at Webster Groves, Missouri, and Clear Lake, Texas, and
discontinuance of ethoxylation activities at Barcelona, Venezuela. This
resulted in the permanent impairment write-down of $3.7 million of buildings
and fixed assets and the accrual of $1.2 million of other shutdown costs. At
October 31, 1994 $1.1 million of shutdown costs were recognized as a liability
on the company's balance sheet.
Due to the company's decision to implement its long-held strategic goal to
move toward synthetic waxes and wax-like polymers and questions regarding
long-term raw material supplies, it was determined to discontinue production
of microcrystalline waxes at the company's Barnsdall, Oklahoma, and Kilgore,
Texas, facilities. The company will continue to participate in the
microcrystalline wax market through its partnership with Pennzoil Wax Partner
Company. This resulted in the permanent impairment write-down of $1.5 million
of fixed assets and the accrual of $0.8 million of other shutdown costs. The
partnership plan calls for microcrystalline wax production to be discontinued
at each facility around October 31, 1995. At October 31, 1994 $0.8 million of
shutdown costs were recognized as a liability on the company's balance sheet.
26
<PAGE> 29
As a result of the company's restructuring actions, pretax cost savings are
expected to be $7.0 million in 1995 and $10.0 million in 1996 and thereafter.
STOCK OPTION PLANS
On December 10, 1986, the company's Board of Directors approved the 1987
Incentive Stock Option Plan. Under this plan, 600,000 shares of unissued stock
were reserved for grant to officers and key employees and could have been
awarded in the form of stock options or restricted stock units.
Stock options were granted at prices not less than 100% of fair market value
of stock on dates of grant and were issued with a fixed expiration date, not
to exceed 11 years from date of grant. Options are exercisable ratably in
annual installments of 25% commencing one year from date of grant.
A restricted stock unit is the right to receive either cash or shares of
capital stock, upon fulfillment of certain conditions, without payment to the
company. Restricted stock units were contingent upon continued employment or
attainment of predetermined performance targets during a restriction period,
generally three years.
<TABLE>
No additional grants will be made under this plan. Transactions under the
1987 Incentive Stock Option Plan are summarized below:
<CAPTION>
Stock Options
......................
Restricted Number Average
Stock of Options
Units Options Price
.........................................................................
<S> <C> <C> <C>
Outstanding October 31, 1991 3,911 210,100 $31.18
Exercised (750) (8,000) 23.00
Forfeited (13,600) 31.10
Expired (13,600) 30.75
.........................................................................
Outstanding October 31, 1992 3,161 174,900 31.59
Exercised (1,750) (6,400) 30.59
Forfeited (500) 32.50
Expired (28,700) 31.67
.........................................................................
Outstanding October 31, 1993 1,411 139,300 31.62
Exercised (3,200) 28.13
Forfeited (1,411) (7,300) 31.99
Expired (3,400) 32.50
.........................................................................
Outstanding October 31, 1994 125,400 $31.66
.........................................................................
.........................................................................
</TABLE>
Under the 1993 Stock Incentive Plan, which was approved by the shareholders on
March 1, 1993, 800,000 shares of unissued stock were reserved for grant to
executive officers, key managers and non-employee members of the Board of
Directors and may be awarded in the form of stock options or restricted stock
units. The plan provides that stock options are granted at prices not less
than 100% of fair market value of stock on dates of grant and are issued with
a fixed expiration date, not to exceed 10 years from date of grant.
Annually, each member of the Board of Directors who has served on the board
at least six months, is not an employee of the company, and who is elected at
an annual shareholders' meeting, receives an option to purchase 2,000 shares of
the company's capital stock, subject to the five-year term of the plan.
The Board of Directors granted two groups of options under the 1993 plan with
different performance criteria. The first group of options is keyed to
compounded annual increases in the value of the company's shares, which
consists of the market price plus dividends paid. Options to purchase shares
are exercisable in five years; however, the exercise date may be accelerated
if certain criteria are met. The second group of options is keyed to the
increase in the value of the company's shares over a five-year period
commencing on the date of the grant. Options to purchase shares are
exercisable in five years; however, the actual number of shares which can be
purchased under the plan will depend on the compounded annual growth in the
value of the company's stock.
<TABLE>
Transactions under the 1993 Stock Incentive Plan are summarized below:
<CAPTION>
Number of Options Average
....................... Average
Non-Employee Option
Employees Directors Price
...........................................................................
<S> <C> <C> <C>
Outstanding October 31, 1993 610,000 28,000 $31.18
Granted-various dates 95,000 12,000 32.56
Exercised (16,000) 29.00
Forfeited (60,000) 32.80
...........................................................................
Outstanding October 31, 1994 645,000 24,000 $32.75
...........................................................................
...........................................................................
</TABLE>
ENVIRONMENTAL MATTERS
The company has been named a potentially responsible party (PRP) under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
with respect to three "Superfund" sites. The company has not owned or operated
any of the sites and other PRPs also have been so designated with respect to
all such sites. Although this law technically imposes joint and several
liability on each responsible party at each site, the extent of the company's
expected financial contribution is expected to be limited based on the number
of other PRPs and the relative volumes and types of materials involved at each
site that may be attributable to the company. The company also is involved in
remedial response and voluntary environmental cleanup, in some cases under the
direction of governmental agencies, at other locations which are not the
subject of the Superfund law. The company accrues for these costs when it is
likely that a liability exists and the amount of a payment with respect
thereto can be estimated reasonably. Actual costs may vary from estimates due
to inherent uncertainties in evaluating environmental exposures. Based on,
among other things, its previous experience with respect to such activities
and its ongoing review and analysis of all sites, at October 31, 1994, the
company's balance sheet included an accrual for estimated remediation and
other environmental costs of approximately $2.6 million. Subject to the
difficulty in estimating future environmental costs, the company expects that
any sums it may be required to pay in connection with such environmental
matters in excess of the amounts so recorded will not have a material adverse
effect on its financial condition or results of operations.
27
<PAGE> 30
LITIGATION AND OTHER CONTINGENCIES
Various claims, lawsuits and other legal and administrative proceedings
arising in the ordinary course of business are pending against the company.
The company accrues for these costs when it is probable that a liability has
been incurred and the amount of the loss can be reasonably estimated. At
October 31, 1994 the company's balance sheet included an accrual for estimated
litigation costs and other contingencies of $2.1 million. Management and legal
counsel are of the opinion that any sum the company may be required to pay in
connection with the ultimate disposition of such proceedings in excess of the
amounts recorded or disclosed above will not have a material adverse effect on
its financial condition or results of operations.
SEGMENT INFORMATION
Statement of Financial Accounting Standards No. 14 requires disclosure of
certain industry and world area "segment data." Accordingly, industry segment
and worldwide operations data appearing on pages 17 and 18 of this annual
report are an integral part of the accompanying financial statements.
Earnings from operations reported under industry segment data have been
charged with corporate expenses of approximately $5.7 million, $6.8 million
and $6.3 million in 1994, 1993 and 1992, respectively, of which approximately
90% was allocated to the Specialty Chemical Products segment each year. These
corporate expenses consisted primarily of administrative costs which were
allocated to segments based upon services provided.
Profitability of the company's foreign operations by geographic area, as
reported on page 18 of this annual report, was determined based on ultimate
sales to unaffiliated customers. Total company profit was included in the
geographic area of the entity transacting the final sale.
<TABLE>
The following is a reconciliation of foreign earnings from operations, as
presented on page 18, to pretax foreign earnings as presented on page 24:
<CAPTION>
(Dollars in thousands) 1994 1993 1992
.........................................................................
<S> <C> <C> <C>
Earnings from operations:
Europe $12,751 $11,856 $ 8,020
Canada/Latin America 7 1,069 2,897
Middle East/Far East 4,885 2,693 1,631
.........................................................................
17,643 15,618 12,548
Intercompany charges, net (7,385) (6,784) (3,394)
Nonoperating income, net (202) 833 (1,230)
.........................................................................
Pretax foreign earnings $10,056 $ 9,667 $ 7,924
.........................................................................
.........................................................................
</TABLE>
Intercompany charges include intercompany profits realized in the United
States on sales originating domestically, and foreign expenses incurred by the
domestic company. Transfers between geographic areas were recorded at regular
selling prices, less an amount intended to compensate the affiliated purchaser
for costs incurred in selling the product, and also to allow a reasonable
profit.
28
<PAGE> 31
RESPONSIBILITY FOR
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
The management of Petrolite is responsible for the integrity and objectivity
of the financial statements of the company and its subsidiaries. The
accompanying financial statements, including the notes, were prepared by the
company in conformity with generally accepted accounting principles,
appropriate in the circumstances, and necessarily include some amounts that
are based on our best estimates and judgments. The financial information in
the remainder of this annual report is consistent with the financial
statements.
The company maintains a system of internal accounting control designed and
intended to provide reasonable assurance that assets are safeguarded and
transactions are executed and recorded in accordance with management's
authorization. The system is tested and evaluated regularly by the company's
internal auditors as well as by its independent accountants, Price Waterhouse
LLP, in connection with their annual audit.
The adequacy of the company's internal financial controls and the accounting
principles employed in financial reporting are under the general surveillance
of the Audit Committee of the Board of Directors, consisting of four outside
directors. The independent accountants and internal auditors have free and
direct access to the Audit Committee and meet with the committee periodically,
with and without management present, to discuss accounting auditing and
financial reporting matters. The committee also recommends appointment of the
independent accountants to the Board of Directors.
Petrolite Corporation
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Stockholders and Directors of
Petrolite Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Petrolite Corporation and its subsidiaries at October 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the three
years in the period ended October 31, 1994, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of Petrolite's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in the footnotes to the consolidated financial statements, the
company changed its method of accounting for income taxes in 1994 and for
postretirement benefit costs other than pensions in 1993.
St. Louis, Missouri
November 30, 1994
29
<PAGE> 32
11-YEAR SUMMARY
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
For Years Ended October 31 (Dollars in thousands,
except per share data) 1994 1993 1992 1991
..................................................................................................................................
<S> <C> <C> <C> <C>
Summary of Operations--
Net revenues $369,227 $351,779 $317,950 $323,516
Gross profit 153,744 150,112 130,358 127,504
Earnings from operations 9,425 31,565 24,397 24,418
Interest expense 3,371 1,475 936 1,407
Nonrecurring (charge) credit (20,025)
Earnings before income taxes
and effect of change
in accounting principle 8,506 31,432 24,849 22,359
Income taxes 1,499 10,886 8,370 7,602
Net earnings:
Before effect of change in
accounting principle 7,007 20,546
Percent of revenues 2.0% 5.8% 5.2% 4.6%
Return on average
stockholders' equity 4.3% 12.5% 10.0% 8.8%
After effect of change in
accounting principle<F**> 9,044 14,046 16,479 14,757
..................................................................................................................................
Year-end Financial Position--
Working Capital $ 66,269 $ 58,060 $ 56,974 $ 58,780
Current ratio 1.83:1 1.79:1 1.98:1 2.00:1
Total properties:
Gross $305,500 $288,367 $265,067 $261,990
Net 127,063 124,101 107,022 107,981
Total assets 314,939 301,145 240,991 243,995
Long-term debt 40,000 40,000
Stockholders' equity 165,589 163,137 164,586 165,953
..................................................................................................................................
Per Share Data--
Net earnings:<F*>
Before effect of change in
accounting principle $0.62 $1.82
After effect of change in
accounting principle<F**> 0.80 1.24 $1.45 $1.30
Dividends 1.12 1.12 1.12 1.12
Stockholders' equity 14.62 14.45 14.59 14.62
..................................................................................................................................
General--
For the year:
Dividends $ 12,741 $ 12,638 $ 12,720 $ 12,712
Capital expenditures, net 21,825 18,923 18,295 21,039
Depreciation 19,326 16,765 15,957 15,603
Research 12,737 13,587 12,224 11,431
Average number of
shares outstanding 11,304,681 11,283,283 11,350,962 11,348,931
At year-end:
Number of shares outstanding 11,325,179 11,289,171 11,281,474 11,351,086
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
<FN>
<F*>Earnings per share are based on weighted average number of shares
outstanding during each year.
<F**>Reflects effect of adopting SFAS 109, related to income taxes in 1994,
and SFAS 106, related to postretirement benefits in 1993.
30
<PAGE> 33
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1990 1989 1988 1987 1986 1985 1984
..................................................................................................................................
<C> <C> <C> <C> <C> <C> <C>
$296,737 $290,849 $301,269 $278,642 $279,953 $308,298 $294,068
114,206 111,883 113,774 109,247 114,673 124,425 122,299
18,693 9,164 16,792 21,527 24,047 33,952 38,487
950 1,736 1,260 892 453 1,406 1,191
(7,700) 820 (5,217)
19,868 10,057 18,766 18,879 28,237 36,632 42,800
6,733 2,930 5,750 7,000 10,787 14,273 17,000
4.4% 2.5% 4.3% 4.3% 6.2% 7.3% 8.8%
8.0% 4.3% 7.6% 7.0% 10.5% 13.7% 16.7%
13,135 7,127 13,016 11,879 17,450 22,359 25,800
..................................................................................................................................
$ 68,544 $ 71,043 $ 76,329 $ 82,014 $ 86,905 $100,614 $ 99,796
2.32:1 2.46:1 2.71:1 2.53:1 2.96:1 3.51:1 3.18:1
$249,963 $233,317 $234,826 $222,484 $206,868 $186,042 $164,745
104,608 99,262 105,698 102,983 94,061 83,186 72,235
241,803 231,113 237,335 248,171 231,404 227,961 221,514
1,674 1,800 2,700 2,560 5,000 6,250 7,500
168,622 160,688 168,925 172,005 164,554 167,663 156,943
..................................................................................................................................
$1.16 $ .63 $1.15 $1.04 $1.51 $1.91 $2.18
1.12 1.12 1.12 1.12 1.12 1.12 1.03
14.86 14.18 14.90 14.98 14.37 14.31 13.40
..................................................................................................................................
$ 12,707 $ 12,695 $ 12,695 $ 12,846 $ 12,974 $ 13,120 $ 12,189
13,648 11,737 16,530 18,965 25,321 23,627 11,323
14,440 14,640 14,576 14,838 14,029 13,447 13,218
12,242 12,029 12,284 12,031 12,131 12,402 12,065
11,340,539 11,334,873 11,349,850 11,466,683 11,572,817 11,714,648 11,834,648
11,345,482 11,334,873 11,334,873 11,484,573 11,451,248 11,714,648 11,714,648
::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::
</TABLE>
31
<PAGE> 34
CORPORATE ORGANIZATION
- -------------------------------------------------------------------------------
DIRECTORS
William E. Nasser
Chairman, President and Chief
Executive Officer,
Petrolite Corporation
St. Louis, Missouri
Paul F. Cornelsen
Former Chairman of
the Board and Chief
Executive Officer,
MiTek, Inc.
St. Louis, Missouri
Andrew B. Craig, III
Chairman, President and Chief
Executive Officer,
Boatmen's Bancshares, Inc.
St. Louis, Missouri
Louis Fernandez
Former Chairman of the Board,
President and Chief Executive
Officer, Celgene Corporation
Summit, New Jersey
Paul H. Hatfield
President and
Chief Executive Officer,
Protein Technologies International
St. Louis, Missouri
William E. Maritz
Chairman of the Board,
President and
Chief Executive Officer,
Maritz, Incorporated
Fenton, Missouri
James E. McCormick
Former President and
Chief Operating Officer,
Oryx Energy Company
Dallas, Texas
Richard L. O'Shields
Former Chairman of the Board,
Panhandle Eastern
Pipe Line Company
Colorado Springs, Colorado
Thomas P. Reidy
President and
Chief Executive Officer,
Reidy International, Inc.
Houston, Texas
- -------------------------------------------------------------------------------
OFFICERS AND KEY MANAGERS
John M. Casper
Vice President
Chief Financial Officer
Ralph J. Churchill
Vice President
General Manager
Tretolite Division
Francis X. Foran
General Manager
International Division
Toby R. Graves
Vice President
General Manager
Polymers Division
William F. Haberberger
Controller
John F. McCartney
Vice President
General Counsel
Charles R. Miller
Corporate Secretary
Associate General Counsel
Stuart Monro
Managing Director of Petrolite
Limited and General Manager
EuroChem Division
William E. Nasser
Chairman, President and
Chief Executive Officer
Derek Redmore
Vice President
Technology
Steven F. Schaab
Treasurer
Richard J. Seidel
Vice President
General Manager
Petreco Division
J. S. Titone
Group Vice President
Chemicals
David Winslett
General Manager
Industrial Chemicals Division
James M. Zemenick
Vice President
Administration and
Corporate Development
32
<PAGE> 35
CORPORATE DIRECTORY
- -------------------------------------------------------------------------------
OPERATING DIVISIONS
Chemicals Group
............................
Industrial Chemicals
Division
International Division
Tretolite Division
369 Marshall Avenue
St. Louis, Missouri 63119
EuroChem Division
Kirkby Bank Road
Knowsley Industrial
Park (North)
Liverpool, England
L33 7SY
Petreco Division
5455 Old Spanish Trail
Houston, Texas 77023
Polymers Division
6910 East 14th Street
Tulsa, Oklahoma 74112
- -------------------------------------------------------------------------------
SUBSIDIARIES
Ecuatoriana de
Petroquimicos-
Petrolite S.A.
Edificio Albatros
Av. de los Shyris
No. 1240 y Portugal
P.O. Box 11026
Quito, Ecuador
Luzzatto & Figlio
(France) S.A.
10 Avenue Percier
F-75008 Paris, France
Petrolite Canada Inc.
369 Marshall Avenue
St. Louis, Missouri 63119
Petrolite France, S.A.
25 Rue Beranger
F-75003 Paris, France
Petrolite GmbH
P.O. Box 2031
Kaiser-Friedrich
Promenade 59
6380 Bad Homburg 1
Germany
Petrolite
Handelsgesellschaft
m.b.H.
Bruner Strasse 105
A-1210 Wien
Austria
Petrolite Iberica, S.A.
Marques de Urquijo 8
28008 Madrid, Spain
Petrolite International
Sales Corporation
369 Marshall Avenue
St. Louis, Missouri 63119
Petrolite Italiana S.p.A.
Via Sasari 86
95127 Catania, Italy
Petrolite Limited
Kirkby Bank Road
Knowsley Industrial Park
(North)
Liverpool, England
L33 7SY
Petrolite de Mexico S.A.
de C.V.
Mercurio 126
Fracc. Galaxia
Villahermosa, Tabasco
Mexico
Petrolite Norge A/S
Harestadvika
4070 Randaberg, Norway
Petrolite Pacific Pte. Ltd.
2 Tanjong Penjuru Crescent
Jurong, Singapore 2260
Petrolite Saudi Arabia Ltd.
P.O. Box 1940
Dammam, Saudi Arabia
Petrolite Suramericana, S.A.
Zona Industrial Los Montones 3ra. Etapa
Apartado Postal 293
Barcelona, Edo.
Anzoategui 6001, Venezuela
P.T. Petrolite Indonesia
Pratama
Batu Ampar
Pulau Batam, Indonesia
South America Petrolite
Corporation
369 Marshall Avenue
St. Louis, Missouri 63119
Petrolite Trinidad, Inc.
Isthmus Road
Galeota Point
Trinidad, West Indies
A.B. Engineering
5455 Old Spanish Trail
Houston, Texas 77023
AFFILIATES
Petrolite (Malaysia)
Sdn. Bhd.
2.12, 2nd Floor, Angkasa
Raya Building
Jalan Ampang
50450 Kuala Lumpur,
Malaysia
Toyo-Petrolite Co. Ltd.
TOIN Bldg. 12-15
2-Chome, Shinkawa
Chuo-Ku, Tokyo 104,
Japan
- -------------------------------------------------------------------------------
CORPORATE INFORMATION
Petrolite Corporation
Our headquarters is located
in St. Louis. Our stock,
traded over the counter
under the symbol PLIT, is
listed among the NASDAQ
national market issues. For
more information, please
contact:
William F. Haberberger
Controller
Petrolite Corporation
369 Marshall Avenue
St. Louis, Missouri 63119
314/961-3500.
Annual Meeting
The next Annual Meeting
of Stockholders of Petrolite
Corporation will take place
on Monday, March 6, 1995,
at 11 a.m. in Conference
Room One on the Atrium
Level of Boatmen's Plaza,
800 Market Street,
St. Louis, Missouri.
Form 10-K
A copy of the annual report
submitted by Petrolite
Corporation to the
Securities and Exchange
Commission on the latter's
Form 10-K can be obtained
by any stockholder of the
company at no charge upon
request in writing to:
William F. Haberberger
Controller
Petrolite Corporation
369 Marshall Avenue
St. Louis, Missouri 63119
Transfer Agent
Boatmen's Trust Company
St. Louis, Missouri
Independent Accountants
Price Waterhouse LLP
St. Louis, Missouri
Responsible Care is a trademark
of the Chemical Manufacturers
Association
XTEND Continuous Protection
Program, I-Pak. PetroCare and
Sulfa-Scrub are trademarks of
Petrolite Corporation
(c) 1995 Petrolite Corporation
<PAGE> 36
PETROLITE
Petrolite Corporation
369 Marshall Avenue
St. Louis, Missouri 63119
<PAGE> 37
APPENDIX
Throughout the electronic submission of Exhibit 13, register marks
are designated by the letter "R" in parentheses; trademarks are
designated by the letters "TM" in parentheses; and the copyrights are
designated by the letter "C" in parentheses.
<PAGE> 1
<TABLE>
EXHIBIT NO. 21
Subsidiaries of Registrant
--------------------------
<CAPTION>
Percent
State or Other Jurisdiction of
Name of Subsidiary of Incorporation Ownership
- ------------------ ---------------- ---------
<S> <C> <C>
Petrolite Canada Inc. Dominion of Canada 100
Petrolite France, S.A. Republic of France 100
Petrolite GmbH Federal Republic of Germany 100
Petrolite Iberica, S.A. Spain 100
Petrolite International Sales Corporation Virgin Islands 100
Petrolite Limited United Kingdom of 100
Great Britain and Northern Ireland
Petrolite Norge A/S Norway 100
Petrolite Pacific Pte. Ltd. Singapore 100
South American Petrolite Corporation Delaware 100
A.B. Engineering Delaware 100
Ecuatoriana de Petroquimicos-
Petrolite, S.A. Ecuador 80
P.T. Petrolite Indonesia Pratama Indonesia 80
Petrolite Saudi Arabia Ltd. Saudi Arabia 75
Petrolite (Malaysia) SDN.BHD. Malaysia 49
Petrolite Suramericana, S.A. Venezuela 100
Petrolite de Mexico S.A. de C.F. Mexico 100
Petrolite Trinidad, Inc. Missouri 100
</TABLE>
Each of these subsidiaries is included in the consolidated financial
statements incorporated by reference into this Report. The following
three wholly owned subsidiaries are included in the registrants
consolidated financial statements; however, the ownership is through other
registrant subsidiaries as follows: Petrolite Italiana S.p.A. is owned
90% by Petrolite Limited and 10% by the registrant; Petrolite
<PAGE> 2
Handelsgesellschaft m.b.H., is owned 100% by Petrolite Limited; and Luzzato
& Figlio is owned 96% by Petrolite France with the remaining 4% split
equally between three other registrant subsidiaries and the registrant.
In addition, the registrant has a 50% interest in Toyo-Petrolite Company,
Ltd. in Japan which is accounted for using the equity method. Also see
information on page 33 of the registrant's Annual Report to stockholders
under the heading "Subsidiaries" which is incorporated by reference
herein.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the registrant statements on Form S-8 (Nos. 2-80631,
33-20553, 33-21962, 33-24261, 33-63108, 33-47814, and 33-47815) of
Petrolite Corporation of our report dated November 30, 1994 appearing on
page 29 of the Petrolite Corporation 1994 Annual Report to Stockholders
which is incorporated in this Annual Report on Form 10-K.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
St. Louis, Missouri
January 26, 1995
<PAGE> 1
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints William E. Nasser, John M. Casper, John F.
McCartney and Charles R. Miller, jointly and severally, each in his own
capacity, his true and lawful attorney-in-fact, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign the 1994 Form 10-K, Annual Report pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, and to
file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Paul F. Cornelsen Director January 11, 1995
- --------------------------------------------
Paul F. Cornelsen
/s/ Andrew B. Craig, III Director January 11, 1995
- --------------------------------------------
Andrew B. Craig, III
/s/ Louis Fernandez Director January 11, 1995
- --------------------------------------------
Louis Fernandez
/s/ Paul H. Hatfield Director January 11, 1995
- --------------------------------------------
Paul H. Hatfield
/s/ William E. Maritz Director January 11, 1995
- --------------------------------------------
William E. Maritz
/s/ James E. McCormick Director January 11, 1995
- --------------------------------------------
James E. McCormick
/s/ William E. Nasser Director January 11, 1995
- --------------------------------------------
William E. Nasser
<PAGE> 2
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard L. O'Shields Director January 11, 1995
- --------------------------------------------
Richard L. O'Shields
/s/ Thomas P. Reidy Director January 11, 1995
- --------------------------------------------
Thomas P. Reidy
</TABLE>
STATE OF MISSOURI )
) SS.
COUNTY OF ST. LOUIS )
On this 11th day of January, 1995, before me personally appeared
Paul F. Cornelsen, Andrew B. Craig, III, Louis Fernandez, Paul H.
Hatfield, William E. Maritz, James E. McCormick, William E. Nasser,
Richard L. O'Shields and Thomas P. Reidy, to me known to be the
persons described in and who executed the foregoing Power of Attorney,
and acknowledged that they executed the same as their free act and deed.
----------------------------------------
Notary Public
My Commission Expires:
- 2 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1993
<PERIOD-END> OCT-31-1994
<CASH> 19,801
<SECURITIES> 763
<RECEIVABLES> 70,039
<ALLOWANCES> (1,306)
<INVENTORY> 43,863
<CURRENT-ASSETS> 145,717
<PP&E> 305,500
<DEPRECIATION> 178,437
<TOTAL-ASSETS> 314,939
<CURRENT-LIABILITIES> 79,448
<BONDS> 40,000
<COMMON> 9,248
0
0
<OTHER-SE> 175,085
<TOTAL-LIABILITY-AND-EQUITY> 314,939
<SALES> 369,227
<TOTAL-REVENUES> 378,432
<CGS> 215,483
<TOTAL-COSTS> 359,802
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 618
<INTEREST-EXPENSE> 3,371
<INCOME-PRETAX> 8,506
<INCOME-TAX> 1,499
<INCOME-CONTINUING> 7,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 2,037
<NET-INCOME> 9,044
<EPS-PRIMARY> 0.80
<EPS-DILUTED> 0.80
</TABLE>
