<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Fiscal Year Ended May 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition
period from _______________ to ______________
Commission File Number 1-4903
------------
PREMIER INDUSTRIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0661122
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
4500 Euclid Avenue, Cleveland, Ohio 44103
- - ---------------------------------------------- ----------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (216) 391-8300
---------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, Without Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- -----
(Cover page continued on following page)
Page 1 of pages
Exhibit Index located on page 18
<PAGE> 2
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. [ ]
The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based on the closing price on the New York Stock Exchange on July
8, 1994, was $629,707,500. (Directors of the registrant are considered
affiliates for the purpose of this calculation.)
Number of shares of Common Stock outstanding on July 8, 1994: 84,837,057
Documents Incorporated by Reference
Portions of the registrant's 1994 Annual Report to its shareholders,
incorporated herein by reference in Part I and Part II; and
Portions of the registrant's Proxy Statement for its 1994 Annual
Meeting of Shareholders, incorporated herein by reference in Part III.
(Cover page continued from preceding page)
<PAGE> 3
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PART I PAGE
------ ----
<S> <C> <C>
Item 1. Business.................................................... 5
(a) General Development of Business......................... 5
(b) Financial Information about
Industry Segments....................................... 5
(c) Narrative Description of the
Business................................................ 5
(d) Financial Information about
Foreign and Domestic Operations
and Export Sales........................................ 7
Item 2. Properties.................................................. 8
Item 3. Legal Proceedings........................................... 8
Item 4. Submission of Matters to a Vote of
Security Holders............................................ 8
Item 4a. Executive Officers of the Registrant........................ 8
PART II
-------
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters............................. 10
Item 6. Selected Financial Data..................................... 11
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................................. 11
Item 8. Financial Statements and Supplementary
Data........................................................ 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure......................... 11
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
PART III PAGE
-------- ----
<S> <C> <C>
Item 10. Directors and Executive Officers of the
Registrant................................................. 11
Item 11. Executive Compensation..................................... 11
Item 12. Security Ownership of Certain Beneficial
Owners and Management...................................... 12
Item 13. Certain Relationships and Related
Transactions............................................... 12
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K.................................... 12
Signatures.................................................................... 14
Financial Statement Schedules (including Independent
Auditors' Report on Financial Statement Schedules)............................ 15
Exhibit Index................................................................. 18
</TABLE>
<PAGE> 5
PART I
Item 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS.
Premier Industrial Corporation was incorporated in Ohio in
1946 as the successor to a partnership formed in 1940. Its executive offices
are located at 4500 Euclid Avenue, Cleveland, Ohio 44103. As used herein, the
term "Premier" or the "Corporation" means Premier Industrial Corporation and
its subsidiaries, unless the context indicates otherwise.
Premier is a leading distributor of electronic components
and also distributes, and in some cases manufactures, a wide range of products
used to repair and maintain equipment, machinery, vehicles and buildings. In
addition, Premier is a leading producer of high performance fire-fighting
components for the original equipment and replacement markets.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Financial information about each of Premier's industry
segments for the last three fiscal years, which is included in the table under
the heading "Industry Segment Information" on page 10 of the Corporation's 1994
Annual Report to its shareholders, which is incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF THE BUSINESS.
ELECTRONICS DISTRIBUTION. The Electronics Distribution
Group distributes a wide array of electronic and electrical products. Its
product line consists of microprocessors, switches, relays, semiconductors,
hand tools, electronic interconnection devices, integrated circuits, factory
automation components, capacitors, resistors, connectors, test equipment, heat
sinks, terminals, coils, motor controls, cable ties, clamps, mounts, alligator
clips, electrical terminals, and associated equipment.
The Electronics Distribution Group services a diverse
customer base in the original equipment and maintenance/repair/operations
markets and manufacturers of computer and data processing equipment,
communications equipment, industrial controls and processing equipment, and
test and measuring equipment, as well as radio and television broadcast
stations, schools, governmental agencies, electrical contractors, electronic
service dealers, and industrial customers.
Each of the divisions within the Electronics Distribution
Group maintains its own sales force. Inside and outside sales personnel, and
in certain cases, manufacturers' representatives, conduct sales by telephone,
direct contact or mail order. Comprehensive catalogs are published by several
divisions for use as data and purchasing references by engineers, purchasing
agents and maintenance personnel in a wide range of businesses.
<PAGE> 6
GENERAL PRODUCTS. The principal products included within
the General Products Group are: high performance cap screws, nuts, washers,
screws, specialty fasteners and industrial shop supplies; replacement parts and
special hardware for cars and trucks, including heavy-duty fasteners, special
hardware and parts for construction equipment; special welding electrodes,
brazing alloys, fluxes, solders and welding aids; electrical systems
components, such as terminals, connectors, fittings, clamps and building
hardware; cleaners, floor care products, drain maintenance systems; pavement
maintenance products and accessories for parking lots and recreational areas;
adhesives, chemicals for the automotive industry; plastic repair products,
engine oils and greases for heavy-duty diesel-driven equipment; specialty
greases and gear lubricants for heavy industry; heavy-duty electrical cord,
cable and associated devices; and fire-fighting components, including nozzles,
valves, and specialized fire-fighting equipment.
The General Products Group serves a wide range of customers
and markets. Products are sold to original equipment, industrial, construction
and transportation companies, and commercial, public and institutional users,
primarily for maintenance and repair. Markets also include municipal fire
departments, the military services and fire truck manufacturers.
The product lines mentioned above are marketed through
separate divisions. Each division has its own distinct sales force. Products
are sold by field representatives, inside sales personnel and outside dealers
and distributors.
OTHER. In addition to the foregoing, Premier has interests
in limited partnerships which own and manage rental properties, as described
under Item 2 of this report.
ADDITIONAL BUSINESS INFORMATION. No one class of products
has accounted for 10 percent or more of consolidated revenues of either
industry segment in any of the last three fiscal years. As an example, Newark
Electronics, Premier's largest division, offers products from over 285 vendors,
no one of which has had a material impact on its business as a whole. No new
product line or business requiring the investment of a material amount of total
assets was announced by any industry segment during the most recent fiscal
year.
Premier and its subsidiaries obtain raw materials and
finished products from a wide variety of sources. Purchases by Premier of
finished products for distribution involve significant dollar volumes annually
in the case of certain suppliers, but Premier does not believe that the loss of
any particular supplier would have a material adverse effect on its business as
a whole.
The industry segments of Premier are not deemed to be
dependent on any particular patent, trademark, license, franchise or
concession.
Seasonality is not a significant factor in the business of
Premier considered as a whole or in either of its industry segments.
Premier requires large amounts of working capital to carry
substantial inventories needed to meet rapid delivery requirements of customers
in each of its industry segments.
No material part of the business of any industry segment of
Premier is dependent upon a single customer or a few customers. No single
customer accounts for 2 percent or more of Premier's consolidated operating
revenues.
<PAGE> 7
Backlog is not significant in any industry segment of
Premier.
No material portion of any industry segment is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the government.
COMPETITION. Substantial competition is encountered in all
industry segments. Competitors include both large and small specialized firms,
as well as large diversified businesses. Premier is one of the larger national
distributors of industrial electronic components. It functions as a single
source supplier to a broad range of customers in the maintenance, repair and
operations market, as well as to original equipment manufacturers.
Product availability and service are key factors in maintaining a strong
competitive position in the industry.
In the General Products industry segment, Premier has
specialized in product lines and markets where it can provide unique customer
benefits. Performance and customer service are more important competitive
factors than price in this industry segment. Premier believes it is a major
supplier in several of its product lines.
RESEARCH AND DEVELOPMENT. The amount spent by Premier on
research activities relating to the development of new products and services or
the improvement of existing products and services was approximately $3,500,000
for the fiscal year ended May 31, 1994 and $3,400,000 for each of the fiscal
years ended May 31, 1993 and 1992. Virtually all such activities were
sponsored by Premier rather than by customers.
ENVIRONMENTAL REGULATION. Compliance with federal, state
and local provisions relating to the protection of the environment is not
expected to have a material effect upon the earnings, financial condition or
competitive position of Premier. In certain cases, the Corporation has
initiated remedial activities at its owned facilities. The estimated costs of
such activities, which are not material, have been fully provided for in the
Corporation's financial statements.
The Corporation also has been involved with several
third-party waste disposal sites in various states at which it has been named a
potentially responsible party under applicable environmental laws. Such laws
can impose joint and several liability upon each party at a given site;
however, the extent of the Corporation's allocated financial contribution to
the investigation and remediation of these sites is expected to be limited
based on the number of other companies involved in the process and the
relatively small volume of waste attributed to the Corporation. Although it is
difficult to quantify the potential impact of compliance at these sites, based
on current information, management believes that the ultimate costs of these
matters will not have a material impact on the earnings, financial condition or
competitive position of Premier.
EMPLOYEES AND SALES FORCE. Premier had approximately 4,300
persons in its employ as of May 31, 1994. As of that date, a sales force of
approximately 2,500 persons, including employees and independent agents, was
engaged in the sale and distribution of Premier products.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC
OPERATIONS AND EXPORT SALES
Premier has direct selling operations (through subsidiaries)
in eight foreign countries. Financial information about
<PAGE> 8
foreign and domestic operations appears as Note 12 (Segment Information) to the
Corporation's Consolidated Financial Statements on page 17 of its 1994 Annual
Report to shareholders, which is incorporated herein by reference. In
addition, Premier is engaged in export sales.
Item 2. PROPERTIES
Premier has facilities, including general and sales offices,
distribution centers, manufacturing plants and research facilities, in 207
locations in the United States, Canada and Europe. Of these facilities, those
owned in fee by Premier contain approximately 2,100,000 square feet and are
located on sites consisting of approximately 155 acres of land. Premier also
owns vacant land adjacent to some of its facilities for future expansion.
Facilities leased by Premier contain approximately 528,000
square feet. No single lease is material to the business of any industry
segment.
The Electronics Distribution segment, headquartered in
Chicago, Illinois, has 142 locations, the majority of which are leased sales
offices. Major distribution centers are located in Chicago, Illinois and
Gaffney, South Carolina, with smaller distribution centers located elsewhere in
the United States and in Canada and the United Kingdom. The General Products
segment, with headquarters in Cleveland, Ohio, maintains numerous distribution
centers and sales offices in the United States, Canada and Europe, along with
manufacturing facilities located in Indianapolis, Indiana, Cleveland, Ohio and
Wooster, Ohio. The Premier executive offices, corporate staff and principal
research and development activities are located in its Cleveland, Ohio
facilities.
Premier has interests in limited partnerships which own and
operate rental properties located in Arlington, Virginia, consisting of
residential units and an office building.
Management believes that the facilities utilized by Premier
in the conduct of its business are suitable for their intended use.
Item 3. LEGAL PROCEEDINGS
There are at the date of this report no material pending
legal proceedings, other than ordinary routine litigation incidental to the
business, to which Premier is a party or to which any of its property is
subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the quarter ended May 31, 1994.
Item 4a. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table and accompanying text set forth the
names, ages and positions held by each of the executive officers of Premier as
of July 8, 1994, as well as information about each such person's principal
occupations and employment during the past five years:
<PAGE> 9
<TABLE>
<CAPTION>
Year First Positions Held with
Elected as Premier During
Name Age an Officer Last Five Years
---- --- ---------- ---------------------
<S> <C> <C> <C>
Morton L. Mandel 72 1946 Chairman of the Board and Director
Jack N. Mandel 82 1946 Chairman of Finance Committee and Director
Joseph C. Mandel 80 1946 Chairman of Executive Committee and Director
Philip S. Sims 66 1968 Vice Chairman of the Board and Director, November 1992;
Vice Chairman of the Board, Treasurer and Director, October 1991;
Executive Vice President and Treasurer
Bruce W. Johnson 53 1978 President, January 1992 and Director, October 1993; Executive Vice
President
Terry L. Taylor 48 1990 Executive Vice President, February 1992; Senior Vice President,
September 1990; Vice President, March 1990; Vice President and
Division Head within the General Products Group
Denis A. Moore 56 1982 Senior Vice President
Denis M. Bohm 55 1978 Vice President
William D. Coole 45 1989 Vice President
Thomas J. Dato 48 1992 Vice President, December 1992; Vice President and Division Head
within the Electronics Distribution Group, September 1989; Assistant
Vice President within the Electronics Distribution Group
Deidra D. Dixon 39 1992 Vice President and General Counsel, December 1991
Howard P. Frank 54 1994 Vice President and Secretary, March 1994; Assistant Vice President
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Year First Positions Held with
Elected as Premier During
Name Age an Officer Last Five Years
---- --- ---------- ---------------------
<S> <C> <C> <C>
John H. Gerhart 51 1991 Vice President, October 1991; Vice President, Human Resources
Development, August 1989; Assistant Vice President, Human
Resources Development
J. Kenneth Gibson 48 1990 Vice President within the General Products Group, April 1990;
Assistant Vice President
J. Robert McCabe 68 1968 Vice President
Stuart D. Neidus 43 1992 Vice President and Treasurer, November 1992
James D. Spotz 48 1989 Vice President
Phillip Vander Pol 53 1978 Vice President and Controller
J. David Webster 57 1992 Vice President
</TABLE>
With the exception of Deidra D. Dixon and Stuart D. Neidus, each of
the executive officers has been employed by Premier in the positions listed
above for the last five years. Deidra D. Dixon was an attorney with the law
firm of Jones, Day, Reavis and Pogue from September, 1983 through November,
1991 and a partner of that firm from January, 1988. Ms. Dixon joined Premier
in December, 1991. Stuart D. Neidus has been employed by Premier since
November, 1992. Prior to joining Premier, Mr. Neidus was an accountant with
the accounting firm of KPMG Peat Marwick from June, 1973 through October, 1992
and a partner in that firm from July, 1984.
Morton L., Jack N. and Joseph C. Mandel are brothers and
co-founders of the Corporation. There are no family relationships between any
other director, director nominee and/or executive officer of the Corporation.
Each of the officers of the Corporation is elected annually by
the Board of Directors to serve until the next annual meeting of the Board and
until his or her successor is elected and qualified.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Premier Common Stock is listed for trading on the New York
Stock Exchange. As of July 8, 1994, there were approximately 8,100 holders of
Premier Common Stock (including individual participants in security position
listings and accounts, as well as holders of record).
The reported high and low sales prices of Premier Common stock
and the amount of dividends per share paid by quarter for the two most recent
fiscal years are contained on
<PAGE> 11
page 10 of the Corporation's 1994 Annual Report to its shareholders under the
caption "Highlights by Quarter" and such information is incorporated herein by
reference.
The last reported sale price of Premier Common Stock on July
8, 1994, based on the closing price on the New York Stock Exchange on that
date, was $20.00.
Item 6. SELECTED FINANCIAL DATA
Information with respect to selected financial data for each
of the last five fiscal years, which is included in the "Ten Year Financial
Summary" contained on pages 8 and 9 of Premier's 1994 Annual Report to its
shareholders, is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The "Management's Review" contained on pages 18 and 19 of
Premier's 1994 Annual Report to its shareholders is incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and accompanying notes
of Premier and its subsidiaries contained on pages 11 through 17, inclusive, of
Premier's 1994 Annual Report to its shareholders, together with the independent
auditors' report relating thereto contained on page 19 thereof, and the
unaudited quarterly financial data under the heading "Highlights by Quarter" on
page 10 of such Annual Report, are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to directors of Premier contained
under the headings "Election of Directors" on pages 4 through 6, inclusive,
"Certain Relationships and Transactions" on page 6, and the paragraph under the
heading "Security Ownership of Certain Beneficial Owners and Management"
appearing at the bottom of page 7 and the top of page 8 of Premier's Proxy
Statement for its 1994 Annual Meeting of Shareholders is incorporated herein by
reference. Information relating to executive officers of Premier is contained
herein under Item 4a of Part I of this report.
Item 11. EXECUTIVE COMPENSATION
The information contained under the headings "Compensation of
the Board of Directors" on page 7, "Compensation of Executive Officers" on page
9 through 12, inclusive, "Compensation Committee Report on Executive
Compensation" on pages 12 through 14, inclusive, "Compensation Committee
Interlocks and Insider Participation" on page 15 and "Five-year
<PAGE> 12
Shareholder Return Comparison" on pages 15 and 16 of Premier's Proxy
Statement for its 1994 Annual Meeting of Shareholders is incorporated
herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information relating to security ownership set forth under
the headings "Election of Directors" on pages 4 through 6, inclusive, and
"Security Ownership of Certain Beneficial Owners and Management" on pages 7 and
8 of Premier's Proxy Statement for its 1994 Annual Meeting of Shareholders is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the headings "Certain Relationships and
Transactions" on page 6 and "Compensation Committee Interlocks and Insider
Participation" on page 15 of Premier's Proxy Statement for its 1994 Annual
Meeting of Shareholders is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT:
(1) The following consolidated financial statements
of Premier Industrial Corporation and Subsidiaries,
together with the independent auditors' report
relating thereto, contained on pages 11 through 17,
inclusive, and page 19 of Premier's 1994 Annual
Report to its shareholders, and the unaudited
quarterly financial data set forth under the heading
"Highlights by Quarter" on page 10 of such Annual
Report, are incorporated herein by reference:
Consolidated Balance Sheet at May 31, 1994 and 1993
Consolidated Statement of Earnings for the years
ended May 31, 1994, 1993 and 1992
Consolidated Statement of Shareholders' Equity
for the years ended May 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flows for the years
ended May 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Auditors' Report
Highlights by Quarter (unaudited)
<PAGE> 13
(2) Financial Statement Schedules of Premier
Industrial Corporation and Subsidiaries:
Independent Auditors' Report on Financial Statement
Schedules
Schedule I - Temporary Investments
Schedule VIII - Valuation Accounts
All other schedules are omitted because they are not
required, not applicable, or the information is given
in the consolidated financial statements or the notes thereto.
(3) Exhibits Required to be Filed by Item 601 of
Regulation S-K
The information called for by this paragraph is contained
in the Exhibit Index of this report on page 18, which is
incorporated herein by reference.
(b) Reports on Form 8-K
No Current Reports on Form 8-K were filed during the
last quarter of the period covered by this report.
<PAGE> 14
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.
PREMIER INDUSTRIAL CORPORATION
Date: July 21, 1994 BY /s/ Morton L. Mandel
----------------------------------
Morton L. Mandel
Chairman of the Board
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 indicated on the 21st day of July, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Morton L. Mandel Chairman of the Board and Director
- - -------------------------- (Principal Executive Officer)
Morton L. Mandel
/s/ Jack N. Mandel Finance Committee Chairman and Director
- - -----------------------
Jack N. Mandel
/s/ Joseph C. Mandel Executive Committee Chairman and Director
- - -----------------------
Joseph C. Mandel
/s/ Philip S. Sims Vice Chairman of the Board and Director
- - ----------------------- (Principal Financial and Accounting Officer)
Philip S. Sims
DIRECTORS
---------
/s/ Edward B. Brandon /s/ Scott S. Cowen
- - ---------------------------------- ------------------------------------
Edward B. Brandon Scott S. Cowen
/s/ Hugh Calkins /s/ William M. Hamilton
- - ---------------------------------- ------------------------------------
Hugh Calkins William M. Hamilton
/s/ John C. Colman /s/ Bruce W. Johnson
- - ---------------------------------- ---------------------------------------
John C. Colman Bruce W. Johnson
</TABLE>
<PAGE> 15
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
-------------------------------------------------------------
The Shareholders and Board of Directors
Premier Industrial Corporation:
Under date of July 21, 1994, we reported on the consolidated balance sheets of
Premier Industrial Corporation and subsidiaries as of May 31, 1994 and 1993,
and the related consolidated statements of earnings, shareholders' equity, and
cash flows for each of the years in the three-year period ended May 31, 1994,
as contained in the 1994 annual report to shareholders. These consolidated
financial statements and our report thereon are incorporated by reference in
the annual report on Form 10-K for the year ended May 31, 1994. In connection
with our audits of the aforementioned consolidated financial statements, we
also have audited the related financial statement schedules as listed in Part
IV, Item 14(a)(2). These financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
the financial statement schedules based on our audits.
In our opinion, the related financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ KPMG PEAT MARWICK
KPMG PEAT MARWICK
Cleveland, Ohio
July 21, 1994
<PAGE> 16
<TABLE>
SCHEDULE I
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
TEMPORARY INVESTMENTS
YEAR END MAY 31, 1994
<CAPTION> Amount
Carried In
Market Balance
Par Value Sheet at
Investment Value Cost May 31, 1994 May 31, 1994
- - ---------- ------- ---- ------------ ------------
<S> <C> <C> <C> <C>
I. TAX EXEMPT BONDS:
Alabama $ 2,000,000 $ 2,000,000 $ 2,000,000 $ 2,000,000
Arkansas 3,255,000 3,258,143 3,255,000 3,256,107
California 2,815,000 2,817,759 2,815,000 2,815,000
Florida 850,000 850,000 850,000 850,000
Georgia:
State Municipal
Elec. Authority 6,000,000 6,002,910 5,996,820 6,000,490
Other 5,100,000 6,102,681 6,099,063 6,100,000
Hawaii 905,000 906,077 904,294 905,609
Illinois 9,000,000 9,011,790 8,996,700 9,003,982
Indiana 3,555,000 3,557,910 3,555,000 3,555,488
Kansas 200,000 200,000 200,000 200,000
Kentucky 500,000 500,000 500,000 500,000
Maryland 6,435,000 6,441,292 6,435,170 6,437,928
Massachusetts 3,000,000 3,004,440 3,000,510 3,000,000
Nebraska 1,510,000 1,510,680 1,504,866 1,510,159
New Mexico 3,000,000 3,001,440 2,999,220 3,000,241
New York 3,000,000 3,004,350 2,998,200 3,002,948
North Carolina 3,600,000 3,622,910 3,596,202 3,601,463
North Dakota 2,890,000 2,892,803 2,887,197 2,890,490
Ohio 6,440,000 6,440,000 6,444,323 6,440,000
Pennsylvania 6,000,000 6,007,260 5,996,920 6,006,110
Tennessee 3,000,000 3,002,190 2,996,820 3,000,367
Texas 5,475,000 5,481,570 5,475,000 5,479,453
West Virginia 325,000 325,000 325,000 325,000
Wisconsin 5,700,000 5,708,164 5,681,313 5,704,161
------------ ------------ ------------ ------------
85,555,000 85,649,369 85,512,618 85,584,996
------------ ------------ ------------ ------------
II.Treasury Notes 1,875,000 1,880,859 1,880,859 1,880,859
------------ ------------ ------------ ------------
TOTAL $ 87,430,000 $ 87,530,228 $ 87,393,477 $ 87,465,855
============ ============ ============ ============
</TABLE>
<PAGE> 17
SCHEDULE VIII
<TABLE>
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Valuation Accounts
Years Ended May 31, 1994, 1993 and 1992
<CAPTION>
Accumulated
Amortization
Allowance for of Oil and Gas
Doubtful Accounts (A) Investments (A)
--------------------- ---------------
<S> <C> <C>
Balance at May 31, 1991 $ 2,176,632 $ 6,049,517
Additions to Profit and Loss 1,635,785 150,000
Deductions 1,257,513 (B) --
----------- -----------
Balance at May 31, 1992 2,554,904 6,199,517
Additions to Profit and Loss 490,732 150,000
Deductions 971,823 (B) --
----------- -----------
Balance at May 31, 1993 2,073,813 6,349,517
Additions to Profit and Loss 686,127 200,000
Deductions 1,132,940 (B) --
----------- -----------
Balance at May 31, 1994 $ 1,627,000 $ 6,549,517
=========== ===========
<FN>
Notes:
(A) Deducted in the consolidated balance sheet from the asset to which it applies.
(B) Accounts charged off, less recoveries.
</TABLE>
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER (1) DESCRIPTION OF EXHIBIT NUMBER
- - ---------- ---------------------- ------
<S> <C> <C>
3 (i) Amended Articles of Incorporation *
3 (i)(a) Amendment to the Amended Articles of Incorporation filed *
with the Secretary of State of Ohio on November 18, 1988
3 (ii) Regulations *
4a. Specimen Common Stock Certificate *
4b. Long-term debt of the registrant or various of its subsidiaries
is outstanding under a $6,500,000 variable rate (3.05% at
May 31, 1994) Industrial Development Revenue Bond payable December
1, 2015. The amount authorized thereunder does not exceed 10% of
the total assets of the registrant and its subsidiaries on a
consolidated basis. Consequently, this instrument is not included
as an exhibit. The registrant agrees that it will furnish a copy
of this instrument to the Securities and Exchange Commission upon
its request.
10. Material Contracts
a. Premier Industrial Corporation 1973 Stock Option Plan for *
Management Employees**
b. Forms of Senior Management Option Agreement** *
c. Summary of Executive Officer Medical Reimbursement Plan** *
d. Consulting Agreement between the Corporation and *
William M. Hamilton**
e. Summary of consulting arrangement between the Corporation *
and John C. Colman.**
11 Statement regarding computation of net earnings per share 20
13 Selected portions of the Annual Report to shareholders for the year
ended May 31, 1994 21
a. Industry Segment Information (page 10 of the 1994 Annual Report) 22
b. Highlights by Quarter (page 10 of the 1994 Annual Report) 22
c. Ten Year Financial Summary (pages 8 and 9 of the 1994 Report) 23
d. Management's Review (pages 18 and 19 of the 1994 Annual Report) 25
e. Consolidated Balance Sheet (page 11 of the 1994 Annual Report) 27
f. Consolidated Statement of Earnings (page 12 of the 1994 Annual Report) 28
g. Consolidated Statement of Shareholders' Equity (page 12 of the Annual Report) 28
h. Consolidated Statement of Cash Flows (page 13 of the 1994 Annual Report) 29
i. Notes to Consolidated Financial Statements (pages 14 through 17,
inclusive, of the 1994 Annual Report) 30
j. Auditor's Report (page 19 of the Annual Report) 34
21 Subsidiaries of the registrant 35
23 Consent of KPMG Peat Marwick 36
- - ----------
<FN>
(1) Numbered in accordance with Item 601 of Regulation S-K.
* Those exhibits previously filed and incorporated herein by
reference are identified above by an asterisk. Exhibits 3(i),
3(i)(a), 3(ii) and 4a were contained in a Registration Statement
on Form 8-A, No. 1-4903, which was effective October 26, 1988,
under the corresponding exhibit number. Exhibits 3(i), 3(i)(a),
3(ii), 10a and 10b were contained in a Registration Statement on
Form S-8, No. 3325251, which was effective November 18, 1988,
under the corresponding exhibit number. Exhibits 10c, 10d and 10e
were contained in the Annual Report on Form 10-K, which was filed
on August 30, 1993, under the corresponding exhibit
</TABLE>
<PAGE> 19
number. Exhibits 10c, 10d and 10e were contained in the Annual Report on Form
10-K, which was filed on August 30, 1993, under the corresponding exhibit
number.
** Represents a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Annual Report on Form 10-K.
<PAGE> 1
EXHIBIT 11
<TABLE>
PREMIER INDUSTRIAL CORPORATION AND SUBSIDIARIES
Computation of Net Earnings Per Share
Per share amounts are based on the average number of shares (after giving
effect to the stock conversion in November, 1988 and 3-for-2 stock splits in
December 1989 and 1992) determined as follows:
<CAPTION>
Years Ended May 31,
--------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Primary:
Weighted average number of
common shares outstanding
during the year. 85,696,029 86,449,309 86,212,221 86,059,455 86,717,408
Common Stock equivalents:
Incremental shares, as
determined under the treasury
stock method, upon the assumed
exercise of options out-
standing during the year using
the average market price. 299,440 418,756 357,128 353,429 430,851
----------- ---------- ---------- ---------- ----------
Shares for primary 85,995,469 86,868,065 86,569,349 86,412,884 87,148,259
=========== ========== ========== ========== ==========
Net earnings $94,246,000 88,224,000 78,835,000 74,718,000 74,715,000
=========== ========== ========== ========== ==========
Net earnings per share $ 1.10 1.02 .91 .86 .86
=========== ========== ========== ========== ==========
Fully diluted:
Weighted average number of
common shares outstanding
during the year 85,696,029 86,449,309 86,212,221 86,059,455 86,717,408
Common stock equivalents:
Incremental shares, as
determined under the
treasury stock method,
upon the assumed exercise
of options outstanding during
the year using the year-end
market price if higher
than the average market price 305,791 453,629 405,267 402,327 455,859
----------- ---------- ---------- ------------- ---------
Shares for fully diluted 86,001,820 86,902,938 86,617,488 86,461,782 87,173,267
=========== ========== ========== ========== ==========
Net earnings $94,246,000 88,224,000 78,835,000 74,718,000 74,715,000
=========== ========== ========== ========== ==========
Net earnings per share $ 1.10 1.02 .91 .86 .86
=========== ========== ========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 13
SELECTED PROTIONS OF THE ANNUAL REPORT TO
SHAREHOLDERS FOR THE YEAR ENDED MAY 31, 1994
<PAGE> 2
<TABLE>
EXHIBIT 13a
INDUSTRY SEGMENT INFORMATION
Years Ended May 31 (in thousands of dollars)
<CAPTION>
DEPRECIATION
INDUSTRY OPERATING OPERATING CAPITAL AND
SEGMENT YEAR REVENUES PROFIT (A) ASSETS EXPENDITURES AMORTIZATION
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ELECTRONICS 1994 $534,284 $116,044 $238,493 $7,997 $4,514
DISTRIBUTION 1993 484,751 104,976 205,124 3,472 4,547
1992 436,332 91,486 200,129 2,777 4,514
1991 422,386 86,206 174,799 2,889 4,049
1990 408,682 85,214 176,814 9,885 3,595
GENERAL 1994 205,236 42,098 80,375 3,258 2,466
PRODUCTS 1993 206,102 41,241 78,267 5,299 2,565
1992 204,506 39,712 72,922 2,242 2,705
1991 214,744 40,480 72,648 2,699 2,647
1990 217,561 43,612 73,515 3,685 2,498
CORPORATE 1994 174,880 1,741 983
1993 182,669 1,998 733
1992 134,366 267 654
1991 101,219 333 672
1990 70,478 1,040 645
TOTAL 1994 739,520 158,142 493,748 12,996 7,963
1993 690,853 146,217 466,060 10,769 7,845
1992 640,838 131,198 407,417 5,286 7,873
1991 637,130 126,686 348,666 5,921 7,368
1990 626,243 128,826 320,807 14,610 6,738
<FN>
(A) OPERATING PROFIT IS SHOWN BEFORE CORPORATE GENERAL AND ADMINISTRATIVE
EXPENSES, INVESTMENT INCOME, INTEREST EXPENSE AND INCOME TAXES.
</TABLE>
<TABLE>
EXHIBIT 13b
HIGHLIGHTS BY QUARTER
Fiscal Years 1993 and 1994 (in thousands of dollars, except per share data)
<CAPTION>
EARNINGS COMMON STOCK (A)
BEFORE EARNINGS -----------------------------
OPERATING GROSS INCOME NET PER DIVIDENDS PRICE RANGE
QUARTER REVENUES PROFIT TAXES EARNINGS SHARE (A) PER SHARE HIGH LOW
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1993
First $166,818 $ 78,998 $ 32,590 $20,551 $ .24 $.08 23 3/8 20 5/8
Second 171,677 81,814 35,336 22,539 .26 .08 26 22 1/4
Third 167,882 77,619 31,405 19,965 .23 .09 30 3/4 24 1/4
Fourth 184,476 85,228 38,898 25,169 .29 .09 30 3/4 25
-------- -------- -------- ------- ----- ----
Total Year $690,853 $323,659 $138,229 $88,224 $1.02 $.34
======== ======== ======== ======= ===== ====
1994
First $177,758 $ 81,491 $ 34,475 $22,080 $ .26 $.09 29 3/4 25 7/8
Second 183,166 84,289 37,443 24,048 .28 .09 28 1/2 24 3/4
Third 177,942 81,538 33,299 20,683 .24 .10 28 5/8 24 1/4
Fourth 200,654 91,889 42,578 27,435 .32 .10 26 1/8 20 1/2
-------- -------- -------- ------- ----- ----
Total Year $739,520 $339,207 $147,795 $94,246 $1.10 $.38
======== ======== ======== ======= ===== ====
<FN>
(A) ADJUSTED TO REFLECT 3-FOR-2 STOCK SPLIT EFFECTIVE IN DECEMBER 1992.
</TABLE>
10
<PAGE> 3
TEN YEAR FINANCIAL SUMMARY EXHIBIT 13c
<TABLE>
<CAPTION>
Years Ended May 31,
(dollars in thousands, except per share data) 1994 1993
- - --------------------------------------------------------------------------------
<S> <C> <C>
OPERATING RESULTS
Operating revenues $739,520 $690,853
Earnings before income taxes 147,795 138,229
As a percent of operating revenues 20.0% 20.0%
Net earnings 94,246 88,224
As a percent of operating revenues 12.7% 12.8%
Per share (a) 1.10 1.02
FINANCIAL POSITION
Current assets 402,937 384,307
Total assets 493,748 466,060
Current liabilities 47,916 48,218
Long-term debt, less current portion 6,500 6,500
Working capital 355,021 336,089
Shareholders' equity 423,199 398,459
Key ratios/percentages:
Current assets to current liabilities 8.4 to 1 8.0 to 1
Net earnings as a percent of average
shareholders' equity 22.9% 23.7%
Ratio of shareholders' equity to debt
at year-end 65.1 to 1 61.3 to 1
OTHER DATA (a)
Price range of common stock:
High 29-3/4 30-3/4
Low 20-1/2 20-5/8
Cash dividends per share .380 .340
<FN>
(a) After giving effect to 3-for-2 stock splits in December 1984, 1987,
1989 and 1992
</TABLE>
8
<PAGE> 4
<TABLE>
1992 1991 1990 1989 1988 1987 1986 1985
- - --------------------------------------------------------------------------------------------
<S> <S> <S> <S> <S> <S> <S> <S>
$640,838 $637,130 $626,243 $596,146 $528,159 $459,000 $435,040 $432,256
124,753 117,157 119,447 110,450 103,487 86,672 76,079 70,097
19.5% 18.4% 19.1% 18.5% 19.6% 18.9% 17.5% 16.2%
78,835 74,718 74,715 69,704 64,029 48,280 41,377 38,505
12.3% 11.7% 11.9% 11.7% 12.1% 10.5% 9.5% 8.9%
.91 .86 .86 .75 .65 .48 .41 .39
336,518 277,587 250,220 214,625 292,700 263,972 233,252 192,927
407,417 348,666 320,807 277,833 354,817 325,569 299,628 256,621
44,284 38,599 51,049 45,626 42,519 35,199 34,121 33,040
6,500 6,500 6,500 6,503 6,561 6,662 6,759 1,176
292,234 238,988 199,171 168,999 250,181 228,773 199,131 159,887
344,947 292,078 251,319 212,434 289,026 266,888 239,622 205,416
7.6 to 1 7.2 to 1 4.9 to 1 4.7 to 1 6.9 to 1 7.5 to 1 6.8 to 1 5.8 to 1
24.8% 27.5% 32.2% 27.8% 23.0% 19.1% 18.6% 20.1%
53.1 to 1 44.9 to 1 38.6 to 1 32.4 to 1 43.2 to 1 39.4 to 1 29.8 to 1 93.3 to 1
24-1/8 21 18-1/4 14-3/4 14-1/2 11-7/8 10-1/2 7-1/2
17-3/8 14 13-1/8 11-1/4 9-3/8 7-1/2 5-1/8 5-1/4
.307 .28 .240 .196 .154 .124 .113 .103
</TABLE>
9
<PAGE> 5
- - --------------------------------------------------------------------------------
EXHIBIT 13d
MANAGEMENT'S REVIEW
RESULTS OF OPERATIONS
1994 VERSUS 1993 -- Operating revenues of $739,520,000 were 7%, or
$48,667,000, higher than the prior year, reflecting continued increases in the
results of the Electronics Distribution Group. Expanded product lines and
domestic and international sales-building programs contributed to the
increases.
Cost of sales, at 54% of operating revenues, was approximately one
percentage point higher in 1994 when compared with 1993 results, mainly due to
changes in product mix.
Selling, administrative and general expenses rose only 3%, or $5,542,000,
compared with 1993. Higher levels of expenses were partially related to the
increased revenue activity and to the funding of business-building programs
involving enhanced operating systems and expanded distribution facilities.
These increases were offset, in part, by benefits from expense control
programs.
The foregoing factors were the primary components of a net earnings increase
of 7%. As a result of the increase in net earnings and a 1% reduction in the
average number of common shares outstanding, earnings per share rose 8% to
$1.10 from $1.02 in the prior year.
1993 VERSUS 1992 -- Operating revenues of $690,853,000 were up 8%, or
$50,015,000, compared with the prior year and benefited from gains from a
number of sales-building programs, principally in the Electronics Distribution
Group. These business-building programs included areas such as expansion and
refinement of product lines, enhanced selling systems and expanded distribution
facilities.
Other income decreased $1,090,000 primarily as a result of lower investment
yields, more than offsetting the income generated from a higher level of
investments. An increase in cost of sales of 11% was primarily related to the
revenue gain. Selling, administrative and general expenses were about even with
1992, as expense control efforts continued.
Primarily as a result of the foregoing factors, net earnings and earnings
per share each increased approximately 12%.
LIQUIDITY, CAPITAL RESOURCES AND CASH FLOWS
(FINANCIAL CONDITION)
The Company continues to maintain a solid financial condition. At May 31,
l994, working capital of $355,021,000 compared with $336,089,000 at the end of
the prior fiscal year. The ratio of current assets to current liabilities at
May 31, 1994, was 8.4 to l, compared with an 8 to l current ratio at May 31,
1993. The Company requires significant funds to carry extensive product
inventories, as product availability and customer service, including rapid
delivery, are key factors in maintaining a strong competitive position in each
industry segment. In addition, the Company maintains cash and invested funds to
meet growth opportunities, including business expansion, new division start-ups
and acquisitions, and to have internal capital available for distributions to
shareholders. The Company continues to develop growth plans and to search for
suitable acquisitions.
The Company's long-term debt of $6,500,000 in variable
rate industrial development bonds represents less than 2% of total
capitalization at May 31, 1994.
The Company's principal source of cash continues to be that provided by
operating activities. Net cash provided by operating activities fluctuates as a
result of variations in operating income, receivable and inventory levels, and
the timing of payment of liabilities and taxes. In fiscal 1994, inventories
increased $23,777,000 to $155,261,000, principally as a result of new products
and additional inventory required to support the higher sales level. The
Company expects that earnings generally will provide sufficient cash to meet
the Company's presently anticipated needs for cash.
Net cash used in investing activities includes capital expenditures for
equipment to maintain and enhance operating capabilities and for facilities
necessary to better serve customers. Fiscal 1994 property, plant and equipment
additions of $12,177,000 were higher than the amount invested in fixed asset
additions in each of the two previous years. Included in 1994 were expenditures
toward the construction of a new distribution facility for the Electronics
Distribution Group that will be equipped and become operational in fiscal 1995.
Fiscal 1995 capital expenditures should be similar to fiscal 1994, primarily as
a result of normal purchases to equip, maintain and enhance operating
capabilities and the opening of the new distribution facility noted above.
Investing activities also include the investment of certain funds being
retained for future business use. These investments are treated as temporary
investments and, like cash and cash equivalents, are held for short periods of
time. Changes in investments occur on a regular basis to take advantage of
changes in yield and to match cash flow requirements. In fiscal 1994, temporary
investments decreased $13,393,000 as a result of these factors.
18
<PAGE> 6
MANAGEMENT'S REVIEW
(Continued)
- - --------------------------------------------------------------------------------
Net cash used in financing activities for 1994, 1993 and 1992 included
dividends paid to shareholders of $32,629,000, $29,437,000 and $26,442,000,
respectively. The Company from time to time, in response to unsolicited offers
to buy Premier common stock, purchases shares of its common stock which are
then held as treasury shares to fund its stock option plan and for general
corporate purposes. In fiscal 1994, the Company purchased 1,853,000 of its
shares for $46,400,000. Consistent with prior years, the Company also received
payments from its management employees for stock reserved for issuance to them
under the Company's 1973 Stock Option Plan, as amended.
- - --------------------------------------------------------------------------------
19
<PAGE> 7
<TABLE>
CONSOLIDATED BALANCE SHEET EXHIBIT 13e
Premier Industrial Corporation and Subsidiaries
<CAPTION>
May 31, 1994 and 1993 (in thousands of dollars) 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and equivalents .................................................................... $ 42,122 $ 43,724
Temporary investments.................................................................... 87,466 100,859
Receivables (less allowance for doubtful accounts
of $1,627 and $2,074, respectively..................................................... 107,911 102,888
Inventories (note 2)..................................................................... 155,261 131,484
Prepaid expenses and deferred income taxes............................................... 10,177 5,352
--------- ---------
Total current assets............................................................... 402,937 384,307
Property, plant and equipment, at cost:
Land and land improvements............................................................... 6,421 6,580
Buildings and improvements............................................................... 47,471 43,759
Equipment, furniture and fixtures........................................................ 66,499 61,329
--------- --------
120,391 111,668
Less accumulated depreciation............................................................ 67,807 63,673
---------- --------
52,584 47,995
Other assets, at cost less accumulated amortization (note 3) 38,227 33,758
----------- ---------
$ 493,748 $ 466,060
Liabilities and Shareholders' Equity ========== =========
Current liabilities:
Payables................................................................................ $ 24,664 $ 27,575
Accrued liabilities (note 3)............................................................ 21,691 18,707
Income taxes............................................................................ 1,561 1,936
---------- ---------
Total current liability............................................................. 47,916 48,218
Deferred income taxes.......................................................................... 16,133 12,883
Long-term debt (note 4)........................................................................ 6,500 6,500
Shareholders' equity (notes 5 and 6):
Capital stock:
Serial preferred, without par value; authorized but unissued 1,500,000 shares......... -- --
Common, without par value; stated value $1 per share;
authorized 100,000,000 shares, issued 87,076,321 .................................. 87,076 87,076
Retained earnings....................................................................... 390,087 332,498
Foreign currency translation adjustment................................................. 221 766
Treasury shares at cost (2,130,567 and 792,956 shares, respectively).................... (54,185) (21,881)
---------- ---------
423,199 398,459
Lease commitments (note 10) ................................................................... ---------- ---------
$ 493,748 $ 466,060
<FN> ========== =========
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE> 8
CONSOLIDATED STATEMENT OF EARNINGS EXHIBIT 13f
Premier Industrial Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years Ended May 31, 1994, 1993 and 1992 (in thousands of dollars, except per share data) 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $739,520 $690,853 $640,838
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,789 4,159 5,249
-------- -------- --------
743,309 695,012 646,087
Costs and expenses:
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,313 367,194 331,043
Selling, administrative and general . . . . . . . . . . . . . . . . . . . . . . . . . 186,934 181,392 181,975
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,588 7,460 7,540
Amortization of other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 385 333
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304 352 443
-------- -------- --------
595,514 556,783 521,334
-------- -------- --------
Earnings before income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 147,795 138,229 124,753
Income taxes (note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,549 50,005 45,918
-------- -------- --------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94,246 $ 88,224 $ 78,835
======== ======== ========
Net earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.10 $ 1.02 $ .91
======== ======== ========
</TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY EXHIBIT 13g
Premier Industrial Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years Ended May 31, 1994, 1993 and 1992 (in thousands of dollars) 1994 1993 1992
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital stock:
At beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 87,076 $ 58,175 $ 58,175
Common stock split (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 28,901 --
-------- --------- --------
At end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,076 87,076 58,175
-------- --------- --------
Retained earnings:
At beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332,498 302,499 252,196
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,246 88,224 78,835
Cash dividends paid ($.38, $.34 and $.307 per share, respectively) . . . . . . . . . . (32,629) (29,437) (26,442)
Common stock split (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (28,901) --
Stock plans transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,028) 113 (2,090)
-------- -------- --------
At end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390,087 332,498 302,499
-------- -------- --------
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . 221 766 1,288
-------- -------- --------
Treasury shares at cost:
At beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,881) (17,015) (19,540)
Purchase of treasury shares (1,852,657, 481,395
and 300,900 shares, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . (46,400) (13,686) (8,215)
Issuance of shares under stock plans . . . . . . . . . . . . . . . . . . . . . . . . . 14,096 8,820 10,740
-------- -------- --------
At end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (54,185) (21,881) (17,015)
-------- -------- --------
$423,199 $398,459 $344,947
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 9
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS EXHIBIT 13h
Premier Industrial Corporation and Subsidiaries
<CAPTION>
Years Ended May 31, 1994, 1993 and 1992 (in thousands of dollars) 1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and equivalents at June 1 . . . . . . . . . . . . . . . . . . . . . . . $ 43,724 $ 39,450 $ 45,405
-------- -------- --------
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,246 88,224 78,835
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 7,963 7,845 7,873
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . 1,412 1,180 1,002
Changes in:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,023) (7,418) (5,078)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,777) (3,192) (23,308)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . (2,987) (56) (1,863)
Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,911) 5,675 2,608
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . 2,984 (2,041) 2,816
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (375) 300 261
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,203) (3,997) (1,328)
-------- -------- --------
Net cash provided by operating activities . . . . . . . . . . . 66,329 86,520 61,818
-------- -------- --------
Cash flows from investing activities:
Net additions to property, plant and equipment. . . . . . . . . . . . . (12,177) (10,441) (4,641)
Purchase of temporary investments . . . . . . . . . . . . . . . . . . . (736,923) (656,942) (580,370)
Sale of temporary investments . . . . . . . . . . . . . . . . . . . . . 750,316 624,110 544,928
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (186) (4,783) (1,683)
-------- -------- --------
Net cash provided by (used in) investing activities . . . . . 1,030 (48,056) (41,766)
-------- -------- --------
Cash flows from financing activities:
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,629) (29,437) (26,442)
Purchase of treasury shares. . . . . . . . . . . . . . . . . . . . . . (46,400) (13,686) (8,215)
Proceeds from stock plans. . . . . . . . . . . . . . . . . . . . . . . 10,068 8,933 8,650
-------- -------- --------
Net cash used in financing activities. . . . . . . . . . . . (68,961) (34,190) (26,007)
-------- -------- --------
Cash and equivalents at May 31 . . . . . . . . . . . . . . . . . . . . . . . $ 42,122 $ 43,724 $ 39,450
======== ======== ========
Supplemental disclosure of cash flow information:
Interest and dividends received . . . . . . . . . . . . . . . . . . . . $ 3,751 $ 4,401 $ 4,800
Income taxes paid, net of refunds . . . . . . . . . . . . . . . . . . . 51,319 46,096 44,361
<FN>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS EXHIBIT 13i
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly owned. All significant intercompany
transactions, profits and balances have been eliminated in consolidation.
(B) TRANSLATION OF FOREIGN CURRENCIES
The Company translates foreign currency financial statements by translating
balance sheet accounts at the current exchange rate and income statement
accounts at the average exchange rate for the year. Translation gains and
losses are recorded in shareholders' equity, and realized gains and losses are
reflected in income.
(C) CASH EQUIVALENTS
Cash equivalents, which are retained for future use in the business, include
short-term investments purchased with maturities of three months or less.
(D) TEMPORARY INVESTMENTS
Other funds retained for future use in the business are temporarily invested in
marketable securities generally held for periods not to exceed one year and are
carried principally at cost which approximates market value determined based on
quoted market prices.
(E) INVENTORIES
Inventories are stated at the lower of cost or market, cost being determined on
the basis of either the first-in, first-out (FIFO) method or on the last-in,
first-out (LIFO) method and market on the basis of the lower of replacement
cost or net realizable value.
(F) PROPERTY, PLANT AND EQUIPMENT
Depreciation is based on the estimated useful lives of the various assets and
is computed principally using the straight-line method.
(G) OTHER ASSETS
Goodwill acquired subsequent to the effective date of APB Opinion No. 17, is
being amortized over a period of 40 years on a straight-line basis; goodwill
acquired prior to that date is not being amortized ($8,535,000). Certain other
intangible assets are being amortized over their respective economic lives.
(H) INCOME TAXES
Effective June 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (Statement 109). Prior to June
1, 1993, the Company followed Statement of Financial Accounting Standards No.
96, "Accounting for Income Taxes." Under Statement 109 deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. This change to adopt Statement
109 had no material impact on the Company's financial statements.
(I) EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common shares
and common stock equivalents outstanding during each year.
(J) RECLASSIFICATIONS
Certain reclassifications have been made to conform prior
years' data to the current presentation.
(2) INVENTORIES
The Company's inventories consist primarily of finished goods. Costs of certain
inventories are determined using the dollar value LIFO method (approximately 9%
and 10% of total inventory at current cost at May 31, 1994 and 1993,
respectively). If all inventory costs were determined on a FIFO basis,
inventories would have been $6,636,000 and $6,931,000 higher than reported at
May 31, 1994 and 1993, respectively.
14
<PAGE> 11
NOTES
(continued)
- - --------------------------------------------------------------------------------
(3) OTHER ASSETS AND ACCRUED LIABILITIES
Other assets consist of:
<TABLE>
<CAPTION>
May 31,
----------------------
(in thousands) 1994 1993
---- ----
<S> <C> <C>
Goodwill and intangibles arising from
acquisitions, net of accumulated
amortization of $2,616 and $2,512,
respectively $11,542 $11,646
Other 26,685 22,112
------- -------
$38,227 $33,758
======= =======
Accrued liabilities consist of:
Compensation $10,881 $9,953
Taxes, other than income taxes 4,213 4,492
Other 6,597 4,262
------- ------
$21,691 $18,707
======= =======
</TABLE>
(4) LONG-TERM DEBT
Long-term debt in 1994 and 1993 represents a $6,500,000 variable rate (3.05% at
May 31, 1994) Industrial Development Revenue Bond payable December 1, 2015.
(5) CAPITAL STOCK
On December 8, 1992, the Board of Directors approved a 3-for-2 stock split for
shareholders of record on December 23, 1992. All shares and per share amounts
reflected herein have been adjusted to give effect to this transaction, except
treasury shares.
(6) STOCK OPTIONS
Under the Company's 1973 Stock Option Plan as amended, 3,150,053 common shares
remain reserved for issuance to any eligible officer or other management
employee. All options granted under the plan, which are non-qualified, will be
at an option price not less than the fair market value at the date of grant.
Options are generally exercisable annually after one year from date of grant to
the extent of one-fifth of the shares granted and expire at the end of the
fifth year. Shares available for future grant aggregated 1,453,311, 1,662,041
and 2,141,139 at May 31, 1994, 1993 and 1992, respectively. Details pertaining
to this plan for 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Number of shares
(Option price range)
-----------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Outstanding
at beginning
of year 2,003,058 2,017,496 2,254,733
($12.94-$24.50) ($12.94-$19.42) ($8.26-$15.17)
Granted 539,835 678,338 577,253
($28.13) ($22.75-$24.50) ($18.33-$19.42)
Exercised (515,046) (493,536) (625,890)
($12.94-$24.50) ($12.94-$22.75) ($8.26-$19.42)
Cancelled (331,105) (199,240) (188,600)
($12.94-$28.13) ($12.94-$22.75) ($8.26-$19.42)
-------------- ------------- ------------
Outstanding
at end of
year 1,696,742 2,003,058 2,017,496
($14.83-$28.13) ($12.94-$24.50) ($12.94-$19.42)
Exercisable
next fiscal
year 464,709 527,125 529,892
</TABLE>
15
<PAGE> 12
<TABLE>
NOTES
(continued)
- - -------------------------------------------------------------------------------
(7) INCOME TAXES
As discussed in note 1(h), the Company adopted Statement 109 as of June 1,
1993. Prior years' financial statements have not been restated to apply the
provisions of Statement 109.
Components of income tax expense are as follows:
<CAPTION>
Years Ended May 31,
---------------------------
(in thousands) 1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
United States income taxes:
Current $41,692 $38,006 $34,455
Deferred 1,412 1,180 1,002
-------- ------- --------
43,104 39,186 35,457
Foreign income taxes 2,724 3,207 3,693
State and local income taxes 7,721 7,612 6,768
-------- ------- --------
$53,549 $50,005 $45,918
======== ======= ========
The effective tax rate differed from the U.S. Federal
income tax rate as follows:
Years Ended May 31,
------------------------------
1994 1993 1992
-------- --------- --------
U.S. Federal income tax rate 35.0% 34.0% 34.0%
State and local income taxes, net of
Federal benefit 3.4 3.6 3.6
Other, net (2.2) (1.4) (.8)
------- ------ ------
36.2% 36.2% 36.8%
======= ====== ======
Deferred tax assets and liabilities are comprised of the following:
May 31,
--------------------
(in thousands) 1994 1993
Assets: --------- ---------
Inventory $ 2,166 $ 2,120
Other 2,814 2,160
--------- ---------
$ 4,980 $ 4,280
========= =========
Liabilities:
Tax lease $ 10,345 $10,084
Depreciation 1,682 1,810
Pension 3,402 1,721
Oil and gas 1,038 1,075
Other 2,759 2,473
--------- ---------
$ 19,226 $17,163
========= =========
No valuation allowance was required for the Company's deferred tax assets.
(8) PENSION PLANS
The Company maintains non-contributory pension plans covering
substantially all of its employees. Plan benefits for most employees are
based on years of service and the highest consecutive five-year average
out of the last ten- year earnings prior to retirement.
Pension cost is summarized as follows:
(in thousands) 1994 1993 1992
-------- -------- --------
Service cost $ 2,185 $ 2,092 $ 2,693
Interest cost on projected
benefit obligation 3,436 3,104 3,030
Actual return on plan assets (7,254) (11,765) (14,582)
Net amortization and deferral (2,864) 2,904 7,302
-------- -------- --------
Net pension benefit $ (4,497) $ (3,665) $ (1,557)
======== ======== ========
The funded status of the plans
at May 31, was as follows:
Actuarial present value of:
Vested plan obligation $(35,350) $(32,215) $(28,142)
Non-vested plan obligation (1,736) (1,727) (2,149)
-------- -------- --------
Accumulated benefit
obligation $(37,086) $(33,942) $(30,291)
======== ======== ========
Projected benefit obligation $(47,598) $(44,385) $(46,164)
Plan assets at fair value 104,545 98,662 87,970
-------- -------- --------
Plan assets in excess of
projected benefit obligation 56,947 54,277 41,806
Unrecognized:
Net gain (35,580) (36,955) (27,035)
Prior service cost 1,253 1,767 1,646
Initial net asset (13,119) (14,246) (15,363)
-------- -------- --------
Net pension asset $ 9,501 $ 4,843 $ 1,054
======== ======== ========
Actuarial assumptions
used were:
Discount rate 7.5% 7.5% 7.5%
Rate of increase in
compensation levels 5.5% 5.5% 5.5%
Expected long-term rate
of return on assets 7.5% 7.5% 7.5%
</TABLE>
The plans' assets consist primarily of listed common stocks, including
$9,452,000 of the Company's common stock at May 31, 1994, and corporate and
government bonds.
16
<PAGE> 13
NOTES
(continued)
- - -----------------------------------------------------------------------------
(9) RESEARCH AND DEVELOPMENT COSTS
Annual research and development costs of approximately $3,500,000 in 1994 and
$3,400,000 in 1993 and 1992 are included in selling, administrative and general
expenses.
(10) LEASE COMMITMENTS
Minimum aggregate rental payments under noncancellable operating leases are as
follows (in thousands):
1995 $4,100
1996 3,000
1997 1,700
1998 1,200
1999 400
After 1999 400
Total rental expense for 1994, 1993 and 1992 was approximately $6,300,000,
$6,400,000 and $7,100,000, respectively.
(11) QUARTERLY FINANCIAL DATA (UNAUDITED)
The quarterly financial data appears on page 10 of the Annual Report to
Shareholders.
(12) SEGMENT INFORMATION
Reference is made to page 10 for the years 1994, 1993 and 1992 for information
regarding operating revenues, operating profit, assets, capital expenditures,
and depreciation and amortization by industry segments.
<TABLE>
The following is information about United States and international operations:
<CAPTION>
Years Ended May 31,
-----------------------------------
(in thousands) 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Operating revenues
United $672,187 $625,176 $577,124
International 67,333 65,677 63,714
-------- -------- --------
$739,520 $690,853 $640,838
======== ======== ========
Operating profit
United $146,078 $134,378 $120,336
International 12,064 11,839 10,862
-------- -------- --------
$158,142 $146,217 $131,198
======== ======== ========
Assets
United States $471,934 $446,140 $387,397
International 21,814 19,920 20,020
-------- -------- --------
$493,748 $466,060 $407,417
-------- -------- --------
</TABLE>
<TABLE>
Operating profit contribution is reconciled to earnings before income taxes as
follows:
<CAPTION>
Years Ended May 31,
-----------------------------------
(in thousands) 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Operating profit contribution $158,142 $146,217 $131,198
Investment income 4,307 4,729 5,586
Corporate expenses (14,350) (12,365) (11,588)
Interest expense (304) (352) (443)
-------- -------- --------
Earnings before income taxes $147,795 $138,229 $124,753
======== ======== ========
</TABLE>
International operating profits, adjusted for non-operating items, are not
materially different from earnings before income taxes. Corporate assets are
included in the United States assets.
17
<PAGE> 14
AUDITORS' REPORT EXHIBIT 13j
The Shareholders and Board of Directors
Premier Industrial Corporation:
We have audited the accompanying consolidated balance sheets of Premier
Industrial Corporation and subsidiaries as of May 31, 1994 and 1993, and the
related consolidated statements of earnings, shareholders' equity and cash
flows for each of the years in the three-year period ended May 31, 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Premier Industrial Corporation and subsidiaries at May 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
years in the three-year period ended May 31, 1994, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick
KPMG PEAT MARWICK
Cleveland, Ohio
July 21, 1994
<PAGE> 1
EXHIBIT 21
<TABLE>
PREMIER INDUSTRIAL CORPORATION
Subsidiaries of the Registrant
As of the date of the Annual Report on Form 10-K to which this is an Exhibit,
the subsidiaries of Premier Industrial Corporation were as follows:
<CAPTION>
State or other jurisdiction of
Name incorporation or organization
---- ------------------------------
<S> <C>
D-A Lubricant Company, Inc. Indiana
Premier Industrial Corporation (Indiana) Indiana
Newark Electronics Corporation Illinois
Premierco Service Corporation Ohio
PIC Corporation Delaware
MCM Electronics, Incorporated Ohio
Premier Foreign Sales Corporation, Inc. Virgin Islands
Premier Fastener, Limited Ontario, Canada
Certanium B.V. Netherlands
Premier Industrial Holland B.V. Netherlands
Premier Industrial Belgium S.A. Belgium (1)
Premier Industrial (UK) Limited United Kingdom (1)
N. V. Certanium Services, S.A. Belgium (1)
Premier Industrial France S.A.R.L. France (1)
Premier Industrial Deutschland GmbH Germany
Premierco Espana, S.L. Spain (1)
Premier Industrial Italia S.r.l. Italy (1)
<FN>
(1) Premier Industrial Corporation owns, directly or indirectly, at least 98% of the outstanding voting shares of these
subsidiaries. All other above-listed subsidiaries are wholly owned directly by Premier.
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Premier Industrial Corporation:
We consent to incorporation by reference in the registration statement No.
33-25251 on Form S-8 of Premier Industrial Corporation of our reports dated
July 21, 1994, relating to the consolidated balance sheets of Premier
Industrial Corporation and subsidiaries as of May 31, 1994 and 1993, and the
related consolidated statements of earnings, shareholders' equity, and cash
flows and related schedules for each of the years in the three-year period
ended May 31, 1994, which reports appear in the May 31, 1994 annual report on
Form 10-K of Premier Industrial Corporation.
/s/ KPMG PEAT MARWICK
KPMG PEAT MARWICK
Cleveland, Ohio
August 24, 1994
