<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, 1995
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, P.O. Box 94884, Cleveland, Ohio 44101-4884
---------------------------------------------------- ----------
(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
--- ---
<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
12, 1995, was $747,159,187.50. (Directors of the registrant are considered
affiliates for the purpose of this calculation.)
Number of shares of Common Stock outstanding on July 12, 1995: 83,491,595
Documents Incorporated by Reference
Portions of the registrant's 1995 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 1995 Annual
Meeting of Shareholders, incorporated herein by reference in Part III.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
PART I PAGE
------ ----
<S> <C> <C>
Item I. 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.. ..................................... 8
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............................. 11
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>
PART III PAGE
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<S> <C> <C>
Item 10. Directors and Executive Officers of the
Registrant................................................. 11
Item 11. Executive Compensation..................................... 12
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
Exhibit Index ................................................................ 15
</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, P.O. Box 94884, Cleveland, Ohio 44101-4884.
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 1995
Annual Report to its shareholders, 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.
<PAGE> 7
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. Neither
industry segment is dependent upon a single customer, or a few customers, the
loss of any one or more of which would have a material adverse effect on the
segment.
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 each of the fiscal years ended May 31, 1995 and 1994. Corresponding
research expenditures for 1993 were approximately $3,400,000. Virtually all
such activities were sponsored by Premier rather than by customers.
ENVIRONMENTAL REGULATION. Compliance with existing federal,
state and local provisions relating to the protection of the environment is not
expected to have a material effect on the Corporation.
The Corporation has initiated remedial activities at certain
of its owned facilities. The estimated costs of such activities, which are not
expected to be material, have been provided for in the Corporation's financial
statements in accordance with generally accepted accounting principles.
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. Based on
current information, management believes that the ultimate costs of these
matters will not be material.
EMPLOYEES AND SALES FORCE. Premier had approximately 4,500
persons in its employ as of May 31, 1995. As of that date, a sales force of
approximately 2,700 persons, including employees and independent agents, was
engaged in the sale and distribution of Premier products.
<PAGE> 8
(d) Financial Information About Foreign and Domestic
------------------------------------------------
Operations and Export Sales
---------------------------
Premier has direct selling operations (through subsidiaries)
in eight foreign countries. Premier also is engaged in export sales, which are
included as a part of domestic sales. Financial information about foreign and
domestic operations appears as Note 8 (Segment Information) to the
Corporation's Consolidated Financial Statements on page 16 of its 1995 Annual
Report to shareholders, which is incorporated herein by reference.
Item 2. Properties
----------
Premier has facilities, including general and sales offices,
distribution centers, manufacturing plants and research facilities, in 175
locations in the United States, Canada and Europe. Of these facilities, those
owned in fee by Premier contain approximately 2,159,000 square feet and are
located on sites consisting of approximately 158 acres of land. Premier also
owns vacant land adjacent to some of its facilities for future expansion.
Facilities leased by Premier contain approximately 480,000
square feet. No single lease is material to the business of any industry
segment.
The Electronics Distribution segment, headquartered in
Chicago, Illinois, has 110 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, 1995.
<PAGE> 9
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 12, 1995, as well as information about each such person's principal
occupations and employment during the past five years:
<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 73 1946 Chairman of the Board and Director
Jack N. Mandel 83 1946 Chairman of Finance Committee and Director
Joseph C. Mandel 81 1946 Chairman of Executive Committee and Director
Philip S. Sims 67 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 54 1978 President, January 1992 and Director, October 1993; Executive Vice
President
Stuart D. Neidus 44 1992 Executive Vice President, July 1995; Vice President and Treasurer,
November 1992
Terry L. Taylor 49 1990 Executive Vice President, February 1992; Senior Vice President,
September 1990; Vice President
William D. Coole 46 1989 Vice President
Thomas J. Dato 49 1992 Vice President, December 1992; Vice President and Division Head
within the Electronics Distribution Group
William J. Evanson 45 1995 Vice President and Treasurer, July 1995; Assistant Vice President
Howard P. Frank 56 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>
Mala N. Garg 35 1995 Vice President, July 1995; Within the General Products Group:
Vice President and Division Head, May 1994; Assistant Vice
President, April 1992; Division Director of Marketing
J. Kenneth Gibson 49 1990 Vice President within the General Products Group
Deidra D. Gold 40 1992 Vice President and General Counsel, December 1991
Jon W. Harst 48 1995 Vice President, July 1995; Vice President and Division Head
within the General Products Group
J. Robert McCabe 69 1968 Vice President
Robert J. Ralston 50 1995 Vice President, July 1995; Vice President within the Electronics
Group
James D. Spotz 49 1989 Vice President
Phillip Vander Pol 54 1978 Vice President and Controller
J. David Webster 58 1992 Vice President
</TABLE>
With the exception of Deidra D. Gold 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. Gold 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. Gold 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 LLP 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.
<PAGE> 11
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 12, 1995, there were approximately 8,600 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 10 of the Corporation's 1995 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
12, 1995, based on the closing price on the New York Stock Exchange on that
date, was $24.75.
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 1995 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 1995 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 16, inclusive, of
Premier's 1995 Annual Report to its shareholders, together with the independent
auditors' report relating thereto contained on page 17 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.
<PAGE> 12
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 8 and the top of page 9 of Premier's Proxy
Statement for its 1995 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
pages 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 Shareholder
Return Comparison" on pages 15 and 16 of Premier's Proxy Statement for its 1995
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 1995 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 1995 Annual
Meeting of Shareholders is incorporated herein by reference.
<PAGE> 13
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, of Premier's 1995 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, 1995 and 1994
Consolidated Statement of Earnings for the years ended
May 31, 1995, 1994 and 1993
Consolidated Statement of Shareholders' Equity for the
years ended May 31, 1995, 1994 and 1993
Consolidated Statement of Cash Flows for the years
ended May 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Auditors' Report
Highlights by Quarter (unaudited)
(2) All financial statement 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 15 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 20, 1995 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 20th day of July, 1995.
SIGNATURE TITLE
--------- -----
/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
<PAGE> 15
EXHIBIT INDEX
-------------
EXHIBIT PAGE
NUMBER (1) DESCRIPTION OF EXHIBIT NUMBER
---------- ---------------------- ------
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 subsi-
diaries is outstanding under a $6,500,000 variable rate
(3.75% at May 31, 1995) 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. Premier Industrial Corporation 1973 Stock Option Plan
for Management Employees, as Amended and Restated as
of June 6, 1995 (subject to approval by shareholders
of the Corporation)** *
c. Amended Forms of Senior Management Option Agreement** 17
d. Premier Industrial Corporation Director Option Plan *
(subject to approval by shareholders of the
Corporation)**
e. Summary of Executive Officer Medical Reimbursement
Plan** *
f. Consulting Agreement between the Corporation and
William M. Hamilton** *
g. Amendment to Consulting Agreement between the
Corporation and William M. Hamilton dated
August 31, 1994 ** 23
h. Summary of consulting arrangement between the
Corporation and John C. Colman** *
<PAGE> 16
13 Selected portions of the Annual Report to shareholders for
the year ended May 31, 1995 24
a. Industry Segment Information (page 10 of the 1995 Annual
Report) 25
b. Highlights by Quarter (page 10 of the 1995 Annual Report) 25
c. Ten Year Financial Summary (pages 8 and 9 of the 1995
Annual Report) 26
d. Management's Review (pages 18 and 19 of the 1995 Annual
Report) 28
e. Consolidated Balance Sheet (page 11 of the 1995 Annual
Report) 30
f. Consolidated Statement of Earnings (page 12 of the 1995
Annual Report) 31
g. Consolidated Statement of Shareholders' Equity (page 12
of the 1995 Annual Report) 31
h. Consolidated Statement of Cash Flows (page 13 of the 1995
Annual Report) 32
i. Notes to Consolidated Financial Statements (pages 14
through 16, inclusive, of the 1995 Annual Report) 33
j. Auditor's Report (page 17 of the 1995 Annual Report) 36
21 Subsidiaries of the registrant 37
23 Consent of KPMG Peat Marwick LLP 38
27 Financial Data Schedule (submitted only in electronic format) 39
(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, under the corresponding exhibit numbers, in a Registration Statement
on Form 8-A, File No. 1-4903, which was effective October 26, 1988. Exhibits
3(i), 3(i)(a), 3(ii) and 10a were contained, under the corresponding exhibit
numbers, in a Registration Statement on Form S-8, Registration No. 3325251,
which became effective on November 18, 1988. Exhibits 10b and 10d were
contained as Exhibits A and B in the Proxy Statement for the 1995 Annual
Meeting of Shareholders, filed on August 23, 1995 (File No. 1-4903). Exhibits
10e, 10f and 10g were contained in the Annual Report on Form 10-K, filed on
August 30, 1993 (File No. 1-4903), as Exhibits 10c, 10d and 10e, respectively.
** 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 10c
Forms of Senior Management Stock Option Agreements
--------------------------------------------------
PREMIER INDUSTRIAL CORPORATION
------------------------------
Senior Management Stock Option Agreement
----------------------------------------
WHEREAS, _____________________________________________________________
(the "Optionee") is ___________________________________________________________
______________________ of Premier Industrial Corporation (the "Company"); and
WHEREAS, the execution of a Stock Option Agreement in the form hereof
has been duly authorized and approved by the Stock Option Committee of the
Board of Directors of the Company (the "Stock Option Committee");
NOW, THEREFORE, the Company hereby grants to the Optionee an option to
purchase ________ shares of Common Stock, without par value, of the Company
("Common Stock") at the price of $____________ (_______________________________
_________________) per share. In the unlikely event that the number of shares
accepted under this year's grants to all eligible employees exceeds the number
of shares available under the Company's 1973 Stock Option Plan for Management
Employees, as amended and restated (the "Stock Option Plan"), this and all
other grants under the Stock Option Plan will be reduced proportionately. The
Company agrees to cause certificates for any shares purchased hereunder to
delivered to the Optionee upon receipt of the purchase price and applicable
withholding taxes, all subject, however, to the terms and conditions
hereinafter set forth. The purchase price may be paid (a) in cash, (b) by
exchanging previously acquired Common Stock of the equivalent market value on
the date of exercise, or (c) by a combination of (a) and (b). Applicable
withholding taxes must be paid in cash.
1. This option (until terminated as hereinafter provided) shall
be exercisable only to the extent of ________ shares hereinabove specified
after the Optionee shall have been in the continuous employ of the Company for
one full year from the date hereof (year one) and to the extent of an
additional ________ shares after each of the next two successive years
thereafter (years two and three), and an additional ____
shares after the next successive year (year four) and a final _________
shares after the next successive year (year five), during each of which periods
the Optionee shall have been in the continuous employ of the Company. For
purposes of this Paragraph, leaves of absence approved by authorized officers
of the Company for illness, military or governmental service or other cause
shall be considered as employment. To the extent exercisable, this option may
be exercised in whole or in part from time to time.
2. This option shall terminate on the earliest of the following
dates:
(a) On the date upon which the Optionee ceases to be an
employee of the Company, unless he ceases to be such
employee by reason of any event or circumstance
described in Subparagraph (b) or (c) below;
<PAGE> 2
(b) One year after the Optionee ceases to be an employee
of the Company by reason of termination of employment
under circumstances determined by the Board of
Directors or the Stock Option Committee to be for the
convenience of the Company, or by reason of
retirement under a retirement plan of the Company at
or after normal retirement age provided for in such
retirement plan or at an earlier age with the consent
of the Board of Directors or the Stock Option
Committee, but in no event after the date set forth
in Subparagraph (e) below;
(c) One year after the death or Qualifying Disability (as
defined in the Stock Option Plan) of the Optionee if
the Optionee dies or becomes so disabled while an
employee of the Company, but in no event after the
date set forth in Subparagraph (e) below;
(d) At the time of any act which the Optionee
intentionally commits and which is materially
inimical to the interests of the Company, as
thereafter so determined by the Board of Directors or
the Stock Option Committee, with this option then
terminating at the time of such act, notwithstanding
any other provision of this Agreement, and with
nothing contained in this option imposing any limit
whatsoever on any right the Company might otherwise
have to terminate the employment of the Optionee; or
(e) On _________________________, ___________.
In the event that the earliest of the above events is one described within
Subparagraph (b) or (c) above, then notwithstanding Paragraph 1, the
exercisability of this option shall be accelerated upon and as of such
triggering event, so that the Optionee may exercise the entire unexercised and
outstanding balance of this option from and after the date of such triggering
event until termination of this option as provided above.
3. This option is not transferable by the Optionee otherwise than
by will or the laws of descent and distribution, and is exercisable, during the
lifetime of the Optionee, only by him.
4. This option shall not be exercisable if, at the time of the
proposed exercise, such exercise would involve a violation of any applicable
federal or state securities law. This option also shall not be exercisable if,
at the time of the proposed exercise, such exercise would require registration
of the shares of Common Stock or other securities to be purchased hereunder
under the Securities Act of 1933, as amended, or under any similar federal
securities law then in effect, and such registration shall not then be
effective.
5. In the case of an exchange of previously acquired Common
Stock, shares shall be valued for such purposes at their fair market value at
the time of option exercise, in accordance with the Stock Option Plan and any
applicable policies and procedures from time to time authorized by the Stock
Option Committee and then in effect.
<PAGE> 3
6. The Board of Directors or the Stock Option Committee shall
make such adjustments in the option price and in the number or kind of shares
of Common Stock or other securities covered by this option as such Board or
Committee, in its sole discretion exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of the
Optionee that otherwise would result from (a) any stock dividend, stock split,
reverse stock split, combination of shares, recapitalization, stock rights
offering or other change in capital structure of the Company, or (b) any
merger, consolidation, separation, reorganization or partial or complete
liquidation, or (c) any other corporate transaction or event having an effect
similar to any of the foregoing. No adjustment provided for in this Paragraph
6 shall require the Company to sell any fractional share, and the Board of
Directors or the Stock Option Committee may provide in its discretion either
for the elimination of fractional shares (by rounding up or down to the nearest
whole number) or settlement in cash.
EXECUTED at Cleveland, Ohio this _______ day of_____________________.
PREMIER INDUSTRIAL CORPORATION
By:_____________________________________
[Name]
[Title]
This undersigned Optionee hereby acknowledges receipt of an executed
original of this Stock Option Agreement.
________________________________________
OPTIONEE
<PAGE> 4
PREMIER INDUSTRIAL CORPORATION
------------------------------
Senior Management Stock Option Agreement
----------------------------------------
WHEREAS, _____________________________________________________________
(the "Optionee") is ___________________________________________________________
______________________ of Premier Industrial Corporation (the "Company"); and
WHEREAS, the execution of a Stock Option Agreement in this form has
been duly authorized and approved by the Stock Option Committee of the Board of
Directors of the Company (the "Stock Option Committee");
NOW, THEREFORE, the Company hereby grants to the Optionee an option to
purchase __________ shares of Common Stock, without par value, of the Company
("Common Stock") at the price of $____________ (_______________________________
__________________) per share. In the unlikely event that the number of shares
accepted under this year's grants to all eligible employees exceeds the number
of shares available under the Company's 1973 Stock Option Plan for Management
Employees, as amended and restated (the "Stock Option Plan"), this and
all other grants under the Stock Option Plan will be reduced proportionately.
The Company agrees to cause certificates for any shares purchased hereunder to
be delivered to the Optionee upon receipt of the purchase price and applicable
withholding taxes, all subject, however, to the terms and conditions
hereinafter set forth. The purchase price may be paid (a) in cash, (b) by
exchanging previously acquired Common Stock of the equivalent market value on
the date of exercise, or (c) by a combination of (a) and (b). Applicable
withholding taxes must be paid in cash.
1. This option (until terminated as hereinafter provided) shall
be exercisable in its entirety after the Optionee shall have been in the
continuous employ of the Company for five (5) full years from the date hereof.
For purposes of this Paragraph, leaves of absence approved by authorized
officers of the Company for illness, military or governmental service or other
cause shall be considered as employment. To the extent exercisable, this
option may be exercised in whole or in part from time to time.
2. This option shall terminate on the earliest of the following
dates:
(a) On the date upon which the Optionee ceases to be an
employee of the Company, unless he ceases to be such
employee by reason of any event or circumstance
described in Subparagraph (b) or (c) below;
(b) One year after the Optionee ceases to be an employee
of the Company by reason of termination of employment
under circumstances determined by the Board of
Directors or the Stock Option Committee to be for the
convenience of the Company, or by reason of
retirement under a retirement plan of the Company at
or after normal retirement age provided for in such
retirement plan or at an earlier age with the consent
of the Board of Directors or the Stock Option
Committee, but in no event after the date set forth
in Subparagraph (e) below;
<PAGE> 5
(c) One year after the death or Qualifying Disability (as
defined in the Stock Option Plan) of the Optionee if
the Optionee dies or becomes so disabled while an
employee of the Company, but in no event after the
date set forth in Subparagraph (e) below;
(d) At the time of any act which the Optionee
intentionally commits and which is materially
inimical to the interests of the Company, as
thereafter so determined by the Board of Directors or
the Stock Option Committee, with this option then
terminating at the time of such act, notwithstanding
any other provision of this Agreement, and with
nothing contained in this option imposing any limit
whatsoever on any right the Company might otherwise
have to terminate the employment of the Optionee; or
(e) On _________________________, ___________.
In the event that the earliest of the above events is one described within
Subparagraph (b) or (c) above, then notwithstanding Paragraph 1, the
exercisability of this option shall be accelerated upon and as of such
triggering event, so that the Optionee may exercise the entire unexercised and
outstanding balance of this option from and after the date of such triggering
event until termination of this option as provided above.
3. This option is not transferable by the Optionee otherwise than
by will or the laws of descent and distribution, and is exercisable, during the
lifetime of the Optionee, only by him.
4. This option shall not be exercisable if, at the time of the
proposed exercise, such exercise would involve a violation of any applicable
federal or state securities law. This option also shall not be exercisable if,
at the time of the proposed exercise, such exercise would require registration
of the shares of Common Stock or other securities to be purchased hereunder
under the Securities Act of 1933, as amended, or under any similar federal
securities law then in effect, and such registration shall not then be
effective.
5. In the case of an exchange of previously acquired Common
Stock, shares shall be valued for such purposes at their fair market value at
the time of option exercise, in accordance with the Stock Option Plan and any
applicable policies and procedures from time to time authorized by the Stock
Option Committee and then in effect.
6. The Board of Directors or the Stock Option Committee shall
make such adjustments in the option price and in the number or kind of shares
of Common Stock or other securities covered by this option as such Board or
Committee, in its sole discretion exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of the
Optionee that otherwise would result from (a) any stock dividend, stock split,
reverse stock split, combination of shares, recapitalization, stock rights
offering or other change in
<PAGE> 6
capital structure of the Company, or (b) any merger, consolidation, separation,
reorganization or partial or complete liquidation, or (c) any other corporate
transaction or event having an effect similar to any of the foregoing. No
adjustment provided for in this Paragraph 6 shall require the Company to sell
any fractional share, and the Board of Directors or the Stock Option Committee
may provide in its discretion either for the elimination of fractional shares
(by rounding up or down to the next whole number) or settlement in cash.
EXECUTED at Cleveland, Ohio this _______ day of_______________________.
PREMIER INDUSTRIAL CORPORATION
BY:_____________________________________
[Name]
[Title]
This undersigned Optionee hereby acknowledges receipt of an executed
original of this Stock Option Agreement.
________________________________________
OPTIONEE
<PAGE> 1
EXHIBIT 10g
AMENDMENT TO CONSULTING AGREEMENT
BETWEEN THE CORPORATION AND WILLIAM M. HAMILTON
DATED AUGUST 31, 1995
August 31, 1994
Mr. William M. Hamilton
2222 Pebblebrook Road
Westlake, Ohio 44145
Re: Consulting Agreement
Dear Bill:
Reference is made to your Consulting Agreement dated June 1, 1992 (the
"Agreement") with Premier Industrial Corporation ("Premier"), relating to your
provision of consulting services to Premier from and after June 1, 1992.
In Paragraph 2 of the Agreement, Premier has agreed to pay you, as a retainer
for your consulting services and in consideration of your service as a
Director, such monthly amount as you and Premier from time to time may agree is
appropriate in light of your current assignments and other circumstances.
This letter is simply to confirm our mutual agreement pursuant to Paragraph 2
of the Agreement that, effective as of June 1, 1994, the amount of your
retainer is increased from $10,000 to $11,000 per month. This change will not
alter any terms and conditions of the Agreement, which will remain in full
force and effect.
For our record-keeping purposes, please signify your concurrence with the above
by signing the enclosed copy of this letter where indicated below and returning
it to me.
PREMIER INDUSTRIAL CORPORATION
By /s/Philip S. Sims
--------------------------
Philip S. Sims
Vice Chairman of the Board
ACKNOWLEDGED AND AGREED:
/s/William M. Hamilton
-------------------------------
William M. Hamilton
<PAGE> 1
EXHIBIT 13a
INDUSTRY SEGMENT INFORMATION
Years Ended May 31, (in thousands of dollars)
<TABLE>
<CAPTION>
DEPRECIATION
INDUSTRY OPERATING OPERATING CAPITAL AND
SEGMENT YEAR REVENUES PROFIT (A) ASSETS EXPENDITURES AMORTIZATION
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ELECTRONICS 1995 $594,023 $133,277 $258,825 $11,177 $4,913
DISTRIBUTION 1994 534,284 116,044 241,509 7,997 4,514
1993 484,751 104,976 206,316 3,472 4,547
1992 436,332 91,486 200,026 2,777 4,514
1991 422,386 86,206 174,422 2,889 4,049
GENERAL 1995 224,142 47,349 95,945 5,629 2,583
PRODUCTS 1994 205,236 42,098 85,723 3,258 2,466
1993 206,102 41,241 81,585 5,299 2,565
1992 204,506 39,712 74,361 2,242 2,705
1991 214,744 40,480 72,971 2,699 2,647
CORPORATE 1995 201,258 1,841 1,177
1994 166,516 1,741 983
1993 178,159 1,998 733
1992 133,030 267 654
1991 101,273 333 672
TOTAL 1995 818,165 180,626 556,028 18,647 8,673
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
</TABLE>
(a) Operating profit is shown before corporate general and administrative
expenses, investment income, interest expense and income taxes.
<PAGE> 1
EXHIBIT 13b
HIGHLIGHTS BY QUARTER
Fiscal Years 1994 and 1995 (in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
EARNINGS COMMON STOCK
BEFORE EARNINGS ----------------------------
OPERATING GROSS INCOME NET PER DIVIDENDS PRICE RANGE
QUARTER REVENUES PROFIT TAXES EARNINGS SHARE PER SHARE HIGH LOW
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
======== ======== ======== ======== ===== ====
1995
First $198,372 $ 90,313 $ 41,001 $ 25,392 $ .30 $.10 23 3/8 17 5/8
Second 201,272 91,584 43,366 27,215 .32 .10 25 7/8 21 5/8
Third 198,440 90,088 39,017 24,479 .29 .11 24 1/8 21 3/4
Fourth 220,081 100,045 48,720 31,025 .37 .11 25 1/4 23
-------- -------- -------- -------- ----- ----
Total Year $818,165 $372,030 $172,104 $108,111 $1.28 $.42
======== ======== ======== ======== ===== ====
</TABLE>
10
<PAGE> 1
<TABLE>
Ten Year Financial Summary EXHIBIT 13c
Years Ended May 31,
FINANCIAL STATEMENTS (dollars in thousands, except per share data) 1995 1994
AND SUMMARIES -----------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING RESULTS
8 Ten Year Financial Summary Operating revenues ............................ $818,165 $739,520
10 Industry Segment Information Earnings before income taxes .................. 172,104 147,795
10 Highlights by Quarter As a percent of operating revenues .......... 21.0% 20.0%
11 Financial Statements Net earnings .................................. 108,111 94,246
17 Auditors' Report As a percent of operating revenues .......... 13.2% 12.7%
17 Management's Report Per share (a) ............................... 1.28 1.10
18 Management's Review
FINANCIAL POSITION
Current assets ................................ 449,849 402,937
Total assets .................................. 556,028 493,748
Current liabilities ........................... 55,461 47,916
Long-term debt, less current portion .......... 6,500 6,500
Working capital ............................... 394,388 355,021
Shareholders' equity .......................... 473,598 423,199
Key ratios/percentages:
Current assets to current liabilities ....... 8.1 to 1 8.4 to 1
Net earnings as a percent of average
shareholders' equity ...................... 24.1% 22.9%
Ratio of shareholders' equity to debt at
year-end .................................. 72.9 to 1 65.1 to 1
OTHER DATA (a)
Price range of common stock:
High ............................................ 25 7/8 29 3/4
Low ............................................. 17 5/8 20 1/2
Cash dividends per share ...................... .420 .380
<FN>
(a) After giving effect to 3-for-2 stock splits in December 1987, 1989 and 1992.
</TABLE>
8
<PAGE> 2
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989 1988 1987 1986
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$690,853 $640,838 $637,130 $626,243 $596,146 $528,159 $459,000 $435,040
138,229 124,753 117,157 119,447 110,450 103,487 86,672 76,079
20.0% 19.5% 18.4% 19.1% 18.5% 19.6% 18.9% 17.5%
88,224 78,835 74,718 74,715 69,704 64,029 48,280 41,377
12.8% 12.3% 11.7% 11.9% 11.7% 12.1% 10.5% 9.5%
1.02 .91 .86 .86 .75 .65 .48 .41
384,307 336,518 277,587 250,220 214,625 292,700 263,972 233,252
466,060 407,417 348,666 320,807 277,833 354,817 325,569 299,628
48,218 44,284 38,599 51,049 45,626 42,519 35,199 34,121
6,500 6,500 6,500 6,500 6,503 6,561 6,662 6,759
336,089 292,234 238,988 199,171 168,999 250,181 228,773 199,131
398,459 344,947 292,078 251,319 212,434 289,026 266,888 239,622
8.0 to 1 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
23.7% 24.8% 27.5% 32.2% 27.8% 23.0% 19.1% 18.6%
61.3 to 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
30 3/4 24 1/8 21 18 1/4 14 3/4 14 1/2 11 7/8 10 1/2
20 5/8 17 3/8 14 13 1/8 11 1/4 9 3/8 7 1/2 5 5/8
.340 .307 .28 .240 .196 .154 .124 .113
</TABLE>
9
<PAGE> 1
MANAGEMENT'S REVIEW EXHIBIT 13d
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS
1995 VERSUS 1994 -- Operating revenues of
$818,165,000 were $78,645,000, or 11%, higher than
the results of a year ago. The increase in revenues
reflects good demand, expanded product offerings, high
levels of product availability and business building
activities, including further development of international
markets, in both business segments.
Other income increased $1,779,000, mainly due to
increased investment income on a higher level of cash
and temporary investments. Cost of sales of
$446,135,000 increased 11%, in line with the revenue
gain. Selling, administrative and general expenses of
$196,477,000 increased only 5%. The success of the
Company's ongoing efforts to manage expense growth
relative to revenue growth resulted in an overall lower
expense to sales ratio, while maintaining higher levels of
payroll and operating activities required to support the
growth in sales.
Income taxes were up 20%, reflecting slightly higher
effective federal and foreign tax rates on the earnings
gains. The above-noted factors resulted in a 15% gain in
net earnings and a 16% increase in net earnings per
share.
1994 VERSUS 1993 -- Operating revenues of
$739,520,000 were 7%, or $48,667,000, higher than
fiscal 1993, 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, net
earnings per share rose 8% to $1.10 in 1994 from $1.02
in 1993.
LIQUIDITY, CAPITAL RESOURCES AND CASH FLOWS
(FINANCIAL CONDITION)
The Company continues to maintain a solid financial
condition. At May 31, 1995, working capital was
$394,388,000 compared with $355,021,000 at
May 31, 1994. The ratio of current assets to current
liabilities was 8.1 to 1 at May 31, 1995. 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 distribution 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 8onds continues to
represent less than 2% of total capitalization.
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.
The Company expects that net earnings generally will
provide sufficient cash to meet the Company's presentiy
anticipated need for cash, including funds for investing
and financing activities.
18
<PAGE> 2
MANAGEMENT'S REVIEW
(continued)
--------------------------------------------------------------------------------
Net cash used in investing activities includes capital
expenditures to maintain and enhance operating
capabilities and for facilities necessary to better serve
customers. Fiscal 1995 net property, plant and
equipment additions of $18,425,000 were higher than
amounts invested in fixed asset additions in previous
years. Included in 1995 were expenditures toward the
completion and equipping of a new distribution facility
for the Electronics Distribution Group, a new office
building in the United Kingdom for our General Products
Group and additional computer systems capability
throughout the Company. Fiscal 1996 capital
expenditures will include normal purchases to equip,
maintain and enhance operating capabilities and
expenditures associated with a multi-year project to
upgrade computer systems to take advantage of new
information software and technology.
Investing activities also include the investment of
certain funds being retained for future business use. Like
cash and cash equivalents, these temporary investments
are invested 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 1995, temporary investments increased
$29,108,000 as a result of cash provided by operating
activities, less additions to property, plant and equipment
and financing activities.
Net cash used in financing activities for 1995, 1994
and 1993 included dividends paid to shareholders of
$35,577,000, $32,629,000 and $29,437,000,
respectively. The Company from time to time, in
response to unsolicited offers of 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 1995, the
Company purchased approximately 1,333,000 of its
shares for $30,899,000. 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.
19
<PAGE> 1
Exhibit 13e
<TABLE>
CONSOLIDATED BALANCE SHEET
Premier Industrial Corporation and Subsidiaries
<CAPTION>
May 31, 1995 and 1994 (in thousands of dollars) 1995 1994
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and equivalents $ 43,413 $ 42,122
Temporary investments 116,574 87,466
Receivables (less allowance for doubtful accounts
of $1,748 and $1,627, respectively) 115,037 107,911
Inventories (note 2) 164,238 155,261
Prepaid expenses and deferred income taxes 10,587 10,177
-------- --------
Total current assets 449,849 402,937
Property, plant and equipment, at cost:
Land and land improvements 7,172 6,421
Buildings and improvements 50,594 47,471
Equipment, furniture and fixtures 78,695 66,499
-------- --------
136,461 120,391
Less accumulated depreciation 73,733 67,807
-------- --------
62,728 52,584
Other assets, at cost less accumulated amortization 43,451 38,227
-------- --------
$556,028 $493,748
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Payables $ 28,136 $ 23,639
Compensation and related items 13,853 13,417
Income taxes 3,634 1,561
Other accrued liabilities 9,838 9,299
-------- --------
Total current liabilities 55,461 47,916
Deferred income taxes 20,469 16,133
Long-term debt (note 3) 6,500 6,500
Shareholders' equity (notes 4 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 87,076,327 87,076 87,076
Retained earnings 460,394 390,087
Foreign currency translation adjustment 1,384 221
Treasury shares at cost (3,073,732 and 2,130,567 shares, respectively) (75,256) (54,185)
-------- --------
473,598 423,199
-------- --------
$556,028 $493,748
======== ========
11
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 1
EXHIBIT 13f
CONSOLIDATED STATEMENT OF EARNINGS
Premier Industrial Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years Ended May 31, 1995, 1994 and 1993 (in thousands of dollars, except pershare data) 1995 1994 1993
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenues ......................................................................... $818,165 $739,520 $690,853
Other income, net .......................................................................... 5,568 3,789 4,159
-------- -------- --------
823,733 743,309 695,012
Costs and expenses:
Cost of sales ........................................................................... 446,135 400,313 367,194
Selling, administrative and general ..................................................... 196,477 186,934 181,392
Depreciation ............................................................................ 8,281 7,588 7,460
Amortization of other assets ............................................................ 392 375 385
Interest ................................................................................ 344 304 352
-------- -------- --------
651,629 595,514 556,783
-------- -------- --------
Earnings before income taxes ....................................................... 172,104 147,795 138,229
Income taxes (note 5) ................................................................... 63,993 53,549 50,005
-------- -------- --------
Net earnings ....................................................................... $108,111 $94,246 $88,224
======== ======= =======
Net earnings per share .................................................................. $ 1.28 $ 1.10 $ 1.02
======== ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 13g
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Premier Industrial Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years Ended May 31, 1995, 1994 and 1993 (in thousands of dollars, except pershare data) 1995 1994 1993
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital stock:
At beginning of year .................................................................... $ 87,076 $ 87,076 $ 58,175
Common stock split (note 4) ............................................................. -- -- 28,901
-------- -------- --------
At end of year ..................................................................... 87,076 87,076 87,076
-------- -------- --------
Retained earnings:
At beginning of year .................................................................... 390,087 332,498 302,499
Net earnings ............................................................................ 108,111 94,246 88,224
Cash dividends paid ($.42, $.38 and $.34 per share, respectively) ....................... (35,577) (32,629) (29,437)
Common stock split (note 4) ............................................................. -- -- (28,901)
Stock plans transactions ................................................................ (2,227) (4,028) 113
-------- -------- --------
At end of year ..................................................................... 460,394 390,087 332,498
-------- -------- --------
Foreign currency translation adjustment .................................................... 1,384 221 766
-------- -------- --------
Treasury shares at cost:
At beginning of year .................................................................... (54,185) (21,881) (17,015)
Purchase of treasury shares (1,332,903, 1,852,657
and 481,395 shares, respectively) .................................................... (30,899) (46,400) (13,686)
Issuance of shares under stock plans ................................................... 9,828 14,096 8,820
-------- -------- --------
At end of year ..................................................................... (75,256) (54,185) (21,881)
-------- -------- --------
$473,598 $423,199 $398,459
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
12
<PAGE> 1
EXHIBIT 13h
CONSOLIDATED STATEMENT OF CASH FLOWS
Premier Industrial Corporation and Subsidiaries
<TABLE>
<CAPTION>
Years Ended May 31, 1995, 1994 and 1993 (in thousands of dollars) 1995 1994 1993
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and equivalents at beginning of year .................................................. $ 42,122 $ 43,724 $ 39,450
-------- -------- --------
Cash flows from operating activities:
Net earnings ............................................................................ 108,111 94,246 88,224
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization ......................................................... 8,673 7,963 7,845
Deferred income taxes ................................................................. 2,322 1,412 1,180
Changes in:
Receivables ........................................................................ (7,126) (5,023) (7,418)
Inventories ........................................................................ (8,977) (23,777) (3,192)
Prepaid expenses ................................................................... 1,604 (2,987) (56)
Payables ........................................................................... 4,497 (2,334) 5,689
Other .............................................................................. (1,462) (3,171) (5,752)
-------- -------- --------
Net cash provided by operating activities ................................... 107,642 66,329 86,520
-------- -------- --------
Cash flows from investing activities:
Net additions to property, plant and equipment .......................................... (18,425) (12,177) (10,441)
Purchase of temporary investments ....................................................... (573,674) (736,923) (656,942)
Sale of temporary investments ........................................................... 544,566 750,316 624,110
Other ................................................................................... 58 (186) (4,783)
-------- -------- --------
Net cash provided by (used in) investing activities ......................... (47,475) 1,030 (48,056)
-------- -------- --------
Cash flows from financing activities:
Dividends ................................................................................ (35,577) (32,629) (29,437)
Purchase of treasury shares .............................................................. (30,899) (46,400) (13,686)
Proceeds from stock plans ................................................................ 7,600 10,068 8,933
-------- -------- --------
Net cash used in financing activities ........................................ (58,876) (68,961) (34,190)
-------- -------- --------
Cash and equivalents at end of year ......................................................... $43,413 $42,122 $43,724
======= ======= =======
Supplemental disclosure of cash flow information:
Interest and dividends received .......................................................... $ 5,597 $ 3,751 $ 4,401
Income taxes paid, net of refunds ........................................................ 58,485 51,319 46,096
</TABLE>
See accompanying notes to consolidated financial statements.
13
<PAGE> 1
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS EXHIBIT 13i
Premier Industrial Corporation and Subsidiaries
May 31, 1995, 1994 and 1993
--------------------------------------------------------------------------------
(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) SHORT-TERM INVESTMENTS
Funds which are retained for future use in the business are
generally invested for periods not to exceed one year.
Investments with maturities at date of purchase of three
months or less are considered cash equivalents.
Effective June 1, 1994, the Company adopted Statement
of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities.
There was no impact resulting from the adoption of the
statement. Under this statement the Company's temporary
investments, comprised principally of U.S. and other
governmental obligations, are stated at approximate
market value and classified as "available-for-sale." There
were no material realized gains or losses from sales of
securities during the year.
(d) 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.
(e) 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.
(f) 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.
Adoption of Statement 109 had no material impact on the
Company's financial statements.
(g) EARNINGS PER SHARE
Earnings per share are based on the weighted average
number of common shares and common stock equivalents
outstanding during each year.
(h) 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% of total
inventory at current cost at May 31, 1995 and 1994,
respectively). If all inventory costs were determined on a
FIFO basis, inventories would have been $7,111,000 and
$6,636,000 higher than reported at May 31, 1995 and
1994, respectively.
(3) LONG-TERM DEBT
Long-term debt in 1995 and 1994 represents a $6,500,000
variable rate (3.75% at May 31, 1995) Industrial
Development Revenue Bond payable December 1, 2015.
(4) 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.
(5) INCOME TAXES
As discussed in note 1(f), 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.
14
<PAGE> 2
Components of income tax expense are as follows:
<TABLE>
<CAPTION>
Years Ended May 31,
-------------------------
1995 1994 1993
(in thousands) ------- ------- -------
<S> <C> <C> <C>
United States income taxes:
Current $50,117 $41,692 $38,006
Deferred 2,322 1,412 1,180
------- ------- -------
52,439 43,104 39,186
Foreign income taxes 3,037 2,724 3,207
State and local income taxes 8,517 7,721 7,612
------- ------- -------
$63,993 $53,549 $50,005
======= ======= =======
</TABLE>
The effective tax rate differed from the U.S. Federal
income tax rate as follows:
<TABLE>
<CAPTION>
Years Ended May 31,
-------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
U.S. Federal income tax rate 35.0% 35.0% 34.0%
State and local income taxes, net of
Federal benefit 3.2 3.4 3.6
Other, net (1.0) (2.2) (1.4)
---- ---- ----
37.2% 36.2% 36.2%
==== ==== ====
</TABLE>
Deferred tax assets and liabilities are comprised of the
following:
<TABLE>
<CAPTION>
May 31,
--------------------
(in thousands) 1995 1994
------- --------
<S> <C> <C>
Assets:
Inventory $ 2,101 $ 2,166
Other 2,849 2,814
------- -------
$ 4,950 $ 4,980
======= =======
Liabilities:
Tax lease $10,373 $10,345
Depreciation 1,778 1,682
Pension 5,353 3,402
Oil and gas 1,066 1,038
Other 2,989 2,759
------- -------
$21,559 $19,226
======= =======
</TABLE>
No valuation allowance was required for the Company's
deferred tax assets.
(6) STOCK OPTIONS
Under the Company's 1973 Stock Option Plan as
amended, 2,760,340 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 1,308,842, 1,453,311 and
1,662,041 at May 31, 1995, 1994 and 1993, respectively.
Details pertaining to this plan for 1995, 1994 and 1993
are as follows:
<TABLE>
<CAPTION>
Number of shares
(Option price range)
----------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Outstanding
at beginning
of year 1,696,742 2,003,058 2,017,496
($14.83-$28.13) ($12.94-$24.50) ($12.94-$19.42)
Granted 637,335 539,835 678,338
($23.75) ($28.13) ($22.75-$24.50)
Exercised (389,713) (515,046) (493,536)
($14.83-$28.13) ($12.94-$24.50) ($12.94-$22.75)
Cancelled (492,866) (331,105) (199,240)
($14.83-$28.13) ($12.94-$28.13) ($12.94-$22.75)
------------- ------------- -------------
Outstanding
at end of
year 1,451,498 1,696,742 2,003,058
($15.17-$28.13) ($14.83-$28.13) ($12.94-$24.50)
Exercisable
next fiscal
year 373,073 464,709 527,125
</TABLE>
15
<PAGE> 3
NOTES
(continued)
(7) 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.
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Pension cost is summarized
as follows:
Service cost $ 2,206 $ 2,185 $ 2,092
Interest cost on projected
benefit obligation 3,680 3,436 3,104
Actual return on plan assets (13,411) (7,254) (11,765)
Net amortization and deferral 2,080 (2,864) 2,904
-------- -------- --------
Net pension benefit $ (5,445) $ (4,497) $ (3,665)
======== ======== ========
The funded status of the plans
at May 31, was as follows:
Actuarial present value of:
Vested plan obligation $(38,983) $(35,350) $(32,215)
Non-vested plan obligation (1,773) (1,736) (1,727)
-------- -------- --------
Accumulated benefit
obligation $(40,756) $(37,086) $(33,942)
======== ======== ========
Projected benefit obligation $(51,831) $(47,598) $(44,385)
Plan assets at fair value 116,540 104,545 98,662
-------- -------- --------
Plan assets in excess of
projected benefit obligation 64,709 56,947 54,277
Unrecognized:
Net gain (38,924) (35,580) (36,955)
Prior service cost 1,327 1,253 1,767
Initial net asset (12,042) (13,119) (14,246)
-------- -------- --------
Net pension asset (included
in Other Assets) $ 15,070 $ 9,501 $ 4,843
======== ======== ========
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 $11,046,000 of the Company's common stock at
May 31, 1995, and corporate and government bonds.
(8) SEGMENT INFORMATION
Reference is made to page 10 for the years 1995, 1994
and 1993 for information regarding operating revenues,
operating profit, assets, capital expenditures, and
depreciation and amortization by industry segments.
The following is information about United States and
international operations:
<TABLE>
<CAPTION>
Years Ended May 31,
--------------------------------------
(in thousands) 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating revenues:
United States $738,639 $672,187 $625,176
International 79,526 67,333 65,677
-------- -------- --------
$818,165 $739,520 $690,853
======== ======== ========
Operating profit:
United States $167,482 $146,078 $134,378
International 13,144 12,064 11,839
-------- -------- --------
$180,626 $158,142 $146,217
======== ======== ========
Assets:
United States $529,332 $471,934 $446,140
International 26,696 21,814 19,920
-------- -------- --------
$556,028 $493,748 $466,060
======== ======== ========
</TABLE>
Operating profit contribution is reconciled to earnings
before income taxes as follows:
<TABLE>
<CAPTION>
Years Ended May 31,
--------------------------------------
(in thousands) 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating profit contribution $180,626 $158,142 $146,217
Investment income 6,448 4,307 4,729
Corporate expenses (14,626) (14,350) (12,365)
Interest expense (344) (304) (352)
-------- -------- --------
Earnings before income taxes $172,104 $147,795 $138,229
======== ======== ========
</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.
(9) QUARTERLY FINANCIAL DATA (UNAUDITED)
The quarterly financial data appears on page 10 of the
Annual Report to Shareholders.
16
<PAGE> 1
AUDITORS' REPORT
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, 1995 and 1994 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, 1995. 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 lndustrial
Corporation and subsidiaries at May 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the years in the three-year
period ended May 31, 1995, in conformity with generally accepted accounting
principles.
/s/KPMG Peat Marwick LLP
---------------------------
KPMG PEAT MARWICK LLP
Cleveland, Ohio
July 20, 1995
17
<PAGE> 1
EXHIBIT 21
PREMIER INDUSTRIAL CORPORATION
Subsidiaries of the Registrant
As of May 31, 1995, the subsidiaries of Premier Industrial Corporation, other
than those which in the aggregate would not constitute a "significant
subsidiary," were as follows:
<TABLE>
<CAPTION>
State or other jurisdiction of
Name incorporation or organization
---- ------------------------------
<S> <C>
D-A Lubricant Company, Inc. Indiana
Newark Electronics Corporation Illinois
Premierco Service Corporation Ohio
PRE Co., Inc. Delaware
MCM Electronics, Incorporated Ohio
Premier Foreign Sales Corporation, Inc. Virgin Islands
Premier Fastener, Limited Ontario, Canada
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)
Premier Industrial International, Inc. Ohio
</TABLE>
(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.
<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 report dated July
20, 1995, relating to the consolidated balance sheets of Premier Industrial
Corporation and subsidiaries as of May 31, 1995 and 1994, 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, 1995, which report
appears in the May 31, 1995 annual report on Form 10-K of Premier Industrial
Corporation.
/s/KPMG PEAT MARWICK LLP
------------------------
KPMG PEAT MARWICK LLP
Cleveland, Ohio
August 23, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> MAY-31-1995
<CASH> 43,413
<SECURITIES> 116,574
<RECEIVABLES> 116,785
<ALLOWANCES> (1,748)
<INVENTORY> 164,238
<CURRENT-ASSETS> 449,849
<PP&E> 136,461
<DEPRECIATION> (73,733)
<TOTAL-ASSETS> 556,028
<CURRENT-LIABILITIES> 55,461
<BONDS> 6,500
<COMMON> 87,076
0
0
<OTHER-SE> 386,522
<TOTAL-LIABILITY-AND-EQUITY> 556,028
<SALES> 818,165
<TOTAL-REVENUES> 823,733
<CGS> 446,135
<TOTAL-COSTS> 642,612
<OTHER-EXPENSES> 8,673
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 344
<INCOME-PRETAX> 172,104
<INCOME-TAX> 63,993
<INCOME-CONTINUING> 108,111
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108,111
<EPS-PRIMARY> 1.28
<EPS-DILUTED> 1.28
</TABLE>
