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FORM 10 - K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
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COMMISSION FILE NUMBER 0-15582
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MINUTEMAN INTERNATIONAL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS ARTICLES OF INCORPORATION)
<TABLE>
<S> <C>
ILLINOIS 36-226931
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
111 SOUTH ROHLWING ROAD, ADDISON, ILLINOIS 60101
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code 708-627-6900
---------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common stock, no par value
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TITLE OF EACH CLASS)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 of 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes No
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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 voting stock held by
non-affiliates of the registrant as of March 1, 1995:
Common stock, no par value, $6,546,000
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The number of shares outstanding of the issuer's class of common
stock as of March 1, 1995:
Common stock, no par value, 3,568,385 shares
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report for the year ended December 31,
1994, are incorporated by reference into Parts I and II.
Portions of the Proxy Statement for the Annual Shareholders
Meeting to be held April 21, 1995, are incorporated by reference into Part III.
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PART I
Item 1. BUSINESS
General Development of Business
Minuteman International, Inc. an Illinois corporation incorporated in 1951 as
American Cleaning Equipment Corporation, manufactures and distributes one of
the most complete lines of commercial and industrial vacuums, floor and carpet
care, chemical cleaning and coating products and complementary accessories in
the United States and Canada. Its products are exported to countries around
the world.
At the Annual Shareholders' Meeting on April 15, 1994, the Company changed its
corporate name from Hako Minuteman, Inc. to Minuteman International, Inc. to
generate better corporate recognition in the industry and better facilitate the
Company's expansive product and service lines worldwide.
Products
The Company's product line consists of hard surface floor care equipment,
carpet care and maintenance products, sweepers, scrubbers, commercial and
industrial specialized vacuums, and complementary accessories. Included in the
specialized vacuum area are the hazardous location/explosive environment
vacuums and the clean/room nuclear vacuums.
Multi-Clean, the chemical division of Minuteman International, Inc. formulates,
manufactures and distributes over 65 chemical cleaning and floor coating
products including multi-surface cleaners and degreasers, finishes and waxes,
carpet care products, concrete and wood coatings and finishes, plus a full
array of specialized chemicals.
Parker Sweeper Company, acquired in 1992, manufactures a full line of litter
vacuums as well as an extensive array of lawn and turf debris handling
equipment. Effective December 30, 1994, Parker Sweeper Company, formerly a
wholly-owned subsidiary, was merged into the Company.
Additional information pertaining to new products is incorporated herein by
reference on pages 5 through 13 of the 1994 Annual Report for the year ended
December 31, 1994.
Marketing and Distribution
The Company manufacturers and distributes its products throughout the world.
The distribution process in the United States is primarily through the more
than 300 active dealers and its two sales branches. The Company distributes
its products in Canada through Minuteman Canada, Inc. a wholly-owned
subsidiary. The Company sells its
3
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products to Hako-Werke subsidiaries in Japan, Australia and certain European
countries. Export of other products is conducted through the headquarter
office in Addison, Illinois. Sales to affiliated and unaffiliated customers in
foreign countries aggregated to $9,037,000, $8,518,000 and $6,630,000 in 1994,
1993 and 1992, respectively. The Company's equipment is sold under Minuteman
International, Minuteman and Parker Sweeper trade names. The chemical cleaning
and coating products are manufactured by Minuteman International, Inc. and
sold under Multi-Clean trade name. Substantially all of the Company's
commercial equipment is manufactured at its Illinois production facilities in
Addison and Hampshire. All of the Company's industrial equipment is imported
from Germany. All of the Company's chemical cleaning and coating products are
produced at its Shoreview, Minnesota facility.
The manufacture, production and demand for the Company's products and services
are not considered to be seasonal in nature. No part of the Company business
depends on any one single customer, the loss of which would adversely affect
the Company. The Company does not believe any material portion of its business
to be subject to renegotiation of profits or termination of contracts at the
election of the Government.
Raw Materials
The Company purchases castings, electric motors, cord sets, switches, brushes,
wheels, injection molded plastics, sheet steel, paint pigment, chemicals and
other raw materials from a number of suppliers. The Company considers its
ability to obtain raw materials and supplies to be readily available. It does
not believe that the loss of any supplier would adversely affect the Company's
business.
Competition
Minuteman International, Inc. competes with many regional, national and
international manufacturers throughout the industry. These competitive markets
include industrial and plant maintenance, sanitation supply, critical filter,
floor coating and chemical fields. The principal competitive factors within
each of these markets are product quality, reliability, service and fair price.
The Company believes it will continue to compete effectively in the marketplace
and continue its sales growth in the future.
Patents and Trademarks
Currently, the Company has 26 United States and 13 international patents.
Although the Company generally seeks to obtain patents where appropriate, it
does not consider the successful conduct of its business in general to be
dependent on any of its patents or patent applications. By agreement dated
March 1, 1994, with Hako-Werke, the Company agreed to discontinue the use of
the "Hako" trademark on any products intended for sale in any country. It was
further agreed that the Company and Hako-Werke would be free to market and
distribute each of their products throughout the world, however, Hako-Werke
would not export products bearing the trademark "Hako" into North America
before April 30, 1996.
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Minuteman International, Inc. is owner of the United States and Canadian
registrations for the Multi-Clean and Parker Sweeper trade names. The
Minuteman trademark is registered in the United States and Canada. The Parker
trademark is registered in the United States and Canada.
Working Capital
The Company had working capital of 17.2 Million at December 31, 1994. Cash,
cash equivalents and short term investments represented 18.5% of the working
capital which when not in use, is invested in bank certificates of deposit,
Eurodollar certificate investments, a managed portfolio of high quality,
variable rate notes and tax exempt seven day bonds.
Backlog
The Company's backlog of orders was approximately $3.0 Million at December 31,
1994, as compared with approximately $2.0 Million at December 31, 1993. The
Company anticipates that substantially all of the 1994 backlog will be
delivered during 1995. In the opinion of Management, fluctuations in the
amount of its backlog are not necessarily indicative of intermediate or
long-term trends in the Company's business.
Research and Development
The Company expended approximately $861,000, $749,000 and $701,000 in research
and development activities during 1994, 1993 and 1992 respectively.
Employees
The Company has 236 full time employees. The facilities in Addison, Illinois
and Shoreview, Minnesota, have approximately 105 hourly paid employees who are
covered by local collective bargaining agreements. These agreements expire in
May 1995 and October 1995, respectively. The Company believes that the current
employee relations are excellent. The Company plans to hire additional
employees during 1995 as are justified by the needs of the business.
Environmental Matters
The Company's operations are subject to various federal, state and local laws
and regulations regarding the environmental aspects of the manufacture and
distribution of chemical components. The Company believes that it is currently
in compliance in all material respects with the environmental laws and
regulations affecting its operations. Capital expenditures for the purpose of
environmental protection are not expected to be material in amount for 1995 or
thereafter.
5
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Item 2. PROPERTIES
The Company owns or leases the following properties in its operations:
<TABLE>
<CAPTION>
Owned
Location Size (sq. ft.) Use or Leased
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<S> <C> <C> <C> <C>
Addison, IL 112,230 (Bldg.) Office, manufacturing
254,300 (Land) Warehouse, sales, service Owned
Villa Park, IL 6,135 (Bldg.) Warehouse, sales service Leased
Hampshire, IL 50,000 (Bldg.) Manufacturing, warehouse Owned
871,200 (Land) Owned
St. Paul, MN 51,350 (Land) Vacant Land Owned
Shoreview, MN 34,952 (Bldg.) Office, manufacturing,
133,830 (Land) Warehouse, sales, service Owned
Glendale, CA 7,320 (Bldg.) Warehouse, sales, service
15,000 (Land) Owned
Dollard Des Ormeaux, Quebec
9,000 (Bldg.) Warehouse, sales, service Leased
Mississauga, Ontario
5,120 (Bldg.) Warehouse, sales, service Leased
</TABLE>
Approximately 90% of the Company's Addison and Hampshire, Illinois facilities
and 85% of the Company's Shoreview, Minnesota facility are devoted to
manufacturing.
In October, 1993, the Company purchased 20 acres of vacant land in Hampshire,
Illinois. In July of 1994, a 50,000 square foot facility was completed and was
fully operational in December 1994 when manufacturing of Parker Sweeper
products were relocated from the former Springfield, Ohio location. With the
acquisition of this property, the Company anticipates expanding the services
currently provided.
The Villa Park, Illinois lease term expires December 31, 1995. The Dollard des
Ormeaux, Quebec lease term was renewed through December 31, 1997. The
Mississauga, Ontario lease term expires on January 31, 1998. The Company
believes that failure to obtain the renewal of any lease would not have a
material adverse effect on its business.
6
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During 1994 the Company sold a portion of the St. Paul manufacturing facility
and recognized a gain on the sale. The Company has listed the remainder of
this facility for sale and does not anticipate that a loss will result upon its
disposition.
Item 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings arising in the ordinary
course of its business. The outcome of these matters will not, in the opinion
of Management, have a material adverse effect on the business or financial
condition of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December 31, 1994, the
Company did not submit any matter to a vote of shareholders through the
solicitation of proxies or otherwise.
Part II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Common stock market prices and dividends on page 21 of the Annual Report for
the year ended December 31, 1994, are incorporated herein by reference.
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
The Selected Consolidated Financial Data on page 22 and the Notes to
Consolidated Financial Statements on pages 19 through 21 of the Annual Report
for the year ended December 31, 1994, are incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" on pages 14 and 15 of the Annual Report for the year ended December
31, 1994, are incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements included on pages 16 through 18 and the
Notes to Consolidated Financial Statements on pages 19 through 21 of the Annual
Report for the year ended December 31, 1994, are incorporated herein by
reference.
Quarterly Results of Operations on page 21 of the Annual Report for the year
ended December 31, 1994, is incorporated herein by reference.
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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with the Company's auditors on
accounting and financial disclosure.
Part III
Item 10. DIRECTORS AND OFFICERS OF THE COMPANY
The information contained on pages 2 through 4 of Minuteman International,
Inc.'s Proxy Statement dated March 15, 1995, with respect to directors and
executive officers of the Company is incorporated herein by reference in
response to this item.
Item 11. EXECUTIVE COMPENSATION
The information contained on pages 5 and 6 of Minuteman International Inc.'s
Proxy Statement dated March 15, 1995, with respect to Executive Compensation
and transactions, is incorporated herein by reference in response to this item.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The information contained on page 2 of Minuteman International Inc.'s Proxy
Statement dated March 15, 1995, with respect to security ownership of certain
beneficial owners and management, is incorporated herein by reference in
response to this item.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained on pages 2 through 7 of Minuteman International
Inc.'s Proxy Statement dated March 15, 1995, with respect to certain
relationships and related transactions, are incorporated herein by reference in
response to this item.
Part IV.
Item 14. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULE AND
REPORTS ON FORM 8-K
(a) (1. and 2.) Financial Statements
The financial statements listed in the accompanying index to financial
statements are filed herewith.
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(a) (3) and (c) Exhibits
The Exhibits required by Item 601 of Regulation S-K and filed
herewith are listed in the Exhibit Index which follows the
financial statements and immediately precedes the exhibits
filed.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed in the fourth quarter of 1994;
(d) Financial Statement Schedule
The financial statement schedule listed in the accompanying index
to financial statements is filed herewith.
9
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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.
Minuteman International, Inc.
-----------------------------
(Registrant)
Date: March 15, 1995 By: /s/ JEROME E. RAU
------------------------------
Jerome E. Rau, President and
Chief Executive Officer
By: /s/ THOMAS J. NOLAN
------------------------------
Thomas J. Nolan,
Chief Financial Officer,
Secretary and Treasurer
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
/s/ JEROME E. RAU
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Jerome E. Rau
President, Chief Executive Officer,
and Director
/s/ TYLL NECKER
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Tyll Necker, Director
/s/ FREDERICK W. HOHAGE
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Frederick W. Hohage, Director
/s/ FRANK REYNOLDS
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Frank Reynolds, Director
/s/ JAMES C. SCHRADER
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James C. Schrader, Jr. Director
10
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ANNUAL REPORT ON FORM 10-K
ITEM 14(a) (1) AND (2), (c) and (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS SCHEDULE
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULE
YEAR ENDED DECEMBER 31, 1994
MINUTEMAN INTERNATIONAL, INC.
ADDISON, ILLINOIS
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REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Minuteman International, Inc.
We have audited the accompanying consolidated balance sheets of Minuteman
International, Inc. (formerly Hako Minuteman, Inc.) and subsidiaries as of
December 31, 1994 and 1993 and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1994. Our audits also includes the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule 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 consolidated financial position of
Minuteman International, Inc. (formerly Hako Minuteman, Inc.) and subsidiaries
at December 31, 1994 and 1993, and consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statements schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Chicago, Illinois
February 10, 1995
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ITEM 14(a) (1) AND (2)
LIST OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
MINUTEMAN INTERNATIONAL, INC. AND SUBSIDIARIES
December 31, 1994
The following consolidated financial statements of Minuteman International,
Inc. and subsidiaries, included in the Annual Report of the Registrant to its
shareholders for the year ended December 31, 1994, are incorporated by
reference in Item 8:
Consolidated Balance Sheets - December 31, 1994
and 1993
Consolidated Statements of Income - Years ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Shareholders' Equity -
Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flow -
Years Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of Minuteman
International, Inc. and subsidiaries are included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts 14
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
13
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
MINUTEMAN INTERNATIONAL, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
- ------------------------------------------------------------------------------------------------------------------------------------
Additions Deductions
---------------------------------------- ----------
(1)
Charged to
Balance at Charged to Other
Beginning of Costs and Accounts -
Description Period Expenses Describe Describe
- ----------- ---------------- -------- -------- --------
<S> <C> <C> <C> <C>
Year Ended December 31, 1994
- ----------------------------
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $385,000 213,000 ------ 198,000
Year Ended December 31, 1993
- ----------------------------
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $180,000 281,000 ------ 76,000
Year Ended December 31, 1992
- ----------------------------
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $194,000 115,000 ----- 129,000
</TABLE>
<TABLE>
<CAPTION>
COL. E
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Balance
at End of
Description Period
- ----------- ---------
<S> <C>
Year Ended December 31, 1994
- ----------------------------
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $400,000
Year Ended December 31, 1993
- ----------------------------
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $385,000
Year Ended December 31, 1992
- ----------------------------
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $180,000
</TABLE>
Note 1 - Uncollectible accounts written off, net of recoveries.
14
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MINUTEMAN INTERNATIONAL, INC.
EXHIBIT INDEX
-------------------
(Pursuant to Item 601 of Regulations S-K)
NO. DESCRIPTION AND PAGE OR INCORPORATION REFERENCE
Certificate of Incorporation and By-Laws
3 (a) Certificate of Incorporation (incorporated herein by reference to
Exhibit 3 (a) of the Registrant's Form S-18 Registration Statement,
Registration Number 33-11858).
3 (b) By-laws (incorporated herein by reference to Exhibit 3 (b) of the
Registrant's Form S-18 Registration Statement, Registration Number
33-11858).
Instruments Defining the Rights of Security Holders,
Including Indentures
4 (a) Specimen Certificate for Common Stock, no par value (incorporated
herein by reference to Exhibit 4 of the Registrant's For S-18
Registration Statement, Registration Number 33-11858).
Material Contracts
10 (a) Employment Agreement dated as of January 20, 1987, between the
Company and Jerome E. Rau (incorporated herein by reference to
Exhibit 10 (a) of the Registrant's Form S-18 Registration
Statement, Registration Number 33-11858).
10 (b) Amendment to Employment Agreement dated as of February 27, 1990,
between the Company and Jerome E. Rau (incorporated herein by
reference to Exhibit 10 (h) at Page 20 of Form 10K Annual Report
for fiscal year ended December 31, 1989).
10 (c) Specimen form of Employment Agreement between the Company and its
executive officers (with the exception of the president)
(incorporated herein by reference to Exhibit 10 (c) at Page 18 of
Form 10K Annual Report for fiscal year ended December 31, 1991).
10 (d) Employment Agreement dated as of March 22, 1990, between the
Company and Michael Gravelle (incorporated herein by reference to
Exhibit 10 (d) at Page 22 of Form 10K Annual Report for fiscal year
ended December 31, 1991).
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10 (e) Agreement dated as of February 9, 1987, with respect to trademark
between the Company and Hako-Werke International GmbH (incorporated
herein by reference to Exhibit 10 (c) of the Registrant's Form S-18
Registration Statement, Registration Number 33-11858).
10 (f) Agreement dated March 1, 1994 with respect to worldwide
distribution/marketing and trademarks between the Company and
Hako-Werke International GmbH. Incorporated herein by reference to
Exhibit 10 (f) at Page 18 of this Form 10-K.
11 Statement re. Computation of Per Share Earnings
Statement re. computation of per share earnings. See Note B of the
Notes to Consolidated Financial Statements on Page 19 of the Annual
Report for the year ended December 31, 1994 (incorporated herein by
reference).
13 Annual Report to Security Holders
The Company's Annual Report to Shareholders for the year ended
December 31, 1994, is incorporated herein by reference.
Subsidiaries of the Registrant
22 (a) Subsidiaries of the Registrant
(included herein at Page 21).
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Minuteman International, Inc. will furnish any of the aforementioned exhibits
indicated above to requesting security holders upon written request.
16
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MINUTEMAN(R)
[IMAGE OF GLOBE]
Minuteman International, Inc. 1994 Annual Report
<PAGE> 2
M I S S I O N S T A T E M E N T
Minuteman will continue its steadfast commitment to provide superior floor
cleaning equipment and chemicals combined with a single-minded focus to
anticipate and answer our customers' needs. This commitment, combined
with the ongoing development of new and more cost effective methods of
manufacturing and product design, will keep our customers on the leading edge
of floor care technology into the next century.
Our new logo retains the equity in our old logo using the familiar corporate
colors -- orange, black and white -- yet is intensified with a strong,
forward-moving typeface and is underscored by a bold, stable "front runner"
horizontal line.
MINUTEMAN INTERNATIONAL, INC.
UNCOMMON BENEFITS.
UNIQUE INDUSTRY STATUS.
GOOD MONEY MANAGEMENT.
As other companies in our industry may become leveraged to better compete,
Minuteman remains debt-free. This unusual position has afforded us the ability
to quickly and efficiently respond to industry demands for new and better
products as well as provide faster, more effective solutions to customer's
needs.
[14-YEAR SUMMARY NET SALES GRAPH]
MISSION DRIVEN.
QUALITY FOCUSED.
FRONT RUNNING TO THE NEXT CENTURY.
MINUTEMAN(R)
...BECOMES NEW CORPORATE NAME.
On April 15, 1994, Hako Minuteman officially changed its name to
Minuteman International, Inc. This name change creates a distinct identity for
Minuteman, separate from that of our German shareholder, Hako Werke, and
further supports Minuteman's position as a worldwide leader -- winning floor
care markets with finesse, vision and exceptional products.
DURABLE, HIGH QUALITY CLEANING PRODUCTS
Our name change simply enhances our durable, high quality floor care
products and cleaning chemicals. We're still headquartered in Addison, Illinois
and manufacture exclusively from our own custom designed manufacturing plants.
NEW IDENTITY CREATES NEW OPPORTUNITIES
There are practical reasons to undergo a name change and a new
"look". It is more distinct. It is recognizable. It conveys a straightforward
message--strength and stability. Most importantly, for our domestic markets, it
ushers in an era of capitalization on the fact that Minuteman products are
designed and manufactured entirely in the United States. Dropping "Hako", which
was often confused as a foreign corporation, and changing our name to
"Minuteman", will make this fact substantially more clear, enhancing sales
volume in many domestic markets.
IMPROVED GROWTH IN EUROPEAN MARKETS
Separate from the "Hako" name, Minuteman is free to venture into
previously
<PAGE> 3
************************************************
PRODUCT INNOVATION AND BEYOND
Minuteman's innovation and vision extends beyond
high quality product development. Responsive
to environmental and safety issues, Minuteman
created a 7-acre lake as part of the Hampshire
site development which allows the plant to pump
their own water for the indoor fire sprinker
system. The custom designed plant also offers
greater vertical cubic foot capacity in
anticipation of storing today's large, plastic
components.
***********************************************
Chicago, Milwaukee, St. Paul and Pacific Railroad
Plan for additional expansion Seven acre lake provides
in 50,000 square foot water for hydrant
increments for a 200,000 [FIGURE 1] and fire sprinkler system.
square foot total facility. [PLANT DIAGRAM]
Twenty acres total.
New 50,000 square foot
plant currently assembling Temporary walls.
Parker products, tank
vacuums and the MPV. Permanent walls.
Four bay loading dock
and one ground level door.
U.S. ROUTE 20
******************************************************************************
closed European markets without confusion between Minuteman and Hako Werke. We
see tremendous potential in Europe for our ergonomically designed automatic
scrubbers and floor machines, rugged tank vacuums and carpet equipment.
VISION, QUALITY CONTROL, EXCEPTIONAL
PRODUCTS DRIVE DESIGN OF HAMPSHIRE PLANT
Minuteman has earned a unique distinction in the floor care industry, one
that has allowed us to achieve remarkable product results--the ability to be
consistently innovative and forward-thinking while continuing to design and
manufacture exceptionally high quality products.
Minuteman's new, ultra-modern 50,000 square-foot manufacturing plant,
located just west of Chicago on 20 acres of rolling countryside in Hampshire,
Illinois, exemplifies this unique distinction. Designed by Minuteman to allow
for up to 200,000 square-feet of manufacturing space, the Hampshire plant was
designed with a vision--one that would allow the company to custom design and
expand as needed in 50,000 square foot increments. This custom design offers
30-40% more manufacturing efficiency, increases quality control and allows
Minuteman to manufacture some of its more popular products at the Hampshire
site including: Parker lawn and turf maintenance equipment, the Multi-Purpose
Vacuum (MPV(TM)) and tank vacuums.
[PHOTO]
START-TO-FINISH PRODUCT CONTROL AND COMMITMENT
Setting new standards is commonplace for Minuteman. Our long-standing dedication
to develop high quality products precisely meshes with our strict, hands-on
control of the manufacturing process. This obsession with quality affords
Minuteman unique industry status--one of providing exceptional products and
services to some of the most satisfied customers in the world.
[FIGURE 2]
[IMAGE OF WORLD]
INTERNATIONAL EXPANSION FUELS GROWTH, ENHANCES DIVERSITY.
Fueled by a diverse product line, existing strong organizational and operation
systems and an experienced international sales department, Minuteman continues
to advance in the expanding international market.
Our commitment to the international market remains firm--educating
dealers, concentrating on the specific needs of each market, listening to the
detailed requests of each dealer and providing the highest quality floor care
equipment possible.
As a result of our steadfast commitment, six new countries joined the
Minuteman force in 1994: Sweden, Belgium, the United Kingdom, Central America,
Iceland and the Philippines.
<PAGE> 4
MINUTEMAN(R)
PRESIDENT'S MESSAGE
1994 marked another outstanding year of growth for Minuteman
International. It was a record year by every meaningful measure -- revenues, net
income, earnings per share -- and our prospects for continued success have never
looked better. The hard work of the past several years has left us poised to
realize significant rewards.
While our name changed in 1994 from Hako Minuteman to Minuteman
International, our corporate goals remained the same. Despite any initial
confusion this may have caused, we achieved record results for the year.
In 1994, net income rose 36% to $3.2 million, equal to $.90 per share.
Sales grew 8.6%.
Strong operating performance led by an upgraded distribution network and
sales of higher-end products, and supplemented by the significant
compensations received from successful patent litigations, resulted in our net
profit margin rising 1.6 percentage points to 7.7% versus 6.1% for 1993.
Our growth and success has allowed us to attract the highest quality
distributors throughout the country. The improvement in our distribution
channels to worldwide dealers, who know and understand their markets and can
draw on Minuteman's resources, was the driving force behind our record
achievements in 1994.
GROWTH THROUGH MARKET PENETRATION AND GEOGRAPHIC EXPANSION
Our goal for 1995 is to increase Minuteman's current market penetration
and spread our scope wider geographically.
Our strategy for expanding our presence in 1995, in the markets we serve,
is based on the ongoing enhancement of our distributor's network, a continued
investment in research and development and superior service.
To be successful, it takes a desire to deliver solutions in the most
demanding of situations. And where no solutions exist, it requires the vision
to invent them.
Within our research and development group, we draw on the resources
necessary to provide customers with imaginative and effective solutions. In
1994, we increased our engineering support 20%, enhancing an already
innovative R & D team. Moreover, our state-of-the art computer-assisted design
(CAD) equipment allows us to bring new versions of our products to market
swiftly.
Minuteman's exceptional ability to deliver the right products to the right
markets is making an impact in 1995. We have several new products and product
upgrades near completion and slated for roll-out this year. Our dealers are
enthusiastically looking forward to marketing these new products because they
offer end users better quality and superior design. We are continually
upgrading our machines to address, even anticipate, the needs of our customers.
One product, the 320, an advanced version in our automatic scrubber line,
has already been introduced in the marketplace. This improved automatic
scrubber is more efficient, quieter and ergonomically designed so that it is
operator-friendly. Its success has increased our presence in supermarkets and
retail stores.
In addition to offering more than 250 innovative products, we believe
Minuteman is differentiated through superior service. Because only committed,
dedicated people can consistently provide imaginative solutions and the best
customer service in the industry, we choose our employees very carefully.
Minuteman has been able to increase operating margins by staying lean and
totally focused. We believe when you have the best people working for you, you
don't
2
<PAGE> 5
[PHOTO]
Jerome E. Rau
President and CEO
need as many to get the job done. Our employees' dedication, efficiency and
intimate knowledge of our markets is another reason for our success.
Another strategy, to extend the company's geographic reach, will be
achieved through global development. We entered six new markets in 1994 --
Sweden, Central America, United Kingdom, Iceland, the Philippines and Belgium.
Our plan is to grow by building Minuteman's market presence in Europe in 1995.
Concurrently, we will be seeking to expand the strategic opportunities in
Canada, the Middle East, the Pacific Rim, Latin America and Asia.
International sales rose 6% in 1994, representing 21.7% of total revenues.
Striving to improve our market share, we continue to evaluate acquisition
opportunities related to our existing business. We look for companies with
leading market positions that can help us execute our strategy. Their products
must be differentiated by uniqueness of design or utilization, or are in an
area complementary to our core businesses.
NEW FACILITY DESIGNED FOR
GREATER CAPACITY AND EFFICIENCY
While working diligently to improve the strength and profitability of
operations in 1994, we were at the same time planning and supervising the
construction of a 200,000 square foot foundation for our newest facility in
Hampshire, Illinois, which replaces our Springfield, Ohio, plant. This involved
not only overseeing the infrastructure, but also closing one plant and ensuring
the smooth transition into another.
Our plan for this new site calls for modular expansion in increments of
50,000 square feet. In the third quarter of 1994, we completed the first phase,
which is currently operational. We expect to begin breaking ground on the
second phase in the spring of 1995. This new facility was paid for out of the
company's capital reserve without incurring any long-term debt.
DIVIDEND INCREASED
In October 1994, your Board of Directors increased the quarterly dividend
to $.10 per share, representing a 25% increase.
As we grow in size through expanding our market penetration and global
reach, we firmly believe that 1995 will show even greater progress, increasing
the value of your investment in the company.
Sincerely,
/s/ Jerome E. Rau
JEROME E. RAU
President & Chief Executive Officer
March 15, 1995
Minuteman International
1994 Annual Report 3
<PAGE> 6
CLOCKWISE FROM TOP LEFT:
Cutting edge design and CAD/CAM systems enable Minuteman to continue being a
Front Runner.
Automatic Scrubbers -- Minuteman scrubbers are available in 17" to 38" walk
behind automatic scrubbers and 34" rider scrubbers.
The 320 Scrubber easily cleans and maneuvers over large areas such as
airports, universities and plant facilities.
[PHOTO]
[PHOTO]
[PHOTO]
4
<PAGE> 7
THE MINUTEMAN HALLMARK.
FROM RAW MATERIALS TO FINAL
ASSEMBLY -- UNSURPASSED QUALITY.
Striving to maintain and nurture an environment that consistently produces
unsurpassed quality and "cutting-edge" innovation is a Minuteman hallmark. From
this unique approach to business, Minuteman has garnered the respect of its
competitors and aptly considers itself a front runner in the floor cleaning
industry. Utilizing a straightforward, simple approach to developing the very
best products possible, Minuteman begins with the obvious -- listening.
STATE-OF-THE-ART TECHNOLOGY.
SYNCHRONIZED TEAMWORK.
At Minuteman we listen and we understand the importance of details. We
also know that new and improved products begin with teamwork. Our skilled team
of engineers and professional designers work together, sifting through customer
comments and distributor suggestions, while examining the marketplace to
determine the type of products most needed. Using state-of-the-art technology
and CAD-CAM systems, our designers bring a concept to life while including
innovative special features such as the ->
MINUTEMAN(R)
AUTOMATIC SCRUBBERS
NEW, INNOVATIVE SCRUBBERS MOVE TO THE FOREFRONT
Minuteman offers a wide variety of scrubbers -- from 17" to 38" -- which
are designed to fill specific needs. The new generation Minuteman 260 and 320
traction drive scrubbers maneuver at the touch of a hand, clean the toughest
floors, and are built to last.
Innovative features set Minuteman's new 320 Automatic Scrubber apart from
the competition. Designed for specific markets such as hospitals, where quiet
is important, this scrubber meets the challenge through engineering
advancements that significantly reduce the dba rating on the vacuum
motor without sacrificing the 320's outstanding performance. This exciting new
scrubber also features enhanced moisture protection for all electrical
components and offers a large 26 gallon tank capacity which means the 320 can
scrub longer between tank refills. Both the 260 and 320 scrubbers combine wet
scrubbing with dry vacuuming in one easy step, their low profile provides
efficiency and maneuverability, and their curved, break-away squeegees pick up
all dirty solution -- even in turns.
Minuteman's 340 Rider Sweeper/Scrubber was designed for efficiency and
overall better performance than standard walk-behind models. The 340 offers the
ability to sweep, scrub and dry vacuum in a single pass. In addition, this
efficient sweeper/scrubber provides maximum maneuverability with the
convenience and coverage of a compact rider.
Minuteman International
1994 Annual Report 5
<PAGE> 8
[PHOTO]
CLOCKWISE FROM TOP LEFT:
Carpet Machines -- Minuteman offers carpet care products that can extract dirt
and groom carpets.
The plastic vacuum forming system at Minuteman's Addison plant produces a
variety of component parts for use in our diverse product line.
The MPV(TM) multi-purpose vacuum assembly line at the new Hampshire, Illinois
plant is a model of efficiency.
Minuteman's MPV(TM) multi-purpose vacuum is the latest in engineering and
performance innovation for carpet care.
[PHOTO]
[PHOTO]
6
<PAGE> 9
- ->patented PAMS(R) Dust Control System on high-speed burnishers. Always
attuned to details and follow-through to final delivery, we even plan for the
best way to ship our products to the customer by working closely with
packaging design manufacturers.
CUTTING EDGE DESIGN.
MINUTEMAN BRINGS
INNOVATION TO THE FOREFRONT.
Our design engineers work aggressively to develop prototypes that turn
concepts into reality. As a testament to their engineering skill, Minuteman
is proud to hold 26 domestic and 13 international patents for innovative
engineering features. Greater demand for cutting edge design in development
of new, better, more efficient ways to manufacture and design products
increased our engineering department by nearly 20% in 1994. This
substantial increase will further enhance Minuteman's position as a front
runner in the industry.
PEERLESS MANUFACTURING. FIRM
QUALITY CONTROL. COST EFFECTIVENESS.
From raw materials to final assembly, Minuteman directs the
manufacturing process. This staunch dedication to quality means that
Minuteman is able to control costs at every step, select high quality raw
materials and manufacture its leading edge equipment on machines designed->
MINUTEMAN(R)
CARPET MACHINES
NEW MULTI-PURPOSE VACUUM (MPV(TM)) --
A CLEANING "WORKHORSE"
We believe nobody cleans carpets like Minuteman. From the total care
approach of the Rugmaster and Ambassador Series, which are able to clean carpet
in one easy operation, to the daily dependability of Minuteman's exciting, new
Multi-Purpose Vacuum (MPV(TM)) Minuteman provides the solution to carpet
maintenance. Each of Minuteman's carpet care machines combines productivity and
efficiency with manageability and minimum operator fatigue.
Minuteman's MPV is the latest in engineering and performance innovation.
Providing maximum performance, this versatile, lightweight, dual-motor upright
vacuum has added bag capacity and is available in 14" and 18" brush widths. The
MPWs top-filling, easy-to-empty collection bag has expanded capacity and is
easily removed with one hand. The MPV's light handle weight makes it easy to use
and a low dba rating makes it unique in the industry.
Minuteman's Wide Area Vacuums generate big power with less effort. Ideal
for big cleaning jobs, they complement the MPV by offering a larger,
wide-sweeping path, which clean up to 25,000 sq. ft. per hour. Their powerful
cleaning is effortless with the Wide Area Vacuums' continuous-duty blower and
brush motor.
Minuteman International
1994 Annual Report 7
<PAGE> 10
CLOCKWISE FROM TOP LEFT:
Epoxy paint finish on various parts allows for a uniform texture finish
thoughout the product line.
Floor Care Machines -- Minuteman's wide range of electric, battery and variable
speed burnishers endure demanding conditions.
The 2-speed PAMS(R) burnisher uses patented technology to virtually eliminate
particles and dust from becoming airborne.
[PHOTO]
[PHOTO]
[PHOTO]
8
<PAGE> 11
RUSSIAN GOODWILL AMBASSADORS
"... the ease of operation... was truly unbelievable!"
Robert E. Thomas, Director of Physical Plant and Security
Cornell College
Acting as Goodwill Ambassadors, Minuteman joined forces with Cornell
College of Vermont, lowa, to aid in upgrading and cleaning Children's Hospital
in Moscow, Russia. Minuteman donated Front Runner 20-inch Floor Machines for
the project and worked with Robert E. Thomas, Director of Physical Plant and
Security at Cornell College who exclaimed, "... it was truly a joy to be able to
demonstrate the power and versatility of your machines to the Russian
custodians..."
[PHOTO]
Russian administrators and custodians give their new 20" Front Runner a whirl.
- -> especially for Minuteman. The efficiency and cost savings gained from
customization is passed on to distributors and end-users. As examples,
Minuteman strictly controls the quality and manufacture of all carriages for
the 170 Automatic Scrubbers; the caster holders for wheels; the housings for
Minuteman burnishers, as well as the metal hoppers for Minuteman Flipper
sweepers. Even the paint is a priority -- Minuteman recently installed new
infrared heating elements to improve paint quality and provide a uniform
paint texture which is constantly achieved through our epoxy paint finish.
For other parts, such as our indestructible polyethylene tanks, we work
closely with expert suppliers -- contributing major features to the design
and working with them to bring these parts up to exact specifications for
Minuteman machines.
EXPERIENCED, HIGHLY TRAINED SALES FORCE.
Since 1992 Minuteman's sales have increased 27.1%. This substantial
growth can be attributed to our superior products, coupled with our
professional, experienced and knowledgeable sales force. These dedicated
professionals work directly with customers to listen, respond and provide
them with technologically advanced floor care products. Highly trained,
this exceptional group educates dealers, services their needs and
constantly keeps their customers on the leading edge. ->
MINUTEMAN TAKES LEAD IN THE IMMENSE FLOOR CARE MARKET
Industry surveys support Minuteman as a front runner in the floor care market.
The durable Front Runner Series has helped Minuteman retain and surpass
competitors in this leadership position.
MINUTEMAN(R)
FLOOR CARE MACHINES
FRONT RUNNER SERIES OPENS UP NEW MARKETS
Minuteman's hard floor machines make quick work of all floor maintenance
jobs. Featuring easy-to-use controls and fatigue-free design, these machines
are highly efficient and quiet.
Minuteman's new series, called the Front Runner Series, was designed to be
competitively priced, yet retain the same high quality product and operator
safety found in all Minuteman machines. This remarkable cost-saving design was
accomplished by reducing the number of component parts needed -- saving time,
labor and inventory costs -- and by using the same wheel bracket for both the
17" and 20" models. These manufacturing improvements and ensuing cost-savings
will bring a keener competitive edge to distributors in the marketplace.
Minuteman's popular, efficient 1500, 2300 and 2600 Burnishers leave the
competition in the dust, thanks to the Passive Air Management System (PAMS(R)).
This patented technology takes advantage of large volumes of air naturally set
in motion by the rapidly rotating pad. Like the Front Runner Series, this
innovative floor care equipment, with unmatched PAMS technology, brings
cost-savings, rugged construction, ergonomic considerations and ease of
operation to new and established markets for Minuteman.
Minuteman International
1994 Annual Report 9
<PAGE> 12
CLOCKWISE FROM TOP LEFT:
Commercial Industrial Tank Vacuums -- Ranging from 5 gallons to 55 gallons,
Minuteman's tank vacuums endure years of use.
At the ISSA show, our Minuteman sales force worked closely with customers to
ensure exceptional floor care.
Cleaning spills in narrow aisles or tight areas is an easy task for the
Minuteman 15 gallon 290 vacuum equipped with a wide area squeegee.
OPPOSITE PAGE, LEFT TO RIGHT:
The CRV(TM) clean room vacuum ensures compliance with safety and quality
standard codes for critical environments.
Critical Filter Vacuums -- These specially built vacuums clean up critical
waste and a variety of hazardous materials.
[PHOTO]
[PHOTO]
[PHOTO]
10
<PAGE> 13
[PHOTO] [PHOTO]
- -> SALES SUPPORT MEANS STRONG DISTRIBUTOR BASE.
Supporting the sales staff, customer service and satisfaction remain a
primary focus for our entire company. Our distributors have responded to this
focus by developing goals that are consistent with our objectives. We work
together with our distributors to make doing business with Minuteman
uncomplicated. To better service our dealers with convenient ordering tools,
orders may be placed by phone, fax, including "800" lines or by mail. By
continuing to offer products that satisfy the needs of customers, and by
providing accessible communication between company, distributor and customer,
Minuteman will continue to attract a strong and growing network of professional
distributors.
START TO FINISH. MINUTEMAN'S
RELIABLE QUALITY SERVICE CIRCLE.
Minuteman's quality service circle means that our job is only completed
when our customer is completely satisfied ->
COMMERCIAL AND INDUSTRIAL TANK VACUUMS
DURABLE 290 VACUUM SERIES
These durable and powerful tank vacuums clean circles around the
competition and are built to last. Available in a wide variety of sizes from
4 to 20 gallons, the 290 Vacuum Series incorporates all our latest patented
features -- the 290 series is a value beyond comparison.
The Minuteman 390 Series is designed for rugged, heavy-duty use with an
exclusive perforated polyethylene filter to protect the motor and float
shut-off from lint and debris when the vacuum is being used for wet recovery.
All our commercial tank vacuums are constructed of either durable stainless
steel or non-corrosive, dent-proof polyethylene for years of dependable
service.
700 SERIES AIR VACS
These super suction, non-electric Air Vacs are perfect for heavy duty
industrial use. With no moving parts and compressed air operation, the 700
Series Air Vacs create a vacuum of exceptionally high flow and high static lift
capable of lifting or moving an extensive variety of solid or liquid material.
With no moving parts, the 700 Series Air Vacs mean continuous service with
little maintenance.
MINUTEMAN(R)
CRITICAL FILTER VACUUMS
Hazardous waste removal requires both safety and efficiency. Minuteman's
High Efficiency Particulate Air (H.E.P.A) filter features our patented safety
interlock system, which prevents the vacuum from starting if the H.E.P.A.
filter is not properly aligned and in place, thus ensuring operator safety. To
guarantee efficiency, we have designed Critical Filter Vacuums that are easy to
use, available in a wide variety of sizes, and created for specific hazardous
waste applications; users are able to select the Minuteman vacuum that suits
their unique hazardous waste removal needs.
Among these popular vacuums is the X829 Vacuum Series with powerful
H.E.P.A. filtered wet/dry vacuums delivering safe, affordable waste removal in
five practical configurations: the Clean Room Vacuum CRV(TM) -- for Class 1
critical clean environments such as biological labs, the Explosion Proof Vacuum
for the containment of flammable materials, and the Mercury Vacuum series for
handling and disposing of mercury based residue.
Minuteman International
1994 Annual Report 11
<PAGE> 14
[PHOTO] [PHOTO]
CLOCKWISE FROM TOP LEFT:
Parker Sweeper Litter Vacuums - Outdoor cleanup is a breeze with the powerful
and proven line of Parker litter vacs and Minuteman Sweepers.
The new Minuteman plant in Hampshire allows for quality, efficient Parker
Sweeper Power Rake production.
OPPOSITE PAGE, LEFT TO RIGHT:
Multi-Clean's state-of-the-art research and development lab at Shoreview,
Minnesota.
Multi-Clean's plant exemplifies strict quality control standards for top notch
maintenance chemicals.
Multi-Clean offers a wide variety of products for all floor types including:
resilient tile, hard floors, carpet, concrete and wood.
[PHOTO]
12
<PAGE> 15
[PHOTO] [PHOTO]
with their product -- not just today, but in the coming years. In fact, we
believe so strongly in our products that we back them up with extended
warranties and exceptional service. Our machines carry a three-year warranty on
parts and our polyethylene tanks carry a seven-year warranty. In addition our
distributors and service people are all well trained to respond to customers
quickly with answers, help and information.
This commitment to long-term service and quality control supports the
Minuteman hallmark of servicing its customers by providing dependable, cost
effective products that answer specific needs -- today and tomorrow.
MINUTEMAN(R)
PARKER SWEEPER LITTER VACUUMS
NEW VAC-CS CHIPPER/SHREDDER A SWEEPING SUCCESS
Parker Sweeper moved from Springfield, Ohio to our newly expanded plant
in Hampshire, Illinois, adding diversification and variety to the Minuteman
product line. The new Vac-CS Chipper/Shredder Vacuum has been a sweeping
success. Cleaning a wide 30" path while it chips, shreds, vacuums and bags -
all in one easy pass, the Vac-CS was designed to improve operator comfort,
reduce user strain and deliver cost efficient performance.
The popular Parker Vac-35(R) and Scavenger(R) line of walk-behind litter
vacuums are very successful. The entire line of products offered by Parker to
grounds maintenance professionals also includes power rakes, lawn sweepers,
dethatchers, tillers and portable truck loaders.
THE MULTI-CLEAN(R) SYSTEM
NEW PRODUCTS, NEW LABELS MARK LEADERSHIP
IN FLOOR CARE TECHNOLOGY
Consistent with our start-to-finish approach to product delivery is the
Multi-Clean story. In its state-of-the art research and development lab,
Multi-Clean's expert chemists formulate and engineer maintenance chemicals to
work specifically with Minuteman machines, resulting in a wide variety of
products for all types of floors including: resilient tile, hard floors,
carpet, concrete and wood.
The newest addition to the Multi-Clean line of floor finishes is DECADE
90. The high solids product is based on an advanced, high gloss polymer system
that produces a spectacular, crystal clear shine in fewer coats compared to
conventional finishes. DECADE 90 is the first finish to utilize soil shield; a
unique dirt repellent that gives the product unsurpassed resistance to dirt and
soils.
NEW "LOOK" FOR MULTI-CLEAN
Multi-Clean's industry standard Bag-in-Box packaging, and container
labeling has taken a step toward the next century. Expansive international
distribution and an increasing multi-national domestic work force has
challenged us to produce a label that is easily identified, ensures safe and
accurate product usage and is multi-lingual. This standard labeling for all
branded Multi-Clean products will include internationally recognized icons,
identification symbols and color coding.
Multi-Clean's full line of innovative, convenient, high quality products
with user-friendly labeling continues to confirm Minuteman International as an
acknowledged leader in floor care technology.
Minuteman International
1994 Annual Report 13
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION
The Company had working capital of $17.2 million and $16.7 million at December
31, 1994 and 1993 respectively. This represented a current ratio
of 6.4 and 7.2 for those years, respectively.
Cash, cash equivalents and short-term investments represented 18.5% and
24.8% of this working capital at December 31, 1994 and 1993, respectively.
At December 31, 1994 and 1993, the Company had shareholders' equity of
$24.7 million and $22.8 million, respectively, which when compared to total
liabilities represented an equity to liability ratio of 7.3 and 7.9,
respectively.
The Company has no debt, more than sufficient capital resources and is in
a strong financial position to meet all business and liquidity needs as they
arise. The Company foresees no unusual future events that will materially
change the aforementioned summarization.
SALES
Net sales increased 8.6% or $3,281,000 in 1994 compared to 1993. The Company's
commercial product line, substantially all of which is domestically
manufactured, increased $3,479,000 or 9.5% compared to 1993. This increase is
due primarily to the sales of new products and by strong sales to
our North American dealer organization. Sales of industrial products declined
$198,000 or 13.6% from 1993.
Net sales increased 17.1% or $5,578,000 in 1993 as compared to 1992. The
Company's commercial product line, substantially all of which is domestically
manufactured, increased $5,752,000 or 18.5% compared to 1992. Strengthened
distribution both domestically and internationally (Note A) along with new
product sales primarily accounted for these increases. Sluggish demand for
industrial products continued in 1993 declining $174,000 or 10.6% from 1992.
GROSS PROFIT
Gross profit during 1994, as a percent to net sales was 33.7%, the same as it
had been in 1993. The effects of higher volume without any current
year price increase and continued manufacturing efficiencies were offset by the
start up costs associated with our new production facility in
Hampshire, Illinois.
Gross profit during 1993 increased as a percent to net sales to 33.7%
from 33.0% in 1992. The positive effects of manufacturing efficiencies and
higher volume accounted primarily for this increase but were partially offset
by the negative impact of product mix changes.
14
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SELLING EXPENSES
Selling expenses, as a percent to net sales, decreased from 18.9% in 1993 to
18.5% in 1994. This decrease resulted primarily from containing
expenses proportionately with the increase in sales. The increase in total
expenses in 1994 was primarily attributable to additional personnel
needed to better service customer demands.
Selling expenses, as a percent to net sales, decreased from 20.1% in 1992
to 18.9% in 1993. This decrease resulted primarily from the fact that personnel
and advertising expenses were controlled in spite of the increased sales
volume.
GENERAL ADMINISTRATIVE EXPENSES
In 1994 these expenses as a percent to sales remained the same as in 1993 at
4.9%. The increase in total expenses for 1994 were primarily
attributable to additional personnel and higher professional fees.
These expenses decreased .9% in 1993 from 1992 due primarily to reduced
insurance costs.
OTHER INCOME
In 1994 the Company's Interest income increased $7,000 due to higher interest
rates earned on lower investable funds resulting from the
construction of our new manufacturing facility in Hampshire, Illinois. In 1993,
the Company's interest income decreased
$101,000, due to lower investable funds resulting from the Parker Sweeper
acquisition and significantly lower interest rates.
In 1994 other income increased $727,000 due to the successful settlement
of patent infringement litigation against various industry competitors as well
as recognizing a gain on the sale of a part of our former St. Paul
manufacturing facility. In 1993 other income decreased $50,000 due to the
non-recurring successful settlements of patent litigation in 1992.
INCOME TAXES
The effective tax rate was 37.4%, 38.9% and 36.6% for 1994, 1993 and 1992,
respectively. The increase in the 1994 and 1993 rate is caused principally
by higher State income taxes and reduced benefits from our Foreign Sales
Corporation.
INFLATION
Inflation has not had a significant impact on the Company's business during the
past three years.
Minuteman International
1994 Annual Report 15
<PAGE> 18
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
----------------------------------
1994 1993
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ....................... $ 655,000 $ 1,078,000
Short-term investments .......................... 2,520,000 3,073,000
Accounts receivable, less allowances of
$400,000 in 1994, and $385,000 in 1993 ........ 6,577,000 6,055,000
Due from affiliates ............................. 407,000 300,000
Inventories ..................................... 9,686,000 8,320,000
Prepaid expenses ................................ 142,000 149,000
Refundable income taxes ......................... 36,000
Deferred income taxes ........................... 405,000 425,000
------------ -----------
TOTAL CURRENT ASSETS ................. 20,392,000 19,436,000
PROPERTY, PLANT AND EQUIPMENT
Land ............................................ 942,000 975,000
Building and improvements ....................... 4,921,000 3,829,000
Machinery and equipment ......................... 6,242,000 5,148,000
Office furniture and equipment .................. 1,567,000 1,400,000
Transportation equipment ........................ 785,000 738,000
------------ -----------
14,457,000 12,090,000
Accumulated depreciation ........................ (7,036,000) (6,152,000)
------------ -----------
7,421,000 5,938,000
OTHER ASSETS ...................................... 254,000 269,000
------------ -----------
$28,067,000 $25,643,000
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ................................ $ 1,049,000 $ 696,000
Accrued expenses ................................ 1,998,000 1,995,000
Income taxes payable ............................ 138,000
------------ -----------
TOTAL CURRENT LIABILITIES .................... 3,185,000 2,691,000
DEFERRED INCOME TAXES ............................. 183,000 185,000
SHAREHOLDERS' EQUITY
Common stock, no-par value:
Authorized shares -- 10,000,000
Issued and outstanding shares --
3,568,385 in 1994 and 1993 .................... 6,396,000 6,396,000
Retained earnings ............................... 18,454,000 16,464,000
Currency translation adjustments ................ (151,000) (93,000)
------------ -----------
24,699,000 22,767,000
------------ -----------
$ 28,067,000 $25,643,000
============ ===========
See notes to consolidated financial statements.
16
</TABLE>
<PAGE> 19
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------
1994 1993 1992
-----------------------------------------------
<S> <C> <C> <C>
Net sales .......................... $41,518,000 $38,237,000 $32,659,000
Cost of sales ...................... 27,540,000 25,357,000 21,884,000
----------- ----------- -----------
Gross profit ..................... 13,978,000 12,880,000 10,775,000
Operating expenses
Selling .......................... 7,675,000 7,241,000 6,574,000
General and administrative ....... 2,024,000 1,897,000 1,914,000
----------- ----------- -----------
Operating Expenses ............ 9,699,000 9,138,000 8,488,000
----------- ----------- -----------
INCOME FROM OPERATIONS ........ 4,279,000 3,742,000 2,287,000
Other income
Interest income .................. 99,000 92,000 193,000
Other -- net ..................... 737,000 10,000 60,000
----------- ----------- -----------
Other income .................. 836,000 102,000 253,000
----------- ----------- -----------
INCOME BEFORE INCOME TAXES ....... 5,115,000 3,844,000 2,540,000
Provision (credit) for income taxes
Current .......................... 1,894,000 1,665,000 969,000
Deferred ......................... 18,000 (170,000) (40,000)
----------- ----------- -----------
PROVISION FOR INCOME TAXES ..... 1,912,000 1,495,000 929,000
----------- ----------- -----------
NET INCOME ..................... $ 3,203,000 $ 2,349,000 $ 1,611,000
=========== =========== ===========
Net income per common share ........ $ .90 $ .66 $ .45
===== ===== =====
</TABLE>
See notes to consolidated financial statements.
Minuteman International
1994 Annual Report 17
<PAGE> 20
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Years Ended December 31, 1992, 1993, and 1994
------------------------------------------------------------------------
Common Stock
------------------------ Currency
Number of Retained Translation
Shares Amount Earnings Adjustments Total
-------- ------ -------- ----------- ------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1992 ........ 3,568,385 $6,396,000 $ 14,502,000 $ 68,000 $20,966,000
Dividends (.28 per share) ........ (999,000) (999,000)
Net income ....................... 1,611,000 1,611,000
Translation adjustment ........... (111,000) (111,000)
--------- ---------- ----------- ---------- -----------
Balance at December 31, 1992 ...... 3,568,385 6,396,000 15,114,000 (43,000) 21,467,000
Dividends (.28 per share) ........ (999,000) (999,000)
Net income ....................... 2,349,000 2,349,000
Translation adjustment ........... (50,000) (50,000)
--------- ---------- ----------- ---------- -----------
Balance at DECEMBER 31, 1993 ...... 3,568,385 6,396,000 16,464,000 (93,000) 22,767,000
Dividends (.34 per share) ........ (1,213,000) (1,213,000)
Net income ....................... 3,203,000 3,203,000
Translation adjustment ........... (58,000) (58,000)
--------- ---------- ----------- ---------- -----------
Balance at December 31, 1994 ...... 3,568,385 $6,396,000 $ 18,454,000 $(151,000) $24,699,000
========= ========== ============ ========== ===========
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income ....................................... $3,203,000 $2,349,000 $1,611,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization .................. 1,189,000 1,106,000 1,092,000
Deferred income taxes (credit) ................. 18,000 (170,000) (40,000)
Other .......................................... (58,000) (120,000) (111,000)
Cash provided (used) due to changes in
operating assets and liabilities:
Accounts receivable and due from affiliates .... (629,000) (645,000) (820,000)
Inventories .................................... (1,366,000) (1,320,000) (19,000)
Prepaid expenses and refundable income taxes ... 43,000 (9,000) 88,000
Accounts payable, accrued expenses
and income taxes ............................ 494,000 668,000 388,000
---------- ---------- ----------
NET CASH PROVIDED BY OPERATIONS 2,894,000 1,859,000 2,189,000
INVESTING ACTIVITIES
Purchase of Parker Sweeper Company .............. (1,277,000)
Purchases of property, plant and equipment, net.. (2,657,000) (1,200,000) (1,280,000)
Purchases of short-term investments ............. (847,000) (461,000) (1,405,000)
Maturities of short-term investments ............ 1,400,000 390,000 1,441,000
---------- ---------- ----------
CASH USED IN INVESTING ACTIVITIES ............. (2,104,000) (1,271,000) (2,521,000)
FINANCING ACTIVITIES
Dividends paid .................................. (1,213,000) (999,000) (999,000)
---------- ---------- ----------
CASH USED IN FINANCING ACTIVITIES ............. (1,213,000) (999,000) (999,000)
---------- ---------- ----------
DECREASE IN CASH AND CASH EQUIVALENTS ......... (423,000) (411,000) (1,331,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ... 1,078,000 1,489,000 2,820,000
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR ......... $ 655,000 $1,078,000 $1,489,000
========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- BUSINESS INFORMATION
The Company operates primarily in one business segment, which consists of the
development, manufacture and marketing of commercial and industrial floor
maintenance equipment and related products. The Company sells to a multitude of
regional, national and international customers, primarily within the sanitary
supply industry. No single customer accounted for a significant amount of net
sales in 1994, 1993 or 1992.
The Company sells to affiliated (see Note D) and unaffiliated customers in
foreign countries. For 1994, 1993, and 1992, these sales aggregated to
$9,037,000, $8,518,000 and $6,630,000, respectively, and were principally to
customers in Canada, the Pacific Rim, the Middle East, Europe, and Latin
America.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash equivalents and trade
receivables. The Company places its cash equivalents with high credit quality
financial institutions, which are Federally insured up to prescribed limits.
However, the amount of cash equivalents at any one institution may exceed the
Federally insured prescribed limits. Concentrations of credit risks with
regard to trade receivables are limited due to the large number of customers
comprising the Company's customer base. The Company performs ongoing credit
evaluations of its customers and maintains allowances for potential credit
losses which, when incurred, have been within the range of management
expectations.
NOTE B -- SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company (an
Illinois corporation) and its wholly-owned subsidiaries, Multi-Clean, Minuteman
Canada, Inc. and Minuteman International Foreign Sales Corporation. Effective
December 30, 1994, Parker Sweeper Company, formerly a wholly-owned subsidiary,
was merged into the Company. Significant intercompany accounts and transactions
have been eliminated in consolidation.
INVENTORIES
Inventories are stated at the lower of cost or market using the last-in,
first-out (LIFO) cost method for a majority (1994-82%, 1993-67%) of inventories
and the first-in, first-out (FIFO) method for the remainder. Inventories at
December 31, 1994 and 1993 consist of the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Inventories at FIFO cost:
Finished goods $ 3,684,000 $ 4,047,000
Work in process 6,362,000 5,064,000
Raw materials 1,521,000 1,307,000
---------- ----------
11,567,000 10,418,000
---------- ----------
Less LIFO reserve (1,881,000) (2,098,000)
----------- -----------
Total Inventories $ 9,686,000 $ 8,320,000
=========== ===========
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated on the basis of cost. Depreciation is
computed by both the straight line and accelerated methods for financial
reporting purposes and by the accelerated method for tax purposes.
INCOME TAXES -- ACCOUNTING CHANGE
In February, 1992, The Financial Accounting Standards Board issued Statement
No. 109, "Accounting for Income Taxes". The Company adopted the provisions
of the new standard in its financial statements for the year ended December 31,
1992. This change in accounting did not materially impact 1992 results of
operations.
Under Statement 109, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined,
based on differences between financial reporting and tax bases of assets and
liabilities, and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse. Prior to the
adoption of Statement 109, income tax expense was determined using the deferred
method. Deferred tax expense was based on items of income and expense that was
reported in different years in the financial statements and tax returns, and
was measured at the tax rate in effect in the year the difference originated.
NET INCOME PER COMMON SHARE
Net income per common share is based on the weighted average number of common
shares outstanding during each year (3,568,385 in 1994, 1993 and 1992).
Minuteman International
1994 Annual Report 19
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
FOREIGN CURRENCY TRANSLATION
The balance sheet accounts of the foreign subsidiary have been translated into
United States dollars using the current exchange rate at the balance sheet
date. Income statement amounts have been translated using the average exchange
rate for the year. Gains and losses resulting from the change in exchange
rates have been classified as a separate component of shareholders' equity.
CASH EQUIVALENTS
The Company considers all bank certificates of deposit and Eurodollar
certificate investments with a maturity of three months or less when
purchased to be cash equivalents.
SHORT-TERM INVESTMENTS
Short-term investments have been categorized as available for sale and are
stated at cost, which approximates fair value. Investments include certificates
of deposit, Eurodollar and treasury certificates, and a managed portfolio of
high quality liquid variable rate notes and tax exempt seven day bonds all with
domestic commercial banks.
NOTE C -- INCOME TAXES
Deferred income taxes primarily relate to temporary differences in the
recognition of depreciation expense and other accrued expenses for financial
reporting and income tax purposes. The temporary differences between the
financial statement carrying amounts and the tax bases of assets and
liabilities that result in significant amounts of deferred taxes in the
consolidated balance sheets at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Accounts receivable $ 375,000 $ 357,000
Property, plant and
equipment (382,000) (380,000)
Accrued expenses
and other 485,000 417,000
Accrued expenses
related to Parker
Sweeper acquisition 278,000 430,000
--------- ---------
$ 756,000 $ 824,000
========= =========
</TABLE>
The effective income tax rate on income taxes differed from the Federal
statutory rate as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0%
State income taxes, net
of Federal tax benefit 4.5 4.8 4.3
Foreign Sales
Corporation benefit (1.3) (1.8) (2.6)
Other, net .2 1.9 .9
----- ----- -----
37.4% 38.9% 36.6%
===== ===== =====
</TABLE>
The Company paid income taxes of $1,723,000, $1,749,000 and $680,000 in
1994, 1993 and 1992, respectively. State income taxes amounted to
$345,000, $290,000 and $165,000 for 1994, 1993 and 1992, respectively. Foreign
income taxes amounted to $17,000, $13,000 and $59,000 for 1994, 1993 and 1992,
respectively.
NOTE D -- RELATED PARTY TRANSACTIONS
Hako-Werke GmbH & Co. (a West German corporation) owns 74.51% of the
outstanding common stock of the Company through a subsidiary.
The Company purchased inventories of approximately $512,000, $586,000 and
$862,000 from Hako-Werke in 1994, 1993 and 1992, respectively. Amounts due to
Hako-Werke, which relate to these purchases, are due within 90 days from the
date of shipment.
The Company sold approximately $1,962,000, $2,176,000 and $1,600,000 of
merchandise to Hako-Werke and certain of its subsidiaries during 1994, 1993 and
1992, respectively. Amounts due from affiliates, which relate to these sales,
are due within 120 days from the date of sale.
NOTE E -- EMPLOYMENT AGREEMENTS
The Company has employment agreements with the executive officers of the
Company which expire through 1997. The agreements contain customary provisions,
including severance pay in the event the Company terminates their employment.
20
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (CONTINUED)
NOTE F -- EMPLOYEE BENEFIT PLANS
The Company maintains a participatory defined contribution plan for
substantially all employees under Section 401(a) of the Internal Revenue Code.
In addition to a discretionary contribution, the Company also matches employee
contributions based upon a formula up to a specified maximum. Contributions to
the plan and related expense were $207,000, $160,000 and $172,000 for the
years ended 1994, 1993 and 1992, respectively.
NOTE G -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the years
ended December 31, 1994 and 1993:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------
MARCH JUNE SEPTEMBER DECEMBER
31 30 30 31
----- ----- --------- --------
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
1994
Net sales $10,269 $11,371 $10,992 $ 8,886
Gross profit 3,508 3,956 3,816 2,698
Net income 745 949 814 695
Net income
per common
share $ .21 $ .26 $ .23 $ .20
1993
Net sales $ 9,752 $10,013 $10,227 $ 8,245
Gross profit 3,270 3,448 3,425 2,737
Net income 661 689 698 301
Net income
per common
share $ .19 $ .19 $ .19 $ .09
</TABLE>
Fourth quarter adjustments, primarily related to inventories, caused net
income and net income per common share to increase by $45,000 or $.01 per
share in 1994 and $119,000 or $.03 per share in 1993.
NOTE H -- RESEARCH AND DEVELOPMENT EXPENSES
Research and development expense for 1994, 1993 and 1992, approximated
$861,000, $749,000 and $701,000, respectively.
NOTE I -- ASSETS HELD FOR SALE
During 1994 the Company sold a portion of a former manufacturing facility and
recognized a gain on the sale. The Company has listed for sale the remainder of
this facility (net book value of $124,000) and does not anticipate that a loss
will result upon its disposition.
MARKETS FOR THE COMPANY'S SECURITIES AND RELATED MATTERS
At the Annual Shareholders' Meeting on April 15, 1994, the Company changed its
corporate name from Hako Minuteman, Inc. to Minuteman International, Inc. to
generate better corporate recognition in the industry and better facilitate the
Company's expansive product and service lines worldwide.
On March 1, 1995 the last reported sales price of the common stock on The
Nasdaq Stock Market was $10. The approximate number of holders of common stock
was 1,100.
Since 1988 the Board of Directors has declared regular quarterly dividends
and the fourth quarter dividend in 1994 represents the twenty fifth consecutive
dividend paid to shareholders. Future dividend policy will be determined by the
Board of Directors in light of prevailing financial needs and earnings of the
Company and other relevant factors.
The common stock of Minuteman International, Inc. is quoted on The Nasdaq
Stock Market and its trading symbol is "MMAN" (formerly "HAKO"). The following
tables set forth for 1994 and 1993 the range of bid prices for the Company's
common stock as reported on The Nasdaq Stock Market for the period indicated:
<TABLE>
<CAPTION>
Dividends
Per
High Low Share
---- --- ----------
<S> <C> <C> <C>
1994
1st Quarter 12-3/4 9-1/2 $ .08
2nd Quarter 12-1/4 9-1/2 $ .08
3rd Quarter 13 10-1/2 $ .08
4th Quarter 11-1/2 10 $ .10
1993
1st Quarter 8-1/4 6-1/4 $ .07
2nd Quarter 9-3/4 7-1/2 $ .07
3rd Quarter 10 8-3/4 $ .07
4th Quarter 11-1/2 9-1/4 $ .07
</TABLE>
Minuteman International
1994 Annual Report 21
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations, and "Notes to Consolidated Financial Statements"
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
In thousands, except share and per share data
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales $41,518 $38,237 $32,659 $30,238 $29,238
Cost of sales 27,540 25,357 21,884 19,065 18,305
------- ------- ------- ------- -------
Gross profit 13,978 12,880 10,775 11,173 10,933
Selling expenses 7,675 7,241 6,574 6,130 6,023
General and
administrative expenses 2,024 1,897 1,914 1,783 1,805
------- ------- ------- ------- -------
Income from operations 4,279 3,742 2,287 3,260 3,105
Interest income 99 92 193 294 389
Other income (expense), net 737 10 60 219 (89)
------- ------- ------- ------- -------
Income before income taxes 5,115 3,844 2,540 3,773 3,405
Income tax expense 1,912 1,495 929 1,270 1,297
------- ------- ------- ------- -------
Net income $ 3,203 $ 2,349 $ 1,611 $ 2,503 $ 2,108
======= ======= ======= ======= =======
PER SHARE DATA
Cash dividends $ .34 $ .28 $ .28 $ .23 $ .20
Net income per
common share .90 .66 .45 .70 .58
Weighted average number
of shares outstanding 3,568,385 3,568,385 3,568,385 3,590,347 3,664,796
BALANCE SHEET DATA
Working capital $17,207 $16,745 $15,604 $15,612 $15,230
Total assets 28,067 25,643 23,670 22,427 20,904
Shareholders' equity 24,699 22,767 21,467 20,966 19,693
</TABLE>
22
<PAGE> 25
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS OF MINUTEMAN INTERNATIONAL, INC.
We have audited the accompanying consolidated balance sheets of Minuteman
International, Inc. (formerly Hako Minuteman, Inc.) and subsidiaries as of
December 31, 1994 and 1993 and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Minuteman
International, Inc. (formerly Hako Minuteman, Inc.) and subsidiaries at
December 31, 1994 and 1993, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended December
31, 1994, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, lllinois
February 10, 1995
REPORT OF MANAGEMENT
The management of Minuteman International, Inc. is responsible for the
integrity of the information presented in this Annual Report, including the
Company's financial statements. These statements have been prepared in
conformity with generally accepted accounting principles and include, where
necessary, informed estimates and judgments by management.
The Company maintains systems of accounting and internal controls designed
to provide assurance that assets are properly accounted for, as well as to
insure that the financial records are reliable for preparing financial
statements. The systems are augmented by qualified personnel and are reviewed
on a periodic basis.
The Company maintains high standards when selecting, training, and
developing personnel, to ensure that management's objectives of maintaining
strong, effective internal accounting controls and unbiased, uniform reporting
standards are attained. The Company believes its policies and procedures
provide reasonable assurance that operations are conducted in conformity with
law and with the Company's commitment to a high standard of business conduct.
Our independent auditors, Ernst & Young LLP, conduct annual audits of our
financial statements in accordance with generally accepted auditing standards
which include the review of internal controls for the purpose of establishing
their audit scope, and issue an opinion of the fairness of such financial
statements.
The Board of Directors pursues its responsibility for the quality of the
Company's financial reporting primarily through its Audit Committee which is
composed of three outside directors. The Audit Committee meets periodically
with management and the independent auditors to review the manner in which they
are performing their responsibilities and to discuss auditing, internal
accounting controls, and financial reporting matters. The independent auditors
periodically meet alone with the Audit Committee and have full and free access
to the Audit Committee at any time.
/s/Thomas J. Nolan
Thomas J. Nolan
Chief Financial Officer,
Secretary & Treasurer
/s/Jerome E. Rau
Jerome E. Rau
President, Chief Executive Officer
Minuteman International
1994 Annual Report 23
<PAGE> 26
BOARD OF DIRECTORS
[PHOTO] JEROME E. RAU
President &
Chief Executive Officer
Minuteman International, Inc.
TYLL NECKER [PHOTO]
Chief Executive Officer
Hako-Werke International
GmbH & Co.
[PHOTO] FREDERICK W. HOHAGE
President
Robert Bosch Corporation,
Sales Group
JAMES C. SCHRADER, JR. [PHOTO]
President
Precision Enterprises, Ltd.
[PHOTO] FRANK R. REYNOLDS
Attorney
Law Offices of
Reynolds & Reynolds, Ltd.
OPERATING OFFICERS
Jerome E. Rau
President & Chief Executive Officer
Gary E. Palmer
Vice President of Engineering
Gregory J. Rau
Vice President of Sales
Thomas J. Nolan
Chief Financial Officer, Secretary & Treasurer
CORPORATE INFORMATION
GENERAL COUNSEL
Law Offices of Reynolds & Reynolds, Ltd.
Chicago, Illinois
INDEPENDENT AUDITORS
Ernst & Young LLP
Chicago, Illinois
TRANSFER AGENT
Mellon Securities Trust Company
85 Challenger Road, Overpeck Centre
Ridgefield Park, New Jersey 07660
1-800-426-5754
STOCK LISTING
Traded over-the-counter on The Nasdaq Stock
Market under the symbol "MMAN"
ANNUAL MEETING
April 21, 1995 at 10:00 a.m. at
Bank of America
231 South LaSalle Street
21st Floor
Shareholders' Meeting Room
Chicago, Illinois 60697
FORM 10-K
Minuteman International, Inc. will send a copy of its Form 10-K
report for fiscal 1994 as filed with the Securities and Exchange Commission
upon written request to Thomas J. Nolan, Chief Financial Officer at the
corporate office.
CORPORATE OFFICE
Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
(708) 627-6900
24
<PAGE> 27
LOCATIONS
CORPORATE OFFICES AND WORLD HEADQUARTERS
Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
(708) 627-6900
MANUFACTURING FACILITIES
Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
(708) 627-6900
Minuteman International, Inc.
14N845 U.S. Route 20
Hampshire, Illinois 60140
(708) 683-5210
Multi-Clean,
Division of Minuteman International, Inc.
600 Cardigan Road
Shoreview, Minnesota 55126
(612) 481-1900
SALES OFFICES
UNITED STATES
Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
(708) 627-6900
Parker Sweeper
111 South Rohlwing Road
Addison, Illinois 60101
(708) 627-6900
Minuteman International, Inc.
3631 San Fernando Road
Glendale, California 91204
(213) 245-7401
Minuteman International, Inc.
1190 North Villa Avenue
Villa Park, Illinois 60181
(708) 530-0007
CANADA
Minuteman Canada, Inc.
84 East Brunswick Boulevard
Dollard des Ormeaux
Quebec H9B 2C5 Canada
(514) 683-3880
Minuteman Canada, Inc.
1100 Mid-Way Boulevard
Mississauga
Ontario L5T 1V8 Canada
(416) 670-1063
Minuteman International
1994 Annual Report 25
<PAGE> 28
MINUTEMAN(R)
FRONT RUNNER OF THE INDUSTRY(SM)
Minuteman International, Inc.
111 S. Rohlwing Rd.
Addison, Illinois 60101
Telephone: (708) 627-6900
<PAGE> 1
EXHIBIT 22 (a)
SUBSIDIARIES
OF
MINUTEMAN INTERNATIONAL, INC.
Multi-Clean Division of Minuteman International, Inc.
600 Cardigan Road
Shoreview, Minnesota 55126
Minuteman Canada, Inc.
84 E. Brunswick Boulevard
Dollard des Ormeaux
Quebec H9B 2C5 Canada
Minuteman International Foreign Sales Corporation
c/o Ernst & Young Services, Ltd.
P.O. Box 261 Bay Street
Bridgetown, Barbados
17
<PAGE> 2
PROTOCOL OF UNDERSTANDING
This document is intended to set forth the mutual understanding between
Hako-Werke GmbH & Co. and Hako Minuteman, Inc. (The "Companies") concerning the
distribution and sales of their respective products in the future. As used
herein, one Company's "Products" is intended to mean all machines or other
products including, in the case of Hako Minuteman, its chemical products, which
each party sell through its distribution channels.
1. The matters set out in this memorandum shall be effective as of March
1, 1994, and shall remain in effect until the two Companies agree to
change it by written agreement of their respective Chief Executive
Officers.
2. This protocol modifies the Trademark Agreement of February 9th, 1987,
as indicated below; and it replaces all other previous agreements,
memos, or understandings on the topics covered, including the General
Agreement on Marketing Cooperation dated March 4, 1987. The Warranty
Agreement as of February 15, 1992 (Exhibit A) and the Agreement on
Direct Deliveries from Hako Minuteman dated February 18, 1993
(Exhibit B) remain unchanged with the exception of the initialed and
lined out portion on Exhibit B.
3. Both Companies desire to increase their respective sales and
distribution through mutual assistance and cooperation, but in
realization that each Company should have control over the sales and
distribution of its own Products. Toward that end, each Company will
hereafter be free to market and distribute its Products throughout
the World. However, Hako Minuteman agrees to sign an Exclusive
Distributor Contract with Hako Australia to run for a minimum period
of two years and will supply on a non-exclusive basis Hako Japan with
products and kits for components under the brand names Minuteman and
Multi-Clean for at least two years.
4. The parties agree to continue their cooperation in (i) providing the
other Company with "kits" (i.e., subassemblies or parts forming a
subassembly), and (ii) selling Products to the other Company in
accordance with present practices.
5. Both Companies are responsible for servicing, warranty, liabilities
and supply of spare parts for all sales undertaken by the respective
Company. Both Companies will assist the other Company according to
good business practices and legal obligations in complying with this
responsibility.
6. The Companies agree to implement before May 1, 1994, a mutually
satisfactory policy on return of overstocked parts to the originating
Company (e.g., Exhibit C).
18
<PAGE> 3
7. Hako Minuteman will not use the term "HAKO" as a trademark on any
Product intended for sale in any country.
8. Hako Minuteman will discontinue the use of the trademark "HAKO" on
its products within six months. However, Hako Minuteman will
continue to use its corporate name on nameplates for its Products
until it changes its name.
9. Hako Minuteman will eliminate "HAKO" from its corporate name by
December 31, 1995.
10. Hako-Werke agrees not to export its products bearing the trademark
"HAKO" into North America before April 30, 1996.
11. The parties agree to respect each others' trademarks and trade dress,
and to cooperate with the other party in maintaining and preserving
their trademarks, trade dress and corporate identification. Any
instance of actual confusion or misconception on the part of any
dealer or customer will be reported to the other Company, and the
Companies agree to cooperate in clearing up any such confusion.
12. In the case where one Company manufacturers a product on an OEM basis
for a third party, the other Company may ask the manufacturing
Company to change the color of the product for the OEM customer in
order to avoid confusion of trade dress, should this occur for
private label customers.
13. Where one Company would like to pursue a joint venture or license
agreement with the other Company, for example, in pursuing a new
market, the Companies will agree to review such a proposal.
14. Any dispute between the two Companies concerning topics in this
protocol shall be discussed and settled, first between the Chief
Executive Officers of the Companies in an amicable way. If a mutual
agreement cannot be reached in this manner, the Companies will submit
the matter to binding arbitration without recourse to civil
litigation by having each Company designate one arbitrator at its
discretion, and the two designees shall agree upon, and choose a
third arbitrator, depending upon the circumstances. A majority vote
of the three arbitrators will be binding and non-appealable.
19
<PAGE> 4
Both parties agree to cooperate and provide relevant information requested by
the arbitrators, but both Companies agree that no civil litigation shall ever
be instituted between them concerning the matters within the scope of this
protocol.
<TABLE>
<S> <C>
HAKO-WERKE GMBH & CO. HAKO MINUTEMAN, INC.
By: By:
------------------------------- ------------------------------------
Tyll Necker Jerome E. Rau
Its President Its President
Date: Date:
------------------------------- -----------------------------------
</TABLE>
20
