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FORM 10 - K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
(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, 1996
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COMMISSION FILE NUMBER 0-15582
----------------------------------------------------
MINUTEMAN INTERNATIONAL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS ARTICLES OF INCORPORATION)
ILLINOIS 36-2262931
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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)
Registrant's telephone number, including area code 630-627-6900
----------------------------
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, 1997:
Common stock, no par value, $6,434,000
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The number of shares outstanding of the issuer's class of common stock as of
March 1, 1997:
Common stock, no par value, 3,568,385 shares
- - --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report for the year ended December 31, 1996, are
incorporated by reference into Parts I and II.
Portions of the Proxy Statement for the Annual Shareholders Meeting to be
held April 25, 1997, are incorporated by reference into Part III.
2
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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.
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 and operates as a
division.
Additional information pertaining to new products is incorporated herein by
reference on pages 5 through 16 of the 1996 Annual Report for the year ended
December 31, 1996.
Marketing and Distribution
The Company manufactures 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 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
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affiliated and unaffiliated customers in foreign countries aggregated
to $11,173,000, $11,063,000 and $9,037,000 in 1996, 1995 and 1994,
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 20 United States and 8 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.
4
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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 $19.2 Million at December 31, 1996. Cash,
cash equivalents and short term investments represented 18.8% 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 $3.1 Million at December 31,
1996 and 1995, respectively. The Company anticipates that substantially all of
the 1996 backlog will be delivered during 1997. 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 $1,146,000 $1,085,000 and $861,000 in
research and development activities during 1996, 1995 and 1994, respectively.
Employees
The Company has 258 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 1998 and October 1998, respectively. The Company believes that the current
employee relations are excellent. The Company plans to hire additional
employees during 1997 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 1997 or
thereafter.
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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
- - ---------------------------------------------------------------------------------------
<S> <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 100,000 (Bldg.) Manufacturing, warehouse
871,200 (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. In August
of 1995, a 50,000 square foot addition to this facility was completed. With
the acquisition of this property, the Company anticipates expanding the
services currently provided.
The Villa Park, Illinois lease term expires December 31, 2000. The Dollard des
Ormeaux, Quebec lease term expires 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.
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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, 1996, 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 24 of the Annual Report for
the year ended December 31, 1996, are incorporated herein by reference.
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
The Selected Consolidated Financial Data on page 24 and the Notes to
Consolidated Financial Statements on pages 21 through 23 of the Annual Report
for the year ended December 31, 1996, are incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" on pages 17 and 18 of the Annual Report for the year ended December
31, 1996, are incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements included on pages 18 through 20 and the
Notes to Consolidated Financial Statements on pages 21 through 23 of the Annual
Report for the year ended December 31, 1996, are incorporated herein by
reference.
Quarterly Results of Operations on page 23 of the Annual Report for the year
ended December 31, 1996, 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, 1997, 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, 1997, 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, 1997, 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, 1997, 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 1996;
(d) Financial Statement Schedule
The financial statement schedule listed in the accompanying index
to financial statements is filed herewith.
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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, 1997 By:
----------------------------
Jerome E. Rau, President and
Chief Executive Officer
By:
----------------------------
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.
- - -------------------------------------
Jerome E. Rau
President, Chief Executive Officer,
and Director
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Tyll Necker, Director
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Frederick W. Hohage, Director
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Frank Reynolds, Director
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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, 1996
MINUTEMAN INTERNATIONAL, INC.
ADDISON, ILLINOIS
11
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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. and subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. Our audits
also include 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. and subsidiaries at December 31, 1996 and 1995,
and consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, 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.
Ernst & Young LLP
Chicago, Illinois
February 13, 1997
12
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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, 1996
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, 1996, are incorporated by
reference in Item 8:
Consolidated Balance Sheets - December 31, 1996
and 1995
Consolidated Statements of Income - Years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity -
Years Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows -
Years Ended December 31, 1996, 1995 and 1994
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 COL. E
- - ---------------------------------------------------------------------------------------------------
Additions Deductions
-------------------------- ----------
Charged to
Balance at Charged to Other Balance
Beginning of Costs and Accounts - at End of
Description Period Expenses Describe Describe(1) Period
- - ------------------------------------- ------------ ---------- ---------- ----------- ---------
Year Ended December 31, 1996
- - -------------------------------------
<S> <C> <C> <C> <C> <C>
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $372,000 104,000 ------ 125,000 $351,000
Year Ended December 31, 1995
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Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $400,000 66,000 ------ 94,000 $372,000
Year Ended December 31, 1994
- - -------------------------------------
Reserves and allowances deducted from
asset accounts:
Allowance for uncollectible accounts $385,000 213,000 ------ 198,000 $400,000
</TABLE>
Note 1 --Uncollectible accounts written off, net of recoveries.
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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 Form 10-K Annual Report for fiscal year ended December 31,
1994.
Statement re. Computation of Per Share Earnings
-----------------------------------------------
11 Statement re. computation of per share earnings. See Note B of the
Notes to Consolidated Financial Statements on Page 21 of the Annual
Report for the year ended December 31, 1996 (incorporated herein by
reference).
Annual Report to Security Holders
---------------------------------
13 The Company's Annual Report to Shareholders for the year ended December
31, 1996, is incorporated herein by reference.
Subsidiaries of the Registrant
------------------------------
22 (a) Subsidiaries of the Registrant
(included herein at Page 17).
- - -------------------------------------------------------------------------
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 LOGO]
[5 PHOTOS WITHIN A PHOTO]
1996 ANNUAL REPORT
MINUTEMAN INTERNATIONAL, INC.
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Mission Statement
A Steadfast Commitment to Our Customers.
The core of Minuteman International is anchored by a single, straightforward
vision - to deliver exceptional floor cleaning equipment and chemicals combined
with a single-minded focus to anticipate and answer our customers' needs.
Answering those needs is just the beginning of a performance-driven philosophy
to help our distributors maximize a profit and to provide outstanding service,
products and training to each Minuteman customer. That philosophy is combined
with the ongoing development of new and more cost effective methods of
manufacturing and product design to keep our customers on the leading edge of
floor care technology into the next century.
[MINUTEMAN "FRONT RUNNER OF THE INDUSTRY(SM)" LOGO]
<PAGE> 3
CONTENTS [3 PHOTOS]
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A message from the President and CEO, Jerry Rau. -- Page 3
Strong distributor base leads stunning global performance. -- Page 5
Celebrating 10 years as a public company. -- Page 7
Dynamic NEW products greet the Millennium. -- Page 11
A full-line of exceptional floor care products drive the market. -- Page 13
Multi-Clean celebrates 50 years of outstanding floor care chemicals. -- Page 16
16-YEAR SUMMARY
NET SALES
- - ----------------------------------------------------------------------
(Dollars in thousands) $49,120
[PERFORMANCE GRAPH -- NEED PLOT POINTS]
Minuteman's growth is characterized by ongoing new product development,
aggressive marketing programs, specific cost containment efforts,
specialization of businesses and focused expansion into new markets.
ISO 9001 Certification
Excellence. Quality. Consistency.
ISO 9001 Certification is a distinct certification because it not only
encompasses manufacturing but also includes the design and development of
products. Minuteman received final certification in October 1995 and received
certification again this past October for our Hampshire manufacturing facility.
Minuteman remains dedicated to complete compliance with ISO 9001 certification
requirements and is proud of the opportunity to fully demonstrate to
distributors their dedication to ongoing quality.
[SEAL -- "UNDERWRITERS LABORATORIES(R) REGISTERED FIRM"]
<PAGE> 4
[PHOTO]
Jerry Rau
President & Chief
Executive Officer
President's Message:
Record revenues and increased earnings per share were achieved by Minuteman
International in 1996. Improved profit margins also were realized, as net
income rose 12% on a 6% increase in revenues.
Revenues for the year were aided by continued dealer support both here
and abroad and a price increase effective last January. The higher volume,
combined with constant attention to expense control, produced greater
profitability evident by our operating profit margin expanding to 9.0% of sales
from 8.6% a year ago.
These results reflect the continuation of our strategy of developing new
products, introducing aggressive marketing initiatives, installing production
efficiencies, containing costs and expanding into new markets.
There is comfort in the steady growth in revenues Minuteman has posted in
all but one of the 16 years since its inception. And in just the past four
years our net income has nearly doubled. We believe the future holds more of
the same because we have positioned the company for continued gains.
Our statement that we are the front runner of our industry is not a hollow
claim. Minuteman has no debt. It has expandable modern facilities that are
state of the art in our industry. All equipment factories are certified for ISO
9001 quality standards, a claim unique to Minuteman among floor care equipment
manufacturers. Flexible employment programs have allowed us to attract workers
of a quality unavailable to companies with more traditional hiring practices.
Twenty separate patents testify to our innovations, and we prevailed in a major
patent enforcement action last year. CAD-CAM design technology, EC and UL
electrical approvals and advanced manufacturing procedures allow us to respond
to the most demanding customer requirements. Dealers in more than 40 countries
are constantly enlarging our global footprint, with international sales now
accounting for 23% of our total revenues.
During 1997, I'm serving as president of the International Sanitary Supply
Association (ISSA), the first equipment manufacturer to do so since 1958. The
ISSA is our industry's leading trade association with more than 4,000 members,
nearly one-fourth of them from foreign countries. This has given Minuteman
significant credibility and increased exposure among all the participants in
our industry worldwide. ISSA is attuned to the profound changes that will
influence our industry in the next five to ten years. Not the least of these
will be consolidations as some current participants are absorbed by companies
in related fields who appreciate the opportunities in the floor and lawn care
industries. In 1998, I will serve as an international director of ISSA, viewing
this evolution from a unique vantage point.
New product developments demonstrate our responsiveness to customers'
needs more than any other activity, and 1996 yielded a number of innovative
offerings. Principal among them are a Back Pack Vacuum that is lightweight and
extremely portable; two new push sweepers; our Gotcha! portable spot removal
system, the only UL approved spotter on the market; a universal intake that
will accommodate any Minuteman hose; and a new line of electric high-speed
burnishers that are easier to operate and produce better results. A new
battery-powered burnisher will be introduced in 1997, along with a line of
propane burnishers that have greater brushing pressure and longer running time.
[PHOTO] [PHOTO]
MPV(R)-14 GOTCHA!(R)
3
<PAGE> 5
Separately, new colors were selected for our equipment to reflect more modern
tastes - rich wine and charcoal. The colors have been well received by dealers,
who feel this makeover dramatically enriches the appearance of our products.
Market expansion, another element in our growth strategy, is heavily
represented by our international activities. In 1996, a manager for all
European sales activities was appointed who is located on the continent, and a
warehouse in the Netherlands was opened for more responsive delivery. This
year, we will be exhibiting at four international trade shows -- in Beijing,
Mexico City, Paris and Singapore. On the home front, heightened training,
special promotions and incentives will encourage dealers to increasingly
feature Minuteman's line in their sales efforts.
Market penetration will be a particular focus in the new year. In an
effort to further stimulate sales, we will undertake specialization in our
businesses, starting with establishing Multi-Clean as a separate division in
1997. Previously Multi-Clean's cleaning chemicals were sold by our equipment
salespeople. Initially, eight new representatives will concentrate their
efforts exclusively on the sales of Multi-Clean products. Our chemical facility
in Shoreview, Minnesota has ample capacity to produce considerably greater
quantities without additional investment. We see an opportunity here to greatly
capitalize on our reputation and capacity in this business.
Our Parker Sweeper lawn care products business was adversely effected in
1996 by unusually inclement weather conditions in both the spring and fall. As
normal weather patterns return, however, we are confident Parker's century-old
renown will again reassert itself with improved operating performance.
Investments in future-oriented resources have characterized Minuteman's
management philosophy from its beginning. At no time has the company been
better positioned in this regard than it is today. Dynamic forces of change lie
ahead, but our valued relationships with dealers, the ingenuity of our
employees and our active involvement with ISSA will keep us on the leading edge
of progress to the benefit of all our constituencies.
Sincerely,
Jerome E. Rau
JEROME E. RAU
President and Chief Executive Officer
March 15, 1997
[PHOTO]
Jerry Rau receiving the President's
gavel from outgoing President
Tom Lane.
THE ISSA
FULFILLING THE PROMISE.
The International Sanitary Supply Association, ISSA, is the industry's leading
trade association serving as a conduit for communication and business contacts
between customers, distributors, manufacturers, wholesalers and, more recently,
contract cleaners. This outstanding Association delivers a promise to be the
avenue for these groups to interact, face new industry challenges together,
become better educated, gain worldwide exposure and run the industry's most
vital annual trade show.
IS THE ISSA FULFILLING
THE PROMISE?
WE THINK SO.
Consider that membership in the ISSA offers Minuteman International exposure to
over 2,400 customers every year at the annual ISSA Show. Membership in the ISSA
offers Minuteman new and important ways to enter and take advantage of new
markets and products. Membership offers new educational opportunities from
internet access to person-to-person contact at monthly regional meetings. We
believe that the ISSA delivers its promise to be the industry's sounding board,
to act as a proving ground for new ideas in the industry and to offer
opportunity for all who participate.
[PHOTO] [PHOTO]
200 BRUSH DRIVE 320 TRACTION DRIVE
4
<PAGE> 6
GLOBAL PRESENCE
DYNAMIC COMMITMENT TO DISTRIBUTORS LEADS GLOBAL PERFORMANCE.
Minuteman's global performance was marked by a substantial increase in new
dealers, expanding our international presence from 12 countries in 1992 to over
40 in 1996. The company's focused entry and continued expansion in the global
marketplace is directly related to a number of strategic directives guided by
management. First, Minuteman follows a commitment to build strong distribution
centers while working directly with dealers to establish strong networks of
customers. On-site product training, direct follow-up with distributors for
progress checks, consistent distribution of new product information, in
addition to innovative, cost-effective products, are the core of our global
success. Second, the expansion of our export department from two people in 1992
to six people in 1996 allows for better and more timely service directed
specifically to our international distributors.
International growth was enhanced by the addition of a professional sales
manager in Europe who directly facilitates communication with distributors
throughout the continent. In the European market, our increase in business has
enabled us to open a warehouse in the Netherlands, just two hours from busy
downtown Amsterdam. This warehouse will stock all of Minuteman's EC approved
machines to allow for more timely delivery to our European customers.
Additionally, in South America, Asia and the Pacific Rim, Minuteman continues
to build on a reputation committed to providing the best value for the price
and has been rewarded by frequent new customer referrals.
Minuteman's commitment to the international community is also represented
by an increasing presence in international trade show participation. In 1997,
Minuteman will staff and participate in trade shows in Paris, France;
Singapore; Beijing, China; and Mexico City, Mexico. Minuteman remains committed
to the unique needs of foreign markets and to fostering long-lasting,
professional working relationships with a growing and diverse group of dealers
abroad.
"Our best reference is a current customer...both domestically and
internationally. The strong relationships that have developed with our
distributors around the world are the result of exceptional customer service,
again and again. When we build a relationship with a customer, we want them to
know that we'll go the extra mile to help - whatever it takes. That may mean
helping them specifically meet one of their customer's needs, intensifying
training efforts with their sales force, or actually redesigning a product so
that it will work better in their marketplace. It's all about satisfying our
customers - that's why we're in business."
GREG RAU, VICE PRESIDENT SALES
Minuteman International, Inc.
[PHOTO] [PHOTO]
170 BRUSH DRIVE 265 BRUSH DRIVE
5
<PAGE> 7
[MAP OF WORLD ILLUSTRATING MINUTEMAN DISTRIBUTION]
WORLDWIDE LEADERSHIP
STRONG DISTRIBUTOR BASE LEADS STUNNING GLOBAL PERFORMANCE.
Minuteman International's expansion is driven by a commitment to provide
outstanding service to distributors through innovative products, aggressive
marketing tools, one-on-one training and ongoing sales support.
EDUCATING THE WORLD
MINUTEMAN DISTRIBUTORS ARE THE BEST IN THE WORLD.
[PHOTO INSET:MEN LOOKING]
Minuteman's commitment to hands-on training and ongoing education through
specially designed service and sales schools keeps customers on the leading
edge of floor care systems and new technologies. In 1997, Minuteman will
enhance this unheralded commitment to training by offering distributors the
option of selecting from ten different schools.
These training schools will review sales techniques, maintenance, and service
level knowledge for all products through advanced technical schools designed to
offer training on such subjects as "developing and maintaining a profit center
service department" and "advanced technical training". In addition to formal
schooling, field sales representatives continue to offer hands-on training,
on-site, to customers as requested, worldwide.
<PAGE> 8
BRIGHTER THAN EVER
CELEBRATING 10 YEARS AS A PUBLIC COMPANY.
Nineteen ninety-six marked the tenth anniversary of Minuteman
International's initial public offering. Since that time the 16-year-old
company has carved a direction in the industry that points the way to future
success for both Minuteman and the floor cleaning industry. Consider that the
trend for Minuteman to capture an increasingly greater share of the marketplace
resulted in the growth of net income from 45 cents per share in 1992 to 89
cents per share in 1996, a substantial increase of nearly 100%.
In addition, Minuteman's continued steady growth since becoming a public
company is characterized by ongoing new product development, aggressive
marketing programs, specific cost containment efforts and focused expansion
into new markets. Expansion has been marked by a concentrated effort to
increase distributors both nationally and internationally. Since becoming a
public company, Minuteman has added many new distributors in the U.S. and over
40 internationally. Net sales as a result of these combined efforts increased
from $30 million to $49 million in just the last five years, a 63% increase.
Continued substantial growth of Minuteman is indicative of a loyal and
dedicated customer base who continue to help us achieve our goals and increase
value for shareholders. The next decade will be marked by heightened
efficiencies in the manufacturing process, further market expansion and
innovative, full-service floor care product development.
"We look forward to reaching and passing the Millennium with a solid
foundation on which to build an even stronger Minuteman...characterized by a
commitment to drive the business forward and grow through increased sales,
specialization of our businesses, such as Multi-Clean, and responsive product
innovation for our customers.
Minuteman will remain the front runner in the industry because we are
committed to our customers first...and that commitment is to provide them with
exceptional floor care products that guarantee the best value for the price."
JERRY RAU, PRESIDENT $50,000 40,000
Minuteman International, Inc. 48,000 38,000
46,000 36,000
92 93 94 95 96 44,000 34,000
42,000 32,000
5-YEAR SUMMARY
NET SALES
(Dollars in thousands)
[PERFORMANCE GRAPH -- NEED PLOT POINTS] $ 3,250 2,000
3,000 1,750
2,750 1,500
5-YEAR 2,500 1,250
NET INCOME 2,250 1,000
GROWTH
(Dollars in thousands)
[PERFORMANCE GRAPH -- NEED PLOT POINTS]
$0.45 $0.89
Per Share Per Share
- - ------------------------------------
92 96
[PHOTO] [PHOTO]
205 TRACTION DRIVE 340 BATTERY RIDER SCRUBBER
7
<PAGE> 9
[PHOTO COLLAGE]
CONNECTING WITH CUSTOMERS
MINUTEMAN HAS NEW COLORS.
Maintaining a strong connection with distributors and customers is
characterized by strong product performance and value. Part of that value is
enhanced by sleek and attractive products designed to help improve distributor
sales and fully satisfy customers. Minuteman's new colors were chosen with
these goals in mind. The combination of tasteful wine and charcoal was
specifically selected to enhance our already high-quality floor cleaning
equipment and to further distinguish our stylish performers from competitors
worldwide.
"MAKING A SPLASH"
Minuteman's new colors were formally introduced this year at the Annual ISSA
Trade Show held in October in Chicago, Illinois. Response from distributors and
customers was enthusiastic and profitable. The new booth and products received
comments from our distributors ranging from, "We love these colors. They'll
really enhance our showroom", to "The new colors really add value to the
products."
<PAGE> 10
[PHOTO]
Ambassador(TM)
Carpet Extractor
[MINUTEMAN "REDESIGNED '96" LOGO]
MINUTEMAN. AN AGGRESSIVE PERFORMER. RICH IN ASSETS.
An aggressive performer in the market means more than increased sales and
revenue. It suggests a consistent utilization of all our resources to deliver a
product to customers that is without equal. Minuteman consistently outperforms
in its markets by recognizing that it holds a unique and rich portfolio of
assets from exceptional, long-time employees to innovative manufacturing tools
and keen operational systems. Uncommonly, the company carries no debt.
THESE ASSETS COMBINE TO CREATE A FRONT RUNNER, EVERY TIME.
---------------------------------------------------------
REMARKABLE ACHIEVEMENTS
INGENUITY. UNWAVERING DEDICATION TO CUSTOMERS. TEAMWORK PLACES
PERFORMANCE FIRST.
High-quality, durable and efficient products are fueled by a dedicated team of
engineers and professional product designers. Each team works on categories of
machines in select product areas such as carpet, concrete or tile. These highly
trained engineers investigate information and product suggestions from
customers around the world. This data, combined with state-of-the-art CAD-CAM
technology, 20 individual U.S. Patents, ISO 9001 Certifications and new, more
cost-effective methods of manufacturing enable Minuteman to anticipate and
answer distributor needs to design remarkable floor care products - every time.
In addition, the group's work with electrical standards both domestically and
internationally has allowed Minuteman to receive EC declarations, UL listings
and cUL listings to ensure easier access to our global marketplace.
MINUTEMAN. MAKING THE BEST, BETTER.
Recent technological advances have made the impossible possible. Consider that
just five years ago many of the sophisticated tooling and CAD-CAM design
options were not available. As a result, technological advances have allowed
Minuteman to make better, more durable and long-lasting products and pass these
substantial benefits on to customers. Some of these advantages are most obvious
in the innovative reengineering that takes place when redesigning and
developing new and existing products.
THE AMBASSADOR(TM)
A DEEP DOWN CLEANER THAT HUGS THE CARPET FOR OUTSTANDING RESULTS.
Minuteman's enhanced AmbassadorTM Carpet Extractor is the ideal choice for
effective carpet and upholstery cleaning in many locations from offices to
hotels, restaurants and hospitals. Redesigned with a more streamlined look, the
Ambassador cleans up to 2,500 sq. ft. per hour and is constructed of
noncorrosive polyethylene so it won't dent, corrode or rust. Technological
advances have allowed engineers to design a convenient removable recovery tank
with a unique capped drain port which makes emptying easy and effortless. The
convenience and exceptional cleaning abilities of this easy-to-use carpet
extractor are just a few reasons why it is a popular and long-term choice for
customers.
[PHOTO] [PHOTO]
Ambassador(TM) 290 TANK VACUUM
9
<PAGE> 11
["REDESIGNED MINUTEMAN '96" LOGO]
[PHOTO]
COMMERCIAL AND INDUSTRIAL TANK VACUUMS
REDESIGNING MAKES THESE POWERFUL AND DEPENDABLE VACUUMS EVEN BETTER.
Another exceptional example of technological advancement, Minuteman's 290 Tank
Vacuum now features a universal intake that will hold any Minuteman hose. This
unique metal multi-intake has been retooled, is more durable than plastic,
offers more support around the seal and still holds its current exclusive
patent. As a result of these changes, customers receive a cost-effective vacuum
that is at once versatile and dependable. Available in a wide variety of sizes
from 4 to 20 gallons, commercial and industrial tank vacuums include all of
Minuteman's latest patented features. Also introduced this year is a new lid
design on the 705 Series Air Vacuums. This super suction, non-electric Air Vac
is perfect for heavy duty industrial use and is capable of lifting or moving an
extensive variety of solid or liquid materials. With no moving parts, the 705
Series Air Vacs require little maintenance with continuous service.
MINUTEMAN'S VISIONARY HAMPSHIRE MANUFACTURING FACILITY
Minuteman's ultra-modern 100,000 sq. ft. Hampshire facility allows us to
achieve remarkable product results and react to an expanding market. Custom
designed to allow for up to 200,000 sq. ft. of manufacturing space, the
facility can be expanded as needed in 50,000 ft. increments to respond to
increased volume and storage needs. A modern training facility, recently
completed on-site, allows distributors to comfortably learn Minuteman products
on a one-to-one basis with professional sales representatives. In addition, the
plant is designed to offer easy access to assembly lines so that distributors
can watch product assembly and fully understand the floor care products to
better sell to their customers.
<PAGE> 12
["NEW PRODUCT '96 MINUTEMAN" LOGO]
DYNAMIC NEW PRODUCTS FUEL 1996.
Paying attention to customers is something we take seriously. In fact,
Minuteman actively seeks out customer feedback to ensure accurate development
of new products or improvements to existing products. Technological
advancements through the use of CAD-CAM, innovations in tool design and
sophisticated new materials help Minuteman engineers and designers to design
new, exciting products to enhance our extensive product line. These
technological achievements are passed on to customers in the form of better,
more cost-effective products that surpass the competition. In addition, new
products such as the BPV-Back Pack Vacuum allow Minuteman to expand their reach
into new and exciting markets.
MINUTEMAN'S 2400 BURNISHER CONTROLS DUST, SAVES LABOR.
The Minuteman 2400 Burnisher Series reduces the need for dust mopping by using
PAMS(R) dust control, features an ergonomically shaped operator handle, a
systems alert center and five patented features unique to this burnisher. The
Passive Air Management System (PAMS(R)) captures the natural air flow produced
by the rotation of the pad and harnesses it to create a vacuum for dust
control. Plus its five patented features help to increase floor luster, extend
pad life, create a full, level pad contact and other innovative benefits. The
2400 PAMS Burnisher is exceptional for use in schools, offices, hospitals and a
great benefit to building contractors.
KLEEN SWEEP(R) 27
QUICK AND EFFICIENT SWEEPING.
Kleen Sweep 27's lightweight carriage is ideal for machine shops, stockrooms,
parks, small yards, parking areas and loading ramps as well as indoors on large
carpet areas. Constructed of durable, noncorrosive polyethylene, this little
powerhouse sweeps five to seven times faster than manual sweeping and can clean
up to 31,000 sq. ft. per hour - a substantial labor savings. Plus, the popular
Kleen Sweep 27 is exceptionally cost-effective.
KLEEN SWEEP(R) 35
QUICK, THOROUGH SWEEPING OF SMALL TO MEDIUM-SIZED AREAS.
This labor-saving, walk-behind power sweeper reduces maintenance time and cost.
Perfect for concrete, asphalt, artificial turf and all commercial carpet
surfaces, this easy-to-use sweeper can sweep up to 55,440 sq. ft. per hour.
Kleen Sweep 35 offers easy maintenance, a large sweeping capacity, exceptional
performance, a dust filter system and efficient ergonomic design. Both
commercial and industrial facilities are ideal for the Kleen Sweep 35.
[PHOTO] [PHOTO] [PHOTO]
2400 BURNISHER SERIES KLEEN SWEEP(R) 27 KLEEN SWEEP(R) 35
WITH PAMS(R)
11
<PAGE> 13
["NEW PRODUCT '96 MINUTEMAN" LOGO]
CARPET CARE
GOTCHA!(R) A SELF CONTAINED, LIGHTWEIGHT, PORTABLE SPOT REMOVAL SYSTEM.
BIG CLEANING IN A SMALL PACKAGE.
The catchy name for our spot remover is perfectly suited to this powerful yet
compact spot removal system. Minuteman's new Gotcha! was designed for spot
removal and carpet maintenance operations that require maneuverability,
efficiency, power and hassle-free, one-person operation.
Gotcha! is the only UL registered spotting machine on the market and is another
power-packed innovation from Minuteman that is specifically designed to answer
distributor and customer needs. Gotcha! can be used anywhere a spot occurs and
is popular in offices, hospitals, retail stores, car dealerships and more.
Gotcha! is great for use on carpet or upholstery.
[PHOTO-MAN AT TERMINAL]
BEST VALUE FOR THE PRICE
Our goal is to offer the best value in the floor cleaning business through
continued investments and improvements in the manufacturing process, research,
development and engineering stages. The outcome is exceptional floor care
products that guarantee the best value for the price anywhere in the market.
It's possible because strategic planning and keen future focus continues to
place Minuteman products at the forefront.
[PHOTO]
GOTCHA! PORTABLE SPOT
REMOVAL SYSTEM
<PAGE> 14
["NEW PRODUCT '96 MINUTEMAN" LOGO]
BACK PACK VACUUM BREAKS NEW GROUND IN CONVENIENCE.
LIGHTWEIGHT, PORTABLE, COMFORTABLE.
Minuteman's new BPV - Back Pack Vacuum answers customer requests for a
lightweight and portable vacuum that is easy to use, comfortable and can go
just about anywhere. Convenient and comfortable to use, it features wide padded
shoulder and waist straps that adjust to any size user and evenly distributes
weight over hips, away from shoulders and back, for a comfortable, light
carriage. To aid movement, the Back Pack Vac includes a 50-foot power cord,
5-foot hose, a telescoping wand and an easy-roll floor tool. Safe for all
locations, the Back Pack Vac can be used anywhere and is especially useful for
offices, schools, hotels, hospitals - anywhere an operator can walk, the Back
Pack goes.
WORLD RENOWNED FLOOR CARE PRODUCTS
A LEADER DRIVES THE FOREFRONT OF FLOOR CARE PRODUCTS.
In addition to the dynamic products introduced in 1996, Minuteman continues to
drive the market with a full line of exceptional maintenance products for
industrial, commercial and institutional facilities. These innovative products
include floor and carpet care machines, industrial and commercial vacuums,
automatic floor scrubbers, critical filter vacuums and a wide array of
specialty items.
CARPET CARE MACHINES
USER-FRIENDLY, POWER-PACKED WORKHORSE CARPET MACHINES.
Minuteman's carpet care equipment is designed to be user-friendly with improved
visibility and reduced fatigue. From the total care approach of the Rugmaster
and Ambassador Series to the daily dependability of the Multi-Purpose Vacuum
(MPV(R)) upright vacuum, Minuteman's solution to carpet maintenance means
excellent cleaning power and minimum operator fatigue.
FLOOR CARE MACHINES
MINUTEMAN KEEPS ITS LEAD WITH COMPETITIVELY PRICED FRONT RUNNERS.
Designed to be competitively priced, Minuteman's Front Runner Series retains
the same high quality 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. Improvements
and cost savings offered by such features as dual safety interlocks, operator
designed plastic handles for grounding and safety and non-marking bumpers make
the Front Runner Series an investment that offers customers a substantial cost
savings and continues to build a bright future for Minuteman.
[PHOTO] [PHOTO] [PHOTO]
BPV-BACK PACK FRONT RUNNER FLOOR MACHINE MPV(R)-18
VACUUM
13
<PAGE> 15
AUTOMATIC SCRUBBERS
INNOVATIVE SCRUBBERS BRING UNSURPASSED QUALITY TO CUSTOMERS.
Minuteman offers a wide variety of scrubbers with cleaning paths ranging from
17" to 34" and coverage from 18,000 to 34,000 sq. ft. Each of Minuteman's
automatic scrubbers is designed to fill a specific floor care need. For
example, Minuteman scrubbers feature innovative designs that set them apart.
The 260 and 320 Automatic Scrubbers clean the toughest floors and are
ergonomically designed to fulfill a specific customer need. Plus, the 320
Automatic Scrubber is specifically designed for unique markets such as
hospitals and features quiet engineering advancements that significantly reduce
the dba rating on the powerful 3-stage motor. The 170 and 200 compact
walk-behind scrubbers meet small to mid-sized floors head-on with easy
operation, increased maneuverability and high performance cleaning. All
Minuteman automatic scrubbers are ergonomically designed to allow for greater
operator comfort and easier serviceability. These aggressive machines continue
to outpace the competition and promise to be a solid foundation for Minuteman
well into the Millennium.
[PHOTOS]
AGGRESSIVE MARKETING
Minuteman continues to aggressively market their outstanding products through
selected advertising in high quality industry publications. These two
advertisements offer distributors and end-users a peek at each machine in a
family, such as the Automatic Scrubbers or Carpet Care products, illustrating
the breadth of Minuteman's line.
<PAGE> 16
FLOOR BURNISHERS
PATENTED PAMS(R) UNIQUE TO MINUTEMAN.
Minuteman's floor care burnishers are efficient, easy to use and feature a
unique Passive Air Management System (PAMS(R)) whose patented technology keeps
Minuteman's popular 1500, 2400 and 2600 burnishers on top of the market. This
innovative floor care equipment brings cost savings, rugged construction,
ergonomic considerations and ease of operation to new and established markets
for Minuteman.
CRITICAL FILTER VACUUMS
CLEANROOM EFFICIENCY, ABSOLUTE FILTRATION, POWERFUL FILTERS.
Critical Filter Vacuums require both safety and efficiency. Consider that the
CRV(TM) Clean Room Vacuum was specifically designed for Class I through Class
100,000 cleanrooms, pharmaceutical labs, gowning areas, air showers, biological
labs and computer rooms. Additional Minuteman Critical Filter Vacuums are
specially designed for easy use, come in a wide variety of sizes, and are
created specifically for hazardous waste applications such as Explosion Proof
Vacuums and the Mercury Recovery Vacuum Series for disposal of mercury and
vapor.
PARKER SWEEPER(R)
DIVERSITY, VARIETY FOLLOW PARKER SWEEPER.
Parker Sweeper, located at Minuteman's Hampshire facility, offers a wide
variety of lawn, turf and industrial maintenance equipment. Products offered by
Parker Sweeper include lawn sweepers, litter vacuums, dethatchers, wheeled
blowers, chipper/shredder vacuums and portable truck loaders. This exciting
product line brings diversity and strength to Minuteman by selling its products
through, but not limited to, the janitorial and cleaning industries. Parker
products are offered to customers through lawn and garden, roofing and paving
distribution channels. All Parker Sweeper models are designed to improve
operator comfort, reduce user fatigue and deliver cost-efficient performance.
Parker products have been the choice of professional landscapers and
discriminating consumers for well over a century. Parker Sweeper's
distinguished reputation in the market is well known and adds substantial value
to the Minuteman brand.
[PHOTO] [PHOTO] [PHOTO]
PARKER SWEEPER 2400 BURNISHER PARKER SCAVENGER(R)
ESTATE MASTER(R)
15
<PAGE> 17
MULTI-CLEAN(R) SHINES
50 YEARS OF HIGH QUALITY FLOOR CARE CHEMICALS.
For 50 years, Multi-Clean has successfully delivered high quality chemical
products for all floor types including resilient tile, hard floors, carpet,
concrete and wood to customers, cleaning contractors and governmental agencies.
This penchant for high quality extends to the Multi-Clean state-of-the-art
research and development lab where chemists formulate and engineer maintenance
chemicals specifically designed to work with all floor care equipment. In
addition, the full line of exceptional products with user-friendly labeling and
industry standard Bag-in-Box packaging confirms Multi-Clean's edge in the
chemical manufacturing industry. New products continue to lead Multi-Clean's
leadership role in the market.
GROWING THE BUSINESS THROUGH SPECIALIZATION.
Plans for the future include a separate Multi-Clean sales force for more
targeted customer service, separate from the traditional floor equipment
representative and an individual order department. This independent profile
will allow Multi-Clean to become more self sufficient and specialize in those
products that we know best. Long-term goals include bolstering profits and
continuing to add to shareholder value.
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION.
RESULTS OF OPERATIONS
EARNINGS
Net Income for the year 1996 was $3,161,000 or $.89 per share compared with
$2,824,000 or $.79 per share.
During 1996, leveraged by higher sales revenues, operating profits
benefited from continued cost containment efforts and a five percent price
increase announced in January. The sales increase was fueled by strong dealer
demand both domestically and internationally and was strong across all product
lines except for Parker Sweeper Company's litter vacuums and lawn care
products, which had been unfavorably affected by inclement weather during the
first half of 1996. The benefits received in other income in 1996 due to the
sale of the remaining portion of our former St. Paul manufacturing facility
likewise contributed to this earnings increase.
The downward pressure on margins in 1995 caused by price concessions
necessary to remain competitive and maintain our market share contributed to
this decline. Profits were adversely affected further due to the significant
commitments made to long-term projects such as ISO certification, expansion of
our research and development department and the completion of the second
50,000-square-foot phase of our new manufacturing plant in Hampshire, Illinois.
It is anticipated that all of these will provide benefits in the years to come.
The benefits received in other income in 1994 due to the successful settlement
of patent infringement litigation and the sale of part of our former St. Paul
manufacturing facility likewise contributed to this decline.
SALES
Net sales increased 6.1% or $2,820,000 in 1996 compared to 1995. The Company's
commercial product line, substantially all of which is domestically
manufactured, increased $2,810,000 or 6.2% compared to 1995. This increase is
due primarily to the sales of new products, our continued expansion in overseas
markets and by strong sales to our North American dealer organization. Sales of
industrial products increased $10,000 or .8% from 1995.
Net sales increased 11.5% or $4,782,000 in 1995 compared to 1994. The
Company's commercial product line, substantially all of which is domestically
manufactured, increased $4,722,000 or 11.7% compared to 1994. This increase is
due primarily to the sales of new products, our continued expansion in overseas
markets and by strong sales to our North American dealer organization. Sales of
industrial products increased $60,000 or 4.8% from 1994.
GROSS PROFIT
As a percent to net sales, gross profit was approximately the same as
in 1995. The effects of higher volume combined with the current year price
increase were offset in part by additional overhead costs associated with our
new production facility in Hampshire, Illinois and an unfavorable change in
product mix.
As a percent to net sales, gross profit decreased to 31.0% in 1995. The
aforementioned pricing pressures and long-term investments coupled with an
unfavorable change in product mix accounted for this decline.
SELLING EXPENSES
Selling expenses, as a percent to net sales, decreased from 18.5% in 1994 to
18.2% in 1995, to 17.4% in 1996. This decrease resulted primarily from
containing expenses proportionately with the increase in sales. The increase in
total expenses in 1996 was primarily attributable to additional personnel
expenses necessary to meet the needs of specific expanding domestic and
international markets. In 1995 this increase was primarily the result of
additional advertising and promotional expenses as well as additional
personnel.
GENERAL AND ADMINISTRATIVE EXPENSES
For 1996 these expenses increased 14.9% from 1995 due primarily to higher
personnel expenses and professional fees.
In 1995 these expenses declined 5.1% from 1994 due primarily to savings
associated with the consolidation of Parker Sweeper administrative functions.
OTHER INCOME
In 1996 the Company's interest income decreased $26,000 due to lower investable
funds. In 1995 interest income decreased $19,000 over the prior year due to
lower investable funds resulting from the construction of the addition to our
new manufacturing facility in Hampshire, Illinois.
In 1995 the Company incurred interest expense of $50,000 on short- term
debt necessitated by the further expansion of the Hampshire manufacturing
facility.
In 1996 other income increased $404,000 due primarily to the gain
recognized on the sale of the remaining portion of our former St. Paul
manufacturing facility. The decline in 1995 other income was 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 during 1994.
INCOME TAXES
The effective tax rate was 36.4%, 31.2% and 37.4% for 1996, 1995 and 1994,
respectively. The increase in the 1996 rates as well as the decrease in the
1995 tax rate from 1994 is caused principally by research and development tax
credits and increased benefit received from our Foreign Sales Corporation
during 1995.
INFLATION
Inflation has not had a significant impact on the Company's business during the
past three years.
17
<PAGE> 19
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES AND FINANCIAL POSITION
The Company had working capital of $19.2 million and $17.1 million at
December 31, 1996 and 1995, respectively. This represented a current ratio of
7.6 and 6.4 for those years respectively.
Cash, cash equivalents and short-term investments represented 18.8% and
6.2% of this working capital at December 31, 1996 and 1995, respectively. This
increase in 1996 was due primarily to financing the expansion of the Hampshire
manufacturing facility during 1995.
At December 31, 1996 and 1995, the Company had shareholders' equity of
$27.9 million and $26.1 million, respectively, which when compared to total
liabilities represented an equity to liability ratio of 8.9 and 7.7,
respectively.
The Company has no debt, more than sufficient capital resources and is
in a strong financial position to meet business and liquidity needs as they
arise. The Company foresees no unusual future events that will materially
change the aforementioned summarization.
CONSOLIDATED STATEMENTS OF INCOME
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995 1994
---------------------------------------
<S> <C> <C> <C>
Net sales ............................ $49,120,000 $46,300,000 $41,518,000
Cost of sales ........................ 33,932,000 31,957,000 27,540,000
----------- ----------- -----------
Gross profit ..................... 15,188,000 14,343,000 13,978,000
Operating expenses
Selling .......................... 8,548,000 8,431,000 7,675,000
General and administrative........ 2,207,000 1,920,000 2,024,000
----------- ----------- -----------
Operating expenses .......... 10,755,000 10,351,000 9,699,000
----------- ----------- -----------
Income From Operations....... 4,433,000 3,992,000 4,279,000
Other income .........................
Interest income .................. 54,000 80,000 99,000
Interest expense.................. (50,000)
Other - net ...................... 486,000 82,000 737,000
----------- ----------- -----------
Other income ................ 540,000 112,000 836,000
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 4,973,000 4,104,000 5,115,000
Provision (credit) for income taxes
Current .......................... 1,882,000 1,228,000 1,894,000
Deferred.......................... (70,000) 52,000 18,000
----------- ----------- -----------
PROVISION FOR INCOME TAXES... 1,812,000 1,280,000 1,912,000
----------- ----------- -----------
NET INCOME .................. $ 3,161,000 $ 2,824,000 $ 3,203,000
=========== =========== ===========
Net income per common share $ .89 $ .79 $ .90
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 20
CONSOLIDATED BALANCE SHEETS
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31
1996 1995
---------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents..................... $ 1,475,000 $ 812,000
Short-term investments ....................... 2,141,000 258,000
Accounts receivable, less allowances of
$351,000 in 1996 and $372,000 in 1995....... 8,957,000 7,914,000
Due from affiliates........................... 356,000 306,000
Inventories................................... 8,591,000 10,557,000
Prepaid expenses.............................. 138,000 100,000
Deferred income taxes......................... 440,000 370,000
----------- -----------
TOTAL CURRENT ASSETS.................. 22,098,000 20,317,000
PROPERTY, PLANT AND EQUIPMENT
Land ......................................... 867,000 942,000
Building and improvements..................... 6,112,000 6,192,000
Machinery and equipment ...................... 8,054,000 7,421,000
Office furniture and equipment................ 1,781,000 1,629,000
Transportation equipment...................... 989,000 879,000
----------- -----------
17,803,000 17,063,000
Accumulated depreciation ..................... (9,155,000) (8,116,000)
----------- -----------
8,648,000 8,947,000
OTHER ASSETS ......................................... 222,000 236,000
----------- -----------
$30,968,000 $29,500,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ............................. $ 1,061,000 $ 1,287,000
Accrued expenses ............................. 1,762,000 1,736,000
Income taxes payable ......................... 91,000 152,000
----------- -----------
TOTAL CURRENT LIABILITIES............. 2,914,000 3,175,000
DEFERRED INCOME TAXES................................. 200,000 200,000
SHAREHOLDERS' EQUITY
Common stock, no-par value
Authorized shares - 10,000,000
Issued and outstanding shares -
3,568,385 in 1996 and 1995 ................... 6,396,000 6,396,000
Retained earnings ............................ 21,585,000 19,851,000
Currency translation adjustments ............. (127,000) (122,000)
----------- -----------
27,854,000 26,125,000
----------- -----------
$30,968,000 $29,500,000
=========== ===========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 21
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
------------------------------------------------------------
COMMON STOCK
------------------- CURRENCY
NUMBER OF RETAINED TRANSLATION
SHARES AMOUNT EARNINGS ADJUSTMENTS TOTAL
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994 ................... 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
Dividends (.40 per share) ............ (1,427,000) (1,427,000)
Net Income ........................... 2,824,000 2,824,000
Translation adjustment ............... 29,000 29,000
--------- ---------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1995 ................. 3,568,385 6,396,000 19,851,000 (122,000) 26,125,000
Dividends (.40 per share) ............ (1,427,000) (1,427,000)
Net income ........................... 3,161,000 3,161,000
Translation adjustment ............... (5,000) (5,000)
--------- ---------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1996.................. 3,568,385 $6,396,000 $21,585,000 $ (127,000) $27,854,000
========= ========== =========== =========== ===========
</TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income ............................................... $3,161,000 $2,824,000 $3,203,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization......................... 1,317,000 1,288,000 1,189,000
Deferred income taxes (credit)........................ (70,000) 52,000 18,000
Other................................................. (5,000) 29,000 (58,000)
Cash provided (used) due to changes in operating
assets and liabilities:
Accounts receivable and due from affiliates ........... (1,093,000) (1,236,000) (629,000)
Inventories ........................................... 1,966,000 (871,000) (1,366,000)
Prepaid expenses and refundable income taxes .......... (38,000) 42,000 43,000
Accounts payable, accrued expenses and income taxes.... (261,000) (10,000) 494,000
---------- ---------- ----------
NET CASH PROVIDED BY OPERATIONS .................. 4,977,000 2,118,000 2,894,000
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net........... (1,004,000) (2,796,000) (2,657,000)
Purchases of short-term investments ...................... (1,883,000) (130,000) (847,000)
Maturities of short-term investments...................... 2,392,000 1,400,000
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES............. (2,887,000) (534,000) (2,104,000)
FINANCING ACTIVITIES
Dividends paid ........................................... (1,427,000) (1,427,000) (1,213,000)
---------- ---------- ----------
NET CASH USED IN FINANCING ACTIVITIES (1,427,000) (1,427,000) (1,213,000)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.. 663,000 157,000 (423,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ................... 812,000 655,000 1,078,000
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR.......................... $1,475,000 $ 812,000 $ 655,000
========== ========== =========
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 22
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 1996, 1995 or 1994.
The Company sells to affiliated (see Note E) and unaffiliated customers
in foreign countries. For 1996, 1995, and 1994, these sales aggregated to
$11,173,000, $11,063,000 and $9,037,000, 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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
INVENTORIES
Inventories are stated at the lower of cost or market using the last-in,
first-out (LIFO) cost method for a majority (1996-76%, 1995-80%) of inventories
and the first-in, first-out (FIFO) method for the remainder. Inventories at
December 31, 1996 and 1995 consist of the following:
<TABLE>
<CAPTION>
1996 1995
- - -------------------------------------------------------------
<S> <C> <C>
Inventories at FIFO cost:
Finished goods $3,136,000 $ 4,112,000
Work in process 6,374,000 7,488,000
Raw materials 1,053,000 1,017,000
---------- -----------
10,563,000 12,617,000
Less LIFO reserve (1,972,000) (2,060,000)
---------- -----------
Total Inventories $8,591,000 $10,557,000
========== ===========
- - -------------------------------------------------------------
</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
Income taxes have been provided using the liability method in accordance with
FASB Statement 109, 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.
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 1996, 1995 and 1994).
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
21
<PAGE> 23
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 -
SHORT-TERM DEBT
The Company entered into an unsecured Line of Credit arrangement for short-term
debt with a financial institution, which expires May, 1997. Under the terms of
this agreement, the Company may borrow up to $5 million on terms mutually
agreeable to the Company and financial institution. There are no requirements
for compensating balances or restrictions of any kind involved in this
arrangement.
At December 31, 1996 and December 31, 1995 there were no borrowings
outstanding. The Company did not have any borrowings under this arrangement
during 1996. During 1995 the maximum and average borrowings and the weighted
average interest rate on short-term borrowings were:
- - ------------------------------------------
Maximum borrowings
at month end: $2,000,000
- - ------------------------------------------
Average borrowings
outstanding during year: $ 749,000
- - ------------------------------------------
Weighted average
interest rate: 6.6%
- - ------------------------------------------
NOTE D - 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, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
- - --------------------------------------------------
<S> <C> <C>
Accounts receivable $325,000 $350,000
Property, plant & equipment (516,000) (493,000)
Accrued expenses & other 963,000 685,000
-------- --------
$772,000 $542,000
======== ========
- - --------------------------------------------------
</TABLE>
The effective income tax rate on income taxes differed from the Federal
statutory rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
- - --------------------------------------------------
<S> <C> <C> <C>
Federal statutory rate 34.0% 34.0% 34.0%
State income taxes, net
of Federal tax benefit 4.6 4.3 4.5
Foreign Sales
Corporation benefit (2.1) (2.7) (1.3)
Research and Develop-
ment Tax Credits ( .6) (5.2)
Other, net .5 .8 .2
---- ---- ----
36.4% 31.2% 37.4%
==== ==== ====
- - --------------------------------------------------
</TABLE>
The Company paid income taxes of $1,933,000, $1,208,000 and $1,723,000 in 1996,
1995 and 1994, respectively. State income taxes amounted to $344,000, $269,000
and $345,000 for 1996, 1995 and 1994, respectively. Foreign income taxes
amounted to $22,000, $55,000 and $17,000 for 1996, 1995 and 1994, respectively.
22
<PAGE> 24
NOTE E - RELATED PARTY
TRANSACTIONS
Hako-Werke GmbH & Co. (a German corporation) owns 72.93% of the outstanding
common stock of the Company through a subsidiary.
The Company purchased inventories of approximately $198,000, $578,000
and $512,000 from Hako-Werke in 1996, 1995 and 1994, 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 $1,807,000, $2,369,000 and $1,962,000 of
merchandise to Hako-Werke and certain of its subsidiaries during 1996, 1995 and
1994, respectively. Amounts due from affiliates, which relate to these sales,
are due within 90 days from the date of sale.
NOTE F - EMPLOYMENT AGREEMENTS
The Company has employment agreements with the executive officers of
the Company which expire through 1999. The agreements contain customary
provisions, including severance pay in the event the Company terminates their
employment.
NOTE G - 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 $237,000, $250,000 and $207,000 for the years
ended 1996, 1995 and 1994 respectively.
NOTE H - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly results of operations for the years
ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
- - -------------------------------------------------------------------
MARCH JUNE SEPTEMBER DECEMBER
31 30 30 31
- - -------------------------------------------------------------------
(Thousands of dollars, except per share data)
<S> <C> <C> <C> <C>
1996
Net sales $12,835 $12,127 $12,607 $11,551
Gross profit 4,084 3,953 3,918 3,233
Net income 1,073 820 703 565
Net income per
common share $ .30 $ .23 $ .20 $ .16
1995
Net sales $11,869 $12,523 $11,576 $10,332
Gross profit 3,807 4,116 3,454 2,966
Net income 764 803 590 667
Net income per
common share $ .21 $ .23 $ .16 $ .19
- - -------------------------------------------------------------------
</TABLE>
Fourth quarter adjustments, primarily related to inventories, resulted in a
reduction to net income and net income per common share of $15,000 or $.01 per
share, respectively in 1996 and an increase of $52,000 or $.01 per share,
respectively in 1995.
NOTE I - RESEARCH
AND DEVELOPMENT EXPENSES
Research and development expense for 1996, 1995 and 1994, approximated
$1,146,000, $1,085,000 and $861,000, respectively.
23
<PAGE> 25
MARKETS FOR THE COMPANY'S SECURITIES AND RELATED MATTERS
- - ---------------------------------------------------------------------------
On March 1, 1997, the last reported sales price of the common stock on the
Nasdaq systems was $9 1/8. 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 1996 represents the thirty-third 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". The following tables set forth for
1996 and 1995 the range of bid prices for the Company's common stock as
reported in the Nasdaq systems for the period indicated:
<TABLE>
<CAPTION>
DIVIDENDS
PER
HIGH LOW SHARE
- - ---------------------------------
<S> <C> <C> <C>
1996
1st Quarter 10 7 1/4 $.10
2nd Quarter 10 7 3/4 $.10
3rd Quarter 9 3/8 8 1/4 $.10
4th Quarter 9 3/8 8 1/4 $.10
1995
1st Quarter 11 9 3/8 $.10
2nd Quarter 10 1/2 9 1/2 $.10
3rd Quarter 11 1/4 9 $.10
4th Quarter 10 9 $.10
- - ---------------------------------
</TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
- - ----------------------------------------------------------------------
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and "Notes to Consolidated Financial Statements"
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994 1993 1992
------------------------------------------------------
(In thousands, except share and per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales $49,120 $46,300 $41,518 $38,237 $32,659
Cost of sales 33,932 31,957 27,540 25,357 21,884
------- ------- ------- ------- -------
Gross profit 15,188 14,343 13,978 12,880 10,775
Selling expenses 8,548 8,431 7,675 7,241 6,574
General and administrative expenses 2,207 1,920 2,024 1,897 1,914
------- ------- ------- ------- -------
Income from operations 4,433 3,992 4,279 3,742 2,287
Interest income, net 54 30 99 92 193
Other, net 486 82 737 10 60
------- ------- ------- ------- -------
Income before income taxes 4,973 4,104 5,115 3,844 2,540
Income tax expense 1,812 1,280 1,912 1,495 929
------- ------- ------- ------- -------
Net income $ 3,161 $ 2,824 $ 3,203 $ 2,349 $ 1,611
======= ======= ======= ======= =======
PER SHARE DATA
Cash dividends $ .40 $ .40 $ .34 $ 28 $ .28
Net income per common share .89 .79 .90 .66 .45
Weighted average number
of shares outstanding 3,568,385 3,568,385 3,568,385 3,568,385 3,568,385
BALANCE SHEET DATA
Working capital $19,184 $17,142 $17,207 $16,745 $15,604
Total assets 30,968 29,500 28,067 25,643 23,670
Shareholders' equity 27,854 26,125 24,699 22,767 21,467
</TABLE>
24
<PAGE> 26
REPORT OF INDEPENDENT AUDITORS
- - --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF MINUTEMAN INTERNATIONAL, INC.
We have audited the accompanying consolidated balance sheets of Minuteman
International, Inc. and subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1996. 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. and subsidiaries at December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
February 13, 1997
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 /s/ Jerome E. Rau
Thomas J. Nolan Jerome E. Rau
Chief Financial Officer, President, Chief Executive Officer
Secretary & Treasurer
25
<PAGE> 27
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
ChaseMellon Shareholder
Services, L.L.C.
85 Challenger Road, Overpeck Centre
Ridgefield Park, New Jersey 07660
1-800-288-9541 Shareholders information
1-800-231-5469 TDD (Telecommunications Device for the Deaf)
STOCK LISTING
Traded over-the-counter on The Nasdaq Stock Market under the symbol "MMAN"
ANNUAL MEETING
April 25, 1997 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 1996 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
(630) 627-6900
LOCATIONS
CORPORATE OFFICES AND
WORLD HEADQUARTERS
Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
(630) 627-6900
MANUFACTURING FACILITIES
Minuteman International, Inc.
111 South Rohlwing Road
Addison, Illinois 60101
(630) 627-6900
Minuteman International, Inc.
14N845 U.S. Route 20
Hampshire, Illinois 60140
(847) 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
(630) 627-6900
Parker Sweeper
111 South Rohlwing Road
Addison, Illinois 60101
(630) 627-6900
Minuteman International, Inc.
3631 San Fernando Road
Glendale, California 91204
(818) 241-9616
Minuteman International, Inc.
1190 North Villa Avenue
Villa Park, Illinois 60181
(630) 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
(905) 670-1063
BOARD OF DIRECTORS
[PHOTO]
Jerome E. Rau
President &
Chief Executive Officer Minuteman International, Inc.
[PHOTO]
Tyll Necker
Chief Executive Officer Hako-Werke International GmbH & Co.
[PHOTO]
Frederick W. Hohage
President
Robert Bosch Corporation, Sales Group
[PHOTO]
James C. Schrader, Jr.
President
Precision Enterprises, Ltd.
[PHOTO]
Frank R. Reynolds
Attorney
Law Offices of Reynolds
& Reynolds, Ltd.
<PAGE> 28
MINUTEMAN INTERNATIONAL, INC.
111 S. Rohlwing Rd.
Addison, Illinois 60101
Telephone: (630) 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Loss provision for doubtful accounts is included in total costs.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> SEP-30-1996 JAN-01-1996
<PERIOD-END> DEC-31-1996 DEC-31-1996
<CASH> 1,475 1,475
<SECURITIES> 2,141 2,141
<RECEIVABLES> 9,313 9,313
<ALLOWANCES> 351 351
<INVENTORY> 8,591 8,591
<CURRENT-ASSETS> 22,098 22,098
<PP&E> 17,803 17,803
<DEPRECIATION> 9,155 9,155
<TOTAL-ASSETS> 30,968 30,968
<CURRENT-LIABILITIES> 2,914 2,914
<BONDS> 0 0
0 0
0 0
<COMMON> 6,396 6,396
<OTHER-SE> 21,458 21,458
<TOTAL-LIABILITY-AND-EQUITY> 30,968 30,968
<SALES> 11,551 49,120
<TOTAL-REVENUES> 11,551 49,120
<CGS> 8,318 33,932
<TOTAL-COSTS> 10,801 44,687
<OTHER-EXPENSES> (11) (486)
<LOSS-PROVISION> (21) 104
<INTEREST-EXPENSE> (28) (54)
<INCOME-PRETAX> 789 4,973
<INCOME-TAX> 224 1,812
<INCOME-CONTINUING> 565 3,161
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 565 3,161
<EPS-PRIMARY> .16 .89
<EPS-DILUTED> .16 .89
</TABLE>
