<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
-------------------- ------------------
Commission File Number: 0-22352
-----------------
HOLOPHANE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-----------------
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 31-1288751
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 EAST BROAD STREET
SUITE 1400
COLUMBUS, OHIO 43215
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (614) 224-3134
-----------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE PER SHARE
-----------------
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or Section 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained, to the best knowledge of the registrant,
in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment of this Form 10-K. [x]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 10, 1998 was approximately $252,747,425.
The number of shares outstanding of registrant's Common Stock as of March
10, 1998: 10,990,200.
Documents incorporated by reference: The Annual Report to Stockholders and
the definitive Proxy Statement of Holophane Corporation relating to the 1998
Annual Meeting of Stockholders are incorporated by reference in Parts II and III
hereof.
<PAGE> 2
PART I
ITEM 1. BUSINESS
Holophane Corporation, a Delaware corporation, and its subsidiaries
(collectively "Holophane"), was formed in May 1989 to acquire substantially all
of the assets and capital stock of the Holophane Lighting Division of Manville
Sales Corporation and related entities.
Holophane, whose operations date back to 1895, is a vertically integrated
manufacturer and marketer of highly engineered lighting fixtures and systems for
a wide range of industrial, commercial and outdoor applications. Holophane
provides a variety of standard and specialized fixtures for both interior and
exterior lighting needs.
Holophane sells products in the industrial, outdoor and
commercial/institutional markets of the lighting industry. Holophane markets its
products in North America, Europe, Latin America and Asia/Pacific in both the
new construction and retrofit markets. Holophane focuses its sales efforts at
the design phase of a lighting project by targeting end-users and specifiers who
are directly involved in the construction process, including architectural,
engineering and electrical contracting firms and distributors.
PRODUCTS
Holophane manufactures and sells a series of industrial fixtures designed
to light large indoor spaces with high ceilings and also for facilities with
large pieces of equipment and lighting required at various mounting heights.
Holophane also produces numerous products tailored to highly specific
applications including hazardous location and explosion proof lighting.
Holophane manufactures outdoor area lighting products for highway
interchanges, tunnels and for other outdoor projects requiring large areas to be
illuminated. Holophane products are also used to light advertising billboard
signs, highway signs and building facades. In addition, Holophane produces
architectural specialty lighting for downtown renovations and housing
developments.
Holophane produces a line of commercial/institutional lighting products
designed for medium height applications where reflected light from the ceiling
can supplement the direct prismatic light source. Holophane also manufactures a
broad line of specialty fluorescent fixtures with an emphasis on optical
performance. Many of Holophane's industrial fixtures are also used in
commercial/institutional applications.
In addition, Holophane also produces an array of glass refractors for
street lighting fixtures and injection molded lenses designed to be used in
fluorescent fixtures.
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MANUFACTURING
Holophane is a vertically integrated manufacturer with the capability to
produce glass, ballasts, injection molded plastic and cast aluminum components.
Holophane has four U.S. manufacturing facilities located in Ohio and two located
in Texas. Holophane operates light manufacturing, assembly and warehousing
facilities in Milton Keynes, England. Holophane also operates an aluminum
foundry in Matamoros, Mexico.
RAW MATERIALS
Holophane's principal raw materials are aluminum, steel and copper.
Holophane avoids some of the price volatility of these materials by purchasing
most of its requirements through annual contracts. Holophane does not rely on
any single supplier for these materials and believes it has the ability to
quickly switch sources for any of these materials should the need arise.
RESEARCH AND DEVELOPMENT
New product development is an integral part of Holophane. State of the art
facilities, located in Newark, Ohio, include optical, photometric, thermal,
electrical and environmental laboratories. Costs associated with research and
development were $6.0 million in 1997, $5.5 million in 1996 and $5.6 million in
1995.
EMPLOYEES
Holophane had an average of approximately 1,708 employees during 1997.
Approximately 399 employees are represented by the American Flint Glass Workers
Union (the "AFGWU"), the International Brotherhood of Electrical Workers (the
"IBEW") or the United Automobile Workers (the "UAW"). The IBEW contract expires
April 1, 1999; the AFGWU contract expires August 3, 1998; and the UAW contract
expires May 2, 1999.
CUSTOMERS
No single customer has accounted for more than 3% of Holophane's net sales
in any year. Consequently, Holophane believes that the loss of any one customer
would not have a material adverse effect on its net sales.
COMPETITION
The lighting industry is highly competitive. Holophane's competitors
include lighting manufacturers of all sizes, some of which have substantially
greater resources than those of Holophane. Holophane competes in the premium
quality tier of the lighting market which consists of specialized products
characterized by higher value and lower unit sales. Most of Holophane's
competitors focus on commodity products.
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BACKLOG
Backlog represents booked orders which are believed by Holophane to be
firm. At February 28, 1998, total order backlog was $38.8 million compared to
$38.1 million at February 28, 1997.
SEASONALITY
Due to the typically increased level of construction activity in the third
quarter, Holophane has historically experienced modestly greater net sales in
the second half of its fiscal year.
TRADEMARKS, LICENSING AGREEMENTS AND PATENTS
Holophane owns all of the rights to the principal trademarks used in its
domestic business and in the international markets in which it participates.
Holophane's principal trademarks are registered in the U.S. and in many other
countries, and Holophane considers protection of such trademarks to be important
to its business.
Holophane does not own the "HOLOPHANE" trademark in France, but has rights
in its use.
An unaffiliated Australian company owns trademark registrations for the
"HOLOPHANE" trademark in Australia and New Zealand. Lighting products
manufactured by the Company are marketed under the "Unique Lighting Solutions"
trademark through a joint venture arrangement among Holophane Australia
Corporation Pty. Ltd., a wholly-owned subsidiary of the Company, and two
unaffiliated third parties in Australia.
Holophane S.A. de C.V. ("Holophane Mexico"), an unaffiliated company, has a
license to manufacture and sell specified lighting products under certain
Holophane trademarks, including the "HOLOPHANE" trademark, in Mexico and other
Latin American countries. In connection with such licenses, Holophane is
obligated to provide technological and engineering information and assistance to
Holophane Mexico relating to the lighting products that are the subject of the
licenses. The licenses and rights of Holophane Mexico generally will expire on
December 31, 2002.
In addition, Holophane owns many patents relating to the design of certain
of its products, including sign lighting, area lighting and street lighting
products. Active patents have remaining lives ranging from one year to 17 years.
INTERNATIONAL OPERATIONS
Net sales of the European operations were L14.6 million ($23.9 million) in
1997, L14.9 million ($23.4 million) in 1996 and L14.6 million ($23.1 million) in
1995. Net sales of
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other foreign operations were $9.7 million in 1997, $9.6 million in 1996 and
$13.4 million in 1995. With the exception of fluctuation in foreign currencies,
the Company does not believe that these operations are subject to risks which
are significantly different from those of domestic operations.
ENVIRONMENTAL
Holophane's operations are subject to federal, state and local regulatory
requirements relating to environmental protection. Compliance with these
requirements has not had a material effect upon Holophane's capital expenditure
program. It is not anticipated that Holophane will have material capital
expenditures for environmental control facilities during the next fiscal year.
ITEM 2. PROPERTIES
The following sets forth information regarding the Company's manufacturing
and warehouse facilities:
<TABLE>
<CAPTION>
PRIMARY SQUARE
LOCATION FUNCTION FEET
- --------------------------------------------------------------------------------------------
UNITED STATES:
- --------------
<S> <C> <C>
Newark, OH Manufacturing 352,000
Springfield, OH Manufacturing 46,000
Pataskala, OH Manufacturing 32,000
Utica, OH Manufacturing 119,000
Austin, TX Manufacturing 52,000
Brownsville, TX Assembly 15,000
MEXICO:
- -------
Matamoros Manufacturing 208,000
UK:
- ---
Milton Keynes Manufacturing 44,000
Milton Keynes Warehouse 10,000
</TABLE>
- ----------------
The Company's manufacturing and warehouse facilities are all owned, except
for the 10,000 square foot Milton Keynes warehouse and the Brownsville facility.
These facilities are all located in appropriately designed buildings which are
kept in good repair. The facilities have well maintained equipment and
sufficient capacity to produce present volumes.
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The principal executive offices of the Company are located in approximately
5,400 square feet of space at 250 East Broad Street, Columbus, Ohio 43215 and
are occupied pursuant to a lease which expires in July 1999.
The Company also leases sales offices and warehouse facilities in a number
of major cities or suburbs, including Norcross, Georgia; Houston, Texas; San
Bruno and Los Angeles, California; Dearborn, Michigan; Minneapolis, Minnesota;
Montvale, New Jersey; Newark, Ohio; and Buda, Texas. The leases expire from
October 1, 1998 to December 31, 2000.
The Company also leases approximately 4,500 square feet of office space in
Brampton, Ontario, Canada. The lease expires December 31, 2000.
Substantially all of the properties and other assets owned by the Company
are, and will continue to be, pledged to various lenders.
ITEM 3. LEGAL PROCEEDINGS
The Company, from time to time, is involved in routine litigation
incidental to its business. However, the Company is not a party to any material
legal proceeding, nor, to the Company's knowledge, has any material legal
proceeding been threatened against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS
The following table sets forth the names and ages of the Company's
executive officers and the positions they hold with the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
<S> <C> <C>
John R. DallePezze.................. 54 Director, Chairman of the
Board, President and Chief
Executive Officer
Bruce A. Philp...................... 46 Vice President, Finance,
Chief Financial Officer
and Secretary
John W. Harvey...................... 52 Vice President, Manufacturing
S. Lee Keller....................... 50 Vice President, Sales
</TABLE>
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<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
<S> <C> <C>
Robert P. St. Germain............... 48 Vice President, Marketing
Robert E. Taylor.................... 52 Vice President, Human Resources
Timothy Weisert..................... 52 Vice President, Research and
Development
</TABLE>
Mr. DallePezze has been a Director, President and Chief Executive Officer
of the Company since he joined the Company in October 1989 and Chairman of the
Board since February 1992. Prior to joining the Company, Mr. DallePezze served
from 1983 to 1989 as President of the McCullough Division of N.L. Industries
Inc. and Western Atlas International Inc. Prior to 1983, Mr. DallePezze served
as General Manager of the Lighting Products Division of Corning Inc. Mr.
DallePezze serves as a director of Belden, Inc., a wire and cable manufacturer.
Mr. Philp has served as Vice President, Finance, Chief Financial Officer
and Secretary since July 1989. From January 1988 through July 1989, Mr. Philp
was Director of Finance and Administration for the Holophane Division of
Manville and prior to that held various other finance positions within Manville,
beginning with the Holophane Division in 1974.
Mr. Harvey has served as Vice President, Manufacturing since July 1989. Mr.
Harvey joined Holophane in 1971 and served in various management positions in
engineering, and research and development and manufacturing from 1971 through
July 1989.
Mr. Keller has served as Vice President, Sales since July 1989. Mr. Keller
joined Holophane in 1970 and was Regional Sales Manager from July 1985 through
January 1988 and National Sales Manager from January 1988 through July 1989.
Mr. Taylor has served as Vice President, Human Resources since July 1989.
From June 1987 through July 1989 Mr. Taylor served as Manager, Human Resources
for the Holophane Division of Manville and was a Director of Human Resources for
Gulf Oil Corporation from 1985 until he joined the Holophane Division in June
1987.
Mr. St. Germain has served as Vice President, Marketing since October 1996.
Prior to joining Holophane, Mr. St. Germain served from 1990 to 1996 as Vice
President, Marketing and Strategic Planning at Northrop Grumman. Mr. St. Germain
served as Assistant to the President at Grumman Allied Industries, Inc. from
1988 to 1990. Mr. St. Germain served from 1986 to 1988 as Market Planning
Manager at Grumman Systems Support, Inc., a subsidiary of Grumman Allied
Industries, Inc.
Mr. Weisert has served as Vice President, Research and Development since
July 1989. Mr. Weisert served as Director of Research and Development for the
Holophane Division of Manville from July 1988 through July 1989 and held various
other positions in research and development since joining the Holophane Division
in 1978.
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PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information required by Item 5 of Part II is set forth under the
caption "Quarterly Results of Operations" on page 8 of the 1997 Annual Report to
Stockholders of Holophane Corporation and is incorporated herein by reference.
A recent last sales price for the shares of Common Stock as reported by
Nasdaq was $23.875 on March 25, 1998. On March 10, 1998, there were
approximately 2,300 holders of Common Stock, based upon the number of holders of
record and the number of individual participants in certain security position
listings.
No dividends on Common Stock were paid during 1997 or 1996 and the Company
does not anticipate paying cash dividends on its Common Stock in the foreseeable
future. Additional information on the Company's dividend payment limitations
appears in note 5 to the consolidated financial statements on pages 13 and 14 of
the 1997 Annual Report to Stockholders of Holophane Corporation.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by Item 6 of Part II is set forth under the
caption "Financial History" on page 20 of the 1997 Annual Report to Stockholders
of Holophane Corporation and is incorporated herein by reference.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by Item 7 of Part II is set forth under the
caption "Management Discussion and Analysis" on pages 18 and 19 of the 1997
Annual Report to Stockholders of Holophane Corporation and is incorporated
herein by reference.
The Company wishes to take advantage of the safe harbor provisions included
in the Private Securities Litigation Reform Act of 1995. Accordingly, except for
the historical information contained herein, the matters set forth in this and
other filings constitute forward-looking statements that are dependent on
certain risks and uncertainties. Any forward-looking statements made by the
Company herein and in future reports and statements are not guarantees for
future performance, and actual results may differ materially from those in such
forward-looking statements as a result of various factors. These factors
include, but are not limited to weather conditions, the general state of the
national economy, competitive, technological, environmental or governmental
factors affecting the Company's operations, markets, services and related
products, prices and other risk factors detailed in the Company's Securities
Exchange Act of 1934 filings.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's consolidated balance sheets as of December 31, 1997 and 1996
and the consolidated statements of income, stockholders' equity and cash flows
for each of the years ended December 31, 1997, 1996 and 1995, and the related
notes to the consolidated financial statements, together with the independent
auditors' report thereon appear on pages 8 through 17 of the 1997 Annual Report
to Stockholders of Holophane Corporation and is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by Item 10 of Part III is incorporated herein by
reference from pages 4 through 6 of Part I included herein and from the
definitive Proxy Statement of Holophane Corporation under the caption "Item 1 -
Election of Directors."
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 11 of Part III is incorporated herein by
reference to the definitive Proxy Statement of Holophane Corporation under the
caption "Executive Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by Item 12 of Part III is incorporated herein by
reference to the definitive Proxy Statement of Holophane Corporation under the
caption "Stock Ownership."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following financial statements required to be included in
items 8 and 14 (a) (1) are incorporated by reference from pages
[8] through [17] of the 1997 Annual Report to Stockholders:
Consolidated Statements of Income for the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 1997, 1996 and 1995
Independent Auditors' Report
Notes to Consolidated Financial Statements for the Years Ended
December 31, 1997, 1996 and 1995
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the registrant in the last
quarter of the 1997 fiscal year.
(c) Exhibits:
3.1 Restated Certificate of Incorporation of the Company.
(Incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1, No. 33-68116.)
3.2 Bylaws of the Company. (Incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-1, No.
33- 68116.)
10.1 Employment Agreement dated as of August 30, 1993 among
Holophane Lighting, Inc., the Company and John R.
DallePezze. (Incorporated by reference to Exhibit 10.7 to
the Company's Registration Statement on Form S-1, No.
33-68116.)
10.2 Termination Benefits Agreement dated as of September 15,
1993 among Holophane Lighting, Inc., the Company and Bruce
Philp. (Identical agreements were entered into with John S.
Forbes, John W. Harvey, S. Lee Keller, Robert P. St.
Germain, Robert E. Taylor, Timothy Weisert and Jerome
Henderson). (Incorporated by reference
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to Exhibit 10.8 to the Company's Registration Statement on
Form S- 1, No. 33-68116.)
10.3 Incentive Stock Plan. (Incorporated by reference to Exhibit
10.9 to the Company's Registration Statement on Form S-1,
No. 33-68116.)
10.4 1996 Incentive Stock Plan. (Incorporated by reference to
Appendix I of the Company's 1996 Proxy Statement.)
10.5 Supplemental Executive Retirement Plan. (Incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement on Form S- 1, No. 33-68116.)
10.6 Second Amended and Restated Credit Agreement dated as of
November 5, 1993 among Holophane Company, Inc., the lenders
named therein and Wells Fargo Bank, N.A., as Administrative
Agent. (Incorporated by reference to Form 10-K for fiscal
year ended December 31, 1993, File No. 0-22352.)
10.7 Amended and Restated Stockholders Agreement dated as of
October 15, 1993. (Incorporated by reference to Exhibit
10.14 to the Company's Registration Statement on Form S-1,
No. 33-68116.)
10.8 Termination Agreement dated as of September 1, 1993 between
Holophane Lighting, Inc. and Raebarn Corporation.
(Incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-1, No. 33-68116.)
10.9 Holophane Bonus Plan Revised February 19, 1997.
(Incorporated by reference to Form 10-K for fiscal year
ended December 31, 1996, File No. 0-22352.)
10.10 Holophane Corporation Employee Stock Option Plan
(Incorporated by reference to Appendix I of the Company's
1998 Proxy Statement.)
13 1997 Annual Report (Selected Portions)
21.1 Subsidiaries of the Company.
23.1 Consent of Deloitte & Touche LLP.
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(d) Financial Statement Schedule
The following independent auditors' report and financial
schedule for the years ended December 31, 1997, 1996 and
1995 are included in this Annual Report on Form 10-K and
should be read in conjunction with the Consolidated
Financial Statements contained in the Annual Report to
Stockholders of Holophane Corporation:
Independent Auditors' Report
Schedule II - Valuation and Qualifying Accounts
All other financial statement schedules are omitted because
they are not applicable or the required information is shown
in the Consolidated Financial Statements or Notes thereto.
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INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
To the Stockholders and Directors of Holophane Corporation
Columbus, Ohio
We have audited the consolidated financial statements of Holophane Corporation
and subsidiaries as of December 31, 1997 and 1996, and for each of the three
years in the period ended December 31, 1997, and have issued our report thereon
dated February 19, 1998; such financial statements and report are included in
your 1997 Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the consolidated financial statement
schedule of Holophane Corporation and subsidiaries, listed in Item 14. This
consolidated financial schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits. In
our opinion, such consolidated financial schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
Deloitte & Touche LLP
Columbus, Ohio
February 19, 1998
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SCHEDULE II
HOLOPHANE CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS (IN 000'S)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
---------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Year Expenses Accounts Deductions (a) of Year
----------- ------- -------- -------- -------------- -------
Allowance for doubtful accounts:
<S> <C> <C> <C> <C> <C>
1997 $1,016 $230 ($5) $154 $1,087
1996 1,015 31 80 110 1,016
1995 782 322 61 150 1,015
Inventory valuation allowance:
1997 $689 $338 ($2) $378 $647
1996 465 519 41 336 689
1995 640 232 39 446 465
</TABLE>
(a) Represents uncollectible accounts written off or inventory items disposed
of, respectively.
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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, in the City of
Columbus, State of Ohio, on the 25th day of March, 1998.
Holophane Corporation
By: /s/ John R. DallePezze
---------------------------
JOHN R. DALLEPEZZE
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John R. DallePezze Chairman of the Board of March 25, 1998
- ------------------------------- Directors; President and
JOHN R. DALLEPEZZE Chief Executive Officer
(Principal Executive Officer)
/s/ Bruce A. Philp Vice President Finance; March 25, 1998
- -------------------------------- Chief Financial Officer
BRUCE A. PHILP and Secretary (Principal
Financial and
Accounting Officer)
/s/ William R. Michaels Director March 25, 1998
- -------------------------------
WILLIAM R. MICHAELS
/s/ Robert L. Purdum Director March 25, 1998
- -------------------------------
ROBERT L. PURDUM
/s/ Anthony P. Scotto Director March 25, 1998
- -------------------------------
ANTHONY P. SCOTTO
/s/ Tadd C. Seitz Director March 25, 1998
- ---------------------------------
TADD C. SEITZ
/s/ Jeffrey M. Wilkins Director March 25, 1998
- -------------------------------
JEFFREY M. WILKINS
</TABLE>
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Exhibit 13
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Holophane Corporation and Subsidiaries
(in thousands except per share data) Year Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Net Sales $205,327 $190,939 $181,069
Cost of goods sold 125,133 117,284 110,591
- ---------------------------------------------------------------------------------------------------------------------------
Gross Margin 80,194 73,655 70,478
Selling and administrative 42,704 39,405 35,743
Research and development 6,037 5,533 5,559
Other expense 466 700 454
- ---------------------------------------------------------------------------------------------------------------------------
Operating Income 30,987 28,017 28,722
Interest expense 1,719 2,139 2,826
Interest income (414) (527) (581)
- ---------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 29,682 26,405 26,477
Provision for income taxes 11,059 9,937 10,435
- ---------------------------------------------------------------------------------------------------------------------------
Net Income $18,623 $16,468 $16,042
===========================================================================================================================
Basic Earnings Per Share $1.65 $1.44 $1.40
===========================================================================================================================
Diluted Earnings Per Share $1.60 $1.40 $1.37
===========================================================================================================================
Weighted Average Number of Shares Outstanding:
Basic 11,283 11,473 11,468
Diluted 11,663 11,779 11,723
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(in thousands except per share and market data) 1ST 2ND 3RD 4TH
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Net sales $46,408 $48,607 $56,437 $53,875
Gross margin 17,882 18,754 22,313 21,245
Operating income 5,376 6,502 10,112 8,997
Net income 3,110 3,918 6,161 5,434
Basic earnings per share $0.27 $0.35 $0.55 $0.49
Diluted earnings per share $0.26 $0.34 $0.53 $0.47
Market Prices: High $22.00 $23.25 $24.25 $26.00
Low $18.75 $19.25 $18.38 $21.25
- ---------------------------------------------------------------------------------------------------------------------------
1996
Net sales $38,056 $44,605 $51,288 $56,990
Gross margin 13,912 17,184 20,369 22,190
Operating income 3,577 6,336 9,393 8,711
Net income 1,953 3,640 5,642 5,233
Basic earnings per share $0.17 $0.32 $0.49 $0.46
Diluted earnings per share $0.17 $0.31 $0.48 $0.44
Market Prices: High $22.50 $18.25 $20.00 $20.00
Low $16.00 $13.75 $15.25 $16.50
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
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CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Holophane Corporation and Subsidiaries
($ in thousands except per share data) December 31,
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets:
Cash and equivalents $11,709 $8,072
Accounts receivable (less allowance of $1,087 and $1,016, respectively) 29,903 33,104
Inventories 12,651 13,302
Prepaid and other assets 3,988 3,848
- ---------------------------------------------------------------------------------------------------------------------------
Total Current Assets 58,251 58,326
- ---------------------------------------------------------------------------------------------------------------------------
Property, Plant and Equipment, net 42,102 39,413
Goodwill (net of accumulated amortization of $3,124 and $2,507, respectively) 21,285 21,276
Other Assets 5,158 4,952
- ---------------------------------------------------------------------------------------------------------------------------
Total $126,796 $123,967
- ---------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long term debt $6,610 $6,390
Trade payables 10,366 10,537
Compensation and employee benefits 8,881 8,383
Income taxes payable 1,987 1,238
Other accrued liabilities 3,678 4,589
- ---------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 31,522 31,137
- ---------------------------------------------------------------------------------------------------------------------------
Long Term Debt (less current maturities) 12,964 18,866
Long Term Compensation 3,522 2,458
Other Long Term Liabilities 3,685 4,362
Stockholders' Equity:
Preferred stock (par value $.01 per share: 1,000,000 shares authorized;
none issued)
Common stock (par value $.01 per share: 20,000,000 shares authorized;
11,895,861 shares issued) 119 119
Additional paid-in capital 43,143 43,801
Retained earnings 49,150 30,527
Common shares in treasury, at cost (1997: 880,014 shares; 1996: 473,369 shares) (15,882) (6,534)
Cumulative translation adjustments (1,427) (769)
- ---------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 75,103 67,144
- ---------------------------------------------------------------------------------------------------------------------------
Total $126,796 $123,967
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Holophane Corporation and Subsidiaries
(in thousands) Year Ended December 31,
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $18,623 $16,468 $16,042
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 6,905 6,487 6,107
Loss on disposal of property, plant and equipment 28 232 106
Provision for deferred income taxes 866 253 521
Change in assets and liabilities net of effects from acquisitions:
Accounts receivable 2,966 (4,053) (4,607)
Inventories 580 1,568 (138)
Prepaid and other current assets (356) (281) (1,296)
Trade payables (536) (1,171) 1,275
Compensation and employee benefits 536 (732) 1,150
Income taxes payable 812 (780) (904)
Other, net 77 955 471
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 30,501 18,946 18,727
- ---------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
- ---------------------------------------------------------------------------------------------------------------------------
Purchase of investment securities (1,906) (1,551) (907)
Sale of investment securities 842 1,005 0
Capital expenditures (8,007) (4,956) (9,741)
Proceeds from the sale of assets 102 42 48
Acquisitions, net of cash acquired 0 (6,100) 0
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (8,969) (11,560) (10,600)
- ---------------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
- ---------------------------------------------------------------------------------------------------------------------------
Principal payments on long term debt (6,381) (9,359) (6,312)
Purchase of treasury shares (11,645) (3,769) 0
Proceeds from the sale of treasury shares 214 385 41
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (17,812) (12,743) (6,271)
- ---------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (83) 73 27
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 3,637 (5,284) 1,883
Cash and equivalents at beginning of year 8,072 13,356 11,473
- ---------------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of year $11,709 $8,072 $13,356
===========================================================================================================================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $1,712 $2,160 $2,897
Income taxes 9,066 10,472 11,611
Non-cash investing and financing activity:
Treasury shares used for acquisitions 1,380 2,145 --
Additional goodwill relating to contingent purchase price 704 1,381 964
Trade payables for property, plant and equipment 687 252 --
Capital leases for property, plant and equipment 699 -- --
Shares exchanged to exercise stock options 488 -- --
===========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Holophane Corporation and Subsidiaries
($ in thousands)
Retained
Common Stock Additional Earnings Treasury Stock Cumulative
--------------- Paid-in (Accumulated ---------------- Translation Stockholders'
Shares Amount Capital Deficit) Shares Amount Adjustments Equity
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 11,895,861 $119 $42,974 ($1,983) 428,823 ($4,575) ($1,813) $34,722
Net income for the year 16,042 16,042
Stock options exercised (5) (3,675) 46 41
Translation adjustments (416) (416)
- --------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 11,895,861 119 42,969 14,059 425,148 (4,529) (2,229) 50,389
Net income for the year 16,468 16,468
Shares used for acquisitions 780 (121,629) 1,365 2,145
Purchase of treasury shares 206,000 (3,769) (3,769)
Stock options exercised, including
related tax benefits 52 (36,150) 399 451
Translation adjustments 1,460 1,460
- --------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 11,895,861 119 43,801 30,527 473,369 (6,534) (769) 67,144
Net income for the year 18,623 18,623
Shares used for acquisitions 13 (71,725) 1,367 1,380
Purchase of treasury shares 544,408 (12,133) (12,133)
Stock options exercised, including
related tax benefits (671) (66,038) 1,418 747
Translation adjustments (658) (658)
- --------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 11,895,861 $119 $43,143 $49,150 880,014 ($15,882) ($1,427) $75,103
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
INDEPENDENT AUDITORS' REPORT
TO THE STOCKHOLDERS AND DIRECTORS OF HOLOPHANE CORPORATION
- --------------------------------------------------------------------------------
We have audited the accompanying consolidated balance sheets of Holophane
Corporation and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1997. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of Holophane Corporation and
subsidiaries at December 31, 1997 and 1996, and results of their operations and
their cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Columbus, Ohio
February 19, 1998
4
<PAGE> 5
1. SUMMARY OF ACCOUNTING POLICIES
The company is engaged in the manufacture and sale of lighting fixtures and
systems primarily for industrial, commercial and outdoor applications. The
company has operations in the United States, Canada, Mexico, United Kingdom,
Germany and Australia.
CONSOLIDATION
The consolidated financial statements include the accounts of Holophane
Corporation and all of its majority-owned subsidiaries. All significant
intercompany transactions have been eliminated.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of the company's subsidiaries outside the United
States are translated into U.S. dollars at the rates of exchange in effect at
the balance sheet dates. Income and expense items are translated at the average
exchange rates prevailing during the period. Gains and losses resulting from
foreign currency transactions are recognized currently in income and those
resulting from translation of financial statements are accumulated in a separate
component of stockholders' equity.
DISCLOSURES REGARDING FINANCIAL
INSTRUMENTS
The carrying value of cash and equivalents, receivables, accrued liabilities and
accounts payable are considered to approximate fair value due to the relatively
short maturity of the respective instruments. For long-term debt, the interest
rates fluctuate with LIBOR or prime rate and thus their carrying value is a
reasonable estimate of fair value.
CASH AND EQUIVALENTS
The company considers money market funds and all highly liquid debt instruments
with an initial maturity of three months or less to be cash equivalents. At
December 31, 1997 and 1996, the company had approximately $6,590,000 and
$5,238,000, respectively, invested in bank commercial paper and U.S. treasury
related investments at two independent trust companies.
INVENTORIES
Inventories are valued at the lower of cost, determined on the first-in,
first-out basis, or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets
which range from one and one-half to forty years.
GOODWILL
The excess of purchase price over the fair values of net assets acquired is
amortized on a straight-line basis over forty years.
ASSET IMPAIRMENTS
Annually, or more frequently if events or circumstances change, a determination
is made by management, in accordance with Statement of Financial Accounting
Standards (SFAS) No. 121, to ascertain whether property, plant and equipment,
goodwill and other intangible assets have been impaired based on the sum of
expected future undiscounted cash flows from operating activities. Based upon
its most recent analysis, the company believes that property, goodwill and other
intangibles at December 31, 1997 and 1996 are realizable and the depreciation
and amortization periods are appropriate.
SELF INSURANCE
The company is self-insured for certain health and workers' compensation
programs in the United States. The company purchases insurance to limit exposure
under these programs. Insurance for the health plan provides a stop-loss ceiling
of $100,000 per individual per year and an aggregate annual stop-loss ceiling
(based on enrollment) of $1,709,000, $1,585,000 and $1,759,000 for 1997, 1996
and 1995, respectively. Insurance for the workers' compensation plan contains a
stop-loss ceiling of $300,000 per event. The company accrues for both claims
reported but not yet paid and claims incurred but not yet reported.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenues are recognized at the time the products are shipped.
ADVERTISING
Advertising costs are expensed as incurred.
5
<PAGE> 6
2. ACQUISITIONS
MetalOptics, Inc. - On September 1, 1996, the company acquired the stock of
MetalOptics, Inc. for $6,100,000 of cash and $1,181,000 (77,296 shares) of
common stock. Under the terms of the purchase agreement, the company will make
additional payments of up to $500,000 and 154,589 additional shares of common
stock, contingent upon MetalOptics, Inc. achieving certain operating results
during the five-year period ending December 31, 2000. At the date of
acquisition, the market value of assets acquired was $13,509,000 and liabilities
assumed were $6,228,000. Any future amounts earned under this agreement will be
recorded as additional goodwill and amortized over the remaining life of the
goodwill recognized at the time of acquisition.
Results of operations after the acquisition date are included in the 1997 and
1996 Consolidated Statements of Income. The following pro forma information has
been prepared assuming the acquisition had taken place at the beginning of the
respective periods. The pro forma information includes adjustments for interest
expense that would have been incurred to finance the purchase, additional
depreciation based on the fair market value of the property, plant and equipment
acquired and the amortization of goodwill arising from the transaction, net of
tax. The pro forma financial information is not necessarily indicative of the
results of operations as they would have been had the transaction been effected
on the assumed dates.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31,
1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C>
(In thousands, except per share amounts)
Net Sales $204,545 $202,912
================================================================================
Net Income $17,088 $16,709
- --------------------------------------------------------------------------------
Basic Earnings per Share $1.48 $1.45
Diluted Earnings per Share $1.44 $1.42
- --------------------------------------------------------------------------------
</TABLE>
Antique Street Lamps, Inc. - On October 1, 1994, the company acquired Antique
Street Lamps, Inc. Under the terms of the purchase agreement, the company will
make additional payments of up to 161,000 additional shares of common stock,
contingent upon Antique Street Lamps, Inc. achieving certain profit levels
during the four-year period ending December 31, 1998. Any future amounts earned
under this agreement will be recorded as additional goodwill and amortized over
the remaining life of the goodwill recognized at the time of acquisition.
6
<PAGE> 7
3. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $7,610 $7,997
Work in process 3,850 3,620
Finished goods 1,838 2,374
- --------------------------------------------------------------------------------
Total 13,298 13,991
Less valuation allowance (647) (689)
- --------------------------------------------------------------------------------
Total $12,651 $13,302
================================================================================
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
The major classes of property, plant and equipment are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $2,322 $2,112
Buildings and improvements 23,687 23,240
Machinery and equipment 51,016 46,897
Office and computer equipment 12,464 9,863
Construction in progress 1,670 731
- --------------------------------------------------------------------------------
Total 91,159 82,843
Less accumulated depreciation (49,057) (43,430)
- --------------------------------------------------------------------------------
Total $42,102 $39,413
================================================================================
</TABLE>
5. LONG TERM DEBT AND CREDIT FACILITIES
Long term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Term loan $18,660 $24,880
Capital lease obligations (Note 6) 883 330
Other borrowings 31 46
- --------------------------------------------------------------------------------
Total 19,574 25,256
Less current maturities (6,610) (6,390)
- --------------------------------------------------------------------------------
Total $12,964 $18,866
================================================================================
</TABLE>
7
<PAGE> 8
The company has a bank credit agreement consisting of a term loan that reduces
semi-annually until scheduled maturity on September 30, 2000 and a revolving
commitment of up to $15,000,000 through the scheduled maturity date. No amounts
were borrowed under the revolving commitment at December 31, 1997 and 1996.
Under the agreement, the company can elect to borrow Eurodollars at .75% to
2.125% ("Eurodollar Margin") in excess of the London Interbank Offered Rate
("LIBOR") or domestic funds at 0% to .375% ("Base Rate Margin") in excess of the
base rate ("Prime"). Eurodollar or Base Rate Margins are determined by the debt
service coverage ratio, as defined, for any four fiscal quarter period. Interest
rates as of December 31, 1997 and 1996 were 6.8% and 6.6%, respectively. A
commitment fee of .25% to .375% is charged on the average daily unused portion
of the available commitment. Loans under the agreement are collateralized by
substantially all of the company's assets. The agreement contains certain
financial and operating covenants and also contains provisions that limit, among
other things, the amount that could have been expended for annual cash dividends
and purchase of the company's stock to $14,235,000 and $12,521,000 for 1997 and
1996, respectively.
Long term debt, excluding capital lease obligations and other borrowings,
matures as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
1998 $6,220
1999 6,220
2000 6,220
- --------------------------------------------------------------------------------
Total $18,660
</TABLE>
6. LEASES
The company leases certain computer and plant equipment under capital leases.
The cost of these assets leased under capital leases is approximately $1,326,000
and $627,000 at December 31, 1997 and 1996, respectively. In addition, the
company leases certain equipment and office space under non-cancelable operating
leases.
8
<PAGE> 9
Future minimum lease payments are as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Capital Operating
Leases Leases
- --------------------------------------------------------------------------------
<C> <C> <C>
1998 $411 $1,018
1999 294 690
2000 256 359
2001 0 156
2002 0 138
Thereafter 0 267
- --------------------------------------------------------------------------------
Total minimum lease
payments 961 $2,628
Less amount representing
interest (78)
- --------------------------------------------------------------------------------
Present value of net minimum
lease payments (Note 5) $883
================================================================================
</TABLE>
Total rent expense under operating leases for 1997, 1996 and 1995 was
approximately $1,693,000, $1,381,000 and $1,032,000, respectively.
7. INCOME TAXES
The company follows the provisions of SFAS No. 109. The components of income
before income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Domestic $27,068 $24,781 $24,134
Foreign 2,614 1,624 2,343
- --------------------------------------------------------------------------------
Total $29,682 $26,405 $26,477
</TABLE>
The components of the provision (credit) for income taxes are as follows (in
thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Current:
Federal $8,366 $7,918 $7,691
State and local 1,196 1,279 1,384
Foreign 631 487 839
- --------------------------------------------------------------------------------
Total 10,193 9,684 9,914
- --------------------------------------------------------------------------------
Deferred:
Federal 550 171 538
State and local 373 37 (17)
Foreign (57) 45 0
- --------------------------------------------------------------------------------
Total 866 253 521
- --------------------------------------------------------------------------------
Total $11,059 $9,937 $10,435
</TABLE>
9
<PAGE> 10
The principal items accounting for the difference in the expected tax expense on
income before income taxes computed at the United States statutory rate are as
follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Computed expense
at 35% of pre-tax income $10,389 $9,242 $9,267
State and local taxes
(net of federal
tax benefit) 1,127 905 963
Change in valuation
allowance (712) 0 0
Other 255 (210) 205
- --------------------------------------------------------------------------------
Total $11,059 $9,937 $10,435
================================================================================
</TABLE>
The tax effect of the items comprising the company's net deferred tax asset are
as follows (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Intangibles $365 $710
Reserves 1,004 2,104
Compensation and employee
benefits 2,128 1,250
Other 1,184 1,264
- --------------------------------------------------------------------------------
Total 4,681 5,328
Deferred tax liabilities:
Property, plant and equipment 2,260 2,049
- --------------------------------------------------------------------------------
Net deferred tax asset $2,421 $3,279
================================================================================
</TABLE>
At December 31, 1997 the company had foreign net operating loss carryforwards
(NOLs) totaling $309,000 which expire in 2001. For financial reporting purposes,
the company provided a full valuation allowance for the foreign NOLs at December
31, 1996 for $712,000.
At December 31, 1997 unremitted earnings of subsidiaries outside the United
States were approximately $7,000,000. The company intends to indefinitely
reinvest the undistributed earnings of its foreign subsidiaries or to repatriate
them only when it is tax effective to do so. Accordingly, no deferred income
taxes for additional United States federal income taxes from distribution of
foreign earnings have been recorded.
10
<PAGE> 11
8. EMPLOYEE BENEFIT PLANS
The company has five 401(k) defined contribution savings plans covering
substantially all United States union and non-union employees. The plans, which
provide for both optional and mandatory company contributions of up to 5%, are
intended to qualify under Section 401(k) of the Internal Revenue Code. The
company matches participant contributions of up to 3% of their salary. The
company's Canadian subsidiary has a defined contribution savings plan covering
substantially all employees. The expense charged to operations under these plans
was $2,530,000, $2,133,000 and $2,357,000 for 1997, 1996 and 1995, respectively.
The company's Supplemental Executive Retirement Plan (SERP) allows participants
to defer up to 50% of their annual bonus. Long term compensation under the SERP
is used to fund a Rabbi Trust. Gains and losses on participant's accounts
directly offset the SERP liability for each participant. The fair value of the
investment included in other assets and offsetting liability was $3,522,000 and
$2,458,000 at December 31, 1997 and 1996, respectively.
Holophane Europe has a defined benefit plan, covering substantially all of its
employees, in which benefits are based primarily on years of service and
employee compensation near retirement. The company's funding policy is in
accordance with local laws and income tax regulations. Fund assets consist
primarily of common stocks, common trust funds and government securities.
Pension expense for Holophane Europe's pension plan included in the company's
Consolidated Statements of Income for 1997, 1996 and 1995 was $496,000, $258,000
and $294,000, respectively.
The following table sets forth the funding status of Holophane Europe's plan and
amounts recognized in the company's balance sheets (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
December 31,
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit
obligation, all vested $9,689 $7,427
================================================================================
Plan assets at fair value $11,417 $9,914
Projected benefit obligation (10,552) (8,750)
- --------------------------------------------------------------------------------
Overfunded projected benefit
obligation 865 1,164
Unrecognized net gain (482) (767)
- --------------------------------------------------------------------------------
Pension asset, net of
cumulative translation
adjustment $383 $397
================================================================================
</TABLE>
11
<PAGE> 12
Net periodic pension cost included the following components (in thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Service cost $542 $460 $468
Interest cost 709 545 528
Actual return on
plan assets (1,210) (569) (1,284)
Net amortization and
deferral 455 (178) 582
- --------------------------------------------------------------------------------
Net periodic pension
cost $496 $258 $294
================================================================================
</TABLE>
Actuarial assumptions used in the accounting for the plan were as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Discount rate 7.5% 8.5% 8.5%
Expected long term rate
of return on plan assets 8.5% 8.5% 9.0%
Average rate of increase in
compensation levels 5.25% 6.25% 6.5%
================================================================================
</TABLE>
12
<PAGE> 13
9. STOCK OPTIONS
The 1996 and 1993 Holophane Corporation Incentive Stock Plans authorize the
grant of options, restricted stock and awards of performance shares of common
stock to officers, key employees and directors. Options are to be granted at
exercise prices equal to the fair market value of such stock as of the date of
grant. The number of authorized options to be granted under these plans are
800,000 and 1,182,000, respectively. Stock option activity is summarized as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Outstanding at
beginning of year 972,825 802,425 537,000
Weighted average exercise price $13.14 $11.27 $11.03
Granted 234,100 209,600 271,500
Weighted average exercise price $20.76 $19.88 $11.73
Exercised (66,038) (36,150) (3,675)
Weighted average exercise price $10.64 $10.67 $10.90
Canceled (43,250) (3,050) (2,400)
Weighted average exercise price $16.19 $14.15 $12.33
- --------------------------------------------------------------------------------
Outstanding at end of year 1,097,637 972,825 802,425
Weighted average exercise price $14.79 $13.14 $11.27
================================================================================
Exercisable at end of year 566,591 385,800 225,225
================================================================================
Available for grant at end of year 801,329 963,900 373,500
================================================================================
</TABLE>
The company applies Accounting Principles Board Opinion 25 in accounting for its
fixed stock compensation plans. Accordingly, no compensation cost has been
recognized for the plans in 1997, 1996 or 1995. All options granted have a
maximum term of 10 years. Employee options vest ratably over four years and
directors' options vest in six months. The weighted average remaining
contractual life of these options is 7.3 years.
In accordance with SFAS 123, the fair value approach to valuing options used for
pro forma presentation has not been applied to stock options granted prior to
January 1, 1995. The compensation cost calculated under the fair value approach
is recognized over the vesting period of the stock options.
The weighted average fair value of options was $7.95, $6.74 and $4.60 for 1997,
1996 and 1995, respectively. Fair value is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Risk-free interest
rate 6.19% 5.88% 7.20%
Dividend yield 0 0 0
Volatility factor .254 .230 .230
Weighted average
expected life 5.8 years 5.5 years 5.9 years
- --------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 14
Had compensation costs for stock options been determined based on the fair value
at the grant dates for awards under the plan consistent with the method of SFAS
123, the company's net earnings and net earnings per share (EPS) would have been
reduced to the pro forma amounts indicated as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net Income:
As reported $18,623 $16,468 $16,042
Pro forma $17,832 $15,919 $15,811
Basic EPS:
As reported $1.65 $1.44 $1.40
Pro forma $1.58 $1.39 $1.38
Diluted EPS:
As reported $1.60 $1.40 $1.37
Pro forma $1.53 $1.35 $1.35
</TABLE>
10. EARNINGS PER SHARE
All share data is presented in accordance with SFAS 128. Basic shares
outstanding is computed on the weighted average number of shares of common stock
outstanding and earned contingent shares issuable during each period, as
adjusted for the 3 for 2 split in December 1995. The reconciliation of basic and
diluted EPS and shares outstanding are as follows (in thousands except per share
data):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Income available to
common
stockholders $18,623 $16,468 $16,042
Basic EPS $1.65 $1.44 $1.40
Diluted EPS $1.60 $1.40 $1.37
- --------------------------------------------------------------------------------
Basic shares
outstanding 11,283 11,473 11,468
Dilutive securities:
Stock options 373 281 244
Contingent shares 7 25 11
- --------------------------------------------------------------------------------
Dilutive shares
outstanding 11,663 11,779 11,723
================================================================================
</TABLE>
Options to purchase 174,000 shares of common stock at $20.38 per share were
granted in the first quarter of 1996 and not included in 1996 diluted EPS due to
their anti-dilutive affect on EPS.
10. GEOGRAPHICAL AREA INFORMATION
<TABLE>
<CAPTION>
(in thousands)
- --------------------------------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Net Sales to Customers
United States $171,749 $157,981 $144,548
Europe 23,908 23,376 23,137
Other 9,670 9,582 13,384
- --------------------------------------------------------------------------------
Total $205,327 $190,939 $181,069
================================================================================
Transfers Between
Geographic Areas
(eliminated in
consolidation)
United States $7,268 $7,694 $11,781
Other 271 0 0
- --------------------------------------------------------------------------------
Total $7,539 $7,694 $11,781
================================================================================
Operating Income
United States $27,688 $25,882 $25,825
Europe 1,945 1,791 2,743
Other 1,354 344 154
- --------------------------------------------------------------------------------
Total $30,987 $28,017 $28,722
- --------------------------------------------------------------------------------
Identifiable Assets
- --------------------------------------------------------------------------------
United States $102,934 $101,361 $89,771
Europe 20,268 20,166 18,356
Other 3,594 2,440 2,652
- --------------------------------------------------------------------------------
Total $126,796 $123,967 $110,779
</TABLE>
14
<PAGE> 15
RESULTS OF OPERATIONS 1997 COMPARED WITH 1996
Net sales for the year were at a record level of $205.3 million, an increase of
$14.4 million, or 7.5% over 1996. Domestic sales of $171.7 million grew 8.7% in
1997, up 1.7% due to internal growth and 7.0% from the 1996 acquisition of
MetalOptics. Canadian sales were down approximately 1% in local currency
compared to previous year, a result of continued weak economic activity.
Holophane Europe sales were down 2.1% in local currency, reflecting a recovering
business climate in the United Kingdom, offset by a softened Deutschemark and a
decline in sales volume in continental Europe.
Gross margin increased $6.5 million or 8.8% to $80.2 million in 1997. Gross
margin as a percent of sales increased in 1997 to 39.1% compared to 38.6% in
1996. The increase is the result of higher sales volume, favorable price/mix and
lower purchased material costs.
Selling and administrative expenses were $42.7 million, or 20.8% of sales,
compared to $39.4 million or 20.6% of sales in 1996. Additional staffing and
other general spending contributed to increased expense in 1997. Adjusting for
the MetalOptics acquisition, research and development spending was 3.2% in 1997,
compared to 3.0% in 1996.
Interest expense of $1.7 million decreased $0.4 million in 1997 compared to 1996
due to lower outstanding balances and lower average interest rates. Interest
income also decreased $0.1 million in 1997 due to lower average interest rates.
The tax rate in 1997 was 37.3%, down from 37.6% experienced in 1996. The lower
effective income tax rate in 1997 is primarily due to benefits generated by the
Foreign Sales Corporation and elimination of the valuation allowance for foreign
NOL's resulting in no tax expense on Canadian income.
Net income was $18.6 million in 1997, compared to $16.5 million in 1996. Basic
and diluted earnings per share rose to $1.65 and $1.60 per share, respectively,
up from $1.44 and $1.40 per share, respectively in 1996.
Overall, increased net sales, lower net interest costs and lower income taxes
led to higher net earnings for 1997.
RESULTS OF OPERATIONS 1996 COMPARED WITH 1995
Net sales for the year were at a record level of $190.9 million, an increase of
$9.8 million, or 5.4% over 1995. Domestic sales of $158.0 million grew a total
of 9.3% in 1996, up 4.6% due to internal growth and 4.7% from the MetalOptics
acquisition completed in September. In 1996, results were negatively impacted by
softness in new retail store construction and severe winter weather conditions
in North America that delayed construction projects. Canadian sales were down
33.5% in local currency compared to previous year, a result of poor winter
weather in the first quarter of the year and decreased activity in highway
infrastructure projects. Holophane Europe sales were up 1.6% in local currency,
reflecting a soft business climate in the United Kingdom, offset by continued
volume growth in continental Europe. 1996 operating results reflect competitive
pricing conditions in all of the company's lighting markets.
Gross margin increased $3.2 million or 4.5% to $73.7 million in 1996, primarily
the result of higher sales volume. Gross margin as a percent of sales decreased
slightly in 1996 to 38.6% compared to 38.9% in 1995. Adjusting for the
MetalOptics acquisition, gross margin as a percent of sales was flat in 1996
compared to 1995.
Aggregate selling and administrative expenses were $39.4 million, or 20.6% of
sales, compared to $35.7 million or 19.7% of sales in 1995. Sales force
expansion and process improvement programs contributed to increased selling and
administrative spending in 1996. Research and development expenses were 2.9% of
sales in 1996 (3.0% adjusting for the MetalOptics acquisition) compared to 3.1%
in 1995.
Interest expense of $2.1 million decreased $0.7 million in 1996 compared to 1995
due to lower outstanding balances and lower average interest rates. Interest
income also decreased $0.1 million in 1996 due to lower average interest rates.
The effective tax rate in 1996 was 37.6%, down from 39.4% experienced in 1995.
The lower effective income tax rate in 1996 is the result of tax benefits
generated by the Foreign Sales Corporation and Canadian income on which no tax
expense was realized for financial reporting purposes.
Net income was $16.5 million in 1996, compared to $16.0 million in 1995. Basic
and diluted earnings per share rose to $1.44 and $1.40 per share, respectively,
up from $1.40 and $1.37, respectively in 1995.
Overall, increased net sales, lower net interest costs and a lower effective tax
rate led to higher net earnings for 1996.
15
<PAGE> 16
CAPITAL RESOURCES AND LIQUIDITY
Holophane's principal sources of liquidity have been cash generated from
operating activities and amounts available under the bank agreements. During the
three year period ended December 31, 1997, the company generated approximately
$68.2 million of cash from operating activities. Holophane has significantly
reduced working capital requirements through programs implemented in the past
that emphasize accounts receivable, inventory and accounts payable management.
As of December 31, 1997, the company had $11.7 million in cash and cash
equivalents.
At December 31, 1997, outstanding long-term indebtedness amounted to $19.6
million (including the current portion of $6.6 million). This represents a
decrease of $6.4 million from December 31, 1996 before the addition of new
capital leases of $0.7 million.
The Credit Agreement provides the company with a $45 million reducing term loan
and a revolving credit facility of up to $15 million, through September 30,
2000. At year-end 1997 there was $15 million available for borrowing under the
Credit Agreement. The agreement contains provisions that limit, among other
things, the amount that could have been expended for cash dividends and purchase
of the company's stock to $14,235,000 and $12,521,000 for 1997 and 1996,
respectively.
Holophane's primary liquidity requirements are the funding of capital
expenditures, scheduled principal and interest payments on indebtedness and
working capital needs. Capital expenditures in 1997 totaled $8.0 million, as
compared to $5.0 million in 1996 and $9.7 million in 1995. The company used
$11.6 million and $3.8 million to purchase shares into treasury in 1997 and
1996, respectively. Cash on hand, funds generated from operations and amounts
available under the Credit Agreement are expected to adequately fulfill
Holophane's anticipated requirements in 1998.
IMPACT OF INFLATION
The company is subject to the effects of inflation. While the company attempts
to pass along inflationary increases in its costs by increasing the selling
prices of its products, it has not always been successful in passing along the
entire amount of such increases due to the level of competition in its markets.
The operating efficiencies and reduced unit cost of production which have been
achieved through the company's capital expenditure programs and other process
improvements have mitigated the impact of inflation on the company's cost
structure.
SAFE HARBOR STATEMENT
Except for the historical information contained herein, the matters discussed in
this annual report are forward-looking statements which involve risks and
uncertainties, including but not limited to economic, competitive, governmental
and technological factors affecting the company's operations, markets, services
and related products, prices and other factors discussed in the company's prior
filings with the Securities and Exchange Commission.
STOCK MARKET PRICES AND DIVIDENDS
Since November 3, 1993, the company's common stock has been listed on the NASDAQ
National Market under the symbol "HLPH." As of March 10, 1998, there were
approximately 2,300 record holders of the company's common stock. See Quarterly
Results of Operations on page 8 for market prices on common stock during 1997
and 1996. No dividends on the common stock were paid in 1997 or 1996.
YEAR 2000
Holophane initiated the process of preparing its computer systems and
applications for the Year 2000 in 1997. This process involved identifying and
modifying certain in-house software developed and maintained by the company as
well as communicating with external service providers to ensure that they are
taking the appropriate action to remedy their Year 2000 issues. Management
expects to have substantially all of the system and application changes
completed by the end of 1998 and believes that its level of preparedness is
appropriate.
Holophane estimates that the total cumulative cost of the project will be
approximately $200,000 which includes both internal and external personnel costs
related to modifying the systems. Personnel and all other costs related to the
project are being expensed as incurred. The costs of the project and the
expected completion dates are based on management's best estimate.
16
<PAGE> 17
Holophane Corporation and Subsidiaries
(in thousands except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
1997 1996 1995 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Net sales $205,327 $190,939 $181,069 $150,997 $138,818 $129,863 $118,166 $115,650
Gross margin 80,194 73,655 70,478 58,407 53,594 47,074 42,029 39,261
Nonrecurring items 0 0 0 3,875 3,424 0 0 0
Operating income 30,987 28,017 28,722 18,580 13,880 12,035 7,773 9,468
Interest expense, net 1,305 1,612 2,245 2,255 6,230 8,220 9,887 10,848
Income (loss) before income taxes,
cumulative effect of accounting change
and extraordinary item 29,682 26,405 26,477 16,325 7,650 3,815 (2,114) (1,380)
Provision for income taxes 11,059 9,937 10,435 6,837 3,075 661 64 227
Income (loss) before cumulative effect
of accounting change and extraordinary item 18,623 16,468 16,042 9,488 4,575 3,154 (2,178) (1,607)
Cumulative effect of accounting change (a) 0 0 0 0 3,693 0 0 0
Extraordinary items, net of tax (b) 0 0 0 0 (4,098) 0 0 (5,464)
Net income (loss) 18,623 16,468 16,042 9,488 4,170 3,154 (2,178) (7,071)
Preferred stock dividends 0 0 0 0 2,137 2,260 1,958 1,845
Net income (loss) available to common
stockholders $18,623 $16,468 $16,042 $9,488 $2,033 $894 ($4,136) ($8,916)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data
- ----------------------------------------------------------------------------------------------------------------------------------
Working capital:
Cash $11,709 $8,072 $13,356 $11,473 $11,788 $3,013 $1,145 $2,156
Other $15,020 19,117 12,688 8,437 5,550 5,498 16,121 16,647
Total assets 126,796 123,967 110,779 99,352 95,915 88,014 99,745 111,494
Debt 19,574 25,256 31,410 37,722 45,671 63,777 76,677 82,550
Redeemable, preferred stock 0 0 0 0 0 16,905 14,645 12,687
Stockholders' equity (deficit) $75,103 $67,144 $50,389 $34,722 $27,201 ($10,608) ($7,546) ($2,858)
- ----------------------------------------------------------------------------------------------------------------------------------
Per Common Share Data (c)
- ----------------------------------------------------------------------------------------------------------------------------------
Basic net earnings (loss) before cumulative
effect of accounting change
and extraordinary items $1.65 $1.44 $1.40 $0.82 $0.29 $0.11 ($0.53) ($0.45)
Basic net earnings (loss) $1.65 $1.44 $1.40 $0.82 $0.24 $0.11 ($0.53) ($1.16)
Diluted net earnings (loss) $1.60 $1.40 $1.37 $0.82 $0.24 $0.11 ($0.53) ($1.16)
Book value $6.82 $5.88 $4.39 $3.03 $2.33 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Other Data
- ----------------------------------------------------------------------------------------------------------------------------------
Gross margin as a % of net sales 39.1% 38.6% 38.9% 38.7% 38.6% 36.2% 35.6% 33.9%
Operating income as a % of net sales 15.1% 14.7% 15.9% 12.3% 10.0% 9.3% 6.6% 8.2%
Weighted average number of basic
common shares (c) 11,283 11,473 11,468 11,580 8,414 7,775 7,765 7,665
Weighted average number of diluted
common shares (c) 11,663 11,779 11,723 11,628 8,415 7,775 7,765 7,665
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents the effect of adopting SFAS No. 109 "Accounting for Income
Taxes."
(b) Relates to early retirement of debt.
(c) Adjusted to reflect stock splits.
17
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
(i) Holophane Canada Inc., a Canadian corporation.
(ii) Luxfab Limited, a United Kingdom corporation and the holding company for
Holophane Europe Limited and Holophane Lichttechnik.
(iii) Holophane Lichttechnik, a German GmbH.
(iv) Holophane Europe Limited, a United Kingdom corporation.
(v) MetalOptics, Inc., a Texas corporation.
(vi) Antique Street Lamps, Inc., a Texas corporation, and the holding company
for Castlight.
(vii) Castlight, a Mexican corporation.
(viii) Holophane International, Inc., a Barbados company.
(ix) Holophane Australia Corporation Pty. Limited, holding company for 50.2%
of Unique Lighting Solutions Pty. Limited and 50.2% of The Austphane
Trust.
(x) Unique Lighting Solutions Pty. Limited, an Australian corporation,
Trustee of The Austphane Trust.
(xi) The Austphane Trust, an Australian unit trust.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements
No. 33-71034, No. 33- 71488 and No. 333-40569 of Holophane Corporation on
Form S-8 of our reports dated February 19, 1998, appearing in and incorporated
by reference in the Annual Report on Form 10-K of Holophane Corporation for the
year ended December 31, 1997.
Deloitte & Touche LLP
Columbus, Ohio
March 25, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 11,709
<SECURITIES> 0
<RECEIVABLES> 30,990
<ALLOWANCES> 1,087
<INVENTORY> 12,651
<CURRENT-ASSETS> 58,251
<PP&E> 91,159
<DEPRECIATION> 49,057
<TOTAL-ASSETS> 126,796
<CURRENT-LIABILITIES> 31,522
<BONDS> 0
0
0
<COMMON> 119
<OTHER-SE> 75,103
<TOTAL-LIABILITY-AND-EQUITY> 126,796
<SALES> 205,327
<TOTAL-REVENUES> 205,327
<CGS> 125,133
<TOTAL-COSTS> 173,874
<OTHER-EXPENSES> 466
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,719
<INCOME-PRETAX> 29,682
<INCOME-TAX> 11,059
<INCOME-CONTINUING> 18,623
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,623
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.60
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 8,888 13,761 8,063
<SECURITIES> 0 0 0
<RECEIVABLES> 29,743 29,836 33,495
<ALLOWANCES> 1,071 1,005 1,070
<INVENTORY> 13,571 14,345 14,582
<CURRENT-ASSETS> 54,838 60,737 59,230
<PP&E> 83,799 85,610 87,618
<DEPRECIATION> 44,833 46,345 47,626
<TOTAL-ASSETS> 120,260 126,338 125,231
<CURRENT-LIABILITIES> 29,743 32,993 34,215
<BONDS> 15,714 15,671 12,518
0 0 0
0 0 0
<COMMON> 119 119 119
<OTHER-SE> 67,927 70,860 71,796
<TOTAL-LIABILITY-AND-EQUITY> 120,260 126,338 125,231
<SALES> 46,408 95,015 151,452
<TOTAL-REVENUES> 46,408 95,015 151,452
<CGS> 28,526 58,379 92,503
<TOTAL-COSTS> 12,338 24,375 36,570
<OTHER-EXPENSES> 168 383 389
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 478 907 1,335
<INCOME-PRETAX> 4,995 11,164 20,972
<INCOME-TAX> 1,885 4,136 7,783
<INCOME-CONTINUING> 3,110 7,028 13,189
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 3,110 7,028 13,189
<EPS-PRIMARY> .27 .62 1.16
<EPS-DILUTED> .26 .60 1.13
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> JUN-30-1996 SEP-30-1996 DEC-31-1996
<CASH> 13,256 6,004 8,072
<SECURITIES> 0 0 0
<RECEIVABLES> 26,558 32,608 34,120
<ALLOWANCES> 1,012 1,074 1,016
<INVENTORY> 14,161 15,556 13,302
<CURRENT-ASSETS> 56,663 57,227 58,326
<PP&E> 75,164 80,657 82,843
<DEPRECIATION> 40,439 41,678 43,430
<TOTAL-ASSETS> 111,429 120,091 123,967
<CURRENT-LIABILITIES> 28,638 32,846 31,137
<BONDS> 21,929 19,139 0
0 0 0
0 0 0
<COMMON> 119 119 119
<OTHER-SE> 55,241 62,302 67,144
<TOTAL-LIABILITY-AND-EQUITY> 111,429 120,091 123,967
<SALES> 82,661 133,949 190,939
<TOTAL-REVENUES> 82,661 133,949 190,939
<CGS> 51,565 82,484 117,284
<TOTAL-COSTS> 21,077 31,953 162,222
<OTHER-EXPENSES> 106 206 700
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 1,138 1,682 2,139
<INCOME-PRETAX> 9,057 18,040 26,405
<INCOME-TAX> 3,464 6,805 9,937
<INCOME-CONTINUING> 5,593 11,235 16,468
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 5,593 11,235 16,468
<EPS-PRIMARY> .49 .98 1.44
<EPS-DILUTED> .48 .96 1.40
</TABLE>
