<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended August 31, 1995 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 1-5034
CORE INDUSTRIES INC
(Exact name of registrant as specified in its charter)
Nevada 38-1052434
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P. O. Box 2000, Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (810) 642-3400
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
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. [X]
As of October 31, 1995, 9,827,012 common shares were outstanding, and the
aggregate market value of the common shares held by nonaffiliates of the
Registrant (based upon the closing sale price of $12.38 for these shares on the
New York Stock Exchange) was approximately $122 million.
Certain sections of the definitive proxy statement to be filed for the Annual
Meeting of Stockholders to be held on January 9, 1996 are incorporated by
reference to Part III.
<PAGE>
PART I
Item 1. Business
(a) General Development of the Company
The Company was incorporated under the name of Soss Manufacturing Company
in 1909 as a manufacturer of a line of concealed hinges sold to the
hardware, furniture and home building trades and subsequently developed
hinges and other stampings for the infant automotive industry. The Company
went public in 1937 and had its shares traded on the American Stock
Exchange.
In 1958, the Company began to diversify its interests through the
acquisition of a number of businesses. It presently groups its businesses
into three industry segments: Fluid Controls and Construction Products;
Test, Measurement and Control; and Farm Equipment. From sales of $5,000,000
in 1958, 90 percent of which were derived from the production of automobile
parts, the Company has grown to its present size and diversified structure
with less than five percent automotive business.
The Company changed its name in January 1969 to SOS Consolidated Inc. to
help alleviate confusion between the parent company and its automotive
division. In April 1969, the Company's shares were listed for trading on
the New York Stock Exchange. In January 1978, the Company adopted the name
Core Industries Inc, as being more representative of its operations.
Various acquisitions, primarily in the electronics industry, contributed to
the Company's sales growth in the 1980s. However, in 1992, after several
years of declining earnings, the Company divested three unprofitable
electronics subsidiaries and instituted a plan to become a more focused
business. Since then, the Company has made four acquisitions related to
existing businesses and has sold two unrelated operations. In October 1995,
the Company announced plans to dispose of Cherokee International, Inc., its
wholly-owned power supply manufacturer, and classified the subsidiary as a
discontinued operation. The Company plans to accelerate growth in its focus
businesses through new products and sales channel initiatives as well as
making selected, strategic acquisitions in its focus areas.
Under the Company's method of operation and control, each division operates
as a separate and autonomous entity with its own manufacturing,
engineering, accounting, sales staff and distribution network. Personnel at
Corporate office direct overall policies and perform services for all
divisions in the areas of financial and treasury control, manufacturing
consultation, information systems and marketing. Corporate office maintains
control over the divisions through direct contact, reviews of budgets and
reports, internal auditing and involvement in formal planning. In addition,
Corporate develops and implements strategic options to increase shareholder
value and responds to division results and opportunities.
(b) Industry Segments
The Company is engaged principally in the manufacture of specialty products
for commercial and industrial use. Required industry segment financial
information is set forth in the notes to consolidated financial statements
incorporated herein by reference. The Company operates in three segments:
Fluid Controls and Construction Products; Test, Measurement and Control;
and Farm Equipment.
FLUID CONTROLS AND CONSTRUCTION PRODUCTS
Fluid Controls and Construction Products and services cover a broad range from
valve and pipeline strainers for various fluid control applications to molded
plastic parts, metal stampings and hinges, and mechanical contracting. This
group serves the Heating, Ventilation and Air Conditioning ("HVAC") market as
well as the chemical and petrochemical processing industry, the paper and food
processing industry, the commercial construction market, and general industry.
2
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The Core Fluid Controls Group (CFCG) consists of Mueller Steam Specialty,
Hendrix, OGASCO, Associated Piping Equipment, Mueller West, and Mueller Asia. In
addition to possessing a worldwide reputation for specialty valves, CFCG
believes that it is the largest manufacturer of pipeline strainers and check
valves in the world. Pipeline strainers catch objects larger than 40 microns and
prevent them from damaging machinery. Strainers and valves are used in various
kinds of industrial processes and plants, essentially wherever piping systems
exist. Mueller Steam Specialty is the largest division of the Core Fluid
Controls Group and manufactures four primary product lines: strainers and
specialty valves, check valves, butterfly valves, and plug valves. CFCG believes
that it carries a product line that is more extensive than its competitors and
CFCG's ability to design, build, and ship products in a short time-frame is
well-known in the industry.
Business is derived largely from quoting new jobs as well as from stocking
distributors and retrofit orders. Valves designed by CFCG are outsourced from
approximately 65 foundries throughout the world. Once castings are received at
CFCG's North Carolina plant, CFCG machines, assembles, tests, and packages the
valves to meet a wide variety of specifications. Orders are typically processed
within a week of their receipt.
CFCG expects to grow by developing or acquiring new products to sell through its
existing channels and by developing or acquiring new channels and market areas
for its products. New products range from sophisticated butterfly and check
valves to valve actuators.
Management believes there are a number of attractive acquisition targets in the
highly fragmented specialty valve and strainer market in addition to the
recently acquired Hendrix (FY 1994) and OGASCO (FY 1995). As a complementary
acquisition, Hendrix brought fabricating expertise and new market areas to CFCG.
The Company plans to use CFCG's purchasing and distribution strength to improve
Hendrix's operations. The Company also plans to use OGASCO's products which have
a strong international presence to develop a stronger overall international
presence for CFCG in the oil and gas processing industry. In turn, it is hoped
that Hendrix will provide a conduit to potential new customers through its valve
fabrication capabilities and its strong position in the southwest United States.
There can be no assurance that the Company's plans with respect to Hendrix and
OGASCO can be realized.
CFCG is also expanding its distribution network through internal efforts. Soss
of Singapore, a Core subsidiary that formerly performed zinc die casting, has
become Mueller Asia and now functions as the sales and stocking distribution
center for the Pacific Rim territory. Mueller Asia is also scheduled to begin
some manufacturing activities by the end of the 1996 fiscal year. CFCG has also
launched Associated Piping Equipment, a division that distributes lower priced
valves and strainers that compete with discount importers. To expand
distribution, CFCG is evaluating strategic sales initiatives in South America
and Mexico and is reviewing the benefits of adding direct sales employees in its
major markets.
Other companies in the fluid control and construction segment are Poly-Craft,
Universal Industrial Products (UIP), and the Robert Carter Corporation.
Poly-Craft and UIP each represent less than five percent of Core's total sales
and all three account for less than five percent of Core's total earnings.
There is substantial competition in the markets served by this product segment,
and in certain instances, the Company competes with companies whose financial
resources are greater.
This product segment's backlog aggregated $21,400,000 at August 31, 1995, as
compared to $10,250,000 at August 31, 1994. It is anticipated that substantially
all of the backlog will be filled during the year ending August 31, 1996. In
general, this product segment business is not seasonal in nature.
The primary raw materials used by this product segment are steel coil and sheet,
castings made of various metals, resins and plastics. The Company generally
obtains these materials from several sources, including foreign suppliers, and
materials are readily available.
The Company holds certain patents relative to this product segment which,
although of value, do not play a significant part in the Company's operations.
The Company also has registered certain product trademarks which are considered
to be of value.
3
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TEST, MEASUREMENT AND CONTROL
The Test, Measurement and Control group is Core's second largest segment. The
Company believes it is the leading producer of selected electrical test,
measurement, and control products. Sales are primarily made through dealers and
manufacturer's representatives in the United States and abroad. This group
serves the electrical, construction, and maintenance market; the HVAC industry;
factory automation companies; general industry; and computer and
telecommunications manufacturers. Core's recent acquisition of Promax, a
manufacturer of refrigerant recycling and recovery products, was intended to
strengthen the Company's presence in the HVAC market.
Amprobe has been recognized as a leader in quality test equipment for
professionals in the electrical, HVAC, construction, and maintenance markets.
Amprobe primarily manufacturers hand-held devices, which are used by
professionals for testing and measuring electrical properties in various field
applications. Amprobe believes that its products have a reputation for being
reliable and competitively priced. Primary products include clamp-on units,
multi-meters (volt/amp/ohmmeters), circuit tracers, harmonic analyzers,
ultrasonic leak detectors, and refrigerant recovery products (through the
acquisition of Promax). All sales are made through distributors. Amprobe's
advertising is targeted directly to consumers to create demand at the
distributor level. Amprobe performs primarily light assembly and calibration in
its ISO 9000 certified plant in Lynbrook, New York, and conducts research and
development activities in Denver, Colorado.
Amprobe's new product development efforts include updating traditional products,
enhancing the features of existing products, and introducing new products such
as circuit tracers, harmonic analyzers, ultrasonic leak detectors, and
refrigerant recovery products. Known in the industry for its clamp-on products,
Amprobe is growing and believes that it is gaining market share in this mature
product niche. Amprobe believes that it faces comparatively little competition
in the wire-tracer market, and through its Promax acquisition intends to develop
a stronger presence in the refrigerant recycling and recovery product market. In
January 1995, Amprobe acquired Promax, a manufacturer of oil-less refrigerant
recovery products. The Company believes that oil-less recovery offers a number
of performance advantages over competitive systems. This product line is sold
through its HVAC distribution channels.
GSE operates in three areas: measurement and control products (including torque
sensors), "tech-motive" tools, and scales and weighing systems. GSE's
measurement and control products are used in a wide variety of applications and
industries. GSE provides process controllers and monitors for process operations
and sensors and systems testing equipment for measuring forces such as torque.
"tech-motive" tools are a line of direct current electric nutrunners and
electronic controllers for accurate fastening in manufacturing or repair
applications. Scales and weighing systems consist of programmable scales and
controllers used for accurate measurement, parts counting, or weight-based
processes.
GSE manufactures numerous torque measuring devices and has the exclusive license
to a non-contact torque sensing technology. Non-contact torque measurement has
two important applications--electronic power steering in vehicles and predictive
maintenance in industrial applications such as oil drilling. In electronic power
steering, a non-contact torque sensor measures the torque generated by turning a
steering wheel and translates it into directions to move the vehicle's wheels.
Electronic power steering systems are lighter, more efficient, more accurate,
and less expensive than hydraulic power steering systems. Management believes
that significant additional revenues from this application may be developed over
the next several years, but there can be no assurance that technological
obstacles can be overcome or that sufficient market acceptance can be achieved
to permit this application to make a significant contribution to this segment's
revenues or earnings.
"tech-motive" products represent GSE's second major growth area. Their nutrunner
products provide accurate, reliable fastening and offer significant performance
advantages over other fastener systems products such as pneumatic tools.
Although the overall market is fairly mature, DC electric systems are growing
and taking market share from other systems. Additionally, GSE is benefitting
from the worldwide macro trend toward superior manufacturing quality and the
increased emphasis on the importance of quality in safety-related applications.
4
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GSE's programmable scales and weighing systems is its third growth area. GSE
seeks to continue to grow in this area by expanding its research and development
effort to remain a technology leader, and introduce new products that provide
greater value than competing systems.
GSE's primary strategy is to become the technology leader in applying controlled
strain gage technology to high performance tooling, torque sensing, and
programmable weighing systems. Through new product development, GSE seeks to
grow in its existing markets and penetrate related markets. GSE also seeks to
expand its presence in Europe, largely by increasing the distribution of its
scale systems.
Great Lakes/Eglinton (GLE) is the other unit in the test, measurement and
control group. It accounts for less than five percent of Core's total sales and
earnings. GLE's products include high precision carbide tooling.
There is substantial competition in the markets served by this market segment,
and in certain instances, the Company competes with companies whose financial
resources are greater.
The backlog of this segment aggregated $5,000,000 at August 31, 1995, as
compared to $6,000,000 at August 31, 1994. It is anticipated that substantially
all of the backlog will be shipped during the year ending August 31, 1996. In
general, the business of this product segment is not highly seasonal in nature.
This segment's products are made principally from purchased electronic
components and materials which are readily available from numerous sources.
The Company holds important patents related to its "tech-motive" tool product
line. Other patents relative to this product segment, although of value, do not
play a significant part in the Company's operations, although the exclusive
right to distribute the non-contact torque sensing technology in the Americas
and Europe has strong potential. The Company also has licenses and has
registered certain product trademarks, which are considered to be of value.
FARM EQUIPMENT
The Farm Equipment segment has, in recent years, represented a profitable and
strong growth area for Core. Core believes it is the leading producer of tillage
equipment in the high plains region and a leading manufacturer of grain augers.
Although farm equipment is a traditionally seasonal business, certain sales
strategies significantly reduce seasonal fluctuations. Sales are made through
dealers and distributors primarily in the High Plains and Midwest United States,
as well as in Canada.
Sunflower is among the world's leading producers of high-quality disc harrows,
and its grain drills and other tillage equipment are also known for their
quality, reliability and value. This equipment is used to prepare land for
seeding and for seeding operations. Tillage equipment usually represents 10 to
15 percent of a dealer's sales. The primary market for Sunflower equipment is
the high plains states of Texas, Colorado, Nebraska, Kansas, and the Dakotas.
Secondary market areas include the Midwest, and Sunflower is working to expand
into the delta region of the South. Sunflower also has limited international
sales to countries such as Canada and Australia.
Sunflower equipment is sold through a direct sales force and an independent
dealership network of more than 400 dealers. Within this 400 dealership network,
Sunflower believes it has approximately an 18 percent share of all tillage
equipment sold. Sunflower enhances its dealer relationships by training and
educating its dealers and by providing outstanding customer service.
Sunflower has benefitted from the 1990 Farm Bill, which required farmers on
erosion-prone soil to maintain a certain percentage of residue. Sunflower
manufactures several conservation tillage tools which protect topsoil from
erosion. Sunflower is continually implementing product design changes to comply
with conservation tillage regulations.
5
<PAGE>
Feterl Mfg. Co. (Feterl) and Richardton Manufacturing form the remainder of
Core's Farm Equipment segment. Neither business accounts for more than five
percent of Core's total sales, although Feterl accounts for slightly more than
five percent of total earnings.
There is substantial competition in the markets served by this product segment,
and in certain instances, the Company competes with companies whose financial
resources are greater.
This product segment's backlog aggregated $3,800,000 at August 31, 1995, as
compared to $4,450,000 at August 31, 1994. It is anticipated that substantially
all of the backlog will be shipped during the first quarter of fiscal 1996.
While the sales of certain individual products are seasonal in nature, the
operations of this product segment are not highly seasonal on an overall basis.
The farm economy has been, historically, very cyclical and can be significantly
affected by the general economy and the weather. As is customary in the farm
equipment industry, the Company makes many sales with seasonal dating payment
terms to its farm equipment customers.
The primary raw material used by the businesses within this product segment is
standard sheet steel which is readily available from numerous sources.
The Company holds various patents relating to the products of this segment
which, although of value, do not play a significant part in the Company's
operations. The Company also has registered certain product trademarks which are
considered to be of value.
(c) Employment
At August 31, 1995, there were approximately 2,260 people employed by the
Company in its operations, of whom 1,910 were employed in the United
States. The discontinued Cherokee operation employed 829 of the 2,260
people at August 31, 1995.
(d) Other
While the Company places a high emphasis on the development of new and
improved products, research and development activities did not represent
significant expenditures during the past three years.
Compliance with federal, state and local provisions which have been enacted
or adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, is not expected to
have a material effect upon the capital expenditures, earnings and
competitive position of the Company.
6
<PAGE>
Item 2. Properties
Listed below are the major properties of the Company:
<TABLE>
<CAPTION>
Square Owned Expiration
Foot or Date of Product
Location Area Leased Lease Group(s)
- -------------------- ------ ------ ----- -----------------------------
<S> <C> <C> <C> <C>
Bridgeport, MI 23,000 Owned Test, measurement and control
Farmington Hills, MI 36,000 Owned Test, measurement and control
Lynbrook, NY 49,000 Owned Test, measurement and control
Southfield, MI 8,000 Leased 1999 Test, measurement and control
Denver, CO 18,000 Leased 1996 Test, measurement and control
Beloit, KS (Note A) 88,000 Leased 1996 Farm Equipment
Cawker City, KS 51,000 Owned Farm Equipment
Richardton, ND 37,000 Owned Farm Equipment
Salem, SD 108,500 Owned Farm Equipment
Houston, TX 32,000 Owned Fluid Controls and Const. Prod.
18,000 Leased 1996
Lumberton, NC 144,000 Owned Fluid Controls and Const. Prod.
St. Pauls, NC 216,000 Owned Fluid Controls and Const. Prod.
Phoenix, AZ 14,000 Leased 1996 Fluid Controls and Const. Prod.
Pioneer, OH 66,400 Owned Fluid Controls and Const. Prod.
Wauseon, OH 47,000 Owned Fluid Controls and Const. Prod.
Singapore 26,700 Owned Fluid Controls and Const. Prod.
9,300 Leased 2006
Bloomfield Hills, MI 12,000 Leased 2001 Corporate Offices
</TABLE>
All of the above properties are substantially utilized, are suitable for the
Company's needs and have sufficient productive capacity. The above listing
excludes property of discontinued operations which are in the process of being
sold.
Note A: This leased production facility was financed by the proceeds
of industrial development revenue bonds. The Company may purchase the
facility under favorable terms upon satisfaction of the lease. As
required by generally accepted accounting principles, the lease has
been treated as a purchase by the Company.
Item 3. Legal Proceedings
Although the Company is involved in certain litigation incidental and related to
its business, there are presently no pending material legal proceedings
involving the Company not covered by insurance.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the fourth quarter of 1995 to a vote of security
holders through a solicitation of proxies or otherwise.
7
<PAGE>
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters
At August 31, 1995, there were approximately 2,158 shareholders of record of the
common stock of Core Industries Inc.
The Company's common stock is traded on the New York Stock Exchange. The
following table indicates the high and low sales prices of the common stock of
the Company, and the dividends paid per share for the periods indicated:
<TABLE>
<CAPTION>
Market Price
Year Ended ------------------
August 31, 1994 High Low Dividends
--------------- ------- ------- ---------
<S> <C> <C> <C>
First quarter $15-1/2 $11-3/4 $ .06
Second quarter 18-3/8 13-3/8 .06
Third quarter 14-7/8 10-1/2 .06
Fourth quarter 11-1/2 10 .06
-----
$ .24
=====
</TABLE>
<TABLE>
<CAPTION>
Market Price
Year Ended ------------------
August 31, 1995 High Low Dividends
--------------- ------- ------- ---------
<S> <C> <C> <C>
First quarter $11-1/8 $ 8-5/8 $ .06
Second quarter 12-1/2 9-1/2 .06
Third quarter 12-5/8 10 .06
Fourth quarter 12-5/8 9-3/4 .06
-----
$ .24
=====
</TABLE>
Note A: Under the Company's debt agreements with insurance companies,
retained earnings of approximately $21 million were available for
dividends at August 31, 1995 subject to future earnings levels.
8
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Item 6. Selected Financial Data
A summary of selected financial data follows:
<TABLE>
<CAPTION>
Year Ended August 31,
------------------------------------------------------------------------
1991 1992 1993 1994 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $164,702,000 $146,571,000 $156,615,000 $166,260,000 $187,897,000
Earnings from
continuing
operations
(Note B) 7,123,000 (596,000) 7,900,000 9,209,000 10,693,000
Net earnings
(loss) 1,625,000 (26,368,000) 8,565,000 10,006,000 3,828,000
Net earnings per
common share:
Continuing
operations $ 0.73 $(0.06) $0.81 $0.94 $1.09
Net earnings
(loss) 0.17 (2.70) 0.88 1.02 0.39
Cash dividends
declared per
share 0.48 0.30 0.24 0.24 0.24
As of August 31:
Total assets $189,046,000 $156,583,000 $151,277,000 $156,387,000 $146,247,000
Long-term debt 52,298,000 50,146,000 47,134,000 41,608,000 32,609,000
</TABLE>
Note A: Effective September 23, 1993, the Company sold its Du-Al
Manufacturing Division, a manufacturer of front end loaders, back hoes
and other equipment sold to the construction and farm industries.
Effective May 31, 1994, the Company sold its Pioneer Industries
Division, a manufacturer of metal doors and frames for the
construction industry. The businesses sold had approximately
$9,000,000 of sales in FY 1994 prior to disposition and approximately
$20,000,000 of sales in FY 1993.
Other income for the year ended August 31, 1994 includes pretax gain of
$1,475,000 (total of $.09 per share) related to the sale of the Du-Al Division.
Note B: Effective February 29, 1992, the Company adopted a formal plan to
divest three major electronics-related subsidiaries. The three
operations, Anilam Electronics, FlexStar and Hilton Industries,
produced machine tool controls, disk-drive test equipment and tantalum
capacitors, respectively, were accounted for as discontinued
operations. Appropriate provisions were recorded for (a) the estimated
losses of the discontinued operations through their expected disposal
dates, (b) reduction of assets to their net realizable values and (c)
the anticipated liabilities relating to the disposals. The total
provision amounted to $20,859,000, net of income tax benefit of
$7,315,000. Selected information related to these discontinued
operations follows:
<TABLE>
<CAPTION>
1991 1992(a)
------------ ------------
<S> <C> <C>
Sales $ 42,796,000 $ 16,291,000
Net earnings (loss) (6,350,000) (4,015,000)
Net earnings (loss) per share (0.65) (0.41)
</TABLE>
9
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On October 6, 1995, the Company adopted a formal plan to divest its wholly-owned
electronics-related subsidiary, Cherokee International, Inc. and its
subsidiaries ("Cherokee") effective August 31, 1995. Cherokee represented a
separate line of business producing electronic power supplies to distinct
customers and has been accounted for as a discontinued operation. Appropriate
provisions were recorded in the fourth quarter of fiscal 1995 for (a) the
estimated losses for the discontinued operation through its expected disposal
date, (b) reduction of assets to their net realizable values, and (c) the
anticipated liabilities related to the disposal. The total provision amounted to
$6,500,000, net of income tax benefit of $3,500,000.
Selected information related to Cherokee's operations prior to discontinuance
follows:
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Sales $ 50,431,000 $ 53,193,000 $ 44,669,000
Pretax income (loss) 1,315,000 1,845,000 (285,000)
Income taxes 650,000 1,048,000 80,000
Net income (loss) 665,000 797,000 (365,000)
Earnings (loss) per share 0.07 0.08 (0.04)
</TABLE>
The net assets of the discontinued Cherokee operation held for sale have been
included in the Balance Sheet at August 31, 1995 under the caption "Net Assets
Held for Sale." Interest expense was allocated based on debt incurred to finance
Cherokee since its acquisition. The Company expects to dispose of all the net
assets within one year.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
During 1995 the Company continued its strong improvement trend which began in
1992 after Core took dramatic action to restructure operations and refocus
management. Management's commitment to improving shareholder value was
demonstrated in 1995 by sales and earnings improvements, acquisitions, new
product introductions and actions to discontinue a business.
Effective August 31, 1995, the Company's Board of Directors adopted a formal
plan to divest its wholly-owned electronics-related subsidiary, Cherokee
International, Inc. and its subsidiaries ("Cherokee"). Cherokee represented a
fundamentally separate line of business that produced electronic power supplies
for distinct customers. It has been accounted for as a discontinued operation.
Appropriate provisions were recorded in the fourth quarter of fiscal 1995 for
(a) the estimated losses for the discontinued operation through its expected
disposal date, (b) reduction of assets to their net realizable values, and (c)
the anticipated liabilities related to the disposal. The total provision
amounted to $6,500,000, net of income tax benefit of $3,500,000. The Company is
reviewing sales alternatives for Cherokee and expects to dispose of the
operation during fiscal 1996.
Fiscal 1995 Compared with Fiscal 1994
Consolidated sales from continuing operations were up 13% to $187,897,000 over
1994 sales of $166,260,000. Earnings from continuing operations were
$10,693,000, or 16% better than 1994. Included in 1994 earnings was a net gain
of $915,000 ($.09 per share) related to the sale of a division. Excluding this
item, earnings from continuing operations increased 29% in 1995 compared to
1994.
Approximately 67% of the sales increase and 60% of the earnings before tax
increase was attributable to the Test, Measurement and Control Group. Fluid
Controls and Construction sales increased 3% with profits growing almost 25%.
Excluding 1994's gain on the sale of the division, Farm Equipment earnings
increased 11% on a 15% sales increase.
Overall gross profit margins improved strongly from 33.1% to 35.6% as a result
of favorable product mix changes and new product introductions. The increase in
selling, general and administrative expenses from 21.2% of sales
10
<PAGE>
to 22.9% relates primarily to key units where there were increased investments
in research and development, and promotional and selling costs related to new
products and entering new markets.
Other income in 1994 includes the $1.475 million pretax gain related to the sale
of the Company's Du-Al division. Interest expense declined 12.2% in 1995 from
1994 as borrowings were reduced by $9 million.
Fiscal 1994 Compared with Fiscal 1993
Consolidated sales from continuing operations were up 6% to $166,260,000 over
1993 sales of $156,615,000. Excluding the unusual gain on the sale of the Du-Al
division in 1994, earnings increased 7%.
Approximately 72% of the sales increase and 47% of the earnings before tax
increase was attributable to the Test, Measurement and Control Group. Excluding
Du-Al sales and earnings, the Farm Segment sales grew 15% and profits increased
17%. Excluding the results of the sold Pioneer division, Fluid Controls and
Construction sales increased 15% with earnings approximately the same in each
year.
The overall gross profit percent and selling, general and administrative costs
as a percent of sales remained constant relative to 1993.
Other income in 1994 includes the $1.475 million pretax gain related to the sale
of the Company's Du-Al division, while other income in 1993 also includes
unusual items - a litigation settlement of approximately $500,000 and $300,000
in gains on property disposals. Interest expense declined 16.5% in 1994 from
1993 primarily due to decreased borrowings.
PRODUCT GROUP DETAIL
Fluid Controls and Construction Products Group
<TABLE>
<CAPTION>
(In Thousands) 1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Sales $72,907 $78,745 $80,732
Earnings before taxes 9,400 8,624 10,766
Ongoing businesses (a)
Sales $61,182 $70,390 $80,732
Earnings before taxes 9,599 9,571 10,766
(a) Excluding unit sold in 1994
</TABLE>
Sales and earnings before taxes in 1995 increased 15% and 12%, respectively,
over the prior year after excluding the Pioneer division which was sold in 1994.
This increase was due to the improved performance of Core's Fluid Controls Group
which benefitted from recent acquisitions and expanded distribution efforts.
Test, Measurement and Control Group
<TABLE>
<CAPTION>
(In Thousands) 1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Sales $42,237 $49,229 $63,819
Earnings before taxes 4,957 5,328 6,928
</TABLE>
Sales and earnings before taxes had strong improvements over the last two years
with sales and earnings in 1995 both increasing 30% over 1994. All three units
within the Group showed strong improvement benefitting from new product
introductions and expanded market penetrations.
11
<PAGE>
Farm Equipment Group
<TABLE>
<CAPTION>
(In Thousands) 1993 1994 1995
------- ------- -------
<S> <C> <C> <C>
Sales $41,471 $38,286 $43,346
Earnings before taxes 5,942 7,257 6,075
Ongoing Businesses(a)
Sales $32,678 $37,724 $43,346
Earnings before taxes 4,658 5,449 6,075
(a) Excluding unit sold in 1994
</TABLE>
On an ongoing business basis this segment has shown 15% increases in sales the
past two years with improvements in earnings compared to prior periods of 11% in
1995 and 17% in 1994. The strong performance in 1995 came in spite of
unfavorable weather conditions during the latter half of the fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
One of the Company's financial strengths is its ability to generate cash from
its operating activities. In 1995, the Company again experienced positive
operating cash flow as operating activities provided $8.5 million. Cash flow
generation has been enhanced by the Company's ongoing efforts to improve
operating efficiencies, make cost reductions, and effectively utilize working
capital.
During 1995 the Company exercised its maximum allowable prepayment options and
reduced 10% long-term debt by $9 million. Accordingly, debt as a percentage of
capital employed was reduced to 31.5% from 36.9% at the end of the previous
year.
The Company continued to invest in the future during 1995 by making two
strategic acquisitions at a total cost of $4.8 million and making capital
expenditures of $5 million in continuing operations. The majority of capital
expenditures were focused at those units where the Company has the greatest
growth potential. The Company plans to invest $7 to 8 million in capital
expenditures in 1996, excluding business acquisitions.
The Company has an active program to complement internal growth with acquisition
of product lines and companies that meet the Company's selective criteria. It is
expected that this effort will require the significant expenditure of funds over
the next few years.
At August 31, 1995, the Company had working capital of $80.3 million with a
current ratio of 3.9 to 1. Management believes its current cash position, cash
flows from operations, expected cash proceeds from divesting its Cherokee unit,
along with its borrowing capacity, are adequate to fund its strategies for
future growth, including working capital, expenditures for manufacturing
expansion and efficiencies, new product development and acquisition activities.
At the Company's current quarterly dividend rate of $.06 per share, future
annual dividend payments would approximate $2.4 million. Under the Company's
debt agreements with insurance companies, retained earnings of approximately
$20.6 million are available for dividends, subject to future earnings levels.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Company and the report of independent
accountants thereon of Coopers & Lybrand L.L.P., independent auditors for the
Company, which appears in the Annual Report, are identified in Item 14(a)(1) of
this report, and are incorporated by reference in this Item 8 (see Exhibit 13).
Other financial statement schedules are filed pursuant to Item 14(a)(2) and
exhibits are filed pursuant to Item 14(a)(3) of this report.
12
<PAGE>
Selected quarterly financial data for the years 1995 and 1994 appear in Note 12
to the financial statements on F-15 of the Annual Report (see Exhibit 13). Such
data is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Item 10. Directors and Executive Officers of the Registrant
Directors
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed by
the Company pursuant to Regulation 14A within 120 days after the close of its
fiscal year.
Executive Officers of the Registrant
The following information is provided as to the Executive Officers of the
Company:
<TABLE>
<CAPTION>
Percentage of
Company's
Outstanding
Common Common
Shares Shares
Beneficially Beneficially
Capacities Owned as of Owned as of
Name Age in Which Served 11/13/95 11/13/95
- ------------ --- ------------------------- ------------ ------------
<S> <C> <C> <C> <C>
David R. 49 President and Chief Executive Officer since 105,358 1.0%
Zimmer* March 1992 (previously President and Chief
Executive Officer of New Venture Gear, Inc.
since January 1990; previously Vice President
and General Manager of Electronics Products
for Acustar, Inc., a subsidiary of Chrysler
since 1988)
Lawrence J. 53 Executive Vice President since October 1990 34,816 **
Murphy* (previously Vice President-Finance, three
years)
Raymond H. 56 Vice President and Chief Financial Officer 30,052 **
Steben, Jr.* since July 1993 (previously Director of
MultiFinancial Services since 1992;
previously President of RHS Industries
since 1989; previously Vice President-
Finance, and Chief Financial Officer of
Bundy Corporation since 1981)
Thomas G. 51 Treasurer and Controller since October 1990 13,435 **
Hooper* (previously Controller since 1981)
James P.
Dixon* 51 Vice President-Planning since January 1994 12,975 **
(previously Vice President-Marketing, since
October 1990; previously Manager-Marketing
Services, since April 1990; previously
President of Smart House, two years)
</TABLE>
*Elected by the Board of Directors on January 10, 1995
**Less than 1%
13
<PAGE>
Item 11. Executive Compensation
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed by
the Company pursuant to Regulation 14A within 120 days after the close of its
fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed by
the Company pursuant to Regulation 14A within 120 days after the close of its
fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated by reference to a
definitive proxy statement involving the election of directors which is filed by
the Company pursuant to Regulation 14A within 120 days after the close of its
fiscal year.
14
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements, all of which are incorporated herein by reference.
<TABLE>
<CAPTION>
Pages in
Annual Report
-------------
<S> <C>
Report of Management F-1*
Report of Independent Accountants F-2*
Consolidated Balance Sheets as of August 31, 1994 and 1995 F-3*
Consolidated Statements of Earnings for the Years Ended
August 31, 1993, 1994 and 1995 F-4*
Consolidated Statements of Stockholders' Equity for the Years Ended
August 31, 1993, 1994 and 1995 F-5*
Consolidated Statements of Cash Flows for the Years Ended
August 31, 1993, 1994 and 1995 F-6*
Notes to Consolidated Financial Statements for the Years Ended
August 31, 1993, 1994 and 1995 F-7-F-15*
</TABLE>
*See Exhibit 13 to Form 10-K
(a) 2. Financial Statement Schedules
<TABLE>
<CAPTION>
Pages in 10-K
-------------
<S> <C> <C>
(A) Consent of Independent Accountants EX-23
(B) Schedule Index:
Schedule II - Valuation and Qualifying Accounts 15
</TABLE>
Schedules other than those listed are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
(a) 3. Exhibits
The exhibits are listed on the accompanying Index to Exhibits.
(b) 4. Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
15
<PAGE>
CORE INDUSTRIES INC AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED AUGUST 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- ------------- ---------- ---------------------- ----------- -----------
(1) (2)
Charged
Balance at Charged to to Other Balance
Beginning Costs and Accounts- Deductions- at End
of Period Expenses Describe Describe of Period
---------- ---------- --------- ----------- ---------
(Note B) (Note A)
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful
accounts,
deducted from
accounts
receivable in
the balance
sheet:
1993 $1,100,000 $360,000 $490,000 $ 970,000
========== ======== ======== ==========
1994 $ 970,000 $480,000 $490,000 $ 960,000
========== ======== ======== ==========
1995 $ 960,000 $300,000 $120,000 $120,000 $1,020,000
========== ======== ======== ======== ==========
</TABLE>
Note A: Accounts written off.
Note B: Discontinued operations.
16
<PAGE>
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.
Date: November 15, 1995 CORE INDUSTRIES INC
----------------- --------------------
By: /s/ THOMAS G. HOOPER
--------------------
Thomas G. Hooper, Treasurer and Controller
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the date indicated.
CHIEF EXECUTIVE OFFICER:
/s/ DAVID R. ZIMMER November 15, 1995
- --------------------------------------- -----------------
David R. Zimmer, President and Director Date
CHIEF FINANCIAL OFFICER:
/s/ RAYMOND H. STEBEN, JR. November 15, 1995
- --------------------------------------- -----------------
Raymond H. Steben, Jr., V.P.-Finance Date
OTHER DIRECTORS:
/s/ JAY A. ALIX November 15, 1995
- --------------------------------------- -----------------
Jay A. Alix Date
/s/ RICHARD P. KUGHN November 15, 1995
- --------------------------------------- -----------------
Richard P. Kughn Date
/s/ HAROLD M. MARKO November 15, 1995
- --------------------------------------- -----------------
Harold M. Marko Date
/s/ LAWRENCE J. MURPHY November 15, 1995
- --------------------------------------- -----------------
Lawrence J. Murphy, Exec. Vice President Date
/s/ ALAN E. SCHWARTZ November 15, 1995
- --------------------------------------- -----------------
Alan E. Schwartz Date
/s/ ROBERT G. STONE, JR. November 15, 1995
- --------------------------------------- -----------------
Robert G. Stone, Jr. Date
17
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- ------- ------------------------------------------------------------
<S> <C>
3(a) Restated Certificate of Incorporation of Company and
amendments thereto**
3(b) By-Laws, as amended, of the Company**
10(a) 1991 Director Discounted Stock Option Plan**
10(b) 1988 Director Discounted Stock Option Plan (Incorporated by
reference to Appendix B to Company's Proxy Statement dated
November 23, 1988 filed pursuant to Regulation 14)
10(d) Preferred Share Purchase Rights (Incorporated by reference to
Company's Form 8-K Report dated September 28, 1988)
10(e) Deferred Compensation for Non-Employee Directors**
10(f) Employment Agreement dated March 3, 1992 between the Company and
David R. Zimmer**
10(g)(1) 9.75 Percent Note Agreement dated August 1, 1987 between the
Company and The Northwestern Mutual Life Insurance Company**
10(g)(2) Amendment dated as of March 15, 1989 to the Agreement dated
August 1, 1987 between the Company and The Northwestern Mutual
Life Insurance Company**
10(g)(3) Amendment dated as of March 15, 1989 to the Agreement dated
August 1, 1987 between the Company and The Northwestern Mutual
Life Insurance Company**
10(h)(1) 10.02 Percent Note Agreements dated as of March 15, 1989
between the Company and The Northwestern Mutual Life
Insurance Company/Allstate Life Insurance Company**
10(h)(2) Amendment dated as of March 15, 1992 to the Agreement dated
as of March 15, 1989 between the Company and The Northwestern
Mutual Life Insurance Company/Allstate Life Insurance Company**
10(i) 1993 Performance Incentive Plan (Incorporated by reference
to Appendix A to Company's Proxy Statement dated November
23, 1993 filed pursuant to Regulation 14)
10(j) 1993 Stock Bonus Plan (Incorporated by reference to Appendix
A to Company's Proxy Statement dated November 23, 1993 filed
pursuant to Regulation 14)
*11 Calculations of Earnings Per Share
*13 Financial Statements included in Annual Report to Stockholders
*21 Subsidiaries of the Company (Page 17)
*23 Consent of Coopers & Lybrand L.L.P.
*27 Financial Data Schedule
</TABLE>
**Incorporated by reference to exhibits to the 1992 Form 10-K
*Filed herewith
Note: The Exhibits attached to this report will be furnished to requesting
security holders upon payment of a reasonable fee to reimburse the
Company for expenses incurred by the Company in furnishing such
Exhibits.
18
Exhibit 11
CORE INDUSTRIES INC AND SUBSIDIARIES
CALCULATION OF EARNINGS PER SHARE
FOR THE YEARS ENDED AUGUST 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
Year Ended August 31,
-------------------------------------
1993 1994 1995
---------- ----------- ----------
<S> <C> <C> <C>
Earnings applicable
to common stock $8,565,000 $10,006,000 $3,828,000
Net earnings $8,565,000 $10,006,000 $3,828,000
Average number of
common shares
outstanding (A) $9,776,376 $ 9,800,135 $9,809,041
Earnings per share $ 0.88 $ 1.02 $ 0.39
</TABLE>
Note A: The number of common stock equivalents related to stock option
plans were $100,000, $117,000 and $77,000 at the fiscal years ended
1993, 1994 and 1995, respectively.
1
REPORT OF MANAGEMENT
Management is responsible for the preparation and integrity of the accompanying
financial statements and all other financial information appearing in this
Annual Report. The financial statements have been prepared in conformity with
generally accepted accounting principles appropriate in the circumstances. The
other financial information in this Annual Report is consistent with the
financial statements.
Management is responsible for developing and maintaining cost-effective internal
accounting control. Internal control effectiveness is supported throughout the
Company with written communication of policies and procedures, careful selection
and training of personnel, and audits by a professional staff of internal
auditors. The Company's control environment is further enhanced through a formal
Code of Conduct that sets standards of professionalism and integrity for
employees.
The financial statements have been audited by the auditors Coopers & Lybrand
L.L.P. The Company engages them to render an independent professional opinion
based upon an examination conducted in accordance with generally accepted
auditing standards.
The Audit Committee of the Board of Directors is composed solely of non-employee
directors and is responsible for oversight of management's internal control and
financial reporting responsibilities. The Audit Committee is also responsible
for recommending to the Board the independent accounting firm to be used for the
coming year. The Audit Committee meets periodically with management, the
internal auditors, and privately with the independent auditors to review
auditing, accounting, internal control and financial reporting matters.
/s/ DAVID R. ZIMMER /s/ RAYMOND H. STEBEN, JR. /s/ THOMAS G. HOOPER
- --------------------- --------------------------- ----------------------
David R. Zimmer Raymond H. Steben, Jr. Thomas G. Hooper
President and Chief Vice President-Finance and Treasurer and
Executive Officer Chief Financial Officer Controller
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Stockholders and Board of Directors Core Industries Inc
We have audited the accompanying consolidated balance sheets of Core Industries
Inc and subsidiaries as of August 31, 1995 and 1994, and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
each of the three years in the period ended August 31, 1995. Our audits also
included the financial statement schedule listed in the index at Item 14 for
each of the three years in the period ended August 31, 1995. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial statement 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Core Industries
Inc and subsidiaries as of August 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended August 31, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the financial statement schedule
when considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information required
to be included therein.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
Coopers & Lybrand L.L.P.
Detroit, Michigan
October 11, 1995
F-2
<PAGE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS August 31
----------------------------
1994 1995
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $14,643,000 $1,135,000
Accounts receivable, less collection
allowances of $960,000 in 1994
and $1,020,000 in 1995 47,444,000 44,214,000
Inventories 48,863,000 41,276,000
Prepaid expenses 808,000 157,000
Deferred taxes on income 2,027,000 5,447,000
Net assets held for disposition - 16,089,000
------------ ------------
TOTAL CURRENT ASSETS $113,785,000 $108,318,000
------------ ------------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements $1,278,000 $896,000
Buildings 18,161,000 17,746,000
Machinery and equipment 44,322,000 36,532,000
------------ ------------
Total $63,761,000 $55,174,000
Less accumulated depreciation 36,377,000 32,332,000
------------ ------------
TOTAL PROPERTY, PLANT AND
EQUIPMENT $27,384,000 $22,842,000
------------ ------------
OTHER ASSETS:
Excess of cost over net assets
of companies acquired $7,033,000 $6,774,000
Inv. in real estate partnership 1,343,000 1,323,000
Note receivable 1,500,000 1,500,000
Prepaid pensions and other 5,342,000 5,490,000
------------ ------------
TOTAL OTHER ASSETS $15,218,000 $15,087,000
------------ ------------
$156,387,000 $146,247,000
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY August 31
----------------------------
1994 1995
------------ ------------
CURRENT LIABILITIES:
Notes payable - $787,000
Accounts payable $11,485,000 7,581,000
Accrued payroll and other expenses 12,817,000 12,385,000
Dividends payable 587,000 589,000
Taxes on income 1,585,000 2,041,000
Long-term debt due within one year 4,610,000 4,610,000
------------ ------------
TOTAL CURRENT LIABILITIES $31,084,000 $27,993,000
------------ ------------
LONG-TERM DEBT $41,608,000 $32,609,000
DEFERRED TAXES ON INCOME 1,770,000 1,690,000
ACCRUED POSTRETIREMENT BENEFITS 2,908,000 2,942,000
STOCKHOLDERS' EQUITY Preferred stock, par value $1:
Authorized - 100,000 shares
Issued - none
Common stock, par value $1:
Authorized - 20,000,000
Issued - 11,219,152 shares in 1994 and
11,237,172 shares in 1995 $11,219,000 $11,237,000
Additional paid-in capital 810,000 999,000
Retained earnings 73,025,000 74,499,000
Cumulative translation adjustments 661,000 976,000
Treasury stock (1,410,160 shares)
- at cost (6,698,000) (6,698,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY $79,017,000 $81,013,000
------------ ------------
$156,387,000 $146,247,000
============ ============
</TABLE>
F-3
<PAGE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Year Ended August 31
------------------------------------------
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $156,615,000 $166,260,000 $187,897,000
Cost of sales, exclusive of
depreciation and amortization $104,455,000 $111,294,000 $121,088,000
Depreciation and amortization 3,943,000 4,004,000 4,364,000
Selling, general and
administrative expenses 33,222,000 35,333,000 43,126,000
Interest expense 4,576,000 3,820,000 3,355,000
Other income (1,531,000) (2,402,000) (929,000)
------------ ------------ ------------
$144,665,000 $152,049,000 $171,004,000
------------ ------------ ------------
Earnings from continuing operations
before taxes on income $11,950,000 $14,211,000 $16,893,000
Taxes on income 4,050,000 5,002,000 6,200,000
------------ ------------ ------------
Earnings from continuing operations $7,900,000 $9,209,000 $10,693,000
------------ ------------ ------------
Discontinued operations (net of
income tax):
Income (loss) from disc. operations $665,000 $797,000 ($365,000)
Estimated loss on disposal - - (6,500,000)
------------ ------------ ------------
Income (loss) from disc. operations $665,000 $797,000 ($6,865,000)
------------ ------------ ------------
Net earnings $8,565,000 $10,006,000 $3,828,000
============ ============ ============
Net earnings (loss) per
common share:
Continuing operations $0.81 $0.94 $1.09
Discontinued operations 0.07 0.08 (0.70)
------------ ------------ ------------
Net earnings $0.88 $1.02 $0.39
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Cumulative
Common Paid-In Retained Translation Treasury
Stock Capital Earnings Adjustments Stock
----------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, August 31, 1992 $11,185,000 $449,000 $59,153,000 $356,000 ($6,698,000)
Net earnings 8,565,000
Cash dividends declared (2,346,000)
Exercise of stock options 2,000 12,000
Incentive compensation awards 21,000 267,000
----------- -------- ----------- ----------- -----------
Balance, August 31, 1993 $11,208,000 $728,000 $65,372,000 $356,000 ($6,698,000)
Net earnings 10,006,000
Cash dividends declared (2,353,000)
Exercise of stock options 4,500 19,000
Incentive compensation awards 6,500 63,000
Foreign currency adjustment 305,000
----------- -------- ----------- ----------- -----------
Balance, August 31, 1994 $11,219,000 $810,000 $73,025,000 $661,000 ($6,698,000)
Net earnings 3,828,000
Cash dividends declared (2,354,000)
Incentive compensation awards 18,000 189,000
Foreign currency adjustment 315,000
----------- -------- ----------- ----------- -----------
Balance, August 31, 1995 $11,237,000 $999,000 $74,499,000 $976,000 ($6,698,000)
=========== ======== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
CORE INDUSTRIES INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended August 31
----------------------------------------
1993 1994 1995
------------ ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $8,565,000 $10,006,000 $3,828,000
Adjustments to reconcile net earnings
to net cash provided
by operating activities:
Depreciation $3,827,000 $3,794,000 $3,953,000
Amortization 117,000 211,000 412,000
Loss on disposal of disc. operations - - 10,000,000
Discontinued operations (665,000) (797,000) 365,000
Net gain on sale of division - (915,000) -
(Increase) decrease in net assets:
Accounts receivable (1,695,000) (1,345,000) (2,828,000)
Inventories 1,275,000 (1,969,000) (4,205,000)
Prepaid expenses 698,000 580,000 475,000
Taxes on income 4,186,000 935,000 514,000
Deferred taxes on income 2,879,000 800,000 (3,500,000)
Increase (decrease) in liabilities:
Accounts payable 3,104,000 (200,000) (1,947,000)
Accrued payroll and other exp. 991,000 1,147,000 1,412,000
------------ ----------- ------------
TOTAL ADJUSTMENTS $14,717,000 $2,241,000 $4,651,000
------------ ----------- ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES $23,282,000 $12,247,000 $8,479,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ($2,894,000) ($4,242,000) ($4,988,000)
Net proceeds from sale of divisions - 9,816,000 -
Acquisition of businesses - (2,510,000) (4,325,000)
Discontinued operations (1,330,000) 4,407,000 (1,728,000)
Other 34,000 494,000 107,000
------------ ----------- ------------
NET CASH FROM (USED IN)
INVESTING ACTIVITIES ($4,190,000) $7,965,000 ($10,934,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments (borrowings) on
short-term bank loans ($15,000,000) ($900,000) $300,000
Reductions in long-term debt (3,012,000) (2,967,000) (8,999,000)
Cash dividends paid (2,346,000) (2,353,000) (2,354,000)
------------ ----------- ------------
NET CASH USED IN
FINANCING ACTIVITIES ($20,358,000) ($6,220,000) ($11,053,000)
NET INCREASE (DECREASE) IN CASH (1,266,000) 13,992,000 (13,508,000)
CASH AT BEGINNING OF PERIOD 1,917,000 651,000 14,643,000
------------ ----------- ------------
CASH AT END OF PERIOD $651,000 $14,643,000 $1,135,000
============ =========== ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $4,538,000 $3,757,000 $3,512,000
============ =========== ============
Income taxes paid $2,070,000 $3,200,000 $5,500,000
============ =========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE>
CORE INDUSTRIES INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED AUGUST 31, 1993, 1994 AND 1995
1. PRINCIPLES OF REPORTING AND ACCOUNTING
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries.
Intercompany profits, transactions and balances have been eliminated.
Inventories - Approximately 89% and 88% of inventories at August 31, 1994
and 1995, respectively, are valued at the lower of cost or market on a
first-in, first-out (FIFO) basis. Other inventories are valued at cost on
a last-in, first-out (LIFO) basis. If all inventories were valued on a
FIFO basis, inventories would have been $1,441,000 and $1,562,000 higher
than reported at August 31, 1994 and 1995, respectively.
Following is the detail of inventories:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Raw materials and supplies $25,976,000 $17,734,000
Work in process 8,940,000 8,225,000
Finished goods 13,947,000 15,317,000
----------- -----------
Total $48,863,000 $41,276,000
=========== ===========
</TABLE>
Property, Plant and Equipment - Items of property, plant and equipment,
including significant improvements to existing facilities and leasehold
improvements, are recorded at cost. Expenditures for maintenance and
repairs are charged to operations in the year incurred. Long-term lease
obligations incurred in connection with industrial development revenue
bond financing have been capitalized at the total principal amount of the
obligations. Depreciation is computed principally on an accelerated basis.
Excess of Cost Over Net Assets of Companies Acquired - The excess of total
cost over net assets of companies acquired is being amortized over either
15 or 40 years except for $2,048,000 relating to acquisitions prior to
October 31, 1970 which is not being amortized. Amortization expense
amounted to $84,000 in 1993 and 1994 and $227,000 in 1995. Accumulated
amortization amounted to $2,645,000 and $2,150,000 at August 31, 1994 and
1995, respectively.
Investment in Real Estate Partnership - The Company has a minority
interest in a partnership formed for the purpose of owning an office
building, a portion of which the Company leases for its corporate offices.
Rents paid were $400,000 in 1993, $346,000 in 1994, and $382,000 in 1995.
The investment is accounted for according to the equity method.
Revenue Recognition - Revenue from sales of products is recognized at the
time of shipment. Revenue from long-term construction contracts is
recognized using the percentage-of-completion method.
Earnings Per Common Share are computed by dividing net earnings by the
weighted average shares outstanding (9,776,376 shares in 1993 , 9,800,135
shares in 1994, and 9,809,041 shares in 1995). The number of common stock
equivalents was not significant.
Foreign Currency Translation - Assets and liabilities of certain foreign
subsidiaries whose functional currencies are other than the U.S. dollar
are translated at year-end rates of exchange. Income and expense items are
translated at average exchange rates for the year. The resulting
translation adjustments are recorded directly into a separate component of
stockholders' equity.
F-7
<PAGE>
2. DEBT AND COMMITMENTS
The Company has a $15,000,000 unsecured line of credit with a major
domestic bank at interest rates on an as-offered basis, which have been
less than the prime rate. There was $14,700,000 available under this
facility at August 31, 1995.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Notes payable $39,550,000 $30,440,000
Industrial development revenue bonds 6,668,000 6,779,000
Total $46,218,000 $37,219,000
----------- -----------
Portion due within one year 4,610,000 4,610,000
----------- -----------
Total $41,608,000 $32,609,000
=========== ===========
</TABLE>
Notes payable include three unsecured promissory notes to insurance
companies: one 9.8%, $6,000,000 note and two 10.02% notes aggregating
$24,000,000. The notes require semi-annual interest payments with
repayment of principal in 10 equal annual installments which commenced
August 1993 for the 9.8% note and commenced May 1995 for the 10.02% notes.
The other note payable requires repayment in four annual equal
installments.
Industrial development revenue bonds mature principally in 2006 and 2013
and include $5,000,000 related to a 15-year loan agreement with a variable
interest rate entered into during 1991. Interest rates on the bonds change
based on prevailing market rates and as of August 31, 1995, averaged
3.84%.
Scheduled principal repayments of long-term debt are $4,610,000 in each of
the four years ending 1999, and $3,000,000 in the year ending 2000.
Certain of the Company's loan agreements contain restrictive covenants
pertaining to the maintenance of working capital and tangible net worth.
Under the most restrictive covenant, retained earnings of $20,604,000 were
available for the payment of cash dividends at August 31, 1995.
The estimated fair value of the notes payable at August 31, 1995 was
approximately $33,000,000. The fair value was estimated based on the
discounted amounts of future cash flows at the current note rates assuming
all prepayment options were exercised. The estimated fair value of
industrial development revenue bonds is the book value of $6,779,000.
3. TAXES ON INCOME
Income taxes on a continuing operations basis are as follows:
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal $ 3,792,000 $ 3,654,000 $ 5,250,000
State and local 536,000 548,000 950,000
----------- ----------- -----------
Total $ 4,328,000 $ 4,202,000 $ 6,200,000
Deferred (278,000) 800,000 0
----------- ----------- -----------
Total taxes on income $ 4,050,000 $ 5,002,000 $ 6,200,000
=========== =========== ===========
</TABLE>
F-8
<PAGE>
Federal income taxes include foreign income taxes of ($9,000) in 1993,
($44,000) in 1994, and ($17,000) in 1995. The foreign pretax loss amounted
to ($98,000) in 1993, ($199,000) in 1994, and ($400,000) in 1995.
A reconciliation of income taxes computed using the U.S. federal statutory
rate to the provision for federal income taxes follows:
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Computed at U.S. statutory rate $4,182,000 $4,974,000 $5,911,000
State and local taxes 348,000 356,000 616,000
Goodwill amortization and write-offs 62,000 62,000 62,000
Foreign income taxes 25,000 26,000 123,000
Research tax credit (258,000) (235,000) (353,000)
Other (309,000) (181,000) (159,000)
---------- ---------- ----------
Total taxes on income $4,050,000 $5,002,000 $6,200,000
========== ========== ==========
</TABLE>
Deferred income taxes result from temporary differences in the recognition
of income and expenses for financial reporting and tax purposes. The
source and deferred tax effect of these differences is as follows:
<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Depreciation $144,000 $(229,000) $(185,000)
Employee benefits (10,000) 496,000 144,000
Inventory related (39,000) 67,000 (60,000)
Accounts receivable allowances (134,000) - (84,000)
Tax credit carryforwards (270,000) 567,000 -
Accrued expenses - - 84,000
Other 31,000 (101,000) 101,000
--------- --------- ---------
Total deferred ($278,000) $800,000 $ 0
========= ========= =========
</TABLE>
Deferred tax (assets) liabilities are comprised of the following:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Discontinued operations - ($3,823,000)
Inventory related ($807,000) (693,000)
Accrued expenses (707,000) (324,000)
Accounts receivable allowances (259,000) (358,000)
Other (14,000) -
----------- -----------
Gross deferred tax assets ($1,787,000) ($5,198,000)
----------- -----------
Depreciation $1,148,000 $871,000
Employee benefits 111,000 296,000
Other 271,000 274,000
----------- -----------
Gross deferred tax liabilities $1,530,000 $1,441,000
----------- -----------
Net deferred tax assets ($257,000) ($3,757,000)
=========== ===========
</TABLE>
F-9
<PAGE>
4. RETIREMENT PLANS
PENSION PLANS
The Company has a defined benefit retirement plan covering a portion of
its domestic employees. The net pension credit for the defined benefit
retirement plan amounted to $286,000, $864,000 and $534,000 in fiscal
1993, 1994 and 1995, respectively.
Net pension credit from the Company's defined benefit plans included the
following components:
<TABLE>
<CAPTION>
1993 1994 1995
---------- ---------- ----------
<S> <C> <C> <C>
Service cost $ 241,000 $ 187,000 $ 162,000
Interest on projected benefit obligations 540,000 544,000 548,000
Actual return on plan assets (909,000) (4,000) (1,963,000)
Net amortization and deferral (219,000) (1,225,000) 719,000
---------- ---------- ----------
Net pension credit ($ 347,000) ($ 498,000) ($ 534,000)
========== ========== ==========
</TABLE>
F-10
<PAGE>
The Company incurred a pension curtailment gain of $366,000 in 1994 in
connection with the sale of its Du-Al division.
The following table sets forth the plans' funded status and prepaid
pension cost at August 31:
<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Vested benefit obligation $ 6,038,000 $ 6,860,000
=========== ===========
Accumulated benefit obligation $ 6,059,000 $ 7,208,000
=========== ===========
Plan assets at fair value (principally listed
stocks and bonds) $11,429,000 $12,989,000
Projected benefit obligation (7,024,000) (8,126,000)
----------- -----------
Excess of assets over projected benefit obligation $ 4,405,000 $ 4,863,000
Unrecognized net (gain) loss:
From excess funding at implementation of SFAS 87 (1,363,000) 776,000
Other 1,162,000 (901,000)
----------- -----------
Prepaid pension cost $ 4,204,000 $ 4,738,000
=========== ===========
</TABLE>
The company-sponsored pension plans generally provide benefits based on
average salary levels and years of service. The projected unit credit
funding method was used along with discount rates of 8% in 1994 and 7.75%
in 1995. The increase in the accumulated benefit obligation from 1994 to
1995 was primarily due to the decrease in discount rates and the effect of
change in other valuation assumptions. The assumed rate of return on
assets was 9%, and the assumed rate of increase in future compensation
levels was 5%.
The Company also contributes certain amounts per labor hour to
multi-employer union pension funds. Such contributions amounted to
$383,000 in 1993, $427,000 in 1994, and $389,000 in 1995.
F-11
<PAGE>
OTHER POSTRETIREMENT BENEFIT PLANS
Certain divisions and subsidiaries of the Company provide health care and
life insurance benefits for retirees which are, depending on the type of
plan, either contributory or non-contributory. Approximately 25% of
employees may become eligible for these benefits.
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits attributed
to service during the period $ 63,000 $ 49,000 $ 42,000
Interest cost on accumulated
postretirement benefit obligation 251,000 260,000 263,000
-------- -------- --------
Net periodic postretirement benefit cost $314,000 $309,000 $305,000
======== ======== ========
</TABLE>
The Company's postretirement plans are not funded. The status of the plans
at August 31, 1995 follows:
<TABLE>
<CAPTION>
1994 1995
---------- ----------
<S> <C> <C>
Accumulated postretirement benefit obligation
Retirees $2,542,000 $2,729,000
Fully eligible and other active participants 524,000 612,000
---------- ----------
Total $3,066,000 $3,341,000
Unrecognized loss (158,000) (399,000)
---------- ----------
Total accrued postretirement benefits $2,908,000 $2,942,000
========== ==========
</TABLE>
For measurement purposes, a 11.7% annual rate of increase in the per
capita cost of covered health care benefits was assumed for 1995. The rate
was assumed to decrease gradually to 6.0% through the year 2008 and remain
constant thereafter. The assumptions for the health care cost trend rate
has a significant effect on the amount of the obligation and periodic cost
reported. An increase in the assumed health care cost trend rates by 1% in
each year would increase the accumulated postretirement benefit obligation
as of August 31, 1995 by approximately 3.7% and the aggregate of the
service and interest cost components of net periodic postretirement
benefit cost for the year then ended by 3.2%.
The weighted-average discount rates used in determining the accumulated
postretirement benefit obligation were 8.0% and 7.75% as of August 31,
1994 and August 31, 1995, respectively. The increase in the accumulated
postretirement benefit obligation from 1994 to 1995 was primarily due to
the decrease in discount rates.
Cash expenditures for postretirement benefits were $214,000 in 1993,
$216,000 in 1994, and $270,000 in 1995.
5. LEASES
The Company leases certain office and production facilities and equipment
under agreements expiring from 1996 through 2006. Several of the lease
commitments contain renewal and/or purchase options exercisable at the end
of the lease terms.
F-12
<PAGE>
The following is a schedule of future minimum rental payments required
under operating leases for continuing operations that have remaining terms
in excess of one year as of August 31, 1995:
Year ending August 31:
1996 $580,000
1997 520,000
1998 420,000
1999 330,000
2000 280,000
Later years 350,000
----------
Total minimum payments required $2,480,000
==========
The rental expense for all operating leases was $660,000, $610,000, and
$560,000, for the years ended August 31, 1993, 1994 and 1995,
respectively.
6. STOCK OPTIONS AND AWARDS
The Company's 1993 Performance Incentive Plan approved during 1994 permits
the grant of up to 490,000 shares of Company common stock for stock
options, stock appreciation rights and restricted stock to key employees
of the Company. Options for 229,000 shares ($13.31 to $13.56 per share)
were granted during 1994, and with 4,000 options expiring in 1995, 225,000
shares were outstanding at August 31, 1995. Vesting of most of the shares
over the first three years following grant is dependent upon appreciating
stock market valuation of Core stock. If the Company's stock fails to
reach and maintain for defined periods of time those specified levels,
vesting is delayed until 9 1/2 years after grant.
Under prior employee stock option plans, options were outstanding as of
August 31, 1995, for 144,900 shares ($5.25 to $13.88 per share) with
expiration dates through 2003. Options for 8,000 shares ($9.25 per share)
were granted in 1993. Options for 2,000 and 4,500 shares were exercised in
1993 and 1994, respectively, and options for 8,900 and 5,000 shares
expired in 1994 and 1995, respectively.
The 1991 Director Discounted Stock Option Plan is for non-employee
directors of the Company. In accordance with the Plan, directors may elect
to receive discounted stock options in lieu of director fees payable in
cash, with the aggregate discounts equal to the cash fees forfeited. Under
the Plan, 200,000 shares were reserved for issuance of non-qualified stock
options at either 50% or 75% of market value at the date of grant. Stock
options for 15,731 shares ($11.16 per share), and 28,128 shares ($7.3594)
were granted in 1994 and 1995, respectively. 205,403 options were
outstanding as of August 31, 1995, with 94,597 shares reserved for future
grants.
Under a similar 1988 Director Discounted Stock Option Plan, options were
outstanding as of August 31, 1994 and August 31, 1995 for 100,000 shares
($4.41 to $9.28 per share) with expiration through 2001.
Pursuant to incentive compensation programs, the Company in 1994 and 1995
awarded 6,594 and 18,020 shares of common stock, respectively, to key
employees of the Company.
7. PREFERRED SHARE PURCHASE RIGHTS
In September 1987, the Board of Directors declared a dividend distribution
of one Preferred Share Purchase Right for each outstanding share of common
stock. Each right will entitle shareholders to purchase one two-hundredth
of a share of a new series of junior participating preferred stock at an
exercise price of $50. The rights will only be exercisable 30 days after a
person or group acquires 20% or more of the Company's common stock or
commences a tender offer to acquire 30% or more of the common stock. The
Company has reserved 48,876 shares of its preferred
F-13
<PAGE>
stock for the outstanding rights. If the Company is acquired in a merger
or other business combination after the rights become exercisable, each
right will entitle the holder to purchase common stock of the acquiring
company having a market value of twice the exercise price of the right.
The rights may be redeemed by the Company at a price of $0.02 per right up
to 30 days after a 20% position has been acquired or completion of a
tender offer for 30% or more of common stock. The rights will expire on
September 28, 1997.
8. ACQUISITIONS
During fiscal 1995, the Company purchased two companies. Core's Amprobe
Instrument Division purchased Promax Industries, Inc., a manufacturer of
refrigerant recycling and recovery products for the heating, ventilating,
and air conditioning (HVAC) industry. Core's Fluid Control Group purchased
Oil and Gas Specialties, Inc. (OGASCO) which designs and fabricates
skid-mounted pipeline metering systems and fabricated strainers. The total
cost of the above acquisitions was approximately $4,800,000, including a
short-term note payable with a balance due of $487,000 at August 31, 1995.
During fiscal 1994, the Company purchased the grain drill business of Best
Manufacturing (Farm Equipment Group), and Hendrix Steel & Fabricating,
Inc. (Fluid Control Group), a fabricator of strainers and other specialty
flow control products. The total cost of these acquisitions was
approximately $3,370,000, including a five year note payable with a
balance due of $440,000 at August 31, 1995.
These acquisitions were accounted for as purchases, and accordingly, the
operating results of the acquired businesses have been included in the
Company's financial statements from their respective dates of acquisition.
The pro forma results of operations, as if the operations of the acquired
businesses had been included from September 1, 1993, would not differ
materially from the amounts reported in the consolidated statement of
earnings.
9. SALE OF DIVISIONS
Effective September 23, 1993, the Company sold its Du-Al Manufacturing
Division, a manufacturer of front end loaders, back hoes and other
equipment sold to the construction and farm industries. Effective May 31,
1994, the Company sold its Pioneer Industries Division, a manufacturer of
metal doors and frames for the construction industry. The total sale price
of these transactions was approximately $12,000,000, consisting of cash
and a promissory note for $1,500,000. The businesses sold had
approximately $9,000,000 of sales in FY 1994 prior to disposition and
approximately $20,000,000 of sales in FY 1993.
Other income for the year ended August 31, 1994 includes pretax gain of
$1,475,000 (total of $.09 per share) related to the sale of the Du-Al
Division.
10. DISCONTINUED OPERATIONS
On October 6, 1995, the Company adopted a formal plan to divest its
wholly-owned electronics-related subsidiary, Cherokee International, Inc.
and its subsidiaries (Cherokee) effective August 31, 1995. Cherokee
represented a separate line of business producing electronic power
supplies sold to distinct customers and has been accounted for as a
discontinued operation. Appropriate provisions were recorded in the fourth
quarter of fiscal 1995 for (a) the estimated losses for the discontinued
operation through its expected disposal date, (b) reduction of assets to
their net realizable values, and (c) the anticipated liabilities related
to the disposal. The total provision amounted to $6,500,000, net of income
tax benefit of $3,500,000.
F-14
<PAGE>
Selected information related to Cherokee's operations prior to
discontinuance follows:
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Sales $50,431,000 $53,193,000 $44,669,000
Pretax income (loss) 1,315,000 1,845,000 (285,000)
Income taxes 650,000 1,048,000 80,000
Net income (loss) 665,000 797,000 (365,000)
Earnings (loss) per share .07 .08 (.04)
</TABLE>
The net assets of the discontinued Cherokee operation held for sale have
been included in the Balance Sheet at August 31, 1995 under the caption
"Net Assets Held for Sale." Interest expense was allocated based on debt
incurred to finance Cherokee since its acquisition. The Company expects to
dispose of all the net assets within one year.
F-15
<PAGE>
11. PRODUCT SEGMENT INFORMATION
The Company groups its products and services into three segments.
Financial information by segment is summarized below (based upon
continuing operations). Assets and capital expenditures are also reported
net of items applicable to discontinued operations.
<TABLE>
<CAPTION>
(In Thousands)
Depreciation Earnings
Capital and Net Before
Assets Expenditures Amortization Sales Income Taxes
-------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Year ended August 31, 1993:
Fluid controls and
construction products $ 48,782 $ 1,734 $ 2,328 $ 72,907 $ 9,400
Test, measurement and control 24,845 407 731 42,237 4,957
Farm equipment 37,912 687 801 41,471 5,942
Corporate unallocated 5,498 66 83 - (3,773)
Discontinued operations 34,240 - - - -
Interest expense - - - - (4,576)
-------- ------- ------- -------- -------
Total $151,277 $2,894 $3,943 $156,615 $11,950
======== ======= ======= ======== =======
Year ended August 31, 1994:
Fluid controls and
construction products $ 44,606 $ 1,610 $ 2,351 $ 78,745 $ 8,624
Test, measurement and control 26,627 1,512 833 49,229 5,328
Farm equipment 34,082 1,073 693 38,286 7,257
Corporate unallocated 21,112 115 127 - (3,178)
Discontinued operations 29,960
Interest expense - - - - (3,820)
-------- ------- ------- -------- -------
Total $156,387 $4,310 $4,004 $166,260 $14,211
======== ======= ======= ======== =======
Year ended August 31, 1995:
Fluid controls and
construction products $ 49,951 $ 2,483 $ 2,404 $ 80,732 $ 10,766
Test, measurement and control 34,702 984 1,022 63,819 6,928
Farm equipment 38,239 1,571 813 43,346 6,075
Corporate unallocated 7,266 139 125 - (3,521)
Discontinued operations 16,089 - - - -
Interest expense - - - - (3,355)
-------- ------- ------- -------- -------
Total $146,247 $5,177 $4,364 $187,897 $16,893
======== ======= ======= ======== =======
</TABLE>
F-16
<PAGE>
12. QUARTERLY SALES AND EARNINGS SUMMARY (UNAUDITED)
<TABLE>
<CAPTION>
Continuing Operations Total
-------------------------------------------------------- -----------------------
Net
Net Net Earnings
Cost Net Earnings Earnings (Loss)
Net Sales of Sales Earnings Per Share (Loss) Per Share
--------- -------- -------- --------- -------- ---------
(In Thousands except per share data)
<S> <C> <C> <C> <C> <C> <C>
Fiscal 1994
First Quarter $ 39,337 $ 26,548 $ 2,523 $ .26 (A) $2,908 .30
Second Quarter 37,635 24,899 1,889 .19 2,143 .22
Third Quarter 47,246 32,243 2,504 .26 2,446 .25
Fourth Quarter 42,042 27,604 2,293 .23 2,509 .25
-------- -------- ------- ----- ------- -----
Total Year $166,260 $111,294 $ 9,209 $ .94 (A) $10,006 $1.02
======== ======== ======= ===== ======= =====
Fiscal 1995
First Quarter $ 43,187 $ 27,724 $2,250 $ .23 $2,021 $.21
Second Quarter 44,819 28,745 2,316 .24 2,362 .24
Third Quarter 52,426 34,269 3,023 .30 3,133 .32
Fourth Quarter 47,465 30,350 3,104 .32 (3,688) (.38)
-------- -------- ------- ----- ------- -----
Total Year $187,897 $121,088 $10,693 $1.09 $3,828 $ .39
======== ======== ======= ===== ======= =====
</TABLE>
(A) Includes pretax gain of $.09 per share related to sale of Du-Al division.
F-17
Exhibit 21
CORE INDUSTRIES INC AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name of Subsidiary State of Incorporation
- ------------------------------------------- ----------------------
<S> <C>
Anilam Electronics Corporation* Florida
The Robert Carter Corporation Indiana
Cherokee International, Inc.* California
Dynamic Electronics Manufacturing Inc.* California
Cherokee India Pte. Ltd.* India
Cherokee Electronica S.A. de C.V.* Mexico
Feterl Mfg. Co. South Dakota
FlexStar, Inc.* California
GSE, Inc. Michigan
Hilton Industries, Inc.* Florida
Hendrix Steel & Fabricating, Inc. Texas
Mueller Asia Pte. Ltd. Singapore
Oil & Gas Specialties Co. Texas
Pasar, Inc. Colorado
Poly-Craft, Inc. Ohio
Soss of Singapore Pte., Ltd. Singapore
Sunflower Manufacturing Co., Inc. Kansas
</TABLE>
*Discontinued operation
1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Core Industries Inc on Form S-8, of our reports dated October 11, 1995, on our
audits of the consolidated financial statements and financial statement schedule
respectively, of Core Industries Inc as of August 31, 1995 and 1994, and for
each of the three years in the period ended August 31, 1995, which reports are
incorporated by reference or included in this Annual Report on Form 10-K.
/s/ COOPERS & LYBRAND L.L.P.
- ----------------------------
Coopers & Lybrand L.L.P.
Detroit, Michigan
November 17, 1995
1
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> AUG-31-1995 AUG-31-1995
<PERIOD-START> JUN-01-1995 SEP-01-1994
<PERIOD-END> AUG-31-1995 AUG-31-1995
<CASH> 1,135,000 1,135,000
<SECURITIES> 0 0
<RECEIVABLES> 45,234,000 45,234,000
<ALLOWANCES> (1,020,000) (1,020,000)
<INVENTORY> 41,276,000 41,276,000
<CURRENT-ASSETS> 108,318,000 108,318,000
<PP&E> 55,174,000 55,174,000
<DEPRECIATION> (32,332,000) (32,332,000)
<TOTAL-ASSETS> 146,247,000 146,247,000
<CURRENT-LIABILITIES> 27,993,000 27,993,000
<BONDS> 32,609,000 32,609,000
<COMMON> 11,219,000 11,219,000
0 0
0 0
<OTHER-SE> 69,794,000 69,794,000
<TOTAL-LIABILITY-AND-EQUITY> 81,013,000 81,013,000
<SALES> 47,465,000 187,897,000
<TOTAL-REVENUES> 47,465,000 187,897,000
<CGS> 30,351,000 121,088,000
<TOTAL-COSTS> 11,833,000 47,490,000
<OTHER-EXPENSES> (332,000) (929,000)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 798,000 3,355,000
<INCOME-PRETAX> 4,815,000 16,893,000
<INCOME-TAX> 1,711,000 6,200,000
<INCOME-CONTINUING> 3,104,000 10,693,000
<DISCONTINUED> (6,792,000) (6,865,000)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,688,000) 3,828,000
<EPS-PRIMARY> (.38) .39
<EPS-DILUTED> (.38) .39
</TABLE>
