February 28, 1994
Securities and Exchange Commission
Division of Corporate Finance
500 North Capitol Street
Washington, D.C. 20549
Gentlemen:
Pursuant to Section 13 or 15 (d) of the Securities and Exchange Act
of 1934, we enclose Form 10-K for the period ended November 30,
1993.
An additional copy has been filed with the New York Stock Exchange.
Very truly yours,
TOKHEIM CORPORATION
Jess B. Ford
Vice President, Finance,
Secretary, and Chief
Financial Officer
Enclosures
pc: New York Stock Exchange - Division of Stock List
Fred Axley - McDermott Will & Emery
Louis Pach - Coopers & Lybrand
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For fiscal year ended NOVEMBER 30, 1993
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from ______________ to _____________
Commission file number 1-6018
TOKHEIM CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-0712500
(State of incorporation) (I.R.S. Employer I.D. No.)
10501 CORPORATE DR., P.O. BOX 360, FORT WAYNE, INDIANA 46801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (219) 423-2552
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
COMMON STOCK, NO PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section l2(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 [ ]
As of February 4, 1994, 7,762,203 shares of voting common stock were outstanding
and the aggregate market value (based on the closing price of these shares on
the New York Stock Exchange) held by non-affiliates was $103,906,854. In
addition, 848,432 shares of convertible preferred stock were held by the
Trustees of the Retirement Savings Plan for Employees of Tokheim Corporation and
Subsidiaries.
The liquidation value is $25 per share with an aggregate liquidation value of
$21,210,800. For a complete discussion regarding the attributes of this
preferred stock see Item 5 on page 8.
Documents Incorporated by Reference
-----------------------------------
The Table of Contents is located on the following page. The total number of
pages is 58. The Exhibit Index is located on Page 50. There are no documents
incorporated by reference.
<PAGE>
TOKHEIM CORPORATION
1993 FORM 10-K ANNUAL REPORT
Table of Contents
PART I Page
Item 1. Business.............................................. 3
Item 2. Properties............................................ 6
Item 3. Legal Proceedings..................................... 7
Item 4. Submission of Matters to a Vote of Security Holders... 7
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters................................... 8
Item 6. Selected Financial Data............................... 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 14
Item 8. Financial Statements and Supplementary Data........... 18
Item 9. Disagreements on Accounting and Financial Disclosure.. 40
PART III
Item 10. Directors and Executive Officers of the Registrant.... 40
Item ll. Executive Compensation................................ 46
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................ 49
Item 13. Certain Relationships and Related Transactions........ 49
PART IV
Item l4. Exhibits, Financial Statement Schedules and Reports
on Form 8-K........................................... 50
2
<PAGE>
PART I
ITEM 1. BUSINESS.
(a) General:
Tokheim Corporation and its subsidiaries (the "Company") are engaged in the
design and manufacture of electronic and mechanical petroleum marketing systems,
including service station equipment, point-of-sale (POS) control systems, and
card- and cash-activated transaction systems for customers around the world.
RECENT DEVELOPMENTS
The information that follows should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements and related notes thereto included
elsewhere in this Form 10-K.
Several factors impacted favorably upon Tokheim Corporation's results of
operations for fiscal 1993 including an improvement in U.S. economic conditions
which favorably impacted the domestic market for petroleum dispensing equipment,
continued expansion in the international markets, and customer acceptance of the
Company's new Premier dispenser product line.
The Company completed important strategic alliances that enhance the Company's
future revenue potential. Internationally, Tokheim was selected as a major
partner by Shell Europe which provides incremental revenue sources in Western
Europe with added potential from the economic expansion developing to the east.
Domestically, the Company was awarded a strategic alliance with Amoco, the
result of two years of development work with that important major oil
company. The recently announced strategic partnership with VeriFone, Inc., a
provider of POS transaction automation systems, will also provide new revenue
potential through access to new jobber sites domestically and the potential
for expansion of the partnership into international markets.
A significant portion of the net losses from continuing operations for fiscal
years 1992 and 1991 was due to special charges associated with facility
closings, consolidations, product rationalizations, employment reductions and
other actions taken to improve the longer-term operating performance of the
Company. These charges are more fully described in "Management's Discussion
and Analysis of Financial Condition and Results of Operations", and in Note 16
to the Consolidated Financial Statements captioned "Special Charges". There
were no special charges incurred in 1993.
In May 1992, the Company completed a restructuring and consolidation of several
loan agreements into one comprehensive Credit, Agency, and Guaranty agreement
which is more fully discussed in Note 3 to the Consolidated Financial Statements
captioned "Notes Payable to Banks".
Through the third quarter 1992, the Company manufactured and sold in two
business segments. In 1992, the Company divested of all operations of the
Controls segment, as more fully described in Note 11 to the Consolidated
Financial Statements captioned "Business and Geographical Segments".
3
<PAGE>
(b) Financial Information About Business and Geographical Segments:
Financial information about business and geographical segments for the years
ended November 30, 1993, 1992, and 1991, is set forth in Item 8 of this Report
in Note 11 to the Consolidated Financial Statements captioned "Business and
Geographical Segments".
(c) Narrative Description of Business:
PETROLEUM DISPENSING EQUIPMENT AND SYSTEMS
This market is served by: (a) Tokheim Corporation, United States; Tokheim B.V.,
The Netherlands; Tokheim and Gasboy of Canada Limited; Tokheim GmbH, Germany;
Tokheim Limited, The United Kingdom; and Tokheim South Africa (Proprietary)
Limited, which are involved in the design, manufacture and marketing of
service station equipment, point-of-sale systems, card- and cash-activated
transaction systems, and commercial dispensers, and (b) Gasboy International,
Inc., a provider of commercial dispensers, hand pumps, transfer pumps, and
dispenser control systems.
While these products are used in several liquid handling fields, the petroleum
industry purchases the major portion, having accounted for approximately 100%,
88%, and 87% of net sales for the years ended November 30, 1993, 1992, and 1991,
respectively. Approximately 92% of 1993, 86% of 1992, and 87% of 1991 petroleum
dispensing equipment and systems sales were derived from the sale of various
models of service station gasoline dispensers, parts, and accessories, which are
sold to major oil companies for their own gasoline stations and to independent
retail station owners through the Company's distributor and manufacturers'
representative organization. Service station equipment accounted for
approximately 92%, 76%, and 76% of consolidated sales for the years ended
November 30, 1993, 1992, and 1991, respectively.
Sales by foreign subsidiaries approximated 28%, 38%, and 39% of sales from
continuing operations in 1993, 1992, and 1991, respectively. While risks
attendant to operations in foreign countries vary widely from country to
country, the Company is of the opinion that, considered in the aggregate,
the risks attendant to its operations in foreign countries are not
significantly greater than the risks attendant to operations in the
United States.
Products are distributed in the United States by a sales organization which
operates from national account offices, district sales offices, petroleum
equipment firms, industrial suppliers, and distributors, in major cities
across the United States. In areas outside the United States, product
distribution is accomplished by the International Division through foreign
subsidiaries and special sales representatives. In addition to its
widespread sales organization, there are approximately 1,000 trained
field service representatives acting as independent contractors, many of
whom maintain service parts inventory. The Company's Customer Service
Division maintains a continuing program of service clinics for personnel
of customers and distributors, both in the field and at the Company's
training centers. The business is somewhat seasonal, primarily relating
to the construction season.
The market for these products is highly competitive. The Company and its
subsidiaries all compete with a number of companies (including the Wayne Divi-
sion of Dresser Industries and Gilbarco), some of which have greater sales and
assets than the Company. The Company competes against four domestic manu-
facturers of service station dispensers.
4
<PAGE>
Environmental regulations and service station automation are expected to
favorably impact the future growth of this business both domestically and
internationally. The Company's belief that environmental regulations will be a
favorable factor is based upon its own analysis and a study of the proposed
Vapor Recovery Market published by an independent consultant to the Company.
That study concludes that over 50,000 retail service stations across the United
States will be potentially impacted by Stage II Vapor Recovery Control regu-
lations becoming effective during the period 1993 through 1996. The study
further indicates that while the majority of service stations will retrofit
existing dispensers, requiring purchase of a retrofit kit from a dispenser
manufacturer, a large contingency of older dispensers will be replaced.
With respect to service station automation, a separate independent study has
estimated that approximately 30,000 stations will install point-of-sale
systems between 1993 and 1999. It is, therefore, expected that overall market
demand may be on the rise during 1994 and 1995.
The Company's conclusions regarding international markets arise from its sales
experience suggesting that international markets tend to follow the lead of the
United States in addressing environmental issues and automation opportunities.
The dollar amount of backlog considered to be firm as of the end of fiscal year
1993 was approximately $23,049,000 compared to approximately $16,158,000 and
$28,839,000 at the end of fiscal years 1992 and 1991, respectively. The
Company expects that the entire backlog will be filled in fiscal year 1994.
Backlog amounts at any fiscal year-end are not necessarily a significant
indicator of sales during the forthcoming year. Factors impacting backlog
levels at any point in time include such events as announcements of price
adjustments, sales promotions, and production delays, which mitigate against
comparisons of one period to another.
In fiscal 1993, no one customer accounted for as much as ten percent of the
Company's consolidated sales. The principal raw materials essential to the
Company's business are flat sheet steel and aluminum, zinc, iron castings, and
electronic components, all of which are available through several competitive
sources of supply.
The Company holds a number of patents, no one of which is considered essential
to its overall operations. The Company relies primarily on its engineering,
production, marketing, and service capabilities to maintain its established
position within the industry it now serves. At November 30, 1993, the Company
employed approximately 1,859 persons at its various locations.
5
<PAGE>
NEW PRODUCTS
The Company's continuing operations spent approximately $8,625,000 in 1993;
$10,485,000 in 1992; and $11,064,000 in 1991 on activities related to the
support and improvement of existing products, manufacturing methods, the
development of new products, and other applied research and development.
Research and development projects are evaluated on the basis of cash payback
and return on investment.
In 1992, a major effort was undertaken to make the entire core of Tokheim's
product family the most technologically advanced in the world.
(d) Financial Information About Foreign and Domestic Operations and
Export Sales:
Financial information about foreign and domestic operations and export sales for
the years ended November 30, 1993, 1992, and 1991 is set forth in Item 8 of this
Report in Note 11 to the Consolidated Financial Statements captioned "Business
and Geographical Segments".
ITEM 2. PROPERTIES.
Properties owned by the Company are located in: Fort Wayne, Indiana; Fremont,
Indiana; Washington, Indiana; Lansdale, Pennsylvania; Brighton, Ontario,
Canada; Leiderdorp, The Netherlands; Kya Sand, Randburg, South Africa;
Glenrothes, Scotland; and Weilheim, Germany. Due to plant consolidations and
the sale of the Controls segment, the following properties were sold in 1993:
Newbern, Tennessee; Dallas, Texas; and London, Ontario, Canada. In 1992, the
Company sold the property located in Albion, Indiana. The Jasper, Tennessee
and Atlanta, Georgia facilities are currently being held for sale. The above
properties are all manufacturing oriented except as noted below:
The Company owns an engineering and design center and corporate office building
located north of Fort Wayne, Indiana. In addition, the Company owns a tract of
land located in a Fort Wayne industrial development area.
The Company also owns a 116-acre tract of unimproved land adjacent to the
Company's engineering and design center and corporate office building located
north of Fort Wayne, Indiana. The operation in Leiderdorp, The Netherlands
is primarily a distribution oriented facility.
6
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
As more fully described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations", and Note 14 to the Consolidated Financial
Statements captioned, "Contingent Liabilities", the Company is defending
various claims and legal actions, including environmental actions which are
common to its operations. These legal actions primarily involve claims for
damages arising out of the Company's manufacturing operations, the use of the
Company's products, and allegations of patent infringement. As to environ-
mental matters, the Company has been designated as a "potentially responsible
party" (PRP) in certain governmental actions associated with hazardous waste
sites falling under the Comprehensive Environmental Response Compensation and
Liability Act (CERCLA). Such actions seek recovery of certain clean-up costs.
While the Company is currently unable to predict the outcome of these matters
and cannot reliably determine estimates of specific amounts to accrue for these
contingencies, the Company has attempted, where possible, to estimate a range
of costs which may accrue from contingencies relating to the Company's having
been named as a PRP, in the opinion of management, any total ultimate
liability will not have a material affect on the Company's fnancial position
but could have a material effect on quarterly or annual operating results when
resolved in a future period.
The Company has been named as a PRP in five governmental actions associated
with hazardous waste sites falling under CERCLA. Dates upon which the Company
received notice as a PRP range from January 1988 to January 1992. The
Company is a "de minimus" party in two of these sites and has accrued total
anticipated clean-up costs of $25,000. The full possible range of anticipated
costs may run from $10,000 to $50,000, in the aggregate, for both of the
"de minimus" sites.
Remediation studies have been completed at two of the remaining sites. The
estimated aggregate cost for total remedial action for all PRPs in response to
the contamination of these two additional sites range from $42 million to $67
million. The Company currently accrues approximately $150,000 in legal costs
annually in connection with the defense of its position in connection with these
two sites. Experts retained by the Company have been unable to advise the
Company on the range of its potential responsibility for these sites.
With respect to the fifth and final site, involving potential groundwater
contamination, the PRPs have agreed to connect eight individual homeowners in
the municipality to the city water supply and are negotiating with the EPA as to
testing to be performed on the property each PRP owns in the area to ascertain
whether the PRP should continue as such or be released from the PRP group. The
Company has not yet formulated a range of costs likely to be encountered in the
event its property is contaminated.
In addition to the legal actions involving claims for damages arising out of
the use of the Company's products and allegations of patent infringement, the
Company has been named in two cases alleging discrimination on the basis of
sex. In the opinion of management, amounts accrued for awards or assessments
in connection with these matters are adequate, and ultimate resolution of these
matters will not have a material effect on the Company's consolidated financial
position. Accordingly, there are no proceedings of a material nature against
the Company involving violations of federal, state, or local statutes or
ordinances dealing with civil rights.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
7
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company's common stock is traded on the New York Stock Exchange under the
symbol "TOK". The approximate number of holders of record of the Company's
common stock as of November 30, 1993, was 7,000. No dividends were paid on
common stock in 1993 and 1992 in accordance with restrictive covenants under
the Company's loan agreement. Dividends were paid on a quarterly basis
through the third quarter of 1991. The high-low sales prices for the
Company's common stock are set forth as follows:
QUARTERLY HIGH-LOW SHARE PRICES
1993 1992
Share Price Share Price
Quarter High-Low High-Low
------- ---------------- --------------
1 8 1/2 - 6 3/8 10 - 7 1/2
2 10 3/4 - 6 5/8 10 3/4 - 7 1/2
3 14 - 9 8 7/8 - 6
4 13 3/4 - 10 5/8 7 - 5 1/2
In September 1993, the Company issued an additional 1,283,000 shares of common
stock through a private placement offering, resulting in net proceeds of
approximately $11,485,000.
On July 10, 1989, the Company sold 960,000 shares of convertible cumulative
preferred stock to the Trust of the Company's Retirement Savings Plan (RSP)
at the liquidation value of $25 per share or $24,000,000. The preferred shares
have a dividend rate of 7.75%. The Trustees, who hold the preferred shares,
may elect to convert each preferred preferred share to one common share in the
event of redemption by Tokheim, certain consolidations or mergers of Tokheim,
or a redemption by the Trustees which is necessary to provide for distributions
under the RSP. A participant may elect to receive a distribution from the
RSP in cash or common stock. If redeemed by the trustees, the Company is
responsible for purchasing the preferred shares at the $25 floor value. The
Company may elect to pay the redemption price in cash or an equivalent amount
of common stock. At November 30, 1993, the difference between the floor value
and the market value of the underlying common stock aggregated $3,322,000.
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data is not covered by the Auditor's Report,
but should be read in conjunction with the Consolidated Financial Statements
and related Notes and "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
8
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
TOKHEIM CORPORATION AND SUBSIDIARIES
(Dollar amounts in thousands except amounts per share)
1993 1992* 1991*
<S> <C> <C> <C>
Operating results:
Net sales.......................................... $172,306 $162,089 $167,522
Cost of products sold**............................ 132,793 128,155 131,486
Equity in net loss of unconsolidated affiliate..... -- -- 754
Earnings (loss) before income taxes, cumulative
effect of accounting change and discontinued
operations....................................... (5,745) (33,801) (21,954)
Earnings (loss) before income taxes, cumulative
effect of accounting change and discontinued
operations percent of sales...................... (3.3)% (20.8)% (13.1)%
Income taxes....................................... 122 1,383 1,194
Earnings (loss) before cumulative effect of
accounting change and discontinued operations.... (5,867) (35,184) (23,148)
Cumulative effect of change in method of
accounting for income taxes...................... -- -- --
Earnings (loss) from continuing operations......... (5,867) (35,184) (23,148)
Total earnings from discontinued operations........ -- 10,278 1,402
Net earnings (loss)................................ (5,867) (24,906) (21,746)
Net earnings (loss) percent of sales............... (3.4)% (15.4)% (13.0)%
Dividends paid common.............................. -- -- 2,649
Dividends paid preferred........................... 1,663 1,790 1,831
Primary per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting change........... (1.09) (5.86) (3.96)
Cumulative effect of change in method of
accounting for income taxes...................... -- -- --
Discontinued operations............................ -- 1.63 0.22
Net earnings (loss)................................ (1.09) (4.23) (3.74)
Fully diluted per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting change........... (1.09) (5.86) (3.96)
Cumulative effect of change in method of
accounting for income taxes...................... -- -- --
Discontinued operations............................ -- 1.63 0.22
Net earnings (loss)................................ (1.09) (4.23) (3.74)
Dividends paid per common share...................... -- -- 0.42
Financial position:
Current assets..................................... 83,139 83,306 117,586
Current liabilities................................ 53,725 57,752 99,803
Current ratio...................................... 1.5 to 1 1.4 to 1 1.2 to 1
Working capital.................................... 29,414 25,554 17,783
Term debt.......................................... 5,374 7,674 11,087
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... 19,206 21,280 -- ***
Property, plant, and equipment, net................ 29,004 32,851 47,490
Total assets....................................... 117,065 121,588 178,525
Stockholders' equity............................... 33,640 28,621 60,554
Return on average equity........................... (21.3)% (50.0)% (27.7)%
Term debt percent of equity........................ 16.0% 26.8% 20.1% ****
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP) obligation. 73.1% 101.2% 58.4% ****
Primary average number of common shares*****....... 6,940 6,307 6,307
Fully diluted average number of common shares*****. 8,236 7,236 7,255
Capital expenditures and depreciation:
Capital expenditures............................... 2,503 2,045 6,910
Depreciation....................................... 4,813 6,089 6,854
</TABLE>
See footnote explanations on page 13.
9
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA (CONTINUED)
TOKHEIM CORPORATION AND SUBSIDIARIES
(Dollar amounts in thousands except amounts per share)
<CAPTION>
1990* 1989* 1988*
<S> <C> <C> <C>
Operating results:
Net sales.......................................... $196,489 $208,778 $188,523
Cost of products sold**............................ 138,413 147,527 130,944
Equity in net loss of unconsolidated affiliate..... 2,720 3,135 214
Earnings (loss) before income taxes, cumulative
effect of accounting change and
discontinued operations.......................... 611 9,551 10,611
Earnings (loss) before income taxes, cumulative
effect of accounting change and discontinued
operations percent of sales...................... .3% 4.6% 5.6%
Income taxes....................................... 875 3,883 3,498
Earnings (loss) before cumulative effect of
accounting change and discontinued operations.... (264) 5,668 7,113
Cumulative effect of change in method of accounting
for income taxes................................. -- -- 2,390
Earnings (loss) from continuing operations......... (264) 5,668 9,503
Total earnings from discontinued operations........ 430 320 1,335
Net earnings (loss)................................ 166 5,988 10,838
Net earnings (loss) percent of sales............... .1% 2.9% 5.7%
Dividends paid common.............................. 3,505 3,561 3,164
Dividends paid preferred........................... 1,854 723 --
Primary per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting change........... (0.34) 0.78 1.12
Cumulative effect of change in method of
accounting for income taxes...................... -- -- 0.37
Discontinued operations............................ 0.07 0.05 0.21
Net earnings (loss)................................ (0.27) 0.83 1.70
Fully diluted per share:
Earnings (loss) from continuing operations
before cumulative effect of accounting change.... (0.34) 0.76 1.12
Cumulative effect of change in method of
accounting for income taxes...................... -- -- 0.37
Discontinued operations............................ 0.07 0.05 0.21
Net earnings (loss)................................ (0.27) 0.81 1.70
Dividends paid per common share...................... 0.56 0.56 0.50
Financial position:
Current assets..................................... 123,755 128,783 127,661
Current liabilities................................ 54,809 54,388 71,436
Current ratio...................................... 2.3 to 1 2.4 to 1 1.8 to 1
Working capital.................................... 68,946 74,395 56,225
Term debt.......................................... 13,815 15,015 15,497
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... 25,002 26,880 3,697
Property, plant, and equipment, net................ 47,124 47,173 43,645
Total assets....................................... 185,635 192,004 184,199
Stockholders' equity............................... 86,622 88,277 86,819
Return on average equity........................... .2% 6.9% 13.1%
Term debt percent of equity........................ 15.9% 17.0% 17.8%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP) obligation. 44.8% 47.5% 22.1%
Primary average number of common shares*****....... 6,351 6,375 6,357
Fully diluted average number of common shares*****. 7,309 6,753 6,357
Capital expenditures and depreciation:
Capital expenditures............................... 8,057 13,144 11,889
Depreciation....................................... 7,315 7,125 6,685
</TABLE>
See footnote explanations on page 13.
10
<PAGE>
SELECTED FINANCIAL DATA (CONTINUED)
TOKHEIM CORPORATION AND SUBSIDIARIES
(Dollar amounts in thousands except amounts per share)
1987 1986
Operating results:
Net sales.......................................... $192,174 $157,232
Cost of products sold**............................ 129,226 112,617
Equity in net loss of unconsolidated affiliate..... -- --
Earnings (loss) before income taxes, cumulative
effect of accounting change and
discontinued operations.......................... 16,696 8,463
Earnings (loss) before income taxes, cumulative
effect of accounting change and discontinued
operations percent of sales...................... 8.7% 5.4%
Income taxes....................................... 5,519 2,799
Earnings (loss) before cumulative effect of
accounting change and discontinued operations.... 11,177 5,664
Cumulative effect of change in method of
accounting for income taxes... .................. -- --
Earnings (loss) from continuing operations......... 11,177 5,664
Total earnings from discontinued operations........ -- --
Net earnings (loss)................................ 11,177 5,664
Net earnings (loss) percent of sales............... 5.8% 3.6%
Dividends paid common.............................. 3,188 3,176
Dividends paid preferred........................... -- --
Primary per share:
Earnings (loss) from continuing operations
before cumulative effect of accounting change.... 1.68 0.85
Cumulative effect of change in method of accounting
income taxes..................................... -- --
Discontinued operations............................ -- --
Net earnings (loss)................................ 1.68 0.85
Fully diluted per share:
Earnings (loss) from continuing operations
before cumulative effect of accounting change.... 1.68 0.85
Cumulative effect of change in method of
accounting for income taxes...................... -- --
Discontinued operations............................ -- --
Net earnings (loss)................................ 1.68 0.85
Dividends paid per common share...................... 0.48 0.48
Financial position:
Current assets..................................... 114,185 94,212
Current liabilities................................ 54,723 37,008
Current ratio...................................... 2.1 to 1 2.5 to 1
Working capital.................................... 59,462 57,204
Term debt.......................................... 14,259 8,588
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... 4,000 4,000
Property, plant, and equipment, net................ 37,137 33,967
Total assets....................................... 161,596 130,531
Stockholders' equity............................... 80,709 73,904
Return on average equity........................... 14.4% 7.6%
Term debt percent of equity........................ 17.7% 11.6%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP) obligation. 22.6% 17.0%
Primary average number of common shares*****....... 6,656 6,628
Fully diluted average number of common shares*****. 6,656 6,628
Capital expenditures and depreciation:
Capital expenditures............................... 10,053 10,745
Depreciation....................................... 6,099 5,291
See footnote explanations on page 13.
11
<PAGE>
SELECTED FINANCIAL DATA (CONTINUED)
TOKHEIM CORPORATION AND SUBSIDIARIES
(Dollar amounts in thousands except amounts per share)
1985 1984
Operating results:
Net sales.......................................... $147,380 $157,520
Cost of products sold**............................ 101,448 108,002
Equity in net loss of unconsolidated affiliate..... -- 433
Earnings (loss) before income taxes, cumulative
effective accounting change and
discontinued operations.......................... 18,119 22,267
Earnings (loss) before income taxes, cumulative
effect of accounting change and discontinued
operations percent of sales...................... 12.3% 14.1%
Income taxes....................................... 7,097 9,318
Earnings (loss) before cumulative effect of
accounting change and discontinued operations.... 11,022 12,516
Cumulative effect of change in method of
accounting for income taxes...................... -- --
Earnings (loss) from continuing operations......... 11,022 12,516
Total earnings from discontinued operations........ -- --
Net earnings (loss)................................ 11,022 12,516
Net earnings (loss) percent of sales............... 7.5% 7.9%
Dividends paid common.............................. 3,174 2,632
Dividends paid preferred........................... -- --
Primary per share:
Earnings (loss) from continuing operations
before cumulative effect of accounting change.... 1.67 1.90
Cumulative effect of change in method of
accounting for income taxes...................... -- --
Discontinued operations............................ -- --
Net earnings (loss)................................ 1.67 1.90
Fully diluted per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting change........... 1.67 1.90
Cumulative effect of change in method of
accounting for income taxes...................... -- --
Discontinued operations............................ -- --
Net earnings (loss)................................ 1.67 1.90
Dividends paid per common share...................... 0.48 0.40
Financial position:
Current assets..................................... 85,802 83,559
Current liabilities................................ 28,652 26,754
Current ratio...................................... 3.0 to 1 3.1 to 1
Working capital.................................... 57,150 56,805
Term debt.......................................... 9,137 11,911
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... -- --
Property, plant, and equipment, net................ 26,679 22,771
Total assets....................................... 117,144 109,046
Stockholders' equity............................... 73,744 64,992
Return on average equity........................... 16.3% 20.8%
Term debt percent of equity........................ 12.4% 18.3%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP) obligation. 12.4% 18.3%
Primary average number of common shares*****....... 6,615 6,602
Fully diluted average number of common shares*****. 6,615 6,602
Capital expenditures and depreciation:
Capital expenditures............................... 7,716 6,949
Depreciation....................................... 4,063 3,321
See footnote explanations on page 13.
12
<PAGE>
* Represents fiscal years' financial information reclassified for
discontinued operations
** Includes product development expenses and excludes depreciation and
amortization
*** A component of long-term obligations in technical default classified as
current
**** Includes long-term obligations in technical default classified as current
***** Reflects three-for-two stock split in form of stock dividend in
February, 1985
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Several factors impacted favorably upon Tokheim Corporation's results of
operations for fiscal 1993 including an improvement in U.S. economic conditions
which favorably impacted the domestic market for petroleum dispensing equipment,
continued expansion in the international markets, customer acceptance of the
Company's new Premier dispenser product line, and the benefit of restructuring
and cost-reduction initiatives began in 1992.
A net loss of $5.9 million, or $1.09 per share, was incurred in 1993 versus a
loss from continuing operations of $35.2 million (including $15.2 million of
special charges), or $5.86 per share, in 1992 and a $23.1 million loss
(including $7.9 million in special charges), or $3.96 per share in 1991.
Consolidated sales from continuing operations were $172.3 million, an increase
of 6% from $162.1 million in 1992 and an increase of 3% from 1991 sales of
$167.5 million. Domestic sales of petroleum dispensing equipment and systems
increased 7.6% from $92.3 million in fiscal 1992 to $99.3 million in fiscal
1993. Fiscal 1992 sales from continuing operations of $162.1 million decreased
3% from $167.5 million in 1991. The decrease in that year was attributable to
the downturn which occurred in the domestic petroleum equipment market,
resulting from the combined effect of an ongoing recession in the United States
and the diversion during the same period of significant portions of customers'
capital budgets to adapt to costly environmental regulations.
International sales were $73.0 million in fiscal 1993, up 4.6% from fiscal 1992
sales of $69.8 million.
The combined domestic and international operations incurred an operating loss of
$1.8 million in fiscal 1993 compared with an operating loss of $27.9 million in
1992 and $20.3 million in 1991.
The gross margin on product sales for 1993 was 22.9% which was up from the prior
year's 20.9% due primarily to lower period manufacturing costs as a percent of
sales. The gross margin on product sales for 1992 had decreased from the
1991 level of 21.5% due primarily to competitive pricing pressures and higher
period manufacturing costs as a percent of sales due to the lower sales level of
1992 relative to 1991. Selling, general, and administrative expenses in fiscal
1993 decreased $3.3 million from 1992 due to cost-reduction initiatives
implemented throughout the year. For the 1992 fiscal year, selling, general,
and administrative expenses had decreased $0.6 million from 1991.
A significant portion of the prior year's reported loss was due to $15.2 million
of special noncash charges and one-time costs associated with facility closings,
consolidations, product rationalizations, employment reductions, and other
actions taken to improve the longer-term operating performance of the Company.
Fiscal 1991 included similar special charges of $7.9 million. There were no
such special charges during fiscal 1993.
Results for fiscal year 1991 reflected a charge of $1.3 million for the final
settlement of a liability arising from the termination of certain defined bene-
fit pension plans. No similar costs were incurred in fiscal 1992 or 1993.
Net interest expense was $2.9 million in 1993, a $1.3 million decrease from
1992 due to a lower level of debt relative to the previous year. Interest
expense in 1992 was $1.3 million higher than 1991 due to a higher weighted
average interest rate relative to that year.
14
<PAGE>
A net foreign currency exchange loss of $0.5 million was incurred in fiscal 1993
versus a net foreign currency gain of $0.7 million in 1992 and a foreign
currency loss of $0.3 million in 1991. The fiscal 1993 losses were incurred
primarily as a result of fluctuations in the exchange rate on intercompany
balances between the Tokheim Corporation parent company and its foreign sub-
sidiaries. The Company's long-term investment in foreign subsidiaries, when
translated at fiscal 1993 conversion rates, resulted in a translation adjust-
ment reflected as a $4.0 million charge to stockholders' equity in 1993. The
comparable 1992 amount was $3.1 million.
In fiscal 1993, the Company sold its Garland, Texas plant and Newbern, Tennessee
plant which had been idled through previous consolidation. Net proceeds were
$1.7 million, and a net loss of $0.4 million was incurred on the transactions.
In fiscal 1992, the Company sold its submerged pump product line and a manu-
facturing facility located in Albion, Indiana for proceeds approximating $1.4
million and a net gain of $0.9 million.
A net loss of $5.9 million was incurred in 1993 versus a net loss of $24.9
million in 1992 and a net loss of $21.7 million in 1991. Fiscal 1993 operating
earnings were favorably impacted principally by a $10.2 million increase in
sales; an improved gross margin on product sales; lower selling, general, and
administrative expenses; and reduced interest expenses. Fiscal 1992 operating
earnings were principally impacted by a $5.4 million reduction in sales from
continuing operations relative to 1991, a lower gross margin on product sales,
$15.2 million in special charges, and higher interest expenses, mitigated in
part by reduced depreciation and amortization costs, increased foreign currency
gains, and a gain on the sale of discontinued operations.
The primary net loss per share of $1.09 was incurred in fiscal 1993 versus
$4.23 in 1992 and $3.74 in 1991. The weighted average shares outstanding
used in computing per share results were 6,940,000 in 1993 and 6,307,000 in
1992 and 1991.
Dividends on common stock aggregating $0.42 per share were paid in 1991. No
dividends were paid on common stock in 1993 or 1992 in accordance with
restrictive covenants under the Company's loan agreement. The number of
stockholders as of November 30, 1993, was approximately 7,000. Inflation has
not had a significant impact on the Company's results of operations.
The Company has been designated as a "potentially responsible party" (PRP) in
five governmental actions associated with hazardous waste sites falling under
the Comprehensive Environmental Response Compensation and Liability Act
(CERCLA). Such actions seek recovery of certain cleanup costs. While the
Company is currently unable to predict the outcome of these matters and cannot
reliably determine estimates of specific amounts to accrue for these contin-
gencies, the Company has attempted, where possible, to estimate a range of
costs which may accrue from contingencies, relating to the Company's having
been named as a PRP.
Dates upon which the Company received notice as a PRP range from January, 1988
to January, 1992. The Company is a "de minimis" party in two of these sites and
has accrued total anticipated cleanup costs of $25,000. The full possible range
of anticipated costs may run from $10,000 to $50,000, in the aggregate, for both
of the de minimis sites. Remediation studies have been completed at two of
the remaining sites. The estimated aggregate cost for total remedial action for
all PRPs in response to the contamination of these two additional sites range
from $42 million to $67 million. The Company currently accrues approximately
$150,000 in legal costs annually in connection with the defense of its position
in connection with these two sites. Experts retained by the Company have been
unable to advise the Company on the range of its potential responsibility for
these sites.
15
<PAGE>
With respect to the fifth and final site involving potential groundwater
contamination, the PRPs have agreed to connect eight individual homeowners in
the municipality to the city water supply and are negotiating with the EPA as
to the testing to be performed on the property each PRP owns in the area to
ascertain whether the PRP should continue as such or be released from the PRP
group. The Company has not yet formulated the range of costs likely to be
encountered in the event its property is contaminated.
Tokheim has accrued all anticipated legal expenses and other costs that, in its
best estimate, will be incurred in the process of participating as a PRP in the
above matters. In addition, the Company is reviewing its insurance policies for
coverage during the relevant periods and also the potential for remedies against
previous owners of the property with legal counsel. The Company is unable to
predict the outcome of these matters and cannot reliably determine estimates of
additional amounts to accrue for these contingencies as the actual cost of
remedial actions has not been determined and the method of allocation of
liability among all PRPs who may ultimately be found liable remains uncertain.
During 1992, in accordance with its plan to refocus on its core business, the
Company divested of its Controls segment through the sale of its National
Controls Corporation subsidiary and the assets of its Tokheim Automation
Corporation subsidiary. Net proceeds of $18.7 million were generated, and an
aggregate net gain of $9.0 million was realized from the sales of these
discontinued operations. Earnings from these discontinued operations were $1.3
million and $1.4 million in 1992 and 1991, respectively.
In the first quarter of 1994, the Company must adopt a mandatory accounting
change pursuant to Statement of Financial Accounting Standards (SFAS) 106 which
governs accounting for nonpension retiree benefit costs. SFAS 106 requires
companies to project the future cost of providing retiree medical, dental, and
life insurance benefits and recognize that cost as benefits are earned during
the employee's career. In Tokheim's case, the actuarily determined liability
approximates $13 million which can either be recorded as a one-time noncash
accounting adjustment or amortized over a period not to exceed 20 years.
Tokheim is currently reviewing the two alternatives. Adoption of this new
accounting standard has no cash flow effect nor does it represent a change,
with respect to previous fiscal years, in the benefit levels provided to
employees.
LIQUIDITY AND CAPITAL RESOURCES
On May 29, 1992, the Company entered into a Credit, Agency, and Guaranty
Agreement with a consortium of banks consolidating $45 million and $2.5 million
of existing, previously unsecured short-term loans and standby letters of
credit, respectively, as well as $32.2 million of long-term debt agreements.
In addition, the agreement provided for $9.7 million of revolving credit during
the period beginning June 1, 1992 through January 31, 1993. The agreement
contains a pledge of substantially all of the Company's assets. In addition,
it contains a provision that net proceeds, or portions thereof, from certain
potential sales of assets, operations, or Company securities and excess cash
flow are to be applied as a permanent reduction of the loans. Loan reduction
in 1993 aggregated approximately $13.4 million and in 1992 approximately $26.9
million as discussed below.
Availability of additional revolving credit is subject to borrowing base
requirements and compliance with covenants as described below. The Company
was in full compliance with all covenants as of November 30, 1993.
16
<PAGE>
Restrictions and financial covenants of the agreement include those related to
indebtedness, net worth, and capital expenditures. The agreement prohibits the
payment of cash dividends on common stock over the life of the agreement.
Management believes that the Company's operating and financial prospects are
such that covenants can be met throughout the remainder of the agreement.
The agreement, which had an original maturity date of April 15, 1994, has been
extended to December 1, 1994. Extension of loans beyond the term of the
agreement is at the discretion of each participant lender. The Company is
currently evaluating refinancing alternatives.
Cash used in operations was $5.0 million in 1993 compared to cash provided from
operations of $7.4 million in 1992 and $0.6 million used in operations in 1991.
The decrease in 1993 relative to the previous year reflects the heavy concen-
tration of sales during the last two months of 1993. Fiscal 1993 cash flow was
also impacted by outflows related to expenses which had been accrued in the
previous fiscal year primarily related to the restructuring of the Company.
The Company's investing activities are generally for capital expenditures which
have amounted to $2.5 million in 1993, $2.0 million in 1992, and $6.9 million in
1991. In 1993, the Company received proceeds from sale of property, plant, and
equipment of $2.4 million versus $1.8 million in 1992 and $0.6 million in 1991.
In addition, the Company received net proceeds from sale of discontinued
operations of $18.7 million in 1992. At November 30, 1993, no significant
contractual commitments existed for future capital expenditures. Further, the
Company plans to avoid significant contractual commitments for capital
expenditures through fiscal 1994.
Financing activities in 1993 included issuance of 1,283,000 shares of common
stock in a private placement of shares with institutional investors raising a
net of $11.5 million of new equity capital. The Company reduced its debt by
$13.4 million which aggregated $44.5 million at November 30, 1993 versus $57.9
million and $84.7 million at the end of fiscal years 1992 and 1991,
respectively. Peak short-term borrowings were $25.0 million in 1993 and $48.0
million in both 1992 and 1991. The weighted average interest rate for these
borrowings was approximately 8.9% in 1993, 8.3% in 1992, and 6.7% in 1991.
Preferred stock dividends paid in fiscal 1993 and 1992 were $1.7 million and
$1.8 million, respectively. Common and preferred stock dividends aggregated
$4.5 million in 1991.
Cash and cash equivalents at November 30, 1993 aggregated $9.1 million versus
$15.5 million and $14.9 million at November 30, 1992 and 1991, respectively.
The Company has guaranteed loans to its Retirement Savings Plan (RSP) in the
amounts of $19.2 million, $21.3 million and $23.2 million at November 30, 1993,
1992, and 1991, respectively. The Company has guaranteed a $25 per share value
for its convertible preferred stock. At conversion, the Company is responsible
for any difference between the market value of the underlying common stock and
the $25 guaranteed value of the preferred stock. At November 30, 1993, this
difference aggregated $3.3 million. Total interest-bearing debt as a percent of
equity for 1993 was 132% compared to 202% for 1992 and 140% for 1991.
In summary, the Company believes that it has adequate financial resources, both
from internal and external sources, to meet its liquidity needs through the term
of its existing credit agreement. The Company is currently pursuing a
refinancing of the debt applicable to this agreement which it expects to
complete in 1994.
17
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
TOKHEIM CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992, and 1991
(Amounts in thousands)
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Net sales............................................ $172,306 $162,089 $167,522
Cost of sales, exclusive of items listed below....... 132,793 128,155 131,486
Selling, general, and administrative expenses........ 36,106 39,441 39,991
Depreciation and amortization........................ 5,233 7,202 8,420
Special charges...................................... -- 15,153 7,900
Interest expense (net of interest income of
$369; $853; and $1,191, respectively).............. 2,890 4,169 2,890
Equity in net loss of unconsolidated affiliate....... -- -- (754)
Foreign currency gains (losses)...................... (453) 726 (330)
Other income (expense), net.......................... (576) (2,496) 2,295
Loss before income taxes and discontinued operations. (5,745) (33,801) (21,954)
Income taxes......................................... 122 1,383 1,194
Loss before discontinued operations.................. (5,867) (35,184) (23,148)
Discontinued operations:
Earnings from discontinued operations.............. -- 1,280 1,402
Gain on sale of discontinued operations............ -- 8,998 --
Total earnings from discontinued operations........ -- 10,278 1,402
Net loss............................................. (5,867) (24,906) (21,746)
Preferred stock dividends ($1.94 per share).......... 1,663 1,790 1,831
Loss applicable to common stock...................... (7,530) (26,696) (23,577)
Retained earnings, beginning of year................. 31,733 58,429 84,655
Treasury stock transactions.......................... (1,374) -- --
22,829 31,733 61,078
Common stock dividends ($.42 per share in 1991)...... -- -- 2,649
Retained earnings, end of year....................... $ 22,829 $31,733 $58,429
Earnings (loss) per common share:
Continuing operations............................ $ (1.09) $ (5.86) $ (3.96)
Discontinued operations.......................... -- 1.63 0.22
Net loss......................................... $ (1.09) $ (4.23) $ (3.74)
Weighted average shares outstanding.............. 6,940 6,307 6,307
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
18
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
TOKHEIM CORPORATION AND SUBSIDIARIES
AS OF NOVEMBER 30, 1993 AND 1992
(Amounts in thousands)
ASSETS
<CAPTION>
1993 1992
-------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents........................ $ 9,097 $15,517
Accounts receivable, less allowance for doubtful
accounts of $1,267 and $1,795, respectively.... 36,644 30,455
Inventories:
Raw materials and supplies..................... 6,295 6,101
Work in process................................ 22,864 25,438
Finished goods................................. 8,644 6,167
37,803 37,706
Less amounts necessary to reduce
certain inventories to LIFO method....... 2,932 2,761
34,871 34,945
Prepaid expenses................................. 2,527 2,389
Total current assets......................... 83,139 83,306
Property, plant, and equipment, at cost:
Land and land improvements....................... 3,133 3,396
Buildings and building improvements.............. 20,940 24,834
Machinery and equipment.......................... 54,995 57,718
Construction in progress......................... 1,361 740
80,429 86,688
Less accumulated depreciation.................... 51,425 53,837
29,004 32,851
Other noncurrent assets and deferred charges....... 4,922 5,431
$117,065 $121,588
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
19
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET (CONTINUED)
TOKHEIM CORPORATION AND SUBSIDIARIES
AS OF NOVEMBER 30, 1993 AND 1992
(Amounts in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt............. $ 1,237 $ 955
Notes payable to banks........................... 18,684 27,986
Accounts payable................................. 19,333 13,088
Accrued expenses................................. 14,471 15,723
Total current liabilities.................... 53,725 57,752
Long-term debt, less current maturities............ 5,374 7,674
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... 19,206 21,280
Minimum pension liability.......................... 3,348 2,978
Other long-term liabilities........................ 150 757
Deferred income taxes.............................. 1,622 2,526
83,425 92,967
Redeemable convertible preferred stock, at
liquidation value of $25 per share, 1,700
shares authorized, 960 shares issued............. 24,000 24,000
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... (17,533) (19,201)
Treasury stock, at cost, 112 and 66
shares, respectively............................. (2,789) (1,658)
3,678 3,141
Preferred stock, no par value; 5,000 shares
authorized and unissued.......................... -- --
Common stock, no par value; 30,000 shares
authorized, 7,942 shares issued.................. 19,594 8,258
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... (1,673) (2,079)
Minimum pension liability.......................... (3,348) (2,978)
Foreign currency translation adjustments........... (4,037) (3,119)
Retained earnings.................................. 22,829 31,733
33,365 31,815
Treasury stock, at cost, 191 and 352
shares, respectively............................. (3,403) (6,335)
29,962 25,480
$117,065 $121,588
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
20
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
TOKHEIM CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992, AND 1991
(Amounts in thousands)
<CAPTION>
1993 1992 1991
-------- --------- ---------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss......................................... $(5,867) $(24,906) $(21,746)
Adjustments to reconcile net loss to net cash
provided from (used in) operations:
Depreciation and amortization.............. 5,233 8,107 8,978
(Gain) loss on sale of property,
plant, and equipment..................... 446 (707) (803)
Gain on sale of discontinued operations.... -- (8,998) --
Asset impairment........................... -- 9,025 --
Deferred income taxes...................... (830) 521 (42)
Receivables, net........................... (7,999) 3,632 7,380
Inventories................................ (590) 12,055 2,673
Prepaid expenses........................... (202) (497) 913
Accounts payable........................... 7,277 2,528 2,827
Accrued Expenses........................... (4,223) 2,730 (773)
U.S. and foreign income taxes.............. 759 (213) (1,548)
Other...................................... 957 4,083 1,517
Net cash provided from (used in) operations...... (5,039) 7,360 (624)
Cash Flows From Investing And Other Activities:
Property, plant, and equipment additions......... (2,503) (2,045) (6,910)
Proceeds from sale of property, plant,
and equipment.................................. 2,427 1,760 643
Net proceeds from sale of discontinued
operations..................................... -- 18,690 --
Advances to an equity affiliate.................. -- -- (754)
Net cash provided from (used in) investing
and other activities.......................... (76) 18,405 (7,021)
Cash Flows From Financing Activities:
Proceeds from term borrowing..................... -- 793 20
Payments on term borrowing....................... (2,176) (2,730) (1,524)
Increase (decrease) notes payable, banks......... (9,166) (19,846) 19,916
Net proceeds from issuance of common stock....... 11,485 -- --
Treasury stock purchased......................... (1,212) (1,098) (530)
Treasury stock issued............................ 1,639 128 16
Cash dividends................................... (1,663) (1,790) (4,480)
Net cash provided from (used in) financing
activities..................................... (1,093) (24,543) 13,418
Effect of Translation Adjustment on Cash........... (212) (569) (420)
Cash and Cash Equivalents:
Increase (decrease) in cash...................... (6,420) 653 5,353
Beginning of year................................ 15,517 14,864 9,511
End of year...................................... $ 9,097 $15,517 $14,864
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars amounts in thousands except dollars per share)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements include the
accounts of Tokheim Corporation and all of its wholly owned and majority owned
subsidiaries.
TRANSLATION OF FOREIGN CURRENCY -- The financial position and results of
operations of the Company's foreign subsidiaries are measured using local
currency as the functional currency, except for the Brazilian subsidiary in 1992
and 1991. Revenues and expenses of such subsidiaries have been translated at
average exchange rates. Assets and liabilities have been translated at year-end
rates of exchange. Translation gains and losses are being deferred as a
separate component of stockholders' equity, unless there is a sale or liquida-
tion of the underlying foreign investments. The Company has no present plans
for the sale or liquidation of significant investments to which these deferrals
relate. In 1992 and 1991, the Company's subsidiary in Brazil operated in a
hyper-inflationary economy. Accordingly, the U.S. dollar was deemed to be the
functional currency of this subsidiary and all translation gains and losses were
included in determining net earnings. Exchange losses incurred by the Brazilian
subsidiary were partially offset by the monetary correction inherent in the
interest earned on invested working capital. Aggregate foreign currency
transaction gains and losses are included in determining net earnings.
INVENTORY VALUATION -- Inventories are valued at the lower of cost or market.
Cost is determined using the last-in, first-out (LIFO) method for the major
portion of United States inventories and the first-in, first-out (FIFO) method
for most other inventories.
Inventories valued using the LIFO method amounted to approximately $28,055 and
$24,708 on a FIFO basis at November 30, 1993 and 1992, respectively.
PROPERTY AND DEPRECIATION -- Depreciation of plant and equipment is determined
generally on a straight-line basis over the estimated useful lives of the
assets.
For income tax purposes, accelerated depreciation methods are used where
permitted or required.
SOFTWARE DEVELOPMENT COSTS -- Amortization of capitalized software costs is
provided over the estimated economic useful life of the software product on a
straight-line basis, generally three years. Unamortized software costs included
in other noncurrent assets were $296 and $728 at November 30, 1993 and 1992,
respectively. The amounts amortized and charged to expense in 1993, 1992, and
1991 were $382; $1,438; and $1,734, respectively. In addition, the Company
wrote off $2,526 of previously capitalized software development costs in con-
nection with a product rationalization in 1992.
All other product development and product support expenditures are charged to
expense in the period incurred. These expenses from continuing operations
amounted to $8,625; $10,485; and $11,064 in 1993, 1992, and 1991,
respectively.
INCOME TAXES -- The Company has adopted the liability method of accounting for
income taxes pursuant to Statement of Financial Accounting Standards (SFAS) No.
96, "Accounting for Income Taxes."
22
<PAGE>
POSTRETIREMENT BENEFITS -- The Company and its subsidiaries have several
retirement plans covering most of their employees, including certain employees
in foreign countries. Charges to operations for the cost of the Company's
retirement plans including the Retirement Savings Plan (RSP) were $2,675 in
1993; $2,521 in 1992; and $2,022 in 1991.
In addition to pension benefits, the Company provides certain postretirement
medical and life insurance benefits, principally to certain United States
employees. Retirees in other countries are generally covered by government-
sponsored programs. In the first quarter of fiscal 1994, the Company must
adopt SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions". This Statement requires accounting for these benefits on an
accrual basis rather than the prevalent cash basis. The transition
obligation may be recognized immediately as an accounting change or on a
delayed basis over 20 years. The Company's transition obligation is
estimated to be $13 million, and it is currently evaluating the method of
adopting the new standard.
The total cost of providing health benefits to both active employees and
retirees and the number of of active employees and retirees covered by the
plan are as follows:
1993 1992 1991
-------- -------- --------
Total cost of health
benefits provided......... $5,523 $4,594 $4,025
Active employees............ 1,018 1,230 1,153
Retirees.................... 161 133 133
STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS -- SFAS No. 109, "Accounting for
Income Taxes," is effective for fiscal years beginning after December 15,
1992, and SFAS No. 112, "Employers' Accounting for Postemployment Benefits,"
is effective for fiscal years beginning after December 15, 1993. In the
opinion of management, these statements will not materially impact the Company's
financial position or results of operations.
PRODUCT WARRANTY COSTS -- Anticipated costs related to product warranty are
expensed in the period of sales.
CASH FLOWS -- For purposes of the statement of cash flows, the Company
considers all highly liquid investments purchased with a maturity of 30 days or
less to be cash equivalents.
Supplemental disclosures of cash flow information:
1993 1992 1991
-------- -------- --------
Cash paid during the year for:
Interest........................... $3,273 $4,388 $3,455
Income taxes...................... 1,352 1,295 4,018
In 1993, the Company recorded noncash transactions totaling $1,374 primarily
related to the issuance of common treasury stock in settlement of Retirement
Savings Plan distributions and a $1,400 adjustment to certain assets and
liabilities in connection with the corporate restructuring.
In 1991, the Company recorded a noncash gain of $850 in connection with the
settlement of a dispute with an equipment manufacturer.
RECLASSIFICATION -- Certain prior amounts in these financial statements have
been reclassified to conform with the current presentation.
23
<PAGE>
2. ACCRUED EXPENSES
Accrued expenses consisted of the following at November 30, 1993
and 1992:
1993 1992
--------- ---------
Salaries, wages, and commissions.............. $ 2,893 $ 2,378
Compensated absences.......................... 2,695 2,538
Retirement plan contributions................. 919 1,523
Warranty...................................... 2,019 1,994
Taxes, other than United States and
foreign income taxes........................ 1,185 1,154
Insurance..................................... 1,196 951
Other......................................... 3,564 5,185
$ 14,471 $ 15,723
3. NOTES PAYABLE TO BANKS
Notes payable to banks as of November 30, 1993, totaled $18,684 at a
weighted average annual interest rate of 8.9% compared with $27,986 at a
weighted average annual interest rate of 8.3 percent at November 30, 1992.
The range of domestic and foreign rates at November 30, 1993 and 1992, were
8.0% to 12.8%. Bank lines of credit available under the secured credit
agreement amounted to $2,487 and $9,700 at November 30, 1993 and 1992,
respectively.
On May 29, 1992, the Company executed a Credit, Agency, and Guaranty Agreement
with a consortium of banks to consolidate previously unsecured short-term loans,
standby letters of credit, and certain long-term debt agreements. The agreement
as amended matures December 1, 1994, and contains a pledge of all the unencum-
bered domestic assets of the Company and its subsidiaries, including but not
limited to accounts receivable, inventory, equipment, and real estate; a second
lien on all other domestic assets as available; a pledge of the common stock of
each domestic subsidiary and a guarantee of debt by each domestic subsidiary; a
pledge of a portion of the common stock of the Company's foreign subsidiaries
and negative pledges of the remaining common stock and all unencumbered assets
of the foreign subsidiaries. Net proceeds, or portions thereof, from certain
potential sales of assets, operations, or Company securities must be applied
as a permanent reduction of the loan facility. The agreement contains
restrictions and financial covenants including those relating to indebtedness,
net worth, and capital expenditures and prohibits the payment of cash dividends
on common stock over the life of the agreement. The Company is required to
maintain funds on deposit in a cash collateral account in an amount equal to
the face amount of certain letters of credit which approximated $1,269 and
$233 at November 30, 1993 and 1992, respectively.
Any extension of the agreement beyond December 1, 1994, is at the discretion of
the lenders. The Company is currently pursuing a refinancing of the debt
applicable to this agreement which it expects to complete in 1994.
24
<PAGE>
4. TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP PLAN
(RSP) OBLIGATION
<TABLE>
Term debt at November 30, 1993 and 1992 consisted of the following:
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Industrial Revenue Bonds, variable rate, maturing
$500 semiannually through 1999, rate of
2.7% at November 30, 1993 (a)(b)........................... $ 5,500 $6,000
German Bonds, 3.5% to 6.1%, maturing $9 to $41,
due in semiannual installments through 1998 (a)(b)......... 419 498
Note payable, variable rate, due in monthly installments
ranging from $3 to $17 through 1998, rate of 16.75%
at November 30, 1993....................................... 389 --
Industrial Revenue Bonds, 5.5% to 6.4% maturing
$35 to $45, due in quarterly and annual
installments through 1994 (a).............................. 35 110
9% Industrial Revenue Bonds.................................. -- 1,475
12% note payable............................................. -- 155
Other, 3% to 14% (a)......................................... 268 391
6,611 8,629
Less: Current maturities.................................... 1,237 955
$ 5,374 $7,674
</TABLE>
<TABLE>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation at November 30,
1993 and 1992 consisted of the following:
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation, 8.2% maturing $1,506 to $2,845
quarterly through 2001 (b)................................. $17,533 $19,201
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation, at prime interest rate maturing
$303 to $484 annually through 1997, rate of 5.5%
at November 30, 1993 (b)................................... 1,673 2,079
$19,206 $21,280
<FN>
(a) Aggregate cost of plant and equipment pledged as collateral
under revenue bonds and lease obligations is $10,563.
(b) Per the Credit, Agency, and Guaranty Agreement as described
in Note 3, the term obligation matures on December 1, 1994.
Any extension of the agreement beyond December 1, 1994, is
at the discretion of the lenders. The Company is currently
pursuing a refinancing of the debt applicable to this
agreement.
</TABLE>
Aggregate scheduled maturities of the above term debt and Guaranteed Employees'
Stock Ownership Plan (RSP) obligation during the ensuing five years approximate
$3,467; $21,923; $127; $139; and $144, respectively.
25
<PAGE>
5. STOCK OPTION PLANS
The Company has three separate Stock Option Plans, as outlined below:
1992 STOCK INCENTIVE PLAN (SIP)
- ---------------------------------
This plan contains both incentive stock options (ISO's) and nonqualified stock
options (NSO's). The price of each share under this Plan for an ISO or NSO
shall not be less than the fair market value of Tokheim Common Stock on the
date the option is granted.
Options granted under this Plan become exercisable at the rate of approximately
25% of the total options granted per year beginning one year after the grant
date. No option expires later than 10 years from the date on which it was
granted.
1982 Incentive Stock Option Plan (ISOP) and
1982 Unqualified Stock Option Plan (USOP)
- ---------------------------------------------
Effective January 21, 1992, no additional options could be granted under these
plans. No option expires later than 10 years from the date on which it was
granted.
The price of the each share under the ISOP was not less than the fair market
value of Tokheim Common Stock on the date the option was granted and under
the USOP was not less than 85% of the fair market value of Tokheim Common
Stock on the date the option was granted.
Options granted under the respective plans during 1993, 1992, and 1991, are
as follows:
1992 Stock Incentive Plan
Year of ------------------------- 1982 1982
Grant ISO NSO ISOP USOP
------- ------- -------- ---- ----
1993 275,162 41,288 -- --
1992 -- 70,000 245,475 --
1991 -- -- 19,500 36,000
Subsequent to November 30, 1993, an additional 14,000 ISO option shares were
granted under the SIP at an option price of $11.9375 per share. These shares
become exercisable starting in fiscal year 1995.
26
<PAGE>
<TABLE>
The following table sets forth the status of all outstanding options at
November 30, 1993:
<CAPTION>
Option Exercisable Total
Price Per Options In The Next One Options
Share Exercisable To Four Years Outstanding
-------- ----------- --------------- -----------
<C> <C> <C> <C>
$20.0000 34,250 -- 34,250
$12.7500 5,000 -- 5,000
$12.3750 3,000 -- 3,000
$12.2500 1,000 -- 1,000
$12.1250 7,000 -- 7,000
$11.3100 36,000 -- 36,000
$ 9.3750 -- 26,500 26,500
$ 8.8800 132,028 -- 132,028
$ 7.8750 5,000 10,000 15,000
$ 7.7500 15,000 15,000 30,000
$ 6.8750 5,000 10,000 15,000
$ 6.8125 -- 260,950 260,950
243,278 322,450 565,728
</TABLE>
<TABLE>
Transactions in stock options under these plans are summarized as follows:
<CAPTION>
Shares
Under
Option Price Range
------- ----------------
<S> <C> <C>
Outstanding, November 30, 1990........ 252,650 $14.75 - $32.00
Granted............................... 55,500 $11.31 - $12.38
Exercised............................. --
Cancelled or expired.................. (57,425) $14.75 - $32.00
Outstanding, November 30, 1991........ 250,725 $11.31 - $24.88
Granted............................... 315,475 $6.88 - $8.88
Exercised............................. --
Cancelled or expired.................. (221,450) $8.63 - $24.88
Outstanding, November 30, 1992........ 344,750 $8.88 - $20.00
Granted............................... 316,450 $6.81 - $9.38
Exercised............................. (14,797) $8.88 - $8.88
Cancelled or expired.................. (80,675) $7.75 - $20.00
Outstanding, November 30, 1993........ 565,728 $6.81 - $20.00
</TABLE>
Reserved for options: Shares
- --------------------------------------------------
November 30, 1991.................. 276,575
November 30, 1992.................. 182,550
November 30, 1993.................. 296,775
27
<PAGE>
6. COMMON AND PREFERRED STOCK
Changes in common stock and common treasury stock are shown below:
Common Stock Common Treasury Stock
------------------- ---------------------
Shares Amount Shares Amount
------ ------ ------ ------
Balance, November 30, 1990.... 6,659,000 $ 8,266 353,000 $6,353
Incentive shares issued....... -- (6) (1,000) (16)
Balance, November 30, 1991.... 6,659,000 8,260 352,000 6,337
Incentive shares issued....... -- (2) -- (2)
Balance, November 30, 1992.... 6,659,000 8,258 352,000 6,335
Shares issued in private
placement................... 1,283,000 11,485 -- --
Shares purchased.............. -- -- 7,000 81
Stock options exercised....... -- (149) (15,000) (265)
Redemption of preferred stock. -- -- (132,000) (2,368)
Employee termination benefits. -- -- (21,000) (380)
Balance, November 30, 1993.... 7,942,000 $19,594 191,000 $3,403
Changes in preferred stock and preferred treasury stock are shown below:
Preferred
Preferred Stock Treasury Stock
------------------ ------------------
Shares Amount Shares Amount
------ ------ ------ ------
Balance, November 30, 1990.... 960,000 $24,000 6,000 $ 156
Shares redeemed............... -- -- 21,000 530
Balance, November 30, 1991.... 960,000 24,000 27,000 686
Shares redeemed............... -- -- 39,000 972
Balance, November 30, 1992.... 960,000 24,000 66,000 1,658
Shares redeemed............... -- -- 46,000 1,131
Balance, November 30, 1993.... 960,000 $24,000 112,000 $2,789
In September, 1993 the Company issued an additional 1,283,000 shares of
common stock through a private placement offering, resulting in net
proceeds of approximately $11,485.
28
<PAGE>
On July 10, 1989, the Company sold 960,000 shares of convertible cumulative
preferred stock to the Trust of the Company's Retirement Savings Plan (RSP)
at the liquidation value of $25 per share or $24,000. The preferred shares
have a dividend rate of 7.75%. The Trustees, who hold the preferred shares,
may elect to convert each preferred share to one common share in the event
of redemption by Tokheim, certain consolidations or mergers of Tokheim, or a
redemption by the Trustees which is necessary to provide for distributions
under the RSP. A participant may elect to receive a distribution from the
RSP in cash or common stock. If redeemed by the Trustees, the Company is
responsible for purchasing the preferred shares at the $25 floor value. The
Company may elect to pay the redemption price in cash or an equivalent amount
of common stock. At November 30, 1993, the difference between the floor value
and the market value of the underlying common stock aggregated $3,322.
7. EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of shares
outstanding during each year and the assumed exercise of dilutive employees'
stock options less the number of treasury shares assumed to be purchased from
the proceeds using the average market price of the Company's common stock.
The following table presents information necessary to calculate earnings per
share for fiscal years ended November 30, 1993, 1992, and 1991:
1993 1992 1991
-------- -------- --------
Shares outstanding (in thousands):
Weighted average outstanding...... 6,891 6,307 6,307
Share equivalents................. 49 -- --
Adjusted outstanding.............. 6,940 6,307 6,307
Net earnings (loss):
Continuing operations............. $(5,867) $(35,184) $(23,148)
Discontinued operations........... -- 10,278 1,402
Net loss.......................... (5,867) (24,906) (21,746)
Less preferred stock dividend..... (1,663) (1,790) (1,831)
Loss applicable to common stock... $(7,530) $(26,696) $(23,577)
Net earnings (loss) per common share:
Continuing operations............. $ (1.09) $ (5.86) $ (3.96)
Discontinued operations........... -- 1.63 0.22
Net loss per common share......... $ (1.09) $ (4.23) $ (3.74)
For 1993, 1992 and 1991, fully diluted earnings per share is considered to be
the same as primary earnings per share, since the effect of certain
potentially dilutive securities would be antidilutive.
29
<PAGE>
8. FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
Consolidated foreign currency translation adjustments are as follows:
1993 1992
-------- --------
Foreign currency translation adjustments,
beginning of year.......................... $(3,119) $ 97
Current year adjustments..................... (918) (3,216)
Foreign currency translation adjustments,
end of year............................... $(4,037) $(3,119)
The adjustments represent principally the effect of changes in the
current rate of exchange from the beginning of the year to the end
of the year in translating the net assets, including certain
intercompany liabilities of foreign subsidiaries.
9. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for 1993 and 1992 is as follows:
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -------
1993
- ----
Net sales.................. $31,949 $44,679 $41,386 $54,292 $172,306
Cost of products sold*..... 25,778 33,803 32,708 40,504 132,793
Net earnings (loss)........ (5,201) (1,116) (1,938) 2,388 (5,867)
Earnings (loss) per share:
Primary:
Net earnings (loss).... (0.89) (0.24) (0.33) 0.25 (1.09)
Fully diluted:
Net earnings (loss).... (0.89) (0.24) (0.33) 0.22 (1.09)
1992
- ----
Net sales.................. $40,347 $39,876 $36,541 $45,325 $162,089
Cost of products sold*..... 30,210 31,367 31,545 35,033 128,155
Loss from continuing
operations.............. (1,957) (7,695) (22,879)** (2,653) (35,184)
Earnings (loss) from
discontinued operations. 526 771 9,117*** (136) 10,278
Net loss................... (1,431) (6,924) (13,762) (2,789) (24,906)
Earnings (loss) per share:
Primary:
Continuing operations.. (0.38) (1.29) (3.70) (0.49) (5.86)
Discontinued operations 0.08 0.12 1.45 (0.02) 1.63
Net loss............... (0.30) (1.17) (2.25) (0.51) (4.23)
Fully diluted:
Continuing operations.. (0.38) (1.29) (3.70) (0.49) (5.86)
Discontinued operations 0.08 0.12 1.45 (0.02) 1.63
Net loss............... (0.30) (1.17) (2.25) (0.51) (4.23)
* Includes product development expenses and excludes depreciation and
amortization.
** 1992 3rd Quarter loss from continuing operations reflects pretax special
charges of $15,153.
*** 1992 3rd Quarter earnings from discontinued operations reflect a pretax
gain on the sale of discontinued operations of $8,998.
30
<PAGE>
10. INCOME TAXES
Earnings (loss) before income taxes and discontinued operations consist of the
following:
1993 1992 1991
-------- --------- ---------
Domestic..................................... $(5,842) $(31,843) $(25,118)
Foreign...................................... 97 (1,958) 3,164
$(5,745) $(33,801) $(21,954)
Income taxes (benefit) consist of the following:
1993 1992 1991
-------- -------- --------
Current:
Federal .................................. $ -- $ -- $ (701)
State..................................... 723 254 19
Foreign................................... 49 478 2,818
Less discontinued operations.............. -- (133) (904)
Deferred:
Federal................................... -- 683 365
Foreign................................... (650) 980 (244)
Less discontinued operations.............. -- (879) (159)
$ 122 $ 1,383 $ 1,194
The nature of temporary differences giving rise to deferred income taxes
(benefit) and the tax effect of each are as follows:
1993 1992 1991
-------- -------- --------
Federal:
Depreciation.............................. $ 149 $ (117) $ (401)
Warranty costs............................ (14) 141 (80)
Provision for doubtful accounts........... 38 (140) (145)
Pension costs............................. (37) (122) (182)
Inventory reserves........................ (717) 1,131 (242)
Equity in net loss of unconsolidated
affiliate.............................. -- -- 2,064
Insurance reserves........................ (54) (40) (129)
Alternative minimum tax credits........... -- -- 355
Restructuring charge...................... 1,060 (961) 513
Software development costs................ (112) (1,241) 150
Net operating loss carryforward........... -- -- (1,113)
Deferred tax benefit not recognized....... 4 2,130 --
Other..................................... (317) (98) (425)
Deferred federal income taxes
(benefit)............................$ -- $ 683 $ 365
Less net items from
discontinued operations........... -- (879) (159)
Deferred federal income taxes
(benefit) from continuing
operations..........................$ -- $ (196) $ 206
Foreign:
Repatriation of foreign earnings......... $ (500) $ 705 $ --
Other..................................... (150) 275 (244)
$ (650) $ 980 $ (244)
31
<PAGE>
A reconciliation of the reported tax expense (benefit) from continuing
operations and the amount computed by applying the statutory United States
federal income tax rate of 34% to earnings before income taxes is as follows:
1993 1992 1991
-------- -------- --------
Computed "expected" tax benefit.............. $(1,953) $(11,492) $(7,464)
Increase (decrease) in taxes resulting from:
State income taxes net of federal tax
benefit................................ 477 80 13
Tax effect of dividends paid on stock
held in Retirement Savings Plan (RSP).. (565) (607) (650)
Realization of loss carryback at
less than 34%.......................... -- -- 1,322
Difference in foreign and U.S. tax rates.. (37) 186 322
Earnings with no current tax
benefit(expense):
Domestic............................... 1,339 13,376 5,274
Foreign................................ (219) 786 1,139
Repatriation of foreign earnings.......... 677 705 876
Write-off of investment
in foreign subsidiary.................. -- (2,229) --
Miscellaneous items, net.................. 403 578 362
$ 122 $ 1,383 $ 1,194
At November 30, 1993, the Company has a net operating loss (NOL) carryover for
financial reporting of $40,440. For domestic federal income tax purposes, the
NOL carryover amounts to $40,395, which will expire from 2006 to 2008. The
difference in the carryover amounts arises as a result of the recognition of a
portion of the NOL as a reduction of deferred income taxes for financial
reporting purposes.
32
<PAGE>
11. BUSINESS AND GEOGRAPHICAL SEGMENTS
Through the third quarter 1992, the Company manufactured and sold in two
business segments: Petroleum segment which consisted primarily of electronic
petroleum marketing systems and the Controls segment which consisted primarily
of process control automation systems and time and temperature control
devices. In 1992, the Company divested of all operations of the Controls
segment. The unconsolidated affiliate operated in the Petroleum segment
in 1991.
Domestic and foreign continuing operations information for 1993, 1992, and
1991 is as follows:
1993 1992 1991
-------- -------- --------
Net sales -- unaffiliated customers:
Domestic................................. $ 99,317 $ 92,295 $ 99,386
Export................................... 25,036 8,004 3,616
Foreign: Europe......................... 22,858 36,471 35,624
Other......................... 25,095 25,319 28,896
$ 172,306 $162,089 $167,522
Inter-area sales eliminations:
Domestic................................. $ 11,098 $ 22,041 $ 20,303
Foreign, principally Europe.............. $ 120 $ 261 $ 26
Operating income (loss):
Domestic................................. $ (3,797) $(30,186) $(25,290)
Foreign: Europe......................... (7) 1,398 3,245
Other.......................... 1,978 926 1,770
$ (1,826) $(27,862) $(20,275)
Identifiable assets:
Domestic................................. $102,743 $107,120 $150,682
Foreign: Europe......................... 21,090 28,042 30,933
Other.......................... 12,776 16,567 32,844
Adjustments and eliminations............. (30,836) (40,783) (49,055)
$105,773 $110,946 $165,404
The fluctuation in net sales between Europe and Export from 1992 to 1993 is
primarily due to the transfer of the related sales and marketing responsi-
bility for certain countries from The Netherlands to the United States. The
Company's foreign operations are located in Canada, Germany, The Netherlands,
Scotland, and South Africa. A substantial amount of European sales to
unaffiliated customers are made to geographical areas outside of Europe.
Transfers between geographical areas are at cost plus an incremental amount
intended to provide a reasonable profit margin to the selling enterprises.
Amounts relating to foreign operations included in the consolidated financial
statements are as follows:
1993 1992 1991
-------- -------- --------
Working capital............................. $ 15,982 $21,557 $27,294
Property, plant, and equipment (net)
and other................................. 5,187 5,253 11,953
Noncurrent liabilities...................... (3,128) (2,891) (3,375)
Net foreign assets........................ $ 18,041 $23,919 $35,872
Net earnings (loss) of foreign operations... $ 161 $(2,273) $ 591
33
<PAGE>
In 1992, the Company wrote off net Brazilian assets of $8,025; and in the first
quarter of 1993, the Company ceased all manufacturing operations in Brazil.
Net sales for the Brazilian operations were $5,495 and $3,741 and operating
losses were $2,530 and $3,919 in 1992 and 1991, respectively.
In 1992, the Company divested of all operations of the Controls segment. In
the third quarter of 1992, the Company completed the sale of its National
Controls Corporation subsidiary, a manufacturer of time and temperature control
devices located in Chicago, Illinois. In the fourth quarter of 1992, the
Company completed the sale of the assets of its Tokheim Automation Corporation
subsidiary, a manufacturer of flow meters located in Houston, Texas.
The sale of these entities resulted in a pretax gain of $8,998 net of accruals
and costs incurred in connection with the sales. There was no income tax effect
as the Company is in a net operating loss carry-forward used the proceeds from
the sales to reduce outstanding debt under the Credit, Agency, and Guaranty
Agreement as described in Note 3.
The results of the Controls segment have been reported separately as discon-
tinued operations for all periods presented in the consolidated financial
statements. Net sales of the discontinued operations were $21,837 in 1992 and
$24,944 in 1991.
12. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts are as follows:
1993 1992 1991
-------- -------- --------
Balance, beginning of year........... $1,795 $1,048 $ 941
Charged to operations................ 381 1,356 976
Uncollectible accounts written off,
less recoveries................... (879) (554) (846)
Foreign currency translation
adjustments....................... (30) (55) (23)
Balance, end of year................. $1,267 $1,795 $1,048
34
<PAGE>
13. RETIREMENT PLAN COSTS
The following table sets forth the aggregate defined benefit plans' funded
status and amounts reflected in the accompanying consolidated balance sheets
as of November 30, 1993 and 1992:
Assets Accumulated
Exceed Benefits
Accumulated Exceed
Benefits Assets
------------------ ------------------
1993 1992 1993 1992
-------- -------- -------- --------
Actuarial present value of
accumulated plan benefits:
Vested........................ $ 1,524 $1,469 $10,953 $ 10,195
Nonvested..................... -- -- -- --
Accumulated benefit
obligations................ $ 1,524 $1,469 $10,953 $ 10,195
Projected benefit obligations... $ 1,524 $1,469 $10,953 $ 10,195
Plan assets at fair value,
principally common stocks,
bonds, and GIC funds,
including $372 in 1993 and
$225 in 1992 of the
Company's common stock........ 1,880 2,004 7,336 7,217
Plan assets in excess of
(less than) projected
benefit obligations........... 356 535 (3,617) (2,978)
Unrecognized net loss........... 374 152 3,527 3,090
Unrecognized net assets at
December 1, 1991 and 1990
being recognized over
15 years...................... (317) (346) (179) (201)
Adjustment required to
recognize minimum liability... -- -- (3,348) (2,978)
Prepaid pension cost (pension
liability) recognized in the
consolidated balance sheet.... $ 413 $ 341 $(3,617) $ (3,067)
The net periodic pension expense amounts were based on actuarial assumptions
as follows:
Discount rate on plan liabilities.... 7.00% 7.25% 7.00% 7.25%
Rate of return on plan assets........ 8.00% 8.00% 8.00% 8.00%
35
<PAGE>
In accordance with Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions," the Company has recorded an
additional minimum pension liability for the underfunded plan of
$3,348 and $2,978 at November 30, 1993 and 1992, respectively,
representing the excess of unfunded accumulated benefit obligations
over previously recorded pension cost liabilities.
The net periodic pension cost of U.S. defined benefit plans for 1993, 1992,
and 1991 includes the following components:
1993 1992 1991
-------- -------- --------
Interest cost on projected benefit
obligations........................ $ 851 $ 868 $ 788
Return on plan assets................ (896) (388) (661)
Net amortization and deferral........ 335 (407) (233)
Settlement loss...................... -- -- 1,269
Net periodic pension expense ........ $ 290 $ 73 $ 1,163
The Company's foreign retirement plans are an insignificant portion of the
Company's total retirement plans and are not required to report to certain
governmental agencies pursuant to ERISA. These plans do not otherwise deter-
mine actuarial value of accumulated benefits or net assets available for
benefits as calculated and are omitted from the above table.
In 1991, the Company incurred a charge of $1,269 in connection with the
settlement of the net termination liability of a defined benefit plan covering
certain salaried employees. Effective December 31, 1990, the Company curtailed
two remaining defined benefit plans covering certain hourly factory and office
employees. The participants in those plans then became eligible to participate
in the Retirement Savings Plan (RSP) beginning January 1, 1991.
The RSP covers substantially all employees of Tokheim and its U.S. subsi-
diaries. Through the RSP, employee ownership of the Company is approximately
12%. The RSP includes a common stock ESOP and a preferred stock ESOP which
provides a retirement contribution of 1.5% of salary for all employees in
the plan and a matching contribution of at least two-thirds of the first 6%
of employee before-tax contributions. The matching contribution can
increase to 150% of the first 6% of contributions, depending on the
performance of the Company.
The number of preferred shares in the RSP at November 30, 1993 and 1992 was
848,432 and 893,657, respectively, at a cost of $25 per share. The number of
common shares in the RSP at November 30, 1993 and 1992 was 168,069 and 186,745,
respectively, at an average cost of $21.06 and $21.08 per share. The dividend
yield on the preferred stock is 7.75%, and the conversion rate is one share of
preferred stock to one share of common stock. Each year, approximately 8% of
the preferred stock held by the plan is allocated to participants' accounts.
The Company has guaranteed the RSP loans as described in Note 4. A like amount
entitled "Guaranteed Employees' Stock Ownership Plan (RSP) obligation" was
recorded as a reduction of stockholders' equity. As the Company makes
contributions to the RSP, these contributions, plus the dividends paid on the
Company's preferred and common stock held by the RSP, will be used to repay the
loans. As the principal amounts of the loans are repaid, the "Guaranteed
Employees' Stock Ownership Plan (RSP) obligation" in the equity and liability
sections of the balance sheet is reduced accordingly. Company contributions in
excess of dividends are allocated to interest and compensation expense on a
basis proportional to the required debt service on RSP loans. Amounts
allocated to interest expense were $887, $937, and $885 for 1993, 1992, and
1991, respectively.
36
<PAGE>
The table below sets forth the interest expense, the amounts contributed to the
RSP, and the amount of dividends on Company shares held in benefit plans used
for debt service:
1993 1992 1991
------ ------ ------
Interest expense incurred by the Plan
Trusts on RSP debt................................. $1,595 $1,702 $1,870
Company contributions to the RSP...................... 3,693 3,655 3,577
Dividends on Company shares held in
benefit plans used for debt service................ 1,663 1,790 1,940
14. CONTINGENT LIABILITIES
The Company is defending various claims and legal actions, including environ-
mental actions, which are common to its operations. These legal actions
primarily involve claims for damages arising out of the Company's
manufacturing operations, the use of the Company's products, and allegations
of patent infringement. As to environmental matters, the Company has been
designated as a "potentially responsible party" (PRP) in certain governmental
actions associated with hazardous waste sites falling under the Comprehensive
Environmental Response Compensation and Liability Act (CERCLA). Such actions
seek recovery of certain cleanup costs. While the Company is currently unable
to predict the outcome of these matters and cannot reliably determine estimates
of amounts to accrue for these contingencies, in the opinion of management, any
total ultimate liability will not have a material effect on the Company's
financial position but could have a material effect on quarterly or annual
operating results when resolved in a future period.
As to the other matters, in the opinion of management, amounts accrued for
award assessments in connection with these matters are ultimate resolution of
these matters will not have a material effect on the Company's consolidated
financial position.
37
<PAGE>
15. INVESTMENT IN AFFILIATE
Until May of 1991, the Company had an investment in D-Tech Corporation
(D-Tech). In February 1991, D-Tech filed under Chapter 11 of the United
States Bankruptcy Code. At the time of the Chapter 11 filing, Tokheim's share
of the accumulated net losses of D-Tech had previously been recorded to the
full extent of its investment in and loans to D-Tech. In May of 1991, the
Company executed an agreement with D-Tech as debtor-in-possession, to purchase
certain of D-Tech's assets and formed a wholly owned subsidiary, Envirotronic
Systems, Inc. (ESI). Commensurate with the closing of the asset purchase
agreement, the affiliate status of D-Tech relative to the Company ceased to
exist.
A provision of $1,200 related to suspension of ESI's operations was included
in the 1991 restructuring charge. Prior to the suspension of its operations,
ESI incurred a 1991 operating loss of $1,100, and the Company's share of
D-Tech's operating losses accounted for under the equity method was $754.
16. SPECIAL CHARGES
In the two previous years, the Company implemented a series of actions in
response to a significant downtrend in the petroleum dispensing equipment
market, designed to maximize its long-term operating results, primarily
through consolidating manufacturing facilities, reducing overhead,
rationalizing product lines, and focusing the deployment of resources on
the Company's core businesses. In connection with these actions, the
Company incurred special charges which were reflected in the operating
results of each year as follows:
1992 1991
---------- ---------
Plant consolidation, severance,
and outplacement................... $ 2,424 $ 2,855
Organizational and product
rationalization..................... 4,704 5,045
Write-down of Brazilian
investment.......................... 8,025 --
$ 15,153 $ 7,900
No such special charges were incurred in 1993.
38
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders and Directors,
Tokheim Corporation:
We have audited the accompanying consolidated financial statements and the
financial statement schedules of Tokheim Corporation and Subsidiaries listed
in Item 14(a) of this Form 10-K. These financial statements and the financial
statement schedules 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 signifi-
cant 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 Tokheim
Corporation and Subsidiaries as of November 30, 1993 and 1992, and the
consolidated results of their operations and their cash flows for each
of the three years in the period ended November 30, 1993, in conformity
with generally accepted accounting principles. In addition, in our opinion,
the financial statement schedules referred to above, when considered in
relation to the basic financial statements taken as a whole, present fairly,
in all material respects, the information required to be included therein.
COOPERS & LYBRAND
Fort Wayne, Indiana
January 19, 1994
39
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
<TABLE>
<CAPTION>
Common Shares
Beneficially
Principal Occupation or Director Owned as of
Employment and Directorships Age Since February 4, 1994
- --------------------------------- --- -------- ----------------
<S> <C> <C> <C>
NOMINEES FOR ELECTION AS CLASS A DIRECTORS
ROBERT M. AKIN, III, President
and Chief Executive Officer
of Hudson International
Conductors, a subsidiary of
Phelps Dodge Industries,
engaged in the manufacture
of specialty wires. 57 1993 2,200
JAMES K. BAKER, Chairman of
the Board, Arvin Industries,
Inc., a global manufacturer
of automotive products; during
the last 5 years, also served
as Chairman and Chief
Executive Officer; also a
director of Arvin Industries,
Inc.; NBD Bancorp; PSI Resources,
Inc.; Amcast Industrial Corp.;
and The GEON Company. 62 1993 1,000
BOB F. JESSE, Chairman and
Chief Executive Officer, Indiana
Construction Corp., a general
contractor engaged in commercial,
industrial, wastewater, and
water treatment plant con-
struction; also a director
of Fort Wayne National
Corporation. 69 1979 3,750
JAMES T. SMITH, Retired; formerly
served as Chairman and Chief
Executive Officer, Magnavox
Government and Industrial
Electronics Company, which designs,
develops, and manufactures
communications, signal processing,
and control systems, primarily for
the Defense Department; during
the last 5 years, also served as
Chairman, President, and Chief
Executive Officer. 69 1982 1,350
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Common Shares
Beneficially
Principal Occupation or Director Owned as of
Employment and Directorships Age Since February 4, 1994
- ----------------------------------- --- --------- ----------------
<S> <C> <C> <C>
CLASS B DIRECTORS WHOSE TERMS EXPIRE AT THE 1995 ANNUAL MEETING
WALTER S. AINSWORTH, Retired;
formerly served as President
and Chief Executive Officer,
Phelps Dodge Magnet Wire Company,
which produces and markets
internationally magnet wire,
the insulated conductor for most
electrical systems; during the
last 5 years, also served
as Senior Vice President, Phelps
Dodge Corp.; also a director of
Fort Wayne National Corporation. 65 1992 2,200
BERNARD D. COOPER, President
and Chairman of the Board of
P.E.S., Inc., which sells and
distributes petroleum equipment
to the petroleum industry; also
a director of Hawkeye
Bancorporation. 51 1993 200
DOUGLAS K. PINNER, President
and Chief Executive Officer of
the Company; during the last
5 years, also served as President
of Slater Steels Fort Wayne
Specialty Alloys, a wholly owned
subsidiary of Slater Industrial
of Toronto, engaged in the
manufacture of stainless steel
bar. 53 1992 641
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Common Shares
Beneficially
Principal Occupation or Director Owned as of
Employment and Directorships Age Since February 4, 1994
- ------------------------------------ --- --------- ----------------
<S> <C> <C> <C>
CLASS C DIRECTORS WHOSE TERMS EXPIRE AT THE 1996 ANNUAL MEETING
GERALD H. FRIELING, JR., Chairman
of the Board of the Company; during
the last 5 years, also served as
Chief Executive Officer of the
Company; as President, Frieling &
Associates, an investment banking
firm; and as Chairman of the Board,
President, and Chief Executive
Officer, National-Standard, a
diversified manufacturer of
specialty wire, metal products,
and machinery; also a director of
CTS Corporation. 63 1989 1,200
DR. WINFRED M. PHILLIPS, Dean,
College of Engineering and
Associate Vice President, Engineering
and Industrial Experiment Station,
University of Florida. 53 1986 1,000
IAN M. ROLLAND, Chairman and
Chief Executive Officer, Lincoln
National Corporation, which provides
life insurance and annuities, property-
casualty insurance and related services
through its subsidiary companies; during
the last 5 years, also served as
President and Chief Executive Officer;
also a director of Lincoln National
Corporation; NIPSCO Industries, Inc.;
Norwest Bank Fort Wayne, N.A.; and
Norwest Corporation. 60 1981 1,525
</TABLE>
42
<PAGE>
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Company's Board of Directors held 11 meetings during the past fiscal year.
The Board of Directors has established the following Committees: Audit,
Compensation, Executive, and Technical. Members serve on a Committee for a
3-year period. As a member's term on one Committee expires, he will be
appointed to another Committee. Each director attended 75% or more of the
aggregate number of meetings of the Board of Directors and meetings of
Committees on which such director served during the past fiscal year.
AUDIT COMMITTEE: The Audit Committee, which consists of 3 nonofficer
directors, met 4 times during the past fiscal year. The Committee arranges
the details of the annual audit of the Company and recommends to the Board of
Directors independent auditors to be presented for consideration by the
stockholders. In addition, the Committee meets periodically with members of
Internal Audit and the independent auditors to review (1) internal audits of a
significant nature, (2) external scope in planning, and (3) management letters
and significant items covered therein. The following directors currently
comprise the Committee: Gerald H. Frieling, Jr.; Dr. Winfred M. Phillips; and
Ian M. Rolland.
COMPENSATION COMMITTEE: The Compensation Committee, which consists of 3
nonofficer directors, met 4 times during the past fiscal year. The Committee
makes recommendations to the Board of Directors concerning officers' salaries
and other compensation and is responsible for reviewing compensation for
directors. The following directors currently comprise the Committee: Walter
S. Ainsworth, Bob F. Jesse, and Ian M. Rolland.
EXECUTIVE COMMITTEE: The Executive Committee, which consists of 3 nonofficer
directors, met 13 times during the past fiscal year. The Committee reviews
strategic plans of the Company and lends other assistance to the President and
Chief Executive Officer as required. In addition, the Committee serves as a
nominating committee for prospective directors. The Committee will consider
candidates for nomination recommended by stockholders. Such recommendations
may be submitted, in writing, to the Executive Committee and forwarded to the
Company's mailing address. The following directors currently comprise the
Committee: Gerald H. Frieling, Jr.; Bob F. Jesse; and James T. Smith.
TECHNICAL COMMITTEE: The Technical Committee, which consists of 4 nonofficer
directors, met 1 time during the past fiscal year. The Committee reviews
strategic technical plans of the Company and reviews software and hardware
approaches used by the Company, as required. The following directors
currently comprise the Committee: Walter S. Ainsworth, Bernard D. Cooper, Dr.
Winfred M. Phillips, and James T. Smith.
43
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to item 401 of Regulation S-K, the following information is presented
herein in lieu of presenting such information in a definitive Proxy Statement
to be filed as described under Part III.
The names, ages, and positions of all of the executive officers of the Company
are listed below along with their business experience during the past five
years. Officers are appointed annually by the Board of Directors at the
meeting of Directors immediately following the Annual Meeting of Stockholders.
There are no family relationships among any of the officers of the Company,
nor any arrangement or understanding between any such officer and any other
person pursuant to which he was elected as an officer.
<TABLE>
Name, Age, And Position Business Experience During Past 5 Years
- ---------------------------- ---------------------------------------
<S> <C>
Gerald H. Frieling, Jr., 63 Elected Chairman of the Board in 1992;
Chairman of the Board during the last 5 years, also served as
chief Executive Officer of the Company;
as President, Frieling & Associates;
and as Chairman of the Board, President,
and Chief Executive Officer, National-
Standard.
Douglas K. Pinner, 53 Joined Tokheim as President and Chief
President and Chief Executive Officer in 1992; during the
Executive Officer last 5 years, also served as President,
Slater Steels Fort Wayne Specialty
Alloys.
Condell B. Ellis, Jr., 61 Elected Senior Vice President in 1993;
Senior Vice President during the last 5 years, also served as
Senior Vice President, North American
Sales and Marketing; Corporate Vice
President, Sales & Marketing; Vice
President, Sales & Marketing, Tokheim
North America, of the Company; and as
Vice President, Sales, Wayne Division,
Dresser Industries, Inc.
Jess B. Ford, 42 Elected Vice President, Finance, Secre-
Vice President, Finance, tary, and Chief Financial Officer in
Secretary, and Chief 1992; during the last 5 years, also
Financial Officer served as Vice President, Corporate
Finance; Corporate Controller; and
Manager, Manufacturing Accounting,
of the Company.
Terry M. Fulmer, 49 Elected Vice President, Corporate Opera-
Vice President, Corporate tions and Planning in 1993; during the
Operations and Planning last 5 years, also served as Vice Presi-
dent, Corporate Planning; General
Manager, Small Pumps Division; Manager
of Manufacturing, Newbern Plant; and
Manager, Fort Wayne Operations, of the
Company.
</TABLE>
44
<PAGE>
<TABLE>
Name, Age, and Position Business Experience During the Past 5 Years
- ---------------------------- -------------------------------------------
<S> <C>
Anthony J. King, 55 Elected Vice President, Domestic and
Vice President, Domestic International Sales in 1993; during the
and International Sales last 5 years, also served as Vice Presi-
dent, International Division, of the Com-
pany; and as Vice President, Inter-
national Sales and Marketing, Babson
Brothers Company.
Arthur C. Prewitt, 52 Elected Vice President, Corporate Engi-
Vice President, Corporate neering and Marketing in 1993; during the
Engineering and Marketing last 5 years, also served as Vice Presi-
dent, Product Engineering, of the Company
and as Manager, Technical Products, Gil-
barco, Inc.
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive (and certain other) officers, and persons who own more
than 10% of the Company's common stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Directors, officers, and greater-than-10% stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on review of copies of such forms
furnished to the Company, or written representations that no Forms 5 were
required, the Company believes that during fiscal year 1993 all Section 16(a)
filing requirements applicable to its directors, officers and greater-than-10%
stockholders were held in compliance.
45
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following tables set forth various aspects of executive compensation paid
by the Company for services over the past three fiscal years to the Company's
Chief Executive Officer and the four most highly compensated executive
officers who were serving as such at the end of the fiscal year ended
November 30, 1993.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS (1)
---------------------------- ------------
Other Securities
Annual Underlying All Other
Name and Principal Compen- Options/ Compen-
Position Year Salary Bonus sation SARs(#) sation(16)
- -------------------- ---- -------- ------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Douglas K. Pinner(2) 1993 $196,667 $50,000 $ 1,036(3) 100,000 $12,661(4)
President and Chief 1992 126,875 -- -- 30,000 460
Executive Officer 1991 -- -- -- -- --
Anthony J. King(5) 1993 $130,000 -- -- 15,000 $11,535(7)
Vice President, 1992 36,458 $38,000 $ 6,088(6) 15,000 --
Domestic and Inter- 1991 -- -- 51,413(6) -- --
national Sales
Arthur C. Prewitt(8) 1993 $128,333 -- $ 549(9) 15,000 $11,091(10)
Vice President, 1992 48,296 -- 17,438(9) 15,000 --
Corporate Engineering 1991 -- -- -- -- --
& Marketing
Condell B. Ellis, Jr.(11)1993 $128,125 -- $ 1,163(12) 13,000 $19,884(13)
Senior Vice President 1992 104,563 $ 6,252 -- 10,000 8,150
1991 96,946 43,748 30,630(12) 7,000 1,925
Terry M. Fulmer 1993 $115,000 -- $10,756(14) 26,750 $13,124(15)
Vice President, 1992 85,542 $26,690 64,233(14) 2,000 5,954
Corporate Operations 1991 77,395 -- -- 1,950 4,260
and Planning
<FN>
(1) There were no Restricted Stock Awards and no long-term incentive plan (LTIP)
payouts in the last fiscal year.
(2) Mr. Pinner first joined the Company in March 1992.
(3) Represents taxes paid on Mr. Pinner's behalf in 1993.
(4) Includes Company base and matching contributions to the Retirement Savings Plan,
a 401(k) plan, of $3,538; term life insurance premiums of $3,264; and $5,859
estimated present value of cash surrender value to be received in future years.
(5) Mr. King first joined the Company in August 1992.
(6) Represents taxes paid on Mr. King's behalf in 1993. The 1992 amount includes
$50,488 to reimburse Mr. King for moving expenses and to compensate for a loss
on the sale of his home related to relocation to the Company's headquarters in
Fort Wayne, Indiana.
46
<PAGE>
FOOTNOTES TO SUMMARY COMPENSATION TABLE (CONTINUED)
(7) Includes Company base and matching contributions to the Retirement Savings Plan,
a 401(k) plan, of $4,617; term life insurance premiums of $2,320; and $4,598
estimated present value of cash surrender value to be received in future years.
(8) Mr. Prewitt first joined the Company in July 1992.
(9) Represents taxes paid on Mr. Prewitt's behalf in 1993. The 1992 amount represents
reimbursement of relocation expenses.
(10) Includes Company base and matching contributions to the Retirement Savings Plan,
a 401(k) plan, of $5,912; term life insurance premiums of $1,601; and $3,578
estimated present value of cash surrender value to be received in future years.
(11) Mr. Ellis first joined the Company in January 1991.
(12) Represents taxes paid on Mr. Ellis' behalf of $1,163 in 1993; and reimbursement
of moving expenses in the amount of $30,630 in 1991.
(13) Includes Company base and matching contributions to the Retirement Savings Plan,
a 401(k) plan, of $6,664; term life insurance premiums of $3,390; and $9,830
estimated present value of cash surrender value to be received in future years.
(14) Represents taxes paid on Mr. Fulmer's behalf in 1993. The 1992 amount includes
$63,387 to reimburse Mr. Fulmer for moving expenses and to compensate for a
loss on the sale of his home related to his relocation to the Company's
headquarters in Fort Wayne, Indiana.
(15) Includes Company base and matching contributions to the Retirement Savings Plan,
a 401(k) plan, of $7,700; term life insurance premiums of $1,279; and $4,145
estimated present value of cash surrender value to be received in future years.
(16) In accordance with the rules of the Securities and Exchange Commission, a
description of the amounts related to fiscal 1992 and 1991 has not been included.
The Company provides the named executive officers with certain group life, health,
medical, and other noncash benefits generally available to all salaried employees
and not included in this column pursuant to the Securities and Exchange
Commission's rules.
</TABLE>
47
<PAGE>
The following information reflects the grant of stock options made during the
fiscal year ended November 30, 1993 to the Chief Executive Officer and each of
the named executive officers reflected in the table above. The Company has not
granted any Stock Appreciation Rights in conjunction with these options:
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
----------------------------------------------------------------------
Number of Potential Realized
Securities % of Total Values at Assumed
Underlying Options/SARs Exercise Annual Rates of
Options/ Granted to or Base Stock Price
SARs Employees in Price Expiration Appreciation
Name Granted (#) Fiscal Year ($/Share) Date for Option Term
- ----------------- ----------- ------------ --------- -------- ------------------
5% 10%
-------- --------
<S> <C> <C> <C> <C> <C> <C>
Douglas K. Pinner 58,712(ISO) 18.6% $6.8125 12-14-97 $110,508 $244,189
Douglas K. Pinner 41,288(NSO) 13.0% 6.8125 12-14-97 77,712 171,721
Anthony J. King 15,000 4.7% 6.8125 12-14-97 28,233 62,387
Arthur C. Prewitt 15,000 4.7% 6.8125 12-14-97 28,233 62,387
Condell B. Ellis, Jr. 13,000 4.1% 6.8125 12-14-97 24,468 54,068
Terry M. Fulmer 26,750 8.5% 6.8125 12-14-97 50,349 111,256
</TABLE>
During the last fiscal year, no options or SARs were exercised; and no long-
term incentive plan awards were made.
48
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
MANAGEMENT OWNERSHIP
The following table sets forth as of the Record Date, the number of shares
beneficially owned (or deemed to be beneficially owned pursuant to the
rules of the Securities and Exchange Commission) by each director of the
Company, each of the executive officers named in the Summary Compensation
Table included elsewhere herein and the current directors and executive
officers of the Company as a group. All references are to Common Stock
unless otherwise spefically noted:
<TABLE>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
------------------------------------------------------------------
Common Preferred Exercisable
Common Stock Stock Stock Percent
Name Stock in the RSP in the RSP Options of Class
- ---------------------- ------ ---------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C>
Walter S. Ainsworth 2,200 -- -- -- *
Robert M. Akin, III 2,200 -- -- -- *
James K. Baker 1,000 -- -- -- *
Bernard D. Cooper 200 -- -- -- *
Condell B. Ellis, Jr. 267 160 749 20,250 *
Gerald H. Frieling, Jr. 1,200 -- -- 36,500 *
Terry M. Fulmer -- 718 858 9,438 *
Bob F. Jesse 3,750 (1)(2) -- -- 1,200 *
Anthony J. King 1,475 338 192 11,250 *
Dr. Winfred M. Phillips 1,000 -- -- 500 *
Douglas K. Pinner 500 141 166 40,000 *
Arthur C. Prewitt -- 219 248 11,250 *
Ian M. Rolland 1,525 -- -- 1,100 *
James T. Smith 1,350 -- -- 1,200 *
Executive Officers
and Directors as a
Group (15 persons) 16,667 1,993 3,345 143,001 2.0%
<FN>
* Represents less than 1% of the Company's outstanding Common Stock.
(1) In addition, American Steel Investment Corporation owns 10,000 shares.
Mr. Jesse is a stockholder and member of the Board of Directors of
American Steel Investment Corporation.
(2) In addition, Donna A. Jesse, wife, owns 4,000 shares, with respect to
which Mr. Jesse disclaims any beneficial interest.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Included in Item 12 (Security Ownership of Certain Beneficial Owners and
Management) of this report.
49
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. FINANCIAL STATEMENTS:
Included as outlined in Item 8 of Part II of this report:
Consolidated Statement of Earnings and Retained
Earnings for each of the three years in the
period ended November 30, 1993 Page 18
Consolidated Balance Sheet as of November 30,
1993 and 1992 Page 19
Consolidated Statement of Cash Flows for
each of the three years in the period ended
November 30, 1993 Page 21
Notes to Consolidated Financial Statements Page 22
Report of Independent Accountants Page 39
(a) 2. SUPPLEMENTARY DATA AND FINANCIAL STATEMENT SCHEDULES:
Included as outlined in Item 8 of Part II of this report:
Quarterly Financial Information (Unaudited)
in Note 9 to the Consolidated Financial
Statements Page 30
Included in Part IV of this report:
Schedule V Property, Plant, and Equipment Page 51
Schedule VI Accumulated Depreciation,
Depletion and Amortization of Property,
Plant and Equipment Page 52
Schedule IX Short-Term Borrowings Page 53
Schedule X Supplementary Income Statement
Information Page 54
All other schedules are omitted for the reason that they are not required or
are not applicable or the information is shown in the Notes to the Consolidated
Financial Statements.
(a) 3. EXHIBITS:
(11) Details supporting the computation
of primary and fully diluted
earnings per share Page 56
(21) Subsidiaries of the Registrant Page 57
(22) Consents of Experts and Counsel Page 58
(b) REPORTS ON FORM 8-K:
None.
50
<PAGE>
<TABLE>
TOKHEIM CORPORATION AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992, AND 1991
(In thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
Other
Changes
Balance Add (Deduct) Balance
Beginning Additions Retire- Translation at End
of Year at Cost ments Adjustments of Year
--------- --------- ------- ------------ -------
<S> <C> <C> <C> <C> <C>
1993
- ------
Land and land improvements.. $ 3,396 $ 7 $ 217 $ (53) $ 3,133
Buildings and building
improvements............. 24,834 342 4,705 469 (A) 20,940
Machinery and equipment..... 57,718 1,534 4,979 722 (B) 54,995
Construction in progress.... 740 621 (C) 1,361
$ 86,688 $ 2,503 $ 9,901 $1,139 $ 80,429
1992
- ------
Land and land improvements.. $ 3,381 $ 355 $ 219 $ (121) $ 3,396
Buildings and building
improvements............. 32,296 651 3,147 (E) (4,966)(G) 24,834
Machinery and equipment..... 63,974 2,960 6,792 (F) (2,424)(G) 57,718
Construction in progress.... 2,665 (1,921)(C) (4) 740
$102,316 $ 2,045 $10,158 $(7,515) $ 86,688
1991
- ------
Land and land improvements.. $ 3,275 $ 176 $ 13 $ (57) $ 3,381
Buildings and building
Improvements............. 31,060 1,926 456 (234) 32,296
Machinery and equipment..... 62,220 5,843 (D) 3,996 (93) 63,974
Construction in progress.... 2,296 376 (C) (7) 2,665
$ 98,851 $ 8,321 $ 4,465 $ (391) $102,316
<FN>
(A) Includes change in asset classifications of $300.
(B) Includes change in asset classifications of $(300) and noncash additions of
$1,234.
(C) Net change in construction in progress.
(D) Includes noncash addition of $850 in connection with settlement of a dispute
with an equipment manufacturer.
(E) Includes approximately $2,125 related to the sale of National Controls
Corporation and the assets of Tokheim Automation Corporation.
(F) Includes approximately $3,893 related to the sale of National Controls
Corporation and the assets of Tokheim Automation Corporation.
(G) Includes approximately $5,457 in connection with the write-down of the
Brazilian assets.
</TABLE>
51
<PAGE>
<TABLE>
TOKHEIM CORPORATION AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND
AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992, AND 1991
(In thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
Other Changes
Balance Additions Add (Deduct) Balance
Beginning Charged to Retire- Translation at End
of Year Cost & Exp ments Adjustments of Year
--------- ---------- ------- ------------ -------
<S> <C> <C> <C> <C> <C>
1993
- ------
Land and land improvements. $ 562 $ 134 $ 71 $ 625
Buildings and building
improvements............ 9,554 578 1,715 $ (21) 8,396
Machinery and equipment.... 43,721 4,101 5,225 (193) 42,404
$53,837 $ 4,813 $ 7,011 $ (213) $51,425
1992
- ------
Land and land improvements. $ 435 $ 127 $ 562
Buildings and building
improvements............ 10,999 810 $ 1,945 $ (310) 9,554
Machinery and equipment.... 43,392 5,118 4,590 (199) 43,721
$54,826 $ 6,055 $ 6,535 $ (509) $53,837
1991
- ------
Land and land improvements. $ 377 $ 58 $ 435
Buildings and building
improvements............ 10,574 871 $ 390 $ (56) 10,999
Machinery and equipment.... 40,776 5,925 3,291 (18) 43,392
$51,727 $ 6,854 $ 3,681 $ (74) $54,826
</TABLE>
52
<PAGE>
<TABLE>
TOKHEIM CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992, AND 1991
(In thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
Weighted
Average
Interest Weighted
Rate for Maximum Average Average
Category of Debt Amount Amount Interest
Aggregate Balance Outstanding Outstanding Outstanding Rate
Short-Term at End at the End During the During the During the
Year Borrowings of Year of the Year Period Period Period
- ---- ----------- ------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1993 Payable to bank $18,684 8.9% $25,049 $21,312 8.5%
1992 Payable to bank $27,986 8.3% $47,974 $40,729 7.7%
1991 Payable to bank $47,769 6.7% $47,991 $37,872 7.1%
</TABLE>
Short-term borrowings are described in Note 3 to the Consolidated Financial
Statements captioned, "Notes Payable to Banks".
53
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992, AND 1991
(In thousands)
COLUMN A COLUMN B
-------- --------
Charged to
Costs and
Item Expenses
---- ----------
Year ended November 30, 1993:
1. Maintenance and repairs $3,777
2. (a) Depreciation, depletion and amortization
of property, plant, and equipment $4,813
(b) Amortization of intangible assets, pre-
operating costs and similar deferrals $ 421
5. Advertising costs $1,477
Year ended November 30, 1992:
1. Maintenance and repairs $4,101
2. (a) Depreciation, depletion and amortization
of property, plant, and equipment $6,055
(b) Amortization of intangible assets, pre-
operating costs and similar deferrals $2,052
5. Advertising costs $1,971
Year ended November 30, 1991:
1. Maintenance and repairs $4,500
2. (a) Depreciation, depletion and amortization
of property, plant, and equipment $6,854
(b) Amortization of intangible assets,
pre-operating costs and similar deferrals $2,124
5. Advertising costs $2,269
Items 3 and 4 are omitted as such amounts are less than 1% of total sales.
54
<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.
February 28, 1994 TOKHEIM CORPORATION
------------------------
(Registrant)
By: Douglas K. Pinner
------------------------
President and Chief
Executive Officer
By: Jess B. Ford
------------------------
Vice President, Finance,
Secretary and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report is signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Douglas K. Pinner President and Chief February 28, 1994
- ------------------------- Executive Officer
Gerald H. Frieling, Jr. Chairman of the Board February 28, 1994
- -------------------------
Walter S. Ainsworth Director February 28, 1994
- -------------------------
Robert M. Akin III Director February 28, 1994
- -------------------------
James K. Baker Director February 28, 1994
- -------------------------
Bernard D. Cooper Director February 28, 1994
- -------------------------
Bob F. Jesse Director February 28, 1994
- -------------------------
Dr. Winfred M. Phillips Director February 28, 1994
- -------------------------
Ian M. Rolland Director February 28, 1994
- -------------------------
James T. Smith Director February 28, 1994
- -------------------------
55
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE YEARS ENDED NOVEMBER 30, 1993, 1992, AND 1991
Primary earnings per share are based on the weighted average number of shares
outstanding during each year and the assumed exercise of dilutive employees'
stock options less the number of treasury shares assumed to be purchased from
the proceeds using the average market price of the Company's common stock.
The following table presents information necessary to calculate earnings per
share for fiscal years ended November 30, 1993, 1992, and 1991:
Primary
----------------------------
1993 1992 1991
-------- -------- --------
Shares outstanding (in thousands):
Weighted average outstanding...... 6,891 6,307 6,307
Share equivalents................. 49 -- --
Adjusted outstanding.............. 6,940 6,307 6,307
Net Earnings (loss):
Loss from continuing operations... $(5,867) $(35,184) $(23,148)
Earnings from discontinued
operations...................... -- 10,278 1,402
Net loss.......................... (5,867) (24,906) (21,746)
Preferred stock dividend.......... (1,663) (1,790) (1,831)
Loss applicable to common stock... $(7,530) $(26,696) $(23,577)
Net earnings (loss) per common share:
Continuing operations............. $ (1.09) $ (5.86) $ (3.96)
Discontinued operations........... -- 1.63 0.22
Net loss per common share......... $ (1.09) $ (4.23) $ (3.74)
For 1993, 1992, and 1991, fully diluted earnings per share is considered
to be the same as primary earnings per share, since the effect of certain
potentially dilutive securities would be antilutive.
Fully Diluted
-----------------------------
1993 1992 1991
-------- --------- --------
Shares outstanding (in thousands):
Weighted average outstanding...... 6,891 6,307 6,307
Share equivalents................. 49 -- --
Weighted conversion of preferred
stock........................... 1,296 929 948
Adjusted outstanding.............. 8,236 7,236 7,255
Net Earnings (loss):
Loss from continuing operations... $(5,867) $(35,184) $(23,148)
Earnings from discontinued
operations...................... -- 10,278 1,402
Net loss.......................... (5,867) (24,906) (21,746)
Less: incremental compensation
expense......................... (1,663) (1,790) (1,433)
Loss applicable to common stock... $(7,530) $(26,696) $(23,179)
Net earnings (loss) per common share:
Continuing operations............. $ (0.91) $ (5.11) $ (3.39)
Discontinued operations........... -- 1.42 0.19
Net loss per common share......... $ (0.91) $ (3.69) $ (3.20)
56
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (21) SUBSIDIARIES OF THE REGISTRANT
NOVEMBER 30, 1993
The Company has no corporate parent. Tokheim Corporation, an Indiana
corporation, owns all of the issued and outstanding stock of each of
the following corporations, except as noted:
State or Country
Subsidiaries of Incorporation
- ------------ ----------------
Tokheim GmbH Germany
Tokheim Investment Corporation Texas
In addition, Tokheim Investment Corporation owns all of the issued and
outstanding stock (other than directors' qualifying shares, if any, with
respect to certain foreign subsidiaries) of each of the following
corporations, except as noted:
State or Country
Subsidiaries of Incorporation
- ------------ ----------------
Sunbelt Hose & Petroleum Equipment, Inc. (A) Georgia
Tokheim and Gasboy of Canada Limited (B) Canada
Tokheim B.V. The Netherlands
Tokheim do Brasil Ltd. (C) Brazil
Tokheim Sales B.V. The Netherlands
Tokheim Limited Scotland
Tokheim South Africa (Proprietary) Limited (D) South Africa
Tokheim Service (Proprietary) Limited (D) South Africa
Gasboy International, Inc. Pennsylvania
(A) In February 1990, the Company sold substantially all of the assets of
this subsidiary.
(B) Owned 35% by Gasboy International, Inc. and 65% by Tokheim Investment
Corporation.
(C) Owned 70% by Tokheim Investment Corporation.
(D) Owned 100% by Tokheim and Gasboy of Canada Limited.
57
<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (23) CONSENTS OF EXPERTS AND COUNSEL
NOVEMBER 30, 1993
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the Incorporation by Reference in the registration statement
of Tokheim Corporation on Form S-8 (file No. 1-6018) of our report dated
January 19, 1994, on our audits of the consolidated financial statements
and financial statement schedules of Tokheim Corporation and Subsidiaries
as of November 30, 1993 and 1992, and for the years ended November 30, 1993,
1992, and 1991, which report is included in this Annual Report on Form 10-K.
COOPERS & LYBRAND
Fort Wayne, Indiana
February 28, 1994
58
