February 27, 1995
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, 1994.
An additional copy has been filed with the New York Stock Exchange.
Sincerely,
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
(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, 1994
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) 470-4600
--------------
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 12(g) of the Act: NONE
----
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [ ]
As of February 3, 1995, 7,853,151 shares of voting common stock were
outstanding. The aggregate market value of shares held by non-affiliates was
$7.1 million (based on the closing price of these shares on the New York Stock
Exchange).
In addition, 829,534 shares of convertible preferred stock were held by the
Trustee 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 $20.7 million. For a complete discussion regarding the
attributes of this preferred stock see Item 5 on page 7.
Documents Incorporated by Reference
-----------------------------------
Document Form 10-K
-------- ---------
Proxy Statement Part III, Item(s) 10-13
The Table of Contents is located on the following page. The total number of
pages is 50. The Exhibit Index is located on Page 44. <PAGE>
TOKHEIM CORPORATION
1994 FORM 10-K ANNUAL REPORT
Table of Contents
PART I
Item 1. Business......................................................... 3
Item 2. Properties....................................................... 6
Item 3. Legal Proceedings................................................ 6
Item 4. Submission of Matters to a Vote of Security Holders.............. 6
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters.................................... 7
Item 6. Selected Financial Data.......................................... 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 13
Item 8. Financial Statements and Supplementary Data...................... 18
Item 9. Disagreements on Accounting and Financial Disclosure............. 41
PART III
Item 10. Directors and Executive Officers of the Registrant............... 41
Item 11. Executive Compensation........................................... 43
Item 12. Security Ownership of Certain Beneficial Owners
and Management................................................. 43
Item 13. Certain Relationships and Related Transactions................... 43
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K............................................ 44
<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 dispensing
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.
A number of factors continued to contribute to an improvement in industry
demand for petroleum marketing equipment, including the development of emerging
markets; compliance with U.S. Federal Clean Air Act amendments requiring Stage
II vapor recovery; and the desire for increased automation equipment, including
dispenser payment terminals and point-of-sale (POS) systems.
In 1994, the Company completed a long-term refinancing of its domestic credit
agreement as more fully described in Note 3 to the Consolidated Financial
Statements captioned "Notes Payable to Banks." Overall, debt levels have
been reduced by $45.9 million, or 54%, over the last three fiscal years.
The Board of Directors recently approved capital expenditures of approximately
$4 million for important improvements in plant productivity, product design, and
quality of both products and processes which should enhance 1995 operating
results.
In 1994, the Company's MaxVac vapor recovery system was approved by the
California Air Resources Board and received the highest efficiency rating of
any competitive system for capturing harmful emissions that would otherwise
escape into the atmosphere. Other new products introduced throughout the year
included the first wireless dispenser to kiosk and POS system in the industry
and the industry's first electronic commercial pump.
Operating results for 1994 were favorably impacted by important strategic
alliances with Shell Europe, Amoco, and VeriFone, Inc. Such alliances will
continue to enhance the Company's future revenue potential.
A significant portion of the net loss from continuing operations for fiscal
year 1992 was due to special charges associated with actions taken to improve
the long-term operating performance of the Company. These charges are described
more fully in Note 16 to the Consolidated Financial Statements captioned
"Special Charges." There were no special charges incurred in fiscal years
1994 and 1993.
Through the third quarter of 1992, the Company manufactured and sold in two
business segments. In 1992, the Company divested of all operations of the
Controls segment to focus strictly on its core business, 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, 1994, 1993, and 1992, 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 Europe
B.V.,The Netherlands; Tokheim and Gasboy of Canada Limited, Canada; Tokheim
GmbH, Germany; Tokheim Limited, The United Kingdom; and Tokheim South Africa
(Proprietary) Limited, South Africa, 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., United States, which designs, manufactures, and
distributes petroleum dispensing equipment for the fleet and commercial markets.
Gasboy also designs and manufactures vehicle fleet management and controls
systems as well as small electrical and hand-powered fuel transfer pumps for
agriculture and industry.
In 1994, 1993, and 1992, the petroleum industry accounted for all of the
Company's sales from continuing operations. Approximately 83%, 81%, and 80%,
respectively, of sales from continuing operations were derived from the sale of
service station gasoline dispensers, parts, accessories, and service contracts,
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.
International sales by foreign subsidiaries and exports from the U.S.
approximated 41%, 42%, and 43% of sales from continuing operations in 1994,
1993, and 1992, 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 1,400 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
and increased purchase activity by major oil companies toward the end of the
calendar year.
The market for these products is highly competitive. The Company and its
subsidiaries all compete with a number of companies (including the Wayne
Division of Dresser Industries and Gilbarco), some of which have greater sales
and assets than the Company. The Company competes against four domestic
manufacturers of service station dispensers.
4<PAGE>
Environmental regulations and service station automation are expected to
continue to favorably impact the future growth of the Company's business both
domestically and internationally. The Company's belief that environmental
regulations will have a favorable impact is based upon its own experience during
the past year, analysis, and a study of the proposed Vapor Recovery Market
published by an independent consultant to the Company. That study concludes that
a significant number of retail service stations across the United States will be
impacted by Stage II Vapor Recovery Control regulations 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 number 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 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 and evidence of strong demand from emerging markets during the
past year.
The dollar amount of backlog considered to be firm as of the end of fiscal
year 1994 was approximately $16.6 million, compared to approximately $23.0
million and $16.2 million at the end of fiscal years 1993 and 1992,
respectively. The Company expects that the entire backlog will be filled in
fiscal year 1995. Backlog amounts at any fiscal year-end are not an indicator of
sales during the forthcoming year. The current year backlog was substantially
impacted by a significant reduction in production lead times. Other 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 1994, 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, aluminum, copper tubing, 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, 1994, the Company
employed approximately 1,797 persons at its various locations.
5<PAGE>
NEW PRODUCTS
The Company's continuing operations spent approximately $10.2 million in 1994;
$8.6 million in 1993; and $10.5 million in 1992 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.
(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, 1994, 1993, and 1992 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.
The Company owns properties located in: Fort Wayne, Indiana; Fremont, Indiana;
Washington, Indiana; Lansdale, Pennsylvania; Brighton, Ontario, Canada;
Leiderdorp, The Netherlands; Kya Sand, Randburg, South Africa; Glenrothes,
Scotland; Weilheim, Germany; Jasper, Tennessee; and Atlanta, Georgia. 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 owned a small
tract of land located in a Fort Wayne industrial development area. This land
was sold subsequent to November 30, 1994. The Company also owns a 116-acre
tract of unimproved land adjacent to the Company's engineering and design center
and corporate office building. The operation in Leiderdorp, The Netherlands, is
primarily a distribution facility.
ITEM 3. LEGAL PROCEEDINGS.
As more fully described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations", and Note 15 to the Consolidated Financial
Statements captioned, "Contingent Liabilities", the Company is defending
various claims and legal actions, including environmental and product liability
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
6<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 stockholders of the Company's common
stock as of November 30, 1994, was 7,000. No dividends were paid on common
stock in 1994, 1993, and 1992 in accordance with restrictive covenants under
the Company's loan agreement. The high-low sales prices for the Company's
common stock are set forth as follows:
QUARTERLY HIGH-LOW SHARE PRICES
-------------------------------
1994 1993
Share Price Share Price
Quarter High-Low High-Low
------- --------------- ---------------
1 15 1/8 - 11 8 1/2 - 6 3/8
2 14 - 11 10 3/4 - 6 5/8
3 12 1/8 - 8 5/8 14 - 9
4 9 5/8 - 8 1/4 13 3/4 - 10 5/8
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 $11.5 million.
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 million. The preferred shares
have a dividend rate of 7.75%. The Trustee who holds 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 Trustee 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 Trustee, 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, 1994, the difference between the floor value
and the market value of the underlying common stock aggregated $5.1 million.
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."
7<PAGE>
SELECTED FINANCIAL DATA
TOKHEIM CORPORATION AND SUBSIDIARIES
(Amounts in thousands except amounts per share)
<TABLE>
1994 1993 1992(1)
<S> <C> <C> <C>
Operating results:
Net sales....................................... $202,134 $172,306 $162,089
Cost of products sold (2)....................... 154,652 133,326 128,690
Equity in net loss of unconsolidated affiliate.. -- -- --
Earnings (loss) before income taxes,
cumulative effect of accounting changes,
and discontinued operations................... 2,119 (5,745) (33,801)
Earnings (loss) before income taxes,
cumulative effect of accounting changes, and
discontinued operations percent of sales...... 1.0% (3.3)% (20.8)%
Income taxes.................................... 257 122 1,383
Earnings (loss) before cumulative effect of
accounting changes and discontinued operations 1,862 (5,867) (35,184)
Cumulative effect of accounting changes......... (13,416) -- --
Earnings (loss) from continuing operations...... (11,554) (5,867) (35,184)
Total earnings from discontinued operations..... -- -- 10,278
Net earnings (loss)............................. (11,554) (5,867) (24,906)
Net earnings (loss) percent of sales............ (5.7)% (3.4)% (15.4)%
Dividends paid common........................... -- -- --
Dividends paid preferred........................ 1,617 1,663 1,790
Primary per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... 0.03 (1.09) (5.86)
Cumulative effect of accounting changes......... (1.72) -- --
Discontinued operations......................... -- -- 1.63
Net earnings (loss)............................. (1.69) (1.09) (4.23)
Fully diluted per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... 0.03 (1.09) (5.86)
Cumulative effect of accounting changes......... (1.72) -- --
Discontinued operations......................... -- -- 1.63
Net earnings (loss)............................. (1.69) (1.09) (4.23)
Dividends paid per common share................. -- -- --
Financial position:
Current assets.................................. 80,408 83,139 83,306
Current liabilities............................. 36,114 53,725 57,752
Current ratio................................... 2.2 to 1 1.5 to 1 1.4 to 1
Working capital................................. 44,294 29,414 25,554
Term debt....................................... 18,941(6) 5,374 7,674
Guaranteed Employees' Stock Ownership Plan
(RSP) Obligation.............................. 16,975 19,206 21,280
Property, plant, and equipment, net............. 27,425 29,004 32,851
Total assets.................................... 113,505 117,065 121,588
Stockholders' equity............................ 25,116 33,640 28,621
Return on average equity........................ (41.8)% (21.3)% (50.0)%
Term debt percent of equity..................... 75.4% 16.0% 26.8%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP)
obligation.................................... 143.0% 73.1% 101.2%
Primary average number of common shares (5)..... 7,801 6,940 6,307
Fully diluted average number of common
shares (5).................................... 9,223 8,236 7,236
Capital expenditures and depreciation:
Capital expenditures............................ 2,757 2,503 2,045
Depreciation.................................... 4,405 4,813 6,089
</TABLE>
See footnote explanations on page 12. 8<PAGE>
SELECTED FINANCIAL DATA
TOKHEIM CORPORATION AND SUBSIDIARIES
(Amounts in thousands except amounts per share)
<TABLE>
1991 (1) 1990 (1) 1989 (1)
<S> <C> <C> <C>
Operating results:
Net sales....................................... $167,522 $196,489 $208,778
Cost of products sold (2)....................... 131,903 138,569 147,626
Equity in net loss of unconsolidated affiliate.. 754 2,720 3,135
Earnings (loss) before income taxes, cumulative
effect of accounting changes, and
discontinued operations....................... (21,954) 611 9,551
Earnings (loss) before income taxes, cumulative
effect of accounting changes, and discontinued
operations percent of sales................... (13.1)% 0.3% 4.6%
Income taxes.................................... 1,194 875 3,883
Earnings (loss) before cumulative effect of
accounting changes, and discontinued
operations.................................... (23,148) (264) 5,668
Cumulative effect of accounting changes......... -- -- --
Earnings (loss) from continuing operations...... (23,148) (264) 5,668
Total earnings from discontinued operations..... 1,402 430 320
Net earnings (loss)............................. (21,746) 166 5,988
Net earnings (loss) percent of sales........... (13.0)% 0.1% 2.9%
Dividends paid common........................... 2,649 3,505 3,561
Dividends paid preferred........................ 1,831 1,854 723
Primary per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... (3.96) (0.34) 0.78
Cumulative effect of accounting changes......... -- -- --
Discontinued operations......................... 0.22 0.07 0.05
Net earnings (loss)............................. (3.74) (0.27) 0.83
Fully diluted per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... (3.96) (0.34) 0.76
Cumulative effect of accounting changes......... -- -- --
Discontinued operations......................... 0.22 0.07 0.05
Net earnings (loss)............................. (3.74) (0.27) 0.81
Dividends paid per common share................. 0.42 0.56 0.56
Financial position:
Current assets.................................. 117,586 123,755 128,783
Current liabilities............................. 99,803 54,809 54,388
Current ratio................................... 1.2 to 1 2.3 to 1 2.4 to 1
Working capital................................. 17,783 68,946 74,395
Term debt....................................... 11,087 13,815 15,015
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation.................................... --(3) 25,002 26,880
Property, plant, and equipment, net............. 47,490 47,124 47,173
Total assets.................................... 178,525 185,635 192,004
Stockholders' equity............................ 60,554 86,622 88,277
Return on average equity........................ (27.7)% 0.2% 6.9%
Term debt percent of equity..................... 20.1%(4) 15.9% 17.0%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP)
obligation.................................... 58.4%(4) 44.8% 47.5%
Primary average number of common shares (5)..... 6,307 6,351 6,375
Fully diluted average number of
common shares (5)............................. 7,255 7,309 6,753
Capital expenditures and depreciation:
Capital expenditures............................ 6,910 8,057 13,144
Depreciation.................................... 6,854 7,315 7,125
</TABLE>
See footnote explanations on page 12. 9<PAGE>
SELECTED FINANCIAL DATA
TOKHEIM CORPORATION AND SUBSIDIARIES
(Amounts in thousands except amounts per share)
<TABLE>
1988 (1) 1987
<S> <C> <C>
Operating results:
Net sales....................................... $188,523 $192,174
Cost of products sold (2)....................... 131,021 129,246
Equity in net loss of unconsolidated affiliate.. 214 --
Earnings (loss) before income taxes, cumulative
effect of accounting changes, and
discontinued operations....................... 10,611 16,696
Earnings (loss) before income taxes, cumulative
effect of accounting changes, and discontinued
operations percent of sales................... 5.6% 8.7%
Income taxes.................................... 3,498 5,519
Earnings (loss) before cumulative effect of
accounting changes and discontinued
operations.................................... 7,113 11,177
Cumulative effect of accounting changes......... 2,390 --
Earnings (loss) from continuing operations...... 9,503 11,177
Total earnings from discontinued operations..... 1,335 --
Net earnings (loss)............................. 10,838 11,177
Net earnings (loss) percent of sales............ 5.7% 5.8%
Dividends paid common........................... 3,164 3,188
Dividends paid preferred........................ -- --
Primary per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... 1.12 1.68
Cumulative effect of accounting changes......... 0.37 --
Discontinued operations......................... 0.21 --
Net earnings (loss)............................. 1.70 1.68
Fully diluted per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... 1.12 1.68
Cumulative effect of accounting changes........ 0.37 --
Discontinued operations......................... 0.21 --
Net earnings (loss)............................. 1.70 1.68
Dividends paid per common share................. 0.50 0.48
Financial position:
Current assets.................................. 127,661 114,185
Current liabilities............................. 71,436 54,723
Current ratio................................... 1.8 to 1 2.1 to 1
Working capital................................. 56,225 59,462
Term debt....................................... 15,497 14,259
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation.................................... 3,697 4,000
Property, plant, and equipment, net............. 43,645 37,137
Total assets.................................... 184,199 161,596
Stockholders' equity............................ 86,819 80,709
Return on average equity........................ 13.1% 14.4%
Term debt percent of equity..................... 17.8% 17.7%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP)
obligation................................... 22.1% 22.6%
Primary average number of common shares (5)..... 6,357 6,656
Fully diluted average number of common
shares (5).................................... 6,357 6,656
Capital expenditures and depreciation:
Capital expenditures............................ 11,889 10,053
Depreciation.................................... 6,685 6,099
</TABLE>
See footnote explanations on page 12. 10<PAGE>
SELECTED FINANCIAL DATA
TOKHEIM CORPORATION AND SUBSIDIARIES
(Amounts in thousands except amounts per share)
<TABLE>
1986 1985
<S> <C> <C>
Operating results:
Net sales....................................... $157,232 $147,380
Cost of products sold (2)....................... 112,627 101,458
Equity in net loss of unconsolidated affiliate.. -- --
Earnings (loss) before income taxes, cumulative
effect of accounting, changes and
discontinued operations....................... 8,463 18,119
Earnings (loss) before income taxes, cumulative
effect of accounting changes, and discontinued
operations percent of sales................... 5.4% 12.3%
Income taxes.................................... 2,799 7,097
Earnings (loss) before cumulative effect of
accounting changes and discontinued
operations.................................... 5,664 11,022
Cumulative effect of accounting changes......... -- --
Earnings (loss) from continuing operations...... 5,664 11,022
Total earnings from discontinued operations..... -- --
Net earnings (loss)............................. 5,664 11,022
Net earnings (loss) percent of sales............ 3.6% 7.5%
Dividends paid common........................... 3,176 3,174
Dividends paid preferred........................ -- --
Primary per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... 0.85 1.67
Cumulative effect of accounting changes........ -- --
Discontinued operations......................... -- --
Net earnings (loss)............................. 0.85 1.67
Fully diluted per share:
Earnings (loss) from continuing operations before
cumulative effect of accounting changes....... 0.85 1.67
Cumulative effect of accounting changes......... -- --
Discontinued operations......................... -- --
Net earnings (loss)............................. 0.85 1.67
Dividends paid per common share................. .48 .48
Financial position:
Current assets.................................. 94,212 85,802
Current liabilities............................. 37,008 28,652
Current ratio................................... 2.5 to 1 3.0 to 1
Working capital................................. 57,204 57,150
Term debt....................................... 8,588 9,137
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation.................................... 4,000 --
Property, plant, and equipment, net............. 33,967 26,679
Total assets.................................... 130,531 117,144
Stockholders' equity............................ 73,904 73,744
Return on average equity........................ 7.6% 16.3%
Term debt percent of equity..................... 11.6% 12.4%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP)
obligation.................................... 17.0% 12.4%
Primary average number of common shares (5)..... 6,628 6,615
Fully diluted average number of common
shares (5).................................... 6,628 6,615
Capital expenditures and depreciation:
Capital expenditures............................ 10,745 7,716
Depreciation.................................... 5,291 4,063
</TABLE>
See footnote explanations on page 12. 11<PAGE>
(1) Represents fiscal years' financial information reclassified for discontinued
operations
(2) Includes product development expenses and excludes depreciation and
amortization
(3) A component of long-term obligations in technical default classified as
current
(4) Includes long-term obligations in technical default classified as current
(5) Reflects three-for-two stock split in form of stock dividend in
February, 1985
(6) Includes $14,700 of domestic notes payable classified as long-term
12<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The continued improvement during fiscal 1994 in industry demand for petroleum
marketing equipment was driven by the development of emerging markets,
compliance with U.S. Federal Clean Air Act amendments requiring Stage II vapor
recovery, and the desire for increased automation equipment including dispenser
payment terminals and point-of-sale systems. In addition, Tokheim's operating
performance continued to benefit from restructuring and cost-reduction
initiatives begun in 1992.
Earnings before cumulative effect of a change in accounting were $1.9 million,
or $0.03 per share, versus a net loss of $5.9 million, or $1.09 per share,
incurred in 1993 and a net loss from continuing operations of $35.2 million
(including $15.2 million of special charges), or $5.86 per share, in 1992.
After giving effect to the required noncash accounting change, reflecting the
1994 first quarter adoption of Statement of Financial Accounting Standards
(SFAS) No. 106 governing accounting for nonpension retiree benefit costs,
the result was a reported net loss of $11.6 million, or $1.69 per share.
Fiscal 1994 operating earnings were favorably impacted principally by a $29.8
million increase in sales, an improved gross margin on product sales, and
reduced interest expenses. Fiscal 1993 operating earnings were principally
impacted 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.
Consolidated sales were $202.1 million, an increase of 17% from $172.3 million
in 1993 and an increase of 25% from 1992 sales of $162.1 million. Domestic
sales of petroleum dispensing equipment and systems increased 21% from $99.3
million in fiscal 1993 to $119.8 million in fiscal 1994. Fiscal 1993 sales of
$172.3 million increased 6% from $162.1 million in 1992.
International sales were $82.4 million in fiscal 1994, up 13% from fiscal 1993
sales of $73.0 million.
The combined domestic and international operating income was $5.0 million in
fiscal 1994 compared with an operating loss of $1.8 million in fiscal 1993 and
an operating loss of $27.9 million in fiscal 1992.
The gross margin on product sales for 1994 was 23.5% which was up from the
prior year's 22.6% due primarily to higher sales volume and actions taken to
improve the Company's cost structure offset, in part, by lower price
realization. The gross margin on product sales for 1993 had increased from the
1992 level of 20.6% due primarily to higher sales volume and the impact of cost
improvement programs. Selling, general, and administrative expenses, which
have been reduced as a percentage of net sales in each of the past three fiscal
years, were 18.7% in 1994, compared to 20.6% in 1993 and 24.0% in 1992. The
decreases are due to cost reduction efforts and higher sales levels. The
primary components of other expense in each of the three fiscal years were debt
restructuring expenses and employee severance payments.
A significant portion of the 1992 reported loss was due to $15.2 million of
special charges and one-time costs associated with actions taken to improve the
longer-term operating performance of the Company. There were no such special
charges during fiscal 1994 or fiscal 1993.
Net interest expense has declined in each of the last three years equaling
$2.4 million in 1994, $2.9 million in 1993, and $4.2 million in 1992, reflecting
three years of successive debt reduction totaling $45.9 million, or 54%, from
the $84.7 million debt level at 1991 year-end.
13<PAGE>
A net foreign currency gain of $0.2 million was earned in fiscal 1994 versus a
net foreign currency loss of $0.5 million in fiscal 1993 and a net foreign
currency gain of $0.7 million in fiscal 1992. The foreign currency gains and
losses during these years were primarily a result of fluctuations in the
exchange rates on intercompany balances between the Tokheim Corporation parent
company and its foreign subsidiaries. The Company's long-term investment in
foreign subsidiaries, when translated at fiscal 1994 conversion rates, resulted
in a translation adjustment reflected as a $3.5 million charge to stockholders'
equity in 1994. The comparable 1993 amount was $4.0 million.
In fiscal 1993, the Company sold two plants which had been idled through
previous consolidations. 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 a
product line and an idle manufacturing facility for proceeds approximating $1.4
million and a net gain of $0.9 million. There were no similar transactions in
fiscal year 1994.
Primary net earnings per share before accounting change were $0.03 in 1994
versus a loss per share of $1.09 incurred in fiscal 1993 and a loss of $4.23
per share in 1992. The weighted average shares outstanding used in computing
per share results were 7,801,000 in 1994; 6,940,000 in 1993; and 6,307,000 in
1992.
No dividends were paid on common stock during fiscal years 1992 through 1994 in
accordance with restrictive covenants under the Company's loan agreement. The
number of stockholders as of November 30, 1994 was approximately 7,000.
Inflation has not had a significant impact on the Company's results of
operations.
The Company is defending various claims and legal actions, including
environmental actions, which are common to its operation. 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.
The Company has been designated as a "potentially responsible party" (PRP), in
conjunction with other parties, in five governmetnal 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. Dates upon which the Company received notice as a PRP range
from January 1988 to January 1992. The company has attempted, where possible,
to develop a reasonable estimate of the cost or range of costs which may accrue
from these actions. Likewise, the Company has attempted, where possible, to
assess the likelihood of an unfavorable outcome to the Company as a result of
these actions.
Legal counsel has been retained to assist the Company in making these
determinations, and cleanup costs are accrued when an unfavorable outcome is
determined to be probable and a reasonable estimate can be made. Total amounts
included in accrued expenses related to environmental matters were $674,000 and
$517,000 at November 30, 1994 and 1993, respectively.
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 $20,000 to $35,000, in the aggregate, for both of the de
minimis sites. A settlement offer is pending before the Environmental
Protection Agency (EPA) for $14,000 at one of the de minimis sites.
14<PAGE>
During 1994, the company received a settlement offer from the EPA pertaining to
the third site in the amount of $628,000. The Company has accepted the offer
and has recorded this liability in full at November 30, 1994. The Company had
accrued $464,000 related to this site at November 30, 1993. The time frame
over which the accrued amount will be paid is uncertain.
Legal counsel retained by the Company has been unable to advise the Company on
the range of its potential liability for the fourth site which is currently in
litigation as the owner-operator has cleaned up the site and is seeking to
recover its cost in a cost recovery action against the PRPs. The Company is one
of approximately 90 PRPs named in this matter. The estimated cost of the
cleanup by the owner-operator is between $12 million and $30 million. The
method of allocation of liability, if any, among the PRPs who may ultimately be
found liable remains uncertain.
With respect to the fifth site, involving potential groundwater contamination,
the Company and other PRPs are negotiating with the EPA as to the testing to be
performed on the property to determine if contamination has occurred; and if so,
the specific tracts of property affected. The Company cannot determine the
extent of its liability in the event its property is deemed to be contaminated;
and the method of allocation of liability, if any, among PRPs, who may
ultimately be found liable, remains uncertain.
The Company is subject to various other legal actions arising out of the conduct
of its business, including those relating to product liability, patent
infringement, and claims for damages alleging violations of federal, state, or
local statutes or ordinances dealing with civil rights. Total amounts included
in accrued expenses related to these actions were $265,000 and $576,000 at
November 30, 1994 and 1993, respectively. In the opinion of management of the
Company, 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, results of
operations, or cash flow.
During 1992, in accordance with its plan to refocus on its core business, the
Company divested of its Controls segment through the sale of both 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 form the sales of these
discontinued operations. Earnings from these discontinued operations were $1.3
million in fiscal 1992.
In the first quarter of 1994, the Company made a mandatory noncash accounting
change pursuant to SFAS No. 106 which governs accounting for nonpension retiree
benefit costs. SFAS No. 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. Tokheim's
actuarially determined liability was $13.4 million which the Company elected to
record as a one-time noncash accounting adjustment versus the alternative of
amortizing the amount over a period not to exceed 20 years. Adoption of the new
accounting standard had no cash flow effect nor did it represent a change with
respect to previous fiscal years in the benefit levels provided to employees.
The Company expects to adopt SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," in the first quarter of 1995. This statement
requires an accrual method of accounting for the expected cost of benefits
to be paid to former or inactive employees and their covered dependents after
employment but prior to retirement. The Company's current practice is to
recognize these costs as claims are incurred. In the opinion of management,
adoption of this statement will not have a material impact on the Company's
financial position or results of operations.
15<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has available to it a variety of sources of liquidity and capital
resources, both internal and external. These resources provide funds required
for current operations, debt retirement, capital expenditures, and other
requirements.
Building on the expanded equity base resulting from the $11.5 million private
placement of common stock in July, 1993 and its improving profitability and cash
flow, on April 22, 1994, the Company completed a refinancing of its loan
agreement which was to have matured on December 1, 1994. The new, three-year,
domestic revolving credit agreement which matures on April 21, 1997 is
collateralized by substantially all of the unencumbered domestic assets of the
Company and its subsidiaries. In addition, the Company in 1994 completed a
refinancing of the previous loan agreement for its German subsidiary and
established a new credit facility for its subsidiary in The Netherlands.
Availability of revolving credit under these agrements 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, 1994.
Restrictions and financial covenants of the agreements include those related to
indebtedness, net worth, cash flow coverage, and the ratio of current assets to
current liabilities. The domestic credit facility prohibited the payment of
cash dividends on common stock through fiscal year 1994. Beyond fiscal 1994,
dividends on common stock are limited by a cash flow coverage test. Management
believes that the Company's operating and financial prospects are such that
covenants can be met throughout the remainder of the agreement.
Cash provided from operations was $2.4 million in 1994, compared to a deficit
of $5.0 million 1993 and cash provided from operations of $7.4 million in 1992.
The increase in 1994 relative to the previous year reflects the increase in
operating earnings and continued improvement in working captial management. The
decrease in 1993 relative to the previous year reflected a heavy concentration
of sales during the last two months of the fiscal year. 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
amounted to $2.8 million in 1994, $2.5 million in 1993, and $2.0 million in
1992. In 1994, the Company received proceeds from sale of property, plant, and
equipment of $0.2 million versus $2.4 million and $1.8 million in 1993 and 1992,
respectively. Also, in fiscal 1992, the Company received net proceeds from sale
of discontinued operations of $18.7 million. At November 30, 1994, no
significant contractual commitments existed for future capital expenditures.
Subsequent to fiscal 1994 year-end, the Board of Directors approved capital
expenditures of approximately $4 million for improvements in plant productivity,
product design, and quality of both products and processes.
Financing activities in 1994 primarily resulted in a $5.7 million reduction in
debt which aggregated $38.8 million at November 30, 1994 versus $44.5 million at
November 30, 1993. Financing activities in 1993 included, as noted above, the
issuance of 1,283,000 shares of common stock in a private placement with
institutional investors, raising a net of $11.5 million of new equity capital.
The Company reduced its debt during 1993 by $13.4 million from the November 30,
1992 amount of $57.9 million. Peak short-term borrowings were $18.4 million in
1994, $25.0 million in 1993, and $48.0 million in 1992. The weighted average
interest rate for these borrowings was approximately 8.1% in 1994, 8.9% in 1993,
and 8.3% in 1992. Preferred stock dividends paid were $1.6 million, $1.7
million, and $1.8 million in fiscal years 1994, 1993, and 1992, respectively.
16<PAGE>
Cash and cash equivalents at November 30, 1994 aggregated $3.9 million versus
$9.1 million and $15.5 million at November 30, 1993 and 1992, respectively.
Working capital at November 30, 1994 increased $14.9 million over the prior year
as a result of higher accounts receivable and inventories and lower current
liabilities offset, in part, by decreases in cash and cash equivalents and
prepaid expenses. The Company's current ratio at November 30, 1994 was
2.2 compared to 1.5 at November 30,1993 increasing primarily due to the
reduction in current liabilities. The reduction current liabilities is
primarily attributable to the reclassification of $14.7 million of notes payable
to long-term debt in connection with the new domestic loan agreement discussed
above.
The Company has guaranteed loans to its Retirement Savings Plan in the amounts
of $17.0 million, $19.2 million, and $21.3 million at November 30, 1994, 1993,
and 1992, 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, 1994, this
difference aggregated $5.1 million. Total interest-bearing debt as a precent of
equity for 1994 was 155% compared to 132% for 1993 and 202% for 1992. The
increase in 1994 relative to 1993, in spite of continued debt reduction and
increased operating earnings, is attributable to the $13.4 million noncash
reduction in equity that occurred as a result of adopting the SFAS No. 106
accounting change.
In summary, the Company believes that it has adequate financial resources, both
from internal and external sources, to meet its liquidity needs over the next
12 months.
17<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
TOKHEIM CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED NOVEMBER 30, 1994, 1993, AND 1992
(Amounts in thousands except amounts per share)
<TABLE>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net sales........................................... $202,134 $172,306 $162,089
Cost of sales, exclusive of items listed below...... 154,652 133,326 128,690
Selling, general, and administrative expenses....... 37,854 35,573 38,906
Depreciation and amortization....................... 4,672 5,233 7,202
Special charges..................................... -- -- 15,153
Interest expense (net of interest income of
$252, $369, and $853, respectively)............... 2,350 2,890 4,169
Foreign currency gains (losses)..................... 172 (453) 726
Other expense, net.................................. (659) (576) (2,496)
Earnings (loss) before income taxes, discontinued
operations, and cumulative effect of change in
accounting........................................ 2,119 (5,745) (33,801)
Income taxes........................................ 257 122 1,383
Earnings (loss) before discontinued operations and
cumulative effect of change in accounting......... 1,862 (5,867) (35,184)
Discontinued operations:
Earnings from discontinued operations............. -- -- 1,280
Gain on sale of discontinued operations........... -- -- 8,998
Total earnings from discontinued operations....... -- -- 10,278
Earnings (loss) before cumulative effect of change
in accounting..................................... 1,862 (5,867) (24,906)
Cumulative effect of change in method of accounting
for postretirement benefits other than pensions... (13,416) -- --
Net loss............................................ (11,554) (5,867) (24,906)
Preferred stock dividends ($1.94 per share)......... 1,617 1,663 1,790
Loss applicable to common stock..................... (13,171) (7,530) (26,696)
Retained earnings, beginning of year................ 22,829 31,733 58,429
Treasury stock transactions......................... (379) (1,374) --
Retained earnings, end of year...................... $ 9,279 $ 22,829 $ 31,733
Earnings (loss) per common share:
Continuing operations before cumulative effect
of change in accounting......................... $ .03 $ (1.09) $ (5.86)
Discontinued operations........................... -- -- 1.63
Cumulative effect of change in method of
accounting for postretirement benefits other
than pensions................................... (1.72) -- --
Net loss.......................................... $ (1.69) $ (1.09) $ (4.23)
Weighted average shares outstanding................. 7,801 6,940 6,307
</TABLE>
The accompanying notes are an integral part of the financial statements.
18<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
TOKHEIM CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED NOVEMBER 30, 1994, 1993, AND 1992
(Amounts in thousands)
<TABLE>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net loss.................................................... $(11,554) $ (5,867) $(24,906)
Adjustment to reconcile net loss to net cash
provided from (used in) operations:
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions................................... 13,416 -- --
Gain on sale of discontinued operations................. -- -- (8,998)
Asset impairment........................................ -- -- 9,025
Depreciation and amortization........................... 4,672 5,233 8,107
(Gain) loss on sale of property, plant, and equipment... (23) 446 (707)
Deferred income taxes................................... (903) (830) 521
Changes in assets and liabilities:
Receivables, net...................................... (1,260) (7,999) 3,632
Inventories........................................... (300) (590) 12,055
Prepaid expenses...................................... 229 (202) (497)
Accounts payable...................................... (3,694) 7,277 2,528
Accrued expenses...................................... 2,486 (4,223) 2,730
U.S. and foreign income taxes......................... 55 759 (213)
Other................................................. (716) 957 4,083
Net cash provided from (used in) operations................. 2,408 (5,039) 7,360
Cash Flows From Investing and Other Activities:
Property, plant, and equipment additions.................. (2,757) (2,503) (2,045)
Proceeds from sale of property, plant, and equipment...... 195 2,427 1,760
Net proceeds from sale of discontinued operations......... -- -- 18,690
Net cash provided from (used in) investing and other
activities.............................................. (2,562) (76) 18,405
Cash Flows From Financing Activities:
Proceeds from term borrowing.............................. 485 -- 793
Payments on term borrowing................................ (3,889) (2,176) (2,730)
Decrease notes payable, banks............................. (522) (9,166) (19,846)
Proceeds from issurance of common stock................... 49 11,485 --
Treasury stock purchased.................................. (565) (1,212) (1,098)
Treasury stock issued..................................... 996 1,639 128
Preferred stock dividends................................. (1,617) (1,663) (1,790)
Net cash used in financing activities..................... (5,063) (1,093) (24,543)
Effect of Translation Adjustment on Cash.................... 53 (212) (569)
Cash and Cash Equivalents:
Increase (decrease) in cash............................... (5,164) (6,420) 653
Beginning of year......................................... 9,097 15,517 14,864
End of year............................................... $ 3,933 $ 9,097 $ 15,517
</TABLE>
The accompanying notes are an integral part of the financial statements.
19<PAGE>
CONSOLIDATED BALANCE SHEET
TOKHEIM CORPORATION AND SUBSIDIARIES
AS OF NOVEMBER 30, 1994 AND 1993
(Amounts in thousands)
ASSETS
1994 1993
-------- --------
Current assets:
Cash and cash equivalents........................ $ 3,933 $ 9,097
Accounts receivable, less allowance for doubtful
accounts of $1,295 and $1,267, respectively.... 38,812 36,644
Inventories:
Raw materials and supplies..................... 7,697 6,295
Work in process................................ 25,675 22,864
Finished goods................................. 4,729 8,644
38,101 37,803
Less amounts necessary to reduce certain
inventories to LIFO method................... 2,746 2,932
35,355 34,871
Prepaid expenses............................... 2,308 2,527
Total current assets......................... 80,408 83,139
Property, plant, and equipment, at cost:
Land and land improvements....................... 3,232 3,133
Buildings and building improvements.............. 22,150 20,940
Machinery and equipment.......................... 55,268 54,995
Construction in progress......................... 1,166 1,361
81,816 80,429
Less accumulated depreciation.................... 54,391 51,425
27,425 29,004
Other noncurrent assets and deferred charges....... 5,672 4,922
$113,505 $117,065
The accompanying notes are an integral part of the financial statements.
20<PAGE>
CONSOLIDATED BALANCE SHEET (CONTINUED)
TOKHEIM CORPORATION AND SUBSIDIARIES
AS OF NOVEMBER 30, 1994 AND 1993
(Amounts in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
1994 1993
-------- --------
Current liabilities:
Current maturities of long-term debt............. $ 1,248 $ 1,237
Notes payable to banks........................... 1,661 18,684
Accounts payable................................. 16,215 19,333
Accrued expenses................................. 16,990 14,471
Total current liabilities...................... 36,114 53,725
Long-term debt, less current maturities............ 18,941 5,374
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... 16,975 19,206
Postretirement benefit liability................... 13,512 --
Minimum pension liability.......................... 1,906 3,348
Other long-term liabilities........................ 150 150
Deferred income taxes.............................. 791 1,622
88,389 83,425
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...................................... (15,733) (17,533)
Treasury stock, at cost, 130 and 112 shares,
respectively.................................... (3,262) (2,789)
5,005 3,678
Preferred stock, no par value; 3,300 shares
authorized and unissued......................... -- --
Common stock, no par value; 30,000 shares
authorized, 7,949 shares issued................. 19,410 19,594
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation...................................... (1,242) (1,673)
Minimum pension liability......................... (1,906) (3,348)
Foreign currency translation adjustments.......... (3,543) (4,037)
Retained earnings................................. 9,279 22,829
21,998 33,365
Treasury stock, at cost, 106 and 191 shares,
respectively.................................... (1,887) (3,403)
20,111 29,962
$113,505 $117,065
The accompanying notes are an integral part of the financial statements.
21<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar 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 its 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. 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 liquidation of the
underlying foreign investments. The Company has no present plans for the sale
or liquidation of significant investments to which these deferrals relate.
Aggregate foreign currency transaction gains and losses are included in the
determination of 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 $27,988 and
$28,055 on a FIFO basis at November 30, 1994 and 1993, 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.
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 $76 and $296 at November 30, 1994 and 1993,
respectively. The amounts amortized and charged to expense in 1994, 1993, and
1992 were $220; $382; and $1,438, respectively. In addition, the Company wrote
off $2,526 of previously capitalized software development costs in connection
with a product rationalization in 1992.
All other product development expenditures are charged to research and
development expense in the period incurred. These expenses from continuing
operations amounted to $10,239; $8,625; and $10,485 in 1994, 1993, and 1992,
respectively.
INCOME TAXES -- The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," effective
December 1, 1993. In 1993 and 1992, the Company accounted for income taxes
in accordance with the provisions of SFAS No. 96, "Accounting for Income Taxes."
The provision for income taxes includes federal, foreign, state, and local
income taxes currently payable and those deferred because of temporary
differences between the financial statement and tax bases of assets and
liabilities. No additional U.S. income taxes or foreign withholding taxes have
been provided on earnings of foreign subsidiaries which are expected to be
reinvested indefinitely. A determination of the tax liability associated with
repatriation of these earnings has not been made as it is not practical.
Additional income and withholding taxes are provided, however, on planned
repatriations of foreign earnings.
22<PAGE>
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND POSTEMPLOYMENT BENEFITS -- The
Company provides certain postretirement medical and life insurance benefits,
principally to certain U.S. employees. Retirees in other countries are
generally covered by government-sponsored programs. In the first quarter of
1994, the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." The adoption of this statement
resulted in a one-time, noncash charge to earnings of $13,416, which the
Company elected to immediately recognize rather than amortize over future
periods.
The Company expects to adopt SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," in the first quarter of 1995. This statement requires
an accrual method of accounting for the expected cost of benefits to be paid to
former or inactive employees and their covered dependents after employment but
prior to retirement. The Company's current practice is to recognize these costs
as claims are incurred. In the opinion of management, adoption of this
statement will not have a material impact on 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.
Selected cash payments and noncash activities were as follows:
<TABLE>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Cash payments for interest..................... $2,441 $3,273 $4,388
Cash payments for income taxes................. 894 1,352 1,295
Noncash transactions primarily related to
the issuance of treasury stock and
settlement of Retirement Savings Plan
distributions............................... 233 1,374 --
Noncash adjustments to certain assets and
liabilities in connection with the
settlement of the corporate reorganization.. 224 1,400 --
</TABLE>
RECLASSIFICATION -- Certain prior year amounts in these financial statements
have been reclassified to conform with current year presentation.
23<PAGE>
2. ACCRUED EXPENSES
Accrued expenses consisted of the following at November 30, 1994 and 1993:
1994 1993
------ ------
Salaries, wages, and commissions................. $3,930 $2,893
Compensated absences............................. 3,391 2,695
Retirement plan contributions.................... 915 919
Postretirement benefits.......................... 697 --
Warranty......................................... 2,506 2,019
Taxes, other than United States and
foreign income taxes........................... 1,487 1,185
Insurance........................................ 651 1,196
Other............................................ 3,413 3,564
$16,990 $14,471
3. NOTES PAYABLE TO BANKS
Notes payable to banks represent short-term borrowings under domestic and
foreign credit lines. In 1994, aggregate amounts outstanding under these lines
were $16,361 of which $14,700 has been classified as long-term debt since the
Company has the ability, under the terms of the agreement, and the intent to
finance these obligations beyond one year. Domestic and foreign credit lines
totaled approximately $35,027 of which $18,666 was unused at November 30,
1994. Availability of revolving credit under these agreements is subject to
borrowing base requirements and compliance with covenants. The weighted
average annual interest rate was 8.1% and 8.9% for fiscal 1994 and 1993,
respectively. The range of domestic and foreign rates at November 30, 1994 and
1993 was 7.3% to 11.8% and 8.0% to 12.8%, respectively.
On April 22, 1994, the Company completed a refinancing of its domestic loan
agreement which was to have matured on December 1, 1994. The new three-year
domestic revolving credit agreement which matures on April 21, 1997 is
collateralized by substantially all of the unencumbered domestic assets of
the Company and its subsidiaries. In July 1994, the Company completed a
refinancing of the previous loan agreement for its German subsidiary. The new
two-year credit agreement is collateralized by substantially all of the assets
of the subsidiary. Also in July, 1994, the Company completed an 18-month loan
agreement for its subsidiary in The Netherlands, which is collateralized by
accounts receivable and real estate of the subsidiary. Each of the debt
agreements contains various restrictions relating to, among other things, net
worth, leverage, cash flow coverage, incurrance of additional debt,
transactions in the Company's own stock, and dividends.
24<PAGE>
4. TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP
PLAN (RSP) OBLIGATION
Term debt at November 30, 1994 and 1993 consisted of the following:
1994 1993
Industrial Revenue Bonds, variable rate, maturing ---------- ----------
$500 semiannually through 1999, rate of 3.66%
at November 30, 1994 (a)........................ $ 4,500 $ 5,500
3.5% German Bonds, due in $45 semiannual
installments through 1998 (a)................... 359 419
Note payable, variable rate, due in monthly
installments ranging from $4 to $15 through
1998, rate of 16.75% at November 30, 1994....... 313 389
5.5% Industrial Revenue Bonds..................... -- 35
8.54% Capital lease obligation, due in $4
semiannual installments through 1997 (a)........ 114 --
Revolving credit facility, variable rate, due
1997, rates ranging from 7.625% to 9.5%
at November 30, 1994 (b)........................ 14,700 -- (c)
Other, 3% to 14% (a).............................. 203 268
20,189 6,611
Less: Current maturities....................... 1,248 1,237
$ 18,941 $ 5,374
Guaranteed Employees' Stock Ownership Plan (RSP) obligation at November 30, 1994
and 1993 consisted of the following:
1994 1993
Guaranteed Employees' Stock Ownership Plan (RSP) ---------- ----------
obligation, variable rate, maturing $1,943 to
$2,636 quarterly through 2001, rate of 7.65%
at November 30, 1994 (b)........................ $ 15,733 $ 17,533
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation, variable rate, maturing $456 to $303
annually through 1997, rate of 8.29% at
November 30, 1994 (b)........................... 1,242 1,673
$ 16,975 $ 19,206
(a) Aggregate cost of plant and equipment pledged as collateral
under revenue bonds and lease obligations is $10,207.
(b) Per the domestic revolving credit agreement as described
in Note 3, the term obligation matures on April 21, 1997.
Any extension of the facility beyond April 21, 1997
is at the discretion of the lenders.
(c) Classified with current liabilities in 1993.
Aggregate scheduled maturities of the above term debt and Guaranteed Employees'
Stock Ownership Plan (RSP) obligation during the ensuing five years approximate
$3,647; $3,836; $27,947; $1,230; and $504, respectively.
25<PAGE>
5. STOCK OPTION PLANS
The Company has three separate Stock Option Plans, as outlined below:
1992 Stock Incentive Plan (SIP)
The Plan contains both incentive stock options (ISOs) and nonqualified stock
options (NSOs). 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.
In addition, the Plan provides for the granting of Stock Appreciation Rights
(SARs) and Restricted Stock Awards (RSAs). At November 30, 1994, no SARs or
RSAs had been granted.
1982 Incentive Stock Option Plan (ISOP) and
1982 Unqualified Stock Option Plan (USOP)
Effective January 21, 1992, no additional shares could be granted under these
plans. No option expires later than 10 years from the date on which it was
granted.
The price of 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 1994, 1993, and 1992 are as
follows:
1992 Stock Incentive Plan
Year of ------------------------- 1982
Grant ISO NSO ISOP
------- --------- -------- -------
1994 19,000 -- --
1993 275,162 41,288 --
1992 -- 70,000 245,475
Subsequent to November 30, 1994, an additional 35,000 ISO shares were
granted under the SIP at an option price of $8.50 per share. These shares
become exercisable starting in fiscal year 1996.
26<PAGE>
The following table sets forth the status of all outstanding options at
November 30, 1994:
Option Exercisable Total
Price Per Options In The Next One Options
Share Exercisable To Four Years Outstanding
--------- ----------- --------------- -----------
$20.0000 32,500 -- 32,500
$12.7500 4,500 -- 4,500
$12.3750 3,000 -- 3,000
$12.2500 1,000 -- 1,000
$12.1250 7,000 -- 7,000
$11.9375 -- 14,000 14,000
$11.3100 36,000 -- 36,000
$ 9.3750 6,625 19,875 26,500
$ 8.8800 118,970 -- 118,970
$ 7.8750 10,000 5,000 15,000
$ 7.7500 25,000 5,000 30,000
$ 6.8750 10,000 5,000 15,000
$ 6.8125 43,346 195,712 239,058
297,941 244,587 542,528
Transactions in stock options under these plans are summarized as follows:
Shares
Under
Option Price Range
-------- ---------------
Outstanding, November 30, 1991.......... 250,725 $11.31 - $24.88
Granted................................. 315,475 $ 6.88 - $ 8.88
Exercised............................... --
Canceled or expired..................... (221,450) $ 8.63 - $24.88
Outstanding, November 30, 1992.......... 344,750 $ 6.88 - $20.00
Granted................................. 316,450 $ 6.81 - $ 9.38
Exercised............................... (14,797) $ 8.88 - $ 8.88
Canceled or expired..................... (80,675) $ 7.75 - $20.00
Outstanding, November 30, 1993.......... 565,728 $ 6.81 - $20.00
Granted................................. 19,000 $10.75 - $11.94
Exercised............................... (29,950) $ 6.81 - $ 8.88
Canceled or expired..................... (12,250) $ 8.88 - $20.00
Outstanding, November 30, 1994.......... 542,528 $ 6.81 - $20.00
Reserved for options: Shares
-------
November 30, 1992.................. 182,550
November 30, 1993.................. 296,775
November 30, 1994.................. 407,508
27<PAGE>
6. COMMON AND PREFERRED STOCK
Changes in common stock and common treasury stock are shown below:
<TABLE> Common
Common Stock Treasury Stock
Shares Amount Shares Amount
--------- -------- -------- --------
<S> <C> <C> <C> <C>
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
Shares purchased........................ -- -- -- 3
Stock options exercised................. 7,000 (184) (22,000) (405)
Redemption of preferred stock........... -- -- (48,000) (852)
Employee termination benefits........... -- -- (13,000) (230)
Other................................... -- -- (2,000) (32)
Balance, November 30, 1994.............. 7,949,000 $19,410 106,000 $1,887
</TABLE>
Changes in preferred stock and preferred treasury stock are shown below:
<TABLE> Preferred
Preferred Stock Treasury Stock
Shares Amount Shares Amount
-------- -------- -------- --------
<S> <C> <C> <C> <C>
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
Shares redeemed......................... -- -- 22,000 562
RSP contributions....................... -- -- (4,000) (89)
Balance, November 30, 1994.............. 960,000 $24,000 130,000 $3,262
</TABLE>
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.
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 Trustee, who holds 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 Trustee 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 Trustee, 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, 1994, the difference between the floor value and the market
value of the underlying common stock aggregated $5,085.
28<PAGE>
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 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 (loss)
per share for fiscal years ended November 30, 1994, 1993, and 1992:
1994 1993 1992
Shares Outstanding (in thousands): --------- -------- --------
Weighted average outstanding.......... 7,801 6,891 6,307
Share equivalents..................... -- 49 --
Adjusted outstanding.................. 7,801 6,940 6,307
Earnings (loss):
Continuing operations before
cumulative effect of change in
accounting............................ $ 1,862 $(5,867) $(35,184)
Discontinued operations............... -- -- 10,278
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions........ (13,416) -- --
Net loss.............................. (11,554) (5,867) (24,906)
Preferred stock dividend.............. (1,617) (1,663) (1,790)
Loss applicable to common stock....... $(13,171) $(7,530) $(26,696)
Earnings (loss) per common share:
Continuing operations before
cumulative effect of change in
accounting.......................... $ .03 $ (1.09) $ (5.86)
Discontinued operations............... -- -- 1.63
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions........ (1.72) -- --
Net loss per common share............. $ (1.69) $ (1.09) $ (4.23)
For 1994, 1993, and 1992, 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.
8. FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
Consolidated foreign currency translation adjustments are as follows:
1994 1993
Foreign currency translation adjustments, -------- --------
beginning of year.............................. $(4,037) $(3,119)
Current year adjustments.......................... 494 (918)
Foreign currency translation adjustments,
end of year.................................... $(3,543) $(4,037)
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.
29<PAGE>
9. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for 1994 and 1993 is as follows:
<TABLE>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
1994 ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net sales............................... $45,236 $49,908 $47,931 $59,059 $202,134
Cost of products sold*.................. 34,511 37,246 37,610 45,285 154,652
Earnings (loss) before cumulative effect
of change in accounting............... 155 1,151 (1,473) 2,029 1,862
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions................... (13,416) -- -- -- (13,416)
Net earnings (loss)..................... (13,261) 1,151 (1,473) 2,029 (11,554)
Earnings (loss) per share:
Primary:
Before cumulative effect of change
in accounting..................... (.03) .10 (.24) .21 .03
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions...... (1.73) -- -- -- (1.72)
Net earnings (loss)................. (1.76) .10 (.24) .21 (1.69)
Fully diluted:
Before cumulative effect of change
in accounting..................... (.03) .08 (.24) .17 .03
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions...... (1.73) -- -- -- (1.72)
Net earnings (loss)................. (1.76) .08 (.24) .17 (1.69)
1993
Net sales............................... $31,949 $44,679 $41,386 $54,292 $172,306
Cost of products sold*.................. 25,907 33,944 32,840 40,635 133,326
Net earnings (loss)..................... (5,201) (1,116) (1,938) 2,388 (5,867)
Earnings (loss) per share:
Primary:
Net earnings (loss).................. (.89) (.24) (.33) .25 (1.09)
Fully diluted:
Net earnings (loss).................. (.89) (.24) (.33) .22 (1.09)
</TABLE>
* Includes product development expenses and excludes depreciation and
amortization.
30<PAGE>
10. INCOME TAXES
Effective December 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
SFAS No. 109 requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
As permitted under the new rule, prior years' financial statements have not been
restated. The cumulative effect of adopting this Statement as of December 1,
1993 was immaterial to net earnings.
Earnings (loss) before income taxes consist of the following:
<TABLE>
1994 1993 1992
-------- -------- ---------
<S> <C> <C> <C>
Domestic.......................................... $ 6,456 $(5,842) $(31,843)
Foreign........................................... (4,337) 97 (1,958
$ 2,119 $(5,745) $(33,801)
Income taxes (benefit) consist of the following:
1994 1993 1992
Current: ------- -------- ---------
Federal........................................ $ -- $ -- $ --
State.......................................... 673 723 254
Foreign........................................ 409 49 478
Less discontinued operations................... -- -- (133)
Deferred:
Federal........................................ -- -- 683
Foreign........................................ (825) (650) 980
Less discontinued operations................... -- -- (879)
$ 257 $ 122 $ 1,383
</TABLE>
A reconciliation of the reported tax expense 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:
<TABLE>
1994 1993 1992
-------- --------- --------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit)......... $ 721 $(1,953) $(11,492)
Increase (decrease) in taxes resulting from:
State income taxes net of federal tax benefit.. 444 477 80
Tax effect of dividends paid on stock held in
Retirement Savings Plan (RSP)............... (550) (565) (607)
Settlement of prior income tax returns and
adjustments to prior year accruals.......... 237 -- --
Difference in foreign and U.S. tax rates....... (104) (37) 186
Decrease in valuation allowance................ (1,492) -- --
Earnings with no current tax benefit (expense):
Domestic.................................... -- 1,339 13,376
Foreign..................................... 1,089 (219) 786
Repatriation of foreign earnings............... (162) 677 705
Write-off of investment in foreign subsidiary.. -- -- (2,229)
Miscellaneous items, net....................... 74 403 578
$ 257 $ 122 $ 1,383
</TABLE>
31<PAGE>
Prior to the change in accounting method, the nature of temporary differences
giving rise to deferred income taxes (benefit) and the tax effect of each during
1993 and 1992 were as follows:
1993 1992
Federal: -------- ---------
Depreciation................................... $ 149 $ (117)
Warranty costs................................. (14) 141
Provision for doubtful accounts................ 38 (140)
Pension costs.................................. (37) (122)
Inventory reserves............................. (717) 1,131
Insurance reserves............................. (54) (40)
Restructuring charge........................... 1,060 (961)
Software development costs..................... (112) (1,241)
Deferred tax benefit not recognized............ 4 2,130
Other.......................................... (317) (98)
Deferred federal income taxes............... $ -- $ 683
Less net items from discontinued operations. -- (879)
Deferred federal income tax benefit from
continuing operations.................... $ -- $ (196)
Foreign:
Repatriation of foreign earnings............... $ (500) $ 705
Other.......................................... (150) 275
$ (650) $ 980
The components of the deferred tax asset and liability as of November 30, 1994
were as follows:
Gross deferred tax assets:
Accounts receivable............................ $ 322
Employee compensation and benefit accruals..... 5,949
Workers' compensation and other claims......... 215
Other.......................................... 184
Warranty reserve............................... 818
EPA accrual.................................... 308
Net operating loss carryforwards............... 12,171
General business credit........................ 5
Valuation allowance............................ (17,753)
Net deferred tax asset...................... $ 2,219
Gross deferred tax liabilities:
Property, plant, and equipment................. $ 1,479
Pension assets................................. 151
Inventory...................................... 201
Investment in property......................... 208
Foreign earnings not permanently invested...... 161
Foreign exchange............................... 236
Export sales provision......................... 574
Gross deferred tax liability................ 3,010
Net deferred tax liability........................ $ (791)
For domestic federal income tax purposes, the net operating loss carryover
amounts to $35,796 which will expire from 2006 to 2008.
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.
Domestic and foreign continuing operations information for 1994, 1993, and 1992
is as follows:
<TABLE> 1994 1993 1992
--------- -------- ---------
<S> <C> <C> <C>
Net sales -- unaffiliated customers:
Domestic........................................ $ 119,774 $ 99,317 $ 92,295
Export.......................................... 28,848 25,036 8,004
Foreign: Europe................................. 34,534 22,858 36,471
Other.................................. 18,978 25,095 25,319
$ 202,134 $172,306 $ 162,089
Inter-area sales eliminations:
Domestic........................................ $ 16,904 $ 11,098 $ 22,041
Foreign, principally Europe..................... $ 207 $ 120 $ 261
Operating income (loss):
Domestic........................................ $ 7,495 $(3,797) $(30,186)
Foreign: Europe................................. (2,299) (7) 1,398
Other.................................. (240) 1,978 926
$ 4,956 $(1,826) $(27,862)
Identifiable assets:
Domestic........................................ $104,213 $114,035 $ 117,762
Foreign: Europe................................. 25,189 21,090 28,042
Other.................................. 13,102 12,776 16,567
Adjustments and eliminations.................... (28,999) (30,836) (40,783)
$113,505 $117,065 $ 121,588
</TABLE>
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 responsibility
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:
<TABLE>
1994 1993 1992
-------- --------- --------
<S> <C> <C> <C>
Working capital.................................. $ 14,828 $ 15,982 $ 21,557
Property, plant, and equipment (net) and other... 5,717 5,187 5,253
Noncurrent liabilities........................... (6,683) (3,128) (2,891)
Net foreign assets............................... $ 13,862 $ 18,041 $ 23,919
Net earnings (loss) of foreign operations........ $(4,438) $ 161 $(2,273)
<table/>
In the first quarter 1993, the Company ceased all manufacturing operations in
Brazil. Net sales for the Brazilian operations were $5,495 and operating losses
were $2,530 in 1992.
33<PAGE>
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 carryforward position. The Company
used the proceeds from the sales to reduce outstanding debt.
The results of the Controls segment have been reported separately as
discontinued operations in the consolidated financial statements. Net sales of
the discontinued operations were $21,837 in 1992.
12. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts are as follows:
</TABLE>
<TABLE>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Balance, beginning of year................... $ 1,267 $ 1,795 $ 1,048
Charged to operations........................ 291 381 1,356
Uncollectible accounts written off,
less recoveries............................ (278) (879) (554)
Foreign currency translation adjustments..... 15 (30) (55)
Balance, end of year......................... $ 1,295 $ 1,267 $ 1,795
</TABLE> 34<PAGE>
13. RETIREMENT PLANS
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
Retirements Savings Plan (RSP) were $2,421 in 1994; $2,675 in 1993; and $2,521
in 1992.
Defined Benefit Plans (U.S.) -- The Company maintains two noncontributory
defined benefit pension plans which cover certain union employees. The
Company's funding to the plans is equal to the minimum contribution required by
the Internal Revenue Code. The benefits are based upon a fixed benefit rate
and years of service. Future benefits under these plans were frozen as of
December 31, 1990. The participants under these plans became eligible to
participate in the Retirement Savings Plan (RSP) beginning January 1, 1991.
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, 1994 and 1993:
<TABLE>
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
1994 1993 1994 1993
--------------------- ---------------------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated
plan benefits:
Vested................................ $ 1,196 $ 1,524 $ 8,720 $ 10,953
Nonvested............................. -- -- -- --
Accumulated benefit obligations....... $ 1,196 $ 1,524 $ 8,720 $ 10,953
Projected benefit obligations........... $ 1,196 $ 1,524 $ 8,720 $ 10,953
Plan assets at fair value, principally
common stocks, bonds, and GIC funds,
including $437 in 1994 and $372 in
1993 of the Company's common stock... 1,765 1,880 6,790 7,336
Plan assets in excess of (less than)
projected benefit obligations........ 569 356 (1,930) (3,617)
Unrecognized net loss................... 189 374 2,063 3,527
Unrecognized net assets at December 1,
1991 and 1990 being recognized over
15 years.............................. (288) (317) (157) (179)
Adjustment required to
recognize minimum liability........... -- -- (1,906) (3,348)
Prepaid pension cost (pension liability)
recognized in the consolidated balance
sheet................................ $ 470 $ 413 $(1,930) $ (3,617)
</TABLE>
The net periodic pension expense amounts were based on actuarial assumptions as
follows:
<TABLE>
<S> <C> <C> <C> <C>
Discount rate on plan liabilities....... 8.50% 7.00% 8.50% 7.00%
Rate of return on plan assets........... 8.00% 8.00% 8.00% 8.00%
</TABLE>
In accordance with Statement of Financial Accounting Standards (SFAS) No. 87,
"Employers' Accounting for Pensions," the Company has recorded an additional
minimum pension liability for the underfunded plan of $1,906 and $3,348 at
November 30, 1994 and 1993, respectively, representing the excess of unfunded
accumulated benefit obligations over previously recorded pension cost
liabilities.
35<PAGE>
The net periodic pension cost of U.S. defined benefit plans for 1994, 1993, and
1992 includes the following components:
1994 1993 1992
Interest cost on projected benefit -------- -------- --------
obligations.................................... $ 849 $ 851 $ 868
Return on plan assets............................. 82 (896) (388)
Net amortization and deferral..................... (625) 335 (407)
Net periodic pension expense...................... $ 306 $ 290 $ 73
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 determine
actuarial value of accumulated benefits or net assets available for benefits
and are omitted from the above table.
Defined Contribution Plan (U.S.) -- The RSP covers substantially all employees
of Tokheim and its U.S. subsidiary. Through the RSP, employee ownership of
the Company is increased approximately 11%. The RSP includes a common stock
ESOP and a preferred stock ESOP which provide a retirement contribution of 1.5%
of salary to all employees in the plan and a matching contribution of at least
two-thirds of the first 6% of employee 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, 1994 and 1993 was
829,534 and 848,432, respectively, at a cost of $25 per share. The number of
common shares in the RSP at November 30, 1994 and 1993 was 153,478 and 168,069,
respectively, at an average cost of $21.05 and $21.06 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" is
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, are 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 $746, $887, and $937 for 1994, 1993, and 1992,
respectively.
The table below sets forth the interest expense, the amounts contributed to
the RSP (excluding preferred stock dividends), and the amount of dividends
on preferred stock used for debt service by the RSP:
1994 1993 1992
Interest expense incurred by the Plan -------- -------- --------
Trust(s) on RSP debt..................... $1,367 $1,595 $1,702
Company contributions to the RSP............ 1,719 2,030 1,868
Dividends on preferred stock used for debt
service by the RSP....................... 1,617 1,663 1,790
36<PAGE>
14. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company provides defined benefit postretirement health and life insurance
benefits to most of its U.S. employees. Covered employees become eligible for
these benefits at retirement after meeting minimum age and service requirements.
Effective December 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." This statement requires that the
costs of future benefits be accrued during an employee's active working career.
The cost of providing these benefits was previously recognized as claims were
incurred. The Company continues to fund benefits on a pay-as-you-go basis,
with some retirees paying a portion of the costs.
The Company recorded the discounted value of expected future benefits earned
as of December 1, 1993 as a cumulative effect of accounting change. This
one-time, noncash accounting change resulted in a charge to earnings of
$13,416, or $1.72 per share. Due to the Company's net operating loss
carryforward position (see Note 10), the Company established a valuation
allowance to offset the deferred tax asset created by this charge to operations.
The accumulated postretirement benefit obligation of November 30, 1994
consisted of unfunded obligations related to the following:
Retirees and dependents...................... $4,903
Fully eligible active plan participants...... 1,274
Other active plan participants............... 6,935
Total accumulated postretirement benefit
obligation............................... 13,112
Unrecognized net gain........................ 1,101
Accrued postretirement benefit cost.......... 14,213
Less current portion......................... (701)
$13,512
Net postretirement benefit cost for 1994 includes the following components:
Service cost................................. $ 582
Interest cost on accumulated postretirement
benefit obligation......................... 916
Net postretirement benefit cost.............. $ 1,498
The assumptions used to develop the net postretirement benefit expense and the
present value of benefit obligations are as follows:
Discount rate................................ 8.50%
Health care cost trend rate for
the next year.............................. 11.00%
The health care cost trend rate used to value the accumulated postretirement
benefit obligation is assumed to decrease gradually to an ultimate rate of 6% in
2004. A 1% increase in this annual trend rate would increase the accumulated
postretirement benefit obligation as of November 30, 1994 by approximately
$1,500 and the combined service and interest components of the annual net
postretirement health care cost by approximately $200.
37<PAGE>
15. 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.
Environmental Matters -- The Company has been designated as a "potentially
responsible party" (PRP), in conjunction with other parties, 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. Dates upon which the
Company received notice as a PRP range from January 1988 to January 1992. The
Company has attempted, where possible, to develop a reasonable estimate of the
cost or range of costs which may accrue from these actions. Likewise, the
Company has attempted, where possible, to assess the likelihood of an
unfavorable outcome to the Company as a result of these actions. Legal counsel
has been retained to assist the Company in making these determinations, and
cleanup costs are accrued when an unfavorable outcome is determined to be
probable and a reasonable estimate can be made. Total amounts included in
accrued expenses related to environmental matters were $674 and $517 at
November 30, 1994 and 1993, respectively.
The Company is a "de minimis" party in two of these sites and has accrued total
anticipated cleanup costs of $25. The full possible range of anticipated costs
may run from $20 to $35, in the aggregate, for both of the de minimis sites. A
settlement offer is pending before the Environmental Protection Agency (EPA) for
$14 at one of the de minimis sites.
During 1994, the Company received a settlement offer from the EPA pertaining to
the third site in the amount of $628. The Company has accepted the offer and
has recorded this liability in full at November 30, 1994. The Company has
accrued $464 related to this site at November 30, 1993. The time frame over
which the accrued amount will be paid is uncertain.
Legal counsel retained by the Company has been unable to advise the Company on
the range of its potential liability for the fourth site which is currently in
litigation as the owner-operator has cleaned up the site and is seeking to
recover its cost in a cost recovery action against the PRPs. The Company is one
of approximately 90 PRPs named in this matter. The estimated cost of the
cleanup by the owner-operator is between $12,000 and $30,000. The method of
allocation of liability, if any, among the PRPs who may ultimately be found
liable remains uncertain.
With respect to the fifth site, involving potential groundwater contamination,
the Company and other PRPs are negotiating with the EPA as to the testing to be
performed on the property to determine if contamination has occurred; and, if
so, the specific tracts of property affected. The Company cannot determine the
extent of its liability in the event its property is deemed to be contaminated;
and the method of allocation of liability, if any, among the PRPs who may
ultimately be found liable remains uncertain.
Product Liability and Other Matters -- The Company is subject to various other
legal actions arising out of the conduct of its businesss, including those
relating to product liability, patent infringement, and claims for damages
alleging violations of federal, state, or local statutes or ordinances dealing
with civil rights. Total amounts included in accrued expenses related
to these actions were $265 and $576 at November 30, 1994 and 1993, respectively.
In the opinion of management of the Company, 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, results of operations, or cash flow.
38<PAGE>
16. SPECIAL CHARGES
In 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 as follows:
1992
--------
Plant consolidation, severance, and outplacement........ $ 2,424
Organizational and product rationalization.............. 4,704
Write-down of Brazilian investment...................... 8,025
$ 15,153
There were no special charges incurred in fiscal years 1994 and 1993.
39<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders and Directors,
Tokheim Corporation:
We have audited the accompanying consolidated balance sheets of Tokheim
Corporation and Subsidiaries as of November 30, 1994 and 1993, and the related
consolidated statements of earnings and retained earnings, and cash flows for
each of the three years in the period ended November 30, 1994. These statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Tokheim
Corporation and Subsidiaries as of November 30, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended November 30, 1994, in conformity with generally
accepted accounting principles.
As discussed in Notes 1, 10, and 14 to the consolidated financial statements,
the Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," and Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," in 1994.
COOPERS & LYBRAND L.L.P.
Fort Wayne, Indiana
January 26, 1995
40<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS OF THE REGISTRANT
The information required by this item is set forth on pages 1 through 4 in
the registrant's Proxy Statement for the 1994 Annual Meeting of Stockholders,
which information is incorporated herein by reference.
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.
NAME, AGE, AND POSITION BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- ----------------------- -------------------------------------------
Gerald H. Frieling, Jr., 64 Elected Chairman of the Board in 1991;
Chairman of the Board during the last 5 years, also served as
Chief Executive Officer of the Company and
as Chairman of the Board, President and
Chief Executive Officer of National-
Standard.
Douglas K. Pinner, 54 Joined Tokheim as President and Chief
President and Chief Executive Officer in 1992; during the last
Executive Officer 5 years, also served as President of
Slater Steels Fort Wayne Specialty Alloys.
William M. Anderson, 48 Joined Tokheim as Vice President, Human
Vice President, Resources in November, 1994; during the
Human Resources last 5 years, also served as Senior Vice
President of NordicTrack, Inc. and as
Director, Total Quality Management/Human
Resources of FMC Corporation.
Condell B. Ellis, 62 Joined Tokheim as Vice President,
Vice President, Domestic Sales in November, 1994; during
Domestic Sales the last 5 years, also served as Vice
President, Sales of CANMAX; and served in
various executive sales officer positions
of Tokheim Corporation; and as Vice
President Sales, Wayne Division of Dresser
Industries Inc.
41<PAGE>
NAME, AGE, AND POSITION BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- ----------------------- ------------------------------------------
Jess B. Ford, 43 Elected Vice President, Finance,
Vice President, Finance, Secretary, and Chief Financial Officer in
Secretary, and Chief 1992; during the last 5 years, also served
Financial Officer as Vice President, Corporate Finance and
as Corporate Controller of the Company.
Terry M. Fulmer, 51 Elected Vice President, Corporate
Vice President, Corporate Operations and Planning in 1993; during
Operations and Planning the last 5 years, also served as Vice
President, Corporate Planning; General
Manager, Small Pumps Division; and Manager
of Manufacturing, Newbern Plant of the
Company.
Anthony J. King, 56 Elected Vice President, International and
Vice President, Venture Development in 1994; during the
International and last 5 years, also served as Vice
Venture Development President, Domestic and International
Sales; Vice President, International
Division of the Company; and as Vice
President, International Sales and
Marketing of Babson Brothers Company.
Arthur C. Prewitt, 53 Elected Vice President, Technology in
Vice President, 1994; during the last 5 years, also served
Technology as Vice President, Corporate Engineering
and Marketing, and Vice President, Product
Engineering of the Company and as
Manager, Technical Products of Gilbarco,
Inc.
Norman L. Roelke, 45 Elected Vice President and General Counsel
Vice President and in July, 1994; during the last 5 years,
General Counsel also served as Corporate Counsel of the
Company.
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 1994 all Section 16(a) filing requirements
applicable to its directors, officers and greater-than-10% stockholders were
held in compliance.
42<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth on pages 4 through 8 in
the registrant's Proxy Statement for the 1994 Annual Meeting of Stockholders,
which information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth on pages 9 through 11 in
the registrant's Proxy Statement for the 1994 Annual Meeting of Stockholders,
which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is set forth on pages 9 through 11 in
the registrant's Proxy Statement for the 1994 Annual Meeting of Stockholders,
which information is incorporated herein by reference.
43<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, 1994................................... Page 18
Consolidated Statement of Cash Flows for each of
the three years in the period ended November 30, 1994..... Page 19
Consolidated Balance Sheet as of November 30,
1994 and 1993............................................. Page 20
Notes to Consolidated Financial Statements.................. Page 22
Report of Independent Accountants........................... Page 40
(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
There are no schedules included in Part IV of this report as they are not
required, 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 46
(21) Subsidiaries of the Registrant........................ Page 48
(23) Consents of Experts and Counsel....................... Page 49
(27) Financial Data Schedule............................... Page 50
(b) REPORTS ON FORM 8-K:
None.
44<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 24,1995 TOKHEIM CORPORATION
(Registrant)
By: Douglas K. Pinner
________________________
Douglas K. Pinner
President and Chief
Executive Officer
By: Jess B. Ford
________________________
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 24, 1995
Executive Officer
Gerald H. Frieling, Jr.
_______________________ Chairman of the Board February 24, 1995
Walter S. Ainsworth
_______________________ Director February 24, 1995
Robert M. Akin, III
_______________________ Director February 24, 1995
James K. Baker
_______________________ Director February 24, 1995
Bernard D. Cooper
_______________________ Director February 24, 1995
Bob F. Jesse
_______________________ Director February 24, 1995
Dr. Winfred M. Phillips
_______________________ Director February 24, 1995
Ian M. Rolland
_______________________ Director February 24, 1995
James T. Smith
_______________________ Director February 24, 1995
45<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE YEARS ENDED NOVEMBER 30, 1994, 1993, AND 1992
(Amounts in thousands except amounts 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 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, 1994, 1993, and 1992:
<TABLE>
Primary
__________________________________
1994 1993 1992
__________________________________
<S> <C> <C> <C>
Shares outstanding:
Weighted average outstanding............... 7,801 6,891 6,307
Share equivalents.......................... -- 49 --
Adjusted outstanding....................... 7,801 6,940 6,307
Earnings (loss):
Continuing operations before cumulative
effect of change in accounting........... $ 1,862 $ (5,867) $(35,184)
Discontinued operations.................... -- -- 10,278
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions...................... (13,416) -- --
Net loss................................... (11,554) (5,867) (24,906)
Preferred stock dividend................... (1,617) (1,663) (1,790)
Loss applicable to common stock............ $(13,171) $ (7,530) $(26,696)
Earnings (loss) per common share:
Continuing operations before cumulative
effect of change in accounting........... $ .03 $ (1.09) $ (5.86)
Discontinued operations.................... -- -- 1.63
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions...................... (1.72) -- --
Net loss per common share.................. $ (1.69) $ (1.09) $ (4.23)
</TABLE>
46<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE YEARS ENDED NOVEMBER 30, 1994, 1993, AND 1992
(CONTINUED)
(Amounts in thousands except amounts per share)
For 1994, 1993, and 1992, 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.
<TABLE>
Fully Diluted
__________________________________
1994 1993 1992
__________________________________
<S> <C> <C> <C>
Shares outstanding:
Weighted average outstanding............... 7,801 6,891 6,307
Share equivalents.......................... 60 49 --
Weighted conversion of preferred stock..... 1,362 1,296 929
Adjusted outstanding....................... 9,223 8,236 7,236
Earnings (loss):
Continuing operations before cumulative
effect of change in accounting........... $ 1,862 $ (5,867) $(35,184)
Discontinued operations.................... -- -- 10,278
Cumulative effect of change in method of
accounting for postretirement benefits
other then pensions...................... (13,416) -- --
Net loss................................... (11,554) (5,867) (24,906)
Preferred stock dividend................... (1,617) (1,663) (1,790)
Loss applicable to common stock............ $(13,171) $(7,530) $(26,696)
Earnings (loss) per common share:
Continuing operations before cumulative
effect of change in accounting........... $ 0.03 $ (0.91) $ (5.11)
Discontinued operations.................... -- -- 1.42
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions............. (1.45) -- --
Net loss per common share.................. $ (1.42) $ (0.91) $ (3.69)
</TABLE>
47<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (21) SUBSIDIARIES OF THE REGISTRANT
NOVEMBER 30, 1994
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
Subsidiary 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
Subsidiary of Incorporation
-------------------------------------------- ----------------
Sunbelt Hose & Petroleum Equipment, Inc. (A) Georgia
Tokheim and Gasboy of Canada Limited (B) Canada
Tokheim Europe 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.
48<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (23) CONSENTS OF EXPERTS AND COUNSEL
NOVEMBER 30, 1994
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 26, 1995, on our audits of the consolidated financial statements of
Tokheim Corporation and Subsidiaries as of November 30, 1994 and 1993, and
for the years ended November 30, 1994, 1993, and 1992, which report is
included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Fort Wayne, Indiana
February 24, 1995
49<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tokheim
Corporation's November 30, 1994, annual financial statements and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000098559
<NAME> TOKHEIM CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> NOV-30-1994
<CASH> 3933
<SECURITIES> 0
<RECEIVABLES> 40107
<ALLOWANCES> 1295
<INVENTORY> 35355<F1>
<CURRENT-ASSETS> 80408
<PP&E> 81816<F2>
<DEPRECIATION> 54391
<TOTAL-ASSETS> 113505
<CURRENT-LIABILITIES> 36114
<BONDS> 0
<COMMON> 16281<F3>
5005<F4>
0
<OTHER-SE> 3830<F5>
<TOTAL-LIABILITY-AND-EQUITY> 113505
<SALES> 202134
<TOTAL-REVENUES> 202134
<CGS> 154652<F6>
<TOTAL-COSTS> 154652<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2350
<INCOME-PRETAX> 2119
<INCOME-TAX> 257
<INCOME-CONTINUING> 1862
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (13416)<F7>
<NET-INCOME> 11554
<EPS-PRIMARY> (1.69)
<EPS-DILUTED> 0
<FN>
<F1>Represents gross inventory net of LIFO and loss reserves.
<F2>Represents gross PP&E.
<F3>Represents common stock of $19,410 less Guaranteed ESOP of $1,242 and treasury
stock of $1,887.
<F4>Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$15,733 and treasury stock of $3,262.
<F5>Represents retained earnings of $9,279 less minimum pension liability of $1,906
and foreign currency translation adjustments of $3,543.
<F6>Includes product development expenses and excludes depreciation and
amortization.
<F7>Represents adoption of SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." 50<PAGE>
</FN>
</TABLE>
