February 23, 1996
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, 1995.
An additional copy has been filed with the New York Stock Exchange.
Sincerely,
TOKHEIM CORPORATION
JOHN A. NEGOVETICH
John A. Negovetich
Vice President 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, 1995
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 l2(g) of the Act: NONE
------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
As of February 2, 1996, 7,937,988 shares of voting common stock were
outstanding. The aggregate market value of shares held by non-affiliates was
$61.1 million (based on the closing price of these shares on the New York Stock
Exchange).
In addition, 808,620 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 $20.2 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 45. The Exhibit Index is located on Page 39.<PAGE>
TOKHEIM CORPORATION
1995 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 . . . . . . . . . . . . 11
Item 8. Financial Statements and Supplementary Data . . . . . . . . . 14
Item 9. Disagreements on Accounting and Financial Disclosure. . . . . 36
PART III
Item 10. Directors and Executive Officers of the Registrant. . . . . . 36
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . 38
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . 38
Item 13. Certain Relationships and Related Transactions. . . . . . . . 38
PART IV
Item l4. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . 39
2<PAGE>
PART I
ITEM 1. BUSINESS.
(a) General:
Tokheim Corporation and its subsidiaries (the "Company") are engaged in the
design and manufacture of electronic and mechanical petroleum 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.
Sales of the Company's products can be affected by a variety of factors, such as
environmental regulations, retail petroleum construction, the price of oil,
interest rates, weather conditions, political stability in foreign markets, and
general economic conditions.
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.
The continuing improvement during 1995 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 new product introductions, strengthened
distribution channels, increased international market penetration, and cost-
reduction programs which more than offset price deterioration.
The Board of Directors recently approved capital expenditures of approximately
$12.8 million for important improvements in plant productivity and capacity,
product design, and quality of both products and processes which should enhance
future operating results.
During the year, the Fort Wayne facility achieved a quality milestone - ISO 9000
certification. This was an important accomplishment for the Fort Wayne plant,
which now joins the plants in the U.K. and South Africa which are also ISO
certified. ISO 9000 will help the Company to continue its expansion into
markets recognizing this certification, especially European markets.
In 1995 the Company introduced a number of new products, including the
Windows(R) PC-based Columbus point-of-sales (POS) system. In addition, the
existing POS system was expanded to include 15 major oil company networks, with
plans to expand to 20 networks, covering virtually the entire industry, by the
end of 1996. Another significant product introduction in 1995 was the new line
of retrofit dispenser heads which enable installed Tokheim equipment to have the
same electronics and functionality as our newest designs.
(b) Financial Information About Business and Geographical Segments:
Financial information about business and geographical segments for the years
ended November 30, 1995, 1994, and 1993, is set forth in Item 8 of this Report
in Note 12 to the Consolidated Financial Statements captioned "Business and
Geographical Segments."
3<PAGE>
(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 petroleum dispensing equipment and services,
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
consumer, fleet, and commercial markets. Gasboy also designs and manufactures
vehicle fleet management and control systems and point-of-sale terminals for
dual purpose, retail, and fleet applications.
In 1995, 1994, and 1993, the petroleum industry accounted for all of the
Company's sales. Approximately 85%, 83%, and 81%, respectively, of Company's
sales 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 43%, 41%, and 42% of consolidated net sales in 1995, 1994, and
1993, 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,
distributors, and special sales representatives. In addition to its widespread
sales organization, there are more than 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 Help Desk
which is open 24 hours a day, 365 days a year for immediate responsiveness to
service needs. Additionally, the 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, some of which have greater
sales and assets than the Company. The Company competes domestically against
four manufacturers of service station dispensers.
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 experience, 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 effective in stages 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.
4<PAGE>
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 throughout this period.
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.
Strong demands from emerging markets during the past year is expected to
continue into and favorably impact 1996.
The dollar amount of backlog considered to be firm as of the end of fiscal year
1995 was approximately $21.0 million, compared to approximately $16.6 million
and $23.0 million at the end of fiscal years 1994 and 1993, respectively. The
Company expects that the entire backlog will be filled in fiscal year 1996.
Backlog amounts at any fiscal year-end are not an indicator of sales during the
forthcoming year. Factors impacting backlog levels at any point in time include
such events as the timing of purchases by the major oil companies, announcements
of price adjustments, sales promotions, and production delays, which mitigate
against comparisons of one period to another.
In fiscal 1995, 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, 1995, the Company
employed approximately 1,700 persons at its various locations.
NEW PRODUCTS
The Company spent approximately $12.7 million in 1995; $10.2 million in 1994;
and $8.6 million in 1993 on activities related to the support and improvement of
existing products, manufacturing methods, the development of new products, and
other applied research and development. Last year, a major investment was made
to upgrade out engineering facility with an advanced CAD/CAM system. Not only
was the Company successful in implementing the system, but also in applying it
to new product introductions. Research and development projects are evaluated
on the basis of cash payback and return on investment.
A number of new products were introduced by the Company during 1995. Major
enhancements were made to the POS systems product line including introduction of
the Windows(R) PC-based Columbus system, an island payment terminal, a card
reader upgrade for the Multi-Modular Dispenser, a retrofit head for Tokheim
Convenience Systems, and installation of the Tokheim POS system in 15 major
oil company networks by the end of 1995.
Products introduced in the commercial and fleet market segmemtns include ASTRA,
a unique electronic commercial dispenser with a remote display designed
specifically for the above-ground market; Fuel Point, a fully automated fuel
management system which captures vehicle identification and odometer
information at the dispenser nozzle; and Oilex, a fully automated oil change
device capable of changing the oil in a commercial truck in less than ten
minutes through a single connection.<PAGE>
(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, 1995, 1994, and 1993 is set forth in Item 8 of this
Report in Note 12 to the Consolidated Financial Statements captioned
"Business and Geographical Segments."
5<PAGE>
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. 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
and an adjacent 116-acre tract of unimproved land located north of Fort Wayne,
Indiana. The building in Leiderdorp, The Netherlands, which previously housed
a distribution facility, was sold subsequent to November 30, 1995. The Company
now leases space in Leiderdorp, The Netherlands, for a sales and technical
support facility.
ITEM 3. LEGAL PROCEEDINGS.
As more fully described in Item 8 of this report in Note 16 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, 1995, was 7,000. No dividends were paid on common
stock in 1995, 1994, and 1993 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
1995 1994
Share Price Share Price
Quarter High-Low High-Low
------- ------------- ---------------
1 9 5/8 - 7 1/4 15 1/8 - 11
2 9 1/4 - 7 1/2 14 - 11
3 9 - 6 1/2 12 1/8 - 8 5/8
4 7 3/4 - 6 3/8 9 5/8 - 8 1/4
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, 1995, the difference between the floor value and the market
value of the underlying common stock aggregated $6.7 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>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
OPERATING RESULTS:
Net sales.................................................. $221,573 $202,134 $172,306
Cost of products sold (2).................................. 167,329 154,652 133,326
Equity in net loss of unconsolidated affiliate............. -- -- --
Earnings (loss) before income taxes, cumulative effect
of accounting change, and discontinued operations........ 2,915 2,119 (5,745)
Earnings (loss) before income taxes, cumulative
effect of accounting change, and discontinued
operations percent of sales.............................. 1.3% 1.0% (3.3)%
Income taxes............................................... 39 257 122
Earnings (loss) before cumulative effect of
accounting change and discontinued operations............ 2,876 1,862 (5,867)
Cumulative effect of accounting change..................... -- (13,416) --
Earnings (loss) from continuing operations................. 2,876 (11,554) (5,867)
Total earnings from discontinued operations................ -- -- --
Net earnings (loss)........................................ 2,876 (11,554) (5,867)
Net earnings (loss) percent of sales....................... 1.3% (5.7)% (3.4)%
Dividends paid common...................................... -- -- --
Dividends paid preferred................................... 1,580 1,617 1,663
PRIMARY PER SHARE:
Earnings (loss) from continuing operations before
cumulative effect of accounting change................... .16 .03 (1.09)
Cumulative effect of accounting change.................... -- (1.72) --
Discontinued operations.................................... -- -- --
Net earnings (loss)........................................ .16 (1.69) (1.09)
FULLY DILUTED PER SHARE:
Earnings (loss) from continuing operations before
cumulative effect of accounting change................... .13 .03 (1.09)
Cumulative effect of accounting change.................... -- (1.72) --
Discontinued operations.................................... -- -- --
Net earnings (loss)........................................ .13 (1.69) (1.09)
Dividends paid per common share............................ -- -- --
FINANCIAL POSITION:
Current assets............................................. 86,798 80,408 83,139
Current liabilities........................................ 39,545 36,114 53,725
Current ratio.............................................. 2.2 to 1 2.2 to 1 1.5 to 1
Working capital............................................ 47,253 44,294 29,414
Term debt.................................................. 21,321(5) 18,941(5) 5,374
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation............................................... 14,576 16,975 19,206
Property, plant, and equipment, net........................ 28,558 27,425 29,004
Total assets............................................... 121,232 113,505 117,065
Stockholders' equity....................................... 27,123 25,116 33,640
Return on average equity................................... 10.4% (41.8)% (21.3)%
Term debt percent of equity................................ 78.6% 75.4% 16.0%
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP) obligation......... 132.3% 143.0% 73.1%
Primary average number of common shares.................... 7,911 7,801 6,940
Fully diluted average number of common shares.............. 9,820 9,223 8,236
CAPITAL EXPENDITURES AND DEPRECIATION:
Capital expenditures....................................... 5,559 2,757 2,503
Depreciation............................................... 4,216 4,405 4,813
</TABLE>
See footnote explanations on page 10.
8<PAGE>
SELECTED FINANCIAL DATA
TOKHEIM CORPORATION AND SUBSIDIARIES
(Amounts in thousands except amounts per share)
<TABLE>
1992 (1) 1991 (1)
-------- --------
<S> <C> <C>
OPERATING RESULTS:
Net sales.................................................. $162,089 $167,522
Cost of products sold (2).................................. 128,690 131,903
Equity in net loss of unconsolidated affiliate............. -- 754
Earnings (loss) before income taxes, cumulative effect
of accounting change, and discontinued operations........ (33,801) (21,954)
Earnings (loss) before income taxes, cumulative
effect of accounting change, and discontinued
operations percent of sales.............................. (20.8)% (13.1)%
Income taxes............................................... 1,383 1,194
Earnings (loss) before cumulative effect of
accounting change and discontinued operations............ (35,184) (23,148)
Cumulative effect of accounting change..................... -- --
Earnings (loss) from continuing operations................. (35,184) (23,148)
Total earnings from discontinued operations................ 10,278 1,402
Net earnings (loss)........................................ (24,906) (21,746)
Net earnings (loss) percent of sales....................... (15.4)% (13.0)%
Dividends paid common...................................... -- 2,649
Dividends paid preferred................................... 1,790 1,831
PRIMARY PER SHARE:
Earnings (loss) from continuing operations before
cumulative effect of accounting change................... (5.86) (3.96)
Cumulative effect of accounting change.................... -- --
Discontinued operations.................................... 1.63 .22
Net earnings (loss)........................................ (4.23) (3.74)
FULLY DILUTED PER SHARE:
Earnings (loss) from continuing operations before
cumulative effect of accounting change................... (5.86) (3.96)
Cumulative effect of accounting change.................... -- --
Discontinued operations.................................... 1.63 .22
Net earnings (loss)........................................ (4.23) (3.74)
Dividends paid per common share............................ -- .42
FINANCIAL POSITION:
Current assets............................................. 83,306 117,586
Current liabilities........................................ 57,752 99,803
Current ratio.............................................. 1.4 to 1 1.2 to 1
Working capital............................................ 25,554 17,783
Term debt.................................................. 7,674 11,087
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation............................................... 21,280 --(3)
Property, plant, and equipment, net........................ 32,851 47,490
Total assets............................................... 121,588 178,525
Stockholders' equity....................................... 28,621 60,554
Return on average equity................................... (50.0)% (27.7)%
Term debt percent of equity................................ 26.8% 20.1%(4)
Term debt percent of equity with Guaranteed
Employees' Stock Ownership Plan (RSP) obligation......... 101.2% 58.4%(4)
Primary average number of common shares.................... 6,307 6,307
Fully diluted average number of common shares.............. 7,236 7,255
CAPITAL EXPENDITURES AND DEPRECIATION:
Capital expenditures....................................... 2,045 6,910
Depreciation............................................... 6,089 6,854
</TABLE>
See footnote explanations on page 10.
9<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) Includes $16,700 in 1995 and $14,700 in 1994 of domestic notes payable
classified as long-term.
10<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The continuing improvement during fiscal 1995 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 new product introductions, strengthened
distribution channels, increased international market penetration, and cost-
reduction programs which more than offset price deterioration.
Net earnings in 1995 were $2.9 million, or $0.13 per fully diluted share, versus
$1.9 million, or $0.03 per share, in 1994 before the cumulative effect of a
change in accounting, or a 1994 net loss of $11.6 million, or $1.69 net loss per
share. In 1993, the net loss amounted to $5.9 million, or $1.09 net loss per
share. Fiscal 1995 operating earnings were favorably impacted principally by
a $19.4 million increase in sales and improved gross margin on product sales
resulting from cost control measures, new product introductions, and product mix
improvements. Fiscal 1994 operating earnings were favorably impacted
principally by a $29.8 million increase in sales and improved gross margin on
product sales. Fiscal 1993 operating earnings were principally impacted by a
$10.2 million increase in sales; an improved gross margin on product sales;
and lower selling, general, and administrative expenses.
Consolidated sales were $221.6 million, an increase of 10% from $202.1 million
in 1994 and an increase of 29% from 1993 sales of $172.3 million. Both
domestic and international sales contributed to this gain. Domestic sales of
petroleum dispensing equipment and systems increased 6% from $119.8 million in
fiscal 1994 to $126.7 million in fiscal 1995. International sales were $94.8
million in fiscal 1995, up 15% from fiscal 1994 sales of $82.4 million.
The gross margin on product sales for 1995 was 24.5% which was up from the prior
year's 23.5% 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 1994 had increased from the 1993 level of
22.6% due primarily to higher sales volume and the impact of cost reduction
programs. Selling, general, and administrative expenses as a percentage of net
sales in each of the past three years were 19.5% in 1995, compared to
18.7% in 1994 and 20.6% in 1993. The increase in 1995 was attributable to sales
promotion efforts to penetrate new markets, costs incurred in connection with
reorganization of the European operations, and improvements in information
systems. The decrease in 1994 was due to cost reduction efforts and higher
sales levels. The primary components of other expense in each of the three
years were debt restructuring expenses and employee severance payments.
The combined domestic and international operations incurred operating income of
$6.1 million in 1995 compared to $5.0 million in 1994 and an operating loss of
$1.8 million in 1993.
Net interest expense of $2.8 million increased over 1994 interest of $2.4
million reflecting increased borrowings throughout the year to support higher
levels of sales, as well as slightly higher rates. Interest expense in 1994 was
$0.5 million less than 1993 reflecting the Company's debt reduction program.
A net foreign currency exchange gain of $0.1 million earned in fiscal 1995 was
about the same as fiscal 1994. A net foreign currency exchange loss of $0.5
million was incurred in fiscal 1993. 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 1995 conversion rates, resulted in a
translation adjustment reflected as a $3.5 million charge to stockholders'
equity in both 1995 and 1994 versus the comparable 1993 amount of $4.0 million.
11<PAGE>
In fiscal 1995, the Company sold a noncore product line and related assets.
Net proceeds were $0.5 million, and a net gain of $0.5 million was realized.
Fully diluted net earnings were $0.13 per share in 1995 versus 1994 earnings per
share before accounting change of $0.03 and a 1994 net loss of $1.69 per share
after accounting change, and a net loss of $1.09 per share incurred in fiscal
1993. The weighted average shares outstanding used in computing fully diluted
earnings per share were 9,820,000 in 1995; 7,801,000 in 1994; and 6,940,000 in
1993.
No dividends were paid on common stock during fiscal years 1993 through 1995 in
accordance with restrictive covenants under the Company's loan agreement. The
number of stockholders as of November 30, 1995 was approximately 7,000.
Inflation has not had a significant impact on the Company's results of
operations.
LITIGATION AND ENVIRONMENTAL MATTERS
Claims have been brought against the Company and its subsidiaries for various
legal matters. In addition, the Company's operations are subject to federal,
state, and local environmental laws and regulations. For further details,
see Notes to Consolidated Financial Statements No. 16, "Contingent Liabilities."
OTHER
In the first quarter of 1994, the Company adopted a mandatory noncash accounting
change pursuant to Statement of Financial Accounting Standards (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. At November 30, 1995, the Company's accrual was
$14.8 million. 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 adopted 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. Adoption of the new accounting standard did not have a material
impact on the Company's financial position, cash flows, or results of
operations, nor did it represent a change in the benefit levels provided to
employees.
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.
On April 22, 1994, the Company completed a refinancing of its loan agreement
which was to have matured on December 1, 1994. The 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.
12<PAGE>
Availability of revolving credit under these agreements 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, 1995.
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 and a net
income test. In 1995, dividends on common stock were prohibited by these tests.
Cash provided from operations was $3.2 million in 1995 compared to $2.4 million
in 1994 and a deficit of $5.0 million in 1993. The increases in 1995 and 1994,
relative to the previous year, reflect the increase in operating earnings and
continued improvement in working capital management.
The Company's investing activities are generally for capital expenditures which
amounted to $5.6 million in 1995, $2.8 million in 1994, and $2.5 million in
1993. In 1995, the Company received proceeds from sales of property, plant, and
equipment of $0.6 million versus $0.2 million and $2.4 million in 1994 and 1993,
respectively. At November 30, 1995, no significant contractual commitments
existed for future capital expenditures. Prior to fiscal 1995 year-end, the
Board of Directors approved capital expenditures of approximately $12.8 million
for improvements in plant productivity and capacity, product design, and quality
of both products and processes. The Company is evaluating various sources to
fund these expenditures and does not foresee any difficulty obtaining adequate
funding.
Financing activities in 1995 were limited to normal business transactions.
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 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 November 30, 1992.
Peak short-term borrowings were $19.9 million in 1995, $18.4 million in 1994,
and $25.0 million in 1993. The weighted average interest rate for these
borrowings was approximately 8.6% in 1995, 8.1% in 1994, and 8.9% in 1993.
Preferred stock dividends paid were $1.6 million, $1.6 million, and $1.7 million
in fiscal years 1995, 1994, and 1993, respectively.
Cash and cash equivalents at November 30, 1995 aggregated $3.0 million versus
$3.9 million at November 30, 1994. Working capital at November 30, 1995
increased $3.0 million over the prior year as a result of higher accounts
receivable, partially offset by an increase in current liabilities and a
decrease in cash and cash equivalents. The Company's current ratio at November
30, 1995 and 1994 was 2.2.
The Company has guaranteed loans to its Retirement Savings Plan in the amounts
of $14.6 million and $17.0 million at November 30, 1995 and 1994, 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, 1995, this difference aggregated $6.7
million.
Total interest-bearing debt as a percent of equity for 1995 was 142% compared to
155% for 1994. The decrease in 1995 is primarily due to a reduction in
Guaranteed Employees' Stock Ownership Plan Obligation, reduction in common
treasury stock, and increased retained earnings.
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.
13<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, 1995, 1994, AND 1993
(Amounts in thousands except amounts per share)
<TABLE>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales............................................... $221,573 $202,134 $172,306
Cost of sales, exclusive of items listed below.......... 167,329 154,652 133,326
Selling, general, and administrative expenses........... 43,262 37,854 35,573
Depreciation and amortization........................... 4,857 4,672 5,233
Interest expense (net of interest income of
$269, $252, and $369, respectively)................... 2,815 2,350 2,890
Foreign currency (gains) losses........................ (143) (172) 453
Other expense, net...................................... 538 659 576
Earnings (loss) before income taxes and cumulative
effect of change in accounting...................... 2,915 2,119 (5,745)
Income taxes............................................ 39 257 122
Earnings (loss) before cumulative effect of change
in accounting........................................ 2,876 1,862 (5,867)
Cumulative effect of change in method of accounting for
postretirement benefits other than pensions.......... -- (13,416) --
Net earnings (loss)..................................... 2,876 (11,554) (5,867)
Preferred stock dividends ($1.94 per share)............. (1,580) (1,617) (1,663)
Earnings (loss) applicable to common stock.............. 1,296 (13,171) (7,530)
Retained earnings, beginning of year.................... 9,279 22,829 31,733
Treasury stock transactions............................. (860) (379) (1,374)
Retained earnings, end of year.......................... $ 9,715 $ 9,279 $ 22,829
Earnings (loss) per common share:
Primary:
Before cumulative effect of change in method
of accounting................................. $ .16 $ .03 $ (1.09)
Cumulative effect of change in method
of accounting for postretirement benefits
other than pensions........................... -- (1.72) --
Net earnings (loss).............................. $ .16 $ (1.69) $ (1.09)
Weighted average shares outstanding.............. 7,911 7,801 6,940
Fully Diluted:
Before cumulative effect of change in method
of accounting................................. $ .13 $ .03 $ (1.09)
Cumulative effect of change in method of
accounting for postretirement benefits
other than pensions........................... -- (1.72) --
Net earnings (loss).............................. $ .13 $ (1.69) $ (1.09)
Weighted average shares outstanding.............. 9,820 7,801 6,940
</TABLE>
The accompanying notes are an integral part of the financial statements.
14<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
TOKHEIM CORPORATION AND SUBSIDIARIES
FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994, AND 1993
(Amounts in thousands)
<TABLE> 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net earnings (loss)....................................... $ 2,876 $(11,554) $(5,867)
Adjustments to reconcile net earnings (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 --
Depreciation and amortization............................ 4,857 4,672 5,233
(Gain) loss on sale of property, plant, and equipment.... (436) (23) 446
Deferred income taxes.................................... (33) (903) (830)
Changes in assets and liabilities:
Receivables, net................................. (6,140) (1,260) (7,999)
Inventories...................................... 444 (300) (590)
Prepaid expenses................................. (877) 229 (202)
Accounts payable................................. 1,648 (3,694) 7,277
Accrued expenses................................. 2,132 2,486 (4,223)
U.S. and foreign income taxes.................... (349) 55 759
Other............................................ (900) (716) 957
Net cash provided from (used in) operations............... 3,222 2,408 (5,039)
Cash Flows From Investing and Other Activities:
Property, plant, and equipment additions.................. (5,559) (2,757) (2,503)
Proceeds from sale of property, plant, and equipment...... 649 195 2,427
Net cash used in investing and other activities........... (4,910) (2,562) (76)
Cash Flows From Financing Activities:
Proceeds from term debt................................... 2,122 485 --
Payments on term debt..................................... (819) (3,889) (2,176)
Net increase (decrease) notes payable, banks.............. 559 (522) (9,166)
Proceeds from issuance of common stock.................... -- 49 11,485
Treasury stock, net....................................... 273 431 427
Preferred stock dividends................................. (1,580) (1,617) (1,663)
Net cash provided from (used in) financing activities.... 555 (5,063) (1,093)
EFFECT OF TRANSLATION ADJUSTMENT ON CASH.................... 166 53 (212)
Cash and Cash Equivalents:
Decrease in cash.......................................... (967) (5,164) (6,420)
Beginning of year......................................... 3,933 9,097 15,517
End of year............................................... $ 2,966 $ 3,933 $ 9,097
</TABLE>
The accompanying notes are an integral part of the financial statements.
15<PAGE>
CONSOLIDATED BALANCE SHEET
TOKHEIM CORPORATION AND SUBSIDIARIES
AS OF NOVEMBER 30, 1995 AND 1994
(Amounts in thousands)
ASSETS
1995 1994
-------- --------
Current assets:
Cash and cash equivalents.......................... $ 2,966 $ 3,933
Accounts receivable, less allowance for doubtful
accounts of $1,150 and $1,295, respectively...... 45,649 38,812
Inventories:
Raw materials and supplies....................... 7,649 7,697
Work in process.................................. 25,535 25,675
Finished goods................................... 4,911 4,729
38,095 38,101
Less amounts necessary to reduce certain
inventories to LIFO method..................... 3,100 2,746
34,995 35,355
Prepaid expenses................................... 3,188 2,308
Total current assets............................. 86,798 80,408
Property, plant, and equipment, at cost:
Land and land improvements......................... 3,311 3,232
Buildings and building improvements................ 22,716 22,150
Machinery and equipment............................ 57,138 55,268
Construction in progress........................... 2,867 1,166
86,032 81,816
Less accumulated depreciation...................... 57,474 54,391
28,558 27,425
Other noncurrent assets and deferred charges......... 5,876 5,672
$121,232 $113,505
The accompanying notes are an integral part of the financial statements.
16<PAGE>
CONSOLIDATED BALANCE SHEET (CONTINUED)
TOKHEIM CORPORATION AND SUBSIDIARIES
AS OF NOVEMBER 30, 1995 AND 1994
(Amounts in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
1995 1994
-------- --------
Current liabilities:
Current maturities of long-term debt............. $ 351 $ 1,248
Notes payable to banks........................... 2,364 1,661
Accounts payable................................. 18,689 16,215
Accrued expenses................................. 18,141 16,990
Total current liabilities.................... 39,545 36,114
Long-term debt, less current maturities............ 21,321 18,941
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... 14,576 16,975
Postretirement benefit liability................... 13,882 13,512
Minimum pension liability.......................... 3,868 1,906
Other long-term liabilities........................ 110 150
Deferred income taxes.............................. 807 791
94,109 88,389
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...................................... (13,790) (15,733)
Treasury stock, at cost, 151 and 130 shares,
respectively..................................... (3,784) (3,262)
6,426 5,005
Preferred stock, no par value; 3,300 shares
authorized and unissued.......................... -- --
Common stock, no par value; 30,000 shares
authorized, 7,949 shares issued................. 19,409 19,410
Guaranteed Employees' Stock Ownership Plan (RSP)
obligation....................................... (786) (1,242)
Minimum pension liability.......................... (3,868) (1,906)
Foreign currency translation adjustments........... (3,542) (3,543)
Retained earnings.................................. 9,715 9,279
20,928 21,998
Treasury stock, at cost, 13 and 106
shares, respectively............................. (231) (1,887)
20,697 20,111
$121,232 $113,505
The accompanying notes are an integral part of the financial statements.
17<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. All intercompany accounts
and transactions have been eliminated in consolidation.
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 determining net earnings.
INVENTORY VALUATION -- Inventories are valued at the lower of cost or market.
Cost is determined using the last-in, first-out (LIFO) method for the major
portion of United States inventories and the first-in, first-out (FIFO)
method for most other inventories.
Inventories valued using the LIFO method amounted to approximately $28,590 and
$27,988 on a FIFO basis at November 30, 1995 and 1994, 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. Upon retirement or sale of assets, the cost of the disposed assets and
the related accumulated depreciation are removed from the accounts and any
resulting gain or loss is credited or charged to income.
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 $543 and $76 at November 30, 1995 and 1994,
respectively. The amounts amortized and charged to expense in 1995, 1994, and
1993 were $109, $220, and $382, respectively.
All other product development expenditures are charged to research and
development expense in the period incurred. These expenses amounted to $12,746;
$10,239; and $8,625 in 1995, 1994, and 1993, respectively.
INCOME TAXES -- The Company adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," effective December 1, 1993. In
1993, the Company accounted for income taxes in accordance with the provisions
of Statement of Financial Accounting Standards 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.
18<PAGE>
POSTEMPLOYMENT BENEFITS -- The Company adopted Statement of Financial Accounting
Standards 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 adoption
of this statement did not have a material impact on the Company's financial
position, cash flows, 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 90 days or less to
be cash equivalents.
Supplemental disclosures of cash flow information:
1995 1994 1993
------ ------ ------
Cash paid during the year for:
Interest................................... $3,060 $2,441 $3,273
Income taxes............................... 926 894 1,352
Noncash transactions primarily related
to the issuance of treasury stock
in settlement of Retirement Savings
Plan distributions....................... 976 612 1,374
Noncash adjustments to certain assets
and liabilities in connection with the
settlement of the corporate
reorganization........................... 383 224 1,400
RECLASSIFICATION -- Certain prior year amounts in these financial statements
have been reclassified to conform with current year presentation.
2. ACCRUED EXPENSES
Accrued expenses consisted of the following at November 30, 1995 and 1994:
1995 1994
-------- --------
Salaries, wages, and commissions........ $ 4,308 $ 3,930
Compensated absences.................... 3,480 3,391
Retirement plan contributions........... 516 915
Postretirement benefits................. 887 697
Warranty................................ 2,821 2,506
Legal and professional.................. 1,525 1,274
Taxes, other than United States and
foreign income taxes.................. 1,304 1,487
Insurance............................... 440 651
Other................................... 2,860 2,139
$18,141 $16,990
19<PAGE>
3. NOTES PAYABLE TO BANKS
Notes payable to banks represent short-term borrowings under domestic and
foreign credit lines. In 1995, aggregate amounts outstanding under these
lines were $19,064 of which $16,700 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 $30,458 of which $11,394 was unused at
November 30, 1995. Availability of revolving credit under these agreements
is subject to borrowing base requirements and compliance with covenants. The
weighted average annual interest rate was 8.6% and 8.1% for 1995 and 1994,
respectively. The range of domestic and foreign rates at November 30, 1995 and
1994 was 7.1% to 9.8% and 7.3% to 11.8%, 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 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
credit agreement which matures on March 31, 1996 is collateralized by
substantially all of the assets 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, and
transactions in the Company's own stock. In addition, the domestic credit
facility prohibited the payment of cash dividends on common stock through 1994.
Beyond 1994, dividends on common stock are limited by a cash flow coverage test
and a net income test. In 1995, dividends on common stock were prohibited by
these tests.
20<PAGE>
4. TERM DEBT AND GUARANTEED EMPLOYEES' STOCK OWNERSHIP PLAN (RSP) OBLIGATION
Term debt at November 30, 1995 and 1994 consisted of the following:
<TABLE>
1995 1994
------- --------
<S> <C> <C>
Industrial Revenue Bonds, variable rate, maturing in 2006,
rate of 4.1% at November 30, 1995 (a)(b)............................ $ 4,000 $ 4,500
3.5% German Bonds, due in $49 semiannual
installments through 1998 (a)....................................... 292 359
Note payable, variable rate, due in monthly installments ranging from
$4 to $8 through 1999, rate of 18.5% at November 30, 1995(a)........ 253 313
Capital lease obligations, variable rate, due in $1 monthly
installments through 1998, rate of 18.5% at November 30, 1995(a).... 168 --
9.2% Capital lease obligation, due in $4 monthly
installments through 1997 (a)....................................... 70 114
10.9% Capital lease obligation, due in $2 monthly
installments though 1997(a)......................................... 44 --
Revolving credit facility, variable rate, maturing April 21, 1997,
rates ranging from 8.8% to 9.8% at November 30, 1995(b)............. 16,700 14,700
Other, 3% to 14% (a)................................................... 145 203
21,672 20,189
Less: Current maturities.............................................. 351 1,248
$21,321 $18,941
</TABLE>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation at November 30, 1995
and 1994 consisted of the following:
<TABLE>
1995 1994
-------- --------
<S> <C> <C>
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate, annual maturities of $1,506 to $2,845,
due in quarterly installments through 2001, rate of
7.5% at November 30, 1995(b)......................................... $13,790 $15,733
Guaranteed Employees' Stock Ownership Plan (RSP) obligation,
variable rate, annual maturities of $484 to $303, through 1997,
rate of 8.5% at November 30, 1995(b)................................. 786 1,242
$14,576 $16,975
</TABLE>
(a) Aggregate cost of plant and equipment pledged as collateral
under revenue bonds and lease obligations is $10,558.
(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.
Aggregate scheduled maturities of the above term debt and Guaranteed Employees'
Stock Ownership Plan (RSP) obligation during the ensuing four years approximate
$2,932; $29,128; $140; and $48, respectively.
21<PAGE>
5. OPERATING LEASES
The Company leases certain manufacturing equipment, office equipment, vehicles,
and office and warehousing space under operating leases. These leases generally
expire in periods ranging from one to five years. In 1995 the Company leased a
CAD/CAM system. The lease is effective for a term of three years with an
interest rate of 12% and monthly rentals ranging from $55 to $68. The lease
contains a fair market value purchase option at the end of the lease term.
Amounts charged to expenses under operating leases in 1995, 1994, and 1993 were
$1,986; $1,077; and $1,144, respectively. Minimum rental payments under
noncancelable operating leases during the ensuing five years approximate $1,448;
$1,211; $307; $145; and $190, respectively.
6. 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, 1995, 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 SIP plans during 1995, 1994, and 1993 are as follows:
Year of 1992 Stock Incentive Plan
Grant ISO NSO
------- ----------- --------------
1995 35,000 --
1994 19,000 --
1993 275,162 41,288
Subsequent to November 30, 1995, an additional 43,000 ISO shares were granted
under the SIP at an option price of $7.125 per share. These shares become
exercisable starting in 1997.
22<PAGE>
The following table sets forth the status of all outstanding options at
November 30, 1995:
Option Exercisable Total
Price Per Options In The Next One Options
Share Exercisable To Four Years Outstanding
- --------- ----------- --------------- -----------
$20.0000 28,225 -- 28,225
$12.3750 3,000 -- 3,000
$12.2500 1,000 -- 1,000
$11.9375 2,875 8,625 11,500
$ 9.3750 12,500 12,500 25,000
$ 8.8800 107,470 -- 107,470
$ 8.5000 -- 35,000 35,000
$ 7.8750 15,000 -- 15,000
$ 7.7500 30,000 -- 30,000
$ 6.8750 15,000 -- 15,000
$ 6.8125 95,070 116,076 211,146
310,140 172,201 482,341
Transactions in stock options under these plans are summarized as follows:
Shares
Under
Option Price Range
------ ----------------
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
Granted................................. 35,000 $ 8.50
Exercised............................... --
Canceled or expired..................... (95,187) $ 6.81 - $20.00
Outstanding, November 30, 1995.......... 482,341 $ 6.81 - $20.00
Reserved for options: Shares
--------
November 30, 1993........ 112,550
November 30, 1994........ 98,550
November 30, 1995........ 95,462
23<PAGE>
7. COMMON AND PREFERRED STOCK
Changes in common stock and common treasury stock are shown below:
<TABLE>
Common Stock Common Treasury Stock
Shares Amount Shares Amount
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
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
Redemption of preferred stock.............. -- -- (67,000) (1,196)
Employee termination benefits.............. -- -- (24,000) (427)
Other...................................... -- (1) (2,000) (33)
Balance, November 30, 1995................. 7,949,000 $19,409 13,000 $ 231
</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, 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
Shares redeemed............................ -- -- 29,000 720
RSP contributions.......................... -- -- (8,000) (197)
Balance, November 30, 1995................. 960,000 $24,000 151,000 $ 3,785
</TABLE> 24<PAGE>
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, 1995, the difference between the $25 floor value and the market
value of the underlying common stock aggregated $6,723.
8. EARNINGS PER SHARE
Primary earnings per share are based on the weighted average number of shares
outstanding during each year and the assumed exercise of dilutive employees'
stock options less the number of treasury shares assumed to be purchased from
the proceeds using the average market price of the Company's common stock.
The following table presents information necessary to calculate earnings (loss)
per share for fiscal years ended November 30, 1995, 1994, and 1993:
<TABLE>
Primary
------------------------------------
1995 1994 1993
-------- ------- --------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......................... 7,893 7,801 6,891
Share equivalents..................................... 18 -- 49
Adjusted outstanding.................................. 7,911 7,801 6,940
Net earnings (loss):
Before cumulative effect of change in method
of accounting..................................... $ 2,876 $ 1,862 $(5,867)
Cumulative effect of change in method of accounting
for postretirement benefits other than pensions... -- (13,416) --
Net earnings (loss)................................... 2,876 (11,554) (5,867)
Preferred stock dividends............................. (1,580) (1,617) (1,663)
Earnings (loss) applicable to common stock............ $ 1,296 $(13,171) $(7,530)
Net earnings (loss) per common share:
Before cumulative effect of change in method of
accounting........................................ $ .16 $ .03 $ (1.09)
Cumulative effect of change in method of accounting
for postretirement benefits other than pensions... -- (1.72) --
Net earnings (loss)................................... $ .16 $ (1.69) $ (1.09)
</TABLE> 25<PAGE>
For 1994 and 1993, 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
---------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Shares outstanding (in thousands):
Weighted average outstanding.......................... 7,893 7,801 6,891
Share equivalents..................................... 18 -- 49
Weighted conversion of preferred stock................ 1,909 -- --
Adjusted outstanding.................................. 9,820 7,801 6,940
Net earnings (loss):
Before cumulative effect of change in method of
accounting........................................ $ 2,876 $ 1,862 $(5,867)
Cumulative effect of change in method of accounting
for postretirement benefits other than pensions... -- (13,416) --
Net earnings (loss)................................... 2,876 (11,554) (5,867)
Incremental RSP expense............................... (1,580) (1,617) (1,663)
Earnings (loss) applicable to common stock............ $ 1,296 $(13,171) $(7,530)
Net earnings (loss) per common share:
Before cumulative effect of change in method of
accounting........................................ $ .13 $ 0.03 $ (1.09)
Cumulative effect of change in method of accounting
for postretirement benefits other than pensions... -- (1.72) --
Net earnings (loss).................................... $ .13 $ (1.69) $ (1.09)
</TABLE>
9. FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
Consolidated foreign currency translation adjustments are as follows:
1995 1994
-------- --------
Foreign currency translation adjustments,
beginning of year............................ $ (3,543) $ (4,037)
Current year adjustments....................... 1 494
Foreign currency translation adjustments,
end of year.................................. $ (3,542) $ (3,543)
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 amounts of foreign subsidiaries.
26<PAGE>
10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information for 1995 and 1994 is as follows:
<TABLE>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
1995
- -------
Net sales............................................ $45,845 $54,127 $52,935 $68,666 $221,573
Cost of products sold*............................... 36,413 40,554 40,577 49,785 167,329
Net earnings (loss).................................. (1,363) 526 (941) 4,654 2,876
Earnings (loss) per share:
Primary:
Net earnings (loss)............................. (.22) .02 (.17) .54 .16
Fully diluted:
Net earnings (loss)............................. (.22) .01 (.17) .42 .13
1994
- --------
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)
</TABLE>
* Includes product development expenses and excludes depreciation and
amortization.
27<PAGE>
11. 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
Company's 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 bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Financial statements for the prior years have not been restated as the
cumulative effect of the accounting change was not material to net earnings.
Earnings (loss) before income taxes consist of the following:
<TABLE>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Domestic............................................... $ 8,591 $ 6,456 $ (5,842)
Foreign................................................ (5,676) (4,337) 97
$ 2,915 $ 2,119 $ (5,745)
Income tax provision (benefit) consists of the following:
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal............................................. $ (272) $ -- $ --
State............................................... 249 673 723
Foreign............................................. 132 409 49
Deferred:
Foreign............................................. (70) (825) (650)
$ 39 $ 257 $ 122
</TABLE>
A reconciliation of the reported tax expense and the amount computed by applying
the statutory United States federal income tax rate of 35% for November 30,
1995 and 34% for November 30, 1994 and 1993 to earnings before income taxes is
as follows:
<TABLE>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Computed "expected" tax expense (benefit).............. $ 1,020 $ 721 $(1,953)
Increase (decrease) in taxes resulting from:
State income taxes net of federal tax benefit....... 162 444 477
Tax effect of dividends paid on stock held in
Retirement Savings Plan (RSP).................... (553) (550) (565)
Settlement of prior income tax returns and
adjustments to prior year accruals............... (599) 237 --
Difference in foreign and U.S. tax rates............ (6) (104) (37)
Decrease in valuation allowance..................... (2,099) (1,492) --
Earnings with no current tax benefit(expense):
Domestic......................................... -- -- 1,339
Foreign.......................................... 1,985 1,089 (219)
Repatriation of foreign earnings.................... 41 (162) 677
Miscellaneous items, net............................ 88 74 403
$ 39 $ 257 $ 122
</TABLE> 28<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 was as follows:
1993
--------
Federal:
Depreciation..................................... $ 149
Warranty costs................................... (14)
Provision for doubtful accounts.................. 38
Pension costs.................................... (37)
Inventory reserves............................... (717)
Insurance reserves............................... (54)
Restructuring charge............................. 1,060
Software development costs....................... (112)
Other............................................ (313)
Deferred federal income taxes (benefit) from
continuing operations.................... $ --
Foreign:
Repatriation of foreign earnings................. $ (500)
Other............................................ (150)
$ (650)
The components of the deferred tax asset and liability as of November 30, 1995
and 1994 were as follows:
1995 1994
-------- --------
Gross deferred tax assets:
Accounts receivable.............................. $ 187 $ 322
Employee compensation and benefit accruals....... 6,198 5,949
Workers' compensation and other claims........... 153 215
Other............................................ 58 184
Warranty accrual................................. 946 818
EPA accrual...................................... 315 308
Net operating loss carryforwards................. 9,430 12,171
General business credit.......................... 295 5
Valuation allowance.............................. (15,654) (17,753)
Total deferred tax asset...................... $ 1,928 $ 2,219
Gross deferred tax liabilities:
Property, plant, and equipment................... $ 1,424 $ 1,479
Pension assets................................... 253 151
Inventory........................................ (217) 201
Investment in property........................... 214 208
Foreign earnings not permanently invested........ 202 161
Foreign exchange................................. 236 236
Export sales provision........................... 623 574
Total deferred tax liability.................. 2,735 3,010
Net deferred tax liability.......................... $ (807) $ (791)
For domestic federal income tax purposes, the Net Operating Loss (NOL) carryover
amounts to $26,942 and will expire from 2006 to 2008. For purposes of the
Alternative Minimum Tax (AMT), the NOL carryover is $13,626 and the credit
carryforwards total $295.
29<PAGE>
12. GEOGRAPHICAL SEGMENTS
Domestic and foreign operations information for 1995, 1994, and 1993 is as
follows:
1995 1994 1993
-------- -------- --------
Net sales -- unaffiliated customers:
Domestic............................ $126,738 $119,774 $ 99,317
Export.............................. 36,238 28,848 25,036
Foreign: Europe..................... 35,829 34,534 22,858
Other...................... 22,768 18,978 25,095
$221,573 $202,134 $172,306
Inter-area sales eliminations:
Domestic............................ $ 17,732 $ 16,904 $ 11,098
Foreign, principally Europe......... $ 47 $ 207 $ 120
Operating income (loss):
Domestic............................ $ 9,296 $ 7,495 $ (3,797)
Foreign: Europe..................... (4,232) (2,971) (1,025)
Other...................... (381) (882) 1,393
Adjustments and eliminations........ 1,442 1,314 1,603
$ 6,125 $ 4,956 $ (1,826)
Identifiable assets:
Domestic............................ $107,445 $ 94,466 $102,743
Foreign: Europe..................... 22,914 25,189 21,090
Other...................... 14,071 13,102 12,776
Adjustments and eliminations........ (23,198) (19,252) (19,544)
$121,232 $113,505 $117,065
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:
1995 1994 1993
-------- -------- --------
Working capital....................... $ 14,717 $ 14,828 $ 15,982
Property, plant, and equipment
(net) and other..................... 5,997 5,717 5,187
Noncurrent liabilities................ (12,666) (6,683) (3,128)
Net foreign assets.................... $ 8,048 $ 13,862 $ 18,041
Net earnings (loss) of foreign
operations.......................... $ (5,620) $ (4,438) $ 161
13. ALLOWANCE FOR DOUBTFUL ACCOUNTS
Changes in the allowance for doubtful accounts are as follows:
1995 1994 1993
-------- -------- --------
Balance, beginning of year............ $ 1,295 $ 1,267 $ 1,795
Charged to operations................. 367 291 381
Uncollectible accounts written
off, less recoveries................ (519) (278) (879)
Foreign currency translation
adjustments......................... 7 15 (30)
Balance, end of year.................. $ 1,150 $ 1,295 $ 1,267
30<PAGE>
14. 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
Retirement Savings Plan (RSP) were $3,054 in 1995; $2,421 in 1994; and $2,675
in 1993.
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, 1995 and 1994:
<TABLE>
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated plan benefits:
Vested....................................... $ 1,599 $ 1,196 $ 10,226 $ 8,720
Nonvested.................................... 57 -- 769 --
Accumulated benefit obligations.............. $ 1,656 $ 1,196 $ 10,995 $ 8,720
Projected benefit obligations.................... $ 1,656 $ 1,196 $ 10,995 $ 8,720
Plan assets at fair value, principally common
stocks, bonds, and GIC funds, including
$409 in 1995 and $437 in 1994 of the
Company's common stock....................... 1,924 1,765 7,325 6,790
Plan assets in excess of (less than) projected
benefit obligations.......................... 268 569 (3,670) (1,930)
Unrecognized net loss............................ 516 189 4,002 2,063
Unrecognized net assets at December 1,
1991 and 1990 being recognized over
15 years..................................... (260) (288) (134) (157)
Adjustment required to
recognize minimum liability................. -- -- (3,868) (1,906)
Prepaid pension cost (pension liability)
recognized in the consolidated balance
sheet........................................ $ 524 $ 470 $ (3,670) $ (1,930)
</TABLE>
The net periodic pension expense amounts were based on actuarial assumptions as
follows:
1995 1994 1995 1994
---- ---- ---- ----
Discount rate on plan liabilities. 7.00% 8.50% 7.00% 8.50%
Rate of return on plan assets. . . 8.00% 8.00% 8.00% 8.00%
31<PAGE>
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 $3,868 and $1,906 at
November 30, 1995 and 1994, respectively, representing the excess of unfunded
accumulated benefit obligations over previously recorded pension cost
liabilities. The net periodic pension cost of U.S. defined benefit plans for
1995, 1994, and 1993 includes the following components:
1995 1994 1993
-------- -------- --------
Interest cost on projected
benefit obligations.................. $ 857 $ 849 $ 851
Return on plan assets.................. (1,138) 82 (896)
Net amortization and deferral.......... 558 (625) 335
Net periodic pension expense........... $ 277 $ 306 $ 290
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, 1995 and 1994 was
808,620 and 829,534, respectively, at a cost of $25 per share. The number of
common shares in the RSP at November 30, 1995 and 1994 was 145,545 and 153,478,
respectively, at an average cost of $21.09 and $21.05 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 $832, $746, and $887 for 1995, 1994, and 1993,
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:
1995 1994 1993
-------- -------- --------
Interest expense incurred by the Plan
Trust(s) on RSP debt..................... $1,265 $1,367 $1,595
Company contributions to the RSP............ 2,300 1,719 2,030
Dividends on preferred stock used for debt
service by the RSP....................... 1,580 1,617 1,663
32<PAGE>
15. 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 11), the Company established a valuation allowance to offset the deferred
tax asset created by this charge to operations.
The accumulated postretirement benefit obligation as of November 30, 1995 and
1994 consisted of unfunded obligations related to the following:
1995 1994
-------- --------
Retirees and dependents........................ $ 8,333 $ 4,903
Fully eligible active plan participants........ 1,114 1,274
Other active plan participants................. 5,631 6,935
Total accumulated postretirement
benefit obligation...................... 15,078 13,112
Unrecognized net gain (loss)................... (309) 1,101
Accrued postretirement benefit cost............ 14,769 14,213
Less current portion........................... (887) (701)
$ 13,882 $ 13,512
Net postretirement benefit cost for 1995 and 1994 includes the following
components:
1995 1994
-------- --------
Service cost................................... $ 422 $ 582
Interest cost on accumulated postretirement
benefit obligation.......................... 1,034 916
Amortization (gain) loss....................... (25) --
Net postretirement benefit cost...... $ 1,431 $ 1,498
The assumptions used to develop the net postretirement benefit expense and the
present value of benefit obligations are as follows:
1995 1994
-------- --------
Discount rate.................................... 7.00% 8.50%
Health care cost trend rate for the next year.... 10.00% 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
5% in 2005. A 1% increase in this annual trend rate would increase the
accumulated postretirement benefit obligation as of November 30, 1995 by
approximately $2,063 and the combined service and interest components of the
annual net postretirement health care cost by approximately $263.
33<PAGE>
16. 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 -- Total amounts included in accrued expenses related to
environmental matters were $872 and $847 at November 30, 1995 and 1994,
respectively. 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.
The Company is a "de minimis" party in two of these sites. One matter was
settled for $14. The second matter will cost the Company approximately $6 for
its share of the pro rated clean up costs.
During 1995, the Company settled two additional actions with the Environmental
Protection Agency (EPA). One matter the Company settled in the amount of $627
as part of a global settlement with other PRPs and has recorded the liability
in full at November 30, 1995. The accrued amount will be paid over a two year
period. In the other settlement, the Company has settled as a participating
generator as part of a global settlement. The Company paid $192 as part of its
past costs and operating maintenance of the site. The Company provided a letter
of credit in the amount of $148 to cover its projected future costs.
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.
The Company is also involved in one lawsuit with respect to environmental
liabilities under an indemnity provision of a sale agreement concerning the sale
of a subsidiary die casting facility to a third party. The Company believes it
has fulfilled its obligations under the sale agreement and it cannot at this
time quantify the liabilities that are alleged in the litigation.
Product Liability and Other Matters -- 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 $156 and $265 at November 30, 1995 and 1994, 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.
34<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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended November 30, 1995, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Wayne, Indiana
January 24, 1996
35<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 page 1 through 4 in the
registrant's Proxy Statement for the 1995 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 5 YEARS
- ------------------------------- -------------------------------------------
GERALD H. FRIELING, JR., 65 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.
DOUGLAS K. PINNER, 55 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, 49 Elected Vice President, Planning and
Vice President, Planning Human Resources in 1995; during the
and Human Resources last 5 years, also served as Vice President,
Human Resources, of the Company and as
Senior Vice President of NordicTrack, Inc.
and as Director, Total Quality Management/
Human Resources of FMC Corporation.
CONDELL B. ELLIS, 63 Elected Vice President, Domestic Sales in
Vice President, 1995; during the last 5 years, also served
Domestic Sales as Vice President, Sales, of CANMAX; served
in various executive sales officer positions
of Tokheim Corporation; and as Vice
President, Sales, Wayne Division of Dresser
Industries, Inc.
36<PAGE>
NAME, AGE, AND POSITION BUSINESS EXPERIENCE DURING PAST 5 YEARS
- ------------------------------- -------------------------------------------
TERRY M. FULMER, 52 Elected Vice President, Global
Vice President, Manufacturing in 1995; during the last 5
Global Manufacturing years, also served as Vice President,
Corporate Operations and Planning; Vice
President, Corporate Planning; General
Manager, Small Pumps Division; and Manager
of Manufacturing, Newbern Plant of the
Company.
JOHN A. NEGOVETICH, 50 Joined Tokheim as Vice President and
Vice President and Chief Financial Officer in 1995; during
Chief Financial Officer during last 5 years, also served as Vice
President, Finance, Chief Financial Officer
and Director of Ardco, Inc. and as Vice
President, Finance, Hawker Siddeley, Inc.
ARTHUR C. PREWITT, 54 Elected Vice President, Technology and
Vice President, Technology Venture Development in 1995; during the
and Venture Development last five years, also served as Vice
President, Technology; 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, 46 Elected Vice President, Secretary and
Vice President, Secretary General Counsel in 1995; during the last
and General Counsel 5 years, also served as Vice President and
General Counsel and as Corporate Counsel of
the Company.
SCOTT A. SWOGGER, 43 Elected Vice President, Quality Systems
Vice President in 1995; during the last 5 years, also
Quality Systems served as Director, Quality Assurance, of
the Company; Corporate Quality Engineer and
Senior Quality Engineer of DePuy, Inc.; and
as Senior Manager, Quality Assurance of
Tokheim Corporation.
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 1995 all Section 16(a) filing requirements
applicable to its directors, officers and greater-than-10% stockholders were
held in compliance.
37<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth on page 4 through 6 in the
registrant's Proxy Statement for the 1995 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 page 9 through 11 in the
registrant's Proxy Statement for the 1995 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 page 9 through 11 in the
registrant's Proxy Statement for the 1995 Annual Meeting of Stockholders, which
information is incorporated herein by reference.
38<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, 1995..... Page 14
Consolidated Statement of Cash Flows for each of the three
years in the period ended November 30, 1995....................... Page 15
Consolidated Balance Sheet as of November 30, 1995 and 1994....... Page 16
Notes to Consolidated Financial Statements........................ Page 18
Report of Independent Accountants................................. Page 35
(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 10 to the
Consolidated Financial Statements................................. Page 27
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 41
(21) Subsidiaries of the Registrant.............................. Page 43
(23) Consents of Experts and Counsel............................. Page 44
(27) Financial Data Schedule..................................... Page 45
(b) REPORTS ON FORM 8-K:
None.
39<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 23, 1996 TOKHEIM CORPORATION
(Registrant)
By: DOUGLAS K. PINNER
----------------------
President and Chief
Executive Officer
By: JOHN A. NEGOVETICH
-----------------------
Vice President 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 in the
capacities and on the dates indicated.
DOUGLAS K. PINNER President and Chief February 23, 1996
- ----------------------- Executive Officer
GERALD H. FRIELING, JR. Chairman of the Board February 23, 1996
- -----------------------
WALTER S. AINSWORTH Director February 23, 1996
- -----------------------
ROBERT M. AKIN, III Director February 23, 1996
- -----------------------
JAMES K. BAKER Director February 23, 1996
- -----------------------
BERNARD D. COOPER Director February 23, 1996
- -----------------------
DR. WINFRED M. PHILLIPS Director February 23, 1996
- -----------------------
IAN M. ROLLAND Director February 23, 1996
- -----------------------
RICHARD W. HANSEN Director February 23, 1996
- -----------------------
40<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994, AND 1993
(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, 1995, 1994, and 1993:
Primary
------------------------------
1995 1994 1993
-------- -------- --------
Shares outstanding:
Weighted average outstanding............ 7,893 7,801 6,891
Share equivalents....................... 18 -- 49
Adjusted outstanding.................... 7,911 7,801 6,940
Earnings (loss):
Continuing operations before cumulative
effect of change in accounting...... $ 2,876 $ 1,862 $(5,867)
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions.......... -- (13,416) --
Net earnings (loss)..................... 2,876 (11,554) (5,867)
Preferred stock dividends............... (1,580) (1,617) (1,663)
Earnings (loss) applicable to
common stock.......................... $ 1,296 $(13,171) $(7,530)
Earnings (loss) per common share:
Continuing operations before cumulative
effect of change in accounting........ $ .16 $ .03 $ (1.09)
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions.......... -- (1.72) --
Net earnings (loss) per common share.... $ .16 $ (1.69) $ (1.09)
41<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (11) - EARNINGS PER SHARE
FOR THE YEARS ENDED NOVEMBER 30, 1995, 1994, AND 1993
(CONTINUED)
(Amounts in thousands except amounts per share)
For 1995, 1994, and 1993, 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.
Fully Diluted
----------------------------------
1995 1994 1993
-------- -------- --------
Shares outstanding:
Weighted average outstanding............ 7,893 7,801 6,891
Share equivalents....................... 18 60 49
Weighted conversion of preferred stock.. 1,909 1,362 1,296
Adjusted outstanding.................... 9,820 9,223 8,236
Earnings (loss):
Continuing operations before cumulative
effect of change in accounting........ $ 2,876 $ 1,862 $ (5,867)
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions.......... -- (13,416) --
Net earnings (loss)..................... 2,876 (11,554) (5,867)
Incremental RSP expense................. (1,580) (1,617) (1,663)
Earnings (loss) applicable to
common stock.......................... $ 1,296 $(13,171) $ (7,530)
Earnings (loss) per common share:
Continuing operations before cumulative
effect of change in accounting........ $ 0.13 $ 0.03 $ (0.91)
Cumulative effect of change in method
of accounting for postretirement
benefits other than pensions.......... -- (1.45) --
Net earnings (loss) per common share.... $ 0.13 $ (1.42) $ (0.91)
42<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (21) - SUBSIDIARIES OF THE REGISTRANT
NOVEMBER 30, 1995
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:
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 Limited Scotland
Tokheim South Africa (Proprietary) Limited (C) South Africa
Tokheim Properties (Proprietary) Limited (C) 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 100% by Tokheim and Gasboy of Canada Limited.
43<PAGE>
TOKHEIM CORPORATION AND SUBSIDIARIES
EXHIBIT (23) - CONSENTS OF EXPERTS AND COUNSEL
NOVEMBER 30, 1995
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
24, 1996, on our audits of the consolidated financial statements of Tokheim
Corporation and Subsidiaries as of November 30, 1995 and 1994, and for the years
ended November 30, 1995, 1994, and 1993, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Fort Wayne, Indiana
February 23, 1996
44<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Tokheim
Corporation's November 30, 1995, 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-30-1995
<PERIOD-END> NOV-30-1995
<CASH> 2966
<SECURITIES> 0
<RECEIVABLES> 46799
<ALLOWANCES> 1150
<INVENTORY> 34995<F1>
<CURRENT-ASSETS> 86798
<PP&E> 86032<F2>
<DEPRECIATION> 57474
<TOTAL-ASSETS> 121232
<CURRENT-LIABILITIES> 39545
<BONDS> 0
6426<F3>
0
<COMMON> 18392<F4>
<OTHER-SE> 2305<F5>
<TOTAL-LIABILITY-AND-EQUITY> 121232
<SALES> 221573
<TOTAL-REVENUES> 221573
<CGS> 167329<F6>
<TOTAL-COSTS> 167329<F6>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2815
<INCOME-PRETAX> 2915
<INCOME-TAX> 39
<INCOME-CONTINUING> 2876
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2876
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.13
<FN>
<F1>Represents gross inventory net of LIFO and loss reserves.
<F2>Represents gross PP&E.
<F3>Represents redeemable preferred stock of $24,000 less Guaranteed ESOP of
$13,790 and treasury stock of $3,784.
<F4>Represents common stock of $19,409 less Guaranteed ESOP of $786 and treasury
stock of $231.
<F5>Represents retained earnings of $9,715 less minimum pension liability of
$3,868 and foreign currency translation adjustments of $3,542.
<F6>Includes product development expenses and excludes depreciation and
amortization. 45
</FN>
</TABLE>
