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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549-1004
Form 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
Commission file number 0-2413
MACDERMID, INCORPORATED
(Exact name of Registrant as specified in its Charter)
Connecticut 06-0435750
(State of incorporation) (I.R.S. Employer I.D. No.)
245 Freight Street, Waterbury, Connecticut 06702-0671
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code (203) 575-5700
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of Class - Common Stock Without Par Value
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. ( )
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 the filing requirements for the past 90 days. Yes (X) No ( )
The aggregate market value of the voting stock held by nonaffiliates of
the Registrant as of May 31, 1995 (based on the closing price on such date
as reported on Nasdaq Stock Market) was $68,668,000.
The number of shares of Registrant's Common Stock outstanding as of May
31, 1995 was 2,767,533 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1995 Annual Report to Shareholders are
incorporated by reference into Parts I and II hereof and filed as Exhibit
13 to this Report. The Proxy Statement mailed on or about June 26, 1995 to
the Corporation's stockholders in connection with the annual meeting
scheduled for July 20, 1995 are incorporated herein by reference into Part
III hereof.
PART I
Item 1(a) GENERAL DEVELOPMENT OF BUSINESS
Incorporated in Connecticut in 1922, MacDermid, Incorporated and its
subsidiaries (collectively, "MacDermid" or the "Corporation") develops,
produces and markets a broad line of specialty chemical products which
are used in the metal and plastic finishing and electronics industries.
MacDermid offers a line of horizontal processing equipment used in the
production of printed circuit boards and in chemical machining, through
Hollmuller America, Inc., a joint venture with a German company.
MacDermid also markets chemical supplies and equipment produced by others.
In May 1995, the Corporation acquired certain assets of the Allied-
Kelite Company (a subsidiary of Witco Corporation), a major supplier of
plating surface preparation proprietary chemical products to automotive,
electronics hardware and other industries. The business, located
primarily in the United States includes licensing of technology to
companies in several other countries. The acquisition, accounted for as
a purchase and financed through borrowings, complements the Corporation's
existing metal finishing and electronics business and provides cost
benefits from consolidation.
On August 1, 1994, MacDermid acquired, for approximately $26 million,
851,899 shares of its common stock (approximately 24% of the shares then
outstanding) through a "Dutch Auction" self-tender offer. The self-
tender was financed by borrowings which include a $25 million six-year
term loan which is to be repaid in even quarterly payments.
For a description of the Corporation's business, see Item 1(c) on the
following page.
Item 1(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
MacDermid has one primary industry segment which is the manufacture and
sale of specialty chemicals used in finishing metals and non metallic
surfaces and in the marketing of supplies and equipment related to the
use of these chemicals.
Item 1(c) of this Report provides information concerning MacDermid's
classes of products and Item 1(d) of this report includes financial
information concerning operations by geographic area and on a
consolidated basis. Additional information with respect to the one
primary business is shown in the portions of MacDermid's 1995 Annual
Report to Shareholders, included in Exhibit 13 to this Form 10-K, and
is incorporated by reference.
Item 1(c) NARRATIVE DESCRIPTION OF BUSINESS
(i) MacDermid produces and markets over 1,000 proprietary chemical
compounds. The proprietary chemical compounds are used for the following
purposes: cleaning, activating and polishing, mechanical plating,
mechanical galvanizing, electro-plating and phosphatizing metal surfaces,
stripping of metal and final coating of metal surfaces, filtering, anti-
tarnishing and rust retarding and etching, imaging, deposition of metal
and other chemical processes. Research in connection with proprietary
products is conducted principally in the United States, with additional
research facilities in Israel and Japan.
In North America, MacDermid markets its entire line of products in the
United States through more than 80 sales and service personnel employed
by it and, in certain areas of the United States, through distributors
and manufacturing representatives. Throughout the United States, the
Corporation maintains inventories at distribution points which typically
are leased or rented. In Canada the Corporation both manufactures and
markets certain of its products through MacDermid Chemicals, Inc.
In Europe, the Corporation markets its proprietary products through
wholly owned subsidiaries. European sales are made from inventory stock
through approximately 45 sales and service representatives who are
employed by the Corporation's subsidiaries located in France, Germany,
Great Britain, Italy, Holland, Spain and Switzerland. MacDermid owns
and operates manufacturing facilities in Spain and Great Britain. In
addition, some of MacDermid's proprietary chemical products are
manufactured by contract chemical compounders located in Belgium, Great
Britain, Italy, Holland and Germany.
In the Asia/Pacific area, the Corporation markets its proprietary
products through wholly owned subsidiaries in Australia, Hong Kong,
Japan, Korea,New Zealand, Singapore, and Taiwan, and sales are made
through more than 30 sales and service representatives who are employed
by local subsidiaries. In addition, sales are made in China, Thailand,
Malaysia and The Philippines directly or through distributors. MacDermid
owns and operates manufacturing facilities in Australia and Taiwan and,
in addition, certain proprietary chemical products are manufactured by
a contract chemical compounder in Japan.
In other foreign markets, MacDermid manufactures and sells certain of
its proprietary chemicals through wholly owned subsidiaries in Israel
through MacDermid Israel Limited, where the Corporation also conducts
research, and in South Africa through a majority owned subsidiary,
MacDermid S.A. (Pty.) Ltd. In South America and in certain countries
in Europe and Asia, MacDermid products are manufactured and sold through
licensees. Certain proprietary chemical products are also sold through
distributors in many areas.
Chemicals, supplies and equipment manufactured by others and resold by
MacDermid consist of basic chemicals, automatic plating conveyors, barrel
plating and pollution control equipment, rectifiers, pumps and filters.
Resale items are marketed primarily in conjunction with and as an aid to
the sale of proprietary chemicals.
MacDermid's principal products fall into the three following classes:
(A) Chemical compounds produced by MacDermid, most of
which are the result of the Corporation's own research
and development and, therefore, are referred to as
proprietary products;
(B) Resale chemicals and supplies; and
(C) Equipment, substantially all of which is manufactured
by others and marketed by the Corporation.
The following table sets forth the classes of MacDermid's products and
the respective percentage of total consolidated revenue for each of the
last three fiscal years:
Class of Products 1995 1994 1993
Proprietary Chemicals 90% 87% 83%
Resale Chemicals
and Supplies 7 9 11
Equipment 3 4 6
(ii) MacDermid has not made a public announcement of, nor has
information otherwise become public about, a new product or line of
business requiring investment of a material amount of assets or which
otherwise is material.
(iii) MacDermid uses in excess of 700 chemicals as raw materials in
the manufacture of its proprietary products. With few exceptions,
several domestic sources of supply are available for all such raw
materials and for resale chemicals, supplies and equipment. During
fiscal 1995, there were no significant difficulties in obtaining raw
materials essential to its business.
(iv) During fiscal 1995, approximately 20% of MacDermid's proprietary
sales were derived from products covered by patents owned by the
Corporation or produced under patent license agreements. MacDermid owns
more than 70 unexpired U.S. Patents, for which corresponding patents have
been obtained or are pending in most industrialized nations, and has more
than 20 patent applications pending in the U.S. The patents owned by
Registrant are important to its business and have varying remaining lives.
Although certain of MacDermid's patents are increasingly more important
to its business, it believes that its ability to provide technical and
testing services to its customers and to meet the rapid delivery
requirements of its customers is equally, if not more, important. In
addition, MacDermid has many proprietary products which are not covered
by patents and which make a large contribution to its total sales.
Further, the Corporation owns a number of domestic and foreign trade
names and trademarks which it considers to be of value in identifying
MacDermid and its products. MacDermid neither holds nor has granted any
franchises or concessions.
(v) No material portion of MacDermid's business is seasonal.
(vi) It is necessary to maintain finished goods inventory at locations
throughout the United States and in the foreign countries in which the
Corporation operates so that it may meet the rapid delivery requirements
of its customers. This impacts working capital requirements by requiring
a considerable investment in inventories to service its customers.
Customer payment terms, which vary by country, are generally in accord
with local industry practice.
(vii) No major portion of MacDermid's business is dependent upon a
single customer or a few customers the loss of whom would have a
materially adverse effect on its business.
(viii) Since products are taken from inventory stock to ship against
current orders, there is essentially no backlog of orders for MacDermid's
proprietary chemical products. MacDermid does not consider the absence
of a backlog to be significant.
(ix) No material portion of MacDermid's business is subject to
renegotiation of profits or termination of contracts or subcontracts at
the election of the Government.
(x) The Corporation provides a broad line of proprietary chemical
compounds and supporting services. MacDermid has many competitors,
estimated to be in excess of 100 in some proprietary product areas.
Some large competitors operate globally, as does MacDermid, but most
operate locally or regionally. To the best of the Corporation's
knowledge no single competitor competes with all its proprietary
products. MacDermid maintains extensive supporting technical and
testing services for its customers, and is continuously developing new
products. Management believes that the Corporation's combined abilities
to manufacture, sell, service and develop new products and applications
enables it to compete successfully both locally and world-wide.
(xi) MacDermid spent approximately $9,644,000, $6,687,000 and
$5,796,000, during fiscal years 1995, 1994 and 1993, respectively, on
research and development activities. Substantially all research and
development activities were sponsored by the Corporation, the greater
percentage of which related to the development of new products.
(xii) For many years, MacDermid has developed proprietary products
designed to reduce the discharge of pollutant materials into the
environment and eliminate the use of certain targeted raw materials
while enhancing the efficiency of customer chemical processes. For
this reason, efforts to comply with Federal, State and local provisions,
which have been enacted or adopted regulating the discharge of materials
into the environment, may have had a positive effect upon the
Corporation's competitive position. Capital expenditures of
approximately $380,000 were made in fiscal 1995 and an estimated
$960,000 will be spent for environmental control facilities in fiscal
1996. Though difficult to predict, future spending for this purpose is
likely to average more than 10% of the capital budget.
(xiii) MacDermid employed 828 and 741 full time, regular employees as
of March 31, 1995 and 1994, respectively.
Item 1(d) FOREIGN AND DOMESTIC OPERATIONS
MacDermid's 1995 Annual Report to Shareholders, included as Exhibit 13 to
this Form 10-K and incorporated by reference, provides information with
respect to the Corporation's geographic segments including operating
information and the effect upon shareholder's equity of the translation
of foreign currency financial statements.
Item 2 PROPERTIES
In the United States, MacDermid owns the following properties:
In Waterbury, Connecticut, a 51,700 square foot building, principally
used for executive offices, marketing and corporate support, and a
62,000 square foot research and customer service facility, both of
which are located on a 5.8 acre tract. In addition, a 180,000 square
foot wood brick and concrete building complex is principally used for
manufacturing and warehousing but also includes some offices and
laboratories. The complex is located on a 7.2 acre tract. Directly
across a street from this property, a 31 acre tract of land is held
for possible future development.
In Ferndale, Michigan, a steel frame and steel sided building of 75,000
square feet consisting of factory, laboratory, warehouse and office
facilities, located on a 6.25 acre tract.
In Blue Ash, Ohio, a steel and brick single story building of 16,350 square
feet consisting of a warehouse and offices located on a 2.75 acre tract.
In New Hudson, Michigan, a steel and brick single story building of 15,000
square feet consisting of research laboratories and offices located on a 7
acre tract.
The Corporation also owns properties in Vernon, Connecticut, and Leominster,
Massachusetts, which are being held for sale or lease but which could be
used for manufacturing should the need arise.
Outside the United States, the Corporation owns additional properties as
follows:
At Barcelona, Spain, 31,000 square feet of factory, warehouse, laboratory
and office space.
At Telford, England, two brick, concrete and steel buildings, connected
by a walkway, containing a total of 43,000 square feet of manufacturing,
warehouse, laboratory and office space.
At Hsin Chu, Taiwan, Republic of China, two buildings of reinforced
concrete totaling 30,000 square feet, located on a 1.8 acre tract, used
for factory, warehouse and offices.
At Hong Kong, 31,000 square feet of office, laboratory and warehouse space
in a concrete block building.
In addition, MacDermid leases office, laboratory, warehouse and
manufacturing facilities as needed. During the year, such additional
facilities were leased in Minnesota, Canada, Holland, Hong Kong, Israel,
Japan, Singapore and several other foreign countries. All owned and
leased facilities are in good condition and are of adequate size for
present business volume.
Item 3 Legal Proceedings
There are no pending legal proceedings to which the Corporation or its
subsidiaries is a party which, in the opinion of Management, would
materially affect the Corporation's consolidated financial position,
results of operations or cash flow.
The Corporation is subject to the usual reviews and inspections by
environmental agencies of the various states in which the Corporation
has facilities and the Corporation has entered into agreements and
consent decrees at various times in connection with such reviews. On
two occasions the Corporation also has been identified as a potentially
responsible party ("PRP") by the U. S. Environmental Protection Agency
in connection with its investigation of certain waste disposal sites.
In both such instances the Corporation's involvement has been de minimis
(less than 0.3%). The Corporation has recorded its best estimate of
liabilities in connection with site clean-up based upon the extent of
its involvement, the number and financial resources of other PRPs and
estimates of the total costs of the site clean-up. Management believes
that the recorded liabilities are reasonable estimates of probable
liability and that future cash outlays are unlikely to be material to
the future financial condition of the Corporation.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Corporation's security
holders during the fourth quarter of fiscal 1995.
Item 4A EXECUTIVE OFFICERS OF MACDERMID
The following is a list of the names, offices and ages (as of March 31,
1995) of all the executive officers of MacDermid, each of whom has been
employed in his respective office(s) for more than five years, except as
noted:
Name Age Office with Registrant
Harold Leever 80 Chairman since 1977
Daniel H. Leever 46 President and Chief Executive
Officer since August 1990,
previously and since April 1989
was Senior Vice President and
Chief Operating Officer.
Charles T. Cobb 52 Vice President since November
1993. Previously was Vice
President of The Shipley
Company since 1988.
Terrence C. Copeland 47 Vice President since July 1991.
Previously was Managing
Director/European Operations
since June 1989.
John L. Cordani (1) 32 Assistant Secretary since February
1995. Previously was General
Counsel since May 1993. From the
beginning of 1992, he was Manager
of Patents and Trademarks prior to
which he was a Research Chemist.
David A. Erdman 52 Vice President since November
1993. Previously, and since
1988, was Director of Quality
of the Electronics Group of
E.I. Dupont de Nemours, Inc.
John J. Grunwald 65 Vice President/Research since
1981
Peter E. Kukanskis 48 Vice President/Technical since
1986
Gary B. Larson 55 Vice President/Research since
1981
Michael A. Pfaff 51 Vice President/Industrial
Products since 1984
Gerald F. Renner (1) 60 Corporate Secretary since 1986
Charles D. Rice (2) 53 Vice President since May 1990,
Chief Financial Officer since
July 1991 and Treasurer since
April 1993.
Name Age Office With Registrant
Sharon J. Stone 46 Assistant Treasurer since
February 1995. Previously, she
was for more than five years,
and continues to be, Manager
of General Accounting
Notes: 1. Mr. Cordani became Secretary upon Mr. Renner's retirement
which was effective March 31, 1995.
2. Mr. Rice resigned effective April 15, 1995.
PART II
Item 5 MARKET FOR MACDERMID'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
Information with respect to the market for MacDermid's Common Stock,
dividends paid and other related information is contained in its 1995
Annual Report to Shareholders included as Exhibit 13 to this form 10-K
and incorporated by reference.
Item 6 SELECTED FINANCIAL DATA
The selected financial data (Five-Year Summary) is contained in
MacDermid's 1995 Annual Report to Shareholders included as Exhibit 13
to this form 10-K and incorporated by reference.
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations is contained in MacDermid's 1995 Annual Report to
Shareholders included as Exhibit 13 to this form 10-K and incorporated
by reference.
Item 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, including the notes thereto, of
the Corporation are contained in MacDermid's 1995 Annual Report to
Shareholders included as Exhibit 13 to this form 10-K and incorporated
by reference. Additional financial information is contained in the
Financial Data Schedule appearing as Exhibit 27 to this report.
Item 9 DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10 DIRECTORS AND OFFICERS
The discussion of "Election of Directors" and a portion of the discussion
in the section, "Interest of Management and Others in Certain Transactions
and Family Relationships" contained in MacDermid's Proxy Statement dated
June 26, 1995 are incorporated herein by reference thereto. Officers of
the Corporation are listed in Item 4A, above.
Item 11 EXECUTIVE COMPENSATION
The discussion of "Executive Compensation" contained in MacDermid's Proxy
Statement dated June 26, 1995 is incorporated herein by reference thereto.
Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to the security ownership of certain beneficial
owners and management contained in.MacDermid's Proxy Statement dated June
26, 1995 is incorporated herein by reference thereto.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND FAMILY
RELATIONSHIPS
The discussion of "Interest of Management and Others in Certain
Transactions and Family Relationships" contained in MacDermid's Proxy
Statement dated June 26, 1995 is incorporated herein by reference thereto.
PART IV
Item 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The consolidated financial statements and report thereon of KPMG Peat
Marwick LLP, dated May 12, 1995 are contained in MacDermid's 1995 Annual
Report to Shareholders included as Exhibit 13 to this form 10-K and
incorporated herein by reference. Additional financial information is
contained in the Financial Data Schedule included as Exhibit 27 to this
report.
(2) Financial Statement Schedules
The following supplementary financial data should be read in conjunction
with the consolidated financial statements and comments thereto referred
to above. Schedules not included with this supplementary financial data
have been omitted because they are not applicable, are immaterial or the
required information is included in the consolidated financial statements
or related notes to consolidated financial statements.
Schedule II - Valuation and Qualifying Accounts and Reserves
Auditors' Report on Supporting Schedule
(3) Exhibits
An index to the exhibits filed or incorporated by reference immediately
precedes such exhibits.
(1) Form 11-K, MacDermid, Incorporated Employee
Stock Ownership Plan; including Accountants'
Consent to be added by amendment.
(2) Form 11-K, MacDermid, Incorporated Employees'
Profit Sharing Plan; including Accountants.
Consent to be added by amendment.
(c) Reports on Form 8-K
MacDermid has not filed any reports on Form 8-K
during the last quarter of the fiscal year covered
by this report.
(d) Schedules
The schedules listed above are filed as part of this
Annual Report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report
on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized.
MACDERMID, INCORPORATED
(Registrant)
Dated: June 27, 1995
By /s/ Harold Leever By /s/ Daniel H. Leever
Harold Leever Daniel H. Leever
Director, Chairman Director, President and
Chief Executive Officer
By /s/ Gregory M. Bolingbroke.
Gregory M. Bolingbroke
Controller and Principal
Accounting Officer
Harold Leever, pursuant to powers of attorney which are being filed
with this Annual Report on Form 10-K, has signed below on June 27, 1995
as attorney-in-fact for the following directors of the Registrant:
Donald G. Ogilvie Walter F. Torrance, Jr.
Thomas W. Smith Robert F. Weltzien
Francis M. White
/s/ Harold Leever
Harold Leever
SCHEDULE II
MACDERMID, INCORPORATED AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years ended March 31, 1995, 1994 and 1993
Balance at Additions Balance
beginning charged to Deductions at end
Description of period earnings of period
----------- ---------- ---------- ---------- ---------
1995
----
Allowance for
doubtful
receivables $2,317,000 664,000 122,000 2,859,000
========== ========= ========= =========
1994
----
Allowance for
doubtful
receivables $2,660,000 1,792,000 2,135,000 2,317,000
========== ========= ========= =========
1993
----
Allowance for
doubtful
receivables $1,894,000 1,797,000 1,031,000 2,660,000
========== ========= ========= =========
Bad debts charged off less recoveries.
REPORT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP (Logo)
Certified Public Accountants
CityPlace II
Hartford, CT 06103-4103
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
MacDermid, Incorporated:
Under date of May 12, 1995, we reported on the consolidated balance
sheets of MacDermid, Incorporated and subsidiaries as of March 31,
1995 and 1994, and the related consolidated statements of earnings
and cash flows for each of the years in the three-year period ended
March 31, 1995, as contained in the 1995 annual report to shareholders.
These consolidated financial statements and our report thereon are
incorporated by reference in the annual report on Form 10-K for the
year 1995. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
financial statement schedules as listed in the accompanying index
under Item 14(a)(2). These financial statement schedules are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statement schedules based
on our audits.
In our opinion, such schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
May 12, 1995
EXHIBIT INDEX
1995 FORM 10-K ANNUAL REPORT
Exhibit
No.
3.1 Restated Certificate of Incorporation, MacDermid, By reference
Incorporated, dated November 19, 1984. Exhibit 19
to September 30, 1991 Form 10-Q Quarterly Report
is incorporated by reference herein.
3.2 By-Laws, amended as of November, 1984. Exhibit 3b By reference
to 1985 Form 10-K Annual Report is incorporated
by reference herein.
4.1 Amended and Restated Credit Agreement, dated as of Attached
October 6, 1994, among MacDermid, Incorporated, the
Banks signatory thereto and Chase Manhattan Bank,
N.A., as Agent.
4.2 First Amendment to Amended and Restated Credit Attached
Agreement, dated as of April 6, 1995, among
MacDermid, Incorporated, the banks signatory
thereto and Chase Manhattan Bank, N.A., as Agent
10.1 MacDermid, Incorporated Special Stock Purchase By reference
Plan, amended as of November 1, 1992. Exhibit 10
to 1993 Form 10-K Annual Report is incorporated
by reference herein.
10.2 MacDermid, Incorporated 1995 Equity Incentive Plan Attached
13 Portions of MacDermid's 1995 Annual Report to Attached
Stockholders as required by Item 8
21 Subsidiaries of MacDermid, Incorporated Attached
23 Independent Auditors' Consent Attached
24 Power of Attorney Attached
27 Financial Data Schedule Attached