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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___ to___
Commission File No. 0-4689
PENTAIR, INC.
(Exact name of Registrant as specified in its charter)
Minnesota 41-0907434
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 County Road B2 West, Suite 400
Saint Paul, Minnesota 55113-3105
(Address of principal executive offices) (Zip Code)
(612) 636-7920
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
1) Common Stock, Par Value $.16 2/3 per share
2) Rights
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
The aggregate market value of voting stock held by
nonaffiliates of the Registrant on February 25, 1994 was $611
million. For purposes of this calculation, all shares held by
officers and directors of the Registrant and by the trustees of
employee stock ownership plans (ESOPs) and pension plans
of the Registrant and subsidiaries were deemed to be shares
held by affiliates.
The number of shares outstanding of Registrant's only class
of common stock on February 25, 1994 was 18,172,891.
DOCUMENTS INCORPORATED BY REFERENCE
The following portions of the Annual Report to Shareholders
for the year ended December 31, 1993 and Proxy Statement
for the 1994 Annual Meeting of Shareholders are incorporated
by reference as the Item of this Form 10-K indicated.
PART OF FORM 10-K PORTION OF ANNUAL REPORT
Part I, Item 1. Page 37: Business
Business - Financial Segment Information,
information about segments Page 29: Research
and about foreign operations and Development.
and research and development.
Part II, Item 5. Market for Page 41: Pentair
Registrant's Common Equity Stock Data, Price
and Related Stockholder Range and Dividends
Matters. of Common Stock.
Part II, Item 6. Selected Page 18: Selected
Financial Data. Financial Data.
Part II, Item 7. Management's Pages 18-23:
Discussion and Analysis of Management's
Financial Condition and Discussion and
Results of Operations. Analysis.
Part II, Item 8. Financial Pages 24-37:
Statements and Consolidated Statement
Supplementary Data. of Income, Balance
Sheet and Statement of
Cash Flows, related
Notes, and Report of
Independent Auditors;
Quarterly Financial Data.
PORTION OF PROXY STATEMENT
Part III, Item 10. Directors Pages 2-5: Security
and Executive Officers of Ownership of
the Registrant. Management and
Beneficial Ownership:
Pages 5-7: Directors
Standing for Election.
Part III, Item 11. Executive Pages 10-18: Executive
Compensation. Compensation.
Part III, Item 12. Security Pages 2-5: Security
Ownership of Certain Ownership of
Beneficial Owners and Management and
and Management. Beneficial
Ownership.
PART I
Item 1. Business
(a) General Development of the Business.
The Registrant was incorporated in 1966 under the laws of
Minnesota. In the past year, the Registrant has not changed
its form of organization or mode of conducting business. The
Registrant intends to continue to grow through internal
development and diversify through the acquisition of
established companies or manufacturing operations and
investments in owned subsidiaries and new joint ventures. As
in the past, periodic dispositions of assets or business units
are possible when they no longer fit with the long-term
strategies of the Registrant.
The Registrant completed on February 28, 1994 the
acquisition of the net assets and the subsidiaries of Schroff
GmbH (Schroff) from Fried. Krupp AG Hoesch-Krupp for a
cash purchase price of approximately $153 million. Schroff
manufactures and sells enclosures, cases, subracks and
accessories for commercial electronic and instrumentation
applications, with world-wide 1993 sales of approximately $160
million. While Schroff faces significant competition in each of
its markets, it is the largest manufacturer of electronic
enclosures and 19 inch subracks in the European market, in
which the majority of Schroff sales are made. The Registrant
views Schroff as strongly complementary to the electrical
enclosure business of Hoffman Engineering and intends to
develop these businesses using their respective strengths in
technology, manufacturing, marketing and market position.
(b) Financial Information about Industry Segments.
The Registrant's business is conducted in three industry
segments. The Specialty Products segment manufactures
woodworking machinery; portable power tools; and pumps and
pumping systems. The General Industrial Equipment segment
manufactures electrical and electronic enclosures and
wireways; industrial lubricating systems and material
dispensing equipment; automotive service equipment; and
sporting ammunition. The Paper Products segment
manufactures printing papers in a variety of types and grades.
Business segment financial information is found on page 37
(Note 17) of the 1993 Annual Report to Shareholders.
(c) Narrative Description of Business.
Description of the Specialty Products Segment:
Products and marketing.
The following table sets forth, for each of the last three years,
the Specialty Products segment net sales by product class as
percentages of the Registrant's consolidated net sales.
1993 1992 1991
Woodworking Machinery 15% 15% 15%
Portable Electric Tools 9 9 8
Pumps and Pumping Systems 7 7 7
Total Segment 31% 31% 30%
Woodworking Machinery. The Registrant, through its
subsidiary Delta International Machinery Corp. (Delta),
manufactures, markets, and services a line of general-purpose
woodworking machinery, such as saws, planers, joiners,
grinders, drill presses, shapers, lathes, and other quality
machines. Delta sells its products in the United States,
Canada, and other foreign countries under its "Delta" brand
name through a network of independent stocking distributors,
independent retailers, mass merchandisers and home centers.
Portable Electric Tools. The Registrant, through its subsidiary
Porter-Cable Corporation (Porter-Cable), manufactures and
markets a variety of portable electric tools, such as saws,
sanders, drills and routers, used in woodworking, industrial
maintenance, and construction trades. Porter-Cable markets
its products under the brand name "Porter-Cable" through
independent distributors, mass merchandisers and home
centers.
Pumps and Pumping Systems. The Registrant, through its
F.E. Myers Co. Division of McNeil (Ohio) Corporation (Myers),
manufactures and markets a wide variety of pumps for
residential, environmental engineering, and industrial use.
Products are marketed by field sales representatives employed
by Myers and are distributed through a network of distributors,
wholesalers, dealers, and installers. In addition, Myers
distributes products to the do-it-yourself market for retail sale
through homecenter retailers and hardware stores under the
names "Water Ace" and "Shur Dri".
Competitive conditions.
Delta participates in the middle range of the overall market for
general purpose woodworking machinery. The addressed
market is focused on high quality and feature oriented
products for the Home Shop, Contractor, and Small Shop
markets. In general, Delta produces a full line of woodworking
machinery for its addressed market. Delta's numerous
competitors do not offer a similar full product line over the
range of Delta's addressed market. Competitors do have
individual products which compete with certain of Delta's
products. Competition in this market focuses on quality,
features and service and at the lower end of Delta's product
offering, price.
Porter-Cable competes in the professional portable electric tool
market which is highly competitive. Porter-Cable faces six
major competitors across its addressed market. Product
innovation, features, quality, performance, delivery and service
are the most significant competitive factors. Porter-Cable is
beginning to address the higher end of the do-it-yourself
market where price is a factor.
Myers' market is pumps and pumping systems. Myers faces
several major competitors across its product lines. Price,
delivery, and quality are significant competitive factors.
Myers is beginning to address the higher end of the do-it-
yourself market.
Description of the General Industrial Equipment Segment:
Products and marketing.
The following table sets forth, for each of the last three years,
the General Industrial Equipment segment net sales by
product class as percentages of consolidated net sales.
1993 1992 1991
Electrical Enclosures
and Wireways 18% 17% 18%
Sporting Ammunition 10 10 10
Industrial Lubricating Systems
and Material Dispensing
Equipment 6 7 7
Automotive Service Equipment 6 5 4
Total Segment 40% 39% 39%
Electrical Enclosures and Wireways. Through the Hoffman
Engineering Company division of Federal-Hoffman, Inc.
(Hoffman Engineering), the Registrant manufactures
enclosures and wireways for electrical and industrial
instrumentation applications and markets these products
primarily through independent manufacturer's representatives
and electrical and electronic equipment distributors throughout
North America and the United Kingdom.
Sporting Ammunition. Through the Federal Cartridge
Company division of Federal-Hoffman, Inc. (Federal Cartridge),
the Registrant manufactures and markets sporting and law
enforcement ammunition, and components. These products
are distributed throughout the United States through a network
of distributors and buying organizations for retail sale; directly
to large retail chains; and directly to law enforcement agencies
(governmental).
Industrial Lubricating Systems and Material Dispensing
Equipment. The Registrant, through its Lincoln Industrial
division of McNeil (Ohio) Corporation (Lincoln Industrial),
manufactures components and designs systems for manual
and automatic delivery of measured quantities of lubricants for
industrial applications. Lincoln Industrial also manufactures
components and designs, fabricates, and installs high-volume
liquid and semi-solid dispensing systems. Both segments
serve original equipment and retrofit markets. Lubricating and
materials dispensing systems are marketed in the United
States by approximately 100 specially qualified systems
distributors with design, installation, and service capability.
Basic lubricating equipment and accessories are marketed
through industrial supply and specialty distributors. A special
direct sales group markets a wide variety of Lincoln Industrial
products to original equipment manufacturers in a variety of
industries. Lincoln Industrial also manufactures lubricating
components and systems at its facility in Walldorf, Germany for
distribution to European, Middle East, Far East and African
markets, and to a lesser extent to the United States. The
remainder of the world market, including the Pacific Rim, is
served from Lincoln Industrial's St. Louis, Missouri
manufacturing facility.
Automotive Service Equipment. The Registrant, through its
Lincoln Automotive division of McNeil (Ohio) Corporation
(Lincoln Automotive), manufactures and markets lubrication,
repair, and service equipment for a broad range of vehicles.
Most products are sold through a key group of approximately
600 aftermarket wholesalers. Certain lubricating equipment,
tools, and jacks and lifting equipment are sold under private
label programs. Garage, service station, car dealership
service department, and fast oil change lubricating systems
are marketed through petroleum equipment and service
distributors with design and installation capability.
Competitive conditions.
Hoffman Engineering is the largest North American
manufacturer of electrical enclosures and wireways, having a
market share estimated to be about 25%. It is currently the
only manufacturer with national distribution and its competitors
are generally smaller, regional manufacturers. Hoffman
Engineering also participates in the North American electronic
enclosures market, facing competition from a large number of
firms, with three or four established firms leading the market.
In both markets, the most significant competitive factors are
product innovation, service, quality, breadth of product line,
and delivery. Price is the most significant factor for certain
commodity products.
Federal Cartridge and its two primary competitors, Winchester
and Remington, have a combined market share of
approximately 90% in the U.S. sporting ammunition market,
with the balance coming from smaller domestic competitors
and foreign ammunition manufacturers. Price, terms, delivery,
and quality are significant competitive factors.
Lincoln Industrial and Lincoln Automotive face three to five
major competitors and several smaller competitors across their
product lines. Competition involving industrial lubricating
systems and material dispensing equipment tends to center
around quality, systems capability, and application knowledge.
Price becomes a more significant competitive factor for vehicle
servicing equipment.
Description of the Paper Products Segment:
Products and marketing.
The following table sets forth, for each of the last three
years, the Registrant's net sales ($ millions), percent of
consolidated net sales and tons shipped (thousands) for each
paper product class.
Years Ended December 31
1993 1992 1991
$ % Tons $ % Tons $ % Tons
Coated 147.8 11 227 143.7 11 237 150.0 13 220
Uncoated 233.8 18 227 231.0 19 223 216.2 18 206
Consolidated 381.6 29 454 374.7 30 460 366.2 31 426
Super-
calendered FN1 71.5 116 75.1 111 83.8 116
Total 453.1 570 449.8 571 450.0 542
[FN]
FN1 Lake Superior Paper Industries is a joint venture mill in
Duluth, Minnesota; only 50% of the joint venture's sales and
tonnage are included. Since this joint venture is accounted for
on the equity method, its sales are not included in
consolidated sales.
Coated Paper. The Registrant, through its subsidiary Niagara
of Wisconsin Paper Corporation (Niagara), manufactures
coated groundwood publication-grade paper (nos. 4 and 5)
used for applications requiring high-resolution printing and
reproduction of color pictures, such as magazines, periodicals,
catalogs, and general commercial printing. These papers are
coated and finished to either a gloss or suede surface. Direct
sales to printers and end users represent approximately 20%
of shipments; remaining sales, which generally are in smaller
quantities, are made through paper merchants.
Uncoated Papers. Cross Pointe Paper Corporation (Cross
Pointe), a subsidiary of the Registrant, through its subsidiaries,
Miami Paper Corporation and Flambeau Paper Corp.,
manufactures a variety of uncoated papers and operates a
centralized converting and distribution operation (IDC) in West
Chicago, Illinois. Of Cross Pointe's total paper production,
60% is commercial printing, 24% is text and cover, 12% is
book, and the remainder is premium writing, specialty and
other paper. Most of the volume is sold through merchants.
Currently, about 45% of total shipments are made from the
IDC. Cross Pointe has adopted long-term strategies of
increased shipments of stocked, value-added grades,
enhanced product developments and continued increases in
quality. As a part of this program, Cross Pointe has become
one of the leaders in recycled grades.
Supercalendered (SCA) Printing and Publication Grade
Papers. The Registrant has a 50% interest in a joint venture,
Lake Superior Paper Industries (Lake Superior), which
produces supercalendered paper known as SCA. End use
markets include magazine publication, catalogues and
advertising inserts. SCA is sold directly to printers and end
users through Lake Superior's own sales and marketing
personnel.
Competitive conditions.
The Paper Products segment output of Niagara and Cross
Pointe is sold in highly competitive markets with between 10
to 15 competitors in each. Many of these competitors are
substantially larger corporations having greater financial
resources, production capacity and, in many cases, captive
sources of "kraft" pulp and merchant distribution. Lake
Superior is the largest North American producer of SCA, but
is subject to substantial competition from European
manufacturers, and makers of other grades of printing and
publication paper. Quality, innovation and service are
significant competitive factors in the markets served by the
Paper Products segment. The Registrant has emphasized
service, quality, product innovation, and environmental
products to meet customer needs, and has developed long-
term relationships with many suppliers and customers.
Raw materials.
The raw materials used in the manufacture of paper are
bleached kraft pulps, pulp substitutes, pulpwood, groundwood
pulp, waste paper, certain chemicals, clays, starches, and
additives. The Registrant does not own its own timberlands or
manufacture its own kraft pulp.
Kraft pulp, which comprises about 35% of the Registrant's fiber
needs (including the Registrant's share of Lake Superior), is
supplied by several pulp manufacturers, principally under long-
term contracts. The balance of fiber needs, comprised
primarily of groundwood pulp, sulphite pulp and secondary
fiber (pulp recovered by recycling waste paper), is produced at
the various mills. The Registrant has recently installed or
expanded its recycled fiber capacity at its Cross Pointe mills
and has invested in a joint venture recycled pulp facility in
Duluth, Minnesota.
The Registrant also purchases chemicals, clays, logs for pulp,
waste paper, and other paper-making components from
various sources. Adequate supplies of these materials are
expected to be available to meet the Registrant's needs.
Backlog.
The following table shows backlog (in days) and approximate
sales value (at average selling price) at December 31:
1993 1992 1991
Days ($000) Days ($000) Days ($000)
Coated Paper 8 $ 3,175 17 $ 6,808 7 $ 2,629
Uncoated Paper 8.5 5,442 5 3,210 5 3,175
SCA Paper 32 12,494 35 15,066 33 15,260
A substantial portion of paper sales are produced to meet
specific customer orders. Although the level of backlogs
provides some indication of the strength of the paper markets,
other factors such as the trend of retail sales and customer
and printer inventory levels must be considered. The current
backlog, especially coated and uncoated, is less than desired.
All backlogs are expected to be filled within the current year.
Information Regarding All Segments:
Working capital items.
The Specialty Products and General Industrial Equipment
businesses offer extended payment terms to a significant
number of customers, requiring these subsidiaries to carry a
significant amount of receivables. The Registrant has not
incurred significant losses in carrying these receivables.
Federal Cartridge's working capital builds from January
through September as inventories are increased to meet third
quarter shipping schedules and receivables increase due to fall
dating for early order programs used in the sporting
ammunition business. Management continues to focus on
reducing working capital requirements through management of
receivable and inventory levels.
Status of new products.
The industries in which the segments participate are
essentially mature and do not experience the introduction of
many products that materially change the nature of the
industry. Individual manufacturers generally make
improvements or apply new technologies to existing products.
Raw materials.
The raw materials used in the manufacturing process include
grey iron (castings), copper, aluminum (diecast), steel (bar and
sheet), and plastic. Federal Cartridge uses gunpowder,
primers, brass, lead and steel in its production of ammunition.
Selected castings, subassemblies, and components are also
purchased. The supply of all raw materials and components
is currently adequate.
Less than 5% of portable electric tool sales are produced by
outside sources in Western Europe and imported under the
Porter-Cable name. The supply of these tools is currently
adequate. Delta imports select tools in its product offering.
Design and engineering of these products is performed by
Delta. The manufacturing process is controlled and monitored
for most of these products in factories dedicated to Delta
production. Supply of these products is currently adequate
and timely.
Patents, trademarks, licenses, franchises and concessions.
The businesses own a number of U.S. and foreign patents and
trademarks. They were acquired over many years and relate
to many products and improvements which are of importance
to the business. No one patent or trademark is of material
importance to the company as a whole.
Brand names are a significant factor in market perception.
The Registrant has undertaken a corporate strategy to
strengthen and capitalize on brand awareness.
Seasonal aspects.
For the Registrant as a whole there is no strongly seasonal
aspect; however, sales of Federal Cartridge sporting
ammunition are generally higher in the third quarter due to
hunting season reorder demand.
Backlog.
The Specialty Products and General Industrial Equipment
segments normally do not experience backlogs for substantial
periods of time. The nature of the businesses emphasizes
maintaining inventories sufficient to satisfy customer needs on
a timely basis, and production and sourcing is geared towards
providing adequate inventories in order to minimize customer
back orders. Accordingly, backlogs are not material to
understanding the sales trends or manufacturing fluctuations
of the segment.
Dependence on limited number of customers.
None of the Registrant's segments is dependent on a single
customer or on a few customers. The loss of a limited number
of customers would not have a material adverse impact on any
of the segments. Since a portion of Specialty Products sales
are through large retail chains, a significant short-term impact
would be experienced if sales to these customers were
affected.
Government contracts.
The Registrant has no material portion of sales under
government contracts that may be subject to renegotiation of
profits or termination of contracts at the election of the
government.
Environmental matters.
The Registrant is subject to federal and state pollution control
and hazardous waste laws and regulations in all jurisdictions
in which it has operating facilities. The Registrant believes that
its ongoing operations are in substantial compliance with
existing environmental regulations other than for infrequent
permit exceedances for air and water emissions at some of its
facilities. In addition to making ongoing capital expenditures
for maintenance, upgrading and closure of on-site waste
treatment facilities, the Registrant intends to continue its
program for implementation of manufacturing process and
configuration changes to achieve both manufacturing
efficiencies and an overall reduction in environmental impact
of its operations.
The Registrant's environmental control programs focus upon
air treatment facilities: including removal of particulates
generated by boilers used in the Registrant's paper businesses
and of volatile organic compounds used in the industrial
manufacturing businesses; waste water treatment, primarily in
the paper businesses; and landfills for solid waste disposal,
including sludge lagoons operated by some of the paper
businesses. The Registrant arranges for disposal of solid and
hazardous waste through licensed transporters at each of the
Registrant's facilities.
The Registrant's Niagara operation was notified by the
Michigan Department of Natural Resources (MDNR) by letter
dated March 7, 1994 that its sludge lagoons have been
operated in violation of various regulations and have caused
degradation of groundwater in the area. Niagara believes that
implementation of its currently pending closure plan, submitted
in 1990, should satisfy many of the concerns raised by MDNR,
although it is likely that Niagara will have to accelerate the
closing. No material adverse impact on Niagara's business is
anticipated but costs to close the lagoons in accordance with
the 1990 proposed plan would exceed $6 million.
The operating costs for maintaining compliance with
environmental regulations does not exceed 5% of operating
costs generally. The Registrant has adopted capital
expenditure programs for upgrading, maintaining and other
costs related to its waste treatment facilities. Such capital
expenditures were $7.6 million, $4.1 million, and $2.1 million
for the years ending December 31, 1993, 1992, and 1991,
respectively. Projected future expenditures are $1.7 million
and $3.2 million for fiscal years 1994 and 1995 respectively.
Over the past three years, the Registrant's paper businesses
have invested a total of $18.2 million in constructing,
upgrading and expanding their recycled fiber facilities. This
program has reduced land disposal of office wastepaper while
giving the Paper Products segment businesses a strong
presence in rapidly growing recycled paper markets.
Employees.
As of December 31, 1993, the Registrant and its subsidiaries
employed approximately 8,300 persons, of which 2,470 were
represented by unions having collective bargaining
agreements.
Labor contracts negotiated in 1993 were: International
Molders and Allied Workers - Ashland, Ohio (extended to April
1, 1994), 49 employees; Patternmakers-Ashland, Ohio
(extended to September 2, 1995), 7 employees; United
Paperworkers - Niagara, Wisconsin (extended to January 31,
1995), 470 employees; and International Union of Electrical
Workers - Jonesboro, Arkansas (extended to April 4, 1996),
175 employees.
Contracts expiring in 1994: Clerical Workers - Niagara,
Wisconsin (expires May 14, 1994), 25 employees; International
Molders and Allied Workers - Ashland, Ohio (expires April 1,
1994), 49 employees; and Molders and Allied Workers -
Guelph, Ontario, Canada (expires July 1, 1994) 7 employees.
The Registrant considers its employee relations to be good
and feels future contracts can be negotiated for the benefit of
the business and the employees.
(d) Financial Information about Foreign Operations.
The Registrant operates primarily in the United States and
North America. Operations outside of the United States in
1993 represented less than 10% of consolidated net sales,
operating income, and identifiable assets. As a result of the
acquisition of the Schroff Group, the Registrant believes that
beginning in 1994, operations outside of the U.S. will represent
approximately 15% of consolidated net sales.
Item 2. Properties
The Registrant's corporate offices, located at 1500 County
Road B2 West, St. Paul, Minnesota 55113-3105, are leased
and consist of approximately 22,000 square feet; the lease
expires in December 1999. The Registrant also has an option
to terminate the lease during the period December 1994 to
June 1995. Information about the Registrant's principal
manufacturing facilities and other properties is presented
below by industry segment. These facilities are adequate and
suitable for the purposes they serve. Unless noted all facilities
are owned.
In addition, the Company is in the process of expanding into
Mexico through the use of a Maquiladora facility. Construction
will commence and will be completed in 1994.
Specialty Products Segment
SUBSIDIARY/ APPROXIMATE
DIVISION LOCATION PRIMARY USE SQUARE FEET
Porter-Cable
FN1 Jackson, Manufacturing, 357,000
Tennessee Distribution,
and Office
Delta
FN2 Pittsburgh, Office and 34,000
Pennsylvania Product
Development
Tupelo, Manufacturing 333,000
Mississippi and Office
FN3 Memphis, Distribution 245,000
Tennessee and Office
FN4 Guelph, Distribution 57,000
Ontario and Office
Taichung, Office and 1,000
Taiwan Product
Development
F.E. Myers
Ashland, Manufacturing, 412,000
Ohio Distribution,
and Office
Kitchener, Distribution, 26,000
Ontario Assembly and
Office
[FN]
FOOTNOTES:
FN1 Leased for a five-year term expiring in 1998.
FN2 Leased for a five-year term expiring in 1994.
FN3 Leased for a five-year term expiring in 1996.
FN4 Leased under a three-year lease which expired in 1991, which is
being renewed under one-year options (limited to seven one-year
periods).
General Industrial Equipment Segment
SUBSIDIARY/ APPROXIMATE
DIVISION LOCATION PRIMARY USE SQUARE FEET
Hoffman Engineering
Anoka, Manufacturing 814,000
Minnesota and Office
FN1 Brooklyn Center, Manufacturing 128,000
Minnesota and Office
FN2 Cwmbran, Wales Manufacturing 26,000
United Kingdom and Office
Federal Cartridge
Anoka, Manufacturing 679,000
Minnesota and Office
Richmond, Manufacturing 41,000
Indiana and Office
Lincoln Industrial
St. Louis, Manufacturing 565,000
Missouri and Office
Walldorf, Manufacturing 117,000
Germany and Office
Antwerp, Distribution 8,000
Belgium and Office
Lincoln Automotive
FN3 Jonesboro, Manufacturing 426,000
Arkansas and Office
FN4 Nogales, Sonora Manufacturing 35,000
Mexico
Mississauga, Distribution 30,000
Ontario and Office
Birch Tree, Manufacturing 8,000
Missouri
Schroff GmbH
FN5 Straubenhardt, Manufacturing 523,000
Germany
Schroff S.A.
FN6 Betschdorf, Manufacturing 210,000
France and Warehouse
Schroff U.K.
Hemel Hempstead, Manufacturing 37,000
England
FN7 Hemel Hempstead, Manufacturing 22,000
England
Schroff, Inc.
Warwick, Manufacturing 80,000
Rhode Island and Office
FN8 Warwick, Office and 18,000
Rhode Island Assembly
Schroff K.K.
Miewa-Cho, Manufacturing 23,500
Japan
[FN]
FOOTNOTES:
FN1 Leased for a 25-year term expiring in 1996, with options to renew
for two ten-year terms.
FN2 Currently leased under a month-to-month lease while a longer term
lease is negotiated.
FN3 Includes approximately 51,000 sq. ft. warehouse and 3,000 sq. ft.
office leased for a three-year term which expires in 1995.
FN4 Leased for a six-year term expiring in 1999.
FN5 A small portion of this total facility has been leased for a 30-year
term expiring in 2011.
FN6 Leased under two lease agreements expiring in 2002 and 2005.
Both leases include a purchase option.
FN7 Leased for a twenty-year term expiring in 2011.
FN8 Leased for a ten-year term expiring in 2000. This lease includes a
purchase option.
Paper Products Segment
APPROXIMATE
ANNUAL
CAPACITY
SUBSIDIARY/ OF MILL
DIVISION LOCATION PRIMARY USE (NET TONS)
Niagara
FN1 Niagara, Manufacturing 235,000
Wisconsin and Office
Cross Pointe
FN2 St. Paul, Office
Minnesota
FN3 West Chicago, Distribution and
Illinois Paper Converting
West Carrollton, Manufacturing 110,000
Ohio and Office
FN4 Park Falls, Manufacturing 125,000
Wisconsin and Office
Dayton, Manufacturing FN5
Ohio and Office
Lake Superior
FN6 Duluth, Manufacturing 240,000
Minnesota and Office
[FN]
FOOTNOTES:
FN1 Certain pulp and paper production equipment is leased. One lease
expires in 1996 with options to renew for two terms of three years each.
Another lease expires in 1999 with options to renew for three terms of two
years each. The third lease expires in 2006 with an option to purchase
after seven years and options to renew for up to eight years . Under
each lease, Niagara has the option to purchase the equipment at the
then-current market value at the end of the initial term or at the end of
each renewal term.
FN2 Consists of 10,700 square feet of space under a lease expiring in
1997.
FN3 Consists of 202,000 square feet under a lease expiring in 1998 and
253,000 square feet under a lease expiring in 2001.
FN4 The Flambeau mill power plant is leased until 2007 with options to
renew for three terms of five years each.
FN5 Purchased December 1993 and not currently in use. Projected
capacity is approximately 45,000 net tons.
FN6 The production equipment is leased under 25-year leases through
2012 with options to renew for periods of five to seven years and options
to purchase the equipment in 1997, and at the expiration of the lease
term and of any renewal term.
Item 3. Legal Proceedings.
The Registrant or its subsidiaries have been made parties to
actions filed, or have been given notice of potential claims, by
state and federal enforcement agencies asserting liability for
past disposal of hazardous wastes, generally in conjunction
with numerous other codefendants or potential codefendants
or asserting responsibility for undertaking remedial action. In
addition, various other legal actions, governmental
proceedings, and claims are pending against the Registrant or
its subsidiaries.
Major matters which had or may have an impact on the
Registrant are discussed below. The Registrant believes that,
because of the reserves, insurance coverage and U.S. Army
indemnification discussed below, it is remote that the outcome
of such matters will have a material adverse effect on the
Registrant's financial position or future results of operations,
based on current circumstances known to the Registrant.
Federal-Hoffman TCAAP Facility. Federal-Hoffman, Inc.
(Federal-Hoffman) is a party to certain litigation and claims
arising out of allegedly improper disposal of hazardous wastes
generated at the Twin Cities Army Ammunition Plant (TCAAP)
in northern Ramsey County, Minnesota, which Federal
Cartridge, a division of Federal-Hoffman, maintains pursuant
to a contract with the U.S. Army. While remediation of
affected sites continues, the underlying claims or litigation are
the subject of settlement agreements or consent orders and
are resolved in large part. In light of previous indemnification
of Federal Cartridge by the U.S. Army or Federal-Hoffman's
insurer for all settlements and costs incurred in TCAAP-related
matters, the Registrant believes that liability, if any, to its
Federal-Hoffman subsidiary arising from its operation of the
TCAAP facility will not be material.
Federal-Hoffman, Inc. Sites. Federal Cartridge, a division of
Federal-Hoffman, has been named by the EPA as a Potentially
Responsible Party (PRP) in connection with two environmental
sites based on claims that Federal Cartridge sent material to
these sites. Based on current information available to it, the
Registrant believes that these matters are unlikely to result in
material future liability.
NL Industries/Taracorp. The EPA issued an administrative
order effective January 18, 1991 to Federal Cartridge and 48
other entities to compel the clean-up of the NL
Industries/Taracorp site in Granite City, Illinois. Federal
Cartridge sent virgin lead to a facility on the site to be formed
into lead shot. The EPA has identified over 300 other PRPs
and estimates the cost of remediating the site to be
approximately $30 million.
On July 31, 1991, EPA sued 11 of the 49 PRPs who were
issued the January 1991 order, seeking enforcement of the
January 1991 order and reimbursement of the EPA's costs,
plus fines and penalties. Federal Cartridge and three others
were not named in the lawsuit because of pending settlement
discussions. Federal Cartridge and one other supplier of virgin
materials have offered to pay a total of $1,000,000, of which
$490,000 is Federal Cartridge's share. The EPA has indicated
that it anticipates submitting a consent decree for court
approval before May 1, 1994. Federal Cartridge has received
notice that several nonsettling parties oppose the settlement.
Federal Cartridge's insurer has been notified of this matter and
has declined to indemnify or defend Federal Cartridge with
respect to this matter at this time.
Aqua-Tech. The EPA issued an administrative order, effective
April 29, 1992 to Federal-Hoffman and 96 other entities, to
compel the cleanup of the Aqua-Tech Environmental, Inc. site
in Greer, South Carolina. Federal Cartridge shipped waste
from its manufacturing process to this site several times in
recent years. Federal-Hoffman is working with a group of
other PRPs to negotiate with the EPA regarding the cleanup
of the site. A surface cleanup of the site is complete. Under
interim allocations by the PRP group, Federal Cartridge paid
$442,000 toward the cost of the surface cleanup. Under
current final allocation proposals, Federal-Hoffman anticipates
receiving a credit for some portion of that amount.
The PRP group anticipates beginning a study of the soil and
groundwater to determine the extent of subsurface
contamination. The cost of such study, any necessary
remediation and the size of allocation, if any, to Federal-
Hoffman is unknown to the Registrant at this time. Federal-
Hoffman however, anticipates a minimal allocation in the
subsurface action due to the nature of its waste and the fact
that virtually all of its waste was accounted for and removed
during the surface remediation.
In October 1992, Hoffman Engineering, a division of Federal-
Hoffman, was also named as a PRP in connection with the
Aqua-Tech site. Hoffman settled out of the surface removal as
a de minimis party, and anticipates doing the same for the
subsurface remediation.
Porter-Cable Corporation. In November 1993, the Tennessee
Department of Environment and Conservation (TDEC) issued
to Porter-Cable Corporation (Porter-Cable) and Rockwell
International Corporation an administrative order requiring
them to investigate, and if necessary, clean up alleged
groundwater contamination at a manufacturing facility located
in Madison County, Tennessee. The facility was acquired by
Porter Cable from Rockwell International Corporation in 1981.
Porter Cable has served notice on Rockwell of Porter Cable's
intent to seek indemnification from Rockwell, based upon
Tennessee and Federal law, for all costs and expenses related
to investigation and cleanup of the site. The Registrant
believes that this matter is unlikely to result in material liability
or material changes in operations. No estimate of the
projected response cost liability can be made based on
information currently known to the Company.
Delta International Machinery. In January 1993, Beaver-Delta
Machinery Corp. (Beaver-Delta), a former subsidiary of Delta
International Machinery Corp., and three other parties were
sued by a commercial developer and current owner of real
estate in Guelph, Ontario that Rockwell International previously
owned and that was acquired by Beaver-Delta in 1984.
Trichlorethylene (TCE) and other contamination of soil and
groundwater has been alleged. Plaintiff seeks past and future
cleanup costs, as well as increased costs and lost profits
allegedly suffered. Plaintiff alleges in the action that it has
spent Cdn. $160,000 to remediate the property and seeks
damages in the amount of Cdn. $5.5 million. Preliminary
investigation indicated that Beaver-Delta did not use TCE
during the short period that it owned the property at issue.
Beaver-Delta has served notice on Rockwell of its intent to
seek indemnification from Rockwell for all costs related to this
matter. Plaintiff has not pursued this lawsuit since its
commencement. The Registrant believes that this matter is
unlikely to result in material liability.
Niagara of Wisconsin Paper Corporation. In January 1994, the
State of Wisconsin filed an enforcement action against Niagara
involving allegations of particulate emissions from Niagara's
coal processing plant in excess of limits set in its permit.
Emissions at issue occurred at various times between August
1992 and May 1993. The State is seeking monetary
forfeitures, penalties, injunctive relief and costs for the alleged
violations. The State's settlement demand of $120,000 has
been rejected by Niagara. The Registrant believes that this
matter is unlikely to result in liability to Niagara that is material
to the Registrant's overall financial condition.
Cross Pointe Paper Corporation. The Miami mill of Cross
Pointe Paper Corporation (Miami) is currently discussing with
the State of Ohio alleged violations of Miami's water pollution
control (NPDES) permit which occurred from 1988 to mid
1992. The State is currently seeking a settlement in an
amount of $220,000. Miami's current NPDES permit provides
an allowance until 1995 to take corrective action to eliminate
violations.
IWD/Cardington Site. In February 1994, Miami was named a
PRP in connection with the IWD/Cardington landfill in Moraine,
Ohio. Waste haulers with whom Miami contracted to transport
its flyash and paper and wood waste allegedly took it to this
landfill for some time prior to its closure in 1980. The EPA has
identified 22 other PRPs at this time. The cost of remediation
of the site is estimated to be approximately $12 to $15 million.
Miami is investigating its alleged involvement at this site.
McNeil (Ohio) Corporation. F.E. Myers (Myers), a division of
McNeil (Ohio) Corporation, has received notice of a claim of
contamination of soil surrounding an underground storage tank
on property owned by Myers prior to September 1986. An
estimate of $125,000 has been given to perform remediation
of the alleged contamination. The Registrant believes that this
matter is unlikely to result in liability to Myers that is material
to the Registrant's overall financial condition.
California Proposition 65 Notice. In February 1994, Myers
received a notice pursuant to California Health and Safety
Code Section 25249 (Proposition 65) regarding alleged
violations arising from discharge of lead from submersible
water pumps into drinking water since February 27, 1988.
Two private environmental groups sent the notice to Myers
and three other pump manufacturers and one pump distributor.
Under Proposition 65, the penalty for each violation is $2,500
per day. Myers is currently investigating the claims set forth
in this notice.
Product Liability Claims. As of March 4, 1994, the Registrant
or its subsidiaries are defendants in approximately 217 product
liability lawsuits and have been notified of approximately 129
additional claims. The Registrant maintains an active case
management and insurance review program to closely
supervise these and other litigation matters. The Registrant
has had and currently has in place insurance coverage it
deems adequate for its needs; accounting reserves covering
the deductible portion of all liability claims have been
established and are reviewed on a regular basis. The
Registrant has not experienced unfavorable trends in either the
severity or frequency of product liability claims.
McNeil Asbestos Lawsuits. Since 1987, McNeil and a large
number of manufacturers or installers of asbestos-containing
products have been named as codefendants in lawsuits
involving claims by 6,340 tireworkers seeking damages for
personal injuries allegedly caused by exposure to asbestos or
talc in various tire plants. A former division of McNeil's
predecessor, McNeil Corporation, supplied tire curing presses
for which asbestos may have been used as an insulating
material. Of those claims against McNeil, 1,109 have been
dismissed, 4,802 have been settled, with an average
settlement amount of $1,400, and 595 claims remain. The
evidence developed to date does not suggest that future
settlements would be higher than the historical average. In
addition, significant dismissals are anticipated to occur without
any indemnity payments.
Ninety percent of the cost of defending and settling these
actions has been paid by McNeil's insurance carriers, with the
balance being paid by McNeil. The Registrant believes that its
carriers will continue to cover a comparable portion of defense
costs and damages, if any, for which McNeil might be found
liable in the future, and self-insurance reserves are adequate
to cover any remaining portion. Considering the existence of
factual and legal defenses to the pending suits and the
applicable insurance coverage, the Registrant believes that
these suits are unlikely to result in material liability.
Item 4. Submission of Matters to a Vote of Security Holders.
During the fourth quarter, no matter was submitted to a vote of
security holders.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the executive officers of the Registrant.
Their term of office extends until the next annual meeting of
the Board of Directors, scheduled for April 20, 1994, or until
their successors are elected and have qualified.
Winslow H. Buxton Age 54
Chairman since January 15, 1993; President and Chief
Executive Officer since August 1992; Chief Operating
Officer, August 1990 - August 1992; Vice President -
Paper Group, January 1989 - August 1990.
Joseph R. Collins Age 52
Senior Vice President - Specialty Products since August
1991; Acting Chief Financial Officer, June 1993 - March
14, 1994; President, Delta International Machinery
Corporation (subsidiary of the Registrant), October 1984 -
August 1991.
Ronald V. Kelly Age 57
Senior Vice President - Paper Products since August
1991; Vice President - Specialty Products, March 1989 -
August 1991; President, Lake Superior Paper Industries (a
joint venture in which the Registrant is a 50% owner),
January 1986 - March 1989.
Gerald C. Kitch Age 56
Senior Vice President - General Industrial Equipment since
August 1991; Vice President - General Industrial
Equipment, March 1989 - August 1991.
Allan J. Kolles Age 62
Vice President, Human Resources since March 1985.
Roy T. Rueb Age 53
Vice President, Treasurer since October 1986 and Acting
Secretary since June 1993.
Mark T. Schroepfer Age 47
Vice President, Controller since January 1990; Corporate
Controller, March 1987 - January 1990.
David D. Harrison Age 46
Senior Vice President and Chief Financial Officer since
March 15, 1994; Vice-President, Finance and Information
Technology of the GE Canada Appliance Component subsidiary of
General Electric, August 1992 - March 1994; Vice
President, Finance and Deputy Executive Officer of the GE
Europe Lighting Component subsidiary of General Electric,
January 1990 - July 1992; and Director of Finance,
Europe, Controller, and various other financial positions for
Borg Warner/GE U.S. Plastics Component, February 1972 -
January 1990.
Richard W. Ingman Age 49
Vice President, Corporate Development, August 1989 -
February 1994; President of Ingman, Inc. (business
training and consulting), January 1987 - August 1989.
Effective March 1, 1994, Mr. Ingman was named President
of Hoffman Engineering Division of Federal-Hoffman, Inc.
(subsidiary of Registrant).
There is no family relationship between any of the officers or
directors.
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters.
Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
Item 8. Financial Statements and Supplementary Data.
For information required under Items 5 through 8, see the
Registrant's Annual Report to Shareholders for the year ended
December 31, 1993, as referenced on page 2 of this report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
No changes in accountants or disagreements between the
Registrant and its accountants regarding accounting principles
or financial statement disclosures have occurred within the 24
months prior to the date of the Registrant's most recent
financial statements.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
For information required under Items 10 through 12, see the
Registrant's Proxy Statement for the 1994 Annual Meeting of
Shareholders referenced on page 2 of this report, and
"Executive Officers of the Registrant" found after Item 4 of this
report.
Item 13. Certain Relationships and Related Transactions.
No relationships or transactions existed that require disclosure
under Item 13.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a) Financial Statements, Financial Statement Schedules, and
Exhibits.
1. The following consolidated financial statements of Pentair,
Inc. and subsidiaries, together with the Report of Independent
Auditors, found on pages 24 to 37 of the Registrant's Annual
Report to Shareholders for the year ended December 31,
1993, are hereby incorporated by reference in this Form 10-K.
Page of Annual Report
Report of Independent Auditors 24
Consolidated Statement of Income
for Years Ended December 31, 1993,
1992 and 1991 25
Consolidated Balance Sheet as of
December 31, 1993 and 1992 26 - 27
Consolidated Statement of Cash Flows
for Years Ended December 31, 1993,
1992 and 1991 28
Notes to Consolidated Financial
Statements 29 - 37
2. The additional financial data listed below is included as
exhibits to this Form 10-K Report and should be read in
conjunction with the consolidated financial statements
presented in the 1993 Annual Report to Shareholders.
Schedules not included with this additional financial data have
been omitted because they are not required or the required
information is included in the financial statements or the notes.
Independent Auditors' Report
Schedules for the years ended December 31, 1993, 1992 and
1991:
V - Property, Plant and Equipment
VI - Accumulated Depreciation and Amortization of Property,
Plant and Equipment
VIII - Valuation and Qualifying Accounts
X - Supplementary Income Statement Information
3. The following exhibits are included with this Report on
Form 10-K (or incorporated by reference) as required by Item
601 of Regulation S-K.
Exhibit
Number Description
(3.1) Restated Articles of Incorporation as amended
through April 25, 1989.
(3.2) Resolution Establishing and Designating $7.50
Callable Cumulative Convertible Preferred
Stock, Series 1988, as a series of Preferred
Stock of Pentair, Inc.
(3.3) Resolution Establishing and Designating 8%
Callable Cumulative Voting Convertible
Preferred Stock, Series 1990, as a series of
Preferred Stock of Pentair, Inc.
(3.4) Second Amended and Superseding By-Laws as
amended through January 19, 1993.
(4.1) Restated Articles of Incorporation, as amended,
and Second Amended and Superseding By-
Laws, as amended (see Exhibits 3.1 - 3.4
above).
(4.2) Rights Agreement dated December 26, 1986
between the Company and First Trust
Company, Inc.
(4.3) Amendment to Rights Agreement dated July 22,
1988 between the Company and Norwest Bank
Minnesota, National Association, as successor
Rights Agent (Amending Exhibit 4.2).
(4.4) Second Amendment to Rights Agreement dated
December 15, 1989 between the Company and
Norwest Bank Minnesota, National Association,
as successor Rights Agent (Amending Exhibit
4.2).
(4.5) Bid Loan Agreement dated December 14, 1988
between the Company, Continental Bank N.A.
for itself and as Agent, Morgan Guaranty Trust
Company of New York, Morgan Bank
(Delaware), First Bank National Association,
Norwest Bank Minnesota, N.A., and Mellon
Bank, N.A.
(4.6) First Amendment to Bid Loan Agreement dated
January 1, 1991 between the Company,
Continental Bank N.A. for itself and as Agent,
Morgan Guaranty Trust Company of New York,
Morgan Bank (Delaware), First Bank National
Association, Norwest Bank Minnesota, N.A., and
NBD Bank, N.A. (Amending Exhibit 4.5).
(4.7) Second Amendment to Bid Loan Agreement
dated as of February 11, 1994 between Pentair,
Inc., Continental Bank N.A. for itself and as
Agent, Morgan Guaranty Trust Company of New
York, J.P. Morgan Delaware, First Bank National
Assocation, Norwest Bank Minnesota, N.A., and
NBD Bank, N.A. (Amending Exhibit 4.5).
(4.8) $125,000,000 Facility Agreement dated as of
February 11, 1994 between Pentair, Inc.,
Continental Bank N.A. for itself and as Agent,
Morgan Guaranty Trust Company of New York
for itself and as Agent, NBD Bank, N.A., and J.
P. Morgan Delaware.
(4.9) $45,000,000 Facility Agreement dated as of
February 11, 1994 between Pentair, Inc., First
Bank National Association, for itself and as
Agent, and Norwest Bank Minnesota N.A.
(4.10) DM 115,000,000 Facility Agreement dated as of
February 11, 1994 between EuroPentair, GmbH
as Borrower, Pentair, Inc., as Guarantor,
Morgan Guaranty Trust Company of New York
for itself and as Agent, Continental Bank N.A.,
for itself and as Agent, NBD Bank, N.A. and
Dresdner Bank.
(4.11) Restatement of Credit Agreement dated July 11,
1989 between Federal-Hoffman, Inc. and First
Bank National Association.
(4.12) Second Amendment to Restatement of Credit
Agreement dated as of January 19, 1993
between Federal-Hoffman, Inc., Pentair, Inc.,
and First Bank National Association (Amending
Exhibit 4.11) .
(4.13) $35,000,000 Note Purchase Agreement dated
March 25, 1991 between Pentair, Inc. and
Nationwide Life Insurance Company.
(4.14) $25,000,000 Note Purchase Agreement dated
December 13, 1991 between Pentair, Inc. and
Principal Mutual Life Insurance Company.
(4.15) $15,000,000 Note Purchase Agreement dated
November 1, 1992 between Pentair, Inc. and
Nationwide Life Insurance Company.
(4.16) $15,000,000 Note Purchase Agreement dated
January 15, 1993 between Pentair, Inc. and
Principal Mutual Life Insurance Company.
(4.17) $70,000,000 Senior Notes Purchase Agreement
dated as of April 30, 1993 between Pentair, Inc.
and United of Omaha Life Insurance Company,
Companion Life Insurance Company, Principal
Mutual Life Insurance Company, Nippon Life
Insurance Company of America, Lutheran
Brotherhood, American United Life Insurance
Company, Modern Woodmen of America, The
Franklin Life Insurance Company and Ameritas
Life Insurance Corp.
(10.1) Agreements dated February 8, 1978 and
February 9, 1982 between the Company and D.
Eugene Nugent.
(10.2) Agreement dated February 8, 1984 (Amending
Exhibit 10.1).
(10.3) Agreement dated December 17, 1985
(Amending Exhibit 10.1).
(10.4) Agreement dated May 7, 1990 (Amending
Exhibit 10.1).
(10.5) Company's Supplemental Employee Retirement
Plan effective June 16, 1988.
(10.6) Company's Restated Long-Term Executive
Performance Plan as amended to October 21,
1987.
(10.7) Company's 1982 Incentive Stock Option Plan.
(10.8) First Amendment to Incentive Stock Plan
(Amending Exhibit 10.10).
(10.9) Second Amendment to Incentive Stock Option
Plan (Amending Exhibit 10.10).
(10.10) Company's 1986 Nonqualified Stock Option
Plan.
(10.11) Company's 1990 Omnibus Stock Incentive Plan
(Superseding Exhibits 10.6 - 10.10 above
starting with 1990 grants).
(10.12) Company's Management Incentive Plan as
amended to January 12, 1990.
(10.13) Employee Stock Purchase and Bonus Plan as
amended and restated effective January 1,
1992.
(10.14) Company's Flexible Perquisite Program as
amended to January 1, 1989.
(10.15) Form of 1986 Management Assurance
Agreement (Revised 1990) between the
Company and certain executive officers.
(10.16) Company's Third Amended and Restated
Compensation Plan for Non-Employee Directors
as amended to January 1, 1992.
(10.17) Company's Outside Directors Nonqualified Stock
Option Plan dated January 22, 1988.
(10.18) First Amendment to Outside Directors
Nonqualified Stock Option Plan (Amending
Exhibit 10.17).
(10.19) Second Amendment to Outside Directors
Nonqualified Stock Option Plan (Amending
Exhibit 10.17).
(10.20) Pentair, Inc. Deferred Compensation Plan
effective January 1, 1993.
(10.21) Lake Superior Paper Industries Venture Council
By-Laws and Management Protocol.
(10.22) Second Amended and Restated Joint Venture
Agreement dated December 31, 1987 between
Pentair Duluth Corp. and Minnesota Paper,
Incorporated.
(10.23) First Amendment to Second Restated Joint
Venture Agreement, First Amendment to
Venture Council By-Laws, and First Amendment
to Management Protocol, all dated May 30,
1989, between Pentair Duluth Corp. and
Minnesota Paper, Incorporated (Amending
Exhibits 10.21 and 10.22).
(10.24) Cash Deficiency Agreement dated December
31, 1987 among Pentair Duluth Corp., as Joint
Venturer, Associated Southern Investment
Company, as Owner Participant, The
Connecticut Bank and Trust Company, National
Association, as Indenture Trustee, and First
National Bank of Minneapolis, as Owner
Trustee. Cash Deficiency Agreements also
were entered into with respect to each of the
other four Owner Participants: Dana Lease
Finance Corporation, NYNEX Credit Company,
Public Service Resources Corporation, and
Southern Indiana Properties, Inc.
(10.25) Keepwell Agreement and Assignment dated
December 31, 1987 among Pentair, Inc., as
Sponsor, Pentair Duluth Corp., as Joint
Venturer, and First National Bank of
Minneapolis, as Owner Trustee; although First
Minneapolis executed this filed document as
Owner Trustee for Associated Southern
Investment Company, additional Keepwell
Agreements and Assignments were entered into
by First Minneapolis as Owner Trustee for the
other four Owner Participants listed in the
description of Exhibit 10.24 above.
(10.26) Definition of Terms for Financing Agreement
dated December 31, 1987 and the Transaction
Documents Referred to Therein: Sale and
Leaseback of Undivided Interest in Lake
Superior Paper Industries' Supercalendered
Paper Mill; although this filed document supplies
the definitions applicable to the agreements filed
as Exhibits 10.24 and 10.25 above, there were
four additional sets of definitions that supply the
definitions for the other sets of agreements
referred to in the descriptions of those Exhibits
with respect to the various Owner Participants.
(10.27) Loan and Stock Purchase Agreement dated
March 7, 1990 between the Company and the
Pentair, Inc. Employee Stock Ownership Plan
Trust, acting through State Street Bank and
Trust Company, as Trustee.
(10.28) $56,499,982 Promissory Note dated March 7,
1990 of the Pentair, Inc. Employee Stock
Ownership Plan Trust, acting through State
Street Bank and Trust Company, as Trustee, to
the Company.
(11) Statement regarding computation of earnings
per share.
(13) Annual Report to Shareholders for period ended
December 31, 1993.
(21) Subsidiaries of Registrant.
(24) Consent of Deloitte & Touche.
(b) Reports on Form 8-K.
None.
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.
PENTAIR, INC.
By: Joseph R. Collins
Senior Vice President and
Chief Financial Officer
Dated: March 28, 1994
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has also been signed by the following
persons on behalf of the Registrant and in the capacities and
on the dates indicated.
By: Winslow H. Buxton
Chairman, President and
Chief Executive Officer, Director
Dated: March 28, 1994
By: George N. Butzow, Director
Dated: March 28, 1994
By: Harold V. Haverty, Director
Dated: March 28, 1994
By: Quentin J. Hietpas, Director
Dated: March 28, 1994
By: B. Kristine Johnson, Director
Dated: March 28, 1994
By: Walter Kissling, Director
Dated: March 28, 1994
By: H. William Lurton, Director
Dated: March 28, 1994
By: D. Eugene Nugent, Director
Dated: March 28, 1994
INDEPENDENT AUDITORS' REPORT
Pentair, Inc.:
We have audited the consolidated financial statements of
Pentair, Inc. and subsidiaries as of December 31, 1993 and
1992, and for each of the three years in the period ended
December 31, 1993, and have issued our report thereon dated
February 11, 1994; such financial statements and report are
included in your 1993 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the
financial statement schedules of Pentair, Inc. and subsidiaries
listed in Item 14. These financial statement schedules are the
responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedules, when
considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE
Saint Paul, Minnesota
February 11, 1994
SCHEDULE V
PENTAIR, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
($ Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
OTHER
BALANCE AT CHANGES BALANCE
BEGINNING ADDITIONS RETIRE- ADD AT END OF
OF PERIOD AT COST MENTS (DEDUCT) PERIOD
YEAR ENDED DECEMBER 31, 1991:
Land & land
improvements $11,866 $830 $(865) $11,831
Buildings 63,925 4,776 $(91) (4,368) 64,242
Machinery &
equipment 357,198 54,446 (5,061) (5,622) 400,961
Construction
in progress-net 24,825 (10,632) (134) 14,059
TOTALS FN1 $457,814 $49,420 $(5,152) $(10,989) $491,093
YEAR ENDED DECEMBER 31, 1992:
Land & land
improvements $11,831 $325 $1,192 $13,348
Buildings 64,242 2,515 $(492) (2,143) 64,122
Machinery &
equipment 400,961 43,810 (7,533) 3,204 440,442
Construction
in progress-net 14,059 20,585 (659) 33,985
TOTALS FN2 $491,093 $67,235 $(8,025) $1,594 $551,897
YEAR ENDED DECEMBER 31, 1993:
Land & land
improvements $13,348 $995 $514 $14,857
Buildings 64,122 6,442 $(135) 3,645 74,074
Machinery &
equipment 440,442 73,345 (6,092) (1,129) 506,566
Construction
in progress-net 33,985 (7,361) (315) (189) 26,120
TOTALS FN3 $551,897 $73,421 $(6,542) $2,841 $621,617
[FN]
FN1 Column E includes the sale of the Accutec division of
Hoffman Engineering.
$ (13,495)
FN2 Column E includes the sale of Invicta division of Delta
International Machinery
$ (11,833)
and FAS 109 tax adjusting entries.
$ 13,228
FN3 Column E includes classification of F.E. Myers Foundry
from asset held for disposition
$ 3,887
SCHEDULE VI
PENTAIR, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
($ Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
OTHER
BALANCE AT CHANGES BALANCE
BEGINNING ADDITIONS RETIRE- ADD AT END OF
OF PERIOD AT COST MENTS (DEDUCT) PERIOD
YEAR ENDED DECEMBER 31, 1991:
Land & land
improvements $1,154 $516 $(87) $1,583
Buildings 12,790 3,457 $(50) (482) 15,715
Machinery &
equipment 180,303 40,742 (4,195) (1,355) 215,495
TOTALS FN1 $194,247 $44,715 $(4,245) $(1,924) $232,793
YEAR ENDED DECEMBER 31, 1992:
Land & land
improvements $1,583 $449 $(7) $2,025
Buildings 15,715 3,214 $(375) (1,094) 17,460
Machinery &
equipment 215,495 41,791 (6,331) (8,356) 242,599
TOTALS FN2 $232,793 $45,454 $(6,706) $(9,457) $262,084
YEAR ENDED DECEMBER 31, 1993:
Land & land
improvements $2,025 $497 $(6) $2,516
Buildings 17,460 9,416 $(1,690) 588 25,774
Machinery &
equipment 242,599 37,744 (3,830) 948 277,461
TOTALS FN3 $262,084 $47,657 $(5,520) $1,530 $305,751
[FN]
FN1 Column E includes the sale of the Accutec division of
Hoffman Engineering.
$(2,482)
FN2 Column E includes the sale of Invicta division of Delta
International Machinery.
$(9,108)
FN3 Column E includes the classification of F.E. Myers
Foundry
from asset held for disposition.
$1,763
SCHEDULE VIII
PENTAIR, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31
($ Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND DEDUCTIONS- AT END OF
PERIOD EXPENSES WRITE-OFFS PERIOD
Allowance for
doubtful
accounts and
notes receivables
1991 4,715 2,875 (1,964) 5,626
1992 5,626 2,549 (2,635) 5,540
1993 5,540 1,514 (857) 6,197
SCHEDULE X
PENTAIR, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31
($ Thousands)
COLUMN A COLUMN B
Charged to Costs and Expenses
Item 1991 1992 1993
Maintenance and repairs $25,072 $25,178 $25,799
Advertising costs $22,230 $23,433 $27,675
All other supplemental income statement information items are
not included in this schedule because they are not required to
be disclosed pursuant to Regulation S-X.
EXHIBIT INDEX
Exhibit
Number Description
(3.1) Restated Articles of Incorporation as amended
through April 25, 1989 (Incorporated by
reference to Exhibit 3.1 to the Company's Form
10-Q for the quarter ended March 31, 1989).
(3.2) Resolution Establishing and Designating $7.50
Callable Cumulative Convertible Preferred Stock,
Series 1988, as a series of Preferred Stock of
Pentair, Inc. (Incorporated by reference to Exhibit
4.1 to Amendment No. 1 to the Company's
Current Report on Form 8-K filed December 30,
1988).
(3.3) Resolution Establishing and Designating 8%
Callable Cumulative Voting Convertible Preferred
Stock, Series 1990, as a series of Preferred
Stock of Pentair, Inc. (Incorporated by reference
to Exhibit 4 to the Company's Current Report on
Form 8-K filed March 21, 1990).
(3.4) Second Amended and Superseding By-Laws as
amended through January 19, 1993
(Incorporated by reference to Exhibit 3.16 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1992).
(4.1) Restated Articles of Incorporation, as amended,
and Second Amended and Superseding By-
Laws, as amended (see Exhibits 3.1 - 3.4
above).
(4.2) Rights Agreement dated December 26, 1986
between the Company and First Trust Company,
Inc. (Incorporated by reference to Exhibit 1 to
the Company's Registration Statement on Form
8-A filed December 26, 1986).
(4.3) Amendment to Rights Agreement dated July 22,
1988 between the Company and Norwest Bank
Minnesota, National Association, as successor
Rights Agent (Amending Exhibit 4.2)
(Incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed
August 2, 1988).
(4.4) Second Amendment to Rights Agreement dated
December 15, 1989 between the Company and
Norwest Bank Minnesota, National Association,
as successor Rights Agent (Amending Exhibit
4.2) (Incorporated by reference to Exhibit 4.3 to
the Company's Current Report on Form 8-K filed
December 28, 1989).
(4.5) Bid Loan Agreement dated December 14, 1988
between the Company, Continental Bank N.A.
for itself and as Agent, Morgan Guaranty Trust
Company of New York, Morgan Bank
(Delaware), First Bank National Association,
Norwest Bank Minnesota, N.A., and Mellon
Bank, N.A. (Incorporated by reference to Exhibit
4.2 to Amendment No. 1 to the Company's
Current Report on Form 8-K filed December 30,
1988).
(4.6) First Amendment to Bid Loan Agreement dated
January 1, 1991 between the Company,
Continental Bank N.A. for itself and as Agent,
Morgan Guaranty Trust Company of New York,
Morgan Bank (Delaware), First Bank National
Association, Norwest Bank Minnesota, N.A., and
NBD Bank, N.A. (Amending Exhibit 4.5)
(Incorporated by reference to Exhibit 4.9 to the
Company's Annual Report on Form 10K for the
year ended December 31, 1990).
(4.7) Second Amendment to Bid Loan Agreement
dated as of February 11, 1994 between Pentair,
Inc., Continental Bank N.A. for itself and as
Agent, Morgan Guaranty Trust Company of New
York, J.P. Morgan Delaware, First Bank National
Assocation, Norwest Bank Minnesota, N.A., and
NBD Bank, N.A. (Amending Exhibit 4.5)
(Incorporated by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed
March 14, 1994).
(4.8) $125,000,000 Facility Agreement dated as of
February 11, 1994 between Pentair, Inc.,
Continental Bank N.A. for itself and as Agent,
Morgan Guaranty Trust Company of New York
for itself and as Agent, NBD Bank, N.A., and J.
P. Morgan Delaware (Incorporated by reference
to Exhibit 4.1 to the Company's Current Report
on Form 8-K filed March 14, 1994).
(4.9) $45,000,000 Facility Agreement dated as of
February 11, 1994 between Pentair, Inc., First
Bank National Association, for itself and as
Agent, and Norwest Bank Minnesota N.A.
(Incorporated by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed
March 14, 1994).
(4.10) DM 115,000,000 Facility Agreement dated as of
February 11, 1994 between EuroPentair, GmbH
as Borrower, Pentair, Inc., as Guarantor, Morgan
Guaranty Trust Company of New York for itself
and as Agent, Continental Bank N.A., for itself
and as Agent, NBD Bank, N.A. and Dresdner
Bank (Incorporated by reference to Exhibit 4.4 to
the Company's Current Report on Form 8-K filed
March 14, 1994).
(4.11) Restatement of Credit Agreement dated July 11,
1989 between Federal-Hoffman, Inc. and First
Bank National Association (Incorporated by
reference to Exhibit 4.10 to the Company's Form
10-K for the year ended December 31, 1989).
(4.12) Second Amendment to Restatement of Credit
Agreement dated as of January 19, 1993
between Federal-Hoffman, Inc., Pentair, Inc., and
First Bank National Association (Amending
Exhibit 4.11) (Incorporated by reference to
Exhibit 4.13 to the Company's Form 10-K for the
year ended December 31, 1992).
(4.13) $35,000,000 Note Purchase Agreement dated
March 25, 1991 between Pentair, Inc. and
Nationwide Life Insurance Company.
(Incorporated by reference to Exhibit 4.14 to the
Company's Registration Statement on Form S-8
filed August 6, 1991).
(4.14) $25,000,000 Note Purchase Agreement dated
December 13, 1991 between Pentair, Inc. and
Principal Mutual Life Insurance Company.
(Incorporated by reference to Exhibit 4.15 to the
Company's Registration Statement on Form S-8
filed January 13, 1992).
(4.15) $15,000,000 Note Purchase Agreement dated
November 1, 1992 between Pentair, Inc. and
Nationwide Life Insurance Company
(Incorporated by reference to Exhibit 4.16 to the
Company's Form 10-K for the year ended
December 31, 1992).
(4.16) $15,000,000 Note Purchase Agreement dated
January 15, 1993 between Pentair, Inc. and
Principal Mutual Life Insurance Company
(Incorporated by reference to Exhibit 4.17 to the
Company's Form 10-K for the year ended
December 31, 1992).
(4.17) $70,000,000 Senior Notes Purchase Agreement
dated as of April 30, 1993 between Pentair, Inc.
and United of Omaha Life Insurance Company,
Companion Life Insurance Company, Principal
Mutual Life Insurance Company, Nippon Life
Insurance Company of America, Lutheran
Brotherhood, American United Life Insurance
Company, Modern Woodmen of America, The
Franklin Life Insurance Company and Ameritas
Life Insurance Corp.
(10.1) Agreements dated February 8, 1978 and
February 9, 1982 between the Company and D.
Eugene Nugent (Incorporated by reference to
Exhibit 10.2 to the Company's Registration
Statement on Form S-2 filed June 24, 1983).
(10.2) Agreement dated February 8, 1984 (Amending
Exhibit 10.1) (Incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the year ended December 31,
1983).
(10.3) Agreement dated December 17, 1985 (Amending
Exhibit 10.1) (Incorporated by reference to
Exhibit 10.6 to the Company's Annual Report on
Form 10-K for the year ended December 31,
1985).
(10.4) Agreement dated May 7, 1990 (Amending
Exhibit 10.1). (Incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on
Form 10K for the year ended December 31,
1990).
(10.5) Company's Supplemental Employee Retirement
Plan effective June 16, 1988 (Incorporated by
reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1989).
(10.6) Company's Restated Long-Term Executive
Performance Plan as amended to October 21,
1987 (Incorporated by reference to Exhibit 10.9
to the Company's Annual Report on Form 10-K
for the year ended December 31, 1987).
(10.7) Company's 1982 Incentive Stock Option Plan
(Incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-2
filed June 24, 1983).
(10.8) First Amendment to Incentive Stock Plan
(Amending Exhibit 10.7) (Incorporated by
reference to Exhibit 10.10 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1985).
(10.9) Second Amendment to Incentive Stock Option
Plan (Amending Exhibit 10.7) (Incorporated by
reference to Exhibit 14 to the Company's Annual
Report on Form 10-K for the year ended
December 31, 1989).
(10.10) Company's 1986 Nonqualified Stock Option Plan
(Incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1986).
(10.11) Company's 1990 Omnibus Stock Incentive Plan
(Superseding Exhibits 10.6 - 10.10 above starting
with 1990 grants) (Incorporated by reference to
Exhibit 10.16 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1989).
(10.12) Company's Management Incentive Plan as
amended to January 12, 1990 (Incorporated by
reference to Exhibit 10.17 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1989).
(10.13) Employee Stock Purchase and Bonus Plan as
amended and restated effective January 1, 1992
(Incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1991).
(10.14) Company's Flexible Perquisite Program as
amended to January 1, 1989 (Incorporated by
reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1989).
(10.15) Form of 1986 Management Assurance
Agreement (Revised 1990) between the
Company and certain executive officers
(Incorporated by reference to Exhibit 10.22 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1989).
(10.16) Company's Third Amended and Restated
Compensation Plan for Non-Employee Directors
as amended to January 1, 1992. (Incorporated
by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-8 filed
January 13, 1992).
(10.17) Company's Outside Directors Nonqualified Stock
Option Plan dated January 22, 1988
(Incorporated by reference to Exhibit 10.20 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1987).
(10.18) First Amendment to Outside Directors
Nonqualified Stock Option Plan (Amending
Exhibit 10.17) (Incorporated by reference to
Exhibit 10.22 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1991).
(10.19) Second Amendment to Outside Directors
Nonqualified Stock Option Plan (Amending
Exhibit 10.17) (Incorporated by reference to
Exhibit 10.23 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1991).
(10.20) Pentair, Inc. Deferred Compensation Plan
effective January 1, 1993 (Incorporated by
reference to Exhibit 10.21 to the Company's
Form 10-K for the year ended December 31,
1992).
(10.21) Lake Superior Paper Industries Venture Council
By-Laws and Management Protocol
(Incorporated by reference to Exhibit 10.16 to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1985).
(10.22) Second Amended and Restated Joint Venture
Agreement dated December 31, 1987 between
Pentair Duluth Corp. and Minnesota Paper,
Incorporated (Incorporated by reference to
Exhibit 10.25 to the Company's Annual Report
on Form 10-K for the year ended December 31,
1987).
(10.23) First Amendment to Second Restated Joint
Venture Agreement, First Amendment to Venture
Council By-Laws, and First Amendment to
Management Protocol, all dated May 30, 1989,
between Pentair Duluth Corp. and Minnesota
Paper, Incorporated (Amending Exhibits 10.21
and 10.22) (Incorporated by reference to Exhibit
10.28 to the Company's Annual Report on Form
10-K for the year ended December 31, 1989).
(10.24) Cash Deficiency Agreement dated December 31,
1987 among Pentair Duluth Corp., as Joint
Venturer, Associated Southern Investment
Company, as Owner Participant, The
Connecticut Bank and Trust Company, National
Association, as Indenture Trustee, and First
National Bank of Minneapolis, as Owner Trustee.
Cash Deficiency Agreements also were entered
into with respect to each of the other four Owner
Participants: Dana Lease Finance Corporation,
NYNEX Credit Company, Public Service
Resources Corporation, and Southern Indiana
Properties, Inc. (Incorporated by reference to
Exhibit 10.1 to Amendment No. 1 to the
Company's Current Report on Form 8-K filed
April 26, 1988).
(10.25) Keepwell Agreement and Assignment dated
December 31, 1987 among Pentair, Inc., as
Sponsor, Pentair Duluth Corp., as Joint Venturer,
and First National Bank of Minneapolis, as
Owner Trustee; although First Minneapolis
executed this filed document as Owner Trustee
for Associated Southern Investment Company,
additional Keepwell Agreements and
Assignments were entered into by First
Minneapolis as Owner Trustee for the other four
Owner Participants listed in the description of
Exhibit 10.24 above (Incorporated by reference
to Exhibit 10.2 to Amendment No. 1 to the
Company's Current Report on Form 8-K filed
April 26, 1988).
(10.26) Definition of Terms for Financing Agreement
dated December 31, 1987 and the Transaction
Documents Referred to Therein: Sale and
Leaseback of Undivided Interest in Lake
Superior Paper Industries' Supercalendered
Paper Mill; although this filed document supplies
the definitions applicable to the agreements filed
as Exhibits 10.24 and 10.25 above, there were
four additional sets of definitions that supply the
definitions for the other sets of agreements
referred to in the descriptions of those Exhibits
with respect to the various Owner Participants
(Incorporated by reference to Exhibit 10.3 to
Amendment No. 1 to the Company's Current
Report on Form 8-K filed April 26, 1988).
(10.27) Loan and Stock Purchase Agreement dated
March 7, 1990 between the Company and the
Pentair, Inc. Employee Stock Ownership Plan
Trust, acting through State Street Bank and Trust
Company, as Trustee (Incorporated by reference
to Exhibit 10.1 to the Company's Current Report
on Form 8-K filed March 21, 1990).
(10.28) $56,499,982 Promissory Note dated March 7,
1990 of the Pentair, Inc. Employee Stock
Ownership Plan Trust, acting through State
Street Bank and Trust Company, as Trustee, to
the Company (Incorporated by reference to
Exhibit 10.2 to the Company's Current Report on
Form 8-K filed March 21, 1990).
(11) Statement regarding computation of earnings
per share.
(13) Annual Report to Shareholders for period ended
December 31, 1993.
(21) Subsidiaries of Registrant.
(24) Consent of Deloitte & Touche.