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1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------------
For the Fiscal Year Ended June 30, 1996
Commission File Number 1-7635
TWIN DISC, INCORPORATED
- ------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Wisconsin 39-0667110
- ---------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
1328 Racine Street, Racine, Wisconsin 53403
- ------------------------------------- ------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (414) 638-4000
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered:
Common stock, no par value New York Stock Exchange
- -------------------------- ------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common stock, no par value
- ------------------------------------------------------------------------------
(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 the 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].
At August 30, 1996, the aggregate market value of the common stock held by
non-affiliates of the registrant was $46,939,728. Determination of stock
ownership by affiliates was made solely for the purpose of responding to this
requirement and registrant is not bound by this determination for any other
purpose.
At August 30, 1996, the registrant had 2,777,274 shares of its common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
The incorporated portions of such documents being specifically identified in
the applicable Items of this Report.
Portions of the Annual Report to Shareholders for the year ended June 30, 1996
are incorporated by reference into Parts I, II and IV.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held October 18, 1996 are incorporated by reference into Parts I, III and IV.
Portions of the Company's Annual Report on Form 10-K for the year ended June
30, 1988, are incorporated by reference into Part II.
2
PART I
Item 1. Business
The Company is engaged in one line of business. Twin Disc designs,
manufactures and sells heavy duty off-highway power transmission equipment.
Products offered include: hydraulic torque converters; power-shift
transmissions; marine transmissions and surface drives; universal joints; gas
turbine starting drives; power take-offs and reduction gears; industrial
clutches; fluid couplings and control systems. Principal markets are:
construction equipment, industrial equipment, government, marine, energy and
natural resources and agriculture. The Company's worldwide sales to both
domestic and foreign customers are transacted through a direct sales force and
a distributor network. There have been no significant changes in products or
markets since the beginning of the fiscal year. The products described above
have accounted for more than 90% of revenues in each of the last three fiscal
years.
During 1995, the Company purchased the outstanding stock of Marine Diffusion,
S.R.L. The acquisition did not require significant capital investment. A
further description of this acquisition appears in Note N to the consolidated
financial statements on page 37 of the 1996 Annual Report, which financial
statements are incorporated by reference in this Form 10-K Annual Report in
Part II.
In July 1994, the Company acquired a minority interest in Palmer Johnson
Distributors, LLC, a major distributor of Twin Disc products. A further
description of this transaction appears in Note E to the consolidated
financial statements on page 29 of the 1996 Annual Report, which financial
statements are incorporated by reference in this Form 10-K Annual Report in
Part II. The Company also began operations of a fully owned marketing
subsidiary in Madrid, Spain in fiscal year 1994. The establishment of this
subsidiary did not require significant capital investment.
The Company's products receive direct widespread competition, including from
divisions of other larger independent manufacturers. The Company also
competes for business with parts manufacturing divisions of some of its major
customers. Ten customers accounted for approximately 45% of the Company's
consolidated net sales during the year ended June 30, 1996. One such customer
is Caterpillar Inc. which accounted for approximately 10% of consolidated net
sales in 1996.
Unfilled open orders for the next six months of $65,574,000 at June 30, 1996
compares to $72,183,000 at June 30, 1995. Since orders are subject to
cancellation and rescheduling by the customer, the six-month order backlog is
considered more representative of operating conditions than total backlog.
However, as procurement and manufacturing "lead times" change, the backlog
will increase or decrease; and thus it does not necessarily provide a valid
indicator of the shipping rate. Cancellations are generally the result of
rescheduling activity and do not represent a material change in backlog.
Most of the Company's products are machined from cast iron, forgings, cast
aluminum and bar steel which generally are available from multiple sources and
which are believed to be in adequate supply.
The Company has pursued a policy of applying for patents in both the United
States and certain foreign countries on inventions made in the course of its
development work for which commercial applications are considered probable.
The Company regards its patents collectively as important but does not
consider its business dependent upon any one of such patents.
Engineering and development costs include research and development expenses
for new product development and major improvements to existing products, and
other charges for ongoing efforts to refine existing products. Research and
development costs charged to operations totalled $2,564,000, $2,718,000 and
$2,649,000 in 1996, 1995 and 1994, respectively. Total engineering and
development costs were $6,998,000, $7,411,000 and $6,843,000 in 1996, 1995 and
1994, respectively.
3
Item 1. Business (continued)
Compliance with federal, state and local provisions regulating the discharge
of materials into the environment, or otherwise relating to the protection of
the environment, is not anticipated to have a material effect on capital
expenditures, earnings or the competitive position of the Company.
The number of persons employed by the Company at June 30, 1996 was 1,080.
The business is not considered to be seasonal except to the extent that
employee vacations are taken mainly in the months of July and August
curtailing production during that period.
Management recognizes that there are attendant risks that foreign governments
may place restrictions on dividend payments and other movements of money, but
these risks are considered minimal due to the political relations the United
States maintains with the countries in which the Company operates or the
relatively low investment within individual countries.
A summary of financial data by geographic area for the years ended June 30,
1996, 1995 and 1994 appears in Note D to the consolidated financial statements
on pages 27 through 29 of the 1996 Annual Report to Shareholders, which
financial statements are incorporated by reference in this Form 10-K Annual
Report in Part II.
Item 2. Properties
The Company owns two manufacturing, assembly and office facilities in Racine,
Wisconsin, U.S.A. and one in Nivelles, Belgium. The aggregate floor space of
these three plants approximates 677,000 square feet. The Racine facility
includes office space which is the location of the Company's corporate
headquarters.
The Company also has operations in the following locations, all of which are
used for sales offices, warehousing and light assembly or product service.
The following properties are leased except for the Johannesburg, South Africa
location, which is owned:
Jacksonville, Florida, U.S.A. Brisbane, Queensland, Australia
Miami, Florida, U.S.A. Perth, Western Australia, Australia
Loves Park, Illinois, U.S.A. Viareggio, Italy
Coburg, Oregon, U.S.A. Singapore
Seattle, Washington, U.S.A. Johannesburg, South Africa
Madrid, Spain
The properties are generally suitable for operations and are utilized in the
manner for which they were designed. Manufacturing facilities are currently
operating at less than 70% capacity and are adequate to meet foreseeable needs
of the Company.
4
Item 3. Legal Proceedings
Twin Disc is a defendant in several product liability or related claims
considered either adequately covered by appropriate liability insurance or
involving amounts not deemed material to the business or financial condition
of the Company.
The Company has joined with a group of potentially responsible parties in
signing a consent decree with the Illinois Environmental Protection Agency to
conduct a remedial investigation and feasibility study at the Interstate
Pollution Control facility in Rockford, Illinois. The consent decree was
signed on October 17, 1991, and filed with the federal court in the Northern
District of Illinois. The Company's total potential liability on the site
cannot be estimated with particularity until completion of the remedial
investigation. Based upon current assumptions, however, the Company
anticipates potential liability of approximately $500,000.
The Company has also joined with a group of potentially responsible parties in
signing a consent decree with the Illinois Environmental Protection Agency to
conduct a remedial investigation and feasibility study at the MIG\DeWane
Landfill in Rockford, Illinois. The consent decree was signed on March 29,
1991, and filed with the federal court in the Northern District of Illinois.
The Company's total potential liability on the site cannot be estimated with
particularity until completion of the remedial investigation. Based upon
current assumptions, however, the Company anticipates potential liability of
approximately $126,000.
The Company also is involved with other potentially responsible parties in
various stages of investigation and remediation relating to other hazardous
waste sites, some of which are on the United States EPA National Priorities
List (Superfund sites). While it is impossible at this time to determine with
certainty the ultimate outcome of such environmental matters, they are not
expected to materially affect the Company's financial position, operating
results or cash flows.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
(Pursuant to General Instruction G(3) of Form 10-K, the following list is
included as an unnumbered Item in Part I of this Report in lieu of being
included in the Proxy Statement for the Annual Meeting of Shareholders to
be held on October 18, 1996.)
Principal Occupation
Name Last Five Years Age
- ------------------ --------------------------------------- ---
Michael E. Batten Chairman, Chief Executive Officer since 56
October 1991; formerly Chairman, President,
Chief Executive Officer
Michael H. Joyce President-Chief Operating Officer since 55
October 1991; formerly President-North
American Operations since January 1991;
formerly President, Mobile Fluid Products
Division, Dana Corporation
James O. Parrish Vice President - Finance and Treasurer 56
Philippe O. Pecriaux Vice President - Europe 58
Lance J. Melik Vice President - Corporate Development 53
since September 1995; formerly Vice
President - Marketing
5
Executive Officers of the Registrant (continued)
Principal Occupation
Name Last Five Years Age
- ---- --------------------- ---
Michael J. Hablewitz Vice President - Quality Assurance 50
since February 1994;
formerly Vice President -
Manufacturing Services
James McIndoe Vice President - International Marketing 57
Darrell J. Olson Vice President - Human Resources since 49
November 1995; formerly Vice President -
Operations, Intercraft Company Division,
Newell Company since March 1994; formally
Vice President - Human Resources,
Mirro Company Division, Newell Company
Paul A. Pelligrino Vice President - Engineering since 57
April 1996; formerly Chief Engineer
of Corporate Engineering
John W. Spano Vice President - Sales and Marketing 52
since September 1995; formerly Director
Mobile Market Group, Trinova Corporation
since June 1993; formerly Director of
Customer Service since October 1991;
formerly Marine Market Sales Manager
Fred H. Timm Corporate Controller and Secretary 50
since August 1994; formerly Controller
and Secretary
Officers are elected annually by the Board of Directors at the first meeting
of the Board held after each Annual Meeting of the Shareholders. Each officer
shall hold office until his successor has been duly elected, or until he shall
resign or shall have been removed from office.
PART II
Item 5.Market for the Registrant's Common Stock and Related Shareholder
Matters
The dividends per share and stock price range information set forth under the
caption "Sales and Earnings by Quarter" on page 1 of the Annual Report for the
year ended June 30, 1996 are incorporated into this Report
by reference.
As of June 30, 1996 there were 913 shareholder accounts. The Company's stock
is traded on the New York Stock Exchange. The market price of the Company's
common stock as of the close of business on August 30, 1996 was $22.00 per
share.
Pursuant to a shareholder rights plan (the "Rights Plan"), on June 17, 1988,
the Board of Directors declared a dividend distribution, payable to
shareholders of record on July 1, 1988, of one Preferred Stock Purchase Right
for each outstanding share of Common Stock. The Rights will expire 10 years
after issuance, and will be exercisable only if a person or group becomes the
beneficial owner of 20% or more (or 30% in the case of any person or group
which currently owns 20% or more of the shares or who shall become the
Beneficial Owner of 20% or more of the shares as a result of any transfer by
reason of the death of or by gift from any other person who is an Affiliate or
an Associate of such existing holder or by succeeding such a person as trustee
of a trust existing on the Record Date) of the Common Stock (such person or
group, an "Acquiring Person") or commences a tender or exchange offer which
would result in the offeror beneficially owning 30% or more of the Common
Stock. A person who is not an Acquiring Person will not be deemed to have
become an Acquiring Person solely as a result of a reduction in the
6
Item 5. Market for the Registrant's Common Stock and Related Shareholder
Matters (continued)
number of shares of Common Stock outstanding due to a repurchase of Common
Stock by the Company until such person becomes beneficial owner of any
additional shares of Common Stock. Each Right will entitle shareholders to
buy one newly issued unit of one one-hundredth of a share of Series A Junior
Preferred Stock at an exercise price of $80, subject to certain antidilution
adjustments. The Company will generally be entitled to redeem the Rights at
$.05 per Right at any time prior to 10 business days after a public
announcement of the existence of an Acquiring Person. In addition, if (i) a
person or group accumulates more than 30% of the Common Stock (except pursuant
to an offer for all outstanding shares of Common Stock which the independent
directors of the Company determine to be fair to and otherwise in the best
interests of the Company and its shareholders and except solely due to a
reduction in the number of shares of Common Stock outstanding due to the
repurchase of Common Stock by the Company), (ii) a merger takes place with an
Acquiring Person where the Company is the surviving corporation and its Common
Stock is not changed or exchanged, (iii) an Acquiring Person engages in
certain self-dealing transactions, or (iv) during such time as there is an
Acquiring Person, an event occurs which results in such Acquiring Person's
ownership interest being increased by more than 1% (e.g., a reverse stock
split), each Right (other than Rights held by such Acquiring Person and
certain related parties which become void) will represent the right to
purchase, at the exercise price, Common Stock (or in certain circumstances, a
combination of securities and/or assets) having a value of twice the exercise
price. In addition, if following the public announcement of the existence of
an Acquiring Person the Company is acquired in a merger or other business
combination transaction, except a merger or other business combination
transaction that takes place after the consummation of an offer for all
outstanding shares of Common Stock that the independent directors of the
Company have determined to be fair, or a sale or transfer of 50% or more of
the Company's assets or earning power is made, each Right (unless previously
voided) will represent the right to purchase, at the exercise price, common
stock of the acquiring entity having a value of twice the exercise price at
the time.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on a substantial number of Rights being
acquired. However, the Rights are not intended to prevent a take-over, but
rather are designed to enhance the ability of the Board of Directors to
negotiate with an acquiror on behalf of all of the shareholders. In addition,
the Rights should not interfere with a proxy contest.
The Rights should not interfere with any merger or other business combination
approved by the Board of Directors since the Rights may be redeemed by the
Company at $.05 per Right prior to 10 business days (as such period may be
extended by the Company) after the public announcement of the existence of an
Acquiring Person.
The press release announcing the declaration of the Rights dividend, dated
June 20, 1988, and a letter to the Company's shareholders, dated June 22,
1988, explaining the Rights, filed as Item 14(a)(3), Exhibits 4(a) and (b) of
Part IV of the Annual Report on Form 10-K for the year ended June 30, 1988 are
hereby incorporated by reference.
Item 6. Selected Financial Data
The information set forth under the caption "Ten-Year Financial Summary" on
pages 40 and 41 of the Annual Report to Shareholders for the year ended June
30, 1996 is incorporated into this report by reference.
Item 7.Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information set forth under the caption "Management's Discussion and
Analysis" on pages 19 through 21 of the Annual Report to Shareholders for the
year ended June 30, 1996 is incorporated into this report by reference.
7
Item 8. Financial Statements and Supplementary Data
The following Consolidated Financial Statements of Twin Disc, Incorporated and
Subsidiaries set forth on pages 22 through 39 of the Annual Report to
Shareholders for the year ended June 30, 1996 are incorporated into this
report by reference:
Consolidated Balance Sheets, June 30, 1996 and 1995
Consolidated Statements of Operations for the years ended June 30,
1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended June 30,
1996, 1995 and 1994
Consolidated Statements of Changes in Shareholders' Equity for the
years ended June 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants for the year ended June 30, 1996
The supplementary data regarding quarterly results of operations set forth
under the caption "Sales and Earnings by Quarter" on page 1 of the Annual
Report to Shareholders for the year ended June 30, 1996 is incorporated into
this report by reference.
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
For information with respect to the executive officers of the Registrant, see
"Executive Officers of the Registrant" at the end of Part I of this report.
For information with respect to the Directors of the Registrant, see "Election
of Directors" on pages 5 through 6 of the Proxy Statement for the Annual
Meeting of Shareholders to be held October 18, 1996, which is incorporated
into this report by reference.
Item 11. Executive Compensation
The information set forth under the captions "Compensation of Executive
Officers", "Stock Options" and "Compensation Pursuant to Plans" on pages 8
through 10 of the Proxy Statement for the Annual Meeting of Shareholders to be
held on October 18, 1996 is incorporated into this report by reference.
Discussion in the Proxy Statement under the captions "Board Executive
Selection and Salary Committee Report on Executive Compensation" and
"Corporate Performance Graph" is not incorporated by reference and shall not
be deemed "filed" as part of this report.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security ownership of certain beneficial owners and management is set forth on
pages 3 and 4 of the Proxy Statement for the Annual Meeting of Shareholders to
be held on October 18, 1996 under the caption "Principal Shareholders and
Share Ownership of Directors and Executive Officers" and incorporated into
this report by reference.
There are no arrangements known to the Registrant, the operation of which may
at a subsequent date result in a change in control of the Registrant.
8
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) The following Consolidated Financial Statements of Twin Disc,
Incorporated and Subsidiaries set forth on pages 22 through 39 of the Annual
Report to Shareholders for the year ended June 30, 1996 are incorporated by
reference into this report in Part II:
Consolidated Balance Sheets, June 30, 1996 and 1995
Consolidated Statements of Operations for the years ended June 30, 1996,
1995 and 1994
Consolidated Statements of Cash Flows for the years ended June 30, 1996,
1995 and 1994
Consolidated Statements of Changes in Shareholders' Equity for the years
ended June 30, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants for the year ended June 30, 1996
The supplementary data regarding quarterly results of operations under the
caption "Sales and Earnings by Quarter" on page 1 of the Annual Report to
Shareholders for the year ended June 30, 1996 is incorporated by reference
into this report in Part II hereof.
Individual financial statements of the 50% or less owned entities accounted
for by the equity method are not required because such 50% or less owned
entities do not constitute significant subsidiaries.
(a)(2) Consolidated Financial Statement Schedule (numbered in accordance with
Regulation S-X) for the three years ended June 30, 1996:
Page
----
Report of Independent Accountants 12
Schedule II-Valuation and Qualifying Accounts 13
Schedules, other than those listed, are omitted for the reason that they are
inapplicable, are not required, or the information required is shown in the
financial statements or the related notes thereto.
The Report of the Independent Accountants of the Registrant with respect to
the above-listed consolidated financial statement schedule appears on page 12
of this report.
9
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(continued)
(a)(3) List of Exhibits: (numbered in accordance with Item 601 of Regulation
S-K)
2 Not applicable
3 a) Articles of Incorporation, as restated October 21, 1988
(Incorporated by reference to Exhibit 3(a) of the Company's
Form 10-K for the year ended June 30, 1989).
b) Corporate Bylaws, amended through June 16, 1995
(Incorporated by reference to Exhibit 3(b) of the Company's
Form 10-K for the year ended June 30, 1995).
4 Instruments defining the rights of security holders, including
indentures
a) Form of Rights Agreement dated as of June 17, 1988 by and
between the Company and the First Wisconsin Trust Company,
as Rights Agent, with Form of Rights Certificate
(Incorporated by reference to Exhibits 1 and 2 of the
Company's Form 8-A dated June 27, 1988).
b) Announcement of Shareholder Rights Plan per press release
dated June 20, 1988 and explanation of plan per letter to
Company's shareholders dated June 20, 1988 (Incorporated by
reference to Exhibit 4(a) and (b), respectively, of the
Company's Form 10-K for the year ended June 30, 1988).
9 Not applicable
10 Material Contracts
a) * The 1988 Incentive Stock Option Plan (Incorporated by
reference to Exhibit B of the Proxy Statement for the Annual
Meeting of Shareholders held on October 21, 1988).
b) * The 1988 Non-Qualified Stock Option Plan for Officers, Key
Employees and Directors (Incorporated by reference to
Exhibit C of the Proxy Statement for the Annual Meeting of
Shareholders held on October 21,1988).
c) * Amendment to 1988 Incentive Stock Option Plan of Twin
Disc, Incorporated (Incorporated by reference to Exhibit A
of the Proxy Statement for the Annual Meeting of
Shareholders held on October 25, 1993).
d) * Amendment to 1988 Non-Qualified Incentive Stock Option
Plan for Officers, Key Employees and Directors of Twin
Disc, Incorporated (Incorporated by reference to Exhibit B
of the Proxy Statement for the Annual Meeting of
Shareholders held on October 15, 1993).
e) * Form of Severance Agreement for Senior Officers and form
of Severance Agreement for Other Officers (Incorporated by
reference to Exhibit 10(c) and (d), respectively, of the
Company's Form 10-K for the year ended June 30, 1989).
f) *Supplemental Retirement Plan (Incorporated by reference to
Exhibit 10(a) of the Company's Form 10-K for the year ended
June 30, 1986).
g) * Director Tenure and Retirement Policy (Incorporated by
reference to Exhibit 10(f) of the Company's Form 10-K for
the year ended June 30, 1993).
10
(a)(3) List of Exhibits: (numbered in accordance with Item 601 of Regulation
S-K) (continued)
h) * Form of Twin Disc, Incorporated Corporate Short Term
Incentive Plan (Incorporated by reference to Exhibit 10(g)
of the Company's Form 10-K for the year ended June 30,
1993).
* Denotes management contract or compensatory plan or arrangement.
11 Not applicable
12 Not applicable
13 Annual Report of the Registrant for the year ended June 30,
1996 is separately filed as Exhibit (13) to this Report
(except for those portions of such Annual Report separately
incorporated by reference into this Report, such Annual
Report is furnished for the information of the Securities
and Exchange Commission and shall not be deemed "filed" as
part of this report).
18 Not applicable
21 Subsidiaries of the registrant
22 Not applicable
23 Consent of Independent Accountants
24 Power of Attorney
27 Financial Data Schedule for the year ended June 30, 1996 is
separately filed as Exhibit (27) to this report. (This
schedule is furnished for the information of the Securities
and Exchange Commission and shall not be deemed "filed" for
purposes of Section 11 of the Securities Act or Section 18
of the Exchange Act.)
28 Not applicable
99 Foreign Affiliate Separate Financial Statements
a) Niigata Converter Co., Ltd. financial statements for
the year ended March 31, 1995 prepared in accordance
with Japanese Commercial Code (Incorporated by
reference to Exhibit 99(a) of the Company's Form 10-K
for the year ended June 30, 1995).
b) Niigata Converter Co., Ltd. financial statements for the
year ended March 31, 1994 prepared in accordance with
Japanese Commercial Code (Incorporated by reference to
Exhibit 99(b) of the Company's Form 10-K for the year ended
June 30, 1995).
Copies of exhibits filed as a part of this Annual Report on Form 10-K may be
obtained by shareholders of record upon written request directed to the
Secretary, Twin Disc, Incorporated, 1328 Racine Street, Racine, Wisconsin
53403.
11
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.
TWIN DISC, INCORPORATED
By FRED H TIMM
------------------------------
Fred H. Timm, Corporate Controller
and Secretary (Chief Accounting Officer)
September 16, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
( By MICHAEL E. BATTEN
( ----------------------------------
( Michael E. Batten, Chairman,
( (Chief Executive Officer and Director(
(
(
(
September 16, 1996 ( By MICHAEL H. JOYCE
( ----------------------------------
( Michael H. Joyce, President,
( Chief Operating Officer and Director
(
(
(
( By JAMES O. PARRISH
( ----------------------------------
( James O. Parrish, Vice President-
( Finance, Treasurer and Director
( (Chief Financial Officer)
( William W. Goessel, Director
( Jerome K. Green, Director
( John L. Murray, Director
(
( Paul J. Powers, Director
September 16, 1996 ( Richard T. Savage, Director
( David L. Swift, Director
( Stuart W. Tisdale, Director
( David R. Zimmer, Director
(
(
( By JAMES O. PARRISH
----------------------------------
( James O. Parrish, Attorney in Fact
12
REPORT OF INDEPENDENT ACCOUNTANTS
(See Item 14)
Consolidated Financial Statement Schedule of
Twin Disc, Incorporated and Subsidiaries
To the Shareholders
Twin Disc, Incorporated
Racine, Wisconsin
Our report on the consolidated financial statements of Twin Disc, Incorporated
and Subsidiaries has been incorporated by reference in this Form 10-K from
page 39 of the 1996 Annual Report to Shareholders of Twin Disc, Incorporated
and Subsidiaries. In connection with our audits of such financial statements,
we have also audited the related financial statement schedule listed in the
index on page 8 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L. L. P.
Milwaukee, Wisconsin
July 26, 1996
13
TWIN DISC, INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended June 30, 1996, 1995 and 1994
(In thousands)
Balance at Additions Charged Balance at
Beginning of to Costs and end of
Description Period Expenses Deductions(1) Period
- ----------- ------------ ----------------- ------------- ----------
1996:
Allowance for losses on
accounts receivable $ 408 $ 41 $ 77 $ 372
------ ------ ------ ------
------ ------ ------ ------
Reserve for inventory
obsolescence 1,581 845 1,500 926
------ ------ ------ ------
------ ------ ------ ------
1995:
Allowance for losses on
accounts receivable $ 441 $ 54 $ 87 $ 408
------ ------ ------ ------
------ ------ ------ ------
Reserve for inventory
obsolescence 1,586 886 891 1,581
------ ------ ------ ------
------ ------ ------ ------
1994:
Allowance for losses on
accounts receivable $ 416 $ 264 $ 239 $ 441
------ ------ ------ ------
------ ------ ------ ------
Reserve for inventory
obsolescence - 2,094 508 1,586
------ ------ ------ ------
------ ------ ------ ------
Accounts receivable written-off and inventory disposed of during the
year and other adjustments.
14
EXHIBIT INDEX
Exhibit Description Page
3a) Articles of Incorporation, as restated October 21, 1988
(Incorporated by reference to Exhibit 3(a) of the Company's
Form 10-K for the year ended June 30, 1989). -
b) Corporate Bylaws, as amended through June 16, 1995
(Incorporated by reference to Exhibit 3(b) of the Company's
Form 10-K for the year ended June 30, 1995). -
4a) Form of Rights Agreement dated as of June 17, 1988 by and
between the Company and the First Wisconsin Trust Company,
as Rights Agent, with Form of Rights Certificate
(Incorporated by reference to Exhibits 1 and 2 of the
Company's Form 8-A date June 27, 1988). -
b) Announcement of Shareholder Rights Plan per press release
dated June 20, 1988 and explanation of plan per letter to
Company's shareholders dated June 20, 1988 (Incorporated by
reference to Exhibit 4(a) and (b), respectively of the
Company's Form 10-K for the year ended June 30, 1988). -
Material Contracts
10a) The 1988 Incentive Stock Option Plan (Incorporated by
reference to Exhibit B of the Proxy Statement for the Annual
Meeting of Shareholders held on October 21, 1988). -
b) The 1988 Non-Qualified Stock Option Plan for Officers, Key
Employees and Directors (Incorporated reference to
Exhibit C of the Proxy Statement for the Annual Meeting of
Shareholders held on October 21,1988). -
c) Amendment to 1988 Incentive Stock Option Plan of Twin Disc,
Incorporated (Incorporated by reference to Exhibit A
of the Proxy Statement for the Annual Meeting of Shareholders
held on October 15, 1993). -
d) Amendment to 1988 Non-Qualified Incentive Stock Option Plan
for Officers, Key Employees and Directors of Twin Disc,
Incorporated (Incorporated by reference to Exhibit B of the
Proxy Statement for the Annual Meeting of Shareholders held
on October 15, 1993). -
e) Form of Severance Agreement for Senior Officers and form of
Severance Agreement for Other Officers (Incorporated by
reference to Exhibit 10(c) and (d), respectively, of the
Company's Form 10-K for the year ended June 30, 1989). -
f) Supplemental Retirement Plan (Incorporated by reference to
Exhibit 10(a) of the Company's Form 10-K for the year ended
June 30, 1986). -
g) Director Tenure and Retirement Policy (Incorporated by
reference to Exhibit 10(f) of the Company's Form 10-K for the
year ended June 30, 1993). -
h) Form of Twin Disc, Incorporated Corporate Short Term
Incentive Plan (Incorporated by reference to Exhibit 10(g) of
the Company's Form 10-K for the year ended June 30, 1993). -
15
EXHIBIT INDEX
(Continued)
Exhibit Description Page
13 Annual Report of the Registrant for the year ended June 30,
1996 16
21 Subsidiaries of the Registrant 41
23 Consent of Independent Accountants 42
24 Power of Attorney 43
27 Financial Data Schedule for the year ended June 30, 1996 44
Foreign Affiliate Separate Financial Statements
99a) Niigata Converter Co., Ltd. financial statements for the year
ended March 31, 1995 prepared in accordance with Japanese
Commercial Code (Incorporated by reference to Exhibit 99(a)
of the Company's Form 10-K for the year ended June 30, 1995). -
b) Niigata Converter Co., Ltd. financial statements for the year
ended March 31, 1994 prepared in accordance with Japanese
Commercial Code (Incorporated by reference to Exhibit 99(b)
of the Company's Form 10-K for the year ended June 30, 1995). -