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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
December 31,
For the fiscal year ended 1996 Commission file number 0-2612
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LUFKIN INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Texas 75-0404410
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 South Raguet, Lufkin, Texas 75901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 409/634-2211
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $1 Per Share
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(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 "X" 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. [ ]
The aggregate market value of the Company's voting stock held by non-affiliates
as of January 31, 1997 is $132,928,000.
6,558,383 shares of the Company's Common Stock were outstanding on December 31,
1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the sections entitled "Financial Review", "Letter to the
Shareholders", "Management's Discussion and Analysis", "Product Line
Information" and the consolidated financial statements of the Company's Annual
Report to Shareholders for the year ended December 31, 1996, are incorporated by
reference in Parts I, II and IV, hereof and are included as Exhibit 13.
The sections entitled "Voting Securities", "Directors and Nominees for Director"
and "Executive Compensation" of the Company's definitive Proxy Statement for its
annual meeting of shareholders on May 7, 1997, are incorporated by reference in
Part III hereof and are included as Exhibit 99.
Part I
Item 1. Business
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The Company was incorporated under the laws of Texas on March 4, 1902 and
since that date, has maintained its principal office and manufacturing
facilities in Lufkin, Texas. The Company designs, manufactures, sells, and
services various types of oil field pumping units, power transmission products,
foundry castings and highway trailers. Lufkin manufactures four basic types of
pumping units: an air-balanced unit; a beam-balanced unit; a crank-balanced
unit; and a Mark II Unitorque unit. The basic differences between the four
types relate to the counterbalancing system. The depth of a well and the
desired fluid production determine the type of counterbalancing configuration
that is required. There are numerous sizes and combinations of Lufkin oil field
pumping units within the four basic types. The Company's power transmission
products (speed increasers and reducers) are designed, manufactured and sold
primarily for use in industrial applications such as petrochemical, refining,
rubber, plastics and steel and for use in marine propulsion applications. The
Company produces numerous sizes and combinations of gears. The Company's
foundry castings are primarily customer designed components manufactured by
Lufkin for use in customer products. Lufkin also produces various sizes and
styles of trailers, including vans, platforms, and dumps.
The Company manufactures most of the component parts used in its Machinery
Division products and purchases the raw materials and outside manufactured parts
from a variety of suppliers on an order basis. The Trailer Division generally
assembles various component parts manufactured by others. The inventory
consists primarily of raw materials and component parts which are generally
assembled into finished products to fill specific customer orders. These
finished products are sold primarily by the Company's own employees.
Oil field pumping units are the Company's primary products sold for export.
These sales, other than to Canada, are made principally through foreign sales
representatives, licensees and distributors. During 1996, foreign sales
accounted for approximately 19 percent of the Company's total sales.
The Company's domestic and international markets are highly competitive with
price, quality and speed of delivery being important factors. While the Company
believes that it is one of the larger manufacturers of sucker rod pumping units
in the United States, manufacturers of other types of units (submersibles and
hydraulics) have a significant share of the total pumping unit market. The
Company does not believe it has a large market share in the power transmission,
castings or trailer markets.
The Company employed approximately 1,900 people at December 31, 1996,
including approximately 1,340 that were paid on an hourly basis. The Company
has an open shop contract, which runs to October 3, 1999, with three AFL-CIO
labor unions. The Company considers its employee relations to be satisfactory.
Additional information required by Item 1 is included in the sections
entitled "Management's Discussion and Analysis", "Letter to the Shareholders",
and "Product Line Information" of the Annual Report, portions of which sections
are incorporated herein by reference and included as part of Exhibit 13.
Item 2. Properties
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The Company's major manufacturing facilities are located in and near Lufkin,
are owned in fee and include approximately 150 acres and a foundry, machine
shop, structural shops, assembly shops and warehouses. The Company also has a
plant in Nisku, Canada which produces structural parts for pumping units. These
parts are then assembled with parts shipped from Lufkin and are delivered to the
Company's Canadian customers.
Item 3. Legal Proceedings
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None
Item 4. Submission of Matters to a Vote of Shareholders
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None
Item 4A. Executive Officers of the Registrant
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The following information is submitted with respect to the executive officers
of the Company as of March 1, 1997:
Officer
Name Position with Company Age Since
---- --------------------- --- -----
D. V. Smith Chairman, President &
Chief Executive Officer 54 1993
J. W. Barber Vice President 64 1994
J. F. Glick Vice President 44 1994
J. R. Partridge Vice President 61 1986
M. A. Penn Vice President 56 1983
E. G. Pittman Vice President 63 1976
S. H. Semlinger Vice President 43 1992
C. J. Haley, Jr. Secretary-Treasurer 54 1973
L. M. Hoes Vice President 50 1996
P. G. Perez Vice President 51 1996
There is no significant family relationship either by blood or by marriage
among the officers of the Company.
All of the executive officers of the Company, with the exception of Mr.
Smith, Mr. Barber, Mr. Glick, Mr. Hoes and Mr. Perez have been employed by the
Company for more than five years in the same or similar positions. Mr. Smith
was first employed by the Company in January 1993 to serve as President and
Chief Executive Officer. For the five year period prior to his employment with
the Company, Mr. Smith was employed and served as Vice President of
Manufacturing of Cooper Industries (1989-93) and as Vice President of Oil Tool
Division of Cameron Iron Works (1982-89). Both companies are based in Houston,
Texas. Mr. Barber was first employed by the Company in July 1990 to serve as
sales manager for trailer products. Mr. Barber was previously employed by
Fruehauf Trailers as Vice President of Welded Products in Detroit, Michigan.
Mr. Glick was first employed by the Company in September 1994 to serve as Vice
President and General Manager of the Power Transmission Division. Prior to
joining the Company, Mr. Glick served as Director of Manufacturing, U.K. and
Ireland, with Cooper Oil Tools and as Plant Manager of Cooper Oil Tools in
Leeds, England. Mr. Hoes was first employed by the Company in May, 1996 to
serve as Vice President and General Manager of the Oil Field Products Division.
Prior to joining the Company, Mr. Hoes was employed as Vice President of
Manufacturing for Cooper Cameron Inc. in Houston, Texas, as Vice President of
Manufacturing for Cooper Oil Tool Division and as Vice President of Engineering
for Cooper Oil Tool Division based in Houston, Texas. Mr. Perez was first
employed by the Company in July, 1993 to serve as Director of Human Resources.
Mr. Perez was previously employed by Cooper Industries as Manager of Employee
Relations for the Oil Tool Division in Houston, Texas and by Cameron Iron Works
as Manager of Labor Relations in Houston, Texas . The executive officers of the
Company serve at the pleasure of the Board of Directors of the Company. The
term of office for all officers expires at the next annual meeting of the Board
of Directors of the Company.
Part II
Item 5. Market for the Registrant's Common Stock
and Related Shareholder Matters
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The information required by Item 5 is included in the section entitled
"Financial Review" of the Annual Report, which section is incorporated herein by
reference and included as part of Exhibit 13.
Item 6. Selected Financial Data
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FIVE YEAR SUMMARY OF SELECTED
CONSOLIDATED FINANCIAL DATA
(In millions, except per share data) 1996 1995 1994 1993 1992
- ------------------------------------ ------ ------ -------- ------ --------
Sales $226.0 $248.9 $217.3 $202.2 $178.6
Earnings (loss) from operations 10.5 8.9 (1.2)* 2.5 (27.3)**
Earnings (loss) per share 1.56 1.31 (.18)* .38 (4.01)**
Total assets 185.9 186.3 176.8 182.5 176.3
Cash dividends per share .60 .60 .60 .60 1.35
*Includes pretax charges of $11.2 million for special inventory writedowns.
**Includes a $24.3 million restructuring charge. The Company adopted SFAS No.
109 effective January 1, 1992, but this change had no effect on the Company's
financial statements. In addition, the Company adopted SFAS No. 106 effective
January 1, 1992. The cumulative effect of the change in accounting for post-
retirement benefits including the applicable income tax benefit was a charge to
income of $7.5 million or $1.11 per share.
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations
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The information required by Item 7 is included in the section entitled
"Management's Discussion and Analysis" of the Company's Annual Report, portions
of which section are incorporated herein by reference and included as part of
Exhibit 13.
Item 8. Financial Statements and Supplementary Data
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The information required by Item 8 is included in the consolidated financial
statements and related notes and the "Report of Independent Public Accountants"
of the Company's Annual Report, which consolidated financial statements and
related notes and report of independent public accountants are incorporated
herein by reference and included as part of Exhibit 13.
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
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None
Part III
Item 10. Directors and Executive Officers of
the Registrant
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The information required by Item 10 relating to the directors of the Company
is included in the section entitled "Directors and Nominees for Director" on
pages 2 through 5 of the definitive Proxy Statement for the annual meeting of
Company shareholders on May 7, 1997 ("Proxy Statement"), which section is
incorporated herein by reference and included as part of Exhibit 99. The
information relating to the executive officers of the Company is provided in
Item 4A of Part I of this Annual Report.
Item 11. Executive Compensation
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The information required by Item 11 is included in the section entitled
"Executive Compensation" on pages 6 through 9 of the Proxy Statement, which
section is incorporated herein by reference and included as part of Exhibit 99.
Item 12. Security Ownership of Certain Beneficial
Owners and Management
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The information required by Item 12 is included in the sections entitled
"Voting Securities" and "Election of Directors" on pages 1 through 5 of the
Company's Proxy Statement, which sections are incorporated herein by reference
and included as part of Exhibit 99.
Item 13. Certain Relationships and Related Transactions
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None
Part IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
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(a) Documents filed as part of the report
1. Consolidated Financial Statements (incorporated by
reference to the Annual Report)
Report of Independent Public Accountants
Consolidated Balance Sheet
Consolidated Statement of Earnings
Consolidated Statement of Stockholders'
Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
2. Financial statement schedules
Schedules Omitted--All schedules for which
provision is made in the applicable regulations of
the Securities and Exchange Commission have been
omitted because they are not applicable or not re-
quired or the required information is included in
the consolidated financial statements or notes thereto.
3. Exhibits
(3) Articles of Incorporation, as amended, and
Bylaws, as amended, were included as exhibit 3
to Form 10-K of the registrant for the year
ended December 31, 1990, which exhibits are
incorporated herein by reference.
(10.1) Shareholder Rights Agreement, dated as of
May 4, 1987, was included as exhibit (1)
to Form 8-A of the registrant dated May 13,
1987, which agreement is incorporated herein
by reference.
(10.2)* Company's 1990 Stock Option Plan was included
as Exhibit 28.1 to the Company's registration
statement on Form S-8 dated September 24, 1990
(File No. 33-36976), which plan is incorporated
herein by reference.
(13) Portions of the Annual Report
to Shareholders for the year ended
December 31, 1996 are included as an
exhibit to this report for the informa-
tion of the Securities and Exchange Com-
mission.
(22) Schedule listing subsidiaries of the
registrant
(24) Consent of Independent Public Accountants
(27) Financial Data Schedule
(99) Portions of the definitive proxy statement of Lufkin
Industries, Inc., for the annual meeting
of shareholders on May 7, 1997 are included
as an exhibit to this report for the informa-
tion of the Securities and Exchange Commission.
*Compensatory plan.
(b) Reports on Form 8-K filed during the fourth quarter of 1996
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Lufkin Industries, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on February 19, 1997.
LUFKIN INDUSTRIES, INC.
BY /s/ C. James Haley, Jr.
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C. James Haley, Jr., Secretary-Treasurer
Principal Financial and Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on February 19, 1997, below by the following persons on
behalf of Lufkin Industries, Inc. and in the capacities indicated.
By /s/ D. V. Smith
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D. V. Smith, President and Chief Executive
Officer
By /s/ S. W. Henderson, III
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S. W. Henderson, III, Director
By /s/ L. R. Jalenak, Jr.
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L. R. Jalenak, Jr., Director
By /s/ H. H. King
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H. H. King, Director
By /s/ M. E. Kurth, Jr.
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M. E. Kurth, Jr., Director
By /s/ W. T. Little
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W. T. Little, Director
By /s/ B. H. O'Neal
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B. H. O'Neal, Director
By /s/ F. B. Stevenson
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F. B. Stevenson, Director
By /s/ H. J. Trout, Jr.
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H. J. Trout, Jr., Director
By /s/ W. W. Trout, Jr.
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W. W. Trout, Jr., Director
By /s/ T. E. Wiener
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T. E. Wiener, Director