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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED AUGUST 31, 1995
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. 1-11288
APPLIED POWER INC.
(Exact name of Registrant as specified in its charter)
WISCONSIN 39-0168610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13000 WEST SILVER SPRING DRIVE
BUTLER, WISCONSIN 53007
MAILING ADDRESS: P.O. BOX 325, MILWAUKEE, WISCONSIN 53201
(Address of principal executive offices)
(414) 781-6600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
$.20 PAR VALUE PER SHARE (Name of each exchange on which registered)
(Title of each class)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
As of October 31, 1995, the aggregate market value of Common Stock held by
non-affiliates was approximately $413.4 million, and there were 13,408,190
shares of the Registrant's Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on January 11, 1996 are incorporated by reference into
Part III hereof.
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF THE COMPANY
Applied Power Inc. (the "Company"), a Wisconsin corporation incorporated in
1910, is a diversified global company engaged in the business of providing
tools, equipment, systems and consumable items to a variety of end-users and
original equipment manufacturers in the manufacturing, construction,
transportation, natural resource, aerospace, defense and other industries.
The Company's operations are divided into three business segments:
Distributed Products
Enerpac......................... Hydraulic high force tools, production automation
components and accessories.
GB Electrical................... Electrical contractor tools, consumable products for
electrical construction, repair and remodeling.
Engineered Solutions
Power-Packer.................... Hydraulic actuation systems for the transportation,
medical equipment and agricultural equipment markets.
APITECH......................... Electro-hydraulic control valves and systems for
transportation and mobile equipment manufacturers.
Barry Controls.................. Standard and engineered shock, vibration and noise
reduction components and systems.
Wright Line.......................... Technical furniture solutions for offices and
laboratories.
Financial information by segment and geographic area, as well as
information related to export sales, is included in Note M -- "Segment
Information" in Notes to Consolidated Financial Statements, which is included as
part of Item 8 of Part II of this report and is incorporated herein by
reference.
All numbers in the report are in thousands of US Dollars unless otherwise
indicated.
DESCRIPTION OF BUSINESS SEGMENTS
DISTRIBUTED PRODUCTS
Distributed Products, which includes Enerpac and GB Electrical, is engaged
in the manufacture and distribution of tools and consumables to the
construction, retail and general industrial markets. Products are generally
distributed through wholesale and retail distributors. Both Distributed Products
businesses supply approximately 5,000 SKU's each to a broad customer base.
Geographic expansion offers a source of growth potential for the Distributed
Products businesses.
ENERPAC
Enerpac is involved in the design, manufacture and sale, on a worldwide
basis, of labor and cost saving products and systems for industrial and
construction operations. The products can be grouped into three product lines:
high force tools, production automation, and specially engineered or
complementary systems.
Enerpac's high force tool line consists of approximately 5,000 products
that are used extensively in general industrial and construction applications.
These hydraulic products allow users to apply controlled force and motion that
increase productivity and make work safer and easier to perform. Hydraulic
pumps, valves, cylinders and presses, as well as more specialized tools such as
pipe benders, torque wrenches and electronically-controlled lifting systems are
examples of Enerpac's high force tools.
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Enerpac's production automation products consist of workholding components
and systems which enable a quick change of dies, molds and other equipment used
in production and assembly operations. Hydraulic workholding components and
systems utilized in metal-cutting machine tools hold parts in position during
the machining process, and provide superior accuracy and flexibility to
traditional mechanical clamping methods. Enerpac also designs and manufactures
quick mold change systems that are used extensively in the injection molding
industry.
In addition to its line of high force tools and production automation
products, Enerpac custom engineers and assembles equipment and special modified
products that are sold directly to original equipment manufacturers ("OEMs").
Enerpac has engineering, manufacturing and warehousing operations in the
United States, the Netherlands, Mexico, France, South Korea and Japan, with
sales and service operations in a number of other countries. The manufacturing
operations in the Netherlands were recently consolidated into the United States,
with the Netherlands' location primarily serving as a European warehouse.
Products are primarily distributed through a worldwide network of over 2,500
independent distributors as well as directly to certain OEM customers. Enerpac
believes its strengths include the breadth of its product line, large
distribution network, long operating history, reputation and technical
expertise.
GB ELECTRICAL
As a result of niche acquisitions, new product introductions, strong
customer service and its expansion into new markets, GB Electrical has tripled
its sales since being acquired by the Company in 1988. It has completed three
acquisitions between October, 1993 and September, 1995, including Palmer
Industries (a manufacturer of plastic and metal staples), New England Controls
(an electrical switch manufacturer) and Vision Plastics (a plastic cable tie
manufacturer). GB's major product groups include the following: tools and
accessories used in industrial, commercial and residential construction,
remodeling and maintenance; wire connectors and other wire termination devices;
conduit fishing and pulling systems; conduit benders; fastening devices
(including cable ties and plastic staples); digital and analog multitesters; and
electrical switches.
GB's products are sold through electrical wholesale distributors and mass
merchandisers. This network includes approximately 4,000 electrical wholesale
accounts as well as merchandisers including Sears, Ace Hardware, Builders
Square, Payless Cashways, Wal-Mart, The Home Depot, Cotter & Co. and other major
chains, which in total represent over 20,000 consumer outlets.
GB operates manufacturing facilities in Wisconsin, Minnesota, North
Carolina, California and Connecticut. GB's products are primarily distributed
through its International Distribution Center located in Milwaukee, Wisconsin as
well as a number of independent warehouses located throughout the United States.
Although the majority of its business is generated in the United States, GB is
aggressively pursuing opportunities in Canada, Mexico, Latin America and Asia.
ENGINEERED SOLUTIONS
Engineered Solutions, consisting of Power-Packer, APITECH and Barry
Controls, focuses on developing and marketing value-added solutions for OEMs in
the transportation, construction, aerospace, defense and industrial markets.
Technical sales force members from each of the Engineered Solutions units often
work together to develop and market Engineered Solutions products in one
technology solution package. These value-added technology solutions offer
cost-effective systems to meet the needs of Engineered Solutions' global
customer base.
POWER-PACKER
Power-Packer custom designs hydraulic systems and components for OEM
customers in the transportation, medical equipment and agricultural equipment
markets. Although its principal engineering and assembly operations are based in
the United States and the Netherlands, Power-Packer also markets its products
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throughout Europe, Japan, South Korea, South America and North America. The
majority of its products are sold direct by its technically-trained sales force.
Power-Packer has three primary product applications in the transportation
industry: the cab-tilt system, the air suspension system and the convertible top
actuation system. The cab-tilt system is installed on heavy-duty,
cab-over-engine trucks and tilts and retracts the cab for engine inspection and
maintenance. The systems are customized to meet the needs of individual truck
manufacturers which include virtually all of the major manufacturers of
cab-over-engine trucks in the United States and Western Europe. Power-Packer
also markets its cab-tilt systems in Japan through a license agreement. Air
suspension systems improve the ride characteristics of trucks, enhance driver
comfort and safety while reducing cab maintenance costs. Power-Packer has also
developed a leading position in supplying electrically powered hydraulic
actuator systems for convertible automobile tops. These systems, which are
shipped to automotive OEMs fully assembled and tested, are presently used on
many car models in Europe and the United States.
Power-Packer supplies self-contained hydraulic actuators to medical
equipment manufacturers that provide portable patient lifting and positioning
capability for institutional or home use. Other manually operated products are
supplied for hospital bed height adjustment. It also produces power driven
systems, in some cases combined with fully integrated microprocessor control, to
expand the multi-function capability of beds and examination tables.
APITECH
The Company formed APITECH to develop and market products that combine
electronic control with hydraulic technologies to increase the control, safety
and performance of end-user products. APITECH employs advanced electronic and
software technology in its modular line of products, including electro-hydraulic
control valves, microprocessor-based control circuitry, sensors and software.
These products can be adapted to customers' control situations and span broad
application areas without extensive redesign. The Company has a patented digital
electro-hydraulic valve, marketed under the Pulsar ValveTM name, which can be
directly controlled by a microprocessor to deliver performance comparable to
servo valve technology at a significantly lower cost.
The Company markets APITECH products to a diversified mix of customers,
primarily OEMs. The highest demand for electro-hydraulic APITECH products occurs
in the off-highway mobile market, the on-highway transportation and maintenance
vehicle market and the automotive market. In the off-highway market, APITECH's
customers include John Deere, Hameck, F.W. McConnell, Palfinger, Snorkel and
Altec. In the on-highway maintenance market, major state and municipal road
fleets in the United States and Canada use APITECH's salt and sand spreader
control products. In the automotive market, APITECH supplies small fast valves
to GM Delphi that are part of the system that provides a semi-active suspension
capability in certain Cadillac models. Sales to GM Delphi are a significant
portion of APITECH's business.
Products are sold as components or turn-key systems, depending on customer
specifications and design capability, typically with long-term supply
arrangements. The Company primarily sells its APITECH products through its own
sales engineering team as well as through a group of full service mobile
equipment distributors in North America and Europe. Sales to the road
maintenance equipment market take place through a national network of truck
equipment dealers in the United States and Canada. APITECH's operations are
based in Butler, Wisconsin.
BARRY CONTROLS
Barry Controls was acquired by Applied Power in 1989, along with Wright
Line, in conjunction with the acquisition of Barry Wright Corporation. Barry
Controls is engaged in the business of custom designing, manufacturing and
marketing engineered products and systems that reduce vibration, shock and
structure-borne noise. Products for the commercial aerospace and defense markets
include engine vibration isolators for aircraft and vibration and shock
isolators for defense and aerospace applications. Industrial products represent
an important part of Barry Controls' business, and include vibration isolators
and noise dampening
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components for a variety of applications including computers, appliances, power
tools, industrial equipment, heavy trucks, farm and construction equipment and
many other diverse applications.
Principal markets and customers served include OEMs of many types of
machinery and equipment, (including computers), aircraft manufacturers,
commercial airlines, defense and aerospace contractors, and users of equipment
requiring noise or vibration reduction. Products are distributed through its
sales engineers, independent sales engineering representatives and specialized
distributors. Barry Controls' products are manufactured in two locations in the
United States as well as in England.
WRIGHT LINE
In the second quarter of 1994, the Company announced its decision to retain
the remaining Wright Line business, which had been held for sale and included in
discontinued operations since the third quarter of 1992. For further
information, refer to Note B -- "Discontinued Operations" in Notes to
Consolidated Financial Statements.
During the past three years, Wright Line has shifted its strategy to
respond to the application and storage demands posed by new and fast changing
markets, including Local Area Networks (LAN's), multi-media, engineering test
and development and scientific laboratory markets. Its customers require
efficient and flexible work centers and equipment for professionals. In addition
to these fast growing markets, Wright Line continues to provide cabinets,
workstations and work surfaces used in the computerized office.
Wright Line products are primarily sold through its direct sales force in
the United States, in addition to a network of independent distributors and
value-added resellers. Its products are marketed in foreign markets through
direct salespeople, sales representatives and dealers, depending on the country.
Products are primarily sold to commercial and governmental end-users. Sales to
the government, which have averaged approximately 30% of total Wright Line net
sales over the past three years, are made pursuant to a contract between Wright
Line and the US Government's General Services Administration.
COMPETITION
The Company competes on the basis of product design, quality, availability,
performance, customer service and price. The Company believes that its technical
skills, global presence, shared technology base, close working relationships
with customers as well as its patents bolster its competitive position.
Applied Power's businesses face competition to varying degrees in each of
their markets. In general, each product line competes with a small group of
different competitors. No one company competes directly with the Company across
all of its businesses. Some competitors of the Enerpac, GB Electrical, APITECH,
and Wright Line businesses are substantially larger than the Company and have
greater financial resources. The competitors of Power-Packer are limited to a
few specialized firms, which are generally privately held and operate in
specific geographic markets. Barry Controls and its principal competitor, a
segment of Lord Corporation, are the dominant suppliers in the shock, vibration
and noise isolation markets.
RESEARCH AND DEVELOPMENT
The Company maintains engineering staffs at several locations, which design
new products and make improvements to existing product lines. Expenditures for
research and development, which constitute a portion of the Company's
engineering expense, were $8,725, $7,446 and $5,878 in fiscal years 1995, 1994
and 1993, respectively. Substantially all research, development and product
improvement expenditures are Company funded.
PATENTS AND TRADEMARKS
The Company has been issued a number of patents that provide protection of
valuable designs and processes in its APITECH, Power-Packer and Barry Controls
businesses. Numerous other United States and foreign patents and trademarks are
owned by the Company, although no such individual patent or trademark
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(or group thereof) is believed to be of sufficient importance that its
termination would have a materially adverse effect on the Company's business.
MANUFACTURING, MATERIALS AND SUPPLIERS
The majority of the Company's manufacturing operations include the assembly
of parts and components which have been purchased by the Company from a number
of suppliers. In the absence of unusual circumstances, substantially all such
products are normally available from a number of local and national suppliers.
ORDER BACKLOGS AND SEASONALITY
At August 31, 1995, the Company had approximately $88,200 in backlog
orders, compared to approximately $81,200 at August 31, 1994. Substantially all
orders are expected to be completed prior to August 31, 1996. The Company's
sales are subject to minor seasonal fluctuations, with second quarter sales
traditionally being the lowest of the year.
EMPLOYEE RELATIONS
As of August 31, 1995, Applied Power employed 2,840 people on a full-time
basis, none of which are subject to a collective bargaining agreement. In
general, the Company enjoys good relationships with its employees.
ENVIRONMENTAL COMPLIANCE
The Company has facilities at numerous geographic locations, which are
subject to a range of environmental laws and regulations. Compliance with these
laws has, and will require expenditures on a continuing basis. Environmental
expenditures are expensed or capitalized depending on their future economic
benefit. The Company has been identified by the United States Environmental
Protection Agency as a "Potentially Responsible Party" regarding seven
multi-party Superfund sites. Based on its investigations, the Company believes
it is a de minimis participant in each case, and that any liability which may be
incurred as a result of its involvement with such Superfund sites, taken
together with its expenditures for environmental compliance, will not have a
material adverse effect on its financial position. Liabilities are recorded when
environmental remediation is probable, and the costs can be reasonably
estimated. Environmental remediation accruals of $573 and $567 were included in
the Consolidated Balance Sheet at August 31, 1995 and 1994, respectively. For
further information, refer to Note N -- "Contingencies and Litigation" in Notes
to Consolidated Financial Statements.
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ITEM 2. PROPERTIES
The following table summarizes the principal manufacturing, warehouse and
office facilities owned or leased by the Company:
LOCATION AND BUSINESS SIZE (SQ. FEET) OWNED/LEASED
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DISTRIBUTED PRODUCTS
Enerpac
Columbus, Wisconsin.............................................. 130,000 Leased
Veenendaal, Netherlands.......................................... 97,000 Owned
Pachuca, Mexico.................................................. 69,000 Leased
Troyes, France................................................... 67,000 Leased
Tokyo, Japan..................................................... 45,000 Leased
Seoul, South Korea............................................... 22,000 Leased
GB Electrical
Glendale, Wisconsin.............................................. 239,000 Leased
Matthews, North Carolina......................................... 33,000 Owned
Alexandria, Minnesota............................................ 25,000 Owned
Milford, Connecticut............................................. 11,000 Owned
San Diego, California............................................ 21,000 Owned
ENGINEERED SOLUTIONS
Power-Packer
Oldenzaal, Netherlands........................................... 74,000 Owned
Westfield, Wisconsin............................................. 48,000 Leased
APITECH
Butler, Wisconsin................................................ 48,000 Leased
Barry Controls
Brighton, Massachusetts.......................................... 227,000 Leased
Burbank, California.............................................. 126,000 Leased
Hersham, England................................................. 39,000 Leased
WRIGHT LINE
Worcester, Massachusetts......................................... 225,000 Owned
In addition to these properties, the Company utilizes a number of smaller
facilities in South Korea, Spain, Italy, Canada, Brazil, France, Germany,
Australia, Russia, Singapore, India, China, the United Kingdom and the United
States. The Company's headquarters are based in a 68,000 square foot leased
office facility in Butler, Wisconsin, which is also utilized by Enerpac and
Power-Packer.
The Company's strategy is to lease properties when available and
economically advantageous. Leases for the majority of the Company's facilities
include renewal options. For additional information, see Note H -- "Leases" in
Notes to Consolidated Financial Statements. The Company believes its current
properties are well maintained and in general, are adequately sized to house
existing operations. The Company is currently making additions to the Wright
Line facility in Worcester which are expected to be completed within the next
year. The Company intends to construct, lease or acquire a larger manufacturing
and warehousing facility in South Korea within the next two years to support its
expansion in that emerging market. Funding for this project is expected to come
from operating cash flow.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings which have arisen in
the normal course of its business. These legal proceedings typically include
product liability, environmental and patent claims. (For further information
related to environmental claims, refer to "Environmental Compliance" on page 6).
The Company has recorded reserves for loss contingencies based on the specific
circumstances of each case. Such
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reserves are recorded when the loss is probable and can be reasonably estimated.
In the opinion of management, the resolution of these contingencies will not
have a materially adverse effect on the Company's financial condition or results
of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of all of the executive officers of the
Company are listed below.
NAME AGE POSITION
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Richard G. Sim................ 51 Chairman, President and Chief Executive Officer;
Director
William J. Albrecht........... 44 Senior Vice President, Engineered Solutions
Robert G. Deuster............. 45 Senior Vice President, Distributed Products
Gustav H.P. Boel.............. 52 Vice President, President of Enerpac
Philip T. Burkart............. 38 Vice President, President of Wright Line Inc.
Theodore M. Lecher............ 44 Vice President, President GB Electrical, Inc.
Robert C. Arzbaecher.......... 35 Vice President, Chief Financial Officer
Louis E. Font................. 42 Vice President, Human Resources
Dale A. Knutson............... 63 Vice President, Technology
Philip M. Van Praag........... 49 Vice President, Chief Information Officer
Douglas R. Dorszynski......... 43 Vice President, Tax and Treasurer
Andrew G. Lampereur........... 32 Controller
Anthony W. Asmuth III......... 53 Secretary
Richard G. Sim was elected President and Chief Operating Officer in August,
1985, Chief Executive Officer effective September, 1986 and Chairman of the
Board effective November, 1988. From January, 1982 through August, 1985, Mr. Sim
was a General Manager in the General Electric Medical Systems Business Group. He
is also a director of The Gehl Company, IPSCO Inc. and Falcon Building Products,
Inc.
William J. Albrecht was named Senior Vice President of Engineered Solutions
in May, 1994. Prior to that, he served as Vice President and President of
Power-Packer and APITECH since January, 1991. He joined the Company in March,
1989 as General Manager of the APITECH Division in the United States. Prior to
joining the Company, Mr. Albrecht was Director of National Accounts and
Industrial Power Systems at Generac Corp. from 1987 to 1989 and Vice
President-Sales at NP Marketing from 1985 to 1987.
Robert G. Deuster was appointed Senior Vice President of Distributed
Products in May, 1994. He had served as a Vice President since August, 1988, and
was named President of Barry Controls in August, 1989. From March, 1987 to
August, 1989, Mr. Deuster had responsibility for the APITECH business worldwide.
From November, 1985 to March, 1987, he was Vice President Marketing and Sales
for Enerpac in the United States. Prior to joining the Company in 1985, Mr.
Deuster spent 10 years at General Electric in engineering and as Manager of
Marketing in its Medical Systems Business Group.
Gustav H.P. Boel was elected Vice President of the Company and named
President of Enerpac in November, 1995. From 1991 until that time, he was
Managing Director of Power-Packer Europe. From 1990 to 1991, Mr. Boel was
Technical Director for Groeneveld, located in Holland. Prior to 1990, he spent
nineteen years with Enerpac in the Netherlands, where he last held the position
of Managing Director.
Philip T. Burkart was elected Vice President of the Company in November,
1995 and named the President of Wright Line Inc. in August, 1994. From 1990 to
1994, Mr. Burkart held various positions within Wright Line Inc. including:
General Manager, Vice President, Marketing and Operations and Director of
Marketing. Prior to joining the Company, Mr. Burkart was a Marketing Manager for
GE Medical Systems.
Theodore M. Lecher has served as President of GB Electrical, Inc. (Gardner
Bender, Inc. prior to its acquisition by the Company in February, 1988) since
September, 1986, and as a Company Vice President
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since August, 1988. He was Vice President-General Manager of Gardner Bender,
Inc. from 1983 to 1986, and prior to that, Director of Sales and Marketing since
1980. Mr. Lecher has been associated with GB Electrical, Inc. since 1977.
Robert C. Arzbaecher was named Vice President and Chief Financial Officer
in October, 1994. He had served as Vice President, Finance of Distributed
Products from August, 1993 to October, 1994. He joined the Company in January,
1992 as Controller. From May, 1988 to December, 1991, Mr. Arzbaecher was
employed by Grabill Aerospace Industries LTD, where he last held the position of
Chief Financial Officer. Prior to 1988, Mr. Arzbaecher held various financial
positions at Farley Industries Inc. and at Grant Thornton and Company, a public
accounting firm.
Louis E. Font was elected Vice President, Human Resources in October, 1994.
From March, 1994 to October, 1994, Mr. Font served as Vice President, Human
Resources for Distributed Products. He served from May, 1992 to March, 1994 as
Vice President, Human Resources for Enerpac Americas. Prior to joining the
Company in 1992, Mr. Font was employed by General Electric for 12 years, holding
various human resource positions.
Dale A. Knutson has served as Vice President, Technology since May, 1987.
From 1982 until May, 1987, he held the position of Vice President, Product
Engineering. Mr. Knutson has been associated with the Company since 1969.
Philip M. Van Praag was named Vice President and Chief Information Officer
in November, 1995. Prior to joining the Company in 1994 as Chief Information
Officer, Mr. Van Praag was with R.R. Donnelley & Sons since 1989, where he last
held the position of Director of Information Systems. From 1979 to 1989, Mr. Van
Praag held various positions with Hughes Aircraft Company.
Douglas R. Dorszynski was appointed Vice President, Tax and Treasurer in
July, 1994. Mr. Dorszynski joined the Company in 1983 as Corporate Tax Manager
and was subsequently appointed Director, Tax and Special Project Planning in
1985. Prior to joining the Company, Mr. Dorszynski was employed by Arthur Young
& Co., a public accounting firm, from 1978 to 1983.
Andrew G. Lampereur was appointed Corporate Controller in May, 1994. He
joined the Company in May, 1993 as Assistant Corporate Controller. Mr. Lampereur
was employed by Terex Corporation from 1988 to May, 1993, where he held a number
of financial positions, most recently Corporate Controller of its Fruehauf
Trailer Corporation subsidiary. Prior to that, he was employed at Price
Waterhouse, a public accounting firm, from 1985 to 1988.
Anthony W. Asmuth III is a partner in the law firm of Quarles & Brady,
Milwaukee, Wisconsin, having joined that firm in 1989. Quarles & Brady performs
legal services for the Company and certain of its subsidiaries. Prior to joining
Quarles & Brady, he was a partner with the law firm of Whyte & Hirschboeck Dudek
S.C. Mr. Asmuth had previously served as Secretary of the Company from January,
1986 to January, 1993. He was re-elected Secretary in July, 1994.
Each officer is appointed by the Board of Directors and holds office until
he or she resigns, dies, is removed or a different person is appointed to the
office. The Board of Directors generally appoints officers at its meeting
following the Annual Meeting of Shareholders.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York Stock Exchange under
the symbol APW. At October 31, 1995, the approximate number of record
shareholders of common stock was 468. The high and low sales prices of the
common stock by quarter for each of the past two years are as follows:
FISCAL YEAR PERIOD HIGH LOW
-------------------------- --------------------------- ---- ----
1995...................... June 1 to August 31 $33 3/8 $24 1/2
March 1 to May 31 27 23 1/4
December 1 to February 28 25 3/4 20 3/4
September 1 to November 30 25 1/8 21 5/8
1994...................... June 1 to August 31 $22 1/2 $ 19
March 1 to May 31 22 5/8 16 3/8
December 1 to February 28 19 3/8 14 5/8
September 1 to November 30 18 1/4 14 1/2
Quarterly dividends of $0.03 per share were declared and paid for each of
the quarters above.
ITEM 6. SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FOR THE YEARS ENDED AUGUST 31,
------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Net Sales................................. $527.1 $433.6 $398.7 $404.3 $400.6
Gross Profit.............................. 201.4 163.5 151.0 154.9 157.1
Earnings(Loss)
Continuing Operations................... 25.0 16.9 7.1(1) 8.5(1) 10.8(1)
Discontinued Operations................. -- (0.4) (3.8) (32.9) (2.9)
Extraordinary Loss...................... (4.9) -- -- -- --
Cumulative Effect of Accounting
Change............................... -- -- (4.4) -- --
------ ------ ------ ------ ------
Net Earnings(Loss)...................... $ 20.1 $ 16.5 $ (1.1) $(24.4) $ 7.9
Earnings(Loss) Per Share
Continuing Operations................... $ 1.82 $ 1.27 $ 0.54(1) $ 0.65(1) $ 0.83(1)
Discontinued Operations................. -- (0.03) (0.29) (2.51) (0.23)
Extraordinary Loss...................... (0.36) -- -- -- --
Cumulative Effect of Accounting
Change............................... -- -- (0.33) -- --
------ ------ ------ ------ ------
Net Earnings(Loss) Per Share............ $ 1.46 $ 1.25 $(0.08) $(1.87) $ 0.60
Dividends Per Common Share................ $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
AUGUST 31,
------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
Total Assets.............................. $332.9 $317.4 $306.3 $301.5 $326.2
Long-term Obligations..................... $ 74.3 $ 88.7 $ 97.5 $108.0 $118.6
Shareholders' Equity...................... $131.7 $107.3 $ 88.0 $ 96.6 $116.8
Actual Shares Outstanding................. 13.4 13.2 13.0 13.0 12.9
- - -------------------------
(1) Earnings from Continuing Operations for 1993, 1992 and 1991 reflect
after-tax restructuring charges of $5.0 ($0.38 per share), $3.1 ($0.24 per
share) and $3.0 ($0.23 per share), respectively. In addition, 1992 includes
a liquidation of LIFO inventory which had the effect of increasing earnings
by $1.3 ($0.10 per share).
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED AUGUST 31, PERCENTAGE OF NET SALES
-------------------------- -----------------------
RESULTS OF CONTINUING OPERATIONS 1995 1994 1993 1995 1994 1993
------ ------ ------ ----- ----- -----
Net Sales...................................... $527.1 $433.6 $398.7 100.0% 100.0% 100.0%
Gross Profit................................... 201.4 163.5 151.0 38.2 37.7 37.9
Operating Expenses............................. 149.2 121.3 117.3 28.3 28.0 29.4
Restructuring Expenses......................... -- -- 7.7 -- -- 1.9
Operating Earnings............................. 52.2 42.2 26.0 9.9 9.7 6.5
Other Expenses................................. 15.3 16.9 16.4 2.9 3.9 4.1
Earnings Before Income Taxes................... 36.9 25.3 9.6 7.0 5.8 2.4
Income Tax Expense............................. 11.9 8.4 2.5 2.3 1.9 0.6
Earnings Before Accounting Change and
Extraordinary Loss........................... 25.0 16.9 7.1 4.7 3.9 1.8
Extraordinary Loss............................. (4.9) -- -- 0.9 -- --
Cumulative Effect of Accounting Change......... -- -- (4.4) -- -- 1.1
Net Earnings.............................. $ 20.1 $ 16.9 $ 2.7 3.8% 3.9% 0.7%
The preceding table sets forth the results of continuing operations of the
Company for the years ended August 31, 1995, 1994 and 1993.
The Company recorded restructuring charges, extraordinary losses and
adopted new accounting pronouncements during the last three years which impact
the comparability of financial information. The following table reconciles
reported net earnings from continuing operations to net earnings from continuing
operations excluding restructuring costs, extraordinary losses and the
cumulative effect of accounting changes:
EARNINGS COMPARISON 1995 1994 1993
----- ----- -----
Earnings from Continuing Operations............................... $20.1 $16.9 $ 2.7
Restructuring -- after tax........................................ -- -- 5.0
Extraordinary Loss................................................ 4.9 -- --
Cumulative Effect of Accounting Change............................ -- -- 4.4
----- ----- -----
Totals....................................................... $25.0 $16.9 $12.1
===== ===== =====
Earnings have grown over the last three years as a result of higher sales
volume, improved operating margins and lower financing costs.
NET SALES
Net sales increased 22% in 1995 with all three segments posting
double-digit sales growth percentages. Ignoring the favorable impact on
translated sales from the weaker US Dollar, sales increased 18% over 1994.
PERCENTAGE CHANGE
SALES FROM PRIOR YEAR
-------------------------- --------------------
GEOGRAPHIC SALES 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
North America...................................... $323.0 $279.6 $259.7 16% 8% 4 %
Latin America...................................... 12.0 11.3 10.2 6 11 6
Europe............................................. 136.8 99.2 87.3 38 14 (14 )
Japan and Asia Pacific............................. 55.3 43.5 41.5 27 5 (2 )
------ ------ ------ ---- ---- ----
Totals........................................ $527.1 $433.6 $398.7 22% 9% (1 )%
====== ====== ====== ==== ==== ====
11
12
Improving economic conditions experienced in the last half of fiscal 1994
carried into 1995, with significant strengthening in Europe and North America.
Sales in Japan and Asia Pacific increased 27% in 1995, but were 14% higher in
real terms. The weak US Dollar relative to the Japanese Yen during 1995 distorts
this comparison. Conversely, Latin America sales growth in real terms was 23%,
but the significant devaluation of the Mexican Peso in December, 1994
unfavorably impacted the translation into US Dollars.
PERCENTAGE CHANGE
SALES FROM PRIOR YEAR
-------------------------- --------------------
SEGMENT SALES 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
Distributed Products............................... $264.9 $222.0 $212.9 19% 4% 1 %
Engineered Solutions............................... 192.2 162.3 147.6 18 10 2
Wright Line........................................ 70.0 49.3 38.2 42 29 (19 )
-- --
------ ------ ------ ---
Totals........................................ $527.1 $433.6 $398.7 22% 9% (1 )%
====== ====== ====== == == ===
Total sales from Distributed Products, which consists of Enerpac and GB
Electrical, increased 19% in 1995, benefiting from improved economic conditions
in North America and Europe, further expansion into developing markets in
Southeast Asia, Latin America, and South America and approximately $4.0 million
from minor acquisitions. The impact of the weaker US Dollar favorably impacted
Distributed Products sales in 1995 relative to 1994, as sales generated by units
outside the US translated into higher US Dollars in 1995. Ignoring currency rate
changes, Distributed Products sales grew 16% in 1995.
Engineered Solutions, consisting of Barry Controls, APITECH and
Power-Packer, had an 18% increase in sales in 1995. Ignoring currency rate
changes, sales grew 14%. The majority of the growth took place in Power-Packer
which enjoyed a 45% increase in sales, resulting from strong demand from
European OEM truck and automobile manufacturers. Barry Controls and APITECH had
sales increases of 5% and 4%, respectively. In addition to improved economic
conditions, Engineered Solutions sales grew from the sale of products introduced
in recent years. Sales of the LAN Management System ("LMS") product line, which
was introduced in the second half of 1993, continued to have a significant
impact on Wright Line sales, which grew 42% in 1995. Sales to government
agencies increased 25% in 1995, also having a considerable impact on Wright
Line's growth.
Total sales in 1994 were 9% higher than 1993, reflecting geographic
expansion and the start of improved economic conditions in North America. With
the exception of the truck and automotive sectors in Europe, sales in Europe and
Japan in 1994 were lower than the prior year due to weak economic conditions.
Sales in 1994 of newly introduced products, such as Power-Packer's
multi-cylinder convertible top actuation systems, Barry Control's Duo-Plexx and
industrial products, APITECH's suspension and motion control systems and Wright
Line's LMS product line more than offset declines in cyclical markets that Barry
Controls competes in, including commercial aerospace and defense. Foreign
currency translation did not materially impact the sales comparison between 1994
and 1993.
Price changes and acquisitions have not had a significant impact on the
comparability of net sales during the last three years.
GROSS PROFIT
Gross profit increased to $201.4 million in 1995, compared to $163.5
million and $151.0 million in 1994 and 1993, respectively. The improvement in
gross profit resulted primarily from the sales increases in 1995 and 1994.
GROSS PROFIT PERCENTAGES BY SEGMENT 1995 1994 1993
---- ---- ----
Distributed Products...................................................... 42.1% 43.4% 45.4%
Engineered Solutions...................................................... 28.8 28.1 27.3
Wright Line............................................................... 48.8 42.6 36.5
---- ---- ----
Totals............................................................... 38.2% 37.7% 37.9%
==== ==== ====
12
13
Items influencing overall gross profit percentages include relative sales
mix between Distributed Products, Engineered Solutions and Wright Line, as well
as production levels. Engineered Solutions' gross profit percentages are lower
than either Wright Line or Distributed Products because a much higher proportion
of its sales are made to OEM customers (which generate lower margins than
non-OEM customers). As a result, the lower the proportion of its sales to total
Company sales, the higher the Company's overall gross profit percentage. Gross
profit percentages from Distributed Products were lower in 1995 and 1994,
relative to 1993, as a result of inefficiencies during the consolidation of
Enerpac manufacturing, higher discounts to distributors and increased shipments
to OEM customers. Engineered Solutions and Wright Line gross profit percentages
improved in 1994 due to the benefits of prior year restructuring, as well as
higher production levels. Both achieved additional improvement in 1995 due to
favorable product mix and the impact of higher production levels on fixed
manufacturing costs.
PERCENTAGE CHANGE
EXPENSES FROM PRIOR YEAR
---------------------------- ----------------------
OPERATING EXPENSES 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
Engineering.................................. $ 17.1 $ 13.5 $ 12.3 27% 10% 13%
Selling and Marketing........................ 89.0 72.0 68.1 24 6 1
Administration............................... 43.1 35.8 36.9 20 (3) 7
------ ------ ------ -- -- --
Totals................................ $149.2 $121.3 $117.3 23% 3% 4%
====== ====== ====== == == ==
OPERATING EXPENSES
Engineering expense increased 39% over the last two years to $17.1 million
due to new product development programs. The Company believes that its
investment in technology in all businesses will continue to provide it with a
competitive advantage.
Selling and marketing expenses increased from $68.1 million in 1993 to
$72.0 million in 1994 and $89.0 million in 1995. The majority of the increase
since 1993 related to variable selling expenses, primarily commissions. Wright
Line has a direct salesforce whose compensation is commission-based. As a result
of its 83% sales growth over the last two years, its selling and marketing
expenses have increased significantly. As Wright Line becomes a larger part of
the total Company, it will exert more influence on the year-to-year growth in
operating expenses. In addition to variable selling costs, total operating costs
have increased as a result of expenditures for geographic expansion into
emerging markets. During the last few years, the Company opened sales offices in
Russia, India and China, and has significantly increased its presence in Latin
America and Southeast Asia.
Administration expense increased 17% from 1993 to 1995. Geographic
expansion expenditures, higher information technology, legal and bonus costs and
the impact of minor acquisitions were the primary reasons for the increase.
RESTRUCTURING EXPENSE
The Company recorded $7.7 million of pre-tax restructuring charges ($0.38
per share) in 1993, primarily related to consolidating certain manufacturing,
distribution and administrative functions at Enerpac and Barry Controls
operations in Europe, downsizing field sales and headquarters administrative
staff at retained Wright Line operations, and idle facility costs at Barry
Controls. Substantially all of the restructuring costs had been incurred as of
August 31, 1995, consisting of severance and consolidation expenditures.
OTHER EXPENSE(INCOME) 1995 1994 1993
----- ----- -----
Net financing costs.................................................. $10.3 $11.4 $12.5
Amortization expense................................................. 3.3 5.1 4.9
Other -- net......................................................... 1.7 0.4 (1.0)
13
14
OTHER EXPENSE(INCOME)
The reduction in financing costs during the last three years reflects lower
market interest rates and reduced debt levels. The Company refinanced certain
debt in 1995, which also had the impact of lowering its financing costs. For
further information, see "Liquidity and Capital Resources" below.
Amortization expense increased in 1994 due to incremental amortization of
intangible assets added in 1993 and 1994 from acquisitions (see "Liquidity and
Capital Resources" below), but declined in 1995 as certain intangible assets
from the GB Electrical acquisition in 1988 became fully amortized.
"Other -- net" includes foreign exchange (gains)losses and miscellaneous
other (income)expense. A net foreign exchange gain was realized in 1993, while
the Mexican Peso devaluation in 1995 caused a $1.3 million foreign exchange loss
in 1995.
INCOME TAX EXPENSE
The Company's effective income tax rate is largely impacted by the
proportion of earnings generated inside and outside the US, as well as the
utilization of foreign tax credits in the US. Higher US earnings, the
utilization of foreign tax credits, deferred tax adjustments and lower pre-tax
income also had a favorable impact on the effective tax rate in 1993.
EXTRAORDINARY LOSS
The Company recorded an extraordinary loss of $4.9 million, or $0.36 per
share, in 1995 in connection with the March 30, 1995 extinguishment of its $64.4
million 9.92% Senior Unsecured Notes. The pre-tax extraordinary loss of $7.3
million was comprised of an estimated make whole provision of $4.1 million,
costs associated with the cancellation of underlying interest rate swap
agreements of $3.0 million and the write-off of $0.2 million of deferred
financing costs. For further information, see Note G -- "Long-term Debt" in
Notes to Consolidated Financial Statements.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions" ("SFAS
106"), on September 1, 1992, which requires the accrual of postretirement
benefits (such as health care and life insurance) during the years an employee
provides service. Previously, these costs were recognized as they were paid. The
cumulative effect of adopting SFAS 106 was $4.4 million ($0.33 per share) in
1993. For further information, see Note K -- "Postretirement Benefits" in Notes
to Consolidated Financial Statements.
The adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109") in 1993 had no material impact on net
earnings or cash flows. Certain assets and liabilities at acquired companies
that previously had been carried on a net-of-tax basis under prior accounting
rules, were adjusted to a gross basis.
DISCONTINUED OPERATIONS
In the second quarter of 1994, the Company announced its decision to retain
the remaining Wright Line business, which had been reported as a discontinued
operation since 1992. The Company completed the sale of Wright Line's German
operation in 1993 and Wright Line's Datafile businesses in Canada, Australia,
the UK and the US in 1994. The net assets and results of operations for the
retained Wright Line business were reclassified from discontinued to continuing
operations for the periods it was held for sale. However, the results of
operations from June, 1992 to November, 1993 have remained offset against the
reserve previously established for the estimated loss on disposition. For
further information, see Note B -- "Discontinued Operations" in Notes to
Consolidated Financial Statements.
14
15
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt at August 31, 1995 totaled $87.0 million, a reduction of
$16.5 million since the beginning of the year. End-of-year debt to total capital
was approximately 37%, its lowest point since 1989. Approximately $23.8 million
of cash was generated from operating activities in 1995, $16.0 million of which
was used to fund capital expenditures. Dividends of $1.6 million were paid
during the year. The Company utilized approximately $2.8 million of cash during
1995 to acquire New England Controls, Inc., and Enerpac's master distributor in
Brazil. The resulting cash flow was used to reduce debt.
Increases in primary working capital (net receivables plus net inventory
less trade accounts payable) used approximately $22.4 million of cash during
1995 as a result of higher sales volume (receivables) and geographic expansion
(inventory). The Company believes that primary working capital will grow further
in 1996 as a result of anticipated business expansion.
The Company extinguished all $64.4 million of its 9.92% Senior Unsecured
Notes on March 30, 1995. The funds used to retire the debt and disburse the make
whole payments totaling $4.0 million were obtained from new borrowings,
including those under a temporary expansion of the Company's then existing $40.0
million multi-currency revolving credit agreement. The Company replaced the
original $40.0 million multi-currency credit agreement and the temporary $40.0
million expansion with the proceeds from a new $120.0 million multi-currency
credit agreement in August, 1995. The new facility expires August, 2000. To
reduce interest rate risk associated with the refinancing, the Company entered
into interest rate caps on a notional $60.0 million in borrowings that limits
the maximum applicable base rate (three month LIBOR) to 8.0%. Currently, the
Company incurs interest at a rate of .45 of 1% above IBOR. The interest rate
caps expire in March, 1997. For additional information, see Note G -- "Long-term
Debt" in Notes to Consolidated Financial Statements.
The Company also replaced its former $25.0 million accounts receivable
financing facility in 1995 with a new facility that expires in August, 1998 and
provides up to $50.0 million of multi-currency accounts receivable financing. An
incremental $11.2 million of receivables were financed in 1995, bringing the
total balance financed to $36.2 million at August 31, 1995. Proceeds were used
to reduce debt. For additional information, see Note D -- "Accounts Receivable
Financing" in Notes to Consolidated Financial Statements.
PERCENTAGE OF
DOLLARS TOTAL CAPITALIZATION
------------------------------ ------------------------
TOTAL CAPITALIZATION 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
Total Debt............................. $ 87.0 $103.5 $117.9 37% 45% 53%
Shareholders' Equity................... 131.7 107.3 88.0 56 48 39
Deferred Taxes......................... 16.4 16.8 17.6 7 7 8
------ ------ ------ --- --- ---
Totals............................ $235.1 $227.6 $223.5 100% 100% 100%
====== ====== ====== === === ===
Outstanding indebtedness declined $14.4 million in 1994. The Company
generated $22.5 million of cash in operating activities during the year and used
$12.7 million on capital expenditures and $2.4 million for acquisitions.
Dividends of $1.6 million were also paid. Total borrowings decreased $6.9
million in 1993. Cash of $12.7 million was generated from operations. Major
expenditures included $12.2 million for fixed asset additions. Dividends
totaling $1.6 million were also paid.
In order to minimize interest expense, the Company intentionally maintains
low cash balances and uses available cash to reduce short-term bank borrowings.
Funds available under unused non-committed lines and the $120.0 million
multi-currency credit agreement totaled $41.0 million and $46.0 million,
respectively, as of August 31, 1995. The Company believes that such
availability, plus funds generated from operations will be adequate to fund
operating activities, including modestly higher capital expenditures and working
capital, for the foreseeable future.
15
16
INFLATION
No meaningful measures of inflation are available because the Company has a
significant number of small operations which operate in countries with diverse
rates of inflation and currency rate movements.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Quarterly financial data for 1995 and 1994 is as follows:
1995
------------------------------------------
FIRST SECOND THIRD FOURTH
------ ------ ------ ------
Continuing Operations
Net Sales.......................................... $125.8 $124.5 $139.4 $137.4
Gross Profit....................................... 48.2 47.3 53.6 52.3
Earnings Before Extraordinary Loss................. 5.5 4.6 7.3 7.6
Extraordinary Loss................................... -- (4.9) -- --
------ ------ ------ ------
Net Earnings(Loss)................................... $ 5.5 $ (0.3) $ 7.3 $ 7.6
====== ====== ====== ======
Earnings(Loss) Per Share
Continuing Operations.............................. $ 0.40 $ 0.34 $ 0.53 $ 0.55
Extraordinary Loss................................. -- (0.36) -- --
------ ------ ------ ------
Net Earnings(Loss) Per Share....................... $ 0.40 $(0.02) $ 0.53 $ 0.55
====== ====== ====== ======
1994
FIRST SECOND THIRD FOURTH
------ ------ ------ ------
Continuing Operations
Net Sales.......................................... $103.6 $101.9 $111.3 $116.8
Gross Profit....................................... 38.6 37.7 42.5 44.7
Earnings Before Discontinued Operations............ 2.9 3.3 5.4 5.3
Discontinued Operations.............................. (0.3) -- -- --
------ ------ ------ ------
Net Earnings(Loss)................................... $ 2.6 $ 3.3 $ 5.4 $ 5.3
====== ====== ====== ======
Earnings(Loss) Per Share
Continuing Operations.............................. $ 0.22 $ 0.25 $ 0.40 $ 0.40
Discontinued Operations............................ (0.03) -- -- --
------ ------ ------ ------
Net Earnings(Loss) Per Share....................... $ 0.20 $ 0.25 $ 0.40 $ 0.40
====== ====== ====== ======
The Consolidated Financial Statements are included on pages 20 to 34 and
are incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
16
17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference from the
"Election of Directors" and "Other Information -- Compliance with Section 16(a)
of the Exchange Act" sections of the Company's Proxy Statement for its Annual
Meeting of Shareholders to be held on January 11, 1996 (the "1996 Annual Meeting
Proxy Statement"). See also "Executive Officers of the Registrant" in Part I
hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from the
"Board Meetings, Committees and Director Compensation" and "Executive
Compensation" sections of the 1996 Annual Meeting Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from the
"Certain Beneficial Owners" and "Election of Directors" sections of the 1996
Annual Meeting Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Consolidated Financial Statements
See "Index to Consolidated Financial Statements and Financial
Statement Schedules" on page 18, the Independent Auditors' Report on
page 19 and the Consolidated Financial Statements on pages 20 to 34,
all of which are incorporated herein by reference.
2. Financial Statement Schedules
See "Index to Consolidated Financial Statements and Financial
Statement Schedules" on page 18 and the Financial Statement Schedule
on page 35, all of which are incorporated herein by reference.
3. Exhibits
See "Index to Exhibits" on pages 37 to 39, which is incorporated
herein by reference.
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated as of August 16,
1995 announcing that its GB Electrical unit had signed a letter of
intent to acquire the business of Vision Plastics Manufacturing
Company.
17
18
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
PAGE
-----
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report....................................................... 19
Consolidated Statement of Earnings for the years ended August 31, 1995, 1994 and
1993............................................................................ 20
Consolidated Balance Sheet as of August 31, 1995 and 1994.......................... 21
Consolidated Statement of Shareholders' Equity for the years ended August 31, 1995,
1994 and 1993................................................................... 22
Consolidated Statement of Cash Flows for the years ended August 31, 1995, 1994 and
1993............................................................................ 23
Notes to Consolidated Financial Statements......................................... 24-34
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule VIII -- Valuation and Qualifying Accounts................................. 35
All other schedules are omitted because they are not applicable, not
required, or because the required information is included in the consolidated
financial statements or notes thereto.
18
19
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Directors of Applied Power Inc.:
We have audited the accompanying consolidated balance sheets of Applied
Power Inc. and subsidiaries as of August 31, 1995 and 1994, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended August 31, 1995. Our audits also
included the consolidated financial statement schedule listed in the Index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Applied Power Inc. and
subsidiaries at August 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended August 31,
1995 in conformity with generally accepted accounting principles. Also, in our
opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
As discussed in Note K to the consolidated financial statements, effective
September 1, 1992 the Company changed its method of accounting for
postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
September 29, 1995
19
20
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED AUGUST 31,
--------------------------------
1995 1994 1993
-------- -------- --------
Net sales..................................................... $527,058 $433,644 $398,727
Cost of products sold......................................... 325,621 270,120 247,741
-------- -------- --------
Gross Profit................................................ 201,437 163,524 150,986
Engineering, selling and administrative expenses.............. 149,210 121,315 117,295
Restructuring expenses........................................ -- -- 7,721
-------- -------- --------
Operating Earnings from Continuing Operations............... 52,227 42,209 25,970
Other Expense(Income)
Net financing costs......................................... 10,291 11,362 12,469
Amortization of intangible assets........................... 3,369 5,092 4,914
Other -- net................................................ 1,694 457 (1,003)
-------- -------- --------
Earnings from Continuing Operations Before Income Tax
Expense..................................................... 36,873 25,298 9,590
Income Tax Expense............................................ 11,868 8,402 2,504
-------- -------- --------
Earnings from Continuing Operations........................... 25,005 16,896 7,086
Discontinued Operations, net of income taxes
Loss(Income) from operations previously offset against
reserve for estimated loss on disposition................ -- (348) 1,618
Provision for loss on disposition........................... -- -- (5,400)
-------- -------- --------
Loss from Discontinued Operations............................. 0 (348) (3,782)
-------- -------- --------
Earnings before Extraordinary Loss and Cumulative Effect of
Accounting Change........................................... 25,005 16,548 3,304
Extraordinary Loss from Early Extinguishment of Debt, net of
$2,423 tax benefit.......................................... (4,920) -- --
Cumulative Effect of Accounting Change -- Postretirement
Benefits.................................................... -- -- (4,355)
-------- -------- --------
Net Earnings(Loss)............................................ $ 20,085 $ 16,548 $ (1,051)
======== ======== ========
Earnings(Loss) Per Share
Continuing Operations....................................... $ 1.82 $ 1.27 $ 0.54
Discontinued Operations..................................... -- (0.03) (0.29)
Extraordinary Loss.......................................... (0.36) -- --
Cumulative Effect of Accounting Change...................... -- -- (0.33)
-------- -------- --------
Net Earnings(Loss) Per Share.................................. $ 1.46 $ 1.25 $ (0.08)
======== ======== ========
Weighted Average Shares Outstanding (In Thousands)............ 13,746 13,289 13,099
The accompanying notes are an integral part of these financial statements
20
21
APPLIED POWER INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
AUGUST 31,
--------------------
1995 1994
-------- --------
ASSETS
Current Assets
Cash and cash equivalents............................................. $ 911 $ 1,907
Accounts receivable, less allowances of $3,593 and $3,131,
respectively....................................................... 71,000 64,259
Inventories........................................................... 103,358 94,949
Prepaid income tax.................................................... 10,297 7,972
Prepaid expenses...................................................... 4,898 5,722
-------- --------
Total Current Assets............................................. 190,464 174,809
Other Assets............................................................ 6,274 6,390
Goodwill, net of accumulated amortization of $11,256 and $9,404,
respectively.......................................................... 57,346 56,708
Other Intangibles, net of accumulated amortization of $18,798 and
$17,141, respectively................................................. 10,427 11,750
Property, Plant and Equipment
Property.............................................................. 1,909 1,643
Plant................................................................. 28,850 27,724
Machinery and equipment............................................... 122,615 109,425
-------- --------
153,374 138,792
Less: Accumulated depreciation........................................ (84,939) (71,047)
-------- --------
Net Property, Plant and Equipment....................................... 68,435 67,745
-------- --------
Total Assets..................................................... $332,946 $317,402
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings................................................. $ 12,620 $ 14,707
Trade accounts payable................................................ 37,530 35,219
Accrued compensation and benefits..................................... 19,707 16,335
Income taxes payable.................................................. 7,575 8,190
Current maturities of long-term debt.................................. 187 10,792
Other current liabilities............................................. 19,828 16,722
-------- --------
Total Current Liabilities........................................ 97,447 101,965
Long-term Debt, less current portion.................................... 74,156 77,956
Deferred Income Tax..................................................... 16,386 16,768
Other Deferred Liabilities.............................................. 13,271 13,402
Shareholders' Equity
Class A common stock, $0.20 par value per share, authorized 40,000,000
shares, issued and outstanding 13,406,590 and 13,152,454 shares,
respectively....................................................... 2,681 2,630
Additional paid-in capital............................................ 28,328 23,648
Retained earnings..................................................... 94,285 75,802
Cumulative translation adjustments.................................... 6,392 5,231
-------- --------
Total Shareholders' Equity....................................... 131,686 107,311
-------- --------
Total Liabilities and Shareholders' Equity....................... $332,946 $317,402
======== ========
The accompanying notes are an integral part of these financial statements
21
22
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED AUGUST 31, 1995, 1994 AND 1993
-----------------------------------------------
CLASS
A ADDITIONAL CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENTS
------ ---------- -------- -----------
Balances at September 1, 1992......................... $2,592 $ 21,300 $ 63,432 $ 9,654
Net loss for the year............................... -- -- (1,051) --
Cash dividends declared -- $0.12 per share.......... -- -- (1,558) --
Exercise of stock options........................... 9 354 -- --
Currency translation adjustments.................... -- -- -- (6,722)
------ ------- ------- -------
Balances at August 31, 1993........................... 2,601 21,654 60,823 2,932
Net earnings for the year........................... -- -- 16,548 --
Cash dividends declared -- $0.12 per share.......... -- -- (1,569) --
Exercise of stock options........................... 29 1,850 -- --
Other............................................... -- 144 -- --
Currency translation adjustments.................... -- -- -- 2,299
------ ------- ------- -------
Balances at August 31, 1994........................... 2,630 23,648 75,802 5,231
Net earnings for the year........................... -- -- 20,085 --
Cash dividends declared -- $0.12 per share.......... -- -- (1,602) --
Exercise of stock options........................... 51 4,168 -- --
Other............................................... -- 512 -- --
Currency translation adjustments.................... -- -- -- 1,161
------ ------- ------- -------
Balances at August 31, 1995........................... $2,681 $ 28,328 $ 94,285 $ 6,392
====== ======= ======= =======
The accompanying notes are an integral part of these financial statements
22
23
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
YEARS ENDED AUGUST 31,
---------------------------------
1995 1994 1993
--------- -------- --------
Net Income from Continuing Operations........................ $ 20,085 $ 16,896 $ 2,731
Adjustments to reconcile earnings from continuing operations
to net cash provided by operating activities:
Depreciation and amortization.............................. 18,456 19,406 19,767
Other non-cash charges..................................... 4,920 -- 8,710
Provision for deferred taxes............................... (2,707) (789) (6,425)
Changes in operating assets and liabilities, excluding the
effects of business acquisitions and disposals:
Accounts receivable..................................... (15,413) (12,855) (2,073)
Inventories............................................. (8,170) (7,182) (9,515)
Prepaid expenses and other assets....................... (2,077) 3,156 2,167
Trade accounts payable.................................. 1,231 8,509 694
Other liabilities....................................... 7,499 (4,663) (3,339)
--------- -------- --------
Net Cash Provided by Operating Activities.................... 23,824 22,478 12,717
Investing Activities
Proceeds on the sale of property, plant and equipment...... 614 1,342 2,073
Additions to property, plant and equipment................. (15,986) (12,707) (12,217)
Business acquisitions...................................... (2,758) (2,446) --
Other...................................................... 162 142 627
--------- -------- --------
Net Cash Used in Investing Activities........................ (17,968) (13,669) (9,517)
Financing Activities
Proceeds from issuance of long-term debt................... 116,055 13,959 3,484
Principal payments on long-term debt....................... (123,997) (33,755) (12,528)
Refinancing expenditures................................... (4,370) -- --
Net (repayments) borrowings on short-term credit
facilities.............................................. (2,092) (5,700) 4,926
Net commercial paper (repayments) borrowings............... (6,671) 9,947 --
Additional receivables financed............................ 11,200 -- --
Dividends paid on common stock............................. (1,602) (1,569) (1,558)
Stock option exercises and other........................... 4,219 1,879 754
--------- -------- --------
Net Cash Used in Financing Activities........................ (7,258) (15,239) (4,922)
Effect of Exchange Rate Changes on Cash...................... 406 132 (436)
--------- -------- --------
Net Cash Used in Continuing Operations....................... (996) (6,298) (2,158)
Discontinued Operations Activities
Proceeds from sale of Datafile............................. -- 6,222 --
Other...................................................... -- 663 31
--------- -------- --------
Net Cash Provided by Discontinued Operations................. 0 6,885 31
--------- -------- --------
Net (Decrease) Increase in Cash and Cash Equivalents......... (996) 587 (2,127)
Cash and Cash Equivalents -- Beginning of Year............... 1,907 1,320 3,447
--------- -------- --------
Cash and Cash Equivalents -- End of Year..................... $ 911 $ 1,907 $ 1,320
========= ======== ========
The accompanying notes are an integral part of these financial statements
23
24
APPLIED POWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include
the accounts of Applied Power Inc. and its majority-owned subsidiaries ("Applied
Power" or the "Company"). All significant intercompany balances, transactions
and profits have been eliminated.
Cash and Cash Equivalents: The Company considers all highly liquid
investments with original maturities of 90 days or less to be cash equivalents.
Inventories: Inventories are comprised of material, direct labor and
manufacturing overhead, and are stated at the lower of cost or market.
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Plant and equipment are depreciated over the estimated useful lives of the
assets under the straight-line method for financial reporting purposes and both
straight-line and accelerated methods for tax purposes. Expenditures for
maintenance and repairs not expected to extend the useful life of an asset
beyond its normal useful life are expensed.
Intangible Assets: Goodwill is amortized on a straight-line basis over
periods of fifteen to forty years. Other intangible assets, consisting primarily
of purchased patents, trademarks and noncompete agreements, are amortized over
periods from two to seventeen years. The Company periodically evaluates the
carrying value of intangible assets in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
Revenue Recognition: Revenues and costs of products sold are recognized as
the related products are shipped.
Research and Development Costs: Research and development costs are
generally expensed as incurred. Such costs incurred in the development of new
products or significant improvements to existing products totaled approximately
$8,725, $7,446 and $5,878 in 1995, 1994 and 1993, respectively.
Financing Costs: Net financing costs represents interest expense on debt
obligations, investment income, and accounts receivable financing costs.
Income Taxes: The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." For further information, see Note L -- "Income Taxes."
Earnings per Share: Earnings per share is based on the weighted average
number of common and common equivalent shares outstanding during the year. The
dilutive effect of stock options, which are considered common stock equivalents,
is calculated using the treasury stock method.
Foreign Currency Translation: Foreign currency translation adjustments are
generally excluded from the Consolidated Statement of Earnings and are included
in Cumulative Translation Adjustments in the Consolidated Balance Sheet. Gains
and losses resulting from foreign currency transactions are included in Other --
net in the Consolidated Statement of Earnings.
Financial Instruments: The Company utilizes interest rate swap and cap
agreements to manage interest rate exposure. The differential to be paid or
received is recorded as interest rates change. For further information, see Note
G -- "Long-term Debt." The Company also utilizes, in limited circumstances,
foreign currency forward contracts. Gains and losses resulting from these
instruments are recognized in the same period as the underlying transaction. At
August 31, 1995, the Company had one immaterial forward contract expiring on
September 1, 1995, which hedged an existing exposure. Other than foreign
currency forward
24
25
contracts and interest rate swap and cap agreements, the Company does not
utilize or trade derivative financial instruments.
Reclassifications: Certain amounts shown for 1994 and 1993 have been
reclassified to conform to the current year presentation.
NOTE B -- DISCONTINUED OPERATIONS
In the second quarter of 1994, the Company announced its decision to retain
the remaining Wright Line business, which had been included in discontinued
operations since the third quarter of 1992. The retained business has refocused
its business strategy on technical furniture solutions for offices and
laboratories.
The Company had originally intended to sell all of Wright Line in a single
transaction in 1993. However, management subsequently determined that proceeds
could be maximized by selling the assets in a series of separate transactions.
The Company completed the sale of certain assets of Wright Line's German
operation to an existing distributor in exchange for the assumption of certain
liabilities. In early 1994, Wright Line's Datafile businesses in Canada,
Australia, the UK and the US were sold, generating proceeds of $6,222. A short
time later, Wright Line sold its Tapeseal product line to a third party for
future compensation.
The operating results from the retained Wright Line operations have been
reclassified from discontinued operations to continuing operations for all
periods presented. However, the results of the retained operations for the
period June, 1992 through November, 1993 have remained offset against the
reserve previously established for operating losses until disposition. The
Company had previously recorded provisions of $31,307 ($2.51 per share) and
$5,400 ($0.41 per share) in 1992 and 1993, respectively, to accrue for the
estimated loss on the sale of Wright Line and a small French subsidiary, the
sale of a previously vacated Wright Line building (completed in 1992), estimated
operating losses prior to disposition, and estimated disposition costs.
Substantially all of the provisions were utilized for the operations, product
lines and assets sold since 1992. The net assets of the retained operations were
returned to the appropriate balance sheet captions based on their historical
cost. After reviewing the value of such assets, the Company determined that no
impairment had taken place.
NOTE C -- ACQUISITIONS
The Company acquired all of the outstanding stock of New England Controls,
Inc. ("NECON") on June 28, 1995 for approximately $2,059 in cash. Approximately
$1,536 of the purchase price was assigned to Goodwill. NECON, based in Milford,
Connecticut, manufactures electrical switches for the electrical wholesale,
retail and OEM markets. The operating results of NECON subsequent to June 28,
1995 are included in the Consolidated Statement of Earnings.
On September 1, 1994, the Company acquired the assets of Enerpac's master
distributor in Brazil for $699 in cash. Approximately $350 of the purchase price
was assigned to Goodwill. The operating results of this business subsequent to
such date are included in the Consolidated Statement of Earnings.
The Company completed the acquisition of certain assets of Palmer
Industries, Inc. ("Palmer") on October 1, 1993 for approximately $1,534 in cash
and a $350 note. Approximately $490 of the purchase price was assigned to
Goodwill. Palmer, based in Alexandria, Minnesota, is a leading manufacturer of
plastic and metal staples, fasteners and straps. The operating results of Palmer
subsequent to October 1, 1993 are included in the Consolidated Statement of
Earnings.
On March 21, 1994, the Company increased its ownership interest in Applied
Power Korea from approximately 50% to 90%. Cash of $912 was used in the
acquisition which resulted in Goodwill of $572. The operating results of this
subsidiary have historically been included in the Consolidated Statement of
Earnings.
All acquisitions were accounted for using the purchase method.
25
26
NOTE D -- ACCOUNTS RECEIVABLE FINANCING
As a part of its overall financing strategy, the Company sells to financial
institutions undivided participation interests in designated pools of accounts
receivable, with limited recourse. Participation interests in new receivables
may be sold as collections reduce previously sold participation interests. The
sold accounts receivable are reflected as a reduction of receivables in the
Consolidated Balance Sheet. The Company retains collection and administrative
responsibilities on the participation interests sold as agent for the purchaser.
In August, 1995, the Company entered into a new multi-currency accounts
receivable financing agreement that allows up to the equivalent of $50,000 of
sold receivables at any one time. Previously, the Company was a party to an
agreement that provided up to $30,000 of accounts receivable financing for US
Dollar denominated receivables. The new accounts receivable financing agreement
expires in August, 1998.
At August 31, 1995 and 1994, accounts receivable were reduced by $36,200
and $25,000, respectively, representing receivable interests sold under this
program.
Accounts receivable financing costs totaling $1,892, $1,076 and $795 for
the years ended August 31, 1995, 1994 and 1993, respectively, are included in
the accompanying Consolidated Statement of Earnings.
NOTE E -- NET INVENTORIES
Inventory cost is determined using the last-in, first-out ("LIFO") method
for substantially all inventory in the United States (approximately 58% and 59%
of total inventories in 1995 and 1994, respectively). The first-in, first-out or
average cost methods are used for all other inventories. If the LIFO method was
not used, inventory balances would be higher than the amounts in the
Consolidated Balance Sheet by approximately $10,296 and $9,748 at August 31,
1995 and 1994, respectively.
It is not practical to segregate the amounts of raw materials,
work-in-process or finished goods at the respective balance sheet dates, since
the segregation is possible only as the result of physical inventories which are
taken at dates different from the balance sheet dates. The systems at many of
the Company's operating units have not been designed to capture this segregation
due to the very short production cycle of their products and the minimal amount
of work-in-process.
NOTE F -- SHORT-TERM BORROWINGS
The Company had borrowings under unsecured non-committed lines of credit
with banks aggregating approximately $12,620 and $14,707 at August 31, 1995 and
1994, respectively. Interest rates vary depending on the currency being
borrowed. The weighted average interest rate on the short-term borrowings was
9.38% at August 31, 1995. The amount of unused available borrowings under such
lines of credit was approximately $41,000 at August 31, 1995.
NOTE G -- LONG-TERM DEBT
AUGUST 31,
---------------------
Borrowings under: 1995 1994
------- --------
$120,000 Multi-currency revolving credit agreement.................. $70,717 $ --
$40,000 Multi-currency revolving credit agreement................... -- 13,959
9.92% Senior Unsecured Notes........................................ -- 64,492
Commercial paper.................................................... 3,276 9,947
Other notes......................................................... 350 350
------- -------
Total long-term debt.................................................. 74,343 88,748
Less current maturities............................................. (187) (10,792)
------- -------
Long-term Debt, less current portion.................................. $74,156 $ 77,956
======= =======
Refinancing: During the second quarter of 1995, the Company recorded an
extraordinary loss of $4,920 ($0.36 per share) in anticipation of the March 30,
1995 extinguishment of the outstanding $64,350 9.92%
26
27
Senior Unsecured Notes. The pre-tax extraordinary loss of $7,343 was comprised
of an estimated make whole provision of $4,050, costs associated with the
cancellation of underlying interest rate swap agreements of $3,047, and the
write-off of deferred financing costs of $246.
Funds used to retire the Senior Unsecured Notes and pay the make whole
obligation were obtained from new borrowings under an existing $40,000
Multi-currency revolving credit agreement and a temporary $40,000 expansion to
the existing Multi-currency revolving credit agreement. These borrowings were
extinguished on August 21, 1995, and all amounts outstanding were simultaneously
reborrowed under a new $120,000 Multi-currency revolving credit agreement (the
"New Multi-currency Credit Agreement").
The New Multi-currency Credit Agreement provides total unsecured credit
availability of $120,000, bears interest at a floating rate of IBOR plus .3 - .5
of 1% annually, and expires in August, 2000. Interest is payable monthly.
Pursuant to the agreement, borrowings may be denominated in various currencies
at the Company's option. A commitment fee, currently computed at a rate of .175
of 1% annually, is payable quarterly on the average unused credit line. The
unused credit line at August 31, 1995 was $46,007.
The New Multi-currency Credit Agreement contains customary restrictions
concerning investments, liens on assets, sales of assets, dividend payments,
maximum levels of debt and minimum levels of shareholders' equity. In addition,
the agreement requires the Company to maintain certain financial ratios. As of
August 31, 1995, the Company was in compliance with all debt covenants. Under
the most restrictive covenant, approximately $35,795 of retained earnings was
available for the payment of future dividends on common stock as of August 31,
1995.
Commercial paper outstanding at August 31, 1995 and 1994 totaled $3,276 and
$9,947, respectively, net of discount, and carried average interest rates of
5.94% and 4.73%, respectively. The Company has the ability and intent to
maintain these commercial paper obligations, classified as long term, for more
than one year. Amounts outstanding as commercial paper reduce the amount
available for borrowing under the New Multi-currency Credit Agreement.
Interest Rate Financial Instruments: As part of its interest rate
management program, the Company periodically enters into interest rate swap and
cap agreements with respect to portions of its outstanding debt. Interest rate
swap agreements typically convert the variable nature of debt to fixed rate, or
vice versa. Interest rate caps limit the maximum interest rate that is paid. As
of August 31, 1995, the Company had interest rate caps in place on a notional
$60,000 in borrowings that limits the maximum applicable base rate (three month
LIBOR) to 8.0%. Currently, the Company incurs interest at .45 of 1% above IBOR.
The interest rate caps expire in March, 1997, and were recorded at a value of
$225 at August 31, 1995.
Fair Values: The fair value of the Company's short-term borrowings and
long-term debt approximated book value as of August 31, 1995. The fair value of
debt instruments is calculated by discounting the cash flow of such obligations
using the market interest rates for similar instruments at August 31, 1995. The
fair value of the Company's interest rate cap agreement and foreign currency
forward exchange contract at August 31, 1995 approximated book value.
Aggregate Maturities: Aggregate maturities of long-term debt outstanding at
August 31, 1995, were: $187 in 1996; $75 in 1997; $81 in 1998; $7 in 1999 and
$73,993 in 2000.
The Company paid $10,363, $10,695 and $11,894 for financing costs in 1995,
1994 and 1993, respectively, excluding the make whole payments associated with
refinancing the 9.92% Senior Unsecured Debt.
NOTE H -- LEASES
The Company leases certain facilities, computers, equipment and vehicles
under various lease agreements over periods of one to twenty years. Under most
arrangements, the Company pays the property taxes, insurance, maintenance and
expenses related to the leased property. Many of the leases include provisions
which enable the Company to renew leases based upon the fair values on the date
of expiration of the initial lease.
27
28
Future obligations on non-cancelable operating leases in effect at August
31, 1995 were: $10,941 in 1996; $9,745 in 1997; $7,491 in 1998; $4,992 in 1999;
$4,530 in 2000; and $21,778 thereafter.
Total rental expense under operating leases was $11,076, $11,379 and
$12,250 in 1995, 1994 and 1993, respectively.
NOTE I -- INCENTIVE STOCK OPTION PLANS
At August 31, 1995, 2,127,835 shares of Class A common stock were reserved
for issuance under the Company's stock option plans.
Employee Plans: The Company has three non-qualified stock option plans for
employees -- the 1985, 1987 and 1990 Plans. No further options may be granted
under the 1985 or 1987 Plans, although options previously issued and outstanding
under these plans remain exercisable pursuant to the provisions of the plans. A
total of 3,050,000 shares may be issued under all three stock option plans
(equal to 950,000 shares authorized under the 1985 Plan, 1,200,000 shares under
the 1987 Plan and 900,000 shares under the 1990 Plan). Any available unissued
shares under the 1985 and 1987 Plans at the date of adoption of the 1990 Plan
became available for issuance under the 1990 Plan.
Options may be granted to officers and key employees. Options generally
have a maximum term of ten years and an exercise price equal to 100% of the fair
market value of a share of the Company's common stock at the date of grant.
Options vest 50% after 2 years and 100% after 5 years.
A summary of option activity under the three plans is as follows:
NUMBER OF PRICE
SHARES RANGE
--------- ---------------
Outstanding at September 1, 1992.................................. 1,473,901 $ 2.21 - $26.75
Granted......................................................... 314,125 15.13 - 16.88
Granted under reload provision.................................. 6,259 15.13
Exercised....................................................... (48,645) 2.21 - 13.00
Cancelled....................................................... (29,030) 15.63 - 26.75
--------- ---------------
Outstanding at August 31, 1993.................................... 1,716,610 $ 2.21 - $26.75
Granted......................................................... 189,400 15.81 - 21.38
Exercised....................................................... (146,288) 2.21 - 20.56
Cancelled....................................................... (174,187) 12.75 - 26.75
--------- ---------------
Outstanding at August 31, 1994.................................... 1,585,535 $ 2.21 - $24.13
Granted......................................................... 227,740 24.13 - 29.25
Exercised....................................................... (250,136) 2.21 - 24.13
Cancelled....................................................... (119,450) 15.44 - 29.25
--------- ---------------
Outstanding at August 31, 1995.................................... 1,443,689 $ 2.21 - $29.25
--------- ---------------
Exercisable at August 31, 1995.................................... 811,564 $ 2.21 - $22.25
========= ===============
Outside Director Plan: Annually each outside director is automatically
granted stock options to purchase 1,000 shares of common stock at a price equal
to the market price of the underlying stock on the date of grant. A maximum of
60,000 shares may be issued under this plan. Options vest 100% after 11 months.
28
29
A summary of option activity under this plan is as follows:
NUMBER OF PRICE
SHARES RANGE
--------- ---------------
Outstanding at September 1, 1992.................................. 10,000 $12.75 - $24.13
Granted......................................................... 5,000 17.00
Exercised....................................................... (1,000) 12.75
------ -------------
Outstanding at August 31, 1993.................................... 14,000 $12.75 - $24.13
Granted......................................................... 6,000 16.69
Cancelled....................................................... (1,000) 16.69
------ -------------
Outstanding at August 31, 1994.................................... 19,000 $12.75 - $24.13
Granted......................................................... 5,000 25.00
Exercised....................................................... (4,000) 12.75 - 24.13
------ -------------
Outstanding at August 31, 1995.................................... 20,000 $12.75 - $25.00
------ -------------
Exercisable at August 31, 1995.................................... 15,000 $12.75 - $24.13
====== =============
NOTE J -- EMPLOYEE STOCK OWNERSHIP AND RETIREMENT PLANS
US Employees: All of the Company's full-time US employees are participants
in the Applied Power Inc. Employee Stock Ownership Plan (the "ESOP Plan"). Under
the provisions of the ESOP Plan, the plan administrator acquires shares of Class
A common stock on the open market and allocates such shares to accounts set
aside for Company employees' retirements. Contributions equal 3% of each
employee's annual cash compensation except "initial participants," who received
no allocation of shares until 1995. During the years ended August 31, 1995, 1994
and 1993, pre-tax expense related to the ESOP Plan was $1,720, $534 and $450,
respectively.
The Company also offers an employee 401(K) Savings Plan (the "Savings
Plan") to encourage eligible employees to save on a regular basis for their
retirements. All full-time US employees are eligible to participate in the
Savings Plan, and generally may contribute up to 15% of their base compensation.
Effective January 1, 1995, the Company's annual match equals approximately 25%
of each participant's first 3% of earnings. Expense attributable to the Savings
Plan was $643, $293 and $307 for 1995, 1994 and 1993, respectively.
Non-US Employees: The Company contributes to a number of retirement
programs for employees outside the US. Pension expense amounted to $821, $631
and $1,213 in 1995, 1994 and 1993, respectively. These plans are not required to
report to US governmental agencies under ERISA and do not otherwise determine
the actuarial value of accumulated plan benefits or net assets available for
benefits.
NOTE K -- POSTRETIREMENT BENEFITS
The Company adopted SFAS No. 106 -- "Employers' Accounting for
Postretirement Benefits Other Than Pensions" effective September 1, 1992. This
new pronouncement requires the accrual of postretirement benefits (such as
health care and life insurance) during the years an employee provides service.
In connection with the adoption of SFAS No. 106, the Company elected to
recognize as expense in 1993 the accumulated postretirement benefit obligation
rather than amortizing such amount to expense over a 20-year period. The Company
recorded a $4,355 charge (net of a $2,579 tax benefit) in 1993 for the
cumulative effect of this accounting change.
The Company's current policy is not to offer postretirement health care and
life insurance benefits to employees. However, certain employees of businesses
previously acquired by the Company were entitled to such benefits upon
retirement. The individuals receiving health care benefits under these programs
are required to make monthly contributions to defray a portion of the cost.
Retiree contributions are adjusted annually. Retirees currently do not
contribute toward the cost of life insurance. The accounting for retiree health
care benefits assumes retirees will continue to contribute toward the cost of
such benefits.
29
30
Net periodic postretirement benefit expense for 1995, 1994 and 1993
included the following components:
1995 1994 1993
----- ---- ----
Service cost of benefits earned........................................ $ 9 $ 9 $ 12
Interest cost on accumulated postretirement benefit obligation......... 482 553 694
Amortization of unrecognized gain...................................... (180) (91) --
----- ---- ----
Total Postretirement Benefit Expense.............................. $ 311 $471 $706
===== ==== ====
The Company's accumulated postretirement benefit obligation for such
benefits is as follows:
AUGUST 31,
----------------
1995 1994
------ ------
Retirees.................................................................... $4,887 $5,686
Vested former employees..................................................... 1,419 1,595
Active employees............................................................ 238 229
------ ------
Subtotal.................................................................... 6,544 7,510
Unrecognized gain........................................................... 3,037 1,966
------ ------
Accumulated Postretirement Benefit Obligation............................... $9,581 $9,476
====== ======
The Company's postretirement benefit obligations are not funded. Benefits
paid in 1995, 1994 and 1993 were $24, $202 and $420 lower than that expensed
during those years, respectively.
The health care cost trend rate used in the actuarial calculations was
11.0%, trending downward to 6.5% by the year 2010, and remaining level
thereafter. The discount rate used in determining the accumulated postretirement
benefit obligation was 7.75% in both 1995 and 1994, and 8.0% in 1993. The effect
of a one percentage-point change in health care cost trend rates would change
the accumulated postretirement benefit obligation by approximately 10%.
NOTE L -- INCOME TAXES
Income tax expense for continuing operations consists of the following:
Currently Payable: 1995 1994 1993
------- ------- -------
Federal........................................................ $ 7,007 $ 4,475 $ 5,926
Foreign........................................................ 6,313 3,621 2,590
State.......................................................... 1,255 1,095 413
----- ---- ----
Subtotals........................................................ 14,575 9,191 8,929
----- ---- ----
Deferred (Credits):
Federal........................................................ (2,582) (2,166) (4,390)
Foreign........................................................ 230 1,672 (1,845)
State.......................................................... (355) (295) (190)
----- ---- ----
Subtotals........................................................ (2,707) (789) (6,425)
----- ---- ----
Totals.................................................... $11,868 $ 8,402 $ 2,504
===== ==== ====
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31
Components of deferred income tax benefits include the following:
1995 1994 1993
------- ------- -------
Compensation and other employee benefits......................... $ (443) $ (962) $ (149)
Inventory items.................................................. 26 (519) (201)
Depreciation and amortization.................................... (956) (1,798) (3,366)
Restructuring expenses........................................... 574 2,504 (2,366)
Deferred income.................................................. (1,225) (119) (29)
Book reserves and other items.................................... (683) 105 (314)
------- ------- -------
Totals......................................................... $(2,707) $ (789) $(6,425)
======= ======= =======
Income tax expense differs from the amounts computed by applying the
Federal income tax rate to earnings before income tax expense. A reconciliation
of income taxes at the US statutory rate to the effective tax rate follows:
PERCENT OF PRE-TAX
EARNINGS
------------------------
1995 1994 1993
---- ---- ----
Federal statutory rate............................................... 35.0% 35.0% 34.0%
State income taxes, net of Federal effect............................ 1.6 2.1 1.8
Non-deductible amortization.......................................... 1.2 1.8 5.3
Adjustment of deferred tax balances.................................. -- -- (6.4)
Net effects of foreign tax rates and credits......................... (5.6) (4.2) (8.0)
Other items.......................................................... -- (1.5) (0.6)
---- ---- ----
Effective Tax Rate................................................. 32.2% 33.2% 26.1%
==== ==== ====
Temporary differences and carryforwards which gave rise to the deferred tax
assets and liabilities included the following items:
DEFERRED TAX ASSETS: 1995 1994
------- -------
Operating loss and foreign tax credit carryforwards..................... $ 4,167 $ 5,551
Compensation and other employee benefits................................ 5,698 5,255
Inventory items......................................................... 4,446 4,563
Restructuring expenses.................................................. 550 1,124
Deferred income......................................................... 1,711 486
Book reserves and other items........................................... 2,501 1,339
------- -------
19,073 18,318
Valuation allowance..................................................... (4,700) (5,551)
------- -------
14,373 12,767
------- -------
DEFERRED TAX LIABILITIES:
Depreciation and amortization........................................... 11,485 12,441
Inventory items......................................................... 3,364 3,455
Other items............................................................. 5,613 5,667
------- -------
20,462 21,563
------- -------
NET DEFERRED TAX LIABILITY................................................ $(6,089) $(8,796)
======= =======
The valuation allowance primarily represents foreign loss and foreign tax
credit carryforwards for which utilization is uncertain. The majority of the
foreign losses may be carried forward indefinitely; however, the foreign tax
credit carryforwards expire in 1996 and 1997.
Income taxes paid during 1995, 1994 and 1993 were $12,280, $9,191 and
$5,080, respectively.
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32
The Company's policy is to remit earnings from foreign subsidiaries only to
the extent any resultant foreign income taxes are creditable in the US.
Accordingly, the Company does not currently provide for the additional US and
foreign income taxes which would become payable upon remission of undistributed
earnings of foreign subsidiaries. Undistributed earnings on which additional
income taxes have not been provided amounted to approximately $33,000 at August
31, 1995. If all such undistributed earnings were remitted, an additional
provision for income taxes of approximately $2,400 would have been necessary as
of August 31, 1995.
Earnings from continuing operations before income taxes from non-US
operations were $16,156, $12,041 and $2,293 for 1995, 1994 and 1993,
respectively.
NOTE M -- SEGMENT INFORMATION
The Company's operations are classified into three business segments:
Distributed Products, Engineered Solutions and Wright Line. Distributed
Products, consisting of Enerpac and GB Electrical, is involved in the
manufacture and distribution of tools and consumables to the construction,
retail and general industrial markets. Engineered Solutions, which consists of
Barry Controls, Power-Packer and APITECH, focuses on high-volume technology
products for OEM customers in the transportation, industrial, defense and
aerospace markets. Wright Line develops, manufactures and sells technical
furniture solutions for offices and laboratories.
Summarized financial information by business segment is as follows:
NET SALES: 1995 1994 1993
-------- -------- --------
Distributed Products.......................................... $264,823 $222,076 $212,924
Engineered Solutions.......................................... 192,219 162,296 147,564
Wright Line................................................... 70,016 49,272 38,239
-------- -------- --------
Totals...................................................... $527,058 $433,644 $398,727
======== ======== ========
OPERATIONS BEFORE INCOME TAXES:
Distributed Products.......................................... $ 37,379 $ 32,023 $ 29,739
Engineered Solutions.......................................... 15,200 12,314 4,526
Wright Line................................................... 8,587 4,242 (2,372)
General corporate and other................................... (24,293) (23,281) (22,303)
-------- -------- --------
Totals...................................................... $ 36,873 $ 25,298 $ 9,590
======== ======== ========
DEPRECIATION:
Distributed Products.......................................... $ 4,826 $ 4,165 $ 3,855
Engineered Solutions.......................................... 7,800 7,346 7,631
Wright Line................................................... 2,406 2,761 3,329
General corporate and other................................... 55 42 38
-------- -------- --------
Totals...................................................... $ 15,087 $ 14,314 $ 14,853
======== ======== ========
CAPITAL EXPENDITURES:
Distributed Products.......................................... $ 6,440 $ 5,917 $ 4,884
Engineered Solutions.......................................... 6,321 5,957 6,159
Wright Line................................................... 2,955 769 753
General corporate and other................................... 270 64 421
-------- -------- --------
Totals...................................................... $ 15,986 $ 12,707 $ 12,217
======== ======== ========
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33
AUGUST 31,
--------------------------------
ASSETS: 1995 1994 1993
-------- -------- --------
Distributed Products.......................................... $163,053 $148,737 $131,868
Engineered Solutions.......................................... 129,682 128,190 127,481
Wright Line................................................... 25,969 23,838 18,618
Net assets held for sale...................................... -- -- 12,035
General corporate............................................. 14,242 16,637 16,315
-------- -------- --------
Totals...................................................... $332,946 $317,402 $306,317
======== ======== ========
Summarized financial information by geographic region is as follows:
NET SALES: 1995 1994 1993
-------- -------- --------
North America................................................. $323,015 $279,613 $259,692
Latin America................................................. 12,022 11,300 10,154
Europe........................................................ 136,813 99,215 87,346
Japan and Asia Pacific........................................ 55,208 43,516 41,535
-------- -------- --------
Totals...................................................... $527,058 $433,644 $398,727
======== ======== ========
OPERATIONS BEFORE INCOME TAXES:
North America................................................. $ 37,777 $ 32,672 $ 23,855
Latin America................................................. 954 512 1,662
Europe........................................................ 15,208 8,352 (820)
Japan and Asia Pacific........................................ 7,227 7,043 7,196
General corporate and other................................... (24,293) (23,281) (22,303)
-------- -------- --------
Totals...................................................... $ 36,873 $ 25,298 $ 9,590
======== ======== ========
AUGUST 31,
--------------------------------
ASSETS: 1995 1994 1993
-------- -------- --------
North America................................................. $192,032 $192,103 $183,412
Latin America................................................. 11,967 11,053 9,358
Europe........................................................ 77,505 64,919 57,927
Japan and Asia Pacific........................................ 37,200 32,690 27,270
Net assets held for sale...................................... -- -- 12,035
General corporate............................................. 14,242 16,637 16,315
-------- -------- --------
Totals...................................................... $332,946 $317,402 $306,317
======== ======== ========
Operations before income taxes for each business and geographic segment do
not include general corporate expenses, amortization expense, interest expense
or currency exchange adjustments. Sales between business segments and geographic
areas are insignificant and are accounted for at prices intended to yield a
reasonable return to the selling affiliate. No single customer accounted for
more than 10% of total sales in 1995, 1994 or 1993. Export sales from domestic
operations were less than 10% in each of the periods presented.
Corporate assets, which are not allocated, represent principally cash,
prepaid taxes and investments.
NOTE N -- CONTINGENCIES AND LITIGATION
The Company had outstanding letters of credit totaling $1,300 and $1,640 at
August 31, 1995 and 1994, respectively. The letters of credit generally serve as
collateral for liabilities included in the Consolidated Balance Sheet.
The Company is involved in various legal proceedings which have arisen in
the normal course of its business. These legal proceedings typically include
product liability and patent claims. The Company has recorded reserves for loss
contingencies based on the specific circumstances of each case. Such reserves
are
33
34
recorded when the occurrence of loss is probable and can be reasonably
estimated. In the opinion of management, the resolution of these contingencies
will not have a materially adverse effect on the Company's financial condition
or results of operations.
The Company has facilities at numerous geographic locations, which are
subject to a range of environmental laws and regulations. Environmental costs
are expensed or capitalized depending on their future economic benefit.
Expenditures that have no future economic value are expensed. Liabilities are
recorded when environmental remediation is probable, and the costs can be
reasonably estimated. Although the level of future expenditures for
environmental remediation is impossible to determine with any degree of
certainty, it is management's opinion that such costs will not have a material
effect on the Company's financial position. Environmental remediation accruals
of $573 and $567 were included in the Consolidated Balance Sheet at August 31,
1995 and 1994, respectively.
NOTE O -- SUBSEQUENT EVENT
On September 29, 1995, the Company completed the acquisition of
substantially all of the assets and certain liabilities of Vision Plastics
Manufacturing Company ("Vision"). Certain proprietary technology rights and
patents related to the business are to be acquired in a separate transaction
that is expected to close in January, 1996. Total consideration for the two
transactions is approximately $21,500, and will be funded by proceeds from
borrowings under existing credit facilities. Vision, based in San Diego,
California, manufactures plastic cable ties which are sold through electrical
wholesale, retail and OEM channels.
34
35
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
DEDUCTIONS
ADDITIONS --------------------
------------------------------------ ACCOUNTS
BALANCE AT CHARGED TO WRITTEN OFF BALANCE AT
BEGINNING COSTS AND NET LESS END OF
DESCRIPTION OF PERIOD EXPENSES ACQUIRED RECOVERIES OTHER PERIOD
- - ------------------------------------- ---------- ---------- -------- ----------- ----- ----------
(DOLLARS IN THOUSANDS)
Deducted from assets to which they
apply:
Allowance for losses -- trade
accounts receivable
August 31, 1995.................... $3,131 $1,255 -- $ 793 -- $3,593
====== ====== == ====== == ======
August 31, 1994.................... $3,053 $1,379 -- $ 1,301 -- $3,131
====== ====== == ====== == ======
August 31, 1993.................... $3,412 $ 739 -- $ 1,098 -- $3,053
====== ====== == ====== == ======
Allowance for losses -- inventory
August 31, 1995.................... $6,268 $5,413 -- $ 3,310 -- $8,371
====== ====== == ====== == ======
August 31, 1994.................... $4,854 $3,998 -- $ 2,584 -- $6,268
====== ====== == ====== == ======
August 31, 1993.................... $5,377 $2,030 -- $ 2,553 -- $4,854
====== ====== == ====== == ======
35
36
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.
APPLIED POWER INC.
(Registrant)
By: /s/ ROBERT C. ARZBAECHER
------------------------------------
Robert C. Arzbaecher
Vice President and Chief Financial
Officer
Dated: November 16, 1995
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard G. Sim and Robert C. Arzbaecher, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this report, and to
file the same, with all and any other regulatory authority, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
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.*
SIGNATURE TITLE
- - ------------------------------------- ----------------------------------------------------
/s/ RICHARD G. SIM Chairman of the Board, President and Chief Executive
- - ------------------------------------- Officer; Director
Richard G. Sim
/s/ ROBERT C. ARZBAECHER Vice President and Chief Financial Officer
- - ------------------------------------- (Principal Financial Officer)
Robert C. Arzbaecher
/s/ ANDREW G. LAMPEREUR Controller (Principal Accounting Officer)
- - -------------------------------------
Andrew G. Lampereur
/s/ H. RICHARD CROWTHER Director
- - -------------------------------------
H. Richard Crowther
/s/ JACK L. HECKEL Director
- - -------------------------------------
Jack L. Heckel
/s/ RICHARD M. JONES Director
- - -------------------------------------
Richard M. Jones
/s/ RICHARD A. KASHNOW Director
- - -------------------------------------
Richard A. Kashnow
/s/ L. DENNIS KOZLOWSKI Director
- - -------------------------------------
L. Dennis Kozlowski
/s/ RAYMOND S. TROUBH Director
- - -------------------------------------
Raymond S. Troubh
- - -------------------------
* Each of the above signatures is affixed as of November 16, 1995
36
37
APPLIED POWER INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED AUGUST 31, 1995
INDEX TO EXHIBITS
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
- - ------- ------------------------------------- ------------------------------------- --------
3.1 (a) Amended and Restated Articles of Exhibit 19.1(a) to Form 10-Q for
Incorporation (as adopted January 8, quarter ended February 28, 1990
1987) ("2/28/90 10-Q")
(b) Articles of Amendment to Amended Exhibit 19.1(b) to 2/28/90 10-Q
and Restated Articles of
Incorporation, amending Sections 3.1
and 3.2 of Article III and Article IV
(adopted January 13, 1990)
3.2 Amended and Restated By-Laws (as last X
amended by amendment to Section 3.01
increasing the number of directors to
seven, adopted November 7, 1995)
4 +
4.1 Articles III, IV and V of Amended and See Exhibit 3.1 above
Restated Articles of Incorporation,
as amended
4.2 Agreement for Purchase and Sale, Exhibit 19.2(a)-(g) to Form 10-Q for
dated August 29, 1990, between quarter ended May 31, 1991
Minnesota Mining and Manufacturing
Company and Applied Power Inc., and
seven related Leases, each dated
April 29, 1991, between Bernard
Garland and Sheldon Garland, d/b/a
Garland Enterprises, as Landlord, and
Applied Power Inc., as Tenant
4.3 Multicurrency Credit Agreement, dated X
as of August 22, 1995 between Applied
Power Inc. and Applied Power Finance
S.A., as borrowers, various financial
institutions, as lenders, Bank of
America National Trust and Savings
Association, as agent, and BA
Securities, Inc., as arranger
- - ---------------
+ Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant agrees
to furnish to the Securities and Exchange Commission upon request a copy of
any unfiled instruments, or any unfiled exhibits or schedules to filed
instruments, defining the rights of security holders.
37
38
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
- - ------- ------------------------------------- ------------------------------------- --------
4.4 Amended and Restated Receivables X
Purchase Agreement, dated as of
August 30, 1995, between Applied
Power Inc., Barry Wright Corporation,
Wright Line Inc., GB Electrical,
Inc., and certain other subsidiaries
from time to time parties thereto, as
sellers, and PNC Bank, National
Association, and other financial
institutions from time to time
parties thereto, as purchasers
101* Employment Agreement dated May 9, Exhibit 10.1 to Form 10-K for the
1994 between Applied Power Inc. and fiscal year ended August 31, 1994
Richard G. Sim (superseding ("1994 10-K")
Employment Agreement dated July 5,
1985, as amended)
10.2* (a) Applied Power Inc. 1985 Stock Exhibit 10.2(a) to Form 10-K for
Option Plan adopted by Board of fiscal year ended August 31, 1989
Directors on August 1, 1985 and ("1989 10-K")
approved by shareholders on January
6, 1986, as amended
(b) Amendment adopted by Board of Exhibit 10.2(b) to 1989 10-K
Directors on November 8, 1989 and
approved by shareholders on January
13, 1990
(c) Amendment adopted by Board of Exhibit 10.2(c) to 1990 10-K for
Directors on August 9, 1990 fiscal year ended August 31, 1990
("1990 10-K")
10.3* (a) Applied Power Inc. 1987 Exhibit 10-8 to Form 10-K for fiscal
Nonqualified Stock Option Plan year ended August 31, 1987
adopted by Board of Directors on
November 3, 1987 and approved by
shareholders January 7, 1988
(b) Amendment adopted by Board of See Exhibit 10.2(b)
Directors on November 8, 1989 and
approved by shareholders on January
13, 1990
10.4* (a) Applied Power Inc. 1990 Stock Exhibit A to Proxy Statement dated
Option Plan, adopted by Board of December 5, 1990 for 1991 Annual
Directors on August 9, 1990, and Meeting of Shareholders
approved by shareholders on January
7, 1991
(b) Amendment adopted by Board of Exhibit 10.5(b) to Form 10-K for
Directors on August 10, 1992, and fiscal year ended August 31, 1992
approved by shareholders on January
7, 1993
10.5* (a) Description of Fiscal 1995 Exhibit 10.6 to 1994 10-K
Management Bonus Arrangement
- - ---------------
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
38
39
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
- - ------- ------------------------------------- ------------------------------------- --------
10.6* Description of Fiscal 1996 Management X
Bonus Arrangement
10.7* (a) Applied Power Inc. 1989 Outside Exhibit 10.7 to 1989 10-K
Directors' Stock Option Plan adopted
by Board of Directors on November 8,
1989 and approved by shareholders on
January 13, 1990
(b) Amendment adopted by Board of Exhibit 10.7(b) to 1990 10-K
Directors on November 9, 1990, and
approved by shareholders on January
7, 1991
108* Outside Directors' Deferred X
Compensation Plan
11 Statement regarding Computation of X
Earnings per Share
21 Subsidiaries of the Registrant X
23 Consent of Deloitte & Touche LLP X
24 Power of Attorney See Signature Page of this report
27 Financial Data Schedule X
- - ---------------
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
39