Back to GetFilings.com
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 10-K
(MARK ONE)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
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 Number 1-4462
-----------------
STEPAN COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-1823834
(State or other (I.R.S.
jurisdiction Employer Identification
of incorporation or Number)
organization)
Edens and Winnetka Road, 60093
Northfield, Illinois (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number including area code: 847-446-7500
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
------------------- ------------------------
Common Stock, $1 par value New York Stock Exchange
Chicago Stock Exchange
5 1/2% Convertible
Preferred Stock, no par New York Stock Exchange
value Chicago Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. [_].
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ____.
Aggregate market value at February 28, 2002, of voting stock held by
nonaffiliates of the registrant: $148,005,000*
Number of shares outstanding of each of the issuer's classes of common stock
as of February 28, 2002:
Outstanding at February
Class 28, 2002
----- -----------------------
Common Stock, $1 par value 9,263,125
Documents Incorporated by Reference
Part of Form 10-K Document Incorporated
----------------- ---------------------
Part I, Item 1 2001 Annual Report to
Stockholders
Part II, Items 5-8 2001 Annual Report to
Stockholders
Part III, Items 10-12 Proxy Statement dated
March 28, 2002
*Based on reported ownership by all directors, officers and beneficial
owners of more than 5% of registrant's voting stock. However, this
determination does not constitute an admission of affiliate status for any of
these holders.
================================================================================
PART I
Item 1. Business
Stepan Company and its subsidiaries (the "company") produce specialty and
intermediate chemicals which are sold to other manufacturers and then made into
a variety of end products. The company has three reportable segments:
surfactants, polymers and specialty products. Surfactants refer to chemical
agents which affect the interaction between two surfaces; they can provide
actions such as detergency (i.e., the ability of water to remove soil from
another surface), wetting and foaming, dispersing, emulsification (aiding two
dissimilar liquids to mix), demulsification and viscosity modifications.
Surfactants are the basic cleaning agent in detergents for washing clothes,
dishes, carpets, fine fabrics, floors and walls. Surfactants are also used for
the same purpose in shampoos and conditioners, toothpastes, cosmetics and other
personal care products. Commercial and industrial applications include
emulsifiers for agricultural products, emulsion polymers such as floor polishes
and latex foams and coatings, wetting and foaming agents for wallboard
manufacturing and surfactants for enhanced oil recovery. Polymers, which
included phthalic anhydride, polyols and polyurethane foam systems, are used in
plastics, building materials and refrigeration industries. Polymers are also
used in coating, adhesive, sealant and elastomer applications. Specialty
products sells chemicals used in food, flavoring and pharmaceutical
applications.
MARKETING AND COMPETITION
Principal markets for surfactants are manufacturers of detergents, shampoos,
lotions, toothpastes and cosmetics. In addition, surfactants are sold to the
producers of emulsifiers and lubricating products. The company also is a
principal provider of polymers used in construction, refrigeration, automotive,
boating and other consumer product industries. Specialty products are used
primarily by food and pharmaceutical manufacturers.
The company does not sell directly to the retail market, but sells to a wide
range of manufacturers in many industries and has many competitors. The
principal methods of competition are product performance, price and
adaptability to the specific needs of individual customers. These factors allow
the company to compete on a basis other than price alone, reducing the severity
of competition as experienced in the sales of commodity chemicals having
identical performance characteristics. The company is a leading merchant
producer of surfactants in the United States. In the case of surfactants, much
of the company's competition comes from several large national and regional
producers and the internal divisions of larger companies. In the manufacture of
polymers, the company competes with the chemical divisions of several large
companies, as well as with other small specialty chemical manufacturers. In
recent years, the company has also faced periodic competition from foreign
imports of phthalic anhydride. In specialty products, the company competes with
several large firms plus numerous small companies.
MAJOR CUSTOMER AND BACKLOG
The company does not have any one single customer whose business represents
more than 10 percent of the company's consolidated revenue. Most of the
company's business is essentially on the "spot delivery basis" and does not
involve a significant backlog. The company does have contract arrangements with
certain customers, but purchases are generally contingent on purchaser
requirements.
ENERGY SOURCES
Substantially all of the company's manufacturing plants operate on
electricity and interruptable gas purchased from local utilities. During peak
heating demand periods, gas service to all plants may be temporarily
interrupted for varying periods ranging from a few days to several months. The
plants operate on fuel oil during these periods of interruption. The company
has not experienced any plant shutdowns or adverse effects upon its business in
recent years that were caused by a lack of available energy sources.
1
RAW MATERIALS
The most important raw materials used by the company are of a petroleum or
vegetable nature. For 2002, the company has commitments from suppliers to cover
its forecasted requirements and is not substantially dependent upon any one
supplier.
RESEARCH AND DEVELOPMENT
The company maintains an active research and development program to assist
in the discovery and commercialization of new knowledge with the intent that
such effort will be useful in developing a new product or in bringing about a
significant improvement to an existing product or process. Total expenses for
research and development during 2001, 2000 and 1999 were $13.7 million, $13.4
million, and $13.1 million, respectively. The balance of expenses reflected on
the Consolidated Statements of Income relates to technical services, which
include routine product testing, quality control and sales support service.
ENVIRONMENTAL COMPLIANCE
Compliance with applicable federal, state and local regulations regarding
the discharge of materials into the environment, or otherwise relating to the
protection of the environment, resulted in capital expenditures by the company
of approximately $1.1 million during 2001. Such capital expenditures in 2002
should approximate $1.5 to $2.0 million. These expenditures represented
approximately three percent of the company's capital expenditures in 2001 and
are expected to be approximately five percent in 2002. These expenditures, when
incurred, are depreciated and charged on a straight-line basis to pre-tax
earnings over their estimated useful lives, which is typically 10 years.
Compliance with such regulations is not expected to have a material adverse
effect on the company's earnings and competitive position in the foreseeable
future.
EMPLOYMENT
At December 31, 2001 and 2000, the company employed worldwide 1,491 and
1,387 persons, respectively.
FOREIGN OPERATIONS
See Note 13, Segment Reporting, in the company's 2001 Annual Report to
Stockholders which is incorporated by reference herein.
SEGMENTS
See Note 13, Segment Reporting, in the company's 2001 Annual Report to
Stockholders which is incorporated by reference herein.
Item 2. Properties
The company's corporate headquarters and central research laboratories are
located in Northfield, Illinois. The Northfield facilities contain
approximately 70,000 square feet on an eight acre site. In addition, the
company leases 49,000 square feet of office space in a nearby office complex.
Stepan Canada maintains a leased sales office in Mississagua, Canada. Stepan
Mexico maintains a leased sales office in Mexico City, Mexico.
Surfactants are produced at four plants in the United States and six wholly
owned subsidiaries: one in France, United Kingdom, Canada, Mexico, Colombia and
Germany. The principal plant is located on a 626 acre site at Millsdale
(Joliet), Illinois. A second plant is located on a 39 acre tract in Fieldsboro,
New Jersey. West Coast operations are conducted on an eight acre site in
Anaheim, California. A fourth plant is located on a 175 acre site in Winder,
Georgia. The plant, laboratory and office of Stepan Europe are located on a 20
acre site near
2
Grenoble, France. Stepan Canada, Inc. is located on a 70 acre leased, with an
option to purchase, site in Longford Mills, Ontario, Canada. Stepan Mexico is
located on a 13 acre site in Matamoros, Mexico. Stepan Germany is located on a
five acre site in Cologne, Germany. Stepan UK Limited is located on a five acre
site in Stalybridge (Manchester), United Kingdom. Stepan Colombia is located on
a five acre site in Manizales, Colombia. The phthalic anhydride, polyurethane
systems and polyurethane polyols plants are also located at Millsdale.
Specialty products are mainly produced at a plant located on a 19 acre site in
Maywood, New Jersey.
The company owns all of the foregoing facilities except the leased office
space and Canadian plant site mentioned above. The company believes these
properties are adequate for its operations.
Item 3. Legal Proceedings
As reported previously, the company's site in Maywood, New Jersey and
property formerly owned by the company adjacent to its current site, were
listed on the National Priorities List in September 1993 pursuant to the
provisions of the Comprehensive Environmental Response Compensation and
Liabilities Act (CERCLA) because of certain alleged chemical contamination.
Pursuant to an Administrative Order on Consent entered into between the United
States Environmental Protection Agency (USEPA) and the company for property
formerly owned by the company, and the issuance of an order by USEPA to the
company for property currently owned by the company, the company completed a
Remedial Investigation Feasibility Study (RI/FS) in 1994. In addition, the
company submitted an FS Addendum to USEPA in October 2000 and its response to
USEPA's comments in September 2001. Discussions between USEPA and the company
are continuing and the company has submitted additional information regarding
the remediation. The company is awaiting the issuance of a Record of Decision
(ROD) from USEPA relating to the currently owned and formerly owned company
property and the proposed remediation. The final ROD will be issued sometime
after the public comment period.
In 1985, the company entered into a Cooperative Agreement with the United
States of America represented by the Department of Energy (Agreement). Pursuant
to this Agreement, the Department of Energy (DOE) took title to radiological
contaminated materials and was to remediate, at its expense, all radiological
waste on the company's property in Maywood, New Jersey. The Maywood property
(and portions of the surrounding area) was remediated by the DOE under the
Formerly Utilized Sites Remedial Action Program, a federal program under which
the U.S. Government undertook to remediate properties which were used to
process radiological material for the U.S. Government. In 1997, responsibility
for this clean-up was transferred to the United States Army Corps of Engineers
(USACE). On January 29, 1999, the company received a copy of a USACE Report to
Congress dated January 1998 in which the USACE expressed their intention to
evaluate, with the USEPA, whether the company and/or other parties might be
responsible for cost recovery or contribution claims related to the Maywood
site. Subsequent to the issuance of that report, the USACE advised the company
that it had requested legal advice from the Department of Justice as to the
impact of the Agreement.
By letter dated July 28, 2000, the Department of Justice advised the company
that the USACE and USEPA had referred to the Justice Department claims against
the company for response costs incurred or to be incurred by the USACE, USEPA
and the DOE in connection with the Maywood site and the Justice Department
stated that the United States is entitled to recovery of its response costs
from the company under CERCLA. The letter referred to both radiological and
non-radiological hazardous waste at the Maywood site and stated that the United
States has incurred unreimbursed response costs to date of $138 million. Costs
associated with radiological waste at the Maywood site, which the company
believes represent all but a small portion of the amount referred to in the
Justice Department letter, could be expected to aggregate substantially in
excess of that amount. In the letter, the Justice Department invited the
company to discuss settlement of the matter in order to avoid the need for
litigation. The company believes that its liability, if any, for such costs has
been resolved by the aforesaid Agreement. Despite the fact that the company
continues to believe that it has no liability to the United States for such
costs, discussions with the Justice Department are currently ongoing to attempt
to resolve this matter.
The company believes it has adequate reserves for claims associated with the
Maywood site. However, depending on the results of the ongoing discussions
regarding the Maywood site, the final cost of the remediation could differ from
the current estimates.
3
As reported previously, the company has been named as a potentially
responsible party (PRP) in the case USEPA v. Jerome Lightman (92 CV 4710 D. N.
J.) which involves the Ewan and D'Imperio Superfund Sites located in New
Jersey. Trial on the issue of the company's liability at these sites was
completed in March 2000. The company is awaiting a decision from the court. If
the company is found liable at either site, a second trial as to the company's
allocated share of clean-up costs at these sites will likely be held in 2002 or
2003. The company believes it has adequate defenses to the issue of liability.
In the event of an unfavorable outcome related to the issue of liability, the
company believes it has adequate reserves. On a related matter, the company has
filed an appeal to the United States Third Circuit Court of Appeals objecting
to the lodging of a partial consent decree in favor of the United States
Government in this action. Under the partial consent decree, the government
recovered past costs at the site from all PRPs including the company. The
company paid its assessed share but by objecting to the partial consent decree,
the company is seeking to recover back the sums it paid.
Regarding the D'Imperio Superfund Site, USEPA has indicated it will seek
penalty claims against the company based on the company's alleged noncompliance
with the modified Unilateral Administrative Order. The company is currently
negotiating with USEPA to settle its proposed penalty against the company but
does not believe that a settlement, if any, will have a material impact on the
financial condition of the company. In addition, the company also received
notice from the New Jersey Department of Environmental Protection (NJDEP) dated
March 21, 2001, that NJDEP has indicated it will pursue cost recovery against
the alleged responsible parties, including the company. The NJDEP's claims
include costs related to remediation of the D'Imperio Superfund Site in the
amount of $434,405.53 and alleged natural resource damages in the amount of
$529,584.00 (as of November 3, 2000). The NJDEP has proposed settling such
claims, with the company being responsible for a portion of these costs.
Although the company has negotiated a share of its costs and damages up to a
maximum amount, any payments made by the company are subject to reallocation
after the allocation phase of the above-identified trial, if any. The company
does not believe that a settlement, if any, will have a material impact on the
financial condition of the company.
As reported previously, the company received a Section 104(e) Request for
Information from USEPA dated March 21, 2000, regarding the Lightman Drum
Company Site located in Winslow Township, New Jersey. The company responded to
this request on May 18, 2000. In addition, the company received a Notice of
Potential Liability and Request to Perform RI/FS dated June 30, 2000, from
USEPA. The company has decided that it will participate in the performance of
the RI/FS. However, based on the current information known regarding this site,
the company is unable to predict what its liability, if any, will be for this
site.
Item 4. Results of Votes of Security Holders
No matters were submitted to stockholders during the fourth quarter of the
fiscal year ended December 31, 2001.
Executive Officers of the Registrant
Executive Officers are elected annually by the Board of Directors at the
first meeting following the Annual Meeting of Stockholders to serve until the
next annual meeting of the Board and until their respective successors are duly
elected and qualified.
Effective February 15, 1999, F. Quinn Stepan, Jr., was elected President and
Chief Operating Officer. He was previously Vice President and General
Manager--Surfactants as of January 1, 1997, Vice President--Global Laundry and
Cleaning Products as of May 1996 and Director--Business Management as of May
1992. Mr. F. Quinn Stepan, Sr., has served the company as Chairman and Chief
Executive Officer since 1984. He served as President and Chief Operating
Officer from 1973 until February 15, 1999.
Effective February 16, 1999, John V. Venegoni was elected Vice President and
General Manager--Surfactants. From May 1992 until May 1996, he served as a
Senior Business Manager--Consumer Products. From May 1996 until February 16,
1999, he served as Director--Global Personal Care.
4
Effective January 1, 2001, Robert J. Wood was elected Vice President and
General Manager--Polymers. From April 1988 until March 1996, he served as a
Business Manager--Polyols. From March 1996 until January 1, 2001, he served as
Director--Polyols.
Mickey Mirghanbari retired on June 30, 2001. Before the retirement, he
served as Vice President-- Manufacturing and Engineering.
Earl H. Wagener retired on August 31, 2001. Before the retirement, he served
as Vice President--Research and Development.
Effective March 7, 2001, F. Samuel Eberts III was elected Vice President,
General Counsel and Secretary. From 1992 until 1996, he served as an Assistant
General Counsel for Baxter International Inc. From 1996 until 1998, he served
as an Associate General Counsel for Allegiance Healthcare Corporation. From
1998 until 2001, he served as an Assistant General Counsel for Cardinal Health
Inc.
Effective July 1, 2001, Anthony J. Zoglio was elected Vice
President--Manufacturing and Engineering. From 1991 until June 1, 1999, he
served as Millsdale Plant Manager. From June 1, 1999 to July 1, 2001, he served
as Vice President, Plant Operations.
Effective February 11, 2002, James E. Hurlbutt was elected Vice President
and Corporate Controller. From August 7, 1996 until February 11, 2002, he
served as Controller--International and Tax Accounting.
All other executive officers have remained in their current capacity for
over five years.
The Executive Officers of the company, their ages as of February 28, 2002,
and certain other information are as follows:
Year First
Elected
Name Age Title Officer
---- --- ----- ----------
F. Quinn Stepan..... 64 Chairman and Chief Executive Officer 1967
James A. Hartlage... 64 Senior Vice President--Technology and Operations 1980
Walter J. Klein..... 55 Vice President--Finance 1985
F. Quinn Stepan, Jr. 41 President and Chief Operating Officer 1997
John V. Venegoni.... 43 Vice President and General Manager--Surfactants 1999
F. Samuel Eberts III 41 Vice President, General Counsel and Secretary 2001
Robert J. Wood...... 44 Vice President and General Manager--Polymers 2001
Anthony J. Zoglio... 56 Vice President--Manufacturing and Engineering 2001
James E. Hurlbutt... 48 Vice President and Corporate Controller 2002
PART II
Item 5. Market for Registrant's Common Stock and Related Security Holder Matters
(a) The company's common stock is listed and traded on both the New York
Stock Exchange and the Chicago Stock Exchange. See Quarterly Stock Data in the
company's 2001 Annual Report to Stockholders for market price information which
is incorporated by reference herein.
The company's 5 1/2 percent convertible preferred stock is listed and traded
on the New York Stock Exchange and the Chicago Stock Exchange. See Note 7 in
the company's 2001 Annual Report to Stockholders for the description of the
preferred stockholders' rights which is incorporated by reference herein.
From time to time the company purchases shares of its common stock in the
open market and in block transactions from dealers for the purpose of funding
option grants under its stock option plans and deferred compensation plans for
directors and officers.
5
(b) On February 28, 2002, there were 1,231 holders of common stock of the
company.
(c) See Quarterly Stock Data in the company's 2001 Annual Report to
Stockholders for dividend information which is incorporated by reference
herein. Also see Note 4 in the company's 2001 Annual Report to Stockholders
which sets forth the restrictive covenants covering dividends.
Item 6. Selected Financial Data
See the Five Year Summary in the company's 2001 Annual Report to
Stockholders for selected financial information which is incorporated by
reference herein.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations and Quantitative and Qualitative Disclosures about Market
Risk
See Management's Discussion and Analysis of Financial Condition and Results
of Operations and Quantitative and Qualitative Disclosures about Market Risk in
the company's 2001 Annual Report to Stockholders which is incorporated by
reference herein.
Some information contained in the Management's Discussion and Analysis is
forward looking and involves risks and uncertainties. The results achieved this
year are not necessarily an indication of future prospects for the company.
Actual results in future years may differ materially. Potential risks and
uncertainties include, among others, fluctuations in the volume and timing of
product orders, changes in demand for the company's products, changes in
technology, continued competitive pressures in the marketplace, availability of
raw materials, foreign currency fluctuations and general economic conditions.
Item 8. Financial Statements and Supplementary Data
See the Consolidated Financial Statements, Notes to the Consolidated
Financial Statements and Auditors' Report in the company's 2001 Annual Report
to Stockholders.
See the Quarterly Financial Data in the company's 2001 Annual Report to
Stockholders for selected quarterly financial data, which is incorporated by
reference herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
See Accounting and Auditing Matters section of the Proxy Statement dated
March 28, 2002, which is incorporated by reference herein.
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Directors
See company's Proxy Statement dated March 28, 2002, for Directors of the
Registrant, which is incorporated by reference herein.
(b) Executive Officers
See Executive Officers of the Registrant in Part 1 above.
Item 11. Executive Compensation
See company's Proxy Statement dated March 28, 2002, which is incorporated by
reference herein.
6
Item 12. Security Ownership of Certain Beneficial Owners and Management
See company's Proxy Statement dated March 28, 2002, which is incorporated by
reference herein.
Item 13. Certain Relationships and Related Transactions
None
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) & (d) Financial Statements and Schedules
See the Index to the Consolidated Financial Statements and Supplemental
Schedule filed herewith.
(b) Reports on Form 8-K
None
(c) Exhibits
See Exhibit Index filed herewith.
7
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.
STEPAN COMPANY
/S/ WALTER J. KLEIN
By: _______________________________
Vice President, Finance
March 15, 2002
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.
/S/ F. QUINN STEPAN Chairman, Chief Executive March 15, 2002
- ----------------------------- Officer and Director
F. Quinn Stepan
/S/ F. QUINN STEPAN, JR. President, Chief Operating March 15, 2002
- ----------------------------- Officer and Director
F. Quinn Stepan, Jr.
/S/ WALTER J. KLEIN Vice President--Finance, March 15, 2002
- ----------------------------- Principal Financial and
Walter J. Klein Accounting Officer
/S/ JAMES A. HARTLAGE Senior Vice President-- March 15, 2002
- ----------------------------- Technology and Operations
James A. Hartlage and Director
/S/ THOMAS F. GROJEAN Director March 15, 2002
- -----------------------------
Thomas F. Grojean
/S/ PAUL H. STEPAN Director March 15, 2002
- -----------------------------
Paul H. Stepan
/S/ ROBERT D. CADIEUX Director March 15, 2002
- -----------------------------
Robert D. Cadieux
/S/ ROBERT G. POTTER Director March 15, 2002
- -----------------------------
Robert G. Potter
Walter J. Klein, pursuant to powers of attorney executed by each of the
directors and officers listed above, does hereby execute this report on behalf
of each of such directors and officers in the capacity in which the name of
each appears above.
WALTER J. KLEIN
March 15, 2002
8
INDEX TO THE
CONSOLIDATED FINANCIAL STATEMENTS
AND
SUPPLEMENTAL SCHEDULE
A copy of Stepan Company's Annual Report to Stockholders for the year ended
December 31, 2001, has been filed as an exhibit to this Annual Report on Form
10-K. These consolidated financial statements and the Auditors' Report thereon
are incorporated herein by reference.
Supplemental Schedule II--Allowance for Doubtful Accounts--to Consolidated
Financial Statements, which is required to comply with regulation S-X, and the
Auditors' report on such Supplemental Schedule of this Form 10-K.
Certain supplemental schedules are not submitted because they are not
applicable or not required, or because the required information is included in
the financial statements or notes thereto.
9
SUPPLEMENTAL SCHEDULE TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2001
AS REQUIRED TO COMPLY WITH REGULATION S-X
Schedule II--Allowance for Doubtful Accounts:
Below is an analysis of the allowance for doubtful accounts for the three
years ended December 31:
2001 2000 1999
------ ------ ------
(In Thousands)
Balance, Beginning of Year................. $3,154 $2,389 $2,263
Provision/(Benefit) charged to income... (156) 1,281 222
Accounts written off, net of recoveries. (726) (516) (96)
------ ------ ------
Balance, End of Year....................... $2,272 $3,154 $2,389
====== ====== ======
10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE
To Stepan Company:
We have audited in accordance with auditing standards generally accepted in
the United States, the financial statements included in Stepan Company's Annual
Report to Stockholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 11, 2002. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
supplemental schedule listed in the index of financial statements is the
responsibility of the company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 11, 2002
11
EXHIBIT INDEX
Exhibit
No. Description
- -------- -----------
(3)a Copy of the Certificate of Incorporation, and the Certificates of Amendment of Certificate of
Incorporation, dated May 6, 1968, April 20, 1972, April 16, 1973, December 2, 1983. Filed with the
Company's Annual Report on Form 10-K for the year ended December 31, 1983, and incorporated
herein by reference.
(3)a(1) Copy of Certificate of Amendment of Certificate of Incorporation, dated May 24, 1999. (Note 13)
(3)b Copy of the Bylaws of the company as amended through February 15, 1999. (Note 14)
(3)c Copy of Certificate of Amendment, dated April 28, 1993, to Article IV of Certificate of
Incorporation. (Note 7)
(3)d Copy of Certificate of Amendment, dated May 5, 1987, to Article X of Certificate of Incorporation.
(Note 1)
(4)h Copy of Loan Agreement, dated June 15, 1995, with Aid Association for Lutherans, the
Northwestern Mutual Life Insurance Company and The Mutual Life Insurance Company of New
York. (Note 10)
(4)i Copy of Revolving Credit and Term Loan Agreement, dated February 20, 1990, with The First
National Bank of Chicago and the amendment, dated March 21, 1990. (Note 3)
(4)m Copy of Second Amendment, dated September 20, 1991, amending Revolving Credit and Term Loan
Agreement, dated February 20, 1990 (see (4)i above). (Note 4)
(4)m(1) Copy of Third Amendment, dated December 29, 1992, amending Revolving Credit and Term Loan
Agreement, dated February 20, 1990 (see (4)i and (4)m above). (Note 8)
(4)m(2) Copy of Fourth Amendment, dated May 31, 1994, amending Revolving Credit and Term Loan
Agreement, dated February 20, 1990 (see (4)i, (4)m and (4)m(1) above). (Note 9)
(4)n(1) Copy of Certificate of Designation, Preferences and Rights of the 5 1/2% Convertible Preferred Stock,
without Par Value and the Amended Certificate, dated August 12, 1992 and April 28, 1993. (Note 7)
(4)n(2) Copy of Issuer Tender Offer Statement on Schedule 13E-4, dated August 13, 1992. (Note 6)
(4)n(3) Copy of Amendment No. 1 to Schedule 13E-4 (see also (4)n(2) above), dated September 23, 1992.
(Note 6)
(4)n(4) Copy of the company's Form 8-A, dated August 13, 1992. (Note 6)
(4)o Copy of Revolving Credit and Term Loan Agreement, dated January 9, 1998, with The First
National Bank of Chicago. (Note 11)
(4)o(1) Copy of Certificate of Amendment, dated March 12, 1999, amending Revolving Credit and Term
Loan Agreement, dated January 9, 1998. (Note 12)
(4)p Copy of Term Loan Agreement, dated October 1, 1998, with The Northwestern Mutual Life
Insurance Company and Connecticut General Life Insurance Company. (Note 14)
In accordance with 601(b)(4) (iii) of Regulation S-K, certain debt instruments are omitted, where the
amount of securities authorized under such instruments does not exceed 10% of the total
consolidated assets of the Registrant. Copies of such instruments will be furnished to the
Commission upon request.
(10)a Description of the 1965 Directors Deferred Compensation Plan. (Note 2)
Exhibit
No. Description
- ------- -----------
(10)b Copy of the 1969 Management Incentive Compensation Plan as amended and restated as of January 1,
1992. (Note 5)
(10)d Copy of the 1982 Stock Option Plan. (Note 2)
(10)e Copy of Leveraged Employee Stock Ownership Plan. (Note 3)
(10)f Copy of the company's 1992 Stock Option Plan. (Note 5)
(10)g Copy of the company's 2000 Stock Option Plan. (Note 15)
(13) Copy of the company's 2001 Annual Report to Stockholders.
(18) Letter re change in accounting principle for the year ended December 31, 1992. (Note 8)
(21) Subsidiaries of Registrant at December 31, 2001.
(23) Consent of Independent Public Accountants.
(24) Power of Attorney.
Notes To Exhibit Index
Note
No.
- ----
1.. Filed with the company's Annual Report on Form 10-K for the year ended December 31, 1987, and
incorporated herein by reference.
2.. Filed with the company's Annual Report on Form 10-K for the year ended December 31, 1988, and
incorporated herein by reference.
3.. Filed with the company's Annual Report on Form 10-K for the year ended December 31, 1989, and
incorporated herein by reference.
4.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991, and
incorporated herein by reference.
5.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992, and
incorporated herein by reference.
6.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1992, and
incorporated herein by reference.
7.. Filed with the company's Current Report on Form 8-K filed on April 28, 1993, and incorporated herein
by reference.
8.. Filed with the company's Annual Report on Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference.
9.. Filed with the company's Annual Report on Form 10-K for the year ended December 31, 1994, and
incorporated herein by reference.
10.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference.
11.. Filed with the company's Annual report on Form 10-K for the year ended December 31, 1997, and
incorporated herein by reference.
12.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, and
incorporated herein by reference.
Note
No.
- ----
13.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, and
incorporated herein by reference.
14.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1998, and
incorporated herein by reference.
15.. Filed with the company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1999, and
incorporated herein by reference.