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1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-313
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T H E L A M S O N & S E S S I O N S C O.
- - - - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 34-0349210
- - - - -------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
25701 Science Park Drive
Cleveland, Ohio 44122-7313
- - - - -------------------------------- ------------------------------------
(Address of principal executive (Zip Code)
offices)
216/464-3400
--------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered
---------------------------------- ----------------------------------
Common Shares, without par value New York Stock Exchange
---------------------------------- ----------------------------------
Pacific Stock Exchange
---------------------------------- ----------------------------------
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
The aggregate market value of the voting stock held as of February 1, 1995 by
non-affiliates of the registrant: $72,894,251.
As of February 1, 1995 the Registrant had outstanding 13,278,784 common shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1995 Annual Meeting of Shareholders are
incorporated by reference into Part III.
L1773 (02/23/95)
2
PART I
Item 1. - BUSINESS
The Lamson & Sessions Co. ("Company"), founded in 1866, is a diversified
manufacturer and supplier of a broad line of thermoplastic electrical and fluid
drainage products for major domestic markets and a producer of fasteners for
the aerospace industry. The markets for thermoplastic electrical conduit,
related fittings and accessories, wiring devices and sewer pipe include the
construction, utility and telecommunications industries; municipalities and
other government agencies; and contractors and do-it-yourself home remodelers.
Fasteners manufactured serve airframe and jet engine manufacturers in the
aerospace industry.
In May 1994, the Company completed the sale of its Midland Steel Division which
was engaged in the manufacture and sale of frame assemblies and components.
Proceeds from sale were utilized to reduce debt (see Note C, page 21 of this
report).
PRINCIPAL PRODUCTS AND MARKETS
The Company is a leading domestic producer of a broad line of thermoplastic
electrical conduit, wiring devices, and related fittings and accessories for
the construction, consumer (DIY), utility and telecommunications industries,
and manufactures and sells thermoplastic sewer pipe. The broad and
comprehensive lines of complimentary and compatible thermoplastic products are
carried by electrical and building supply wholesalers and retailers.
All of the Company's thermoplastic electrical products compete with and serve
as substitutes for similar metallic products, and its engineered sewer pipe
products compete with and serve as substitutes for clay, concrete, ductile
iron, cement asbestos and polyethylene products. The Company's thermoplastic
products offer several advantages over these other products. Specifically,
nonmetallic electrical conduit and related fittings and accessories are
generally less expensive, lighter and easier to install than metallic products.
Furthermore, thermoplastic conduit does not rust, corrode or conduct
electricity. Thermoplastic sewer pipe weighs less than substitute products, is
easier and more economical to install, does not degenerate due to sewer gases
as do some competing products, and eliminates avoidable problems which can be
caused by infiltration and exfiltration.
Four core markets are served, each of which has unique product and marketing
requirements. These markets are: (i) Industrial, Residential, Commercial and
Utility Construction (served by Carlon Electrical Products ("Electrical")) --
contractors engaged in the installation of electrical systems in industrial,
residential, commercial construction and electric power utility projects;
original equipment manufacturers who use components as subassemblies for their
own products and industrial companies who maintain or repair their own
facilities; (ii) Consumer (served by Lamson Home Products ("Home")) -- retail
consumers of electrical products who perform "do-it-yourself" home repairs and
small electrical contractors; (iii) Telecommunications (served by Carlon
Telecom Systems ("Telecom")) -- cable TV, telephone and telecommunications
companies and (iv) Engineered Sewer Products (served by Lamson Vylon Pipe
("Vylon")) -- various government and private builders of sewer and drainage
system. Additionally, the aircraft market serves airframe and jet engine
manufacturers.
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A breakdown of revenues as a percent of net sales related to significant classes of product by
major market segment for 1994, 1993 and 1992, respectively is as follows:
1994 1993 1992
--------------------- ----------------------- ---------------------
(In thousands)
Industrial,
Residential,
Commercial & Utility
Construction $ 149,863 52% $ 141,210 55% $ 139,033 55%
Consumer 49,463 17% 40,754 16% 39,498 15%
Telecommunications 44,603 16% 39,123 15% 37,569 15%
Engineered Sewer
Products 24,878 9% 21,744 8% 16,090 6%
Aircraft Parts 18,838 6% 16,741 6% 23,232 9%
---------- ---- ---------- ---- ---------- ----
$ 287,645 100% $ 259,572 100% $ 255,422 100%
========== ==== ========== ==== ========== ====
The following summarizes the principal products used in each of the four core
markets:
INDUSTRIAL, RESIDENTIAL, COMMERCIAL AND UTILITY CONSTRUCTION. The principal
products sold to this market include rigid conduit, flexible (electrical
nonmetallic tubing), fittings and accessories, outlet boxes, and other
products. Other products in this market also include thermoplastic spirally
extruded liquidtight conduit, which is used by industrial companies and
original equipment manufacturers requiring a watertight housing for electrical
cable, and a broad line of industrial nonmetallic enclosures comprised of
molded, non-corrosive boxes designed to enclose and protect devices such as
electrical controls, switches and industrial control panels.
CONSUMER. The products included in this market are products such as light
dimmers, fan speed controls, touch controls, door chimes and home security
systems. In addition, the Company supplies this market with products such as
outlet boxes, electrical conduit, liquidtight conduit and electrical fittings.
TELECOMMUNICATIONS. In this market products include (i) traditional smooth
wall communication duct and spacers used by telecommunication and CATV
industries to house electrical cable, (ii) duct systems designed to protect
underground fiber optic cables and improve the efficiency and space utilization
of existing duct systems.
ENGINEERED SEWER PRODUCTS. Principal products utilized by this market include
closed profile engineered sewer pipe used for direct burial and sliplining as
well as traditional solid wall sewer and drain pipe used in residential
construction of sanitary drainage systems, sewer main and highway underdrain
available in diameters ranging from 4 to 48 inches.
AIRCRAFT PARTS. The principal market served is the aircraft market, for which
special design high performance fasteners and spherical pivot bearings are
manufactured and sold primarily to domestic and foreign markets for use by
original equipment manufacturers.
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L1773 (02/23/95)
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COMPETITION
Each of the four core markets in which the Company is presently operating are
highly competitive based on service, price and quality. Most of the
competitors are either national or smaller regional manufacturers who compete
with limited product offerings. Unlike a majority of its competitors, the
Company manufactures a broad line of thermoplastic products, complementary
fittings and accessories, thus enabling it to offer its customers complete and
integrated systems.
Markets for the Company's aircraft parts are highly fragmented and include
several major competitors. The Company believes that it competes effectively
on the basis of price, product quality and delivery.
Certain of the Company's competitors have greater financial resources than the
Company.
DISTRIBUTION
The Company distributes its core products through a nationwide network of more
than 170 manufacturers' representatives. Currently, 3 of these manufacturers'
representatives inventory the Company's products. The Company has reduced the
number of inventory locations and has developed its own distribution centers.
In the aerospace unit, a combination of direct sales, manufacturer's
representatives and distributors are used.
RAW MATERIALS
The Company is a large purchaser of pipe grade polyvinyl chloride resin and has
historically been able to obtain adequate quantities. Raw materials for the
aerospace market consist mainly of carbon, alloy and stainless steels,
aluminum, zinc and other special metals that are purchased principally from
major domestic companies and are adequately available.
PATENTS AND TRADEMARKS
The Company owns various patents, patent applications, licenses, trademarks and
trademark applications relating to its products and processes. While the
Company considers that, in the aggregate, its patents, licenses and trademarks
are of importance in the operation of its business, it does not consider that
any individual patent, license or trademark, or any technically related group,
is of such importance that termination would materially affect its business.
SEASONAL FACTORS
The Company's four core business units experience seasonality caused
principally by a decrease in construction activity during the winter months.
They are subjected to the economic cycles affecting the construction industry.
The aerospace fastener unit is dependent on the economic cycles of the aircraft
market, although such impact should be reduced in the future, as the Company
expands into a broader range of market niches.
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L1773 (02/23/95)
5
MAJOR CUSTOMERS
Sales to Affiliated Distributors, a buying group not otherwise affiliated with
the Company, totalled approximately 12% of the Company's sales. No customer
exceeded 10% of net sales in 1993 or 1992.
BACKLOG
The Company's backlog of orders, believed firm, at the fiscal years ended was
as follows:
1994 1993 1992
----------- ----------- -----------
(In thousands)
$ 17,493 $ 26,598 $ 32,052
The Company does not believe that information concerning backlog is reflective
of the status of its business at any one point in time. Due to the nature of
the business within the Electrical, Telecom, Home and Vylon markets, the
Company typically ships its products within a short period after receipt of the
order. In the aerospace market, major customers generally issue blanket
purchase orders and then issue short-term releases against these purchase
orders. Therefore, at any point in time, backlog only includes the releases
that have been received for shipment of products against the blanket orders and
not the entire quantity represented by the blanket order. Approximately 6% of
the backlog at December 31, 1994, primarily in the aerospace unit, is not
expected to be delivered during 1995. The reduction in backlog from each
preceding year is attributable to the lower backlogs in the aerospace unit
reflecting the general weakness in that market.
RESEARCH AND DEVELOPMENT
The Company is engaged in an aggressive new product development program in an
effort to introduce new and innovative applications for thermoplastic products
for its existing core business units. The Company maintains a separate
research and development center in Cleveland, Ohio to facilitate the
introduction of new value-added products and improved manufacturing processes.
This activity during each of the last three years of Company sponsored research
and development activities totalled $3.4 million, $3.2 million and $3.3 million
in 1994, 1993 and 1992, respectively.
ENVIRONMENTAL REGULATIONS
The Company believes that its current operations and its use of property, plant
and equipment conform in all material respects to applicable environmental laws
and regulations presently in effect (See Notes C and G -- Notes to Consolidated
Financial Statements on pages 21 and 25 of this report). The Company has
facilities at numerous geographic locations, which are subject to a range of
federal, state and local environmental laws and regulations. Compliance with
these laws has, and will, require expenditures on a continuing basis.
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L1773 (02/23/95)
6
EMPLOYEES
At fiscal years ended, the Company had the following employees:
1994 1993 1992
------- ------- -------
1,325 1,425 1,510
FOREIGN OPERATIONS
The net sales, operating earnings, and assets employed outside the United
States are not significant. Export sales are approximately 1% of consolidated
net sales in each of the past three fiscal years and are made principally to
countries in North America.
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L1773 (02/23/95)
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Item 2. - PROPERTIES
The Company owns manufacturing and distribution facilities which are suitable
and adequate for the production and marketing of its products. The Company
owns executive and administrative offices which are located in Cleveland, Ohio
and occupy 68,000 square feet in a suburban office complex. In addition, the
Company also has research and development offices, located in Cleveland, Ohio
which occupy leased space of 27,000 square feet. Principal facilities are
located in the following cities:
Type of Operation Principal Approximate
and Location Products Square Feet
- - - - ------------ -------- -----------
Injection molding:
Clinton, Iowa Outlet boxes, enclosures and fittings 155,800
Clinton, Iowa Distribution Center 55,900
Bowling Green, Ohio Outlet boxes, enclosures,
fittings and large diameter 61,300
sewer pipe
Extrusion:
Woodland, California Rigid conduit, fluid 72,900
systems pipe, duct
and fittings
Woodland, California Distribution Center 40,800
High Springs, Florida Rigid conduit, duct, 112,500
sewer pipe and fittings
Aurora, Ohio Rigid conduit, flexible 143,400
conduit, duct, enclosure
assembly/modification and fittings
Oklahoma City, Oklahoma Rigid conduit, duct, fluid 165,600
systems pipe, large diameter
sewer pipe and fittings
Nazareth, Pennsylvania Rigid conduit, duct and sewer pipe 52,800
Pasadena, Texas Flexible conduit 46,200
Montreal, Canada Distribution Center 20,000
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L1773 (02/23/95)
8
Principal Approximate
Location Products Square Feet
- - - - -------- -------- ------------
Sylmar, California Special design high performance 104,000
fasteners, spherical pivot bearings
All of the Company's facilities listed in the above table are owned, except for
the Clinton, IA and Woodland, CA Distribution Centers and Montreal, Canada.
The Company presently utilizes substantially all of its facilities and operated
in 1994 at approximately 80% of productive capacity.
Item 3. - LEGAL PROCEEDINGS
On January 14, 1992 an action was filed against the Company by Ameritrust Co.
N.A. ("Plaintiff") in the U.S. District Court, Northern District of Ohio,
seeking to recover $7.3 million under the Comprehensive Environmental Response,
Compensation & Liability Act of 1980, as amended ("CERCLA") as well as under
state law theories of public nuisance, negligence and strict liability. The
plaintiff claims damages consisting of response costs incurred by the plaintiff
in remediating environmental contamination allegedly caused by the Company at a
manufacturing plant site which the Company sold in 1978 and which was acquired
by the plaintiff in 1985. The plaintiff also seeks prejudgment interest and
attorneys' fees. On May 21, 1992, the Court dismissed with prejudice the state
law claims for public nuisance, negligence and strict liability and ruled that
the plaintiff does not have the right to a contribution claim under CERCLA. On
June 9, 1992, the Company filed a Second Motion to Dismiss or in the Alternative
for Partial Summary Judgment alleging among other things, failure to comply
with certain mandatory federal notice requirements and that the remediation was
inconsistent with the national contingency plan as required by CERCLA. On
October 15, 1993, the Court denied the Company's Second Motion to Dismiss and
at the same time denied all pending motions filed by the Plaintiff. On April
29, 1994, the Company filed a Third-Party Complaint against Baker Material
Handling Company seeking contribution. On May 27, 1994, the Company filed its
Answer to the Second Amended Complaint, and the Court has set a discovery
cut-off of February 28, 1995. On November 24, 1994, the Company filed a
declaratory judgment action in the Cuyahoga County Common Pleas Court against
its liability insurer seeking defense and indemnity costs associated with the
action brought by Ameritrust. The outcome of this litigation is not expected
to have a material effect on the Company's financial position.
Item 4. - SUBMISSION OF MATTERS TO SECURITY HOLDERS.
None.
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L1773 (02/23/95)
9
EXECUTIVE OFFICERS OF THE
REGISTRANT
JOHN B. SCHULZE MELVIN W. JOHNSON
Chairman, President and Chief Executive Officer. Vice President
Chairman, President and Chief Executive Officer since Vice President since February 1991. Previously was Vice
January 1990. Age 57. President -- Engineering January 1985 - January 1991.
Age 58.
JAMES J. ABEL
Executive Vice President, Secretary, Treasurer and Chief MARK R. BUCK
Financial Officer.
Vice President - Carlon Electrical Products
Executive Vice President, Secretary, Treasurer and Chief
Financial Officer since September 1994. Previously was Vice President - Carlon Electrical Products since October
Executive Vice President, Treasurer and Chief Financial 1983. Age 41.
Officer February 1993 - September 1994. Previously was
Senior Vice President, Treasurer and Chief Financial
Officer December 1990 - February 1993. Previously was A. CORYDON MEYER
Senior Vice President & Chief Financial Officer of The
Gibson-Homans Company. Age 49. Vice President - Lamson Home Products
CHARLES E. ALLEN Vice President - Lamson Home Products since March 1990.
Age 40.
Senior Vice President
Senior Vice President since September 1989. Age 54.
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L1773 (02/23/95)
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PART II
Item 5. - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange and Pacific
Stock Exchange. High and low sales prices for the common stock are included in
Note L -- Notes to Consolidated Financial Statements on page 29 of this report.
No dividends were paid in 1994, 1993 or 1992. The approximate number of
shareholders of record of the Company's Common Stock at February 1, 1995 was
2,360. Information concerning restrictions on the Company's ability to pay
dividends is contained in Note B -- Notes to Consolidated Financial Statements
on pages 20 and 21 of this report.
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L1773 (02/23/95)
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Item 6. - SELECTED FINANCIAL DATA
FIVE-YEAR FINANCIAL SUMMARY
FISCAL YEARS ENDED
---------------------------------------------------------------------------
(In thousands except per share data, shareholders 1994 1993 1992 1991 1990
and employees)
- - - - ------------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net Sales $ 287,645 $ 259,572 $ 255,422 $ 284,241 $ 289,142
Cost of Products Sold 235,876 221,405 220,901 251,010 244,214
GROSS MARGIN 51,769 38,167 34,521 33,231 44,928
Selling, General and Administrative Expenses 40,840 35,500 33,404 36,224 36,098
Non-Recurring Charges 4,602 6,696
OPERATING EARNINGS (LOSS) 10,929 2,667 (3,485) (9,689) 8,830
Net Interest Expense 6,673 5,784 5,815 4,864 4,825
Gain on Sale of Business 4,362
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND EFFECT OF ACCOUNTING CHANGE 4,256 (3,117) (9,300) (10,191) 4,005
Income Tax (Benefit) (800) (1,742) 457
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE EFFECT OF
ACCOUNTING CHANGE 4,256 (3,117) (8,500) (8,449) 3,548
Earnings (Loss) on Discontinued Operations (9,930) (2,674) (10,956) (5,448) (2,223)
Cumulative Effect of Accounting Change (26,860)
NET EARNINGS (LOSS) (5,674) (5,791) (46,316) (13,897) 1,325
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Year-End Financial Position:
Current Assets $ 87,526 $ 83,842 $ 86,737 $ 86,290 $ 93,434
Other Assets 1,899 9,148 13,131 11,090 14,924
Assets Held for Sale 3,742 17,555 16,349 17,783 18,540
Property, Plant and Equipment 53,979 57,841 61,028 64,360 73,211
Total Assets 147,146 168,386 177,245 179,523 200,109
Current Liabilities 52,032 48,268 50,336 42,829 43,014
Long-Term Debt 46,958 62,730 58,579 53,031 57,201
Other Long-Term Liabilities 35,276 41,562 41,886 9,245 9,001
Shareholders' Equity 12,880 15,826 26,444 74,418 90,893
Working Capital 35,494 35,574 36,401 43,461 50,420
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Statistical Information:
Average Number of Common Shares and
Common Share Equivalents 13,239 13,210 13,197 13,184 13,158
Number of Shareholders of Record 2,370 2,553 2,531 2,662 2,731
Number of Employees 1,325 1,425 1,510 1,448 1,517
Book Value 0.97 1.20 2.00 5.64 6.91
Market Price 6 4-3/4 5-5/8 4-1/8 3-7/8
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Common Share:
Continuing Operations $ 0.32 $ (0.24) $ (0.64) $ (0.64) $ 0.27
Discontinued Operations (0.75) (0.20) (0.83) (0.41) (0.17)
Accounting Change (2.04)
Net Earnings (Loss) $ (0.43) $ (0.44) $ (3.51) $ (1.05) $ 0.10
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12
Item 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1994 Compared with 1993
Sales were higher in all of the Company's core business units for the second
consecutive year increasing overall sales 11% over 1993 levels. Product mix
improvements, which gave rise to higher average selling prices, were coupled
with strong demand through the fourth quarter contributing to the sales gains.
Carlon Electrical Products ("Electrical") and Carlon Telecom Systems
("Telecom") emphasis on priority products improved their product mix and
achieved higher sales on lower volume in 1994. Lamson Home Products ("Home
Products") aggressive expansion of its product line and market share
contributed to sales growth of 21% compared with the prior period. Lamson
Vylon Pipe ("Vylon") experienced strong demand for its products, and better
product mix resulted in a 15% increase in revenue compared with 1993.
Gross margins improved by 22% in 1994 to 18%. Increased manufacturing
efficiencies and reduced rigid pipe sales improved margins despite escalating
prices throughout the year on the Company's primary raw material.
Selling, general and administrative expenses increased nominally as a
percentage of sales over the 1993 period. Increased commission rates on the
higher margin product, promotional expenses, salary expenses and employee
health care costs contributed to this change. The effect of rising interest
rates on the Company's secured credit facility were softened by the lower
average borrowings resulting from the proceeds from the sale of Midland Steel
Products.
Since there is no income against which net operating losses can be carried
back, the Company did not record any current tax benefit for 1994. The Company
does have net operating loss carryforwards which should reduce future income
tax expense.
1993 Compared with 1992
Sales increased in 1993 for the first time since 1988 due to a significant
improvement in the fourth quarter versus the prior year. Product mix improved
by virtue of strong growth in sales of engineered specialty products. This
shift in product mix resulted in higher average selling prices which helped
offset competitive pricing conditions and adverse weather conditions
particularly in the third quarter of 1993. Increased sales in all four core
business units with Electrical and Telecom shifting their emphasis from
commodity product, particularly rigid pipe, resulted in higher average selling
prices and mitigated lower overall unit shipments. Home Products and Vylon
experienced stronger demand for their expanded product lines which contributed
to higher sales in both units.
Gross margins improved in 1993 by 9% to 14.7%. Cost reduction programs in our
manufacturing facilities, coupled with a reduction in total commodity rigid
pipe sales, improved the margin by 10.6% offsetting margin erosion due to the
erratic pricing of the Company's primary raw material.
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L1773 (02/23/95)
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Selling, general and administrative expenses decreased nominally in relation to
sales from the prior year. The overall increase is due to salary expenses,
employee health care costs, commissions and promotional expenses. While the
Company had higher average borrowings during 1993, interest income on
refundable income taxes reduced overall interest expense in 1993.
Since there is no income against which net operating losses can be carried
back, the Company did not record any current tax benefit for 1993. The Company
does have net operating loss carryforwards which should reduce future income
tax expense. The Company adopted Financial Accounting Standard Board Statement
No. 109, "Accounting for Income Taxes," in the first quarter of 1993 and this
adoption had no impact on the Company's financial position.
CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
Cash flow from continuing operations increased nearly 50% over 1993 and the
Midland Steel Products' sale proceeds reduced overall borrowing levels. These
sources provided adequate funding of capital expenditures and working capital
requirements and strengthened the Company's liquidity. The Company has
announced its intent to refinance its credit facility in recognition of its
improved financial condition. While the outcome of this effort is not known,
the Company expects a favorable resolution to this effort. In 1993, the
Company did not increase its total borrowing and generated cash flow from
operations for the first time since 1990. Cash flow from operations provided
the funding for capital expenditures while borrowings under the secured credit
agreement were virtually offset by principal reductions. Internally generated
cash flows and existing capacity under the secured credit agreement will be
adequate to fund the cash needs for capital expenditures and general operating
requirements.
OUTLOOK
The Company's progress to transform itself into a strategically focused
electrical-products manufacturer and marketer has improved the operating
results in recent years. Consistent with this strategy, the Company has
previously announced its intent to pursue the possible sale of its aerospace
fastener unit, Valley-Todeco. The Company will continue to emphasize product
development for industrial original equipment manufacturers and maintenance
repair operations markets in addition to an expanded line of convenience items
for the consumer which should provide protection against cyclical trends in
residential construction markets. Despite concerns about rising interest rates
and weak growth in the general economy, the Company foresees opportunities for
significant improvement in 1995.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENT OF OPERATIONS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands, except per share amounts)
FISCAL YEARS
-------------------------------------------------
1994 1993 1992
-------------------------------------------------
Net sales $ 287,645 $ 259,572 $ 255,422
Cost of products sold 235,876 221,405 220,901
---------- ---------- ----------
GROSS MARGIN 51,769 38,167 34,521
Selling, general and
administrative expenses 40,840 35,500 33,404
Non-recurring charges 4,602
---------- ---------- ----------
OPERATING EARNINGS (LOSS) 10,929 2,667 (3,485)
Interest (6,673) (5,784) (5,815)
---------- ---------- ----------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND EFFECT OF ACCOUNTING CHANGE 4,256 (3,117) (9,300)
Income tax benefit 800
---------- ---------- ----------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE EFFECT OF
ACCOUNTING CHANGE 4,256 (3,117) (8,500)
Loss from Discontinued Operations (9,930) (2,674) (10,956)
---------- ---------- ----------
EARNINGS (LOSS) BEFORE EFFECT OF
ACCOUNTING CHANGE (5,674) (5,791) (19,456)
Cumulative Effect of Accounting Change (26,860)
---------- ---------- ----------
NET EARNINGS (LOSS) $ (5,674) $ (5,791) $ (46,316)
========== ========== ==========
EARNINGS (LOSS) PER COMMON SHARE
--------------------------------
Continuing operations $ .32 $ (.24) $ (.64)
Discontinued operations (.75) (.20) (.83)
Accounting change (2.04)
---------- ---------- ----------
Net earnings (loss) $ (.43) $ (.44) $ (3.51)
========== ========== ==========
AVERAGE COMMON SHARES 13,239 13,210 13,197
========== ========== ==========
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands)
FISCAL YEARS
---------------------------------------------
1994 1993 1992
---------------------------------------------
OPERATING ACTIVITIES
Earnings (loss) from continuing operations $ 4,256 $ (3,117) $ (8,500)
Adjustments to reconcile earnings (loss) from continuing
operations to cash provided (used) by continuing operations:
Depreciation and amortization 8,544 8,126 8,087
Non-recurring charges 4,602
Net change in working capital accounts:
Accounts receivable (719) (4,298) 2,180
Inventories (2,857) 6,644 (4,159)
Prepaid expenses and other 589 580 682
Accounts payable, accrued expenses and other
current liabilities 1,200 1,968 2,661
Net change in other long-term items 79 (2,290) (6,199)
--------- --------- ----------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS 11,092 7,613 (646)
Earnings (loss) from discontinued operations (9,930) (2,674) (10,956)
Adjustments to reconcile earnings (loss) from discontinued
operations to cash used by discontinued operations:
Net change in assets held for sale (1,792) (1,206) 1,434
Net change in other long-term items 4,403
Non-recurring charges 5,040
--------- --------- ----------
CASH USED BY DISCONTINUED OPERATIONS (7,319) (3,880) (4,482)
--------- --------- ----------
CASH PROVIDED (USED) BY OPERATING ACTIVITIES 3,773 3,733 (5,128)
INVESTING ACTIVITIES
Net proceeds from sale of division 16,430
Purchases of property, plant and equipment (6,074) (6,437) (6,198)
Proceeds from sale of property, plant and equipment 2,550
--------- --------- ----------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES 10,356 (3,887) (6,198)
FINANCING ACTIVITIES
Long-term borrowings 10,980 8,831 38,574
Payments on long-term borrowings (24,685) (8,716) (28,180)
Exercise of stock options 273 70 82
--------- --------- ----------
CASH (USED) PROVIDED BY FINANCING ACTIVITIES (13,432) 185 10,476
--------- --------- ----------
INCREASE (DECREASE) IN CASH 697 31 (850)
Cash at beginning of year 1,188 1,157 2,007
--------- --------- ----------
CASH AT END OF YEAR $ 1,885 $ 1,188 $ 1,157
========= ========= ==========
See notes to consolidated financial statements.
- 15 -
L1773 (02/23/95)
16
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
December 31, 1994 and January 1, 1994
(Dollars in thousands)
1994 1993
-----------------------------
ASSETS
CURRENT ASSETS
Cash $ 1,885 $ 1,188
Accounts receivable, less allowances:
1994--$1,653 and 1993--$1,559 35,448 34,729
Inventories:
Finished goods and work-in-process 41,157 39,317
Raw materials and supplies 5,048 4,031
----------- -----------
46,205 43,348
Prepaid expenses and other 3,988 4,577
----------- -----------
TOTAL CURRENT ASSETS 87,526 83,842
ASSETS HELD FOR SALE 3,742 17,555
OTHER ASSETS 1,899 9,148
PROPERTY, PLANT AND EQUIPMENT
Land 4,019 4,019
Buildings 24,350 22,807
Machinery and equipment 87,545 86,300
----------- -----------
115,914 113,126
Less allowances for depreciation
and amortization 61,935 55,285
----------- -----------
53,979 57,841
----------- -----------
$ 147,146 $ 168,386
=========== ===========
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L1773 (02/23/95)
17
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
December 31, 1994 and January 1, 1994
(Dollars in thousands)
1994 1993
------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 17,354 $ 19,408
Accrued expenses and other liabilities 27,167 23,361
Taxes 3,009 3,064
Current maturities of long-term debt 4,502 2,435
---------- ----------
TOTAL CURRENT LIABILITIES 52,032 48,268
LONG-TERM DEBT 46,958 62,730
POSTRETIREMENT BENEFITS AND OTHER
LONG-TERM LIABILITIES 35,276 41,562
SHAREHOLDERS' EQUITY
Common shares, without par value, with stated
value of $.10 per share, authorized 20,000,000
shares; outstanding--13,278,784 shares in 1994
and 13,220,034 shares in 1993 1,328 1,322
Other capital 72,679 72,412
Retained earnings (deficit) (52,728) (47,054)
Pension adjustment (8,399) (10,854)
---------- ----------
12,880 15,826
---------- ----------
$ 147,146 $ 168,386
========== ==========
See notes to consolidated financial statements.
- 17 -
L1773 (02/23/95)
18
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands)
RETAINED TOTAL
COMMON OTHER EARNINGS PENSION SHAREHOLDERS'
SHARES CAPITAL (DEFICIT) ADJUSTMENT EQUITY
---------- -------- ---------- ------------ ----------------
Balance at December 31, 1991 $ 1,319 $ 72,263 $ 5,053 $ (4,217) $ 74,418
Net loss (46,316) (46,316)
Issuance of 18,250 common shares
under stock option plans 1 81 82
Pension adjustment (1,740) (1,740)
---------- -------- ---------- ------------ ----------------
Balance at January 2, 1993 1,320 72,344 (41,263) (5,957) 26,444
Net loss (5,791) (5,791)
Issuance of 15,300 common shares
under stock option plans 2 68 70
Pension adjustment (4,897) (4,897)
---------- -------- ---------- ------------ ----------------
Balance at January 1, 1994 1,322 72,412 (47,054) (10,854) 15,826
Net loss (5,674) (5,674)
Issuance of 58,750 common shares
under stock option plans 6 267 273
Pension adjustment 2,455 2,455
---------- -------- ---------- ------------ ----------------
Balance at December 31, 1994 $ 1,328 $ 72,679 $ (52,728) $ (8,399) $ 12,880
========== ======== ========== ============ ================
See notes to consolidated financial statements.
- 18 -
L1773 (02/23/95)
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
Three fiscal years ended December 31, 1994
NOTE A--ACCOUNTING POLICIES
FISCAL YEAR - The Company's fiscal year end is the Saturday closest to December
31.
PRINCIPLES OF CONSOLIDATION AND PRESENTATION: The consolidated financial
statements include the accounts of the Company and all domestic and foreign
subsidiaries after elimination of significant intercompany items and
transactions. Certain 1993 and 1992 items have been reclassified to conform
with 1994 reporting classifications.
INVENTORIES: Inventories are valued at the lower of first-in, first-out (FIFO)
cost or market.
PROPERTY AND DEPRECIATION: Property, plant and equipment are recorded at cost.
For financial reporting purposes, depreciation and amortization are computed
principally by the straight-line method over the estimated useful lives of the
assets. Accelerated methods of depreciation are used for federal income tax
purposes.
INCOME TAXES: Beginning in fiscal year 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." There was no cumulative effect nor any impact
on the Company's financial position as a result of this adoption. Investment
tax credits are recorded using the flow-through method. In previous years, the
Company followed the provisions of SFAS No. 96.
EARNINGS (LOSS) PER COMMON SHARE: Earnings (loss) per common share are based
on the weighted average number of common shares and common share equivalents
outstanding during the year.
- 19 -
L1773 (02/23/95)
20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE B--LONG-TERM DEBT
Long-term debt consists of the following:
(In thousands)
1994 1993
---------- ----------
Secured Credit Agreement:
Term Note $ 9,000 $ 15,771
Revolver 18,955 24,405
---------- ----------
27,955 40,176
14% Senior Subordinated Notes 11,120 11,120
Industrial Revenue Bonds 9,600 10,885
Building mortgage 2,785 2,984
---------- ----------
51,460 65,165
Less amounts classified as current 4,502 2,435
---------- ----------
$ 46,958 $ 62,730
========== ==========
The Company has a long-term $65,000,000 secured credit agreement supported by
the Company's accounts receivable, inventory and property, plant and equipment.
The term portion of this facility carries interest at 11.55% and requires
quarterly principal payments of $750,000 with interest. The remaining
revolving credit portion permits borrowings up to $45,000,000 at any time
through December 31, 1999, with interest at 2.5% over the prime rate (8.5% at
December 31, 1994). The agreement provides for the payment of a commitment fee
of .375% per annum on the average daily unused commitment. In addition to
amounts borrowed, letters of credit related to Industrial Revenue Bond
financings total approximately $10,000,000 under the agreement.
The 14% Senior Subordinated Notes are due in 1997 with interest payable
semi-annually on each June 1 and December 1. The Notes are redeemable at the
option of the Company, in whole or in part, at the principal amount plus a
specified declining premium together with accrued interest.
The Company's Industrial Revenue Bond financings include several issues due in
annual installments from 1994 through 2023 with interest at rates varying from
4% to 8%. In addition, the Company has available letter of credit arrangements
with an additional lender to provide approximately $3,000,000 for trade and
general corporate purposes. Substantially all of these letters of credit are
secured by certain assets. The Company's headquarter facility is subject to a
mortgage payable in equal monthly installments through 2003 with interest at
8.625%.
The Company's credit agreements contain various restrictive covenants
pertaining to maintenance of working capital, debt service, tangible net worth,
certain financial ratios and prohibit the payment of dividends and early
redemption of subordinated notes.
- 20 -
L1773 (02/23/95)
21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE B--LONG-TERM DEBT--Continued
The aggregate minimum combined maturities of long-term debt for the years 1996
through 1999 are approximately $4,531,000, $15,678,000, $1,581,000 and
$20,561,000, respectively, with $4,607,000 due thereafter.
Interest expense includes $850,000, $767,000 and $713,000 for amortization of
deferred financing cost in 1994, 1993 and 1992, respectively. Interest paid
was $6,847,000, $8,229,000 and $7,320,000 in 1994, 1993 and 1992, respectively.
Rental expense related to operating leases was $3,015,000, $2,647,000 and
$2,531,000 in 1994, 1993 and 1992, respectively. Aggregate future minimum
payments related to operating leases with initial or remaining terms of one
year or more for the years 1995 through 1998 and thereafter are $1,880,000,
$1,265,000, $851,000, $694,000 and $854,000, respectively.
NOTE C--DISCONTINUED OPERATIONS
The results of discontinued operations are reflected on a restated comparative
basis as follows:
(In thousands)
1994 1993 1992
------------ ------------ --------------
Net Sales $ 23,337 $ 41,884 $ 28,338
============ ============ ==============
Loss from Operations $ 1,030 $ 2,674 $ 10,956
Loss on Disposal 8,900
------------ ------------ --------------
$ 9,930 $ 2,674 $ 10,956
============ ============ ==============
During the first quarter of 1994, the Company entered into a definitive
agreement to sell substantially all of the assets and certain liabilities
(including prospective pension and postretirement benefit obligations) of its
Midland Steel Products Division for $16,430,000 resulting in a loss of
$8,900,000 ($.67 per share) after related costs and expenses. Included in the
loss on disposal is a curtailment loss of $1,140,000 related to net pension
costs and a settlement gain of $650,000 related to postretirement benefits
other than pensions. The Company believes adequate provision has been made for
all contractual obligations, environmental costs, and other obligations
retained in the sale of the division. Included in each years' loss from
operations is interest of $1,836,000 allocated on the basis of the Company's
incremental borrowing rate applied on the net proceeds from the sale. The
assets held for sale at the end of 1994 are comprised of land and building
pending final resolution of certain contractual conditions.
- 21 -
L1773 (02/23/95)
22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE D--PENSION PLANS
The Company sponsors pension plans covering substantially all employees. Plans
covering salaried employees provide benefits that are based on an employee's
years of service and compensation during the five-year period prior to
retirement. Plans covering hourly employees provide benefits of stated amounts
for each year of service. The Company annually contributes amounts to the
plans which are actuarially determined to provide sufficient assets to meet
future benefit payment requirements.
Pension expense from continuing operations is comprised of the following:
(In thousands) 1994 1993 1992
---------- ---------- ---------
Benefits earned $ 1,694 $ 1,599 $ 1,235
Interest on projected
benefit obligations 5,781 6,090 5,853
Actual return on assets (1,917) (6,813) (5,956)
Net amortization and deferral (3,310) 1,678 400
Defined contribution and other plans 813 620 474
---------- ---------- ---------
$ 3,061 $ 3,174 $ 2,006
========== ========== =========
The following table summarizes the funded status of the Company's defined benefit pension
plans and the related amounts recognized in the Company's consolidated statement of financial
position:
1994 1993
STATUS OF PLANS STATUS OF PLANS
----------------------------- -----------------------------
(In thousands) ASSETS BENEFITS ASSETS BENEFITS
EXCEED EXCEED EXCEED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ---------- -----------
Actuarial present
value of benefit
obligations:
Vested benefit
obligations $ 8,849 $ 61,633 $ 14,126 $ 60,959
=========== =========== ========== ===========
Accumulated benefit
obligations $ 9,313 $ 61,790 $ 15,243 $ 62,792
=========== =========== ========== ===========
Plan assets at fair
value $ 13,235 $ 49,329 $ 20,000 $ 43,313
Projected benefit
obligations (12,569) (62,156) (19,998) (62,999)
----------- ----------- ---------- -----------
Plan assets in excess
of (less than)
projected benefit
obligations 666 (12,827) 2 (19,686)
Unrecognized prior service cost (30) 346 233 1,048
Unrecognized net
liabilities due to
changes in assumptions 1,508 10,962 4,273 12,585
Unrecognized initial
net (asset) obligations (266) (1,561) (1,267) 473
Minimum liability (9,381) (13,899)
----------- ----------- ---------- -----------
Pension assets
(liabilities) $ 1,878 $ (12,461) $ 3,241 $ (19,479)
=========== =========== ========== ===========
- 22 -
L1773 (02/23/95)
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE D--PENSION PLANS--Continued
Accrued expenses and other liabilities include the current portion of pension
liabilities of $4,487,000 and $4,665,000 in 1994 and 1993, respectively. The
discount rates used in determining pension expense were 7.25%, 8.5% and 9% in
1994, 1993 and 1992, respectively. The discount rates used for funded status
information were 8.0% in 1994 and 7.25% in 1993. The change in the discount
rate had the effect of decreasing the accumulated benefit obligation
approximately $4,800,000. This change will not have a material effect on
future pension expense. The long-term rates of return on assets used in
determining the funded status information were 9.5% in 1994 and 1993. Plan
assets consist primarily of fixed income and equity securities including
Company securities totalling $3,212,000. The salary progression assumptions
used in determining the funded status information were 5% in each year.
NOTE E--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to providing pension benefits, the Company provides health care and
life insurance benefits for certain of its retired employees.
In 1992, the Company adopted SFAS No. 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions." Under SFAS No. 106, the Company
is required to accrue the estimated cost of retiree benefit payments, other
than pensions, during employees' active service period. The Company previously
expensed the cost of these benefits, which are primarily health care, as claims
were paid.
The Company elected to recognize this change in accounting on the immediate
recognition basis. The cumulative effect of adopting SFAS No. 106 was an
increase in accrued postretirement benefits other than pensions and decrease in
1992 net earnings of $26,860,000.
The Company continues to fund these benefit costs on a pay-as-you-go basis,
with the retiree, in most instances, paying a portion of the costs.
- 23 -
L1773 (02/23/95)
24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE E--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--Continued
Summary information for the Company's plans is as follows:
(In thousands)
1994 1993
--------------- --------------
Accumulated Postretirement Benefit Obligation (APBO):
Retirees $ 17,036 $ 19,164
Active participants eligible to receive benefits 2,134 3,763
Other active plan participants 5,561 7,323
--------------- --------------
24,731 30,250
Unamortized (loss) (960) (1,962)
--------------- --------------
23,771 28,288
Current portion 2,100 2,100
--------------- --------------
$ 21,671 $ 26,188
=============== ==============
The decrease in APBO is principally due to the sale of the Midland Steel
Products Division (see Note C). In addition, the Company remains contingently
liable for postretirement benefits of certain businesses previously sold.
The components of periodic postretirement benefit cost reflected in continuing operations are as
follows:
(In thousands)
1994 1993 1992
------------- ------------ --------------
Benefits earned $ 698 $ 670 $ 598
Interest on postretirement benefit obligation 1,806 2,073 2,022
------------- ------------ --------------
$ 2,504 $ 2,743 $ 2,620
============= ============ ==============
The discount rate used in determining the APBO was 7.5% in 1994 and 1993. The
assumed health care cost trend rate used in measuring the APBO was an average
of 14% in 1994 and 1993, declining to an ultimate rate of 5.5% in 2007 and
thereafter.
If the health care cost trend rate assumptions were increased by 1%, the APBO
as of December 31, 1994 would increase by 9.2%. The effect of this change on
periodic postretirement benefit cost for 1994 would be an increase of 11.2%, or
approximately $280,000.
- 24 -
L1773 (02/23/95)
25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE F--NON-RECURRING CHARGES
In 1992, the Company recorded non-recurring charges of $4,602,000 ($.35 per
share after tax effect). The majority of these costs are included in other
long-term liabilities and represent provisions for the relocation of production
lines, consolidation of plant capacity, and various other costs resulting from
the Company's efforts to improve cost effectiveness and future profitability.
NOTE G--LITIGATION
In 1992, the present owner of property sold by the Company in 1978 filed a
complaint against the Company seeking reimbursement for certain costs related
to environmental remediation of the site. All but one of the claims have been
dismissed. Management believes that the final resolution of this matter will
not have a material adverse effect on the Company's consolidated financial
position.
The Company is a party to various claims and matters of litigation incidental
to the normal course of its business. Management believes that the final
resolution of these matters will not have a material adverse effect on the
Company's financial position.
NOTE H--PREFERRED AND PREFERENCE STOCK
The Company has authorized 1,200,000 and 3,000,000 shares of Serial Preferred
and Preference Stock, respectively, none of which is issued or outstanding at
December 31, 1994.
The Company has reserved for issuance 200,000 shares of Cumulative Redeemable
Serial Preference Stock, Series II, without par value, which is part of
purchase rights related to each outstanding common share. None of these shares
were issued in 1994 or 1993. The right associated with each common share
entitles its holder to purchase from the Company or acquiring company, one
one-hundredth of a share of preference stock at a price of $47 which is subject
to adjustment. The rights become exercisable only if a person or group
acquires beneficial ownership of 15% or more of the Company's common shares or
takes certain other actions. In any such event, a 15% or more owner is
prohibited from exercising the rights. When exercisable, the rights entitle
each holder to purchase, according to the agreement, either the Company's
common shares or stock in the acquiring entity worth twice the value of the
then applicable purchase price. Under certain circumstances, the Company has
the authority to exchange each right for one common share without payment
required. Unless otherwise extended, the Company may redeem the rights in
their entirety, at a price of one cent per right, at any time until the tenth
calendar day following any public announcement that beneficial ownership of 15%
or more has occurred in the Company's common shares, or upon certain other
events, including Board of Directors approval of a merger. The rights expire
on September 7, 1998.
- 25 -
L1773 (02/23/95)
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE I--STOCK OPTIONS
Under the 1994 Nonemployee Directors Stock Option Plan, the Company is
authorized to issue 60,000 non-qualified stock options. The options become
exercisable one year after date of grant and expire at the end of ten years.
Under the 1988 Incentive Equity Performance Plan, the Company is authorized to
issue 1,150,000 incentive stock options (ISO's), non-qualified stock options,
stock appreciation rights (SAR's), and restricted or deferred stock. Options
generally become exercisable in part one year after date of grant and expire at
the end of ten years. Options outstanding under the 1978 Non-Qualified
Incentive Stock Option Plan have been granted for the purchase of common shares
at prices ranging from $4.750 to $5.75 per share. No options are available for
future grant under the 1978 Plan.
A summary of the option transactions follows:
NUMBER OF SHARES
----------------------------
1994 1993
-------- --------
Outstanding, beginning of year 659,400 500,900
Granted at $5.563 to $6.75 per share 200,500 192,500
Exercised at $2.125 to $7.19 per share (58,750) (15,300)
Expired/cancelled at $4.375 to $15.438 per share (74,850) (18,700)
-------- --------
Outstanding, end of year at $3.88 to $12.938 726,300 659,400
======== ========
Exercisable, end of year 490,300 428,650
======== ========
At fiscal year end 1994, there were 431,900 options available for future grant.
- 26 -
L1773 (02/23/95)
27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE J -- INCOME TAXES
There was no income tax expense or benefit recorded in 1994 or 1993. The
Company provided an income tax benefit of $800,000 in 1992.
The Company has available net operating loss carryforwards totalling
approximately $39 million which expire in the years 1999 to 2009. The Company
also has available general business tax credit carryforwards of $2 million
which expire through 2009, and alternative minimum tax credit carryforwards of
approximately $1 million which may be carried forward indefinitely.
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities are presented below:
(In thousands) 1994 1993
------------- ------------
Deferred tax assets:
Net operating loss carryforwards $ 13,600 $ 14,600
Other accruals, credits and reserves 11,300 9,500
General business and alternative minimum tax credits 2,900 2,900
Postretirement benefits other than pensions 8,300 9,900
------------- ------------
36,100 36,900
Less: valuation allowance (30,000) (28,000)
------------- ------------
Total net deferred tax assets 6,100 8,900
Deferred tax liabilities:
Tax in excess of book depreciation 5,900 8,200
Pensions 200 700
------------- ------------
Total deferred tax liabilities 6,100 8,900
------------- ------------
$ -0- $ -0-
============= ============
- 27 -
L1773 (02/23/95)
28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE J -- INCOME TAXES -- Continued
The provision for income taxes is different than the amount computed using the
applicable statutory federal income tax rate with the differences summarized
below:
(In thousands)
1994 1993 1992
-------------- ------------ ------------
Tax expense (benefit) at statutory rates $ (1,995) $ (2,027) $ (6,887)
Adjustment due to:
Effect of temporary differences 3,738
Alternative minimum tax 1,970
Change in valuation allowance 1,964 1,818
Other 31 209 379
-------------- ------------ ------------
$ -0- $ -0- $ (800)
============== ============ ============
In 1994, 1993 and 1992, the Company received income tax refunds of $201,000,
$1,626,000 and $1,618,000, respectively.
NOTE K--INDUSTRY SEGMENTS
With the completion of the sale of the Midland Steel Products Division (see
Note C), the Company presently operates in one dominant industry segment. The
Company is principally engaged in the manufacture and sale of thermoplastic
conduit, enclosures, wiring devices and accessories for the construction,
consumer, power, communications and waste water markets as well as fasteners
for the aerospace engine and airframe markets.
In 1994, sales to a single customer totalled approximately 12%. No customer
exceeded 10% of net sales in 1993 or 1992.
- 28 -
L1773 (02/23/95)
29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands, except per share amounts)
NOTE L--SUMMARY OF QUARTERLY RESULTS OF OPERATIONS--(UNAUDITED)
EARNINGS
(LOSS) FROM LOSS FROM NET
NET GROSS CONTINUING DISCONTINUED EARNINGS
SALES PROFIT OPERATIONS OPERATIONS (LOSS)
--------- --------- ----------- ----------- --------
Fiscal 1994:
First quarter $ 63,889 $ 10,267 $ (960) $ (9,930) $(10,890)
Second quarter 74,655 14,016 2,019 2,019
Third quarter 79,048 14,161 2,110 2,110
Fourth quarter 70,053 13,325 1,087 1,087
--------- --------- ----------- ----------- --------
TOTALS $287,645 $ 51,769 $ 4,256 $ (9,930) $ (5,674)
========= ========= =========== =========== ========
Fiscal 1993:
First quarter $ 57,692 $ 8,942 $ (1,470) $ (1,075) $ (2,545)
Second quarter 65,971 10,236 (547) (127) (674)
Third quarter 70,537 10,990 1,409 (2,073) (664)
Fourth quarter 65,372 7,999 (2,509) 601 (1,908)
--------- --------- ----------- ----------- --------
TOTALS $259,572 $ 38,167 $ (3,117) $ (2,674) $ (5,791)
========= ========= =========== =========== ========
EARNINGS EARNINGS
(LOSS) PER (LOSS) PER
COMMON COMMON MARKET PRICE
SHARE FROM SHARE FROM NET EARNINGS PER COMMON
CONTINUING DISCONTINUED (LOSS) PER SHARE
OPERATIONS OPERATIONS COMMON SHARE HIGH LOW
------------ ----------- -------------- -------------------
Fiscal 1994:
First quarter $ (.07) $ (.75) $ (.82) $ 7-1/2 $ 4-7/8
Second quarter .15 .15 8-1/2 6-1/8
Third quarter .16 .16 8-1/2 6-3/4
Fourth quarter .08 .08 7-1/4 5-1/4
------------ ----------- --------------
TOTALS $ .32 $ (.75) $ (.43)
============ =========== ==============
Fiscal 1993:
First quarter $ (.11) $ (.08) $ (.19) $ 6-1/2 $ 5-1/2
Second quarter (.04) (.01) (.05) 5-7/8 4-3/4
Third quarter .11 (.16) (.05) 5-1/2 4-5/8
Fourth quarter (.20) .05 (.15) 5-1/4 4-5/8
------------ ----------- --------------
TOTALS $ (.24) $ (.20) $ (.44)
============ =========== ==============
- 29 -
L1773 (02/23/95)
30
PART IV
The Lamson & Sessions Co. and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In thousands)
- - - - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND DEDUCTIONS - END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE PERIOD
- - - - ------------------------------------------------------------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1994
Allowances deducted from assets:
Trade receivable allowances $ 1,559 $ 805 $ 711 (B) $ 1,653
Inventory obsolescence reserve 1,703 464 1,137 (C) 1,030
Other Assets 3,452 (3,414) (D) 6,866
Accounts and loss reserves included in
current and long-term liabilities 3,027 8,950 (A) 4,068 (A) 7,909
- - - - ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 1, 1994
Allowances deducted from assets:
Trade receivable allowances $ 1,861 $ 872 $ 1,174 (B) $ 1,559
Inventory obsolescence reserve 2,480 210 987 (C) 1,703
Other Assets 3,606 154 3,452
Accounts and loss reserves included in
current and long-term liabilities 3,337 310 3,027
- - - - ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 2, 1993
Allowances deducted from assets:
Trade receivable allowances $ 1,405 $ 1,003 $ 547 (B) $ 1,861
Inventory obsolescence reserve 1,534 2,031 1,085 (C) 2,480
Other Assets 2,991 600 (15) 3,606
Accounts and loss reserves included in
current and long-term liabilities 2,337 1,000 (A) 3,337
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Note A - Provision for discontinued operations, costs relating to sales of businesses and non-recurring charges.
Note B - Principally write-off of uncollectible accounts and disputed items, net of recoveries.
Note C - Principally the disposal of obsolete inventory.
Note D - Adjustment to provisions for previously sold business.
- 30 -
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31
REPORT OF INDEPENDENT AUDITORS
- - - - ------------------------------
Board of Directors and Shareholders
The Lamson & Sessions Co.
We have audited the accompanying consolidated statements of financial position
of The Lamson & Sessions Co. and Subsidiaries as of December 31, 1994 and
January 1, 1994, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 31, 1994. Our audits also included the financial
statement schedule listed in the Index at Item 14 (a). These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
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, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Lamson & Sessions Co. and Subsidiaries at December 31, 1994 and January 1,
1994, and the consolidated results of their operations and their cash flows for
each of the three fiscal years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
As discussed in Note E to the consolidated financial statements, effective
January 1, 1992, the Company changed its method of accounting for
postretirement benefits other than pensions.
Ernst & Young LLP
Cleveland, Ohio
January 20, 1995
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32
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
----------------------------------------
We have prepared the financial statements and other financial information
contained in this Annual Report.
The management of Lamson & Sessions is primarily responsible for the integrity
of this financial information. The financial statements were prepared in
accordance with generally accepted accounting principles and necessarily
include certain amounts based on management's reasonable best estimates and
judgments, giving due consideration to materiality. Financial information
contained elsewhere in this annual report is consistent with that contained in
the financial statements.
Management is responsible for establishing and maintaining a system of internal
control designed to provide reasonable assurance as to the integrity and
reliability of financial reporting. The concept of reasonable assurance is
based on the recognition that there are inherent limitations in all systems of
internal control, and that the cost of such systems should not exceed the
benefits to be derived therefrom.
To meet management's responsibility for financial reporting, we have
established internal control systems which we believe are adequate to provide
reasonable assurance that our assets are protected from loss. These systems
produce data used for the preparation of published financial information and
provide for appropriate reporting relationships and division of responsibility.
All significant systems and controls are reviewed periodically by our internal
auditors in order to ensure compliance, and by our independent auditors to
support their audit work. It is management's policy to implement a high
proportion of recommendations resulting from these reviews.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets regularly with management, internal auditors, and our
independent auditors to review accounting, auditing and financial matters.
Both the independent auditors and the internal auditors have free access to the
Audit Committee, with or without management, to discuss the scope and results
of their audits and the adequacy of the system of internal controls.
/s/ John B. Schulze
- - - - --------------------------------
John B. Schulze
Chairman of the Board, President and
Chief Executive Officer
/s/ James J. Abel
- - - - --------------------------------
James J. Abel
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
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33
PART II
Item 9. - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
Item 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors
The information set forth under the caption "Election of Directors" in
the Company's definitive proxy statement for its annual meeting of
shareholders to be held April 28, 1995 is hereby incorporated by
reference.
(b) Executive Officers - See Part I
(c) Compliance with Section 16 (a) of the Exchange Act.
The information set forth in the last paragraph under caption
"Election of Directors" in the Company's definitive proxy statement
for its annual meeting of shareholders to be held April 28, 1995 is
hereby incorporated by reference.
Item 11. - EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation" in the
Company's definitive proxy statement for its annual meeting of shareholders to
be held April 28, 1995 is hereby incorporated by reference.
Item 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the captions "Ownership of the Company's Common
Shares," "Election of Directors" and "Security Ownership of Management" in the
Company's definitive proxy statement for its annual meeting of shareholders to
be held April 28, 1995 is hereby incorporated by reference.
Item 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
None.
PART IV
Item 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
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34
(a) The following documents are filed as part of this report:
Consolidated financial statements of The Lamson & Sessions Co. and
Subsidiaries are included in Item 8 of this report:
1. Financial Statements
Consolidated Statement of Operations for Fiscal Years Ended 1994, 1993
and 1992.
Consolidated Statement of Cash Flows for Fiscal Years Ended 1994, 1993
and 1992.
Consolidated Statement of Financial Position at December 31, 1994 and
January 1, 1994.
Consolidated Statement of Shareholders' Equity for Fiscal Years Ended
1994, 1993 and 1992.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts and Reserves.
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been omitted.
3. Exhibits - Management Contracts and Compensatory Plans are identified
with an asterisk (*).
3(a) Amended Articles of Incorporation of the Company (incorporated by
reference to Exhibit 1 to the Company's Registration Statement on
Form 8-A filed with the Securities and Exchange Commission on June 1,
1989).
3(b) Amended Code of Regulations of the Company filed herewith.
4(a) Specimen Certificate of Common Shares, without par value with Rights
legend (incorporated by reference to Exhibit 3 to the Company's
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 1, 1989).
4(b) Form of Indenture by and between the Company and AmeriTrust Company
of New York, Trustee, pertaining to the 14% Senior Subordinated Notes
due 1997 (incorporated by reference to Exhibit 4(j) to the Company's
Registration Statement on Form S-2 (Registration No. 33-13574) filed
with the Securities and Exchange Commission on June 12, 1987).
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35
4(c) Supplemental Indenture by and between the Company and AmeriTrust
Company of New York, Trustee, pertaining to 14% Senior Subordinated
Notes due 1997 dated as of February 5, 1992 (incorporated by
reference to Exhibit 4(c) of the Company's Annual Report on Form 10-K
for the year ended December 31, 1991).
4(d) Form of 14% Senior Subordinated Note due 1997 (incorporated by
reference to Exhibit 4(k) of the Company's Registration Statement on
Form S-2 (Registration No. 33-13574) filed with the Securities and
Exchange Commission on June 12, 1987).
4(e) Form of Right Certificate (incorporated by reference to Exhibit 4(oo)
to the Company's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission on August 25, 1988).
4(f) Amendment No. 1 to Rights Agreement dated as of February 14, 1990, by
and between the Company and National City Bank (incorporated by
reference to Exhibit 2.4 of the Company's Form 8 filed with the
Securities and Exchange Commission on February 20, 1990).
4(g) Rights Agreement, amended and restated as of February 14, 1990, by
and between the Company and National City Bank (incorporated by
reference to Exhibit 2.5 of the Company's Form 8 filed with the
Securities and Exchange Commission on February 20, 1990).
4(h) Loan Agreement dated as of February 13, 1992 among the Company, the
Lenders party thereto from time to time, and General Electric Capital
Corporation (incorporated by reference to Exhibit 4(i) of the
Company's Annual Report on Form 10-K for the year ended December 31,
1991, the "GECC Loan Agreement").
4(i) Letter of Credit Agreement dated as of February 13, 1992 by and
between the Company and National City Bank (incorporated by reference
to Exhibit 4(j) of the Company's Annual Report on Form 10-K for the
year ended December 31, 1991).
4(j) Amendment No. 1 and Waiver dated February 11, 1993 to the GECC Loan
Agreement (incorporated by reference to Exhibit 4(j) of the Company's
Annual Report on Form 10-K for the year ended January 2, 1993).
* 10(a) 1988 Incentive Equity Performance Plan (as amended on September 22,
1988, February 23, 1989, and December 20, 1990 and April 24, 1992)
(incorporated by reference to Exhibit 28 of the Company's Registration
Statement, on Form S-8 and Form S-3 (Registration No. 33-54732) filed
with the Securities and Exchange Commission on November 20, 1992).
* 10(b) Form of Three-Year Employment Agreement between the Company and
certain executive officers filed herewith.
* 10(c) Form of Two-Year Employment Agreement between the Company and certain
executive officers filed herewith.
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36
* 10(d) Corporate Officers Incentive Compensation Plan filed herewith.
* 10(e) Form of Amended and Restated Supplemental Executive Retirement
Agreement dated as of March 20, 1990 between the Company and certain
of its executive officers (incorporated by reference to Exhibit 10(g)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990).
* 10(f) The Company's Deferred Compensation Plan for Nonemployee Directors
(incorporated by reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990).
* 10(g) Form of Indemnification Agreement between the Company and the
Directors and certain officers filed herewith.
* 10(h) The Company's Long Term Incentive Plan (incorporated by reference to
Exhibit 10(k) to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1991).
* 10(i) Separation Agreement between the Company and Thomas M. Kostelnik,
dated June 7, 1993 (incorporated herein by reference to Exhibit 10 to
the Company's Quarterly Report on Form 10-Q for the period ended July
3, 1993).
10(j) Mortgage and Security Agreement, dated October 29, 1993, between The
Lamson & Sessions Co. and PFL Life Insurance Company (incorporated
herein by reference to Exhibit 10(j) to the Company's Annual Report
on Form 10-K for the year ended January 1, 1994).
10(k) Asset Purchase Agreement between Iochpe-Maxion Ohio, Inc. and The
Lamson & Sessions Co. dated as of May 4, 1994 (incorporated by
reference to Exhibit 10 to the Company's Current Report on Form 8-K
dated as of May 27, 1994).
* 10(l) Separation Agreement between The Lamson & Sessions Co. and Allan J.
Zambie, dated July 31, 1994 (incorporated by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the period ended
October 1, 1994).
10(m) Amendment No. 2 and Consent, dated as of March 1, 1994, to the GECC
Loan Agreement filed herewith.
10(n) Amendment No. 3, dated as of March 31, 1994 to the GECC Loan
Agreement filed herewith.
10(o) Amendment No. 4 and Consent, dated as of May 15, 1994, to the GECC
Loan Agreement filed herewith.
10(p) Amendment No. 5, dated as of June 10, 1994, to the GECC Loan
Agreement filed herewith.
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37
10(q) Amendment No. 6, dated as of September 30, 1994, to the GECC Loan
Agreement filed herewith.
10(r) Amendment No. 7, dated as of January 31, 1995, to the GECC Loan
Agreement filed herewith.
11 Computation of Earnings Per Common Share
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
24 Powers of Attorney
27 Financial Data Schedule (submitted for the SEC's information).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
December 31, 1994.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules - The response to this portion of Item
14 is included in Item 8.
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38
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 of the undersigned, thereunto duly authorized, on this 24th day of
February 1995.
THE LAMSON & SESSIONS CO.
By /s/ James J. Abel
------------------------
James J. Abel
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
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 indicated as of February 24, 1995.
Signature Title
--------- -----
/s/ John B. Schulze Chairman of the Board, President
- - - - ------------------------------------ and Chief Executive Officer
John B. Schulze (Principal Executive Officer)
/s/ James J. Abel Executive Vice President, Secretary,
- - - - ----------------------------------- Treasurer and Chief Financial Officer
James J. Abel (Principal Financial Officer and
Principal Accounting Officer)
/s/ Francis H. Beam, Jr.* Director
- - - - -------------------------
Francis H. Beam, Jr.
/s/ Leigh Carter* Director
- - - - -------------------------
Leigh Carter
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39
/s/ Martin J. Cleary* Director
- - - - -------------------------
Martin J. Cleary
/s/ John C. Dannemiller* Director
- - - - -------------------------
John C. Dannemiller
/s/ Russel B. Every* Director
- - - - -------------------------
Russel B. Every
/s/ George R. Hill* Director
- - - - -------------------------
George R. Hill
/s/ A. Malachi Mixon III* Director
- - - - -------------------------
A. Malachi Mixon III
/s/ Kevin O'Donnell* Director
- - - - -------------------------
Kevin O'Donnell
/s/ D. Van Skilling* Director
- - - - -------------------------
D. Van Skilling
* The undersigned, by signing his name hereto, does sign and execute this
Annual Report on Form 10-K pursuant to a Power of Attorney executed on
behalf of the above named directors of The Lamson & Sessions Co. and filed
herewith as Exhibit 24 on behalf of The Lamson & Sessions Co. and each
such person.
February 24, 1995
By /s/ James J. Abel
-----------------------------------
James J. Abel, Attorney-in-fact
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40
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
3(a) Amended Articles of Incorporation of the Company (incorporated by
reference to Exhibit 1 to the Company's Registration Statement on
Form 8-A filed with the Securities and Exchange Commission on June 1,
1989).
3(b) Amended Code of Regulations of the Company filed herewith.
4(a) Specimen Certificate of Common Shares, without par value with Rights
legend (incorporated by reference to Exhibit 3 to the Company's
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 1, 1989).
4(b) Form of Indenture by and between the Company and AmeriTrust Company of
New York, Trustee, pertaining to the 14% Senior Subordinated Notes due
1997 (incorporated by reference to Exhibit 4(j) to the Company's
Registration Statement on Form S-2 (Registration No. 33-13574) filed
with the Securities and Exchange Commission on June 12, 1987).
4(c) Supplemental Indenture by and between the Company and AmeriTrust Company
of New York, Trustee, pertaining to 14% Senior Subordinated Notes due
1997 dated as of February 5, 1992 (incorporated by reference to Exhibit
4(c) of the Company's Annual Report on Form 10-K for the year ended December
31, 1991).
4(d) Form of 14% Senior Subordinated Note due 1997 (incorporated by reference
to Exhibit 4(k) of the Company's Registration Statement on Form S-2
(Registration No. 33-13574) filed with the Securities and Exchange Commission
on June 12, 1987).
4(e) Form of Right Certificate (incorporated by reference to Exhibit 4(oo) to the
Company's Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on August 25, 1988).
4(f) Amendment No. 1 to Rights Agreement dated as of February 14, 1990, by and
between the Company and National City Bank (incorporated by reference to
Exhibit 2.4 of the Company's Form 8 filed with the Securities and Exchange
Commission on February 20, 1990).
4(g) Rights Agreement, amended and restated as of February 14, 1990, by and
between the Company and National City Bank (incorporated by reference to
Exhibit 2.5 of the Company's Form 8 filed with the Securities and Exchange
Commission on February 20, 1990).
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41
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
4(h) Loan Agreement dated as of February 13, 1992 among the Company,
the Lenders party thereto from time to time, and General Electric
Capital Corporation (incorporated by reference to Exhibit 4(i) of
the Company's Annual Report on Form 10-K for the year ended December
31, 1991, the "GECC Loan Agreement").
4(i) Letter of Credit Agreement dated as of February 13, 1992 by and
between the Company and National City Bank (incorporated by reference
to Exhibit 4(j) of the Company's Annual Report on Form 10-K for the
year ended December 31, 1991).
4(j) Amendment No. 1 and Waiver dated February 11, 1993 to the GECC Loan
Agreement (incorporated by reference to Exhibit 4(j) of the Company's
Annual Report on Form 10-K for the year ended January 2, 1993).
* 10(a) 1988 Incentive Equity Performance Plan (as amended on September 22, 1988,
February 23, 1989, December 20, 1990 and April 24, 1992) (incorporated by
reference to Exhibit 28 of the Company's Registration Statement, on Form
S-8 and Form S-3 (Registration No. 33-54732) filed with the Securities and
Exchange Commission on November 20, 1992).
* 10(b) Form of Three-Year Employment Agreement between the Company and certain
executive officers filed herewith.
* 10(c) Form of Two-Year Employment Agreement between the Company and certain
executive officers filed herewith.
* 10(d) Corporate Officers Incentive Compensation Plan filed herewith.
* 10(e) Form of Amended and Restated Supplemental Executive Retirement Agreement
dated as of March 20, 1990 between the Company and certain of its
executive officers (incorporated by reference to Exhibit 10(g) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1990).
* 10(f) The Company's Deferred Compensation Plan for Nonemployee Directors
(incorporated by reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990).
* 10(g) Form of Indemnification Agreement between the Company and the Directors
and certain officers filed herewith.
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42
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
* 10(h) The Company's Long Term Incentive Plan (incorporated by reference to
Exhibit 10(k) to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1991).
* 10(i) Separation Agreement between the Company and Thomas M. Kostelnik,
dated June 7, 1993 (incorporated herein by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the period ended
July 3, 1993).
10(j) Mortgage and Security Agreement, dated October 29, 1993, between
The Lamson & Sessions Co. and PFL Life Insurance Company
(incorporated herein by reference to Exhibit 10(j) to the Company's
Annual Report on Form 10-K for the year ended January 1, 1994).
10(k) Asset Purchase Agreement between Iochpe-Maxion Ohio, Inc. and The
Lamson & Sessions Co. dated as of May 4, 1994 (incorporated by
reference to Exhibit 10 to the Company's Current Report on Form 8-K
dated as of May 27, 1994).
* 10(l) Separation Agreement between The Lamson & Sessions Co. and Allan J.
Zambie, dated July 31, 1994 (incorporated by reference to Exhibit
10 to the Company's Quarterly Report on Form 10-Q for the period
ended October 1, 1994).
10(m) Amendment No. 2 and Consent, dated as of March 1, 1994, to the GECC
Loan Agreement filed herewith.
10(n) Amendment No. 3, dated as of March 31, 1994 to the GECC Loan
Agreement filed herewith.
10(o) Amendment No. 4 and Consent, dated as of May 15, 1994, to the GECC
Loan Agreement filed herewith.
10(p) Amendment No. 5, dated as of June 10, 1994, to the GECC Loan
Agreement filed herewith.
10(q) Amendment No. 6, dated as of September 30, 1994, to the GECC Loan
Agreement filed herewith.
10(r) Amendment No. 7, dated as of January 31, 1995, to the GECC Loan
Agreement filed herewith.
11 Computation of Earnings Per Common Share
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43
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
24 Powers of Attorney
27 Financial Data Schedule (Submitted for the SEC's information)
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