Document/Exhibit Description Pages Size
1: 10-K Form 10-K for Lilly Industries, Inc. 19 97K
2: EX-4.4 Second Amendment to Credit Agreement 12 24K
3: EX-4.5 Change in Rights Agent 2 10K
4: EX-10.24 Douglas W. Huemme Executive Employment Agreement 13 61K
5: EX-10.25 Crocker Change-In-Control Agreement 14 69K
6: EX-10.26 Deblandre Change-In-Control Agreement 12 59K
7: EX-10.27 Underwood Change-In-Control Agreement 14 69K
8: EX-13 Lilly Industries, Inc. 1999 Annual Report 28± 131K
9: EX-21 List of Subsidiaries 2± 8K
10: EX-23 Consent of Ernst & Young LLP 1 7K
11: EX-27 Financial Data Schedule 1 8K
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the Fiscal Year ended November 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-6953
LILLY INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
INDIANA 35-0471010
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 W. 103rd Street
Indianapolis, Indiana 46290
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
317-814-8700
Securities registered pursuant to Section 12(b) of the Act:
Class A Stock, without par value
Common Share Purchase Right
(Title of class)
New York Stock Exchange
(name of each exchange on which registered)
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. [X]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of February 14, 2000 was $288,728,000.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of February 14, 2000.
22,733,318 shares of Class A Common Stock, without par value; 486,306 shares
of Class B Common Stock, without par value
DOCUMENTS INCORPORATED BY REFERENCE
Part II: Items 5 Annual Report to Shareholders for Fiscal
through 8 Year Ended November 30, 1999
Part III: Items 10 Proxy Statement for Annual Meeting of
through 13 Shareholders to be held March 31, 2000
PART I
Lilly Industries, Inc.
Item 1. BUSINESS
Business Description
Lilly Industries, Inc. (referred to herein as "Lilly" or the "Company") was
founded in 1865, and incorporated under the laws of the State of Indiana on
December 5, 1888. The Company believes it is a leader in the industrial coatings
and specialty chemicals industry, one of the five largest industrial coatings
and specialty chemicals manufacturers in North America, and one of the 15
largest in the world based on net sales of $656.2 million in fiscal 1999. Lilly
formulates, manufactures and markets industrial coatings and specialty chemicals
to original equipment manufacturers, enhancing the appearance of and providing
durability to products such as home and office furniture, cabinets, appliances,
building products, transportation, agricultural and construction equipment,
mirrors and a variety of metal and fiberglass reinforced surfaces. A significant
amount of the Company's sales represent industrial coatings and specialty
chemicals developed in cooperation with its customers to meet their specific
product requirements, resulting in a number of primary supplier relationships
with those customers.
No one class of similar products (other than protective and decorative coatings)
accounted for 10% or more of the consolidated revenues of the Company in any of
the last three fiscal years (1). The Company has only one reportable operating
segment, and employs approximately 2,400 people. The Company has plants or sales
offices in the U.S., Australia, Canada, China, Germany, Ireland, Malaysia,
Mexico, Singapore, Taiwan and the United Kingdom.
(1) References in this Form 10-K are references to the Company's fiscal years
ended November 30, 1999, 1998 and 1997.
Industrial Coatings and Specialty Chemicals Industry
Industrial coatings and specialty chemicals protect a wide range of manufactured
goods from the effects of external elements over the life of the product. In
addition, industrial coatings and specialty chemicals make products more
aesthetically pleasing to end use customers. Lilly competes in three end use
markets: (i) wood coatings, such as lacquer and protective coatings for
furniture, building products and kitchen cabinets; (ii) metal coatings, such as
liquid and powder coatings used to finish building products, furniture,
appliances and transportation equipment; and (iii) composites and glass
coatings, such as gelcoats and specialty chemicals for transportation equipment,
recreational vehicles and mirrors.
Sales for the global paints and coatings market equal approximately $57 billion
annually, with annual sales for the domestic market equaling approximately $17
billion. Annual sales for the industrial coatings and specialty chemicals
segment in which Lilly participates are approximately $27 billion globally and
$9 billion domestically. The balance of the market consists primarily of
architectural coatings (primarily house paints), a market in which Lilly does
not compete, and specialty coatings, including maintenance coatings and traffic
paints.
The industrial coatings and specialty chemicals industry is a mature and highly
fragmented industry in the U.S., growing in-line with industrial production, and
includes many small competitors. Long term annual unit growth in the U.S.
industrial coatings and specialty chemicals business is projected between 1% and
2%, largely tied to fluctuations in general economic cycles. Annual unit growth
rate is projected between 1% and 2% in Europe and between 4% and 6% in Asia. The
North American industrial coatings and specialty chemicals industry is divided
among over 700 participants.
Due to its maturity and historically fragmented participant base, this industry
is undergoing consolidation through mergers and acquisitions. Consolidation of
the industrial coatings and specialty chemicals industry is being driven by
several factors, including (i) the need for growth in maturing markets; (ii)
environmental costs which, together with a more demanding global customer base,
will make it difficult for smaller manufacturers with limited financial
resources to remain independent; and (iii) the increasing technical and
financial resources of the larger companies. To date, the effects of industry
consolidation include a greater concentration of market share with fewer
companies, a reduction in the number of competitors, and the creation of new
synergies within the larger industrial coatings and specialty chemicals
companies, such as raw material purchasing power and manufacturing economies of
scale.
Competition
The industrial coatings and specialty chemicals industry is competitive, with
more than 700 North American manufacturers operating in numerous end-use
markets. Manufacturers include large international companies as well as small
regional firms, and no one manufacturer dominates. Competitive advantages
include developing industrial coatings and specialty chemicals that meet
specific customer requirements, pricing industrial coatings and specialty
chemicals competitively and rapidly delivering quality products. Technological
developments that reduce negative environmental effects are also an important
competitive factor.
Lilly is one of the top five industrial coatings and specialty chemicals
manufacturers in North America, one of the top 15 worldwide. While Lilly is
among the top five North American producers of industrial coatings and specialty
chemicals, some competitors are generally more diversified and have greater
financial resources than the Company. Major competitors include Akzo Nobel;
Ferro Corporation; BASF; The Sherwin-Williams Company; PPG Industries, Inc.; and
The Valspar Corporation.
End Use Markets
The Company focuses on three end use markets, wood coatings; metal coatings; and
composites and glass coatings. These three markets accounted for approximately
46%, 43%, and 11% of the Company's fiscal 1999 net sales, respectively. The
following provides a summary of these markets.
Wood Coatings. Lilly's wood coatings provide a full range of custom-formulated
coatings designed to enhance the beauty of wood while providing maximum
durability for products such as residential and office furniture, building
products and kitchen cabinets. Wood coatings are manufactured at six U.S.
locations, as well as five foreign facilities located in Canada, China, Ireland,
Malaysia and Taiwan.
Metal Coatings. The Company's metal coatings provide specialized coatings for
numerous applications such as appliances, building products and fixtures (such
as residential siding, aluminum gutters, and metal roofing), agricultural and
construction equipment, furniture, bicycles, digital satellite systems,
automotive trim and wheels, entry and garage doors, computers, window trim,
shelving, and playground equipment. These coatings include traditional liquid
coatings as well as coil coatings and a full range of decorative and functional
powder coatings. The coil coatings process is considered one of the most
environmentally safe, energy-efficient methods of applying coatings to metal
substrates. Lilly's technical innovation has produced conventional and
water-borne coil coatings formulated with proprietary resins that provide high
durability, flexibility, corrosion resistance and chemical resistance. Powder
coatings are experiencing growth because of their environmental desirability, as
powder coatings have no solvent content. Lilly powder coatings are
environmentally compliant and provide outstanding durability and performance for
both interior and exterior applications. Metal coatings are manufactured at
thirteen facilities in the U.S. and facilities in Canada and Germany.
Composites and Glass Coatings. The Company's composites include gelcoats and
fiberglass reinforced plastic composites for boats, recreational vehicles,
cultured marble vanity tops, custom van and truck components and personal
watercraft. Lilly's glass coatings are well recognized globally. The Company's
glass coatings provide mirror manufacturers with everything needed to convert
glass into mirrors of premier quality. Glass coatings are manufactured at one
U.S. facility located in Connecticut, and foreign facilities located in Canada
and Germany.
Distribution and Customers
Lilly's technical sales force of approximately 700 people market and sell its
industrial coatings and specialty chemicals directly to over 6,000 customers
throughout the world. Most of the Company's customers are located throughout the
United States and Canada, with the remaining customers concentrated in Europe
and Asia-Pacific. The Company is not dependent upon any single customer or few
customers. The loss of any single customer would not have a material adverse
impact on the Company. No single customer of the Company represented more than
5% of net sales. International sales, including U.S. exports, were $176.6
million in fiscal year 1999, which represented 27% of consolidated sales.
Information concerning the Company's net sales, operating income and assets in
foreign countries and the United States for the three years ended November 30,
1999 is set forth in Note 9 in the Notes to Consolidated Financial Statements in
the Company's 1999 Annual Report to Shareholders, which is incorporated herein
by reference.
The Company has no significant order backlog. No material part of the business
is subject to re-negotiation of profit or termination of contracts or
subcontracts at the election of any governments. Historically, first quarter
operating results are below operating results for the second, third and fourth
quarters due to the lower demand for industrial production which typically
occurs in December.
Raw Materials
Raw materials are the largest single cost in the industrial coatings and
specialty chemicals business, representing about half of the selling price of
most products. The typical product consists of pigments dispersed in a liquid
known as the "vehicle," which is usually composed of one or more polymers, and a
solvent. The solvent helps the product coat the substrate; the polymers form a
film to hold the product coating in place after the solvent has evaporated and
provides the unique performance characteristics of the product coating. Solvents
are typically petrochemical-based products that evaporate quickly. However, the
use of petrochemical-based solvents is declining as environmentally friendly
technologies, such as water-borne liquid and powder coatings, gain market share.
The pigment, usually an inorganic substance, provides the color. "Fillers" and
"extender pigments" provide gloss and sheen control, while specialty chemicals
known as additives, enhance the flow and application properties of the product
coating.
The Company manufactures its industrial coatings and specialty chemicals from a
variety of polymers, pigments, solvents and other chemicals, the bulk of which
are obtained from petrochemical feed stocks. In addition to petrochemicals, the
Company uses both silver and copper. Under normal conditions, all of these raw
materials are available on the open market, although prices and availability are
subject to fluctuation from time to time. Lilly, like most other companies in
the industrial coatings and specialty chemicals industry, uses a variety of
organic and inorganic materials in its products. No single raw material cost
currently accounts for over 5% of net sales and most account for less than 1% of
net sales.
The Company's largest single raw material cost is for titanium dioxide (TiO2),
which is a white pigment, and accounts for approximately 30% of pigment usage in
the industrial coatings and specialty chemicals industry. The Company's annual
expenditures for TiO2 total approximately 5% of the Company's annual net sales.
Research and Development
Lilly's Corporate Technology Center, as well as laboratories at its major
facilities, emphasize the development of product finishes to meet specific
requirements of customers and the maintenance of quality throughout the
manufacturing process. They are also engaged in research directed toward
development of new products and new manufacturing and application techniques.
Research and development expenses were $21.2 million (3.2% of net sales), $20.6
million (3.3% of net sales), and $18.7 million (3.1% of net sales) for the
fiscal years 1999, 1998 and 1997, respectively. Future research and development
expenses as a percent of net sales are anticipated to remain at current levels
with emphasis on new product development.
The Company holds several patents and trademarks, and considers patent and
trademark protection to be important, but no individual patent is currently
material to the Company's business as a whole. The Company has patents and
licenses for glass coatings which are material to that specific business; and
new patents are continually being developed to sustain the Company's competitive
advantage.
Properties
Lilly maintains thirty principal facilities, of which eighteen were located in
the U.S. See Item 2 - Properties. The plants range in size from approximately
260,000 square feet to approximately 9,000 square feet. The facilities vary in
age and are well maintained and adequate for their present uses. Utilization
rates vary from site to site depending on capacity, customers served and range
of production capabilities. The Company believes it can take advantage of
special situations (e.g., special orders, new customers, new technology) that
may arise during the course of an operating cycle by adding capacity through
incremental shifts. Each facility operates technical support centers to assist
customers in addressing both application and processing issues.
Although the Company has traditionally located its domestic plants near its
customer base, the Company has begun to rely on larger, more efficient,
centralized plants in the U.S. With respect to its foreign operations, the
Company continues to adhere to its strategy of following, and being in close
proximity to its customers as they open plants around the world.
Employees and Collective Bargaining Units
As of November 30, 1999, Lilly employed approximately 2,400 people. The
industrial coatings and specialty chemical industry is not heavily unionized and
to the extent there is unionization, it is highly fragmented. Unionized workers
account for approximately 10% of the Company's total work force and operate
through five separate unions at six Lilly facilities. The Company believes its
relations with its employees are good.
Environmental Regulation
The Company's operations are subject to numerous foreign, federal, state and
local environmental laws and regulations relating to protection of the
environment, employee health and safety, and the discharge, storage, treatment
and disposal of hazardous materials. In the United States, these laws include
the Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA" or "Superfund"), the Resource Conservation and Recovery Act, the Clean
Water Act, and the Clean Air Act. Certain operations of the Company use
pigments, resins and solvents that contain chemicals that are considered
hazardous under various environmental laws. Accordingly, management closely
monitors the Company's environmental performance at its facilities. Management
believes the Company is in compliance in material respects with all
environmental laws and regulations.
CERCLA imposes joint and several liability, without regard to fault or the
legality of the original conduct, on certain classes of persons that are
considered to have contributed to the release of hazardous substances into the
environment. These persons include the owner and operator of the site where the
release occurred and companies that disposed or arranged for disposal of the
hazardous substances found at the site. The Company has been named as a
potentially responsible party ("PRP") by the United States Environmental
Protection Agency ("EPA") or similar state agencies with respect to several
inactive waste processing and/or disposal sites where clean-up costs have been
incurred or may be incurred. In addition to these sites, the Company is
currently investigating and remediating on-site disposal areas at certain of its
current and former facilities.
The Company continually assesses its environmental matters and establishes
reserves to provide for these matters as they arise. The Company's experience to
date leads it to believe it will have continuing expenditures for compliance
with provisions regulating protection of the environment and remediation efforts
at waste and manufacturing sites. However, management believes such expenditures
will not have a material adverse effect on operating results or the financial
position of the Company as a whole.
Under the Clean Air Act Amendments of 1990 ("CAAA"), the EPA is required to
regulate volatile organic compound ("VOC") emissions from a variety of consumer
and commercial products, including industrial coatings and specialty chemicals.
Accordingly, the EPA has issued various regulations that limit VOCs from
industrial coatings and specialty chemicals. Although the Company cannot
accurately assess the impact of these regulations prior to their promulgation or
implementation in final form, based on currently available information, the
Company believes these regulations will not have a material adverse effect on
the operating results or the financial position of the Company as a whole.
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements which constitute forward
looking statements within the meaning of Section 27A of the Securities Act.
Discussions containing such forward looking statements may be found under the
captions "Management's Discussion and Analysis of Results of Operations and
Financial Condition ("MD&A"), and "Business," as well as elsewhere within this
Report. Forward looking statements include statements regarding the intent,
belief or current expectations of the Company, primarily with respect to the
future operating performance of the Company or related industry developments.
When used in this Report, terms such as "anticipate," "believe," "estimate,"
"expect," "intend," "indicate," "may be," "objective," "plan," "predict," and
"will be" are intended to identify such statements. Forward looking statements
are not guarantees of future performance and involve risks and uncertainties.
Forward looking statements are based upon management's expectations at the time
they are made. Actual results could differ materially from those projected in
the forward looking statements as a result of the risk factors set forth below
and the matters set forth in this Report generally, many of which are beyond the
control of the Company. The Company cautions the reader, however, the following
list of factors may not be exhaustive.
Sensitivity to General Economic and Industry Conditions
The Company's business, and the industrial coatings and specialty chemicals
industry as a whole, is cyclical in nature and affected by the general trends of
the economy. In particular, consumer behavior and confidence, the level of
personal discretionary spending, housing activity, interest rates, credit
availability, and demographics influence the Company's end use markets, such as
the housing, building products, construction and agricultural equipment,
appliance, furniture and automotive industries. During economic downturns, these
industries tend to experience declines, which in turn diminish demand for the
Company's products.
Effects of Leverage
The Company's level of indebtedness will have several important effects on its
operations including (i) a substantial portion of the Company's cash flow from
operations will be dedicated to debt service obligations, (ii) the covenants
contained in the Company's revolving credit facility and senior notes may limit
the Company's ability to borrow additional funds, and (iii) the Company's
leveraged financial position may make the Company more vulnerable to economic
downturns and may limit its ability to withstand competitive pressures, and plan
for, or react to, changes in market conditions.
Environmental Matters
The operations of the Company, like those of other companies in the industrial
coatings and specialty chemicals industry, are subject to numerous foreign,
federal, state and local environmental laws and regulations. While the Company
believes it is currently in material compliance with environmental requirements,
any failure to comply with such present and future requirements could subject
the Company to future liabilities. The imposition of more stringent
environmental requirements, or a determination the Company is potentially
responsible for site remediation where contamination is not presently known
could result in expenditures for which no accrual has been made.
Mature Industry
The industrial coatings and specialty chemicals industry is a mature business in
the U.S., growing in line with industrial production. Long-term annual growth in
the U.S. industrial coatings and specialty chemicals industry is projected in
the 1% to 2% range. To expand and remain competitive, the Company will be
required to continue (i) to develop industrial coatings and specialty chemicals
that meet specific customer requirements, (ii) to price those industrial
coatings and specialty chemicals competitively, and (iii) to deliver quality
products on time. In addition, the Company will also need to keep pace with
technological developments to remain competitive, particularly technological
developments that relate to environmental demands such as reductions of volatile
organic compound emissions imposed by government regulations.
Raw Materials
Approximately 50% of the Company's operating costs are typically attributable to
the cost of raw materials. The cost of these raw materials, most of which are
derived from petrochemical products, depends on numerous factors, including
changes in the economy, the level of foreign and domestic production, and the
crude oil supply and demand balance. A rise in the price of raw materials could
materially increase the Company's operating costs and thereby adversely affect
its profit margins.
International Operations
During fiscal 1999, the Company's international sales, including U.S. exports
accounted for approximately 27% of total sales, and this percentage may increase
in the coming years. The Company's international operations subject it to the
risks of doing business abroad, including currency fluctuations, various trade
barriers, restrictions on the transfer of funds, greater difficulty in accounts
receivable collection, burdens of complying with a wide variety of foreign laws,
and, in certain parts of the world, economic, social, and political instability,
any of which could have an adverse effect on the Company's financial position
and results of operations.
Executive Officers of the Company
The executive officers of the Company, the age of each, the positions and
offices held by each during the last five years, and the period during which
each has served in such positions and offices are as follows:
Name of
Executive Officer Age Positions and Offices Held
----------------- --- --------------------------
Douglas W. Huemme 58 Director since 1990; Chairman and
Chief Executive Officer of the
Company since prior to 1995;
President from prior to 1995 to
April, 1999.
Robert A. Taylor 45 Director since April, 1997;
President since April, 1999;
Chief Operating Officer since
February, 1997; Executive Vice
President from February, 1997 to
April, 1999; Vice President
and General Manager, Wood
Coatings from prior to 1995 to
February, 1997;
Larry H. Dalton 52 Vice President - Manufacturing
and Engineering since prior to
1995.
William C. Dorris 56 Director since 1989; Vice
President - Corporate Development since
prior to 1995.
John C. Elbin 46 Director since April, 1999,
Vice President, Chief Financial
Officer and Secretary since
April, 1997 when he joined the Company;
Senior Vice
President and Chief Financial
Officer of Pet Incorporated
from prior to 1995 to 1995.
A. Barry Melnkovic 42 Vice President - Human
Resources since April, 1996;
Director, Corporate Employee &
Labor Relations and Director
Corporate Compensation and
Benefits, Cummins Engine
Company, Inc., from prior to
1995 to 1996.
Kenneth L. Mills 51 Corporate Controller since 1999.
Corporate Accounting Director
from prior to 1995 to 1999. Assistant
Secretary since prior to 1995.
Each executive officer will serve as such until his successor is chosen and
qualified. No family relationships exist among the Company's executive officers.
Item 2. Properties.
The Company has thirty principal facilities. The locations and approximate
square footage at those facilities are as follows:
Location Square Feet
High Point, North Carolina (2 locations) 320,000
Indianapolis, Indiana 260,000
Grand Rapids, Michigan 165,000
North Kansas City, Missouri 138,000
Eschweiler, Germany 121,000
Fremont, Michigan 120,000
London, Ontario, Canada 103,000
Cornwall, Ontario, Canada 97,000
Bowling Green, Kentucky 94,000
Moline, Illinois 76,000
Kaohsiung Hsien, Taiwan, R.O.C. 64,000
Montebello, California 58,000
Charlotte, North Carolina 57,000
Rocky Hill, Connecticut 57,000
Gardena, California 52,000
Paulsboro, New Jersey 47,000
Dallas, Texas 36,000
Little Rock, Arkansas 35,000
Guadalupe, Mexico 35,000
Seattle, Washington 30,000
Elkhart, Indiana 25,000
Dongguan, China 25,000
Selangor, Malaysia 20,000
Davie, Florida 14,000
Ballinamore, Ireland 12,000
Abingdon, England 12,000
Wallenfels, West Germany 9,000
North Sydney, Australia 1,000
Singapore 1,000
All of these principal facilities noted above are owned directly or indirectly
by the Company, except for leased facilities in Grand Rapids, Michigan;
Dongguan, China; Selangor, Malaysia; Abingdon, England; Singapore; and North
Sydney, Australia.
Item 3. Legal Proceedings.
The Company is involved in various litigation and other asserted and unasserted
claims arising in the ordinary course of business, primarily relating to product
warranty and clean-up costs at independently operated waste treatment/disposal
sites previously used by the Company or the predecessors of businesses purchased
by the Company. While the results of lawsuits or other proceedings against the
Company cannot be predicted with certainty, management believes that uninsured
and unreserved losses, if any, arising from these proceedings will not have a
material adverse effect on the business or consolidated financial position of
the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of fiscal 1999 to a vote of
security holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Company's Common Equity and Related
Stockholder Matters.
The information required by this item is incorporated by reference herein from
the information included under caption "Stock Trading and Dividend Information"
in the Company's 1999 Annual Report to Shareholders and is included in Exhibit
13. There is no public trading market for the Company's Class B Common Stock.
Item 6. Selected Financial Data.
The information required by this item is incorporated by reference herein from
the information included under the caption "Selected Financial Data" in the
Company's 1999 Annual Report to Shareholders and is included in Exhibit 13.
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition.
The information required by this item is incorporated by reference herein from
the information included under the caption "Management's Discussion and Analysis
of Results of Operations and Financial Condition" in the Company's 1999 Annual
Report to Shareholders and is included in Exhibit 13.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company is subject to market risk in the form of interest rate risk and
foreign currency risk. Both interest rate risk and foreign currency risk are
immaterial to the Company.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements of the Company are incorporated by
reference from the Company's 1999 Annual Report to Shareholders and are included
in Exhibit 13.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
No information is required to be disclosed under this item of this report
pursuant to Instruction 1 to Item 304 of Regulation S-K.
PART III
Item 10. Directors and Executive Officers of the Company.
The information required by this item with respect to directors of the Company
is incorporated herein by reference from the section entitled "Proposal Number
One, Election of Directors" of the Company's definitive Proxy Statement relating
to its Annual Meeting of Shareholders to be held March 31, 2000. See Part I, for
a list of the Company's executive officers, and their ages, positions and
offices.
Item 11. Executive Compensation.
The information required by this item is incorporated herein by reference from
the section entitled "Compensation of Executive Officers" of the Company's
definitive Proxy Statement relating to its Annual Meeting of Shareholders to be
held March 31, 2000.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this item is incorporated herein by reference from
the sections entitled "Share Ownership of Certain Beneficial Owners" and
"Proposal Number One, Election of Directors" of the Company's definitive Proxy
Statement relating to its Annual Meeting of Shareholders to be held March 31,
2000.
Item 13. Certain Relationships and Related Transactions.
The information required by this item, if any, is incorporated herein by
reference from the section entitled "Proposal Number One, Election of Directors"
of the Company's definitive Proxy statement relating to its Annual Meeting of
Shareholders to be held March 31, 2000.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)-1 The following items, included in the Company's 1999 Annual
Report to Shareholders, are incorporated herein by reference
and are included herein in Exhibit 13.
Report of Independent Auditors
Consolidated Balance Sheets -- November 30, 1999 and 1998
Consolidated Statements of Income -- Years ended November 30,
1999, 1998 and 1997
Consolidated Statements of Cash Flows -- Years ended November
30, 1999, 1998 and 1997
Consolidated Statements of Shareholders' Equity -- Years ended
November 30, 1999, 1998 and 1997
Notes to Consolidated Financial Statements -- November 30,
1999
(a)-2 The following financial statement schedule is filed as a part
of this report.
Schedule II
Valuation and Qualifying Accounts
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.
(a)-3 Exhibits.
Exhibits Incorporated by Reference
EXHIBIT INDEX
Exhibit No. Description
2 Merger Agreement, dated March 4, 1996, by and among Lilly
Industries, Inc., LP Acquisition Corporation and Guardsman
Products, Inc. This exhibit is incorporated by reference to
Exhibit 2 to Lilly Industries, Inc.'s Form 8-K Current Report
filed with the SEC on April 22, 1996.
3.1 Restated Articles of Incorporation of Lilly Industries, Inc., as
amended. This exhibit is incorporated by reference to Exhibit
3(a) to Lilly Industries, Inc.'s Form 10-K Annual Report for the
fiscal year ended November 30, 1996.
3.2 Restated By-Laws of Lilly Industries, Inc., as amended. This
exhibit is incorporated by reference to Exhibit 3(b) to Lilly
Industries, Inc.'s Form 10-K Annual Report for the fiscal year
ended November 30, 1993.
4.1 Indenture, dated November 10, 1997,between Lilly Industries, Inc
and Harris Trust and Savings Bank. This exhibit is incorporated
by reference to Exhibit 4.1 to Lilly Industries, Inc.'s
Registration Statement on Form S-4 filed with the Commission on
December 5, 1997 (Commission No. 333-41587).
4.2 Credit Agreement, dated October 24, 1997, between Lilly
Industries, Inc., the Lenders Signatory thereto, and NBD Bank,
N.A. as Agent. This exhiit is incorporated by reference to
Exhibit 4.2 to Lilly Industries, Inc.'s Registration Statement on
Form S-4 filed with the Commission on December 5, 1997
(Commission No. 333-41587). First Amendment to Credit Agreement
among Lilly Industries, Inc., the lenders signatory thereto and
NBD Bank, N.A. as agent, dated as of April 4, 1998 is
incorporated by reference to Exhibit 4.4 to Lilly Industries,
Inc.'s Form 10-K Annual Report for the fiscal year ended November
30, 1998.
4.3 Rights Agreement, dated January 12, 1996, between Lilly
Industries, Inc. and KeyCorp Shareholder Services, Inc. as Rights
Agent. This exhibit is incorporated by reference to Exhibit 4 to
Lilly Industries, Inc.'s Form 8-A filed with the SEC on January
23, 1996.
10.1 Registration Agreement, dated November 5, 1997, between Lilly
Industries, Inc. and Salomon Brothers, Inc., Lehman Brothers,
Inc. and Schroder & Co., Inc. This exhibit is incorporated by
reference to Exhibit 10.1 to Lilly Industries, Inc.'s
Registration Statement on Form S-4 filed with the Commission on
December 5, 1997 (Commission No. 333-41587).
10.2 Form of Exchange Agent Agreement, dated December 22, 1997,
between Lilly Industries, Inc. and Harris Trust and Savings Bank.
This exhibit is incorporated by reference to Exhibit 10.2 to
Lilly Industries, Inc.'s Registration Statement on Form S-4 filed
with the Commission on December 5,1997 (Commission No.
333-41587).
*10.3 Lilly Industries, Inc. Unfunded Supplemental Retirement Plan (as
in effect November 29, 1990). This exhibit is Incorporated by
reference to Exhibit 10(b) to Lilly Industries, Inc.'s Form 10-K
Annual Report for the fiscal year ended November 30, 1990.
*10.4 Lilly Industries, Inc. Unfunded Excess Benefit Plan. This exhibit
is incorporated by reference to Exhibit 10(c) to Lilly
Industries, Inc.'s Form 10-K Annual Report for the fiscal year
ended November 30, 1989.
*10.5 Lilly Industries, Inc. Second Unfunded Supplemental Retirement
Plan (effective June 4, 1990). This exhibit is incorporated by
reference to Exhibit 10(f) to Lilly Industries, Inc.'s Form 10-K
Annual Report for the fiscal year ended November 30, 1990.
*10.7 Lilly Industries, Inc. 1991 Director Stock Option Plan. This
exhibit is incorporated by reference to Exhibit 10(i) to Lilly
Industries, Inc.'s Form 10-K Annual Report for the fiscal year
ended November 30, 1991.
*10.8 Lilly Industries, Inc. 1992 Stock Option Plan. This exhibit is
incorporated by reference to Exhibit 10(j) to Lilly Industries,
Inc.'s Form 10-K Annual Report for the fiscal year ended November
30, 1991. First Amendment to Lilly Industries, Inc. 1992 Stock
Option Plan. This exhibit is incorporated by reference to Exhibit
10.8 to Lilly Industries, Inc.'s Registration Statement on Form
S-4 filed with the Commission on December 5, 1997 (Commission No.
333-41587).
*10.9 Lilly Industries, Inc. Executive Retirement Plan (effective as of
January1, 1996). This exhibit is incorporated by reference to
Exhibit 10(i) to Lilly Industries, Inc.'s Form 10-K Annual Report
for the fiscal year ended November 30, 1996.
*10.10 Lilly Industries, Inc. Retirement Plan (effective as of January
1, 1996) and Trust Agreement for Lilly Industries, Inc.
Replacement Plan between Lilly Industries, Inc. and Bankers Trust
Company of Des Moines, dated September 27, 1996. This exhibit is
incorporated by reference to Exhibit 10(j) to Lilly Industries,
Inc.'s Form 10-K Annual Report for the fiscal year ended November
30, 1996.
*10.11 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Hugh M. Cates. This exhibit is
incorporated by reference to Exhibit 10(1) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.12 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Larry H. Dalton. This exhibit is
incorporated by reference to Exhibit 10(2) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.13 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and William C. Dorris. This exhibit is
incorporated by reference to Exhibit 10(3) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.14 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and John C. Elbin. This exhibit is
incorporated by reference to Exhibit 10(4) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.15 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Ned L. Fox. This exhibit is incorporated
by reference to Exhibit 10(5) to Lilly Industries, Inc.'s Form
10-Q Quarterly Report for the fiscal quarter ended August 31,
1997.
*10.16 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Douglas W. Huemme. This exhibit is
incorporated by reference to Exhibit 10(6) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.17 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and A. Barry Melnkovic. This exhibit is
incorporated by reference to Exhibit 10(7) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.18 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and John D. Million. This exhibit is
incorporated by reference to Exhibit 10(8) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.19 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Kenneth L. Mills. This exhibit is
incorporated by reference to Exhibit 10(9) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.20 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Gary D. Missildine. This exhibit is
incorporated by reference to Exhibit 10(10) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.21 Change in Control Agreement, dated September 5, 1997, by and
between Registrant and Robert A. Taylor. This exhibit is
incorporated by reference to Exhibit 10(11) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.22 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Keith C. Vander Hyde, Jr. This exhibit is
incorporated by reference to Exhibit 10(12) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
*10.23 Change in Control Agreement, dated September 26, 1997, by and
between Registrant and Jay M Wiegner. This exhibit is
incorporated by reference to Exhibit 10(13) to Lilly Industries,
Inc.'s Form 10-Q Quarterly Report for the fiscal quarter ended
August 31, 1997.
* Management contracts and compensatory plans required to be filed
pursuant to Item 14(c) of Form 10-K.
Exhibits Filed Herewith:
4.4 Second Amendment to Credit Agreement among Lilly Industries, Inc., the
Lenders Signatory thereto and NBD Bank, N.A., as agent, dated as of
August 31, 1999.
4.5 Letter date November 29, 1999 appointing National CityBank as Rights
Agent under the Rights Agreement dated January 12, 1996 referenced as
Exhibit 4.3 to this Form 10-K
10.24 Douglas W. Huemme Executive Employment Agreement dated as of January
14, 2000.
10.25 Change in Control Agreement, dated February 3, 2000, by and between
Registrant and Olin R. Rocker.
10.26 Change in Control Agreement, dated February 3, 2000, by and between
Registrant and Alan DeBlandre.
10.27 Change in Control Agreement, dated February 3, 2000, by and between
Registrant and Virgil E. Underwood.
13 Excerpts from the Lilly Industries, Inc. 1999 Annual Report.
21 List of Subsidiaries.
23 Consent of Ernst & Young LLP.
27 Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: February 25, 2000
LILLY INDUSTRIES, INC.
/s/ Douglas W. Huemme
------------------------------
Douglas W. Huemme,
Chairman and Chief
Executive 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 Company and in
the capacities and on the dates indicated.
Signature Title Date
(1) Principal Executive
Officer and Director
/s/ Douglas W. Huemme Chairman and Chief February 25, 2000
----------------------- Executive Officer
Douglas W. Huemme
(2) Principal Financial
Officer and Director
/s/ John C. Elbin Vice President, February 25, 2000
------------------------ Chief Financial Officer
John C. Elbin and Secretary
(3) Principal
Accounting Officer
/s/ Kenneth L. Mills Corporate Controller February 25, 2000
----------------------- and Assistant
Kenneth L. Mills Secretary
(4) A majority of the
Board of Directors
/s/ James M. Cornelius Director February 25, 2000
---------------------------
James M. Cornelius
/s/ William C. Dorris Director February 25, 2000
---------------------------
William C. Dorris
/s/ Paul K. Gaston Director February 25, 2000
---------------------------
Paul K. Gaston
/s/ Harry Morrison, Ph.D. Director February 25, 2000
---------------------------
Harry Morrison, Ph.D.
/s/ Norma J. Oman Director February 25, 2000
---------------------------
Norma J. Oman
/s/ John D. Peterson Director February 25, 2000
---------------------------
John D. Peterson
/s/ Thomas E. Reilly, Jr. Director February 25, 2000
---------------------------
Thomas E. Reilly, Jr.
/s/ Robert A. Taylor Director February 25, 2000
---------------------------
Robert A. Taylor
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
LILLY INDUSTRIES, INC. AND SUBSIDIARIES
[Enlarge/Download Table]
COL. A COL. B COL. C COL. D COL. E
------ ------ ------ ------ ------
Additions
Description Balance at Deductions- Balance
Beginning Charged to Charged to Acquired in Describe at End of
of Period Costs and Other Accounts Business Period
Expenditures -Describe Combination
Year ended November 30, 1999:
Reserves and allowances
deducted from asset
accounts:
Allowance for doubtful
accounts receivable $1,981,000 $127,000 $-- $-- $333,000 (A) $1,775,000
==============================================================================================
Year ended November 30, 1998:
Reserves and allowances
deducted from asset
accounts:
Allowance for doubtful
accounts receivable $2,139,000 $752,000 $-- $-- $910,000 (A) $1,981,000
==============================================================================================
Year ended November 30, 1997:
Reserves and allowances
deducted from asset
accounts:
Allowance for doubtful
accounts receivable $2,705,759 $538,000 $-- $-- $1,104,759 (A) $2,139,000
==============================================================================================
Note A - Uncollectible accounts receivable charged off, net of recoveries.
Dates Referenced Herein and Documents Incorporated by Reference
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