Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 2000 Form 10-K 45± 232K
2: EX-10.27(J) Ninth Amend. to the Credit and Guaranty Agreement 13± 49K
3: EX-10.33 Amendment to Asset Purchase Agreement 7± 27K
4: EX-21 Subsidiaries of the Company as of Dec. 31, 2000 2± 8K
5: EX-27 Financial Data Schedule as of December 31, 2000 1 6K
UNITED STATES
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 December 31, 2000
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------------- ----------------
Commission file number - 1-9294
Imo Industries Inc.
(Exact name of registrant as specified in its charter)
Delaware 21-0733751
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
997 Lenox Drive, Suite 111
Lawrenceville, New Jersey 08648
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 609-896-7600.
Securities registered pursuant to Section 12(b) of the Act: None
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, and will not be contained, to the best
of Registrant's knowledge, in this Form 10-K or any amendment to this Form 10-K.
(X )
Shares of Registrant's common stock, $.01 par value, outstanding as of
March 30, 2001 ......................100
DOCUMENTS INCORPORATED BY REFERENCE
Identification of Documents Part into which Incorporated
--------------------------- -----------------------------
None
PART I
Item 1. Business.
General
Imo Industries Inc. (hereinafter with its subsidiaries referred to as the
"Company") is an integrated multinational manufacturer of a broad range of
engineered industrial products designed primarily to transfer liquids or
regulate and control motion in a variety of industrial applications. The Company
markets its products on a worldwide basis to a diverse customer base. The
Company operates in two distinct industry segments: Fluid Handling and
Industrial Positioning.
Fluid Handling. The Fluid Handling segment designs and produces a broad
range of pumps, including screw, centrifugal and gear pumps. The pumps designed
and produced by the Fluid Handling segment serve a variety of applications in
the following industries: chemicals, marine and offshore engineering, energy and
power generation, sewage and environmental engineering, pulp and paper, water
treatment and other process industries. In Fluid Handling, the Company markets
its products principally under the Imo and Warren brand names.
Industrial Positioning. The Industrial Positioning segment designs and
produces a wide range of power transmission and motion control products,
including enclosed gear drives, speed reducers, open gearing components, AC and
DC motor controllers, push-pull cable, remote control systems and marine and
power equipment after-market products. In Industrial Positioning, the Company's
Boston Gear and Morse Controls units are among sales leaders in their respective
market segments. Boston Gear products have applications in a wide range of
industrial manufacturing operations, ranging from packaging machinery and
equipment to integrated steel and pulp and paper mills. Morse Controls products
are sold into a variety of end use markets with a concentration in the marine,
mobile equipment and aviation sectors. On February 13, 2001, the Company sold
the assets of its Morse Controls division and stock of the Morse related
subsidiaries to Teleflex Incorporated ("Teleflex") pursuant to an agreement
dated November 15, 2000 for $135 million in cash, subject to final adjustment.
History
The Company, founded in 1901 in the United States by Dr. Carl Gustaf Patrick de
Laval, a Swedish scientist, was incorporated in Delaware on March 2, 1959. The
Company was acquired by Transamerica Corporation ("Transamerica") in 1963, and
in 1964, Transamerica merged its existing wholly owned manufacturing subsidiary,
General Metals Corporation, into the Company. At the close of business on
December 18, 1986, Transamerica distributed all of the issued and outstanding
shares of the Company common stock to holders of record of Transamerica common
stock on the basis of one share of Company common stock for each ten shares of
Transamerica common stock held and since that time the Company has operated on a
stand-alone basis.
On August 28, 1997, Colfax Corporation ("Colfax"), acquired approximately 93% of
the Company's outstanding shares of common stock pursuant to its tender offer
for all outstanding shares of common stock of the Company (the "Acquisition").
The consideration paid was $7.05 per share of common stock or $112.1 million in
total. On July 2, 1998, Imo Merger Corp., a wholly owned subsidiary of Colfax,
merged with and into Imo, pursuant to a short-form merger under Delaware law
("back-end merger"). The Company was the surviving corporation in the back-end
merger and as result became a wholly owned subsidiary of Colfax.
Information regarding the Acquisition of the Company is contained in Note 2 to
the Consolidated Financial Statements included in Part IV of this Form 10-K
Report as indexed at Item 14(a)(1).
Industry Segments
A description of the principal products and services offered by each business
segment of the Company, as well as the principal markets for such products and
services, are set forth below. Certain information with respect to net sales,
operating profit, and identifiable assets of each of these segments and by
geographic area is contained in Note 10 to the Consolidated Financial
Statements.
Fluid Handling
The Fluid Handling business segment is a leading worldwide manufacturer of
rotary screw pumps. The three units that comprise the Fluid Handling segment --
Imo Pump, Imo AB and Warren Pumps Inc. -- design and manufacture screw-type
fuel, lube oil and hydraulic pumps for use primarily by the marine, process, oil
and gas and elevator industries. The segment's three-screw pumps are the leading
low-noise-level pumps used in United States Navy and commercial vessels. These
pumps are also used to power hydraulic elevators, lubricate diesel engines and
fuel gas turbines. The segment's two-screw pumps are used by the pulp and paper
industry and in other high-viscosity process applications.
Industrial Positioning
The Industrial Positioning business segment produces speed reducers, loose
gearing, and precision mechanical and electronic control products and systems,
that are recognized as leading products in their market niches. This segment is
comprised of four units: Boston Gear, a leading producer of gears and speed
reducers, Fincor Electronics, a producer of adjustable-speed motor controllers,
Morse Controls, a manufacturer of push-pull cable and control systems and Sierra
International Inc., a marketer of after-market marine and power equipment
products. Speed reducers are used to reduce the output speed and increase the
torque of power trains in numerous products, ranging from industrial machinery
to exercise treadmills. Adjustable-speed motor controllers are used for the
accurate control of electric motor speed, torque, shaft position and direction
of rotation in applications such as ski lifts, textile machinery, overhead
cranes and large printing presses. These operations also produce worm gear sets
used as speed reducers by original equipment manufacturers and by oil and gas
and industrial machinery customers. Push-pull cable and control systems are used
to control and actuate functions, such as steering and valve adjustment, as an
alternative to electrical systems. Applications include throttle control and
steering systems for both off-the-road vehicles and pleasure boats. After-market
marine and power equipment products include engine parts and flexible hose for
pleasure craft and lawn and garden equipment. On February 13, 2001, the Company
sold the assets of its Morse Controls division and stock of the Morse related
subsidiaries to Teleflex Incorporated ("Teleflex").
Discontinued Operations
On February 27, 1998, the Company completed the sale of its Roltra Morse
business to Magna International Inc. for cash of $30 million, plus the
assumption of Roltra Morse's debt. The sale price approximated the recorded net
book value of the business. Net proceeds were used to reduce domestic senior
debt.
In accordance with APB Opinion No. 30, the disposal of this business segment has
been accounted for as a discontinued operation and, accordingly, the operating
results have been segregated and reported as Discontinued Operations in the
accompanying Consolidated Statements of Income.
See Note 3 to the Consolidated Financial Statements for additional details
regarding the discontinued operations.
Cost Reduction Programs
In connection with the Acquisition, the Company implemented a cost reduction
program. The cost of this program was $18.6 million and was accrued for in
accordance with the purchase method of accounting. It is comprised of $10.5
million related to severance and termination benefits as a result of headcount
reductions at the Company's corporate headquarters. In addition, $1.2 million
and $6.9 million of costs for the Company's Fluid Handling and Industrial
Positioning segments, respectively, related to severance and termination
benefits resulting from headcount reductions and the consolidation of certain
manufacturing facilities. The program was completed in 1999. The required cash
outlay related to this program was $8.1 million in 1997, $7.4 million in 1998
and $3.1 million in 1999.
Competition
The Company's products and services are marketed on a worldwide basis. Most
markets in which the Company operates are highly competitive. The principal
elements of competition for the products manufactured in each of the Company's
business segments are design features, product quality, customer service, and
price. Because the Company competes in certain narrowly defined niche markets,
there is not any single company that competes directly with the Company across
all of the Company's product lines.
Product Distribution and Customers
During 2000, sales by the Company's direct sales forces were approximately 81%
and 44% of the Fluid Handling and Industrial Positioning segments, respectively.
The Company's remaining sales are made through distributors, dealers and agents.
None of the Company's business segments is dependent on any single customer or a
few customers, the loss of which would have a material adverse effect on the
respective segments, or on the Company as a whole. No customer accounted for 10%
or more of consolidated sales from continuing operations in 2000, 1999 or 1998.
Backlog
The Company's backlog of unfilled orders at February 23, 2001, February 25, 2000
and at December 31, 2000, 1999 and 1998, by business segment, was as follows:
February 23, February 25, December 31,
------------ ------------ ------------
2001 2000 2000 1999 1998
---- ---- ---- ---- ----
(Dollars in millions)
Fluid Handling $ 35.3 $27.9 $ 30.4 $ 25.7 $ 32.1
Industrial Positioning 12.5 36.6 32.9 33.3 30.2
---- ---- ---- ---- ----
$ 47.8 $ 64.5 $ 63.3 $ 59.0 $ 62.3
====== ====== ====== ====== ======
Of the total backlog at December 31, 2000, the Company believes that all but
approximately $1.9 million of its orders will be filled in 2001. The February
23, 2001 backlog does not include the Morse Controls division which was sold on
February 13, 2001.
Raw Materials
The Company obtains raw materials, component parts and supplies from a variety
of sources, generally from more than one supplier. The Company's principal raw
materials are metals and plastics. The Company's suppliers and sources of raw
materials are based in both the United States and internationally. The Company
believes that its sources of raw materials are adequate for its needs for the
foreseeable future. The loss of any one supplier would not have a material
adverse effect on the Company's financial condition or results of operations.
Patents, Licenses and Trademarks
The Company owns numerous unexpired U.S. patents (currently having a term of 17
years from the date of issuance and expiring at various times in the future) and
foreign patents (having an initial term that is governed by the law of the
country and expiring at various times in the future), including counterparts of
certain of its U.S. patents, in major industrial countries of the world. The
Company's products are marketed under various trade names and registered U.S.
and foreign trademarks (having an initial term that is governed by the law of
the country and expiring at various times in the future). The Company, however,
does not consider any one patent or trademark, or any group thereof, essential
to its business as a whole, or to any of its business segments. The Company
relies, to an extent, on proprietary product knowledge and manufacturing
processes in its operations.
Research and Development
The Company's ongoing research and development programs involve the development
of new technologies to enhance the performance or lower the cost of
manufacturing its products, and the redesign of existing product lines either to
increase their efficiency or to lower their manufacturing cost. Expenditures for
research and development charged against continuing operations for 2000, 1999
and 1998 by business segment were as follows:
Year Ended December 31,
2000 1999 1998
---- ---- ----
(Dollars in millions)
Fluid Handling $ 1.1 $1.5 $2.1
Industrial Positioning 2.9 2.8 3.2
--- --- ---
$ 4.0 $4.3 $5.3
===== ==== ====
Environmental Matters
In connection with the Company's separation from Transamerica in 1986, three of
the Company's properties required compliance with the New Jersey Environmental
Cleanup Responsibility Act, which was amended by the Industrial Site Recovery
Act ("ISRA"). ISRA required that the Company's three New Jersey industrial
establishments undergo an approved remediation. Remediation has been completed
at two sites and final closure approvals have been sought. As a result of the
sale of a portion of the third establishment, this site has been divided into
two separate sites for ISRA compliance. Both sites have undergone cleanup, but
the New Jersey Department of Environmental Protection and Energy has requested
and received from the Company additional sampling information. If further
cleanup is required, the Company does not expect it to have a material adverse
effect on its financial condition.
The Company has been identified in a number of instances as a "Potentially
Responsible Party" by the U.S. Environmental Protection Agency, and in one
instance by the State of Washington, with respect to the disposal of hazardous
wastes at a number of facilities that have been targeted for clean-up pursuant
to the Comprehensive Environmental Response Compensation and Liability Act
("CERCLA") or similar state law. Similarly, the Company has received notice that
it is one of a number of defendants named in an action filed in the United
States District Court, for the Southern District of Ohio Western Division by a
group of plaintiffs who are attempting to allocate a share of cleanup costs, for
which they are responsible, to a large number of additional parties, including
the Company. Although CERCLA and corresponding state law liability is joint and
several, the Company believes that its liability will not have a material
adverse effect on the financial condition of the Company since it believes that
it either qualifies as a de minimis or minor contributor at each site.
Accordingly, the Company believes that the portion of remediation costs that it
will be responsible for will not be material.
The Company has current and former operations in numerous locations, some of
which require environmental remediation. The Company, however, does not know of
or believe that any such matters or the cost of any required corrective measure,
either individually or in the aggregate, will have a material adverse effect on
the financial condition of the Company. There can be no assurance, however, that
these matters, or other environmental matters not currently known to the Company
will not have such a material adverse effect.
Seasonality
General economic conditions worldwide continue to create business opportunities
for the coming year in many of the markets in which the Company operates.
Management believes that because of the nature of its industrial products and
the fact that the Company sells diverse products to many markets, the Company is
not significantly affected by the cyclical behavior, or seasonality, of any
particular market that it serves.
Associates
At February 23, 2001, the Company employed approximately 1,000 associates
worldwide. Approximately 900 associates were employed in the United States, and
approximately 100 associates were employed outside of the United States. There
are approximately 100 associates worldwide covered by collective bargaining
agreements with various unions expiring in 2001 through 2004. The Morse Controls
division is not included as it was sold on February 13, 2001. The Company
considers its relations with its associates to be satisfactory.
Item 2. Properties.
The location of the Company's manufacturing facilities at February 23, 2001 are
as follows:
Location Product Owned/Leased
Fluid Handling
Monroe, North Carolina Three-screw and two-screw pumps Owned
Columbia, Kentucky Three-screw and gear pumps Owned
Warren, Massachusetts Two-screw, gear and centrifugal pumps Owned
Stockholm, Sweden Three-screw pumps Owned
Paris, France Three-screw pumps Leased
Industrial Positioning
Charlotte, North Carolina Open gearing and clutches Owned
Louisburg, North Carolina Worm gear speed reducers Owned
York, Pennsylvania Electronic drives Owned
The Company believes that its machinery, plants and offices are in satisfactory
operating condition and are adequate for the uses to which they are put. The
Company believes that its properties have sufficient capacity to substantially
increase its current utilization without incurring significant additional
capital expenditures.
Item 3. Legal Proceedings.
The Company and one of its subsidiaries are two of a large number of defendants
in a number of lawsuits brought in various jurisdictions by approximately 4,500
claimants who allege injury caused by exposure to asbestos. Although neither the
Company nor any of its subsidiaries has ever been a producer or direct supplier
of asbestos, it is alleged that the industrial and marine products sold by the
Company and the subsidiary named in such complaints contained components which
contained asbestos. Suits against the Company and its subsidiary have been
tendered to its insurers, who are defending under their stated reservation of
rights. In addition, the Company and the subsidiary are named in cases,
involving approximately 40,000 claimants, which were "administratively
dismissed" by the U.S. District Court for the Eastern District of Pennsylvania.
Cases that have been "administratively dismissed" may be reinstated only upon a
showing to the Court that (i) there is satisfactory evidence of an
asbestos-related injury; and (ii) there is probative evidence that the plaintiff
was exposed to products or equipment supplied by each individual defendant in
the case. The Company believes that it has adequate insurance coverage or has
established appropriate reserves to cover potential liabilities related to these
cases.
The Company is a defendant in a lawsuit in the Supreme Court of British Columbia
alleging breach of contract arising from the sale of a steam turbine delivered
by the Company's former Delaval Turbine Division and claiming damages in excess
of $10 million. The Company believes that there are legal and factual defenses
to the claim and intends to defend the action vigorously.
The Company was a defendant in a lawsuit in the Circuit Court of Cook County,
Illinois alleging performance shortfalls in products delivered by the Company's
former Delaval Turbine Division. The Company has reached an agreement on
December 7, 1999, with the plaintiff settling all claims between the parties.
However, a co-defendant, Federal Insurance Company, continues to pursue its
counterclaim against the Company for attorney's fees it alleges it incurred in
its role as surety for the project from which the litigation arose. The Company
believes that there are legal and factual defenses to the claim and intends to
defend the action vigorously.
On June 3, 1997, the Company was served with a complaint in a case brought in
the Superior Court of New Jersey which alleges damages in excess of $10 million
incurred as a result of losses under a Government Contract Bid transferred in
connection with the sale of the Company's former Electro-Optical Systems
business. The Electro-Optical Systems business was sold in a transaction that
closed on June 2, 1995. The sales contract provided certain representations and
warranties as to the status of the business at the time of sale. The complaint
alleges that the Company failed to provide notice of a "reasonably anticipated
loss" under a bid that was pending at the time of the transfer of the business
and therefore a representation was breached. The contract was subsequently
awarded to the Company's Varo subsidiary and thereafter transferred to the buyer
of the Electro-Optical Systems business. The Company believes that there are
legal and factual defenses to the claims and intends to defend the action
vigorously.
The operations of the Company, like those of other companies engaged in similar
businesses, involve the use, disposal and clean up of substances regulated under
environmental protection laws. In a number of instances the Company has been
identified as a Potentially Responsible Party by the U.S. Environmental
Protection Agency, with respect to the disposal of hazardous wastes at a number
of facilities that have been targeted for clean-up pursuant to CERCLA or similar
state law. Similarly, the Company has received notice that it is one of a number
of defendants named in an action filed in the United States District Court, for
the Southern District of Ohio Western Division by a group of plaintiffs who are
attempting to allocate a share of cleanup costs, for which they are responsible,
to a large number of additional parties, including the Company. Although CERCLA
and corresponding state law liability is joint and several, the Company believes
that its liability will not have a material adverse effect on the financial
condition of the Company since it believes that it either qualifies as a de
minimis or minor contributor at each site. Accordingly, the Company believes
that the portion of remediation costs that it will be responsible for will not
be material.
The Company is also involved in various other pending legal proceedings arising
out of the ordinary course of the Company's business. None of these legal
proceedings are expected to have a material adverse effect on the financial
condition of the Company. With respect to these proceedings and the litigation
and claims described in the preceding paragraphs, management of the Company
believes that it either will prevail, has adequate insurance coverage or has
established appropriate reserves to cover potential liabilities. There can be no
assurance, however, as to the ultimate outcome of any of these matters, and if
all or substantially all of these legal proceedings were to be determined
adversely to the Company, there could be a material adverse effect on the
financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The Company delisted its Common Stock from the New York Stock Exchange on July
2, 1998. The Common Stock was deregistered under the Securities Exchange Act of
1934.
[Enlarge/Download Table]
Item 6. Selected Financial Data.
(Dollars in millions except per share amounts) (a)
Post-Acquisition Pre-Acquisition
Year Year Year August 29, January 1, Year
Ended Ended Ended 1997 to 1997 to Ended
December December December December 31, August 28, December
31, 2000* 31, 1999* 31, 1998* 1997 1997 31, 1996
---------------------------------------------- ----------- ----------- ----------- -------------- -------------- -----------
Net sales $329.4 $292.7 $314.4 $108.3 $213.5 $314.4
Income (loss) from continuing operations
before extraordinary item 16.4 15.3 10.9 (5.7) (31.3) (33.1)
Discontinued operations, net of taxes --- --- --- (12.2) 2.4 (16.8)
Extraordinary item (net of tax) --- (0.2) (5.2) (3.3) --- (8.5)
Net income (loss) 16.4 15.1 5.7 (21.2) (28.9) (58.4)
---------------------------------------------- ----------- ----------- ----------- -------------- ------------- ------------
(Loss) earnings per share, basic and diluted:
Continuing operations before extraordinary item (.33) (1.82) (1.93)
Discontinued operations, net of taxes (.71) .14 ( .99)
Extraordinary item (.20) --- (.49)
Net loss (1.24) (1.68) (3.41)
Cash dividends per share --- --- --- --- --- ---
---------------------------------------------- ----------- ----------- ----------- -------------- ------------ ------------
Total assets 371.9 377.1 389.0 463.3 330.9
Total long-term debt, including current portion 164.9 169.1 174.3 223.4 276.0
============================================== =========== =========== =========== ============== ============ ============
(a) The notes to the consolidated financial statements located in Part IV of
this Form 10-K Report as indexed at Item 14(a)(l) should be read in
conjunction with this summary.
* As a result of the back-end merger on July 2, 1998, earnings per share is not
presented for 2000, 1999 and 1998.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion and analysis of the Company's consolidated results of
operations and financial condition should be read in conjunction with the
audited Consolidated Financial Statements included elsewhere in this Form 10-K
Report. Comparisons of the results of operations for the year ended December 31,
2000, with the results for the years ended December 31, 1999 and 1998, are being
presented on a historical basis.
Recent Events
Morse Controls Sale: On February 13, 2001, the Registrant sold the assets of its
Morse Controls division and stock of the Morse related subsidiaries, to Teleflex
pursuant to an agreement dated November 15, 2000 for $135 million in cash,
subject to final adjustment. Cash proceeds have been principally used by the
Company to pay down its domestic senior debt and accounts receivable
securitization. The transaction will be reflected in the Company's financial
statements in the first quarter of 2001.
Results of Operations
The Company's former Roltra Morse business is accounted for as a discontinued
operation. Accordingly, the operating results of this business have been
segregated and reported as Discontinued Operations in the audited Consolidated
Financial Statements included elsewhere in this Form 10-K Report. The discussion
that follows concerns only the results of continuing operations, which are
grouped into two business segments for management and financial reporting
purposes: Fluid Handling and Industrial Positioning.
2000 Compared to 1999
Sales. Net sales from continuing operations in 2000 increased 12.6% to $329.4
million, compared with $292.7 million in 1999, as a result of the Fluid Handling
segment's sales decreasing 2.6% and an increase of 20.7% in the Industrial
Positioning segment's sales. The decrease in the Fluid Handling segment sales is
due to cyclicality in the federal and chemical markets during 2000 and
unfavorable foreign currency fluctuations of the Swedish Krona. The increase in
the Industrial Positioning segment is due to the purchase of Sierra on December
1, 1999.
Gross Profit. Gross profit in 2000 increased as a percentage of sales to 31.7%
compared with 31.6% in 1999, as a result of productivity improvements in each
segment.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to 17.1% of net sales in the twelve months
ended December 31, 2000, as compared with 17.3% in the 1999 period. The
decreased expenses as a percentage of sales in 2000 were the result of continued
cost reduction programs in each of the Company's operating units.
Interest Expense. Average borrowings in 2000 were approximately $2.3 million
higher than in 1999, due to the increase in borrowings for the purchase of
Sierra. Total interest expense of $19.5 million in 2000 was $2.8 million, or
16.8%, higher than in 1999.
Income from Continuing Operations. The Company had income from continuing
operations of $16.4 million in 2000, compared with $15.3 million in 1999.
1999 Compared to 1998
Sales. Net sales from continuing operations in 1999 decreased 6.9% to $292.7
million, compared with $314.4 million in 1998, as a result of the Fluid Handling
segment's sales decreasing 10.4% and a decrease of 4.9% in the Industrial
Positioning segment's sales. The decrease in the Fluid Handling segment is due
to cyclicality in the crude oil, machinery support and pulp & paper markets and
unfavorable effects of a 4.6% change in the exchange rates for the Swedish
Krona. The decrease in the Industrial Positioning segment is due to lower demand
in the agricultural and power transmission sectors, unfavorable foreign currency
fluctuations, the sale of the conveyor business in Germany on July 31, 1998, and
inventory reduction programs initiated by key customers.
Gross Profit. Gross profit in 1999 decreased as a percentage of sales to 31.6%
compared with 31.9% in 1998, as a result of reduced sales volume and
manufacturing levels.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to 17.3% of net sales in the twelve months
ended December 31, 1999, as compared with 18.0% in the 1998 period. The
decreased expenses as a percentage of sales in 1999 was the result of continued
cost reduction programs in each of the Company's operating units.
Interest Expense. Average borrowings in 1999 were approximately $33.2 million
lower than in 1998. Total interest expense of $16.7 million in 1999 was $4.6
million, or 21.6%, lower than in 1998, due primarily to the reduction of debt,
through the generation of operating cash flow.
Income from Continuing Operations. The Company had income from continuing
operations of $15.3 million in 1999, compared with $10.9 million in 1998, due to
the decrease in interest expense.
Other Operating Results
Extraordinary Items. The year ended December 31, 1999, includes an extraordinary
charge of $0.2 million net of tax, related to the early extinguishment of $3.5
million of its 11.75% senior subordinated notes due in 2006.
The year ended December 31, 1998, includes an extraordinary charge of $5.2
million net of tax, representing charges related to the early extinguishment of
the Company's debt under its current senior secured credit facilities and its
Notes, as well as the write-off of previously deferred loan costs.
Provision for Income Taxes. Income tax expense from continuing operations was
$10.9 million, $8.8 million, and $7.0 million for 2000, 1999 and 1998,
respectively.
Income tax expense for the year ended 2000, represents current tax expense of
$3.4 million for federal alternative minimum tax, foreign and state income
taxes, as the Company is utilizing existing U.S. net operating loss
carryforwards to offset its domestic earnings.
The net deferred tax asset currently recorded at December 31, 2000, is $25.3
million, a level where management believes that it is more likely than not that
the tax benefit will be realized.
The Company establishes valuation allowances in accordance with the provisions
of FASB Statement No. 109, "Accounting for Income Taxes." The Company
continually reviews the adequacy of the valuation allowance and is recognizing
these benefits only as reassessment indicates that it is more likely than not
that the benefits will be realized. The valuation allowance was $1.7 million for
December 31, 2000 and December 31, 1999.
The Company has net operating loss carryforwards of approximately $76.5 million
expiring in years 2001 through 2018, and minimum tax credits of approximately
$2.7 million, which may be carried forward indefinitely. Tax credit
carryforwards include foreign tax credits of approximately $5.3 million,
expiring beginning in the year 2002. These carryforwards are available to offset
future taxable income, and may be subject to Section 382 limitations, due to the
Acquisition.
Taxes have not been provided on the unremitted earnings of foreign subsidiaries
since it is the Company's intention to indefinitely reinvest these earnings
overseas. The amount of foreign withholding taxes that would be payable on
remittance of these earnings is approximately $0.5 million.
Liquidity and Capital Resources
Short-term and Long-term Debt
As of December 31, 2000, the Company had $6.3 million of outstanding standby
letters of credit. The Company had $6.0 million in foreign short-term credit
facilities with no amounts outstanding at December 31, 2000. Due to the
short-term nature of these debt instruments it is the Company's opinion that the
carrying amounts approximate the fair value.
In addition, the Company had outstanding $75.0 million of its 11.75% senior
subordinated notes due in 2006, $27.3 million of term loan borrowings and $62.5
million in revolver borrowings.
Cash Flow
The Company's operating activities provided cash of $12.4 million in 2000,
compared with cash provided of $39.5 million in 1999. The cash provided by
operating activities in 2000 was attributable to net operating profits offset by
the increase in working capital in the period. Cash and cash equivalents were
$5.2 million at December 31, 2000 compared with $2.9 million at December 31,
1999.
The Company's total debt as a percent of its total capitalization decreased to
55.8% at December 31, 2000, compared with 59.2% at December 31, 1999, as a
result of the debt paid down due to internal cash generation.
Capital expenditures of continuing operations decreased to $4.8 million compared
with the 1999 level of $6.4 million. In 2000 capital spending was used for the
purpose of maintaining and improving competitive advantages at the Company's
operations. The Company anticipates that capital expenditures in 2001 will
increase over the 2000 level primarily due to expenditures related to new
product development in the operating segments. There were no material
outstanding commitments for the acquisition of property, plant, and equipment at
December 31, 2000.
Management believes that cash flow from operations and cash available from
unused credit facilities will be sufficient to fund future anticipated working
capital needs, capital spending requirements and debt service requirements.
Seasonality; Customer Concentration; Inflation
General economic conditions worldwide continue to create business opportunities
for the coming year in many of the markets in which the Company operates.
Management believes that because of the nature of its industrial products and
the fact that the Company sells diverse products to many markets, the Company is
not significantly affected by the cyclical behavior, or seasonality, of any
particular market that it serves.
None of the Company's business segments is dependent on any single customer or a
few customers, the loss of which would have a material adverse effect on the
respective segments, or on the Company as a whole. No customer accounted for 10%
or more of consolidated sales in 2000, 1999 or 1998.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. Except for historical matters, the
matters discussed in this Form 10-K Report are forward-looking statements based
on current expectations and involve risks and uncertainties. Forward-looking
statements include, but are not limited to, statements under the following
headings: (i) Item 1 - "Backlog, Raw Materials and Environmental Matters" - the
expected ability to fill existing orders in 2001, the continued adequacy of the
Company's raw materials sources, and the future impact of environmental matters
on the financial condition of the Company; (ii) Item 3 - "Legal Proceedings" -
the future impact of legal proceedings on the financial condition of the
Company. The Company wishes to caution the reader that, in addition to the
matters described above, various factors such as delays in contracts from key
customers, demand and market acceptance risk for new products, continued or
increased competitive pricing and the effects of under-utilization of plants and
facilities, particularly in Europe, and the impact of worldwide economic
conditions on demand for the Company's products, could cause results to differ
materially from those in any forward-looking statement.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
During 1999, the Company periodically entered into foreign exchange contracts
for purposes of hedging its exposure to foreign currency exchange rate
fluctuations. These contracts hedged firm commitments between the Swedish Krona
and the German Deutschmark and the United States Dollar. At December 31, 1999,
the Company had foreign currency contracts with notional amounts totaling
approximately $0.1 million with various expiration dates through June 2000. The
amount of deferred gain or loss associated with these contracts is not material.
There were no foreign currency contracts outstanding at December 31, 2000.
All foreign currency derivative agreements are with major commercial banks;
therefore the risk of credit loss from nonperformance by the banks is considered
by management to be minimal. The Company evaluates its exposure to credit loss
on an ongoing basis.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements and supplementary data required by Part
II, Item 8 of Form 10-K are included in Part IV of this Form 10-K Report as
indexed at Item 14(a)(1).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
Not Applicable
Item 11. Executive Compensation.
Not Applicable
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Not Applicable
Item 13. Certain Relationships and Related Transactions.
None
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) Financial Statements
The Financial Statements and Supplementary Data required by Part II,
Item 8 of Form 10-K are included in this Part IV of this
Form 10-K Report as follows:
Consolidated Financial Statements
Consolidated Statements of Income and Comprehensive Income for
the Years Ended December 31, 2000, 1999 and 1998
Consolidated Balance Sheets at December 31, 2000 and 1999
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity (Deficit)
for the Years Ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Report of Independent Public Accountants on Schedule II
Quarterly Financial Information (unaudited)
(2) Financial Statement Schedules
The following consolidated financial statement schedule for the years
ended December 31, 2000, 1999 and 1998 is filed as part of this Report
and should be read in conjunction with the Company's Consolidated
Financial Statements.
Schedule
II Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable regulation of the Securities and Exchange Commission are
omitted because they are not required under the related instructions
or because the required information is given in the financial
statements or notes thereto.
(3) Exhibits
The Exhibits listed in the accompanying Index to Exhibits are
filed as part of this Report.
(b) Reports on Form 8-K
None
EXHIBIT INDEX
Exhibit No. Note No. Description
---------- ------- -------------
3(i) (23) The Company's Restated Certificate of Incorporation, as amended
March 10, 1989 and November 10, 1992 and April 30, 1997
3(ii) (28) The Company's Bylaws
4.1 (A) (18) Indenture, dated as of April 15, 1996, between the Company and
IBJ Schroder Bank & Trust Company, as Trustee
(B) (28) Second Supplemental Indenture, dated as of August 26, 1997,
between the Company and IBJ Schroder Bank & Trust Company, as
Trustee
4.3 (18) Registration Rights Agreement, dated as of April 23, 1996,
between the Company and the Initial Purchasers
4.3 (A) (20) Rights Agreement dated as of April 30, 1997 between the Company
and First Chicago Trust Company of New York, which includes, as
Exhibit A thereto, the Certificate of Designation, Preferences
and Rights of Series B Junior Participating Preferred Stock of
Imo Industries Inc., as Exhibit B thereto, the Form of Rights
Certificate and as Exhibit C thereto, the Summary of Rights to
Purchase Preferred Stock.
(B) (21) Amendment to Rights Agreement dated June 25, 1997 between the
Company and First Chicago Trust Company of New York
(C) (22) Second Amendment to Rights Agreement dated July 25, 1997
between the Company and First Chicago Trust Company of New York
(D) (24) Third Amendment to Rights Agreement dated August 21, 1997
between the Company and First Chicago Trust Company of New York
(E) (29) Fourth Amendment to Rights Agreement dated April 30, 1998
between the Company and First Chicago Trust Company of New York
Management Contracts, Compensatory Plans and Arrangements:
-------------------------------------------------------------
10.1 (14) Amended and restated Equity Incentive Plan for Key Employees
10.2 (16) Amended and restated 1988 Equity Incentive Plan for Outside
Directors
10.3 (15) 1995 Equity Incentive Plan for Outside Directors
10.4 (17) The Company's Supplemental Retirement Income Plan
10.5 (8) Change in Control Agreement dated January 9, 1987 between the
Company and John J. Carr
10.6 (8) Change in Control Agreement dated August 5, 1992 between the
Company and William M. Brown
10.7 (8) Change in Control Agreement dated August 13, 1992 between the
Company and Thomas J. Bird
10.8 (10) Change in Control Agreement dated September 13, 1993 between
the Company and Donald K. Farrar
10.9 (19) Change in Control Agreement dated May 21, 1996 between the
Company and Donald N. Rosenberg
10.10 (19) Severance Agreement dated February 6, 1997 between Imo
Industries (UK) Limited and Brian Lewis
10.11 (19) Consultancy Agreement dated February 13, 1997 between Imo
Industries Inc. and Brian Lewis
Other Material Contracts:
---------------------------
10.12(A)(3),(4) The Company's Salaried Employees Stock Savings Plan as amended
on July 1, 1987 and as amended on June 14, 1988
(B) (7) Amendment dated March 16, 1989 to the Imo Industries Inc.
Employees Stock Savings Plan
(C) (5) Amendments dated September 6, 1990 and February 14, 1991 to
the Imo Industries Inc. Employees Stock Savings Plan
(D) (6) Amendment dated May 9, 1991 to the Imo Industries Inc.
Employees Stock Savings Plan
(E) (8) Amendments dated December 30, 1991 and August 3, 1992 to the
Imo Industries Inc. Employees Stock Savings Plan
(F) (12) Trust Agreement for the Imo Industries Inc. Employees Stock
Savings Plan as of March 1, 1995 between the Company and Eagle
Trust Company
10.13 (1) Distribution Agreement dated December 18, 1986 between
Transamerica Corporation and the Company
10.14 (1) Tax Agreement between the Company and Transamerica Corporation
10.15 (J) (9) Warrant dated July 15, 1993 issued by the Company to The
Prudential Insurance Company of America
10.16 (2) Stock Purchase Agreement dated November 30, 1987 between the
Company and TRIFIN B.V.
10.17 (5) Stock Purchase Agreement dated as of May 31, 1990 among United
Scientific Holdings PLC, United Scientific Inc. and the
Company
10.18 (10) Stock Purchase Agreement dated as of October 28, 1993 among
the Company, Imo Industries GmbH, Mark Controls Corporation
and Mark Controls GmbH i. Gr., as amended
10.19 (A)(18) Credit Agreement dated as of April 29, 1996 among the Company,
as Borrower, Varo Inc., as Guarantor, Warren Pumps Inc. as
Guarantor, the Institutions from time to time party thereto as
Lenders and Issuing Banks, and Citicorp USA, Inc., as Agent
10.19 (B)(19) First Amendment dated as of February 19, 1997 to the Credit
Agreement dated as of April 29, 1996 among the Company, as
Borrower, Varo Inc., as Guarantor, Warren Pumps, Inc. as
Guarantor, the Institutions from time to time party thereto as
Lenders and Issuing Banks, and Citicorp USA, Inc., as Agent
10.20 (A)(11) Asset Purchase Agreement dated as of November 4, 1994 by and
among the Company, Imo Industries International Inc. and
Mannesmann Capital Corporation
(B)(12) Agreement, Amendment and Waiver dated January 17, 1995 by and
among the Company and Mannesmann Capital Corporation
10.21 (12) Asset and Stock Purchase Agreement dated as of January 1, 1995
by and among the Company and Thermo Jarrell Ash Corporation
10.22 (13) Purchase and Sale Agreement among Litton Industries, Inc., and
Litton Systems, Inc. and Imo Industries Inc., Baird
Corporation, Optic-Electronic International, Inc. and Varo
Inc. dated May 11, 1995 and amended and restated as of
June 2, 1995
10.23 (A)(19) Asset Purchase Agreement dated as of September 13, 1996
between Varo Inc. and Varo Acquisition Corp.
(B)(19) Reinstatement Agreement dated January 28, 1997 between Varo
Inc. and Varo Acquisition Corp.
10.24 (21) Agreement and Plan of Merger, dated June 26, 1997, among
United Dominion Industries Limited, UD Delaware Corp. and Imo
Industries Inc.
10.25 (22) Share Purchase Agreement, dated July 25, 1997, between II
Acquisition Corp. and the Company
10.26 (25) Asset Purchase Agreement dated as of August 29, 1997 among the
Registrant and certain of its subsidiaries and Danaher
Corporation and certain of its subsidiaries
10.27 (A)(26) Credit and Guaranty Agreement dated as of August 29, 1997
among the Company, as Borrower, II Acquisition Corp., as
Guarantor, Certain Financial Institutions, as Lenders,
The Bank of Nova Scotia, as Administrative and Documentation
Agent and Nationsbanc Capital Markets, Inc., as Syndication
Agent for the Lenders
(B)(28) First Amendment to Credit and Guaranty Agreement dated as of
November 6, 1997
(C)(28) Second Amendment to Credit and Guaranty Agreement dated as of
December 2, 1997
(D)(28) Third Amendment to Credit and Guaranty Agreement dated as of
February 16, 1998
(E)(30) Fourth Amendment to Credit and Guaranty Agreement dated as of
March 9, 1998
(F)(31) Fifth Amendment to Credit and Guaranty Agreement dated as of
June 1, 1998
(G)(32) Sixth Amendment to Credit and Guaranty Agreement dated as of
October 15, 1998
(H)(33) Seventh Amendment to Credit and Guaranty Agreement dated as of
August 3, 1999
(I)(33) Eighth Amendment to Credit and Guaranty Agreement dated as of
November 29, 1999
(J) Ninth Amendment to Credit and Guaranty Agreement dated as of
January 26, 2001
10.28 (27) Stock Purchase Agreement dated as of January 30, 1998 between
the Registrant and Magna International Inc.
10.29 (33) Receivables Purchase Agreement dated as of November 29, 1999
among Imo Funding Company, LLC, Imo Industries Inc., Liberty
Street Funding Corp. and The Bank of Nova Scotia
10.30 (33) Purchase and Sale Agreement dated as of November 29, 1999
among the Originators named herein, Imo Industries Inc. and
Imo Funding Company, LLC
10.31 (33) Stock Purchase Agreement by and between Echlin Inc. and Imo
Industries, Inc. dated as of October 13, 1999
10.32 (34) Asset Purchase Agreement dated as of November 15, 2000 between
the Registrant and Teleflex Incorporated.
10.33 Amendment to Asset Purchase Agreement dated as of February 11,
2001 to be effective as of November 15, 2000 between the
Registrant and Teleflex Incorporated.
21 Subsidiaries of the Company as of December 31, 2000
27 Financial Data Schedule as of December 31, 2000
-----------------------------------------------
NOTES
(1) Incorporated by reference to the Company's Form 8 Amendment No. 2 filed
with the Commission on December 9, 1986 amending the Company's Form 10
as filed with the Commission on October 15, 1986.
(2) Incorporated by reference to the Company's Form 8-K filed with the
Commission on February 17, 1987.
(3) Incorporated by reference to the Imo Industries Inc. Employees Stock
Savings Plan Form 11-K filed with the Commission on April 13, 1988.
(4) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 29, 1990.
(5) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 28, 1991.
(6) Incorporated by reference to the Company's Form S-8 filed with the
Commission on June 17, 1991.
(7) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 26, 1992.
(8) Incorporated by reference to the Company's Form 10-K filed with the
Commission on April 19, 1993.
(9) Incorporated by reference to the Company's Form 10-K/A filed with the
Commission on August 6, 1993
amending the Company's Form 10-K as filed with the Commission on
April 19, 1993.
(10) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 31, 1994.
(11) Incorporated by reference to the Company's Form 10-Q filed with the
Commission on November 14, 1994.
(12) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 29, 1995.
(13) Incorporated by reference to the Company's Form 8-K filed with the
Commission on June 19, 1995.
(14) Incorporated by reference to the Company's Form S-8 as filed with the
Commission on June 23, 1995,
Registration No. 33-60533
(15) Incorporated by reference to the Company's Form S-8 as filed with the
Commission on June 23, 1995,
Registration No. 33-60535
(16) Incorporated by reference to the Company's Form 10-Q filed with the
Commission on November 13, 1995.
(17) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 28, 1996.
(18) Incorporated by reference to the Company's Form S-4 (Registration No.
333-3477) filed with the Commission on May 10, 1996.
(19) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 27, 1997.
(20) Incorporated by reference to the Company's Form 8-A Registration
Statement filed with the Commission on May 2, 1997.
(21) Incorporated by reference to the Company's Schedule 14D-9
Solicitation/Recommendation Statement filed with the Commission on July
2, 1997.
(22) Incorporated by reference to the Company's Schedule 14D-9
Solicitation/Recommendation Statement filed with the Commission on July
31, 1997.
(23) Incorporated by reference to the Company's Form 10-Q filed with the
Commission on August 14, 1997.
(24) Incorporated by reference to the Company's Form 8-K filed with the
Commission on August 27, 1997.
(25) Incorporated by reference to the Company's Form 8-K filed with the
Commission on September 15, 1997.
(26) Incorporated by reference to the Company's Form 10-Q filed with the
Commission on November 14, 1997.
(27) Incorporated by reference to the Company's Form 8-K filed with the
Commission on March 13, 1998.
(28) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 31, 1998.
(29) Incorporated by reference to the Company's Form 8-A/A filed with the
Commission on May 1, 1998.
(30) Incorporated by reference to the Company's Form 10-Q filed with the
Commission on May 13, 1998.
(31) Incorporated by reference to the Company's Form 10-Q filed with the
Commission on August 14, 1998.
(32) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 31, 1999.
(33) Incorporated by reference to the Company's Form 10-K filed with the
Commission on March 30, 2000.
(34) Incorporated by reference to the Company's Form 8-K filed with the
Commission on February 28, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Imo Industries Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: April 16, 2001
IMO INDUSTRIES INC.
By: /s/ G. SCOTT FAISON
G. Scott Faison
Vice President 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 Imo Industries Inc.
and in the capacities and on the dates indicated.
/s/ JOHN A. YOUNG Chief Executive Officer
John A. Young and President
(principal executive officer) April 16, 2001
/s/ G. SCOTT FAISON Vice President and
G. Scott Faison Chief Financial Officer
(principal financial officer) April 16, 2001
/s/ STEVEN M. RALES Director April 16, 2001
Steven M. Rales
/s/ MITCHELL P. RALES Director April 16, 2001
Mitchell P. Rales
/s/ NEIL D. COHEN Director April 16, 2001
Neil D. Cohen
/s/ PHILIP W. KNISELY Director April 16, 2001
Philip W. Knisely
[Enlarge/Download Table]
Imo Industries Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(Dollars in thousands)
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
---------------------------------------------------------- ---------------- ----------------- ---------------
Net Sales $329,444 $292,694 $314,372
Cost of products sold 225,009 200,123 214,081
---------------------------------------------------------- ---------------- ----------------- ---------------
Gross Profit 104,435 92,571 100,291
Selling, general and administrative expenses 56,340 50,516 56,464
Research and development expenses 3,995 4,344 5,317
---------------------------------------------------------- ---------------- ----------------- ---------------
Income From Operations 44,100 37,711 38,510
Other income 2,754 1,045 684
Loss / (Gain) on sale of assets 24 (2,066) ---
Interest expense 19,492 16,668 21,293
---------------------------------------------------------- ---------------- ----------------- ---------------
Income From Continuing Operations Before
Income Taxes and Extraordinary Item 27,338 24,154 17,901
Income taxes 10,890 8,840 7,008
---------------------------------------------------------- ---------------- ----------------- ---------------
Income From Continuing Operations Before
Extraordinary Item 16,448 15,314 10,893
Extraordinary item - loss on extinguishment of debt,
(net of tax) --- (216) (5,223)
-------------------------------------------------------------------------------------------------------------
Net Income $ 16,448 $ 15,098 $5,670
============================================================================================================
Other comprehensive loss, net of taxes -
Foreign currency translation adjustments (3,599) (1,774) (266)
---------------------------------------------------------- ---------------- ----------------- ---------------
Comprehensive Income $ 12,849 $ 13,324 $5,404
========================================================== ================ ================= ===============
The accompanying notes are an integral part of these consolidated financial statements
[Enlarge/Download Table]
Imo Industries Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands except par value)
December 31, 2000 1999
----------------------------------------------------------------- --------------- --------------
Assets
Current Assets
Cash and cash equivalents $5,152 $2,898
Trade accounts and notes receivable, less allowance of
$1,404 in 2000 and $1,348 in 1999 36,931 30,075
Inventories 55,989 57,844
Deferred income tax assets 6,112 11,972
Prepaid expenses and other current assets 3,051 3,051
----------------------------------------------------------------- --------------- --------------
Total Current Assets 107,235 105,840
----------------------------------------------------------------- --------------- --------------
Property, plant and equipment:
Land 4,501 4,710
Buildings and improvements 20,005 20,745
Machinery and equipment 51,592 49,040
----------------------------------------------------------------- --------------- --------------
76,098 74,495
Less accumulated depreciation and amortization (18,951) (12,911)
----------------------------------------------------------------- --------------- ---------------
Net property, plant and equipment 57,147 61,584
Intangible assets, principally goodwill, net 175,324 180,746
Investments in and advances to unconsolidated companies 5,509 5,069
Deferred income tax assets 19,231 20,845
Pension and other assets 7,417 2,637
----------------------------------------------------------------- --------------- --------------
Total Assets $ 371,863 $ 376,721
================================================================= =============== ==============
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable $ 1 $ 1,295
Trade accounts payable 18,393 21,854
Accrued expenses and other liabilities 26,720 31,928
Accrued costs related to discontinued operations 1,610 2,559
Income taxes payable 4,195 ---
Current portion of long-term debt 39,666 9,447
----------------------------------------------------------------- --------------- --------------
Total Current Liabilities 90,585 67,083
----------------------------------------------------------------- --------------- --------------
Long-term debt 125,207 159,624
Accrued postretirement benefits - long-term 8,547 8,555
Accrued pension expense and other liabilities 17,085 23,869
----------------------------------------------------------------- --------------- --------------
Total Liabilities 241,424 259,131
----------------------------------------------------------------- --------------- --------------
Shareholders' Equity
Preferred stock: $1.00 par value; authorized and
unissued 5,000,000 shares --- ---
Common stock: $1.00 par value; authorized and issued
100 shares 1 1
Additional paid-in capital 120,751 120,751
Retained earnings (deficit) 15,996 (452)
Cumulative foreign currency translation adjustments (6,309) (2,710)
----------------------------------------------------------------- --------------- --------------
Total Shareholders' Equity 130,439 117,590
----------------------------------------------------------------- --------------- --------------
Total Liabilities and Shareholders' Equity $ 371,863 $ 376,721
================================================================= =============== ==============
The accompanying notes are an integral part of these consolidated financial
statements.
[Enlarge/Download Table]
Imo Industries Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2000 1999 1998
------------------------------------------------------------ --------------- -------------- ---------------
OPERATING ACTIVITIES
Net income $ 16,448 $ 15,098 $5,670
Adjustments to reconcile net income to net cash
provided by continuing operations:
Depreciation 7,118 5,597 4,880
Amortization 5,610 5,354 6,872
Provision for deferred income taxes 7,474 7,730 4,668
Extraordinary item --- 216 5,223
Other 80 111 49
Other changes in operating assets and liabilities (excluding the effects of
acquisitions and dispositions):
Accounts and notes receivable, excluding effects
of securitization (6,081) (5,628) 13,549
Inventories 711 5,737 11,774
Accounts payable and accrued expenses (7,801) (5,330) (21,019)
Other operating assets and liabilities (7,973) (8,713) 9,163
------------------------------------------------------------ ---------------- --------------- -------------
Net cash provided by continuing operations 15,586 20,172 40,829
Net cash used by discontinued operations (949) (1,730) (1,219)
-----------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 14,637 18,442 39,610
------------------------------------------------------------ --------------- -------------- ---------------
INVESTING ACTIVITIES
Net proceeds from sale of businesses and sales
of property, plant and equipment 255 2,332 32,726
Purchases of property, plant and equipment (4,750) (6,402) (6,049)
Acquisition of Sierra International Inc. --- (33,036) ---
Net investing activities of discontinued operations --- --- (1,164)
Other --- --- 80
------------------------------------------------------------ --------------- -------------- ---------------
Net Cash (Used by) Provided by Investing Activities (4,495) (37,106) 25,593
------------------------------------------------------------ ---------------- --------------- -------------
FINANCING ACTIVITIES
(Decrease) increase in notes payable (1,169) 511 (2,421)
Proceeds from sale of accounts receivable --- 21,041 ---
Repurchase of receivables for securitization (2,234) --- ---
Proceeds from long-term borrowings 67,650 68,500 23,559
Principal payments on long-term debt (71,779) (73,685) (71,583)
Purchase of minority shares --- --- (6,247)
Premium payment on repurchase of long-term debt --- (210) (5,822)
Other --- --- (37)
------------------------------------------------------------ --------------- -------------- ----------------
Net Cash Used by Financing Activities (7,532) 16,157 (62,551)
------------------------------------------------------------ ---------------- --------------- -------------
Effect of exchange rate changes on cash (356) (825) 50
------------------------------------------------------------ ---------------- --------------- -------------
Increase (Decrease) in Cash and Cash Equivalents 2,254 (3,332) 2,702
Cash and cash equivalents at beginning of the period 2,898 6,230 3,528
------------------------------------------------------------ --------------- -------------- ---------------
Cash and Cash Equivalents at End of the Period $5,152 $2,898 $6,230
============================================================ =============== ============== ===============
Supplemental disclosures of cash flow information: Cash paid during the period for:
Interest $18,857 $15,560 $22,443
Income taxes $ 2,171 $ 2,671 $ 2,725
The accompanying notes are an integral part of these consolidated financial
statements.
[Enlarge/Download Table]
Imo Industries Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Dollars in thousands)
Cumulative
Foreign
Additional Retained Currency
Common Paid-in Earnings Translation
Stock Capital (Deficit) Adjustments Total
------------------------------- ----------- ------------- ----------- ------------- ------------
Balance at
December 31, 1997 $ 17,128 $ 106,805 $ (33,016) $(670) $90,247
Net income --- --- 5,670 --- 5,670
Purchase of minority interest --- (3,181) 11,796 --- 8,615
New equity structure upon
merger with Imo Merger
Corp. (17,127) 17,127 --- --- ---
Foreign currency translation
adjustments --- --- --- (266) (266)
------------------------------- ----------- ------------- ----------- ------------- ------------
Balance at
December 31, 1998 1 120,751 (15,550) (936) 104,266
Net income --- --- 15,098 --- 15,098
Foreign currency translation
adjustments --- --- --- (1,774) (1,774)
------------------------------- ----------- ------------- ----------- ------------- ------------
Balance at
December 31, 1999 1 120,751 (452) (2,710) 117,590
Net income --- --- 16,448 --- 16,448
Foreign currency translation
adjustments --- --- --- (3,599) (3,599)
------------------------------- ----------- ------------- ----------- ------------- ------------
Balance at
December 31, 2000 $ 1 $ 120,751 $15,996 $(6,309) $130,439
=============================== =========== ============= =========== ============= ============
The accompanying notes are an integral part of these consolidated financial
statements.
Notes to Consolidated Financial Statements
Note 1 Significant Accounting Policies
---------------------------------------
Consolidation: The consolidated financial statements include the accounts of Imo
Industries Inc. (the "Company") and its majority-owned subsidiaries. Significant
intercompany transactions have been eliminated in consolidation. The Company
uses the equity method to account for investments in corporations in which it
does not own a majority voting interest but has the ability to exercise
significant influence over operating and financial policies.
Translation of Foreign Currencies: Assets and liabilities of international
operations are translated into U.S. dollars at year-end exchange rates. Income
and expense accounts are translated into U.S. dollars at average rates of
exchange prevailing during the year. Translation adjustments are reflected as a
separate component of shareholders' equity and comprehensive income.
Cash Equivalents: Cash equivalents include investments in government securities
funds and certificates of deposit. Investment periods are generally less than
one month.
Inventories: Inventories are carried at the lower of cost or market, cost being
determined principally on the basis of standards which approximate actual costs
on the first-in, first-out method, and market being determined by net realizable
value. Appropriate consideration is being given to deterioration, obsolescence
and other factors in evaluating net realizable value.
Revenue Recognition: Revenues are recorded generally when the Company's products
are shipped.
Shipping and Handling: The Company adopted Emerging Issues Task Force Issue
00-10 "Accounting for Shipping and Handling Fees and Costs," which requires
amounts billed to customers for shipping and handling to be included as a
component of sales. Shipping and handling costs are included as a component of
cost of sales.
Depreciation and Amortization: Depreciation and amortization of plant and
equipment are computed principally on a straight-line basis over the estimated
useful lives of the assets as follows: buildings and improvements, 10 to 40
years and machinery and equipment, 3 to 15 years.
Earnings Per Share: As a result of the back-end merger on July 2, 1998, earnings
per share is not presented for 2000, 1999 and 1998. (See Note 2).
Recent Accounting Pronouncements: In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. This statement is effective for
fiscal years beginning after June 15, 2000. The Company believes that results of
operations will not be impacted by the adoption of this statement.
During the fourth quarter of 1999, the Company adopted SFAS 125 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
which provides accounting and reporting standards for sales, securitization and
servicing of receivables and other financial assets and extinguishment of
liabilities. The provisions of the Statement do not have a material impact on
the results of operations of the Company.
Intangible Assets: Goodwill of businesses acquired is being amortized on the
straight-line basis over 40 years. The carrying value of goodwill is reviewed
when indicators of impairment are present, by evaluating future cash flows of
the associated operations to determine if impairment exists. Goodwill at
December 31, 2000 and 1999 was $172.6 million and $177.2 million, respectively,
net of respective accumulated amortization of $16.6 million and $12.0 million.
Patents are amortized over the shorter of their legal or estimated useful lives.
Management Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Note 2 Acquisition By Colfax Corporation
-----------------------------------------
On August 28, 1997, Colfax Corporation ("Colfax"), acquired approximately 93% of
the Company's outstanding shares of common stock pursuant to its tender offer
for all outstanding shares of the common stock of the Company (the
"Acquisition"). The consideration paid was $7.05 per share of common stock or
$112.1 million in total. On July 2, 1998, Imo Merger Corp., a wholly owned
subsidiary of Colfax, merged with and into Imo, pursuant to a short-form merger
under Delaware law ("back-end merger"). The Company was the surviving
corporation in the back-end merger and as result became a wholly owned
subsidiary of Colfax. As of December 31, 2000, 972,961 of the outstanding
1,221,888 common shares held by minority shareholders were converted to cash. A
payable of $1.8 million was accrued as of December 31, 2000, for the remaining
248,927 shares that were not converted as of that date. Total consideration for
the purchase of Imo was $120.7 million.
Cost Reduction Programs
In connection with the Acquisition, the Company implemented a cost reduction
program. The cost of this program was $18.6 million and was accrued for in
accordance with the purchase method of accounting. It is comprised of $10.5
million related to severance and termination benefits as a result of headcount
reductions at the Company's corporate headquarters. In addition, $1.2 million
and $6.9 million of costs for the Company's Fluid Handling and Industrial
Positioning segments, respectively, related to severance and termination
benefits resulting from headcount reductions and the consolidation of certain
manufacturing facilities. The program was completed in 1999. The cash outlays
related to this program were $7.4 million in 1998 and $3.1 million during 1999.
Note 3 Discontinued Operations
-------------------------------
On February 27, 1998, the Company completed the sale of its Roltra Morse
business to Magna International Inc. for cash of $30 million, plus the
assumption of Roltra Morse's debt. The sale price approximated the recorded net
book value of the business. Net proceeds were used to reduce domestic senior
debt.
In accordance with APB Opinion No. 30, the disposal of this business segment has
been accounted for as a discontinued operation and, accordingly, the operating
results have been segregated and reported as Discontinued Operations in the
accompanying Consolidated Statements of Income and Comprehensive Income.
The income (loss) from operations of the Discontinued Operations for 1998
includes allocated interest expense of $0.2 million. Allocated interest expense
is an allocation of corporate interest expense to the Discontinued Operations
based on the ratio of net assets to be sold to the sum of the Company's
consolidated net assets, if positive, plus consolidated debt. The operating loss
of $0.9 million for Roltra Morse for the two months ended February 28, 1998 was
accrued as a portion of the estimated loss on disposal as of December 31, 1997.
Note 4 Restructuring Asset Sales
--------------------------------
2000 Assets Sales: During 2000, the Company completed the sales of certain
non-operating real estate for net proceeds of $0.3 million.
1999 Assets Sales: During 1999, the Company completed the sales of certain
non-operating real estate for net proceeds of $0.1 million.
1998 Assets Sales: On February 27, 1998, the Company sold its Roltra Morse
business segment to Magna International. During 1998, the Company also completed
the sales of certain non-operating real estate for net proceeds of $0.6 million.
Note 5 Inventories
------------------
Inventories are summarized as follows:
December 31 (Dollars in thousands) 2000 1999
-------------------------------------------------------------------------------
Finished products $ 21,336 $ 24,740
Work in process 11,248 14,277
Materials and supplies 24,225 19,904
-------------------------------------------------------------------------------
56,809 58,921
Less customers' progress payments (820) (1,077)
-------------------------------------------------------------------------------
$ 55,989 $ 57,844
===============================================================================
Note 6 Accrued Expenses and Other Liabilities
----------------------------------------------
Accrued expenses and other liabilities consist of the following:
December 31 (Dollars in thousands) 2000 1999
-------------------------------------------------------------------------------
Accrued payroll and related items $9,397 $8,403
Accrued product warranty costs 2,780 2,507
Accrued interest payable 2,473 2,496
Accrued litigation and claims costs 1,639 7,124
Accrued environmental costs 1,129 1,548
Accrued divestiture costs 993 977
Advance customer payments 765 539
Accrued restructuring costs 308 909
Other 7,236 7,425
-------------------------------------------------------------------------------
$ 26,720 $ 31,928
===============================================================================
Note 7 Income Taxes
--------------------
The components of income tax expense from continuing operations are:
Year Ended December 31
(Dollars in thousands) 2000 1999 1998
------------------------------------------------------------------------------
Current:
Federal $ 59 $ (449) $ 233
Foreign 2,971 1,326 1,801
State 386 233 306
------------------------------------------------------------------------------
3,416 1,110 2,340
------------------------------------------------------------------------------
Deferred:
Federal 7,754 6,450 4,668
Foreign and State (280) 1,280 ---
------------------------------------------------------------------------------
7,474 7,730 4,668
------------------------------------------------------------------------------
$10,890 $8,840 $7,008
==============================================================================
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities as of December 31, 2000 and
1999 are as follows:
[Enlarge/Download Table]
December 31
(Dollars in thousands) 2000 1999
------------------------------------------ ----------------------------- -----------------------------
Current Long-term Current Long-term
------------------------------------------ ------------ ---------------- ------------ ----------------
Deferred tax assets:
Postretirement benefit obligation $ 234 $ 2,996 $ 234 $ 3,235
Expenses not currently deductible 7,082 4,999 12,942 6,467
Net operating loss carryover --- 26,785 --- 29,026
Tax credit carryover --- 8,021 --- 6,071
------------------------------------------ ------------ ---------------- ------------ ----------------
Total deferred tax assets 7,316 42,801 13,176 44,799
Valuation allowance for
deferred tax assets (1,204) (516) (1,204) (516)
------------------------------------------ ------------- ---------------- ------------ ----------------
Net deferred tax assets 6,112 42,285 11,972 44,283
------------------------------------------ ------------ ---------------- ------------ ----------------
Deferred tax liabilities:
Tax over book depreciation --- 17,436 --- 16,835
Other --- 5,618 --- 6,603
------------------------------------------ ------------ ---------------- ------------ ----------------
Total deferred tax liabilities --- 23,054 --- 23,438
------------------------------------------ ------------ ---------------- ------------- ---------------
Net deferred tax assets $ 6,112 $19,231 $ 11,972 $ 20,845
========================================== ============ ================ ============= ===============
The net deferred tax asset currently recorded at December 31, 2000 is $25.3
million, a level where management believes that it is more likely than not that
the tax benefit will be realized. Although the Company has a history of prior
losses, these losses were primarily attributable to divested businesses and
unusual items.
The Company establishes valuation allowances in accordance with the provisions
of FASB Statement No. 109, "Accounting for Income Taxes." The Company
continually reviews the adequacy of the valuation allowance and is recognizing
these benefits only as reassessment indicates that it is more likely than not
that the benefits will be realized. The valuation allowance was $1.7 million for
December 31, 2000 and December 31, 1999.
At December 31, 2000, unremitted earnings of foreign subsidiaries were
approximately $27.3 million. Since it is the Company's intention to indefinitely
reinvest these earnings, no U.S. taxes have been provided. Determination of the
amount of unrecognized deferred tax liability on these unremitted earnings is
not practicable. The amount of foreign withholding taxes that would be payable
upon remittance of those earnings is approximately $.5 million.
The components of income from continuing operations before income taxes and
extraordinary item:
Year Ended December 31
(Dollars in thousands) 2000 1999 1998
------------------------------------------------------------------------------
United States $ 17,395 $ 14,291 $ 7,963
Foreign 9,943 9,863 9,938
------------------------------------------------------------------------------
$ 27,338 $24,154 $17,901
==============================================================================
U.S. income tax expense (benefit) at the statutory tax rate is reconciled below
to the overall U.S. and foreign income tax expense.
Year Ended December 31
(Dollars in thousands) 2000 1999 1998
------------------------------------------------------------------------------
Tax at U.S. federal income tax rate $9,568 $ 8,454 $ 6,265
State taxes, net of federal income
tax effect 250 151 198
Impact of foreign tax rates and
credits, and tax refunds (789) (1,247) (1,677)
Net U.S. tax on distributions of
current foreign earnings 385 486 266
Goodwill amortization and write-off 1,540 1,574 1,995
Other (64) (578) (39)
-------------------------------------------------------------------------------
Income tax expense $ 10,890 $ 8,840 $ 7,008
===============================================================================
The Company has net operating loss carryforwards of approximately $76.5 million
expiring in years 2001 through 2018, and minimum tax credits of approximately
$2.7 million, which may be carried forward indefinitely. Tax credit
carryforwards include foreign tax credits of approximately $5.3 million that
expire beginning in the year 2002. These carryforwards are available to offset
future federal taxable income, and may be subject to the Section 382
limitations, due to the Acquisition.
Note 8 Long-Term Debt and Notes Payable
----------------------------------------
Long-Term Debt
Long-term debt consists of the following:
December 31 (Dollars in thousands) 2000 1999
-------------------------------------------------------------------------------
Term Loans (1) (2) $ 27,290 $ 36,689
Revolver Loans (1) (2) 62,500 52,250
Due to Ameridrives International, L.P. (3) --- 5,000
Senior subordinated notes with interest at 11.75%,
due May 1, 2006, net of unamortized discount of
$0.7 million in 2000 and $0.8 million in 1999 74,299 74,217
Other 784 915
-------------------------------------------------------------------------------
164,873 169,071
Less current portion (39,666) (9,447)
-------------------------------------------------------------------------------
$125,207 $159,624
===============================================================================
(1) A portion of the proceeds from the sale of the Morse Controls division on
February 13, 2001 was used to pay down the term loan by $17.3 million.
Quarterly principal payments are as follows: $1.1 million due quarterly
February 28, 2001 to August 29, 2001; $1.7 million due quarterly November
29, 2001 to August 29, 2002. All revolver balances are due on August 29,
2002.
(2) These loans bear interest at prime plus .50%, or LIBOR plus 1.75%. The
prime and LIBOR margins are a sliding scale based on the Company's total
debt to EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization.)
(3) The majority shareholders of Ameridrives International, L.P. are also the
majority shareholders of the Company. This loan bears interest at LIBOR
+ 1.50%.
-------------------------------------------------------------------
On February 27, 1998, the Company completed the sale of its Roltra Morse
business to Magna International Inc. (See Note 3). The net proceeds were used to
reduce domestic senior debt by $30 million on February 27, 1998, including $8
million of the outstanding Term Loans. The sale of Roltra Morse and use of the
proceeds to reduce its domestic senior debt increased the availability under its
revolving credit facility to purchase a portion of its 11.75% senior
subordinated notes (the "Notes") on the open market.
The aggregate annual maturities of long-term debt, in thousands, for the four
years subsequent to 2001 are:
(Dollars in thousands)
------------------------------------------------------------------------------
2002 $ 125,207
2003 ---
2004 ---
2005 ---
Thereafter ---
------------------------------------------------------------------------------
Total $125,207
==============================================================================
The Term Loans have required mandatory prepayments under certain conditions such
as from proceeds from asset sales, specified percentages of net proceeds of debt
or equity issuances, and a percentage of excess cash flow. The mandatory
prepayments will be applied to the Term Loans pro rata, and then to the
repayment of the Revolver Loans. Mandatory prepayments applied to the Term Loans
reduce the scheduled quarterly principal payments on a pro rata basis. The
interest rates on the Revolver and Term Loans are based on current market rates.
Consequently, the carrying value of the Term Loans approximates fair value.
The Credit Agreement requires the Company to meet certain objectives with
respect to financial ratios. The Credit Agreement and the Notes contain
provisions, which place certain limitations on dividend payments and outside
borrowings. Under the most restrictive of such provisions, the Credit Agreement
requires the Company to maintain certain minimum interest coverage, fixed charge
coverage and maximum permitted debt levels and prohibits dividends. The Company
was in compliance with all of its covenants under the Credit Agreement at
December 31, 2000.
During March of 2001, the Company plans to exercise its option to call the
entire issue of the 11.75% senior subordinated notes due May 1, 2006, for
redemption on May 1, 2001, at a redemption price of 106% of the principal
amount.
The Company intends to finance the redemption with proceeds from the sale of the
Morse Controls division, as well as additional revolver borrowings.
The year ended December 31, 1999, includes an extraordinary charge of $0.2
million, as a result of the early extinguishment of a portion of its Notes.
The year ended December 31, 1998, include an extraordinary charge of $5.2
million net of tax, representing charges related to the early extinguishment of
the Company's debt under its current senior secured credit facilities and its
Notes, as well as the write-off of previously deferred loan costs.
Notes Payable
The Company's continuing operations had $6.0 million in foreign short-term
credit facilities with $0.001 million outstanding at December 31, 2000. Due to
the short-term nature of these debt instruments it is the Company's opinion that
the carrying amounts approximate the fair value. As of December 31, 2000, the
Company had $6.3 million of outstanding standby letters of credit.
Note 10 Operations by Industry Segment and Geographic Area
-----------------------------------------------------------
The Company classifies its continuing operations into two business segments:
Fluid Handling and Industrial Positioning. Detailed information regarding
products by segment is contained in the section entitled "Business" included in
Part I, Item 1 of this Form 10-K Report. Amounts related to pre-Acquisition and
post-Acquisition have not been separated, as the effect of the Acquisition on
the segments was not material. Information about the business of the Company by
business segment, foreign operations and geographic area is presented below:
[Enlarge/Download Table]
Year Ended December 31
(Dollars in thousands) 2000 1999 1998
----------------------------------------------------------- --------------- ---------------- ---------------
Net Sales
Fluid Handling $99,170 $101,854 $113,688
Industrial Positioning 230,274 190,840 200,684
----------------------------------------------------------- --------------- ---------------- ---------------
Total net sales $329,444 $292,694 $314,372
=========================================================== =============== ================ ===============
Segment operating income
Fluid Handling $ 23,108 $ 22,779 $ 21,462
Industrial Positioning 30,024 23,198 26,323
----------------------------------------------------------- --------------- ---------------- ---------------
Total segment operating income 53,132 45,977 47,785
----------------------------------------------------------- --------------- ---------------- ---------------
Equity in income of unconsolidated companies 742 --- 31
Unallocated corporate expenses (8,332) (7,344) (9,275)
(Loss) / Gain on sale of assets (24) 2,066 ---
Interest income / (expense), net (19,157) (16,545) (20,640)
Other non operating 977 --- ---
----------------------------------------------------------- --------------- ---------------- ---------------
Income from continuing operations before income taxes and
extraordinary item $ 27,338 $ 24,154 $ 17,901
=========================================================== =============== ================ ===============
A reconciliation of segment operating income to income from operations follows:
[Enlarge/Download Table]
Year Ended December 31
(Dollars in thousands) 2000 1999 1998
---------------------------------------- ------------------- ------------------ -------------------
Segment operating income $ 53,132 $ 45,977 $ 47,785
Unallocated corporate expenses (8,332) (7,344) (9,275)
Other income (700) (922) ---
---------------------------------------- ------------------- ------------------ -------------------
Income from operations $ 44,100 $ 37,711 $ 38,510
======================================== =================== ================== ===================
Year Ended December 31
(Dollars in thousands) 2000 1999
-------------------------------------------------------------------------------
Identifiable assets
Fluid Handling $ 55,129 $ 53,536
Industrial Positioning 126,469 125,018
Corporate 190,265 198,167
-------------------------------------------------------------------------------
Total identifiable assets $371,863 $376,721
===============================================================================
Depreciation and amortization
Fluid Handling $ 2,023 $ 1,978
Industrial Positioning 5,045 3,360
Corporate 5,660 5,613
-------------------------------------------------------------------------------
Total depreciation and amortization $12,728 $10,951
===============================================================================
Capital expenditures
Fluid Handling $1,312 $1,362
Industrial Positioning 3,396 4,738
Corporate 42 302
-------------------------------------------------------------------------------
Total capital expenditures $4,750 $6,402
===============================================================================
Identifiable assets of corporate at December 31, 2000 and 1999 include goodwill
of $172.6 million and $177.2 million related to the Acquisition of Imo,
respectively (See Note 2).
The continuing operations of the Company on a geographic basis are as follows:
[Enlarge/Download Table]
Year Ended December 31
(Dollars in thousands) 2000 1999 1998
-------------------------------------------- ------------------ ------------------ -------------------
Net sales
United States $250,387 $203,659 $207,795
Foreign 79,057 89,035 106,577
-------------------------------------------- ------------------ ------------------ -------------------
Total net sales $329,444 $292,694 $314,372
============================================ ================== ================== ===================
Segment operating income
United States $ 42,163 $ 34,881 $34,523
Foreign 10,969 11,096 13,262
-------------------------------------------- ------------------ ------------------ -------------------
Total segment operating income $ 53,132 $ 45,977 $47,785
============================================ ================== ================== ===================
Year Ended December 31
(Dollars in thousands) 2000 1999 1998
-------------------------------------------- ------------------ ------------------ -------------------
Identifiable assets
Continuing Operations:
United States $319,328 $319,711 $327,720
Foreign 52,535 57,010 61,252
-------------------------------------------- ------------------ ------------------ -------------------
Total identifiable assets $371,863 $376,721 $388,972
============================================ ================== ================== ===================
Export sales
Asia $3,650 $3,463 $5,277
Canada 9,705 5,616 3,801
Europe 4,656 3,461 3,288
Middle East & North Africa 1,148 544 769
Central and South America 3,583 4,320 8,272
Other 1,572 2,183 3,440
-------------------------------------------- ------------------ ------------------ -------------------
Total export sales $ 24,314 $ 19,587 $ 24,847
============================================ ================== ================== ===================
No one customer accounted for 10% or more of consolidated sales in 2000, 1999 or
1998.
Note 11 Pension Plans and Other Postretirement Benefits
--------------------------------------------------------
The Company and its subsidiaries have various pension plans covering
substantially all of their employees. Benefits under these pension plans for
substantially all U.S. employees ceased to accrue on January 31, 1999, when the
Company froze benefits under its primary pension plan. At the same time, the
Company increased the length of service credit for the pension plan by 20% and
enhanced its 401k plan. Curtailment of the pension plan resulted in a
curtailment gain of $6.5 million, while the increased length of service resulted
in a loss of $4.9 million. Both changes were contemplated at the Acquisition and
were recorded as purchase accounting adjustments.
It is the general policy of the Company to fund its pension plans in conformity
with requirements of applicable laws and regulations. Net periodic pension
(income) cost was $(4.9) million in 2000, $(3.8) million in 1999, $0.7 million
in 1998, and includes amortization of prior service cost and transition amounts
for periods of 5 to 15 years. The 2000, 1999 and 1998 expense includes costs
related to retained pension liabilities of discontinued operations.
In addition to providing pension benefits, the Company provides certain health
care and life insurance benefits for certain retired union employees. The
Company's unionized retiree benefits are determined by their individually
negotiated contracts. The Company's contribution toward the full cost of the
benefits is based on the retiree's age and continuous unbroken length of service
with the Company. The Company's policy is to pay the cost of medical benefits as
claims are incurred. Life insurance costs are paid as insured premiums are due.
The following sets forth the funded status of the plans as of the most recent
actuarial valuation using a measurement date of December 31.
[Enlarge/Download Table]
Pension Benefits Other Benefits
------------------------------------------------------ ------------------------------- ------------------------------
Year Ended December 31
(Dollars in thousands) 2000 1999 2000 1999
------------------------------------------------------ --------------- -------------- ---------------- --------------
Change in benefit obligation:
Benefit obligation at beginning of year $206,762 $219,638 $9,014 $ 10,004
Service cost 38 331 13 19
Interest cost 15,625 14,882 659 643
Actuarial loss (gain) 5,246 (12,813) (26) (705)
Effect of plan change --- 407 --- ---
Estimated benefits paid (15,079) (15,683) (969) (947)
------------------------------------------------------ --------------- -------------- ---------------- --------------
Benefit obligation at end of year $212,592 $206,762 $8,691 $9,014
------------------------------------------------------ --------------- -------------- ---------------- --------------
Change in plan assets:
Fair value of plan assets at beginning of year $ 235,714 $ 214,742 $ --- $ ---
Estimated return on plan assets 2,333 35,811 --- ---
Employer contribution 309 844 969 947
Estimated benefits paid (15,079) (15,683) (969) (947)
------------------------------------------------------ --------------- --------------- --------------- ---------------
Fair value of plan assets at end of year $ 223,277 $ 235,714 $ --- $ ---
------------------------------------------------------ --------------- --------------- --------------- ---------------
Funded status $ 10,685 $ 28,952 $ (8,691) $ (9,014)
Unrecognized actuarial gain (6,376) (30,056) (205) (197)
Unrecognized prior service cost 493 583 72 79
Unrecognized net obligation 127 153 --- ---
------------------------------------------------------ --------------- --------------- --------------- --------------
Accrued benefit (cost) $4,929 $ (368) $ (8,824) $ (9,132)
====================================================== =============== =============== =============== ==============
Pension Benefits Other Benefits
------------------------------------------------------ ------------------------------- -------------------------------
Year Ended December 31
(Dollars in thousands) 2000 1999 2000 1999
------------------------------------------------------ --------------- --------------- --------------- ---------------
Discount rate 7.75% 7.75% 7.75% 7.75%
Expected return on plan assets 9.25% 9.25% --- ---
For measurement purposes, a 5% annual rate of increase in the per capita cost of
covered health care benefits was assumed for 2000 and in all future years. The
rate of compensation increase was zero in 2000 and 1999 because the plan was
frozen on January 31, 1999.
[Enlarge/Download Table]
Pension Benefits Other Benefits
------------------------------------------------------ ------------------------------- -------------------------------
Year Ended December 31
(Dollars in thousands) 2000 1999 2000 1999
------------------------------------------------------ --------------- --------------- --------------- ---------------
Components of net periodic benefit cost:
Service cost $ 38 $ 331 $ 13 $ 19
Interest cost 15,625 14,882 659 643
Expected return on plan assets (20,721) (19,128) --- ---
Amortization 162 132 (12) 6
--- --- --- ---
------------------------------------------------------ ---------------- -------------- --------------- ---------------
Net periodic (income) benefit cost $ (4,896) $ (3,783) $660 $668
====================================================== ================ ============== =============== ===============
The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plans with accumulated benefit obligations in
excess of plan assets were $10.1 million, $9.8 million and $8.4 million,
respectively, as of December 31, 2000 and related to the Varo and Morse Ltd
pension plans. The projected benefit obligation, accumulated benefit obligation,
and fair value of plan assets for the pension plans with accumulated benefit
obligations in excess of plan assets were $2.8 million, $2.8 million and $1.4
million, respectively, as of December 31, 1999 and related to the US Salaried,
Louisburg, Warren and Varo pension plans
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one-percentage-point change in assumed
health care cost trend rates would have the following effects:
1-Percentage-Point 1-Percentage-Point
(Dollars in thousands) Increase Decrease
-------------------------------------------------------------------------------
Effect on total of service and interest
cost components $ 45 $ (39)
Effect on the postretirement benefit
obligation $ 595 $(519)
Plan assets at December 31, 2000 are invested in fixed income investments and
equity securities whose values are subject to fluctuations of the securities
market.
The Company maintains a defined contribution plan ("Plan") covering
substantially all domestic, non-union employees. Eligible employees may
generally contribute from 1% to 15% of their compensation on a pre-tax basis to
the Plan. The Company's expense for 2000, 1999 and 1998 was $2.6 million, $2
million and $.4 million, respectively, related to the Plan. Effective February
1, 1999, the Company contributions are based on 50% of the first 6% of each
participant's pre-tax contribution. In addition, the Company will also
contribute 3% of all employees' salary (including non-contribution plan
participants) to the defined contribution plan, effective January 1, 1999.
Note 12 Leases
---------------
The Company leases certain manufacturing and office facilities, equipment, and
automobiles under long-term leases. Future minimum rental payments required
under operating leases of continuing operations that have initial or remaining
noncancelable lease terms in excess of one year, as of December 31, 2000, are:
(Dollars in thousands)
-------------------------------------------------------------------------------
2001 $ 3,433
2002 2,698
2003 2,047
2004 830
2005 508
Thereafter 2,915
-------------------------------------------------------------------------------
Total minimum lease payments $ 12,431
===============================================================================
Total rental expense under operating leases charged against continuing
operations was $6.0 million in 2000, $6.5 million in 1999 and $7.3 million in
1998.
Note 13 Foreign Exchange Contracts
-----------------------------------
The Company periodically enters into foreign exchange contracts for purposes of
hedging its exposure to foreign currency exchange rate fluctuations. These
contracts hedged firm commitments between the Swedish Krona and the German
Deutschmark and the United States Dollar. At December 31, 1999, the Company had
foreign currency contracts with notional amounts totaling approximately $0.1
million with various expiration dates through June 2000. The Company did not
have any foreign currency contracts outstanding at December 31, 2000.
All foreign currency derivative agreements are with major commercial banks;
therefore the risk of credit loss from nonperformance by the banks is considered
by management to be minimal. The Company evaluates its exposure to credit loss
on an ongoing basis.
Note 14 Sierra International Inc. Acquisition
----------------------------------------------
On December 1, 1999, the Company purchased the stock of Sierra International
Inc. ("Sierra") from Echlin Inc., a subsidiary of Dana Corporation. Sierra sells
and distributes replacement parts for marine and power equipment applications
and marine hose products. Sierra has become part of the Company's Industrial
Positioning segment. On February 13, 2001, Sierra was sold with the Company's
Morse Controls division. (See Note 16).
Note 15 Accounts Receivable Securitization
--------------------------------------------
On November 29, 1999, the Company entered into an agreement to sell an interest
in accounts receivable to finance a portion of the Sierra acquisition. Under the
program, the Company entered into an agreement to sell, on a revolving basis,
certain of its accounts receivable to a wholly-owned bankruptcy-remote
subsidiary, Imo Funding Company, LLC, which entered into an agreement to
transfer, on a revolving basis, an undivided percentage ownership interest in a
pledged pool of accounts receivable to an unrelated third party purchaser,
Scotia Capital. Amounts pledged to the purchaser under this agreement include
the accounts receivable from the Company's US operations of the Imo Pump, Boston
Gear and Morse Controls divisions.
At December 31, 2000 and 1999, approximately $23.2 million and $22.4 million,
respectively, of accounts receivable had been pledged, and of this amount,
approximately $18.8 million and $21.0 million, respectively had actually been
sold to Scotia Capital under this agreement. The sales are reflected as a
reduction of accounts receivable and are net of a discount amount that
approximates the purchaser's financing cost of issuing its own commercial paper
backed by these accounts receivable. The retained interest in the accounts
receivables sold are valued at the carrying amount of the retained accounts
receivable net of applicable loss reserve and related commercial paper rates,
which approximates fair value. During the year, management monitors the change
in the outstanding retained interest and makes adjustments to its carrying
amount based on actual and projected losses as well as any changes in interest
rates.
As of December 31, 2000 and 1999, the delinquencies on the amounts pledged were
approximately $1.1 million and $0.9 million, respectively. During 2000 and 1999,
the actual losses on the pledged amounts were approximately $0.2 million and
$0.1 million, respectively. At December 31, 2000, a 10 and 20 percent adverse
change in the expected losses would have approximately a $0.1 million and $0.2
million, impact on residual interest, respectively. Any changes in interest
rates would only have only a marginal impact on residual interest.
The Company, as agent for the purchaser, retains servicing responsibilities for
the pledged receivables. The fees received by the Company for these services
during 2000 and 1999, were recorded at fair value, and therefore no related
assets have been recorded. The discount fees arising from the securitization
transactions were approximately $1.5 million and $0.1 million for 2000 and 1999,
respectively, recorded as interest expense and are based on the level of
receivables sold and related commercial paper rates.
A portion of the proceeds from the sale of the Morse Controls division on
February 13, 2001 was used to fully repay the entire accounts receivable
securitization. As a result, the Company's ownership interest in the pledged
pool of accounts receivable was returned.
SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," provides accounting and reporting standards for
sales, securitization and servicing of receivables and other financial assets
and extinguishments of liabilities. The Company adopted the Statement in the
1999 fourth quarter. The provisions of the Statement do not have a material
impact on the accounting for actual or future sales of trade accounts receivable
under the securitization agreement referred to above. SFAS 140 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -
a Replacement of FASB Statement 125," provides for accounting and reporting
standards for sales, securitization and servicing of receivables and other
financial assets and extinguishments of liabilities. The Company adopted the
Statement's disclosure requirements in the 2000 fourth quarter.
Note 16 Subsequent Events
--------------------------
Sale of Morse Controls - On February 13, 2001, the Company sold the assets of
its Morse Controls division and stock of the Morse related subsidiaries, to
Teleflex Incorporated ("Teleflex") pursuant to an agreement dated November 15,
2000 for $135 million in cash, subject to final adjustment. Cash proceeds have
been principally used by the Company to pay down its domestic senior debt and
accounts receivable securitization. The transaction will be reflected in the
Company's financial statements in the first quarter of 2001.
Note 17 Contingencies
-----------------------
The Company and one of its subsidiaries are two of a large number of defendants
in a number of lawsuits brought in various jurisdictions by approximately 4,500
claimants who allege injury caused by exposure to asbestos. Although neither the
Company nor any of its subsidiaries has ever been a producer or direct supplier
of asbestos, it is alleged that the industrial and marine products sold by the
Company and the subsidiary named in such complaints contained components which
contained asbestos. Suits against the Company and its subsidiary have been
tendered to its insurers, who are defending under their stated reservation of
rights. In addition, the Company and the subsidiary are named in cases,
involving approximately 40,000 claimants, which were "administratively
dismissed" by the U.S. District Court for the Eastern District of Pennsylvania.
Cases that have been "administratively dismissed" may be reinstated only upon a
showing to the Court that (i) there is satisfactory evidence of an
asbestos-related injury; and (ii) there is probative evidence that the plaintiff
was exposed to products or equipment supplied by each individual defendant in
the case. The Company believes that it has adequate insurance coverage or has
established appropriate reserves to cover potential liabilities related to these
cases.
The Company is a defendant in a lawsuit in the Supreme Court of British Columbia
alleging breach of contract arising from the sale of a steam turbine delivered
by the Company's former Delaval Turbine Division and claiming damages in excess
of $10 million. The Company believes that there are legal and factual defenses
to the claim and intends to defend the action vigorously.
The Company was a defendant in a lawsuit in the Circuit Court of Cook County,
Illinois alleging performance shortfalls in products delivered by the Company's
former Delaval Turbine Division. The Company has reached an agreement on
December 7, 1999, with the plaintiff settling all claims between the parties.
However, a co-defendant, Federal Insurance Company, continues to pursue its
counterclaim against the Company for attorney's fees it alleges it incurred in
its role as surety for the project from which the litigation arose. The Company
believes that there are legal and factual defenses to the claim and intends to
defend the action vigorously.
On June 3, 1997, the Company was served with a complaint in a case brought in
the Superior Court of New Jersey which alleges damages in excess of $10 million
incurred as a result of losses under a Government Contract Bid transferred in
connection with the sale of the Company's former Electro-Optical Systems
business. The Electro-Optical Systems business was sold in a transaction that
closed on June 2, 1995. The sales contract provided certain representations and
warranties as to the status of the business at the time of sale. The complaint
alleges that the Company failed to provide notice of a "reasonably anticipated
loss" under a bid that was pending at the time of the transfer of the business
and therefore a representation was breached. The contract was subsequently
awarded to the Company's Varo subsidiary and thereafter transferred to the buyer
of the Electro-Optical Systems business. The Company believes that there are
legal and factual defenses to the claims and intends to defend the action
vigorously.
The operations of the Company, like those of other companies engaged in similar
businesses, involve the use, disposal and clean up of substances regulated under
environmental protection laws. In a number of instances the Company has been
identified as a Potentially Responsible Party by the U.S. Environmental
Protection Agency, with respect to the disposal of hazardous wastes at a number
of facilities that have been targeted for clean-up pursuant to CERCLA or similar
state law. Similarly, the Company has received notice that it is one of a number
of defendants named in an action filed in the United States District Court, for
the Southern District of Ohio Western Division by a group of plaintiffs who are
attempting to allocate a share of cleanup costs, for which they are responsible,
to a large number of additional parties, including the Company. Although CERCLA
and corresponding state law liability is joint and several, the Company believes
that its liability will not have a material adverse effect on the financial
condition of the Company since it believes that it either qualifies as a de
minimis or minor contributor at each site. Accordingly, the Company believes
that the portion of remediation costs that it will be responsible for will not
be material.
The Company is also involved in various other pending legal proceedings arising
out of the ordinary course of the Company's business. None of these legal
proceedings are expected to have a material adverse effect on the financial
condition of the Company. With respect to these proceedings and the litigation
and claims described in the preceding paragraphs, management of the Company
believes that it either will prevail, has adequate insurance coverage or has
established appropriate reserves to cover potential liabilities. There can be no
assurance, however, as to the ultimate outcome of any of these matters, and if
all or substantially all of these legal proceedings were to be determined
adversely to the Company, there could be a material adverse effect on the
financial condition of the Company.
The Company is self-insured for a portion of its product liability and certain
other liability exposures. Depending on the nature of the liability claim, and
with certain exceptions, the Company's maximum self-insured exposure ranges from
$250,000 to $500,000 per claim with certain maximum aggregate policy limits per
claim year. With respect to the exceptions, which relate principally to diesel
and turbine units sold before 1991, the Company's maximum self-insured exposure
is $5 million per claim.
Report of Independent Public Accountants
----------------------------------------
To the Shareholders and Board of Directors of
Imo Industries Inc.:
We have audited the accompanying consolidated balance sheets of Imo Industries
Inc. (a Delaware corporation) and subsidiaries as of December 31, 2000 and 1999,
and the related consolidated statements of income and comprehensive income,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform an 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 financial position of Imo Industries Inc.
and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.
ARTHUR ANDERSEN LLP
Richmond, Virginia
March 28, 2001
Report of Independent Public Accountants on Schedule II
-------------------------------------------------------
To the Shareholders and Board of Directors of
Imo Industries Inc.:
We have audited in accordance with auditing standards generally accepted in the
United States the consolidated financial statements included in the Form 10-K
Annual Report of Imo Industries Inc. (a Delaware corporation) and subsidiaries
as of December 31, 2000 and 1999, and for each of the three years in the period
ended December 31, 2000, and have issued our report thereon dated March 28,
2001. Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. Schedule II filed as a part
of the Company's Form 10-K Annual Report is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not a part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly states, in all material respects, the financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Richmond, Virginia
March 28, 2001
[Enlarge/Download Table]
Imo Industries Inc. and Subsidiaries
Quarterly Financial Information (Unaudited)
Quarterly financial information for 2000 and 1999 is as follows:
1st 2nd 3rd 4th
2000 (Dollars in thousands)(a) Quarter Quarter Quarter Quarter
Net Sales $83,424 $89,130 $78,840 $78,050
Gross profit 26,711 28,873 24,439 24,412
Income from continuing operations
before extraordinary item 4,533 6,111 3,557 2,247
Net income $ 4,533 $ 6,111 $ 3,557 $2,247
1st 2nd 3rd 4th
1999 (Dollars in thousands)(a) Quarter Quarter Quarter Quarter
Net Sales $ 75,843 $ 77,211 $ 68,371 $ 71,269
Gross profit 23,768 25,650 20,899 22,254
Income from continuing operations
before extraordinary item 3,321 5,352 2,278 4,363
Extraordinary Item (216) --- --- ---
Net income 3,105 5,352 2,278 4,363
(a) The notes to the consolidated financial statements located in Part IV of
this Form 10-K Report as indexed at Item 14(a)(1) should be read in
conjunction with this summary.
[Enlarge/Download Table]
SCHEDULE II
IMO INDUSTRIES INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
THREE-YEAR PERIOD ENDED DECEMBER 31, 2000
---------- ------------------------------------ ---------------- ------------------------------ ---------------
ADDITIONS
BALANCE -------------------------
AT BEGINNING CHARGED TO OTHER - DEDUCTIONS - BALANCE AT
OF YEAR COSTS EXPENSES DESCRIBE DESCRIBE END OF YEAR
YEAR ENDED DECEMBER 31, 2000:
Allowance for doubtful accounts $1,348 $ 538 $ --- $ 477 (3) $1,404
5 (1)
============= ============= ============ ============= =============
Inventory valuation allowance $5,682 $1,995 $ --- $1,504 (5) $6,097
76 (1)
============= ============= ============ ============= =============
Valuation allowance for deferred
tax assets $1,720 $ --- $ --- $ --- $1,720
============= ============= ============ ============= =============
Accrued product warranty liability $2,507 $1,841 $ --- $1,554 (4) $2,780
14 (1)
============= ============= ============ ============= =============
YEAR ENDED DECEMBER 31, 1999:
Allowance for doubtful accounts $1,058 $ 360 $ 200 (7) $ 50 (2) $1,348
220 (3)
============= ============= ============ ============= =============
Inventory valuation allowance $7,222 $1,211 $ 36 (2) $2,810 (5) $5,682
821 (7) 700 (2)
98 (1)
============= ============= ============ ============= =============
Valuation allowance for deferred
tax assets $1,720 $ --- $ --- $ --- $1,720
============= ============= ============ ============= =============
Accrued product warranty liability $1,423 $1,655 $ 602 (2) $1,349 (4) $2,507
176 (7)
============= ============= ============ ============= =============
YEAR ENDED DECEMBER 31, 1998:
Allowance for doubtful accounts $1,435 $(158) $ 3 (2) $ 229 (3) $1,058
(7) (1)
============= ============= ============ ============= =============
Inventory valuation allowance $9,508 $ 974 $ 53 (2) $3,249 (5) $7,222
64 (1)
============= ============= ============ ============= =============
Valuation allowance for deferred
tax assets $53,257 $ --- $ --- $51,537 (6) $1,720
============= ============= ============ ============= =============
Accrued product warranty liability $1,844 $1,224 $ 46 $1,691 (4) $1,423
============= ============= ============ ============= =============
(1) Foreign exchange adjustments.
(2) Reclassifications and adjustments.
(3) Uncollectible accounts written off, net of recoveries.
(4) Product warranty claims honored during the year.
(5) Charges against inventory valuation account during the year.
(6) True up balances and reduce valuation reserve due to management's belief that it is more likely than not that Deferred tax
benefits will be utilized in the future.
(7) Sierra acquisition (not included in the beginning balance).
Dates Referenced Herein and Documents Incorporated by Reference
| This ‘10-K405’ Filing | | Date | | Other Filings |
|---|
| |  |
| | 5/1/06 |
| | 8/29/02 |
| | 11/29/01 |
| | 8/29/01 |
| | 5/1/01 |
| Filed on: | | 4/16/01 |
| | 3/30/01 | | NT 10-K |
| | 3/28/01 |
| | 2/28/01 | | 8-K |
| | 2/23/01 |
| | 2/13/01 |
| | 2/11/01 |
| | 1/26/01 |
| For Period End: | | 12/31/00 | | NT 10-K |
| | 11/15/00 |
| | 6/15/00 |
| | 3/30/00 | | 10-K405 |
| | 2/25/00 |
| | 12/31/99 | | 10-K405 |
| | 12/7/99 |
| | 12/1/99 |
| | 11/29/99 |
| | 10/13/99 |
| | 8/3/99 |
| | 3/31/99 | | 10-K405 |
| | 2/1/99 |
| | 1/31/99 |
| | 1/1/99 |
| | 12/31/98 | | 10-K405 |
| | 10/15/98 |
| | 8/14/98 |
| | 7/31/98 |
| | 7/2/98 | | 8-K, SC 13E3/A |
| | 6/1/98 | | SC 13E3 |
| | 5/13/98 | | 10-Q |
| | 5/1/98 | | 8-A12B/A, 8-K |
| | 4/30/98 |
| | 3/31/98 | | 10-K |
| | 3/13/98 | | 8-K |
| | 3/9/98 |
| | 2/28/98 |
| | 2/27/98 |
| | 2/16/98 |
| | 1/30/98 |
| | 12/31/97 | | 10-K |
| | 12/2/97 |
| | 11/14/97 | | 10-Q |
| | 11/6/97 |
| | 9/15/97 | | 8-K |
| | 8/29/97 | | 8-K, SC 13D/A, SC 14D1/A |
| | 8/28/97 | | 8-K |
| | 8/27/97 | | 8-A12B/A, 8-K |
| | 8/26/97 | | SC 14D1/A |
| | 8/21/97 | | 8-K, SC 14D1/A |
| | 8/14/97 | | 10-Q |
| | 7/31/97 | | SC 14D1, SC 14D9 |
| | 7/25/97 | | 8-K |
| | 7/2/97 | | SC 13D, SC 14D1, SC 14D9 |
| | 6/26/97 | | 8-K |
| | 6/25/97 | | 11-K |
| | 6/3/97 |
| | 5/2/97 | | 8-A12B, 8-K |
| | 4/30/97 | | 8-K |
| | 3/27/97 | | 10-K405 |
| | 2/19/97 |
| | 2/13/97 |
| | 2/6/97 |
| | 1/28/97 |
| | 9/13/96 |
| | 5/21/96 | | DEF 14A |
| | 5/10/96 | | S-4 |
| | 4/29/96 |
| | 4/23/96 | | 8-K |
| | 4/15/96 |
| | 3/28/96 | | 10-K |
| | 11/13/95 | | 10-Q |
| | 6/23/95 | | S-8, S-8 POS |
| | 6/19/95 | | 8-K |
| | 6/2/95 | | 8-K |
| | 5/11/95 |
| | 3/29/95 |
| | 3/1/95 |
| | 1/17/95 | | 8-K |
| | 1/1/95 |
| | 11/14/94 | | 10-Q |
| | 11/4/94 |
| | 3/31/94 | | 10-K, 10-Q |
| | 10/28/93 |
| | 9/13/93 |
| | 8/6/93 |
| | 7/15/93 |
| | 4/19/93 |
| | 11/10/92 |
| | 8/13/92 |
| | 8/5/92 |
| | 8/3/92 |
| | 3/26/92 |
| List all Filings |
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