Document/Exhibit Description Pages Size
1: 10-K Form 10-K for Year Ended 2/28/94 68 258K
2: EX-10.4 Stock Option Plan 11± 53K
3: EX-10.5 Restricted Stock Plan 8± 38K
4: EX-10.8 Non-Qualified Plan 32± 127K
5: EX-10.9 Non-Qualified Plan for Non-Employee Directors 21± 84K
6: EX-11 Statement Regarding Computation of Per Share 2± 9K
7: EX-21 Subsidiaries 3± 13K
8: EX-23 Consent of Independent Accountants 1 6K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 1994 Commission File No. 1-8862
MARK IV INDUSTRIES, INC.
__________________________________________________________________________
(Exact name of Registrant as specified in its charter)
Delaware 23-1733979
______________________________ ___________________________________
(State or other jurisdiction of (IRS employer Identification number)
incorporation or organization)
501 John James Audubon Pkwy., P.O. Box 810, Amherst, NY 14226-0810
_______________________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 689-4972
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of Class which registered
______________ ___________________
Common Stock, $.01 par value New York Stock Exchange
6-1/4% Convertible Subordinated
Debentures due February 15, 2007 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (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 .
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant based on the closing price of the Common
Stock on May 18, 1994 on the New York Stock Exchange was $564,880,881.
As of May 18, 1994, the number of outstanding shares of Registrant's
Common Stock, $.01 par value, was 42,743,594 shares.
Documents Incorporated By Reference
Portions of the Registrant's definitive proxy statement to be filed
pursuant to Regulation 14A not later than 120 days after the end of the fiscal
year are incorporated by reference into Part III.
MARK IV INDUSTRIES, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K
PART I Page
Item 1: Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2: Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Item 3: Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .16
Item 4: Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . . . . . .16
PART II
Item 5: Market for the Company's Common Stock and
Related Security Holder Matters . . . . . . . . . . . . . . . .17
Item 6: Selected Financial Data. . . . . . . . . . . . . . . . . . . . .18
Item 7: Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . .20
Item 8: Financial Statements and Supplementary
Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Item 9: Disagreement on Accounting and Financial
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . .53
PART III
Item 10: Directors and Executive Officers of the
Registrant. . . . . . . . . . . . . . . . . . . . . . . . . . .53
Item 11: Executive Compensation . . . . . . . . . . . . . . . . . . . . .53
Item 12: Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . .53
Item 13: Certain Relationships and Related
Transactions. . . . . . . . . . . . . . . . . . . . . . . . . .53
PART IV
Item 14: Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . .54
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . .63
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . 64
PART I
ITEM 1. BUSINESS
General
Mark IV Industries, Inc. ("Mark IV", or "the Company") is a diversified
manufacturer of a wide variety of proprietary and other products which are
primarily grouped into three core businesses: Power and Fluid Transfer;
Transportation; and Professional Audio. Many of Mark IV's product groups have
a significant, and in certain instances the leading share of their respective
markets. Its products principally serve specialized needs in markets in which
relatively few manufacturers compete. The products are sold directly, and
through independent distributors, to other manufacturers and commercial users
in the United States and Europe, and to a lesser extent in Canada and the Far
East. Mark IV operates 52 separate manufacturing facilities and employs
approximately 12,500 people.
Mark IV's business strategy in fiscal 1992 and 1993 was focused on the
accelerated reduction of debt and the enhancement of its three core
businesses. By February 28, 1993, Mark IV had significantly reduced the
amount of its outstanding long-term debt (by $220,500,000) from the beginning
of fiscal 1992, bringing the Company's long-term debt as a percentage of total
capitalization from 80.8% at February 28, 1991 to 59.0% at February 28, 1993.
Having accomplished significant debt reductions by the end of fiscal 1993, the
Company's emphasis shifted to building its core businesses by expanding their
product coverages and increasing their global presence.
In fiscal 1994, the Company announced the discontinuance of its non-core
businesses, and completed the sale of certain of those businesses for cash
proceeds of approximately $35,000,000. In June 1993, the Company acquired
Pirelli Trasmissioni Industriali S.p.A (PTI) for a cash purchase price of
$65,000,000 and the assumption of PTI bank indebtedness of $50,000,000.
Financing for the PTI acquisition was provided by the Company's new credit
agreements, as well as the proceeds from the sale of discontinued operations.
PTI's operations are based in Italy, and include manufacturing and
distribution centers in 5 other Western European countries and in the U.S.
Segment Information
As a result of the Company's discontinuance and sale of certain of its
non-core businesses in fiscal 1994 and 1993, and its PTI acquisition in June
1993, the Company has modified its industry segment definitions and
descriptions for fiscal 1994. The company now classifies its operations into
the following three core business segments:
(i) Power and Fluid Transfer, which includes the design and
manufacture of automotive aftermarket and OEM belts, hose,
couplings, accessory drive systems and fluid transfer assemblies;
industrial belts, hose and fittings, and garden hose.
(ii) Transportation, which includes the design and manufacture of
products and systems for mass transit, such as door systems,
lighting, and informational display devices and applications for
bus and rail transit vehicles; traffic, such as advanced traffic
control and management systems, directional information and
warning signs for roads and highways, and automatic (intelligent)
vehicle identification for toll collection and traffic control;
and commercial aviation, such as aircraft interior lighting and
air-diffusion, and aircraft emergency lighting and night vision
compatibility.
(iii) Professional Audio, which includes the design and manufacture of
products and systems used primarily in the high-performance
professional audio market, such as professional performance
microphones, speakers, mixers, and amplifiers; high-fidelity
public address and musical instrument loudspeaker systems; audio
signal processors, sound reinforcement equipment, and sound
enhancement and noise canceling equipment.
Summary financial information concerning the Company's business segments
for fiscal 1994 follows. The comparative information for fiscal 1993 and 1992
has been restated to exclude discontinued operations and to recognize the
effects of adopting SFAS No. 109, Accounting For Income Taxes. The summary
information has been derived from the more detailed information regarding
industry segments in accordance with generally accepted accounting principles
as presented in Note 15 to the Company's audited consolidated financial
statements included elsewhere herein. Such summary information is as follows
(dollars in thousands):
[Download Table]
1994 1993 1992
________________ ________________ ________________
(As Restated) (As Restated)
Percent Percent Percent
Amount of Sales Amount of Sales Amount of Sales
______ ________ ______ ________ ______ _______
NET SALES
TO CUSTOMERS
Power and
Fluid Transfer $ 852,100 68.5% $ 709,400 65.3% $ 635,200 63.3%
Transportation 218,600 17.6% 199,500 18.4% 199,900 19.9%
Professional
Audio 173,500 13.9% 176,800 16.3% 169,200 16.8%
Total net sales
to customers $1,244,200 100.0% $1,085,700 100.0% $1,004,300 100.0%
OPERATING INCOME (1)
Power and
Fluid Transfer $ 97,800 11.5% $ 79,200 11.2% $ 67,000 10.5%
Transportation 27,000 12.4% 24,900 12.5% 27,100 13.6%
Professional
Audio 21,900 12.6% 22,000 12.4% 23,900 14.1%
Total operating
income $ 146,700 11.8% $ 126,100 11.6% $ 118,000 11.7%
<FN>
(1) Operating income represents income from continuing operations before
corporate expenses, interest expense, securities transactions and taxes.
A description of the Company's three business segments follows:
Power and Fluid Transfer
Mark IV's largest business group, the Power and Fluid Transfer segment,
is a global business, primarily operating under the name of Dayco. Around the
world, Dayco's products can be identified by their many registered trademarks,
including: Dayco, Dayflex, Gold Label, Isoran, Petroflex, Poly-Rib, Stecko,
Swan, and Top Cog.
Mark IV entered the power and fluid transfer business through the
acquisition in October 1988 of Armtek Corporation, of which Dayco was a
principal component. Dayco's business expanded significantly with its
November 1990 acquisition of Anchor Swan. At the time of its acquisition,
Anchor Swan manufactured and distributed garden hoses, general purpose air,
water and agricultural spray, air compressor and other hose products; Dayco
produced many of the same hose products, plus industrial belts, industrial,
hydraulic and appliance hoses and fittings and belts and hoses for original
equipment manufacturers (OEMs) and the automotive aftermarket. The Power and
Fluid Transfer segment was further expanded by the Company's acquisitions in
June 1991 of System Stecko Limited, a United Kingdom-based manufacturer of
hose couplings used primarily for high pressure industrial applications, and
its June 1992 acquisition of Tecaflex International S.p.A., an Italian
manufacturer primarily of hoses for automotive applications. Dayco's
acquisition of the power transmission business of Pirelli Trasmissioni
Industriali, S.p.A. (PTI) in June 1993, significantly expanded the company's
presence in Europe, by adding highly automated manufacturing capacity and a
research and development center in Europe, as well as experienced management,
a strong market presence, and brand name recognition. In North America, the
addition of PTI significantly enhanced Dayco's belt product line.
The Power and Fluid Transfer segment accounted for about 68% of
Mark IV's total revenue and 67% of its operating income (before corporate
expenses) in fiscal 1994. Also included in this business segment is
Protective Closures, which manufactures plastic and metal caps, plugs, seals
and protective netting sold to a broad base of industrial and automotive OEM
customers; and Mokon, which produces oil and water-based temperature control
systems. The segment has been divided into three, market-focused sub-groups -
- Industrial, Automotive OEM, and Automotive Aftermarket -- each of which is
unique in terms of its products, markets, customers and strengths. Therefore,
despite the overall size of this segment, no single business, market or
customer has dominant influence over the Company's operations.
Industrial
Approximately 44% of the Power and Fluid Transfer group's sales are to
Industrial customers, making it the largest sub-group within this segment.
The Industrial group supplies a variety of belts, hose, tensioners, pulleys,
couplings and assemblies for a variety of markets, including agricultural, oil
field, mining, lawn and garden, food and beverage handling, construction,
environmental, chemical and specialty applications. Many of the Industrial
group's products are sold to OEMs for use in products such as snowmobiles,
washing machines, golf carts, vacuum cleaners, outboard motors, lawn mowers
and farm equipment. The balance of the group's sales are divided between
distributors of industrial replacement belts and hose, and lawn and garden
product distributors, such as hardware chains, home centers, mass
merchandisers, and lawn and garden retailers.
Concern for the environment and environmental legislation are among the
key factors in the growth of the segment's Industrial business. One of the
fastest growing product lines is vapor recovery hose systems, which capture
gasoline fumes released while refueling, and return them to an underground
storage tank. Currently, 74 metropolitan areas and 32 states in the U.S.
mandate the use of vapor recovery systems, with an opportunity for continued
growth. Competition is increasing, but with its early entry into the market
and innovative products, such as new hose compounds formulated to handle the
newer gasoline additives, Dayco is well-positioned for the future. In
addition, Dayco's vapor recovery hose is lighter and easier to use than many
competing products.
Environmental concerns also are propelling growth in underground fuel
storage systems. Dayco is the exclusive supplier of the "hose within a hose"
used by Total Containment, Inc. in its EnviroflexTM flexible underground
piping system. This system is designed to capture any fluid that might leak
from an underground piping system, and is used together with a detection
system to reduce the risk of damage to the environment. Several states now
require the use of secondary containment systems, and many more are expected
to follow suit in order to meet the 1998 deadline for compliance with the
Underground Tank Storage Regulations Act. Total Containment has introduced a
similar product in Europe in response to increasing environmental regulations
there, which should also increase demand for this product.
The acquisition of PTI has provided Dayco with the opportunity to
produce a full line of high-torque synchronous belts and sprockets for the
industrial OEM and replacement markets. This line of more efficient timing
belts is referred to as RPPTM (Reinforced Parabolic Profile) belts. These
belts are used in situations where timing is critical, such as on large
conveyor systems or copy machines, or to prevent slippage of the belt in a
drive system, such as on a motorcycle or a large-scale industrial fan. The
marketing strategies for this product line include targeting new OEM
customers, and introducing this line of belts to current Dayco distributors.
Dayco's position as a leading manufacturer of garden hose in North
America will be further enhanced through the introduction of several new
products under the SWAN(R) brand. Dayco is scheduled to introduce the PERFECT
GARDENERTM brand of premium garden hose. This hose offers greater kink-
resistance, flexibility, soil resistance and coiling capabilities than any
competing brand. Also in this market, a new line of packaging for Dayco's
higher-quality SWAN garden hose products will be introduced in August 1994,
for the 1995 garden hose season. The new DURA-DISCTM vinyl boards -- circular
packaging placed on the coils of hose -- will replace traditional cardboard
packaging. DURA-DISC boards are expected to maintain their "like-new"
appearance throughout the entire selling season, thus benefitting our retail
distributors.
Automotive OEM
Approximately 32% of the Power and Fluid Transfer segment's sales are to
Automotive OEM customers. Dayco participates in the worldwide automotive OEM
market by supplying an extensive array of automotive systems and assemblies,
including entire accessory drive, cam drive, fuel, air conditioning; and power
steering systems; and radiator, heater, fuel, engine and transmission oil
cooler assemblies, consisting of various hose, belts, tensioners, brackets,
pulleys, canisters and sprockets. Revenues in this group are split about
evenly between automotive belt and hose products and systems.
In fiscal 1994, Dayco's Automotive OEM sub group was reorganized into a
single global business unit to better meet the needs of its worldwide
customers. Such reorganization has helped Dayco to eliminate useless
duplication, increase efficiencies, and maximize the use of its resources on a
global basis.
At its research and development center near Detroit, Dayco engineers and
technical support personnel work hand-in-hand with OEM customers during the
design phase, to develop complete power or fluid transfer systems from
individual components, for a specific vehicle. In Europe, Dayco's research
and development facility in Turin, Italy, is also involved in the design of
automotive systems, including fuel, air conditioning and power steering
systems developed for use in European-made vehicles.
Dayco does business with virtually all major automobile manufacturers
around the world. Growth in the automotive OEM market will be boosted by
Dayco's increasing activity with the U.S. operations of foreign-based
automotive OEMs. Dayco is currently selling to -- or has an active product
development program with -- most of the leading foreign-based OEMs, including
Diamond Star (Mitsubishi), Auto Alliance (Mazda), Nissan, Toyota, Isuzu and
BMW. Looking ahead, Dayco has multiple development programs with the Detroit
OEMs and most of the major European automotive manufacturers, as well as with
the foreign-based OEMs.
Automotive Aftermarket
The Automotive Aftermarket accounted for roughly 24% of the Power and
Fluid Transfer segment's sales in fiscal 1994. The products in this group
include a vast array of automotive belts, hose and accessories sold to
automotive warehouse distributors, oil companies, retail and auto parts
chains, mass merchandisers, farm and fleet stores, and hardware distributors.
Products include multiple-ribbed belts, V-belts, snowmobile and timing
belts; radiator, automotive service, fuel line and heater hose and assemblies;
as well as fan clutches, transmission and oil coolers, fan blades, electric
fans, tensioners, couplings and pulleys.
Of primary importance in the Automotive Aftermarket is the distribution
of products. When vehicle owners need a replacement belt or hose to make
their engine run, availability is of significant importance. The Dayco
distribution centers ship to a warehouse distributor, who is the direct Dayco
customer, and the one who pays for the product. The next level on the
distribution chain is a "jobber." The jobber sells to a walk-in do-it-
yourselfer, or to a garage mechanic, either of whom actually puts the belt or
hose on the vehicle. Automotive Aftermarket products aren't really "consumed"
until they are installed on a vehicle. Dayco's support is provided at every
level of this distribution chain. Dayco has made major investments in its
primary distribution center in Waynesville, North Carolina, to upgrade both
the facility and the distribution process.
The Automotive Aftermarket strategy for growth includes widening its
product offerings within current lines in order to gain market share. As part
of this strategy, Dayco has leveraged its position as a supplier to the
automotive OEMs, to introduce new products into the aftermarket. For
instance, a new heater hose assembly developed for the OEM market, has been
subsequently introduced to Dayco's aftermarket customers.
Not all of the products supplied to the aftermarket carry the Dayco
brand name. Some customers prefer to have their own, or a private label
(other than Dayco), on their products. This is one of the fastest growing
areas in the aftermarket, and Dayco is well-positioned to take advantage of
this growth. Also, as the average age of vehicles on the road continues to
rise, and with the number of miles driven increasing for the 12th straight
year, the need for aftermarket parts is growing.
Transportation
Mark IV's Transportation business segment supplies products and systems
for the Mass Transit, Traffic Management, and Commercial Aviation markets.
Customers include OEMs of mass transit bus and rail vehicles and commercial
aircraft, as well as state and local highway and transportation agencies.
Products in this segment are also sold to the aftermarket.
Mark IV entered the transportation business in 1984 through its LFE
acquisition (traffic signals and highway signs) as supplemented by its 1986
acquisition of Gulton Industries, Inc., through which Mark IV acquired its
Luminator businesses. Mark IV enhanced its international presence in the mass
transit and traffic control business through several strategic acquisitions
which expanded the Company's product lines in this segment. In August 1990,
the Company acquired a Canadian-based manufacturer of electromagnetic display
devices for use in destination signs, gasoline pumps and other information
displays (F-P Electronics). In December 1990, the Company acquired a
manufacturer of door systems and certain electrical controls for buses and
rail cars, with operations in both Canada and the U.S. (Vapor). In January
1993, Mark IV acquired a French company which supplies passenger information,
display and automatic bus location systems to the European market (SLE).
The Transportation segment is predominantly contract driven, with many
of the contracts spanning one or more years. At times, there are delays in
the completion of contracts which are beyond the Company's control -- a
problem which affected the market for the Company's bus and rail products in
the latter half of fiscal 1994. This can cause fluctuations in the timing of
revenues, and allow inventories to build. Also inherent to this business are
backlogs -- firm orders for products which are to be delivered at a future
date. As of February 28, 1994, the Transportation business segment's backlog
of orders believed to be firm was approximately $141,000,000, of which,
approximately $80,000,000 is expected to be shipped during fiscal 1995. The
Transportation business segment's backlog as of February 28, 1993 was
approximately $127,200,000.
The Company's Transportation products are sold primarily in North
America and Europe, with 34% of total segment revenue coming from outside of
the U.S. In fiscal 1994, this segment accounted for 18% of both the
consolidated sales and operating income (before corporate expenses) of Mark
IV. The segment is divided into three sub-groups, each of which is unique in
terms of its products, markets, customers and strengths.
Mass Transit
The Mass Transit group -- the largest group within the Transportation
segment -- provides door systems, electronic controls, vehicle information
systems, interior lighting, and passenger information display systems and
components, for mass transit buses and rail cars. While most of the products
in this group are sold directly to vehicle manufacturers, there is also a
large market for replacement parts used to repair or upgrade mass transit
vehicles. The Company's marketing efforts are directed primarily at OEMs, but
are also focused on transit agencies, who can specify that Mark IV products be
included in their mass transit systems.
Through Vapor, the Company has a commanding lead in the bus and rail
vehicle door closure market, supplying complete door systems as well as basic
components to the North American transit industry. Vapor is known for its
innovative design capabilities, reliability and quality of performance. Vapor
Canada supplies complete door systems for the London Underground Limited
(LUL), the largest subway system in the world, and has already delivered
three-quarters of a 700-subway car order it received for the LUL Central Line.
Vapor was recently awarded another contract to supply door systems for 354
cars on the LUL's Jubilee Line extension running to Canary Wharf.
Also included in the Mass Transit group is Luminator Mass Transit, a
leading producer of interior lighting and passenger information systems, air
diffusers, overhead storage racks and accessories for transit buses and
passenger rail cars. Together with its sister companies in Europe, LLE and
SLE, Luminator is a significant worldwide supplier of electronic passenger
information displays for public transportation vehicles.
F-P Electronics, a significant worldwide manufacturer of electro-
mechanical display components used in airport, bus and rail passenger
information displays -- both on the vehicle (mobile) and in the station
(fixed) -- is also a part of the Mass Transit group. Its customers include
manufacturers of mass transit equipment and gasoline dispensing pumps, as well
as commercial sign companies. F-P's products are also used for programmable
highway, time and temperature, scoreboard, stock exchange and other commercial
displays.
Traffic Management
The Traffic Management portion of the Transportation segment provides
traffic control and management systems, traffic controllers and signals;
automatic toll collection and vehicle identification systems; and highway
information displays. These products, which are sold to state and local
governments as well as transportation agencies primarily in the U.S. and
Canada, help to reduce traffic congestion, pollution and gridlock on highways,
city streets and at toll booths.
Automatic Signal/Eagle Signal is a leading, full-line supplier of
traffic control equipment and systems in the U.S. Its range of products
includes traffic lights, which control vehicular and pedestrian traffic; pre-
timed and traffic-adjusted controllers (boxes at intersections programmed to
control the operation of an individual traffic light); and complete traffic
management systems. Its MONARCTM system, a fully computerized transportation
management and control system, is in use at a number of locations in the U.S.
This system can coordinate and control all of the traffic lights and various
traffic information signs in an entire metropolitan area. The MONARC also is
able to control video surveillance equipment within a transportation network,
and can be fully integrated with other Intelligent Vehicle Highway Systems
(IVHS) technologies.
Mark IV is an active participant in the rapidly growing IVHS market. In
March 1994, Mark IV IVHS equipment was selected by the Interagency Group (IAG)
-- a group representing seven toll authorities in New Jersey, New York and
Pennsylvania -- for use on the new E-ZPasssm electronic toll collection
system. The Company's equipment has now been recommended to the governing
boards of each of the individual agencies within the IAG, and a contract was
recently signed with MTA Bridges and Tunnels (formerly the Triborough Bridge
and Tunnel Authority). Mark IV IVHS will provide the tag and reader equipment
for the E-ZPasssm system, which is designed to eliminate the need for
motorists to exchange cash, tokens, or tickets at toll booths. Tolls will be
paid electronically, as vehicles pass through the booths, reducing congestion,
increasing accuracy in toll collection, and improving driver convenience on
toll roads, bridges and tunnels. In addition to an increase in automated toll
systems, the group is also seeing significant growth in the market for
electronic variable message displays, which are produced by F-P Electronics.
These systems can be found on the highway in applications such as overhead
message, speed limit and lane control signs, and in toll collection stations.
F-P Electronics also has a new line of high light intensity fiber optic
traffic displays, specifically designed to improve visibility on the highway.
Also serving the Traffic Management market is the company's Interstate Highway
Sign operation -- a leading manufacturer of reflective directional,
informational, regulatory and warning signs for the nation's highways and
other roadways. Interstate Highway Signs is also producing new signs using
exterior light that provide better visibility and are easier to maintain.
Commercial Aircraft
Luminator Aircraft Products supplies interior lighting and other
passenger comfort systems for commercial aircraft, including the MD-11 and new
MD-90, and every other McDonnell Douglas aircraft produced since the DC-3. In
addition, Luminator provides components for several Boeing aircraft models.
Luminator also supplies aircraft panel, navigation, landing and emergency
lights to general aviation customers, such as Beechcraft and Cessna, and makes
a comprehensive line of night vision compatible interior and exterior lighting
used in military applications. Luminator's interior aircraft products include
fluorescent cabin lighting, overhead reading lights, emergency lighting, and
"Exit", "No Smoking" and other passenger information signs, as well as self-
powered light sources used to illuminate these displays.
Professional Audio
The Professional Audio business segment accounted for approximately 14%
of Mark IV's total revenue and 15% of its operating income (before corporate
expenses) in fiscal 1994. This group of companies, known in the marketplace
as "Mark IV Audio," provides a comprehensive range of high-quality, high-
performance audio products used by professional musicians, broadcast and
recording studios, touring bands, and in sound system installations of all
types -- from stadiums to churches, theaters to airports, and amusement parks
to factories.
Mark IV entered the professional audio business in 1986 through its
acquisition of Gulton Industries, Inc., which had two operations engaged in
the audio business -- Electro-Voice and Altec Lansing. Since that time, Mark
IV has made four additional strategic acquisitions of companies engaged in the
manufacture of audio equipment for commercial and professional use, thereby
giving this segment a manufacturing and distribution presence in many parts of
the world.
Mark IV Audio produces a full-line of the components required in sound
systems, which has enabled it to align itself with retailers, contractors and
distributors around the world. The Mark IV Audio group includes some of the
industry's oldest and most prestigious brand names, and is the leader in many
segments of the professional audio market. EV's recently-introduced System
200 has set a new standard for performance in a compact, portable loudspeaker
system, and is gaining market share in live music and audio-visual
applications. EV microphones are a significant brand among leading radio
personalities and television news people. Electro-Voice products are also
used in movie theaters and large sports venues.
Altec Lansing was a pioneer in the market for installed engineered sound
systems. Sound contractors around the world continue to look to Altec Lansing
for products and technical support for the audio systems they install in
airports, theme parks, hotels, churches, theaters, convention centers, and
other locations where sound quality and speech intelligibility are important.
Altec's products can be found at Euro Disneyland, in France, and at the new
Cancun Convention Center, Mexico's largest convention center.
The Mark IV Audio group's Vega microphones were used at the recent
Academy Awards presentations. Klark Teknik's signal processing electronics
are used where performance demands are critical in studio, touring and fixed
installation applications around the world. Its Midas XL3 mixing console has
been established as a clear choice for mid-sized systems in touring and live
theater applications. Another Mark IV Audio company, DDA, produces consoles
for use in live sound, post-production for videos, and fixed installations.
Using EV's established distribution network, the group's Dynacord
products from Germany are being introduced to musicians in North America,
under a new brand name -- EV/Dynacord. Dynacord is also prominent in the
fixed installation market in Europe, working in conjunction with the Altec, EV
and University brands to present a full line of products to sound contractors.
Approximately 59% of Mark IV Audio's sales are to customers outside of
the United States. The group has company-owned distributors in Australia,
Canada, France, Hong Kong, Japan and Switzerland, as well as in the countries
where Mark IV Audio products are manufactured, which include the U.S., Germany
and the U.K. Recently, Mark IV Audio made some major changes to its
organizational structure, in order to better focus its widely diversified
strengths in technology, brand recognition, geographic distribution, and
manufacturing. General administration, research and development, and
manufacturing responsibilities have now been centralized for all Mark IV Audio
companies, enabling the group to more effectively coordinate and utilize its
resources. These changes have been implemented in order to increase the rate
of technological innovation, reduce lead-time on new product development,
maintain world-class quality and competitive costs in production, and shorten
lines of communication within the organization.
Also as part of this reorganization, marketing, sales and other business
development activities have been divided into three regions -- The Americas,
Europe (including the Middle East, Africa and part of Asia), and The Pacific
(Australia, Southeast Asia, Japan and China). Each region is structured with
a business development team whose mission is to identify and aggressively
pursue growth opportunities within its territory. All Mark IV Audio products
will be available for sale in each region. With its regional decision-making,
this new strategy will enable Mark IV Audio to provide products, pricing and
programs tailored to the specific needs of customers in each area, with an
understanding of the cultures, conditions and business practices of the given
region.
Marketing and Competition
Mark IV's products are marketed primarily in the United States and
Europe, and to a lesser extent in Canada and the Far East. The Company uses
its own sales engineers and other sales personnel, independent distributors
and sales representatives to market its products.
A majority of the Company's products have a significant and in many
instances the leading market share in their respective markets. Most of the
markets for the Company's products are characterized by a limited number of
competitors. However, competition in certain of those markets is intense.
Some of the Company's competitors are substantially larger than Mark IV and
have greater financial resources. The Company competes on the basis of price,
quality, technical innovation and its ability to fill orders promptly, with
the relative importance of each factor depending on the market for the
particular product.
Backlog
The Company does not believe that the backlog of orders for any of its
products is material to the Company as a whole. However, as discussed
previously, backlogs are a significant factor in the Transportation business
segment.
Patents and Trademarks
Although a number of patents and trademarks have been issued to the
Company and its subsidiaries, the Company believes its competitive position is
more dependent on its technical knowledge and processes than on patent or
trademark protection. The Company believes, however, that its trademarks and
tradenames used in connection with certain products may be significant to its
business.
Research and Development
The Company is engaged in ongoing research and development in connection
with new and existing products. Research and development expenditures are
expensed as incurred, and amounted to $30,900,000; $26,100,000; and
$24,900,000 in the Company's continuing operations in fiscal 1994, 1993 and
1992, respectively.
Raw Materials and Supplies
The materials and supplies used to produce the Company's products are
generally obtained from a wide variety of suppliers, and the Company has not
experienced any shortages. Although certain materials used in the manufacture
of flip-dots, electrostatic control equipment, self-illuminating lights and
smoke-detector ionization elements are readily available from only a few
suppliers, the Company does not anticipate any significant difficulties in
obtaining any of these raw materials in the foreseeable future.
Government Regulation
Certain of the Company's process control systems, electrostatic control
devices, smoke-detector ionization elements and self-illuminating lights have
radioactive components, the production, storage and transportation of which
are subject to federal, state and local laws and regulations. Federal and
state regulations also limit the amount of exposure the Company's employees
may have to such radioactive materials. The Company has obtained all licenses
and approvals required for its businesses and believes it is in material
compliance with all applicable regulations concerning radioactive materials
and employee safety.
A portion of the Company's business is conducted pursuant to U.S.
Government contracts or sub-contracts. Generally, government contracts and
sub-contracts contain provisions permitting termination at any time at the
convenience of the Government upon payment to the Company of costs incurred
plus a profit related to the work performed to the date of termination.
Substantially all of the Company's government contracts and sub-contracts
contain these provisions. The Company, as a government contractor, is subject
to various statutes and regulations governing defense contracts.
Other than as described above with respect to radioactive components,
the Company is not subject to any particular environmental laws or regulations
which are not generally applicable to all manufacturing companies. The
Company believes that it is in material compliance with all applicable
environmental laws and regulations. Mark IV does not anticipate having to
incur material capital expenditures for environmental compliance in fiscal
1995 or fiscal 1996.
Employees
The Company currently employs approximately 12,500 persons, of whom
approximately 8,700 are production employees, with the remainder serving in
executive, administrative, engineering or sales capacities. Approximately
3,400 production employees are covered by nine (9) collective bargaining
agreements which expire at various times through June 1999. The Company
believes its relationship with its employees is good.
Other
Mark IV was incorporated in Delaware in 1970 and its executive offices
are at 501 John James Audubon Parkway, Amherst, New York 14228. Its telephone
number is (716) 689-4972.
ITEM 2. PROPERTIES
The table below summarizes the approximate floor space of the Company's
corporate office and principal manufacturing facilities by business segment.
Approximate Floor Space
(In Thousands of Square Feet)
Owned Leased Total
Corporate Office - 23 23
Power and Fluid Transfer (1) 4,975 538 5,513
Mass Transit and Traffic Control (2) 684 914 1,598
Professional Audio (3) 490 192 682
(1) Consisting of the following twenty-seven facilities:
North American facilities (approximately 4,505,000 square feet):
Waynesville, NC; Springfield, MO; Walterboro, SC; Williston, SC; Ocala,
FL; Fort Scott, KS; Fort Worth, TX; Alliance, NE; Eldora, IA; McCook,
NE; Fayetteville, AR; Red Wing, MI; Weston, Ontario, Canada; Walnut, CA;
Rock Island, IL; Easley, SC; Bucyrus, OH; Lexington, TN; Buffalo, NY;
Vero Beach, FL.
European Facilities (approximately 1,008,000 square feet): Halesowen,
U.K.; Torino, Italy; Barcelona, Spain; Baudour, Belgium; Chieti, Italy;
Manopello, Italy (2).
(2) Consisting of the following fourteen facilities:
North American facilities (approximately 1,548,000 square feet): Plano,
TX; Montreal, Quebec, Canada; Niles, IL; Mississauga, Ontario, Canada
(2); Cobourg, Ontario, Canada; Little Rock, AR; Denton, TX; Austin, TX;
Grand Island, NY; Clinton, MA; Hudsonville, MI.
European facilities (approximately 50,000 square feet): Rastatt,
Germany and Nice, France.
(3) Consisting of the following eleven facilities:
North American facilities (approximately 535,000 square feet):
Buchanan, MI; Newport, TN; Sevierville, TN; Mishawaka, IN; Oklahoma
City, OK; Sun Valley, CA; El Monte, CA.
European facilities (approximately 147,000 square feet):
Straubing, West Germany; Hohenwarth, West Germany; Kidderminster,
Worchester, U.K.; Hounslow, Middlesex, U.K.
The Company also owns or leases various small production facilities,
sales offices and distribution centers which are not included in the above
list of properties.
The Company believes that its existing facilities have sufficient
capacity to meet its anticipated needs in each of its industry segments for
the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
A subsidiary of the Company was the defendant in a patent infringement
case which was tried in the latter part of fiscal 1994. The decision of the
Court was reached in April 1994 in favor of the plaintiff, awarding them
damages and issuing an injunction which prohibits the Company from any further
use of the technology at issue. Prior to the court's decision, the Company
had stopped using the technology in question; therefore, the injunction will
have no impact on the Company's future sales and marketing efforts. If the
judgement for the plaintiff is upheld on appeal, the after-tax cost to the
Company could be in the range of $2,300,000. Management of the Company has
been advised by its legal counsel as to the merits of its arguments, and
continues to believe it has not infringed on the plaintiff's patent.
In view of the above, management has directed its legal counsel to
pursue the appeal process as diligently as possible. Management believes the
ultimate conclusions of law will be decided upon by the appeals court in favor
of the Company. However, in view of the trial court's findings, an accrual
has been established to provide for the cost of the resolution of this issue
in the event the Company is not successful. The litigation accrual did not
have an effect on income, since the effects of establishing it have been
offset by the reversal of accrued liabilities related to an acquisition in
fiscal 1991 which management has determined are no longer required.
The Company is involved in various other legal and environmental related
claims or disputes in the ordinary course of business. In the opinion of
management, the ultimate cost to resolve these matters will not have a
material adverse effect on the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
SECURITY HOLDER
MATTERS
The Company's Common Stock is listed on the New York Stock Exchange
(Symbol: IV). The following table sets forth, for the fiscal periods
indicated, the high and low closing sale prices per share of the Company's
Common Stock as reported by the New York Stock Exchange. All amounts have
been adjusted for the 5% stock dividend paid in April 1994.
Fiscal 1994 Fiscal 1993
Low High Low High
1st Quarter $15.65 $18.81 $11.88 $14.04
2nd Quarter $18.93 $22.02 $11.45 $13.39
3rd Quarter $17.98 $24.52 $11.11 $14.06
4th Quarter $17.14 $20.00 $13.61 $17.57
As of February 28, 1994, the approximate number of holders of record of
the Company's Common Stock was 2,500.
The Company declared total cash dividends of $.098 and $.084 per share
during fiscal 1994 and 1993, respectively.
ITEM 6. SELECTED FINANCIAL DATA
[Download Table]
The following table sets forth selected consolidated financial information
of the Company for each of the five fiscal years in the period ended February 28,
1994. This table should be read in conjunction with the audited consolidated
financial statements of the Company and the related notes thereto included
elsewhere herein.
FIVE YEAR SUMMARY OF OPERATIONS
(Amounts in thousands, except per share data)
Fiscal Year Ended the Last Day of February,
______________________________________________________
1994 (1) 1993 (2) 1992 (2) 1991 (2) 1990 (2)
________ ________ ________ ________ _______
Income Statement Data:
Net sales $1,244,200 $1,085,700 $1,004,300 $ 789,700 $ 672,700
========== ========== ========== ========== =========
Operating income (3) $ 131,800 $ 113,600 $ 108,600 $ 88,000 $ 77,700
Interest expense 50,100 51,600 64,700 60,600 51,200
__________ __________ _________ __________ _________
Operating income,
net of interest
expense $ 81,700 $ 62,000 $ 43,900 $ 27,400 $ 26,500
========== ========== ========== ========== ==========
Income from
continuing
operations:
Before securities
transactions $ 51,100 $ 39,100 $ 28,400 $ 17,000 $ 16,300
Securities
transactions - - (1,600) 600 3,600
__________ __________ __________ _________ _________
Total from
continuing
operations 51,100 39,100 26,800 17,600 19,900
Discontinued
operations - 3,600 2,000 4,700 39,800
Extraordinary items (21,700) (3,700) (4,500) 700 10,000
Cumulative effect of
accounting change (26,000) - - - -
__________ __________ __________ __________ ________
NET INCOME $ 3,400 $ 39,000 $ 24,300 $ 23,000 $ 69,700
========== ========== ========== ========== ==========
Primary income
per share (4):
Continuing
operations:
Before securities
transactions $ 1.20 $ .93 $ .86 $ .68 $ .58
Securities
transactions - - (.05) .02 .13
__________ __________ __________ __________ _________
Total from
continuing
operations 1.20 .93 .81 .70 .71
Discontinued
operations - .09 .06 .18 1.41
Extraordinary items (.51) (.09) (.14) .03 .36
Cumulative effect of
accounting change (.61) - - - -
__________ __________ __________ __________ __________
NET INCOME $ .08 $ .93 $ .73 $ .91 $ 2.48
========== ========== ========== ========== ==========
1994 (1) 1993 (2) 1992 (2) 1991 (2) 1990 (2)
------- -------- -------- -------- --------
Fully-diluted income
per share (4):
Continuing
operations:
Before
securities
transactions $ 1.09 $ .87 $ .78 $ .59 $ .52
Securities
transactions - - (.04) .02 .10
_________ __________ _________ __________ __________
Total from
continuing
operations 1.09 .87 .74 .61 .62
Discontinued
operations - .07 .05 .14 1.09
Extraordinary
items (.43) (.07) (.12) .02 .28
Cumulative effect of
accounting change (.51) - - - -
__________ __________ __________ __________ _________
NET INCOME $ .15 $ .87 $ .67 $ .77 $ 1.99
========== ========== ========== ========== =========
Weighted average
number of shares
outstanding (4):
Primary 42,481 41,993 33,140 25,256 28,153
Fully-diluted 50,747 50,325 38,358 33,351 36,283
Balance Sheet Data:
Working capital $ 312,800 $ 275,400 $ 285,500 $ 345,100 $ 262,300
Total assets $1,282,300 $1,124,800 $1,104,500 $1,100,100 $ 872,100
Long-term debt $ 567,200 $ 497,100 $ 525,400 $ 717,600 $ 544,200
Stockholders'
equity (5) $ 345,400 $ 345,600 $ 311,900 $ 170,000 $ 159,700
<FN>
____________________________
(1) Includes the results of operations of the PTI business from its June 1993
acquisition date, and excludes the results of discontinued operations.
(2) Income Statement data has been restated to reflect the effects of the
adoption of SFAS #109, Accounting For Income Taxes, and to exclude the
results of discontinued operations. Balance Sheet Data has been restated
to reflect the adoption of SFAS #109.
(3) Represents income from continuing operations before interest expense,
securities transactions and taxes.
(4) Adjusted to reflect the three-for-two stock distributions in April 1992 and
November 1989, and the 5% stock dividends paid in April 1994, May 1993,
July 1992, April 1991 and July 1990.
(5) The Company declared cash dividends of approximately $.098; $.084; $.066
and $.058 per share in fiscal 1994, 1993, 1992 and 1991, respectively. No
cash dividends were paid in years preceding fiscal 1991.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition
In early fiscal 1992, management stated its intention to significantly
reduce long-term debt levels by the application of cash generated through
earnings, reductions in working capital requirements, and the sale of non-core
businesses and non-operating assets. At the end of fiscal 1993, long-term
debt had been reduced by approximately $220,500,000 (31%) from the
$717,600,000 level at February 28, 1991 to $497,100,000 at February 28, 1993.
The reduction brought the Company's level of long-term debt as a percentage of
total capitalization from 80.8% at February 28, 1991 to 59.0% at February 28,
1993.
Having accomplished significant debt reductions by the end of fiscal
1993, the Company's emphasis shifted to building its core businesses by
expanding their product coverage and increasing their global presence.
In June 1993, the Company completed its acquisition of Pirelli
Trasmissioni Industriali S.p.A. (PTI) for a cash purchase price of $65,000,000
and the assumption of PTI bank indebtedness of $50,000,000. Financing for the
PTI acquisition was provided by the Company's new credit agreements, as well
as the proceeds from the sale of discontinued operations, as discussed below.
PTI's operations are based in Italy, and include manufacturing and
distribution centers in 5 other Western European countries, and in the U.S.
In fiscal 1994, the Company announced the discontinuance of its non-
core businesses, and completed the sale of certain of those businesses for
cash proceeds of approximately $35,000,000.
In March 1993, the Company commenced a tender offer to purchase its
13-3/8% Subordinated Debentures for a cash price of $1,137.50 per $1,000
principal amount, plus accrued interest. As a result of the tender offer and
certain open-market purchases, the Company acquired approximately $138,000,000
principal amount of these debentures. The Company then completed an "in-
substance defeasance" in which approximately $60,400,000 was deposited in an
irrevocable trust to cover both the remaining outstanding principal amount
($52,000,000) and related interest expense requirements of these debentures.
In March 1993, the Company also completed a public offering of
$258,000,000 principal amount of its 8-3/4% Senior Subordinated Notes due
April 1, 2003. A substantial portion of the net proceeds from the sale of the
notes was used to fund the retirement of the Company's outstanding 13-3/8%
Subordinated Debentures referred to above.
In May 1993, the Company entered into a revolving credit agreement
("Multi-Currency Agreement") providing for a five year multi-currency
revolving credit facility with a group of financial institutions in the U.S.
and Europe. The Multi-Currency Agreement provides for a revolving loan
commitment for the first two years of the equivalent of $100,000,000. The
commitment declines by $12,500,000 at each of six semi-annual dates beginning
in June 1995, with the remaining $25,000,000 of commitment expiring in May
1998. Interest rates on borrowings under the Multi-Currency Agreement are
subject to change based on a specified pricing grid which increases from LIBOR
plus 0.625% to LIBOR plus 1.375% per annum based on the Company's senior debt
rating (as defined in the Multi-Currency Agreement). The Company is currently
paying interest at LIBOR plus 1.25% on borrowings under the Multi-Currency
Agreement. The Multi-Currency Agreement also contains certain affirmative and
negative covenants customary in an agreement of this nature.
In July 1993, the Company entered into a Credit Agreement providing for
a $300,000,000 five year revolving credit facility with a group of financial
institutions. A portion of the credit facility was used to repay amounts
outstanding under the Company's revolving credit facility dated June 19, 1990,
which was then canceled. Interest on the Credit Agreement is based on a
pricing grid which is either prime per annum or, under a LIBOR option, LIBOR
plus 0.375% to LIBOR plus 1.375% per annum based on the Company's senior
unsecured long-term debt ratings (as defined in the Credit Agreement). The
Company is currently paying interest at LIBOR plus 0.75% on borrowings under
the Credit Agreement. The Credit Agreement contains certain affirmative and
negative covenants customary in an agreement of this nature and is secured by
a pledge of the stock of certain of the Company's subsidiaries.
As a result of the above, net cash provided from earnings of continuing
operations was $91,200,000 in fiscal 1994, a 46% increase over the $62,600,000
provided in fiscal 1993. As of February 28, 1994, the Company had working
capital of $312,800,000 and borrowing availability under its primary credit
agreements of $211,000,000 and additional availability under its various
domestic and foreign demand lines of credit of approximately $51,700,000. The
Company's long-term debt as a percentage of total capitalization was 62.1% at
February 28, 1994. If the Company's $114,200,000 of 6-1/4% Convertible
Subordinated Debentures, which are callable in February 1995, were considered
to have been converted at February 28, 1994, long-term debt as a percentage of
total capitalization would be approximately 49.6% at that date.
Despite the recent increase in long-term debt resulting from the
Company's PTI acquisition, management will continue to emphasize the reduction
of long-term debt as a percentage of its total capital. It is anticipated
that debt reductions will continue to be achieved through a combination of the
application of cash generated from operations and reduced working capital
requirements in the Company's existing businesses. Management believes that
cash generated from operations should be sufficient to support working capital
requirements and anticipated capital expenditures for the foreseeable future.
Results of Operations
The Company classifies its operations in three core business segments:
Power and Fluid Transfer, Transportation, and Professional Audio. The
Company's current business strategy is focused upon the enhancement of its
three core business segments through internal growth, cost control, and
quality improvement programs and selective, strategic acquisitions, with an
emphasis on expanding the Company's international presence.
The results of operations of PTI have been included in the Company's
results of operations for fiscal 1994 from its June 2, 1993 acquisition date.
The Company's results of operations for fiscal 1993 and 1992 have been
restated to exclude the results of operations of the Company's discontinued
businesses and to recognize the effects of the Company's retroactive adoption
of SFAS No. 109, Accounting for Income Taxes.
[Download Table]
In reviewing the Company's sales performance, the following results by
segment should be considered for each of the fiscal years presented (dollars
in thousands):
1994 1993 1992
_________________ ________________ ____________
(As Restated) (As Restated)
% Increase % Increase
Over Prior Over Prior
Amount Year Amount Year Amount
______ __________ _______ _________ ______
NET SALES TO CUSTOMERS
Power and Fluid Transfer $ 852,100 20.1% $ 709,400 11.7% $ 635,200
Transportation 218,600 9.6% 199,500 (0.2)% 199,900
Professional Audio 173,500 (1.9)% 176,800 4.5% 169,200
__________ __________ ___________
Total net sales
to customers $1,244,200 14.6% $1,085,700 8.1% $1,004,300
========== ========== ==========
The increase in the Power and Fluid Transfer sales in fiscal 1994 is
the result of internal growth of approximately $41,000,000 (5.8%), and the
inclusion of the PTI operations. Excluding PTI and the negative effect of
foreign currency movements, the internal growth was approximately $57,900,000
(8.2%), with $36,200,000 (5.1%) of such growth generated from the segment's
U.S. operations and the balance from its foreign based operations. In fiscal
1993, the $74,200,000 (11.7%) increase over fiscal 1992 resulted from a
combination of increased unit sales and the inclusion of the results of
operations for the full year of a business acquired in the second half of
fiscal 1992. The effects of foreign currency movements in fiscal 1993 were
not significant in comparison to the amounts reported for fiscal 1992.
The sales increase in the Transportation segment in fiscal 1994 is the
result of internal growth of approximately $16,600,000 (8.3%), and the SLE
acquisition at the end of fiscal 1993, net of certain negative effects of
foreign currency movements in fiscal 1994. The sales increase was most
significantly generated by the segment's foreign operations. Slower sales
growth than anticipated was experienced in the segment's U.S. operations in
fiscal 1994 as a result of delays in the development of the IVHS (Intelligent
Vehicle Highway System) toll collection and traffic control markets. Sales in
fiscal 1993 remained comparable to fiscal 1992, with increases in the
segment's foreign operations substantially offset by declines in the segment's
U.S. operations. Sales in the Professional Audio segment in fiscal 1994
remained comparable to fiscal 1993, with a slight increase in U.S. sales being
offset by a decline in the segment's foreign operations. The modest increase
in the Professional Audio segment's fiscal 1993 sales over fiscal 1992 was
equally split between its U.S. and foreign operations.
The Cost of Products Sold as a percentage of consolidated net sales was
64.6%, 64.4%, and 64.0% in fiscal 1994, 1993, and 1992, respectively. This
consistent level of costs reflects the positive effects of the Company's cost
control programs, which have helped to substantially offset the negative
pressures on the margins experienced by each of the Company's three business
segments. The slightly higher costs in fiscal 1994 are also caused by the
contract delays referred to above and economic weakness experienced in our
European markets.
Selling and Administration costs as a percentage of consolidated net
sales were 19.0%, 19.8%, and 20.0% in fiscal 1994, 1993, and 1992,
respectively. The reduction in fiscal 1994 is primarily the result of
operating synergies achieved from the combination of the PTI business with the
previously existing European operations of the Power and Fluid Transfer
business segment. The relatively consistent level of costs indicates the
Company's continued emphasis on cost control has been successful in
substantially offsetting the impact of inflation on such costs.
Research and Development costs increased by $4,800,000 (18.4%) in
fiscal 1994 over fiscal 1993, which in turn increased by $1,200,000 (4.8%)
over fiscal 1992. The increase in fiscal 1994 is primarily caused by the PTI
acquisition. As a percentage of consolidated net sales, such costs were
approximately 2.5% in each of fiscal 1994, 1993, and 1992. This consistent
level of investment reflects the Company's continuing emphasis on new product
development.
Depreciation and Amortization expense increased by $9,600,000 (29.9%)
in fiscal 1994 over fiscal 1993, which in turn increased by $3,800,000 (13.4%)
over fiscal 1992. The increase in fiscal 1994 is primarily attributable to
the PTI acquisition. The fiscal 1994 amount also includes $800,000 related to
the restricted stock grants made in fiscal 1994. The remaining increases are
primarily the result of increased capital equipment expenditures.
The above sales and operating expense movements result in the following
operating income for each of the fiscal years presented (dollars in
thousands):
[Download Table]
1994 1993 1992
______________ _______________ _______________
(As Restated) (As Restated)
% of % of % of
Related Related Related
Amount Sales Amount Sales Amount Sales
________ _______ ______ _______ ________ ______
OPERATING INCOME
Power and Fluid Transfer $ 97,800 11.5% $ 79,200 11.2% $ 67,000 10.5%
Transportation 27,000 12.4% 24,900 12.5% 27,100 13.6%
Professional Audio 21,900 12.6% 22,000 12.4% 23,900 14.1%
Total operating income 146,700 11.8% 126,100 11.6% 118,000 11.7%
General corporate (14,900) (1.2)% (12,500) (1.1)% (9,400) (0.9)%
Continuing operations,
before interest,
securities transactions,
and taxes $131,800 10.6% $113,600 10.5% $108,600 10.8%
======== ===== ======== ===== ======== =====
In spite of the increased interest cost resulting from the PTI
acquisition, interest expense of continuing operations in fiscal 1994 was down
$1,500,000 (2.9%) from the amount incurred in fiscal 1993, which in turn was
down $13,100,000 (20.3%) from fiscal 1992. The reduction in fiscal 1994 was
primarily the result of the Company's repurchase and in-substance defeasance
of its 13-3/8% subordinated debentures at the beginning of the fiscal year,
which was refinanced with the issuance of the Company's 8-3/4% Senior
Subordinated Notes. The reduction in fiscal 1993 was accomplished primarily
as a result of the Company's debt reduction program in fiscal 1993 and 1992,
which substantially reduced the outstanding amounts of high interest rate
debt. The Company's improved financial position at the end of fiscal 1992, as
well as the overall reduction in the economic interest rate as compared to
fiscal 1992, also contributed to lower interest costs in fiscal 1993. The
interest expense amounts reported for continuing operations also reflect the
allocation of $2,200,000; $5,00,000; and $6,400,000 to discontinued operations
in fiscal 1994, 1993, and 1992, respectively, since the proceeds from the
disposal of these businesses have been utilized to reduce indebtedness, and
therefore related interest expense as well.
The loss on securities transactions in fiscal 1992 reflects costs of
$2,100,000 related to the Company's conversion of its 7% Convertible
Subordinated Debentures, as well as the net effects of the Company's sale of
certain other investments and idle assets.
The Company's provision for income tax as a percentage of the pre-tax
accounting income was approximately 37.5%, 37.0%, and 35.4% in fiscal 1994,
1993, and 1992, respectively. The succeeding higher rates in fiscal 1994 and
1993 are primarily the result of increased income in foreign locations with
higher statutory tax rates than in the U.S. The effective tax rate in fiscal
1994 was not quite as high as previously anticipated, due to certain one-time
permanent tax differences. However, the rate is expected to increase in
fiscal 1995 as a result of the increased foreign income as a percentage of
total consolidated income.
As a result of all of the above, the Company's income from continuing
operations in fiscal 1994 increased $12,000,000 (30.7%) over fiscal 1993. In
turn, fiscal 1993 income from continuing operations increased $12,300,000
(45.9%), most notably by the reduction in interest expense over fiscal 1992.
As a result of the debt extinguishment referred to above, the Company
incurred extraordinary losses, net of related tax benefits, of $21,700,000;
$3,700,000; and $4,500,000 in fiscal 1994, 1993, and 1992, respectively.
Additionally, the Company's adoption of SFAS No. 106 in fiscal 1994 resulted
in the recognition of a net of tax charge of $26,000,000 as the cumulative
effect of the accounting change in fiscal 1994. The above extraordinary items
and one-time charge resulted in significantly reduced net income of $3,400,000
in fiscal 1994 in comparison to the $39,000,000 earned in fiscal 1993. Since
the discontinued operations and extraordinary charges were comparable in
fiscal 1993 and 1992, the net income reported in those years is consistent
with the reported income from continuing operations discussed above.
Impact of Inflation
Generally, the Company has been able to pass on or offset inflation-
related cost increases; consequently, inflation has had no material impact on
income from operations.
Recently Issued Accounting Standards
In November 1992, the Financial Accounting Standards Board issued
Statement No 112, Employers' Accounting for Postemployment Benefits (SFAS No.
112), which requires that accrual accounting be used to value the cost of
benefits provided to former or inactive employees who have not yet retired.
The benefits covered by the statement include salary continuation, disability,
severance, and health care. The statement will be effective for the Company's
1995 fiscal year, and could require a cumulative catch-up charge against
income, measured as of the beginning of fiscal 1995. The Company is currently
evaluating the impact of this statement; however, it is not expected to be
significant.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Financial Statements
Page
Report of Independent Accountants for
each of the three fiscal years in the
period ended February 28, 1994. . . . . . . . . . . . . . . . . . . . . .27
Financial Statements:
Consolidated Balance Sheets at February 28, 1994 and 1993 . . . . . . . . .28
Consolidated Statements of Income for each of
the three fiscal years in the period ended
February 28, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Consolidated Statements of Stockholders' Equity for
each of the three fiscal years in the period
ended February 28, 1994. . . . . . . . . . . . . . . . . . . . . . . . . .30
Consolidated Statements of Cash Flows
for each of the three fiscal years in
the period ended February 28, 1994 . . . . . . . . . . . . . . . . . . . .31
Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . .32
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Mark IV Industries, Inc.
We have audited the accompanying consolidated balance sheets of Mark IV
Industries, Inc. and subsidiaries as of February 28, 1994 and 1993, and the
related consolidated statements of income, stockholders' equity and cash flows
for each of the three fiscal years in the period ended February 28, 1994.
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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Mark IV Industries, Inc. and subsidiaries as of February 28, 1994 and 1993,
and consolidated results of its operations and its cash flows for each of the
three fiscal years in the period ended February 28, 1994, in conformity with
generally accepted accounting principles.
As discussed in Notes 10 and 12 to the consolidated financial statements, the
Company changed its method of accounting for income taxes and postretirement
benefits other than pensions, in accordance with statements of the Financial
Accounting Standards Board.
COOPERS & LYBRAND
Rochester, New York
March 29, 1994, except as
to the information presented
in the first and second
paragraphs of Note 13 and
in the first paragraph of
Note 14, for which the
date is April 8, 1994
[Download Table]
MARK IV INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1994 AND 1993
(Dollars in Thousands)
ASSETS 1994 1993
____ ____
(As Restated)
Current Assets:
Cash $ 500 $ 2,700
Accounts receivable 275,100 228,100
Inventories 265,000 243,800
Other current assets 42,100 21,800
Total current assets 582,700 496,400
Pension related and other
non-current assets 126,300 114,100
Property, plant and equipment, net 365,300 318,300
Cost in excess of net assets acquired
and deferred charges 208,000 196,000
TOTAL ASSETS $1,282,300 $1,124,800
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current maturities of debt $ 45,000 $ 34,800
Accounts payable 99,700 77,600
Compensation related liabilities 43,100 39,600
Accrued interest 13,600 14,200
Accrued expenses and other liabilities 67,000 45,100
Income taxes payable 1,500 9,700
Total current liabilities 269,900 221,000
Long-Term Debt:
Senior debt 195,000 194,300
Subordinated debt 372,200 302,800
Total long-term debt 567,200 497,100
Other non-current liabilities 99,800 61,100
Stockholders' Equity:
Common stock - $.01 par value;
Authorized 100,000,000 shares;
Issued 42,697,864 shares in 1994 and
42,188,178 shares in 1993 400 400
Additional paid-in capital 261,500 219,300
Retained earnings 88,600 128,300
Foreign currency translation adjustment (5,100) (2,400)
Total stockholders' equity 345,400 345,600
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY $1,282,300 $1,124,800
========== ==========
<FN>
The accompanying notes are an integral part of these financial statements.
[Download Table]
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED THE LAST DAY OF FEBRUARY 1994, 1993 and 1992
(Amounts in Thousands, Except Per Share Data)
1994 1993 1992
____ _____ ____
(As Restated) (As Restated)
Net sales $1,244,200 $1,085,700 $1,004,300
Operating costs:
Cost of products sold 803,500 698,800 641,900
Selling and administration 236,300 215,100 200,600
Research and development 30,900 26,100 24,900
Depreciation and amortization 41,700 32,100 28,300
Total operating costs 1,112,400 972,100 895,700
Operating income 131,800 113,600 108,600
Interest expense 50,100 51,600 64,700
Loss on securities transactions - - 2,400
Income from continuing operations
before provision for taxes 81,700 62,000 41,500
Provision for taxes 30,600 22,900 14,700
Income from continuing operations 51,100 39,100 26,800
Income from discontinued operations,
net of tax - 3,600 2,000
Income before extraordinary items
and cumulative effect of
accounting change 51,100 42,700 28,800
Extraordinary loss from early
extinguishment of debt, net of tax
benefit of $12,300; $2,000; and $2,500 (21,700) (3,700) (4,500)
Cumulative effect of a change in
accounting principle (26,000) - -
NET INCOME $ 3,400 $ 39,000 $ 24,300
========== ========== ==========
Net income per share of common stock:
Primary:
Income from continuing operations $ 1.20 $ .93 $ .81
Income from discontinued operations - .09 .06
Extraordinary loss (.51) (.09) (.14)
Cumulative effect of a change in
accounting principle (.61) - -
NET INCOME $ .08 $ .93 $ .73
========== ========== ==========
Fully-diluted:
Income from continuing operations $ 1.09 $ .87 $ .74
Income from discontinued operations - .07 .05
Extraordinary loss (.43) (.07) (.12)
Cumulative effect of a change in
accounting principle (.51) - -
NET INCOME $ .15 $ .87 $ .67
========== ========== ==========
Weighted average shares outstanding:
Primary 42,481 41,993 33,140
========== ========== ==========
Fully-diluted 50,747 50,325 38,358
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
[Download Table]
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED THE LAST DAY OF FEBRUARY 1994, 1993 AND 1992
(Dollars in Thousands Except Per Share Data)
Retained Foreign
Additional Earnings Currency
Common Paid-in (As Translation
Stock Capital Restated) Adjustment
______ ________ ________ __________
Balance at February 28, 1991 $ 300 $ 66,400 $134,600 $ 3,600
Net income for fiscal 1992 24,300
Cash dividends of $.066 per share (2,400)
Retirement of treasury stock (100) (34,800)
Public sale of common
stock at $7.50 per share 100 60,400
Sale of common stock to
Pension Plan at $9.79 per share 6,800
Conversion of 7%
Convertible Debentures 100 55,900
Exercise of stock options 100
Translation adjustments (3,400)
Balance at February 29, 1992 400 154,800 156,500 200
Net income for fiscal 1993 39,000
Cash dividends of $.084 per share (3,600)
Stock dividend of 5%
issued in July 1992 27,900 (27,900)
Stock dividend of 5%
issued in May 1993 35,700 (35,700)
Exercise of stock options 900
Translation adjustments (2,600)
Balance at February 28, 1993 400 219,300 128,300 (2,400)
Net income for fiscal 1994 3,400
Cash dividends of $.098 per share (4,200)
Stock dividend of 5% issued
in April 1994 38,900 (38,900)
Restricted stock grants, net 800
Conversion of 6-1/4% Convertible
Debentures 100
Exercise of stock options,
including related tax benefits 2,400
Translation adjustments (2,700)
Balance at February 28, 1994 $ 400 $261,500 $ 88,600 $ (5,100)
===== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
[Download Table]
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED THE LAST DAY OF FEBRUARY 1994, 1993 AND 1992
(Dollars in Thousands)
1994 1993 1992
____ ____ ____
(As Restated) (As Restated)
Cash flows from operating activities:
Income from continuing operations $ 51,100 $ 39,100 $ 26,800
Items not affecting cash:
Depreciation and amortization 41,700 32,100 28,300
Pension and compensation related (12,400) (12,500) (10,700)
Deferred income taxes 10,800 3,900 2,200
Net cash provided by earnings 91,200 62,600 46,600
Changes in assets and liabilities, net
of effects of businesses acquired and
discontinued:
Accounts receivable (27,200) (12,000) 25,600
Inventories (7,700) 1,300 22,300
Other assets (5,700) 6,000 1,900
Accounts payable (2,600) 3,800 3,800
Other liabilities (8,400) (21,400) (15,400)
Net cash provided by
continuing operations 39,600 40,300 84,800
Discontinued operations,
before non-cash items 1,100 8,800 7,200
Extraordinary items, before
deferred charges (30,100) (4,900) (6,200)
Net cash provided
by operating activities 10,600 44,200 85,800
Cash flows from investing activities:
Acquisitions (65,000) (4,000) (9,300)
Divestitures 35,000 12,200 -
Purchase of plant and equipment, net (38,000) (32,900) (19,200)
Proceeds from sale of assets - 1,300 23,000
Net cash used in investing activities (68,000) (23,400) (5,500)
Cash flows from financing activities:
Credit agreement borrowings, net (30,000) 65,000 (116,500)
Multi-currency credit agreement
borrowings, net 48,400 - -
Purchases of senior and
subordinated debt (190,200) (62,800) (121,700)
Issuance of subordinated debt 258,000 - 114,300
Other changes in long-term debt, net (18,900) (33,600) (18,600)
Changes in short-term bank borrowings (8,300) 11,700 (3,800)
Common stock transactions 800 900 67,400
Cash dividends paid (4,100) (3,300) (2,400)
Net cash provided by (used in)
financing activities 55,700 (22,100) (81,300)
Effect of exchange rate fluctuations (500) (600) (300)
Net decrease in cash (2,200) (1,900) (1,300)
Cash and cash equivalents:
Beginning of the year 2,700 4,600 5,900
End of the year $ 500 $ 2,700 $ 4,600
======== ======== ========
The accompanying notes are an integral part of these financial statements.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
all of its subsidiaries. All significant intercompany transactions have been
eliminated.
Foreign Currency
The assets and liabilities of the Company's foreign subsidiaries are
translated at year-end exchange rates. Translation gains and losses are not
included in determining net income, but are accumulated in a separate
component of stockholders' equity. Foreign currency transactions are included
in income as realized, and amounted to gains (losses) of $300,000; ($700,000)
and $300,000 in fiscal 1994, 1993, and 1992, respectively. During fiscal
1994, the Company entered into foreign currency forward contracts, of which
the notional amount outstanding was $27,000,000 at February 28, 1994. The
forward contracts hedge transactions in existing non-U.S. dollar denominated
inter-company receivables and payables.
Net Income Per Share of Common Stock
Primary net income per share is calculated on the basis of the weighted
average number of shares outstanding during each period, adjusted for
subsequent stock distributions. Common stock equivalents which would arise
from the exercise of stock options, using the treasury stock method, were not
significant and have not been included in the calculation.
Fully-diluted net income per share, in addition to the weighted average
determined above, includes common stock equivalents which would arise from the
exercise of stock options using the treasury stock method, and assumes the
conversion of the Company's 6-1/4% and 7% Convertible Subordinated Debentures
(for the periods outstanding), as well as the elimination of related interest
expense, net of income tax effects.
All income per share amounts have been calculated as if the stock split
distributed in April 1992, and the stock dividends distributed in April 1994,
May 1993 and July 1992 had occurred on March 1, 1991, the beginning of fiscal
1992. The weighted average number of shares outstanding have been determined
as if shares issued pursuant to the stock distributions had been issued at
that date and income per share amounts for fiscal 1993 and 1992 have been
restated accordingly.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in Accounting Policies
As discussed in Note 10, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes, effective March 1,
1993, the beginning of fiscal 1994. The Company adopted SFAS No. 109 by
restating prior years' financial statements for all years back to and
including fiscal 1986. As discussed in Note 12, the Company also adopted SFAS
No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, as of March 1, 1993. The Company adopted SFAS No. 106 by the
immediate recognition of its accumulated benefit obligation.
Statements of Cash Flows
For purposes of cash flows, the Company considers overnight investments as
cash equivalents. Interest and investment earnings are netted against
interest expense and amounted to approximately $400,000; $300,000; and
$700,000 in fiscal 1994, 1993 and 1992, respectively. The Company paid
interest of approximately $52,900,000; $58,700,000; and $74,100,000 in fiscal
1994, 1993 and 1992, respectively. Such amounts include $2,200,000; $5,000,000
and $6,400,000 allocated to the costs of discontinued operations in fiscal
1994, 1993 and 1992, respectively. The Company paid income taxes of
approximately $13,700,000; $11,800,000; and $7,700,000 in fiscal 1994, 1993
and 1992, respectively. Liabilities recorded in connection with businesses
acquired, excluding bank indebtedness, amounted to approximately $82,000,000;
$3,600,000; and $63,800,000 in fiscal 1994, 1993 and 1992, respectively.
2. Acquisition
On June 2, 1993, the Company purchased the stock and assets comprising Pirelli
Trasmissioni Industriali S.p.A. ("PTI"), the power transmission business of
Pirelli S.p.A., for approximately $115,000,000. PTI is a manufacturer of a
variety of timing belts, v-belts, v-ribbed belts and hydraulic hose sold to
customers in automotive and industrial markets. PTI has manufacturing,
distribution, engineering and marketing operations in six Western European
countries and the United States, and employs approximately 1,500 people
worldwide. PTI is a significant addition to the Company's Power and Fluid
Transfer business segment. The purchase price consisted of $65,000,000 in
cash and the assumption of approximately $50,000,000 of existing bank
indebtedness of PTI and its subsidiaries. The funding for the transaction was
provided substantially by borrowings under the Company's multi-currency credit
agreement.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The acquisition has been accounted for under the purchase method, and the
results of operations of PTI are included in the Company's results of
operations from the date of acquisition. The Company has made a
determination and allocation of the purchase price as of the acquisition date,
consisting of the following (dollars in thousands):
Accounts receivable $37,000
Inventories 34,600
Other current assets 6,700
Current notes payable to banks (18,600)
Accounts payable and other
current liabilities (52,800)
Net working capital acquired 6,900
Fixed assets 77,200
Cost in excess of net assets acquired 33,000
Long-term indebtedness to banks (32,300)
Other non-current items, net (19,800)
Cash purchase price paid at closing $65,000
An independent appraisal firm has been retained by the Company to determine
the fair market value of all of the fixed assets included in the PTI
acquisition. The above amounts are based upon the preliminary results of such
appraisal, and are subject to adjustment to the extent the final valuation
differs from the preliminary determination. The financial position of PTI as
of February 28, 1994 has been included in the accompanying consolidated
balance sheet of the Company as of that date based upon the allocation
identified above. The cost in excess of net assets will be amortized over 40
years.
The following table presents the pro-forma consolidated condensed results of
operations for the fiscal years ended February 28, 1994 and 1993. The pro-
forma amounts give effect to the acquisition of PTI as if it had occurred on
March 1, 1992, the beginning of fiscal 1993. The pro-forma amounts do not
purport to be indicative of the results that actually would have been obtained
had the acquisition taken place on March 1, 1992, nor are they intended to be
a projection of future results (dollars in thousands, except per share data):
1994 1993
(Unaudited)
Net Sales $1,286,700 $1,243,300
Income from continuing operations $ 52,100 $ 42,800
Earnings per share from continuing operations:
Primary $ 1.23 $ 1.02
Fully-diluted $ 1.11 $ .94
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Discontinued Operations
Effective May 31, 1993 (the "measurement date") the Company decided to sell
its non-core business units. Such units have been accounted for as
discontinued operations, and their results of operations have been excluded
from continuing operations in the consolidated statement of income for fiscal
1994. The consolidated statements of income for fiscal 1993 and 1992 have
been restated to exclude the discontinued operations in a similar manner.
In June 1993, the Company sold certain of its non-core instruments businesses
for cash consideration of approximately $35,000,000. The businesses sold had
sales of approximately $54 million for the Company's fiscal year ended
February 28, 1993. The proceeds from the sale were used to repay a portion of
the debt incurred to finance the acquisition of PTI, as discussed in Note 2.
The remaining net assets of discontinued operations as of February 28, 1994
amount to approximately $28,100,000. Such amounts have been segregated in the
balance sheet and offset by a corresponding amount of long-term debt, on the
assumption that the net sale proceeds will equal or exceed the net asset
amount, and all such proceeds will be utilized to offset existing borrowings
of the Company.
The results of operations of these discontinued businesses in fiscal 1993 and
1992 were as follows (dollars in thousands):
1993 1992
Sales $136,300 $141,300
Income before provision for taxes $ 5,600 $ 3,100
Provision for taxes 2,000 1,100
Income from discontinued operations $ 3,600 $ 2,000
Sales of the discontinued operations in fiscal 1994 were $26,800,000 through
the measurement date, and approximately $42,300,000 from the measurement date
through February 28, 1994. The related income from these operations has been
deferred until the ultimate disposition of the businesses, which is expected
to occur in fiscal 1995.
4. Accounts Receivable
Accounts receivable are reflected net of allowances for doubtful accounts of
$17,600,000 and $13,000,000 at February 28, 1994 and 1993, respectively. The
amount at February 28, 1993 includes $800,000 related to discontinued
operations.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Inventories
Inventories include contracts in process, and are stated at the lower of cost
or market. The cost of inventories is determined primarily on the last-in,
first-out (LIFO) method. As a result of the fair value determination of
inventories required by the purchase method of accounting for acquired
companies as of their acquisition date, LIFO costs exceed FIFO costs by
approximately $35,000,000 and $39,800,000 at February 28, 1994 and 1993,
respectively. The excess at February 28, 1993 includes $2,800,000 related to
discontinued operations.
Inventories consist of the following at February 28, 1994 and 1993 (dollars in
thousands):
1994 1993
(As Restated)
Raw materials, parts, and sub-assemblies $ 67,700 $ 70,300
Work-in-process 43,500 62,400
Finished goods 157,100 123,500
268,300 256,200
Less progress billings 3,300 12,400
Inventories $265,000 $243,800
The amount at February 28, 1993 includes $21,100,000 related to discontinued
operations, which is net of related progress billings of $10,900,000.
6. Property, Plant and Equipment
Property, plant and equipment is stated at cost and consists of the following
at February 28, 1994 and 1993 (dollars in thousands):
1994 1993
(As Restated)
Land and land improvements $ 35,700 $ 31,800
Buildings 115,700 99,600
Machinery and equipment 324,700 296,700
Total property, plant and equipment 476,100 428,100
Less accumulated depreciation 110,800 109,800
Property, plant and equipment, net $365,300 $318,300
The cost of property, plant and equipment retired or otherwise disposed of,
and the accumulated depreciation thereon, are eliminated from the asset and
related accumulated depreciation accounts, and any resulting gain or loss is
reflected in income. The net amount at February 28, 1993 includes $31,000,000
related to discontinued operations.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company provides for depreciation of plant and equipment on methods and
rates designed to amortize the cost of such plant and equipment over its
useful life. Depreciation is provided principally on the straight-line method
and amounted to approximately $33,200,000; $29,800,000; and $26,900,000 in
fiscal 1994, 1993 and 1992, respectively. Of such amounts, approximately
$4,000,000 and $3,600,000 relates to discontinued operations in fiscal 1993
and 1992, respectively.
7. Cost in Excess of Net Assets Acquired and Deferred Charges
Cost in excess of net assets acquired, net of accumulated amortization,
amounted to approximately $196,100,000 and $187,800,000 at February 28, 1994
and 1993 respectively. The change in fiscal 1994 includes approximately
$33,000,000 related to the Company's PTI acquisition, and also reflects the
elimination of approximately $18,200,000 related to the Company's discontinued
operations. The costs related to continuing operations are being amortized on
the straight-line method over 40-year periods from the acquisition dates of
the respective businesses, and resulted in amortization expense of
approximately $5,700,000; $4,700,000 and $3,900,000 in fiscal 1994, 1993 and
1992, respectively. Accumulated amortization of such costs was approximately
$22,700,000 and $17,000,000 at February 28, 1994 and 1993, respectively.
Deferred charges, net of accumulated amortization, amounted to approximately
$11,900,000 and $8,200,000 at February 28, 1994 and 1993, respectively. Such
amounts include costs incurred in connection with the issuance of the
Company's credit agreements and the sale of subordinated debentures, and are
being amortized over their respective terms.
8. Long-Term Debt
Long-term debt consists of the following at February 28, 1994 and 1993
(dollars in thousands):
1994 1993
Senior debt:
Credit Agreement $140,000 $170,000
Multi-Currency Agreement 48,400 -
Other items 40,500 30,200
Total 228,900 200,200
Less current maturities (5,800) (5,900)
Less amounts allocated
to discontinued operations (28,100) -
Net senior debt 195,000 194,300
Subordinated debt:
8-3/4% Senior Subordinated Notes 258,000 -
6-1/4% Convertible Subordinated Debentures 114,200 114,300
13-3/8% Subordinated Debentures - 188,500
Total subordinated debt 372,200 302,800
Total long-term debt $567,200 $497,100
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In July 1993, the Company entered into a Credit Agreement providing for a
$300,000,000 five-year revolving credit facility with a group of financial
institutions. A portion of the credit facility was used to repay amounts
outstanding under the Company's revolving credit facility dated June 19, 1990,
which was then canceled. Interest on the Credit Agreement is based on a
pricing grid which is either prime per annum or, under a LIBOR option, LIBOR
plus 0.375% to LIBOR plus 1.375% per annum based on the Company's senior
unsecured long-term debt ratings (as defined in the Credit Agreement). The
Company is currently paying interest at LIBOR plus 0.75% on borrowings under
the Credit Agreement. The Credit Agreement contains certain affirmative and
negative covenants customary in an agreement of this nature, and is secured by
the stock of certain of the Company's subsidiaries.
In May 1993, the Company entered into a revolving credit agreement ("Multi-
Currency Agreement") providing for a five year multi-currency revolving credit
facility with a group of financial institutions in the U.S. and Europe. The
Multi-Currency Agreement provides for a revolving loan commitment for the
first two years of the equivalent of $100,000,000. The commitment declines by
$12,500,000 at each of six semi-annual dates beginning in June 1995, with the
remaining $25,000,000 of commitment expiring in May 1998. Interest rates on
borrowings under the Multi-Currency Agreement are subject to change based on a
specified pricing grid which increases from LIBOR plus 0.625% to LIBOR plus
1.375% per annum based on the Company's senior debt rating (as defined in the
Multi-Currency Agreement). The Company is currently paying interest at LIBOR
plus 1.25% on borrowings under the Multi-Currency Agreement. The Multi-
Currency Agreement also contains certain affirmative and negative covenants
customary in an agreement of this nature.
In March 1993, the Company completed a public offering of $258,000,000
principal amount of its 8-3/4% Senior Subordinated Notes due April 2003. A
substantial portion of the net proceeds from the sale of the notes was used to
fund the retirement of the Company's 13-3/8% Subordinated Debentures. There
are no sinking fund requirements on the Senior Subordinated Notes and they may
not be redeemed until April 1998. At such date they are redeemable at
104.375% of principal amount, and thereafter at an annually declining premium
over par until April 2001 when they are redeemable at par. The Indenture
limits the payment of dividends and the repurchase of capital stock, and
includes certain other restrictions and limitations customary with
subordinated indebtedness of this type.
The 6-1/4% Convertible Subordinated Debentures are convertible into shares of
the Company's common stock at a conversion price of $14.37 per share, subject
to adjustment. The Company is required to make sinking fund payments
commencing February 2002, calculated to retire 50% of the debentures prior to
their February 2007 maturity. The debentures may not be redeemed until
February 1995. At such date they are redeemable at 104.375% of principal
amount, and thereafter at an annually declining premium over par until
February 2002, when they are redeemable at par.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In March 1993, the Company offered to purchase its 13-3/8% Subordinated
Debentures for a cash price of $1,137.50 per $1,000 principal amount, plus
accrued interest. As a result of the offer, and certain open-market
purchases, the Company acquired approximately $138,000,000 principal amount of
these debentures. The Company then completed an "in-substance defeasance" in
which approximately $60,400,000 was deposited in an irrevocable trust to cover
both the remaining outstanding principal amount ($52,000,000) and the related
interest expense requirements of these debentures. The Company recognized an
extraordinary loss, net of tax, of approximately $21,700,000 as a result of
the extinguishment of this debt in fiscal 1994. The Company also acquired or
defeased approximately $63,000,000 and $122,000,000 of its indebtedness and
recognized an extraordinary loss, net of tax, of $3,700,000 and $4,500,000 in
fiscal 1993 and 1992, respectively.
The fair value of the 6-1/4% Convertible Subordinated Debentures exceeds their
recorded value by approximately $48,000,000 as of February 28, 1994, based
upon the quoted market value of the debentures as of that date. The fair
value of the 8-3/4% Senior Subordinated Notes exceeds their recorded value by
approximately $6,000,000 as of February 28, 1994, based upon the quoted market
value of such notes as of that date. Since the rest of the Company's notes
payable and senior debt are primarily floating rate debt, their recorded
amounts approximate their fair values as of February 28, 1994. The recorded
amounts for other financial instruments, such as cash and accounts receivable,
approximate their fair value.
Annual maturities of the Company's long-term debt for the next five fiscal
years are: 1995-$5,800,000; 1996-$18,200,000; 1997-$4,000,000; 1998-
$26,900,000; and 1999-$138,200,000.
9. Leases
The Company has operating leases which expire at various dates through 2002
with, in some instances, renewal privileges. Certain leases provide for
escalation of the rentals primarily for increases in maintenance costs and
property taxes. Total rental expense for continuing operations under
operating leases was $15,900,000; $15,900,000; and $15,400,000 in fiscal 1994,
1993 and 1992, respectively.
Minimum rental payments under operating leases of continuing operations and
having an initial or remaining noncancellable term in excess of 12 months are:
1995-$13,200,000; 1996-$11,200,000; 1997-$10,100,000; 1998-$9,100,000;
1999-$7,400,000; 2000 and thereafter $22,100,000.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Income Taxes
The company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS No. 109), in fiscal 1994. The adoption of
this standard changed the Company's method of accounting for income taxes from
the deferred method to the liability method. The Company adopted SFAS No. 109
retroactively by restating prior years' financial statements for all years
back to and including fiscal 1986.
Income from continuing operations and the related provision for taxes under
SFAS No. 109 for fiscal 1994, 1993 and 1992 consists of the following (dollars
in thousands):
1994 1993 1992
(As Restated) (As Restated)
Income from continuing operations
before provision for taxes:
United States $45,800 $41,400 $27,800
Foreign 35,900 20,600 13,700
Total income from continuing
operations before provision
for taxes $81,700 $62,000 $41,500
Provision for taxes on income from
continuing operations:
Currently payable:
United States $14,500 $10,900 $ 6,900
Foreign 5,300 8,100 5,600
Total currently payable 19,800 19,000 12,500
Deferred:
United States 3,600 4,200 2,800
Foreign 7,200 (300) (600)
Total deferred 10,800 3,900 2,200
Total provision for taxes $30,600 $22,900 $14,700
The cumulative effect of the January 1993 increase in the U.S. statutory tax
rate was not significant. As a result of the exercise of certain employees'
incentive stock options, the Company realized a tax benefit of $1,700,000
which has been recognized as a direct increase in additional paid-in capital.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The tax effects of temporary differences which give rise to a significant
portion of deferred tax assets (liabilities) consist of the following at
February 28, 1994 and 1993 (dollars in thousands):
1994 1993
____ ____
Current:
Accounts receivable $ 3,900 $ 3,000
Inventories (9,500) (9,500)
Compensation related 3,400 3,100
Tax credit and net
operating loss carryforwards 9,000 -
Other items 7,500 800
Total current asset (liability) 14,300 (2,600)
Valuation allowance (4,000) -
Net current asset (liability) $ 10,300 $ (2,600)
Non-current:
Fixed and intangible assets $(39,500) $(47,800)
Pension and other benefit plans (21,400) (31,800)
Tax credit and net
operating loss carryforwards 29,400 35,900
Capital loss carryforwards 11,300 19,300
All other items 19,600 23,400
Total non-current liability (600) (1,000)
Valuation allowance (16,800) (19,300)
Net non-current liability $(17,400) $(20,300)
The net current amount is included in other current assets at February 28,
1994, and in income taxes payable at February 28, 1993. The net non-current
amount is included in other non-current liabilities at February 28, 1994 and
1993.
The current valuation allowance offsets foreign tax benefits established in
the PTI acquisition which may not be realized. To the extent the benefits are
realized, the valuation allowance will be reversed with a corresponding
reduction in the cost in excess of net assets acquired resulting from the PTI
acquisition. The non-current valuation allowance is primarily attributable to
the capital loss carryforwards, which are available to use primarily through
fiscal 1996. The change in the non-current valuation allowance relates to
capital loss carryforward benefits realized in discontinued operations.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Management of the Company has determined, based on the Company's history of
prior operating earnings and its expectations for the future, that operating
income will more likely than not be sufficient to utilize the tax credit and
net operating loss carryforwards in their carryforward periods, which run
substantially through fiscal 2007. The undistributed earnings of the
Company's foreign subsidiaries have been reinvested in each country, and are
not expected to be remitted back to the parent company. Accordingly, no
federal income taxes have been provided on such earnings as of February 28,
1994. The determination of the possible tax effect relating to such
reinvested income is not practicable.
The provision for taxes on income from continuing operations for fiscal 1994,
1993, and 1992 differs from the amount computed using the United States
statutory income tax rate as follows (dollars in thousands):
1994 1993 1992
____ ____ ____
(As Restated) (As Restated)
Expected tax at United States
statutory income tax rate $28,600 $21,100 $14,100
Permanent differences 1,200 900 400
State and local income taxes 1,200 600 700
Tax credits (500) (400) (800)
Foreign tax rate differences 100 700 300
Total provision for taxes $30,600 $22,900 $14,700
As a result of prior acquisitions, the retroactive adoption of SFAS No. 109
resulted in increases in property, plant and equipment of $17,800,000; cost in
excess of net assets acquired of $43,000,000; deferred tax assets of
$19,000,000 and deferred tax liabilities of $79,800,000. The adoption of SFAS
No. 109 also resulted in a cumulative decrease in stockholders' equity as of
February 28, 1991 of $7,800,000, which adjustment included increased tax
expense for preceding years through fiscal 1991 of $800,000. The increase in
property, plant and equipment and cost in excess of net assets acquired
resulted in increased depreciation and amortization in prior years of
approximately $2,500,000 per year, of which $2,000,000 relates to continuing
operations, and $500,000 relates to discontinued operations. The effects of
this accounting change on the results of continuing operations for fiscal 1993
and 1992 are as follows (dollars in thousands, except per share data):
1993 1992
____ ____
Income from continuing operations
before provision for taxes $(2,000) $(2,000)
Provision for taxes (600) 300
Income from continuing operations $(2,600) $(1,700)
Income per share from continuing operations:
Primary $ (.06) $ (.05)
Fully-diluted $ (.05) $ (.04)
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Pension and Profit Sharing Plans
The Company has a variety of defined benefit plans covering both union and
non-union employees. Under the union plans, employee benefits are computed
based on a dollar amount multiplied by the number of years of service.
Benefits under the non-union plans are computed in a similar manner for
certain plans, and based on the employees' earnings in other plans.
The following table sets forth the funded status of the defined benefit plans
and the amounts recognized in the Company's consolidated balance sheets at
February 28, 1994 and 1993 (dollars in thousands):
1994 1993
____ ____
(As Restated)
Actuarial present value of benefit obligations:
Vested $(233,300) $(202,900)
Accumulated $(236,100) $(204,800)
Projected $(241,900) $(211,100)
Plan assets at fair value 314,300 300,100
Plan assets in excess of projected
benefit obligation 72,400 89,000
Unrecognized net loss and
differences in assumptions 36,400 6,800
Unrecognized prior service costs 3,100 2,600
Prepaid pension cost recognized in the
consolidated balance sheets $ 111,900 $ 98,400
========= =========
The plans' assets consist of corporate and government bonds, guaranteed
investment contracts, listed common stocks and real estate investments.
Included in the plans' assets are common stock of the Company with a market
value of approximately $16,500,000 and the Company's 6-1/4% and 8-3/4%
subordinated debentures with a market value of $11,800,000 at February 28,
1994.
Net pension income for the defined benefit plans in fiscal 1994, 1993, and
1992 includes the following components (dollars in thousands):
1994 1993 1992
(As Restated) (As Restated)
Service cost-benefits
earned during the period $ (2,900) $ (2,700) $ (2,500)
Interest cost on projected
benefit obligation (18,200) (17,300) (16,900)
Actual return on assets 32,100 36,600 36,400
Net amortization and deferral 2,500 (4,100) (6,300)
Net pension income $ 13,500 $ 12,500 $ 10,700
======== ======== ========
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following assumptions were utilized to measure net pension income for each
of the fiscal years presented, as well as the projected benefit obligation as
of the end of the fiscal years:
1994 1993 1992
____ ____ ____
Discount rate 7.75% 9.00% 9.00%
Expected long-term rate of return 12.00% 12.00% 12.00%
Average increase in compensation 5.00% 5.00% 5.00%
As a result of the change in the discount rate, the projected benefit
obligation as of February 28, 1994 is approximately $25,000,000 more than it
would have been using the previous 9% discount rate. The change had no effect
on net pension income in fiscal 1994, and is expected to reduce pension income
in fiscal 1995 by approximately $500,000.
The Company also has defined contribution pension and profit sharing plans for
a significant number of its salaried and hourly employees. The Company's
contributions to these plans is based on various percentages of compensation,
and in some instances is based upon the amount of the employees' contributions
to the plans. The annual cost of these plans amounted to approximately
$6,700,000; $6,600,000; and $6,000,000 in fiscal 1994, 1993 and 1992,
respectively.
12. Postretirement Benefits
The Company currently provides health and life insurance benefits to a number
of existing retirees from certain of its operations under the provisions of a
number of different plans. Contributions currently required to be paid by the
retirees towards the cost of such plans range from zero to 100%. The Company
also has a number of active employees who might receive such benefits upon
their retirement. The plans which relate to retirees and active non-union
employees include provisions which allow the Company to increase the cost to
participants, or otherwise modify or terminate them as determined by
management. The plans which relate to active union employees are subject to
modification in the same manner as are all other compensation and benefits
matters in the process of the Company's negotiations of contracts covering its
union employees. The cash cost incurred by the Company for its retirees
amounted to approximately $4,600,000; $3,600,000; and $3,300,000 in fiscal
1994, 1993 and 1992, respectively. Through fiscal 1993, the Company accounted
for the cost of these postretirement benefits on the cash basis as they were
paid.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Financial Accounting Standards Board (FASB) issued Statement No. 106,
Employers Accounting for Postretirement Benefits Other Than Pensions (SFAS No.
106) in December 1990. SFAS No. 106 requires the estimated present-value of
the Company's liability for its commitments to provide health and life
insurance benefits to its retirees to be included in the balance sheet, either
entirely as of the date of adoption, or over a transition period. Such
liability is referred to as the Accumulated Benefit Obligation (ABO). The
related expense is required to be recognized on the accrual method over the
remaining years of the employees' active service, up to the dates of
individual eligibility to retire and begin receiving the benefit. The Company
adopted this new accounting rule as of March 1, 1993, the beginning of fiscal
1994. Prior to its adoption of SFAS No. 106, the Company advised the
participants of certain plan design changes, including the establishment of
caps on the amount of annual expense to be incurred by the Company. The
participants are now required to pay 100% of the excess of costs incurred over
the established annual caps, in addition to whatever contribution percent is
required of the retirees for amounts incurred up to the amount of the caps.
Actuarial calculations indicate the Company's actual costs are not expected to
reach the substantial majority of the caps until fiscal 1996, and assume an
annual health-care cost trend rate of 10% until that time.
The Company adopted SFAS No. 106 by recognizing the ABO entirely in fiscal
1994. The ABO was calculated on an actuarial basis using a 9% discount rate,
and amounted to approximately $40,000,000 as of the March 1, 1993 adoption
date. Since the Company also adopted SFAS No. 109 - Accounting for Income
Taxes at the same date, the Company recognized a deferred tax asset of
$14,000,000 representing the future tax benefits to be received related to the
ABO. The resulting net charge of $26,000,000 ($.51 per fully diluted share)
from the adoption of SFAS No. 106 has been included as the cumulative effect
of a change in accounting principle in the consolidated statement of income
for fiscal 1994. The company continues to fund such costs on the cash-basis,
and such cash costs for these plans in fiscal 1994 have been charged against
the ABO.
The ABO for fiscal 1994, and the reconciliation to the amount provided in the
consolidated balance sheet, is comprised of the following elements (dollars in
thousands):
Fiscal 1994
_______________________
End Beginning
of the year of the year
___________ ___________
Accumulated post-retirement benefit obligation:
Retirees and beneficiaries receiving benefits $34,700 $29,300
Active employees, fully eligible for benefits 4,600 4,900
Active employees,
not fully eligible for benefits 6,500 5,800
Total accumulated benefit obligation 45,800 40,000
Unrecognized net loss (6,600) -
Post-retirement benefit liability
recognized in the balance sheet $39,200 $40,000
======= =======
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company's postretirement benefit expense for fiscal 1994 on the accrual
method was $3,800,000. The expense is made up of a service cost for active
employees of $400,000 and interest on the ABO of $3,400,000. Such cost was
approximately $800,000 less than the cash-basis expense for the year, or
$500,000 after tax effects ($.01 per share). The unrecognized net loss is
primarily the result of a change in the discount rate from 9% at the beginning
of the year to 7-3/4% at the end of the year, plus the excess of the cash-
basis expense over the accrual basis expense. The change in the discount rate
and the amortization of the unrecognized net loss will not have a significant
effect on the Company's postretirement benefit expense for fiscal 1995. As a
result of the cost caps, a 1% change in the health-care cost trend rate would
have a nominal effect on the Company's ABO and annual cost.
13. Legal Proceedings
A subsidiary of the Company was the defendant in a patent infringement case
which was tried in the latter part of fiscal 1994. The decision of the Court
was reached in April 1994 in favor of the plaintiff, awarding them damages and
issuing an injunction which prohibits the Company from any further use of the
technology at issue. Prior to the court's decision, the Company had stopped
using the technology in question; therefore, the injunction will have no
impact on the Company's future sales and marketing efforts. If the judgement
for the plaintiff is upheld on appeal, the after-tax cost to the Company could
be in the range of $2,300,000. Management of the Company has been advised by
its legal counsel as to the merits of its arguments, and continues to believe
it has not infringed on the plaintiff's patent.
In view of the above, management has directed its legal counsel to pursue the
appeal process as diligently as possible. Management believes the ultimate
conclusions of law will be decided upon by the appeals court in favor of the
Company. However, in view of the trial court's findings, an accrual has been
established to provide for the cost of the resolution of this issue in the
event the Company is not successful. The litigation accrual did not have an
effect on income, since the effects of establishing it have been offset by the
reversal of accrued liabilities related to an acquisition in fiscal 1991 which
management has determined are no longer required.
The Company is involved in various other legal and environmental related
issues. In the opinion of the Company's management, the ultimate cost to
resolve these matters will not have a material adverse effect on the Company's
financial position.
14. Stockholders' Equity and Stock Options
The Company's Board of Directors declared five percent stock dividends which
were distributed in April 1994, May 1993 and July 1992, and a three-for-two
stock split in fiscal 1992. All earnings per share amounts have been
calculated as if the stock distributions had occurred on March 1, 1991, the
beginning of fiscal 1992. As a result of these stock distributions, the
conversion price of the Company's 6-1/4% Convertible Subordinated Debentures
is $14.37 per share and approximately 7,944,000 shares have been reserved for
such conversion.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In December 1993, the Company's Board of Directors authorized the repurchase
of approximately 4,200,000 shares, or approximately 10 percent of the
Company's outstanding common stock. This authorization, in addition to
authorizations remaining from previous years, gives the Company the authority
to repurchase a total of 6,400,000 additional shares, or 15% of its
outstanding common stock as of February 28, 1994. The Company did not acquire
any of its common stock in fiscal 1994 or fiscal 1993.
The Company's Incentive Stock Option Plans provide for granting officers and
other key employees options to purchase the Company's common stock at an
exercise price equal to 100% of the market price on the date of grant. The
options may be exercised in cumulative annual increments of 25% commencing one
year after the date of grant, and have a maximum duration of seven to ten
years. There were 1,449,467 and 1,447,735 shares reserved for the future
granting of options at February 28, 1994 and 1993.
The following table summarizes the Company's stock option transactions for
fiscal 1994, 1993 and 1992:
1994 1993 1992
_________________ ________________ _______________
Average Average Average
Option Option Option Option Option Option
Shares Price Shares Price Shares Price
______ ______ ______ _____ ______ ______
Balance at
beginning
of year 737,285 $ 7.65 843,097 $ 4.25 526,175 $2.94
Activity during
the year:
Granted 13,650 $19.29 233,399 $13.05 342,078 $6.26
Exercised (167,314) $ 3.88 (335,738) $ 3.00 (24,941) $2.65
Canceled (15,383) $ 9.64 (3,473) $ 6.19 (215) $3.49
Balance at
end of year:
Outstanding 568,238 $ 8.98 737,285 $ 7.65 843,097 $4.25
======= ======= =======
Exercisable 255,050 $ 7.17 258,841 $ 4.12 486,661 $2.90
======= ======= =======
The Company's Board of Directors established a Restricted Stock Plan in fiscal
1993. In fiscal 1994, the Company granted certain executives restricted stock
awards with respect to 336,262 shares at $.01 par value per share. As a
result, common stock and additional paid-in capital have been increased by a
total of $6,600,000 based upon the market value of the stock as of the grant
date. The restrictions on the stock lapse after a five year period, or sooner
if certain performance measurements of the Company are achieved. Therefore,
the expense will be recognized as it is earned over the restriction period,
with $800,000 recognized as an expense in fiscal 1994. The unearned balance
of $5,800,000 as of February 28, 1994 has been presented as an offset to
additional paid-in capital. Approximately 50,000 shares remain available for
issuance under this plan as of February 28, 1994.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At a special meeting of the company's stockholders in December 1991, the
Company's Certificate of Incorporation was amended to increase the authorized
shares of the Company's common stock, from 25,000,000 to 100,000,000 and to
increase the authorized shares of the Company's preferred stock, from
1,000,000 to 10,000,000. There are no shares of preferred stock outstanding
at the present time.
15. Industry Segments and Geographic Areas
As a result of the Company's discontinuance and sale of certain of its non-
core businesses in fiscal 1994 and 1993, and its PTI acquisition in June 1993,
it has modified its industry segment definitions and descriptions for fiscal
1994. The Company now classifies its operations into the following three core
business segments:
(i) Power and Fluid Transfer, which includes the design and manufacture
of automotive aftermarket and OEM belts, hose, couplings, accessory
drive systems and fluid transfer assemblies; industrial belts, hose
and fittings, and garden hose.
(ii) Transportation, which includes the design and manufacture of
products and systems for mass transit, such as door systems,
lighting, and informational display devices and applications for bus
and rail transit vehicles; traffic, such as advanced traffic control
and management systems, directional information and warning signs
for roads and highways, and automatic (intelligent) vehicle
identification for toll collection and traffic control; and
commercial aviation, such as aircraft interior lighting and air-
diffusion, and aircraft emergency lighting and night vision
compatibility.
(iii) Professional Audio, which includes the design and manufacture of
products and systems used primarily in the high-performance
professional audio market, such as professional performance
microphones, speakers, mixers, and amplifiers; high-fidelity public
address and musical instrument loudspeaker systems; audio signal
processors, sound reinforcement equipment, and sound enhancement and
noise canceling equipment.
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The continuing operations and classifications for fiscal 1993 and 1992 have
been presented in a manner consistent with the information presented for
fiscal 1994. All sold or discontinued operations have been excluded from the
following industry segment and geographic information, and included in the
Corporate category where applicable. Information concerning the Company's
business segments for fiscal 1994, 1993 and 1992 is as follows (dollars in
thousands):
1994 1993 1992
__________ ____________ ____________
(As Restated) (As Restated)
NET SALES TO CUSTOMERS
Power and Fluid Transfer $ 852,100 $ 709,400 $ 635,200
Transportation 218,600 199,500 199,900
Professional Audio 173,500 176,800 169,200
Total net sales
to customers $1,244,200 $1,085,700 $1,004,300
========== ========== ==========
OPERATING INCOME
Power and Fluid Transfer $ 97,800 $ 79,200 $ 67,000
Transportation 27,000 24,900 27,100
Professional Audio 21,900 22,000 23,900
Total operating income 146,700 126,100 118,000
General corporate (14,900) (12,500) (9,400)
Interest expense and loss
on securities transactions (50,100) (51,600) (67,100)
Income from continuing
operations, before
provision for taxes $ 81,700 $ 62,000 $ 41,500
========== ========== ==========
IDENTIFIABLE ASSETS
Power and Fluid Transfer $ 826,000 $ 622,500 $ 618,400
Transportation 236,100 220,600 194,900
Professional Audio 162,700 158,900 159,400
General corporate 57,500 122,800 131,800
Total
identifiable assets $1,282,300 $1,124,800 $1,104,500
========== ========== ==========
DEPRECIATION AND AMORTIZATION
Power and Fluid Transfer $ 27,500 $ 19,100 $ 16,500
Transportation 7,100 6,700 5,600
Professional Audio 4,500 4,400 4,300
General corporate 2,600 1,900 1,900
Total depreciation
and amortization $ 41,700 $ 32,100 $ 28,300
========== ========== ==========
CAPITAL OUTLAYS
Power and Fluid Transfer $ 31,900 $ 25,800 $ 13,100
Transportation 7,000 6,800 4,300
Professional Audio 2,500 1,700 1,600
General corporate - 1,200 1,700
Total capital outlays $ 41,400 $ 35,500 $ 20,700
========== ========== ==========
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Operating income represents total revenues less operating expenses, and
excludes general corporate expenses, interest expense and income taxes.
Litigation costs are considered to be corporate expenses. Identifiable assets
are those assets employed in each segment's operation, including an allocated
value to each segment of cost in excess of net assets acquired. Corporate
assets consist primarily of cash, marketable securities, investments and
assets not employed in production and net assets of discontinued operations.
The Company's foreign operations are located primarily in Europe, and to a
lesser extent in Canada and the Far East. Information concerning the
Company's operations by geographic area for fiscal 1994, 1993 and 1992 is as
follows (dollars in thousands):
1994 1993 1992
__________ _____________ ____________
(As Restated) (As Restated)
NET SALES TO CUSTOMERS
United States $ 884,500 $ 815,200 $ 798,500
Foreign 359,700 270,500 205,800
Total net sales
to customers $1,244,200 $1,085,700 $1,004,300
========== ========== ==========
OPERATING INCOME
United States $ 105,700 $ 102,100 $ 99,700
Foreign 41,000 24,000 18,300
Total operating income $ 146,700 $ 126,100 $ 118,000
========== ========== ==========
IDENTIFIABLE ASSETS
United States $ 898,700 $ 916,800 $ 873,400
Foreign 383,600 208,000 231,100
Total identifiable assets $1,282,300 $1,124,800 $1,104,500
========== ========== ==========
The net sales to customers reflect the sales of the operating units in each
geographic area to unaffiliated customers. Export sales from the United
States to unaffiliated customers were $71,300,000; $67,800,000 and $66,500,000
in fiscal 1994, 1993, and 1992, respectively. Inter-segment sales are not
material. Sales between geographic areas are accounted for at prices which
are competitive with prices charged to unaffiliated customers.
[Download Table]
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Quarterly Financial Data and Information (Unaudited)
The following table sets forth the unaudited quarterly results of operations for
each of the fiscal quarters in the years ended February 28, 1994 and 1993. As a
result of the decision to discontinue the Company's non-core businesses and the
adoption of SFAS No. 109, the Company's results of operations for each of its
fiscal quarters in the year ended February 28, 1993 have been restated (dollars in
thousands, except per share data):
First Second Third Fourth Total
Fiscal 1994 Quarter Quarter Quarter Quarter Year
___________ _______ _______ _______ _______ _____
Net sales $287,800 $316,600 $320,000 $319,800 $1,244,200
Gross profit (a) $102,000 $110,800 $113,800 $114,100 $ 440,700
Income from
continuing operations $ 13,600 $ 13,100 $ 12,800 $ 11,600 $ 51,100
Extraordinary items (21,700) - - - (21,700)
Cumulative effect of
accounting change (26,000) - - - (26,000)
________ _________ ________ _________ __________
Net income $(34,100) $ 13,100 $ 12,800 $ 11,600 $ 3,400
======== ========= ======== ========= ==========
Income per share (b) (c):
Primary:
Continuing operations $ .32 $ .31 $ .30 $ .27 $ 1.20
Extraordinary items (.51) - . - (.51)
Cumulative effect of
accounting change (.62) - - - (.61)
________ _________ ________ _________ __________
Net income $ (.81) $ .31 $ .30 $ .27 $ .08
======== ========= ======== ========= ==========
Fully-diluted:
Continuing operations $ .29 $ .28 $ .27 $ .25 $ 1.09
Extraordinary items (.43) - - - (.43)
Cumulative effect of
accounting change (.51) - - - (.51)
________ _________ ________ _________ __________
Net income $ (.65) $ .28 $ .27 $ .25 $ .15
======== ========= ======== ========= ==========
Fiscal 1993
___________
Net sales $271,000 $268,600 $270,700 $ 275,400 $1,085,700
Gross profit (a) $ 97,200 $ 95,100 $ 98,000 $ 96,600 $ 386,900
Income from continuing
operations $ 10,300 $ 8,900 $ 10,800 $ 9,100 $ 39,100
Income from discontinued
operations 1,300 2,400 500 (600) 3,600
Extraordinary items - (400) (1,600) (1,700) (3,700)
________ ________ ________ _________ _________
Net income $ 11,600 $ 10,900 $ 9,700 $ 6,800 $ 39,000
======== ======== ======== ========= =========
Income per share (b) (c):
Primary:
Continuing operations $ .25 $ .21 $ .26 $ .22 $ .93
Discontinued operations .03 .06 .01 (.02) .09
Extraordinary items - (.01) (.04) (.04) (.09)
________ ________ ________ _________ _________
Net income $ .28 $ .26 $ .23 $ .16 $ .93
======== ======== ======== ========= =========
Fully-diluted:
Continuing operations $ .23 $ .20 $ .24 $ .20 $ .87
Discontinued operations .02 .05 .01 (.01) .07
Extraordinary items - (.01) (.03) (.03) (.07)
________ ________ ________ _________ _________
Net income $ .25 $ .24 $ .22 $ .16 $ .87
======== ======== ======== ========= =========
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<FN>
___________________________________
(a) Excluding depreciation expense.
(b) The sum of the quarterly amounts do not equal the total as a result of
the common stock transactions discussed in Note 14. The impact of those
transactions on the determination of the weighted average number of
shares outstanding is different in each quarter, and for the year in
total.
(c) Restated to reflect the five percent stock dividend issued in April 1994.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Items 10-13
The information required for Items 10, 11, 12 and 13 has been omitted as
such information will be set forth in the definitive Proxy Statement for the
Company's 1994 Annual Meeting of Stockholders which will be filed with the
Securities and Exchange Commission not later than 120 days after February 28,
1994, which information is incorporated herein by reference.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Page
(a) (1) Financial Statements
Report of Independent Accountants for
each of the three fiscal years in the
period ended February 28, 1994. . . . . . . . . . . . . . . . . . .27
Financial Statements:
Consolidated Balance Sheets at February 28, 1994 and 1993 . . . . .28
Consolidated Statements of Income for each of
the three fiscal years in the period ended
February 28, 1994 . . . . . . . . . . . . . . . . . . . . . . . .29
Consolidated Statements of Stockholders' Equity for
each of the three fiscal years in the period
ended February 28, 1994 . . . . . . . . . . . . . . . . . . . . .30
Consolidated Statements of Cash Flows
for each of the three fiscal years in
the period ended February 28, 1994. . . . . . . . . . . . . . . .31
Notes to Consolidated Financial Statements. . . . . . . . . . . . .32
(2) Financial Statement Schedules
Report of Independent Accountants
for each of the three fiscal years in the
period ended February 28, 1994. . . . . . . . . . . . . . . . . .58
Financial Statement Schedules:
V. Property, plant and equipment cost . . . . . . . . . . . . .59
VI. Accumulated depreciation and amortization
of property, plant and equipment. . . . . . . . . . . . . .60
VIII. Valuation and qualifying accounts. . . . . . . . . . . . . .61
X. Supplementary income statement information . . . . . . . . .62
All other schedules and statements have been omitted as the required
information is inapplicable or is presented in the financial
statements or notes thereto.
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed pertaining to
events occurring during the quarter ended February 28, 1994.
(c) Exhibits
2.1 Share Purchase Agreement dated April 29, 1993 among Mark IV
Industries, Inc., a Delaware Corporation, and its indirect
wholly-owned subsidiary, Dayco Italy, S.p.A., an Italian
Corporation, and Pirelli S.p.A., an Italian Corporation
(incorporated by reference to exhibit 2.1 to the Company's
Current Report on Form 8-K dated May 27, 1993, as filed on June
17, 1993). All schedules and other attachments to this exhibit,
as identified on the last page of the exhibit, have been
omitted.
3.1 Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 28.1 to the Company's Registration
Statement No. 33-45215 on Form S-3, as filed with the SEC on
January 24, 1993).
4.1 Indenture dated as of March 15, 1989 between the Company and the
First National Bank of Boston, as Trustee (including the form of
13-3/8% Subordinated Debentures due March 15, 1999)
(incorporated by reference to Exhibit 4.10 to the Company's
Current Report on Form 8-K, dated May 23, 1989).
4.2 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.11 to Amendment No. 1 to the Registrant's Registration
Statement No. 33-41553 on Form S-3 dated August 6, 1991).
4.3 By-Laws of the Registrant (incorporated by reference to Exhibit
4.12 To Amendment No. 1 to the Registrant's Registration
Statement No. 33-41553 on Form S-3, dated August 6, 1991).
4.4 Conformed copy of the Indenture, dated as of February 13, 1992,
between Mark IV Industries, Inc. and Marine Midland Bank, N.A.,
including the form of 6-1/4% Convertible Subordinated Debentures
due February 15, 2007 (incorporated by reference to Exhibit 4.1
to the Company's Current Report on Form 8-K dated February 13,
1992).
4.5 Conformed copy of the Indenture, dated as of March 15, 1993,
between Mark IV Industries, Inc. and Citibank, N.A.; including
the form of Senior Subordinated Notes due April 1, 2003
(incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated March 29, 1993).
Executive Compensation Plans and Arrangements (10.1 -10.9)
10.1 Employment Agreements dated May 1, 1989 between the Company and
each of Sal Alfiero, Clement R. Arrison, Gerald S. Lippes,
William P. Montague, John J. Byrne and Frederic L. Cook
(incorporated by reference to Exhibit 10.27 to the Company's
Form 10-K for the fiscal year ended February 28, 1989).
10.2 Employment Agreement dated July 1, 1989 between the Company and
Richard L. Grenolds (incorporated by reference to Exhibit 10.33
to the Company's Form 10-Q for the fiscal quarter ended May 31,
1989).
10.3 Amendment and Restatement of Mark IV Industries, Inc. and
Subsidiaries Incentive Stock Option Plan, as of February 8, 1988
(incorporated by reference to Exhibit 10.13.1 to the Company's
Registration Statement No. 33-42307 on Form S-8 dated August 19,
1991).
10.4* Amendment and Restatement of the Mark IV Industries, Inc. and
Subsidiaries 1992 Incentive Stock Option Plan Effective March
30, 1994.
10.5* Amendment and Restatement of the Mark IV Industries, Inc. 1992
Restricted Stock Plan Effective March 30, 1994.
10.6 Mark IV Industries, Inc. Executive Bonus Plan (incorporated by
reference to Exhibit 10.8 to the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1991).
10.7 First Amendment and Restatement of the Mark IV Industries, Inc.
Enhanced Executive Incentive Plan (incorporated by reference to
Exhibit 10.16 to the Company's Annual Report on Form 10-K dated
February 29, 1992).
10.8* Third Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation of Mark IV Industries, Inc. Effective
September 1, 1993.
10.9* First Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation for Non-Employee Directors of Mark IV
Industries, Inc. Effective December 1, 1993.
Other Material Contract Exhibits
10.10 Revolving Credit Facility Agreement dated May 27, 1993, among
Mark IV Industries, Inc., a Delaware Corporation, Dayco Italy
S.p.A., an Italian Corporation, Bank of America National Trust
and Savings Association, Chemical Investment Bank Limited, and
Citibank, N.A. and Chase Manhattan Bank N.A., as co-agents for
various financial institutions that are signatories thereto
(incorporated by reference to the Company's Current Report on
Form 8-K dated May 27, 1993 as filed on June 17, 1993). All
schedules and other attachments to this exhibit, as identified
on page v of the exhibit, have been omitted.
10.11 Credit Agreement dated July 20, 1993 among Mark IV Industries,
Inc., and certain of its subsidiaries and Bank of America
National Trust and Savings Association, Continental Bank N.A.,
Citibank, N.A., The Bank of Nova Scotia, The Bank of New York,
The Chase Manhattan Bank, N.A., and certain other banks
(incorporated by reference to the Company's Current Report on
Form 8-K dated July 20, 1993 as filed on August 4, 1993). All
schedules and exhibits listed on page v of this exhibit have
been omitted.
11* Statement regarding computation of per share earnings.
21* Subsidiaries of the Registrant.
23* Consent of Independent Accountants.
______________________
* Filed herewith by direct transmission pursuant to the EDGAR program.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Mark IV Industries, Inc.
Our report on the consolidated financial statements of Mark IV Industries,
Inc. is included in Item 8 of this Form 10-K. In connection with our audit of
such financial statements, we have also audited the related financial
statement schedules listed in Item 14 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND
Rochester, New York
March 29, 1994
[Enlarge/Download Table]
MARK IV INDUSTRIES, INC.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT COST
Balance at Changes Balance at
Beginning Add (Deduct) End of
Classifications of Period Additions(a) Retirements (b)(c)(d) Period
_______________ _________ ____________ ___________ ____________ ________
Year ended February 28, 1994
Land and land improvements $ 31,800,000 $ 9,000,000 $ (100,000) $ (5,000,000) $ 35,700,000
Buildings 99,600,000 27,200,000 (400,000) (10,700,000) 115,700,000
Machinery and equipment 296,700,000 82,400,000 (6,800,000) (47,600,000) 324,700,000
$428,100,000 $118,600,000 $ (7,300,000) $(63,300,000) $476,100,000
Year ended February 28, 1993
Land and land improvements $ 32,100,000 $ 100,000 $ (300,000) $ (100,000) $ 31,800,000
Buildings 100,500,000 2,300,000 (3,200,000) - 99,600,000
Machinery and equipment 275,900,000 33,100,000 (6,700,000) (5,600,000) 296,700,000
$408,500,000 $ 35,500,000 $(10,200,000) $ (5,700,000) $428,100,000
Year ended February 29, 1992
Land and land improvements $ 26,600,000 $ 400,000 $ - $ 5,100,000 $ 32,100,000
Buildings 107,000,000 3,300,000 (2,200,000) (7,600,000) 100,500,000
Machinery and equipment 261,500,000 30,000,000 (6,600,000) (9,000,000) 275,900,000
$395,100,000 $ 33,700,000 $ (8,800,000) $(11,500,000) $408,500,000
<FN>
(a) Includes property, plant and equipment of subsidiaries acquired as follows:
1994 1993 1992
Land and land improvements $ 9,000,000 $ - $ 400,000
Buildings 22,800,000 - 2,300,000
Machinery and equipment 45,400,000 200,000 10,300,000
$ 77,200,000 $ 200,000 $13,000,000
(b) Includes foreign currency adjustments of $(14,400,000), $(8,500,000) and $(2,500,000) for fiscal 1994,
1993 and 1992, respectively.
(c) Includes purchase price adjustments related to fiscal 1992 and 1991 acquired companies of $2,800,000 and
$(9,000,000) for fiscal 1993 and 1992, respectively.
(d) Includes amounts related to discontinued operations of $(48,900,000) for fiscal 1994.
[Enlarge/Download Table]
<cption>
MARK IV INDUSTRIES, INC.
SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Balance at Changes Balance at
Beginning Add (Deduct) End of
Classifications of Period Additions Retirements (a)(b) Period
_______________ _________ _________ ___________ ___________ __________
Year ended February 28, 1994
Land improvements $ 500,000 $ 100,000 $ - $ (200,000) $ 400,000
Buildings 15,300,000 3,500,000 (100,000) (3,900,000) 14,800,000
Machinery and equipment 94,000,000 29,600,000 (3,600,000) (24,400,000) 95,600,000
$109,800,000 $ 33,200,000 $ (3,700,000) $(28,500,000) $110,800,000
Year ended February 28, 1993
Land improvements $ 300,000 $ 200,000 $ - $ - $ 500,000
Buildings 12,800,000 3,600,000 (800,000) (300,000) 15,300,000
Machinery and equipment 76,000,000 26,000,000 (4,500,000) (3,500,000) 94,000,000
$ 89,100,000 $ 29,800,000 $(5,300,000) $(3,800,000) $109,800,000
Year ended February 29, 1992
Land improvements $ 200,000 $ 100,000 $ - $ - $ 300,000
Buildings 10,100,000 3,700,000 (900,000) (100,000) 12,800,000
Machinery and equipment 56,300,000 23,100,000 (2,700,000) (700,000) 76,000,000
$ 66,600,000 $ 26,900,000 $ (3,600,000) $ (800,000) $89,100,000
<FN>
(a) Includes foreign currency adjustments of $(7,300,000), $(3,800,000) and $(800,000) for fiscal 1994,
1993 and 1992, respectively.
(b) Includes amounts related to discontinued operations of $(21,200,000) for fiscal 1994.
[Enlarge/Download Table]
MARK IV INDUSTRIES, INC.
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Additions
Charged Deductions
Beginning (Credited) Accounts Ending
Classifications Balance to Expense Charged Off Other Balance
_______________ _________ __________ ___________ _____ _______
Year ended February 28, 1994
Allowance for doubtful
accounts $ 13,000,000 $ 3,000,000 $ (3,100,000) $ 4,700,000(a) $ 17,600,000
Year ended February 28, 1993
Allowance for doubtful
accounts $ 13,300,000 $ 2,700,000 $ (3,000,000) $ - $ 13,000,000
Year ended February 29, 1992
Allowance for doubtful
accounts $ 11,100,000 $ 2,700,000 $ (1,200,000) $ 700,000(b) $ 13,300,000
<FN>
(a) Represents the following
Reserve at date of acquisition of subsidiary $3,900,000
Net change in reserve for customer
returns and allowances 2,000,000
Reclassification from other reserves 300,000
Reserves of discontinued operations
at February 28, 1993 (800,000)
Foreign currency translation adjustment (700,000)
$4,700,000
(b) Represents reserve at date of acquisition of subsidiaries.
[Download Table]
MARK IV INDUSTRIES, INC.
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Dollars in Thousands)
February 28, February 28, February 29,
1994 1993 1992
___________ ___________ ___________
Repairs and maintenance $21,505,000 $19,961,000 $17,981,000
Advertising Costs $13,567,000 $12,981,000 $11,278,000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MARK IV INDUSTRIES, INC.
By: /s/ Sal H. Alfiero
______________________________
Sal H. Alfiero, Chairman of the
Board and Chief Executive Officer
Dated: May 24, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
/s/ Sal H. Alfiero Chairman of the Board May 24, 1994
Sal H. Alfiero and Chief Executive Officer
/s/ Clement R. Arrison President, Director May 24, 1994
Clement R. Arrison
/s/ William P. Montague Executive Vice President May 24, 1994
William P. Montague and Chief Financial Officer
/s/ Frederic L. Cook Senior Vice President- May 24, 1994
Frederic L. Cook Administration
/s/ John J. Byrne Vice President-Finance May 24, 1994
John J. Byrne
/s/ Richard L. Grenolds Vice President - May 24, 1994
Richard L. Grenolds Chief Accounting Officer
/s/ Gerald S. Lippes Secretary and Director May 24, 1994
Gerald S. Lippes
/s/ Joseph G. Donohoo Director May 24, 1994
Joseph G. Donohoo
/s/ Herb Roth, Jr. Director May 24, 1994
Herb Roth, Jr.
Exhibit Index
2.1 Share Purchase Agreement dated April 29, 1993 among Mark IV
Industries, Inc., a Delaware Corporation, and its indirect
wholly-owned subsidiary, Dayco Italy, S.p.A., an Italian
Corporation, and Pirelli S.p.A., an Italian Corporation
(incorporated by reference to exhibit 2.1 to the Company's
Current Report on Form 8-K dated May 27, 1993, as filed on June
17, 1993). All schedules and other attachments to this exhibit,
as identified on the last page of the exhibit, have been
omitted.
3.1 Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 28.1 to the Company's Registration
Statement No. 33-45215 on Form S-3, as filed with the SEC on
January 24, 1993).
4.1 Indenture dated as of March 15, 1989 between the Company and the
First National Bank of Boston, as Trustee (including the form of
13-3/8% Subordinated Debentures due March 15, 1999)
(incorporated by reference to Exhibit 4.10 to the Company's
Current Report on Form 8-K, dated May 23, 1989).
4.2 Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4.11 to Amendment No. 1 to the Registrant's Registration
Statement No. 33-41553 on Form S-3 dated August 6, 1991).
4.3 By-Laws of the Registrant (incorporated by reference to Exhibit
4.12 To Amendment No. 1 to the Registrant's Registration
Statement No. 33-41553 on Form S-3, dated August 6, 1991).
4.4 Conformed copy of the Indenture, dated as of February 13, 1992,
between Mark IV Industries, Inc. and Marine Midland Bank, N.A.,
including the form of 6-1/4% Convertible Subordinated Debentures
due February 15, 2007 (incorporated by reference to Exhibit 4.1
to the Company's Current Report on Form 8-K dated February 13,
1992).
4.5 Conformed copy of the Indenture, dated as of March 15, 1993,
between Mark IV Industries, Inc. and Citibank, N.A.; including
the form of Senior Subordinated Notes due April 1, 2003
(incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated March 29, 1993).
Executive Compensation Plans and Arrangements (10.1 -10.9)
10.1 Employment Agreements dated May 1, 1989 between the Company and
each of Sal Alfiero, Clement R. Arrison, Gerald S. Lippes,
William P. Montague, John J. Byrne and Frederic L. Cook
(incorporated by reference to Exhibit 10.27 to the Company's
Form 10-K for the fiscal year ended February 28, 1989).
10.2 Employment Agreement dated July 1, 1989 between the Company and
Richard L. Grenolds (incorporated by reference to Exhibit 10.33
to the Company's Form 10-Q for the fiscal quarter ended May 31,
1989).
10.3 Amendment and Restatement of Mark IV Industries, Inc. and
Subsidiaries Incentive Stock Option Plan, as of February 8, 1988
(incorporated by reference to Exhibit 10.13.1 to the Company's
Registration Statement No. 33-42307 on Form S-8 dated August 19,
1991).
10.4* Amendment and Restatement of the Mark IV Industries, Inc. and
Subsidiaries 1992 Incentive Stock Option Plan Effective March
30, 1994. Beginning on Page 67.
10.5* Amendment and Restatement of the Mark IV Industries, Inc. 1992
Restricted Stock Plan Effective March 30, 1994. Beginning on
Page 78.
10.6 Mark IV Industries, Inc. Executive Bonus Plan (incorporated by
reference to Exhibit 10.8 to the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1991).
10.7 First Amendment and Restatement of the Mark IV Industries, Inc.
Enhanced Executive Incentive Plan (incorporated by reference to
Exhibit 10.16 to the Company's Annual Report on Form 10-K dated
February 29, 1992).
10.8* Third Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation of Mark IV Industries, Inc. Effective
September 1, 1993. Beginning on Page 86.
10.9* First Amendment and Restatement of the Non-Qualified Plan of
Deferred Compensation for Non-Employee Directors of Mark IV
Industries, Inc. Effective December 1, 1993. Beginning on Page
125.
Other Material Contract Exhibits
10.10 Revolving Credit Facility Agreement dated May 27, 1993, among
Mark IV Industries, Inc., a Delaware Corporation, Dayco Italy
S.p.A., an Italian Corporation, Bank of America National Trust
and Savings Association, Chemical Investment Bank Limited, and
Citibank, N.A. and Chase Manhattan Bank N.A., as co-agents for
various financial institutions that are signatories thereto
(incorporated by reference to the Company's Current Report on
Form 8-K dated May 27, 1993 as filed on June 17, 1993). All
schedules and other attachments to this exhibit, as identified
on page v of the exhibit, have been omitted.
10.11 Credit Agreement dated July 20, 1993 among Mark IV Industries,
Inc., and certain of its subsidiaries and Bank of America
National Trust and Savings Association, Continental Bank N.A.,
Citibank, N.A., The Bank of Nova Scotia, The Bank of New York,
The Chase Manhattan Bank, N.A., and certain other banks
(incorporated by reference to the Company's Current Report on
Form 8-K dated July 20, 1993 as filed on August 4, 1993). All
schedules and exhibits listed on page v of this exhibit have
been omitted.
11* Statement regarding computation of per share earnings.
Beginning on Page 151.
21* Subsidiaries of the Registrant. Beginning on Page 153.
23* Consent of Independent Accountants. Beginning on Page 156.
______________________
* Filed herewith by direct transmission pursuant to the EDGAR program.
Dates Referenced Herein and Documents Incorporated by Reference
↑Top
Filing Submission 0000062418-94-000003 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Wed., May 15, 7:10:13.2am ET 
