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Lilly Industries Inc · 10-K · For 11/30/99 · EX-13

Filed On 2/25/00   ·   Accession Number 908834-0-28   ·   SEC File 1-11553

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  As Of                Filer                Filing    For/On/As Docs:Size              Issuer               Agent

 2/25/00  Lilly Industries Inc              10-K       11/30/99   11:261K                                   Barnes & Thornbu..LLP/FA

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Form 10-K for Lilly Industries, Inc.                  19     97K 
 2: EX-4.4      Second Amendment to Credit Agreement                  12     24K 
 3: EX-4.5      Change in Rights Agent                                 2     10K 
 4: EX-10.24    Douglas W. Huemme Executive Employment Agreement      13     61K 
 5: EX-10.25    Crocker Change-In-Control Agreement                   14     69K 
 6: EX-10.26    Deblandre Change-In-Control Agreement                 12     59K 
 7: EX-10.27    Underwood Change-In-Control Agreement                 14     69K 
 8: EX-13       Lilly Industries, Inc. 1999 Annual Report             28±   131K 
 9: EX-21       List of Subsidiaries                                   2±     8K 
10: EX-23       Consent of Ernst & Young LLP                           1      7K 
11: EX-27       Financial Data Schedule                                1      8K 


EX-13   —   Lilly Industries, Inc. 1999 Annual Report
Exhibit Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
2Forward-Looking Statements
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Selected Financial data1 (in thousands, except per share data and number of employees) Lilly Industries, Inc. and Subsidiaries SELECTED FINANCIAL DATA (1) (IN THOUSANDS, EXCEPT PER SHARE DATA AND NUMBER OF EMPLOYEES) [Enlarge/Download Table] Year Ended November 30 1999 1998 1997 1996 (2) ------------------------------------------------------------------------------------------------------------ Operations Net sales $656,201 $619,002 $601,296 $508,976 Cost of products sold 401,286 379,641 373,015 321,748 Gross margin percentage 38.8% 38.7% 38.0% 36.8% Selling, general and administrative expenses 160,861 146,763 139,467 112,361 Research and development expenses 21,154 20,567 18,680 17,294 Operating income 72,900 72,031 70,134 57,573 Operating income percentage 11.1% 11.6% 11.7% 11.3% Interest expense, net 15,791 16,919 18,967 13,938 Income taxes 23,155 22,867 23,068 11,039 Effective income tax rate 41.0% 42.0% 45.1% 45.0% Net income 33,321 31,579 28,095 24,060 EBITDA (3) 93,202 91,389 92,120 73,233 EBITDA interest coverage (4) 5.9 5.4 4.9 5.3 Per Share Data (5) Net income, diluted 1.43 1.35 1.20 1.04 Cash dividends .32 .32 .32 .32 Book value 8.28 7.15 6.21 5.36 Price range of common stock 20 1/8-13 1/8 24 5/8-14 3/8 24 1/8-163/4 19 3/4-12 1/4 Other Data Total assets 550,426 516,485 501,795 521,860 Working capital 48,720 50,071 52,126 50,579 Capital expenditures (6) 41,472 17,015 12,673 19,233 Depreciation 10,391 9,102 8,850 6,453 Amortization 10,544 10,922 13,140 9,097 Total debt 206,803 203,700 224,171 261,561 EBITDA to total debt 45.1% 44.9% 41.1% 28.0% Book value 192,171 165,575 142,439 121,889 Return on equity 18.6% 20.5% 21.3% 20.8% Debt to total capitalization 52% 55% 61% 68% Number of employees 2,395 2,291 2,116 2,140 Sales per employee 274 270 283 274 Operating income per employee 30 31 33 31 Average shares outstanding, diluted (7) 23,320 23,400 23,400 23,100 1 This table of Selected Financial Data should be read in conjunction with Management's Discussion and Analysis of Results of Operations and Financial Condition and the Company's consolidated financial statements included herein. 2 1996 includes the effect of the acquisition of Guardsman Products, Inc. on April 8, 1996 and excludes the effect of a restructuring charge of $9,607 which reduced net income by $5,284 or $.23 per diluted share. 3 EBITDA represents earnings before interest, taxes, depreciation and amortization. 4 EBITDA interest coverage is determined by dividing EBITDA by net interest expense. 5 Adjusted for all stock splits and stock dividends through November 30, 1999 inclusive. Prices are rounded to nearest 1/8th. 6 Excludes effect of acquisitions. 7 Used to calculate net income per diluted share.
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[Enlarge/Download Table] 1995 1994 1993 1992 1991 1990 1989 -------------------------------------------------------------------------------------------- Operations Net sales $328,345 $331,306 $284,325 $236,476 $220,508 $240,146 $219,713 Cost of products sold 219,899 214,809 189,111 152,480 150,669 161,626 145,592 Gross margin percentage 33.0% 35.2% 33.5% 35.5% 31.7% 32.7% 33.7% Selling, general and administrative expenses 59,874 61,498 53,319 50,128 46,921 50,404 44,113 Research and development expenses 13,184 12,982 12,325 11,030 10,606 10,814 9,708 Operating income 35,388 42,017 29,570 22,838 12,312 17,302 20,300 Operating income percentage 10.8% 12.7% 10.4% 9.7% 5.6% 7.2% 9.2% Interest expense, net 1,487 2,465 1,568 1,245 2,254 2,573 1,111 Income taxes 13,510 16,350 11,784 9,201 4,417 6,850 8,399 Effective income tax rate 40.0% 41.2% 42.2% 42.0% 41.0% 40.6% 40.6% Net income 20,264 23,302 16,155 12,706 6,357 10,022 12,574 EBITDA (3) 43,435 51,082 36,394 29,944 19,994 26,117 26,670 EBITDA interest coverage (4) 29.2 20.7 23.2 24.1 8.9 10.2 24.0 Per Share Data (5) Net income, diluted .88 1.00 .70 .55 .27 .41 .51 Cash dividends .31 .27 .24 .22 .21 .20 .17 Book value 4.86 4.38 3.60 3.16 3.16 3.10 3.00 Price range of common stock 15-11 18-11 3/4 15 7/8-9 3/8 9 3/4-5 5/8 6 1/8-4 1/8 7 5/8-4 7 1/8-5 3/8 Other Data Total assets 183,582 190,252 167,044 117,049 127,342 125,371 129,025 Working capital 35,505 41,604 33,270 27,131 30,405 34,513 40,389 Capital expenditures (6) 15,599 6,693 7,598 3,262 1,928 3,968 2,486 Depreciation 4,251 4,637 3,746 3,965 4,038 4,021 3,387 Amortization 3,923 4,328 3,141 2,827 2,928 2,651 1,199 Total debt 28,229 35,110 44,101 14,642 21,501 28,345 25,560 EBITDA to total debt 153.9% 145.5% 82.5% 204.5% 93.0% 92.1% 104.3% Book value 109,374 99,424 81,128 70,125 74,187 73,185 74,482 Return on equity 19.4% 25.8% 21.4% 17.6% 8.6% 13.6% 17.9% Debt to total capitalization 21% 26% 35% 17% 22% 28% 26% Number of employees 1,148 1,182 1,176 1,072 1,140 1,230 1,350 Sales per employee 282 281 253 214 186 186 174 Operating income per employee 30 36 26 21 10 13 16 Average shares outstanding, diluted (7) 23,086 23,231 22,962 23,048 23,521 24,738 25,043 Management's Discussion and Analysis of Results of Operations and Financial Condition Operating Results 1999 vs. 1998 Consolidated net sales increased 6% to a record $656.2 million for fiscal year 1999. Sales benefited from strong volume increases, particularly in wood and metal coatings. Wood coatings increased in all major markets served, with especially strong growth in the Asia-Pacific Region. Metal coatings sales were led by continued large increases in powder coatings. The Company's international sales, including U.S. exports, grew $27.3 million to $176.6 million during 1999, representing growth of 18.3% over 1998. International sales now account for 27% of consolidated sales. Sales to the Company's three end-use markets (wood, metal and composites and glass) represented 46%, 43%, and 11% of 1999 consolidated sales, respectively. Overall, selling prices were stable during the year. Gross profit margin improved slightly to 38.8% of sales in 1999, rising 0.1 percentage point over 1998. Raw material costs are the largest component of the Company's cost structure. Continued emphasis on supply chain management, raw material consolidation, as well as favorable pricing in certain commodity markets, produced a 0.2 percentage point reduction in raw material costs as a percentage of net sales. Improvements in raw material costs were partially offset by a slight increase in direct labor and overhead costs. The Company will continue to pursue improvement in gross margin by reducing the number of raw materials used in products, process re-engineering, company-wide purchasing opportunities, and product re-formulations. As a percentage of sales, operating expenses increased 0.7 percentage points to 27.7%. Selling, general and administrative expenses, as a percentage of sales, increased 0.8 percentage points to 24.5%, primarily due to continued investments in selling, marketing and other infrastructure enhancements, as the Company continues to focus on global expansion and capturing additional market share in certain markets. Research and development expense increased by $0.6 million to $21.2 million for 1999. Net interest expense continued to decline during 1999, falling $1.1 million to $15.8 million, a decrease of 6.7%. The reduction in interest expense reflects improved cash management practices coupled with lower average market rates of interest, which reduced the cost of borrowing under the Company's variable rate debt facilities. The Company's effective tax rate declined one full percentage point to 41.0% for 1999, due primarily to a full year's impact of U.S. state and international tax planning strategies. The effective tax rate remained above U.S. statutory rates principally due to the impact of non-deductible amortization of intangibles acquired as part of the Guardsman Products, Inc. ("GPI") acquisition in 1996, and generally higher foreign tax rates. Operating Results 1998 vs. 1997 Consolidated net sales increased 2.9% to a record $619.0 million for fiscal year 1998, despite a $10 million unfavorable impact from foreign currency translations. Sales benefited from the December, 1997 acquisition in Germany of Merckens Lackchemie GmbH & Company. The acquisition helped boost the Company's international sales, including U.S. exports, to $149.3 million during 1998, representing growth of 18.0% over 1997. During 1998, Lilly experienced volume growth in each of its end-use markets. Sales to the Company's three end-use markets (wood, metal, and composites and glass) represented 44%, 44%, and 12% of 1998 consolidated sales, respectively. Overall, selling prices were stable during the year. Gross profit margin continued to improve in 1998, rising 0.7 percentage points over 1997 to 38.7%. Raw material costs are the largest component of the Company's cost structure. However, continued emphasis on supply chain management, as well as favorable pricing in certain commodity markets, produced a 1.1% reduction in raw material costs as a percentage of net sales. Improvements in raw material costs were partially mitigated by a slight increase in direct labor and overhead costs. The Company will continue to pursue improvement in gross margin by reducing the number of raw materials used in products, process re-engineering, company-wide purchasing opportunities and product re-formulations. As a percentage of sales, operating expenses increased 0.7 percentage points to 27.0%. Selling, general and administrative expenses, as a percentage of sales, increased from 23.2% to 23.7%, primarily due to increased marketing initiatives. In addition, the Company made record expenditures on research and development, which rose 10.1% to $20.6 million. Net interest expense declined significantly during 1998, falling $2.0 million, reflecting the benefits of the Company's 1997 debt restructuring and lower average debt outstanding. Continued strong cash flow from operations allowed the Company to reduce average debt outstanding during 1998, while lower average market rates of interest reduced the cost of borrowing under the Company's variable rate debt facilities. The improvement in interest expense was partially offset by additional interest expense associated with borrowings to finance the Company's acquisition in Germany in December, 1997. The Company's effective tax rate declined significantly to 42.0% during 1998, due primarily to implementation of international tax planning strategies. The effective tax rate remained above U.S. statutory rates, primarily due to the impact of non-deductible intangibles acquired as part of the GPI acquisition in 1996 and generally higher foreign tax rates. Environmental The Company's operations, like those of most companies in the coatings industry, are subject to regulations related to maintaining or improving the quality of the environment. Such regulations, along with the Company's own internal compliance efforts, have required, and will continue to require, ongoing expenditures. Spending for environmental compliance is not anticipated to be material to the Company's financial position. The Company has been notified that it is a potentially responsible party for clean-up costs with respect to several government investigations at independently operated waste disposal sites previously used by the Company. Management has accrued, as appropriate, for these environmental liabilities. Management believes the liabilities associated with these sites will not have a material adverse effect on its operating results or financial position. Year 2000 The Company completed all Year 2000 ("Y2K") readiness procedures during 1999 and did not experience any significant adverse effects on its systems or operations from the transition to Y2K. All critical IT systems were inventoried and assessed, and replacement of non-conforming IT systems began in 1998 and was completed in 1999. The Company estimates the total cost of resolving the Y2K issue was $5 million. Of this amount, the Company estimates $2 million was spent during fiscal year 1999. Approximately 70% of total Y2K costs were comprised of equipment and software replacement costs with the balance being comprised of assessment and remediation costs. Y2K costs were expensed as incurred except for new systems and equipment, which were capitalized and will be charged to expense over the estimated useful life of the related assets. Liquidity and Capital Resources During fiscal 1999, the Company continued to maintain a $175 million revolving credit facility ("Facility") and $100 million in senior notes ("Notes"). Both the Facility and the Notes are unsecured and require no principal amortization. The remaining terms on the Facility and Notes are three and eight years, respectively, as of November 30, 1999. During fiscal 1998, the Company's German subsidiary entered into a five-year, Deutsche Mark-denominated $10,000,000 revolving credit facility ("German Facility") to fund the German acquisition. The German Facility is unsecured. Principal amounts available for borrowing under the German Facility decline over the five-year term of the agreement. Management expects to fund required debt service on all borrowings from operating cash flows. The Company's total debt increased during 1999 by $3.1 million to a total of $206.8 million. The relatively low increase was mainly a result of capital investments in infrastructure expansion and improvements. Additional amounts available for borrowing under the Facility for general operating or other purposes totaled $74.9 million as of November 30, 1999. Management believes funds available from internal and external sources are sufficient to meet the liquidity needs of the Company during the next twelve months. Cash provided by operating activities declined by $16.5 million to $38.7 million during 1999. Higher net income was offset by the cash effect of changes in certain operating assets and liabilities including increases in accounts receivable and inventories to support higher sales levels. Cash used by investing activities increased by $17.2 million to $42.1 million during 1999. The increase was driven by a $24.5 million increase in capital expenditures primarily offset by a decrease of $8.5 million in payments for acquired businesses. Future investing activities are expected to be financed from internal sources and existing credit facilities. Cash used by financing activities decreased by $22.9 million to $4.2 million during 1999. Cash dividend payments of $7.4 million during 1999 remained the same as 1998 while long term borrowings increased by $3.1 million. In 1998 principal payments exceeded borrowings by $20.5 million. The Company focuses on three key measures of liquidity and access to capital markets: EBITDA (earnings before interest, taxes, depreciation and amortization); Interest Coverage (EBITDA divided by net interest expense); and Debt Capitalization (debt divided by the sum of debt plus equity). For 1999, the Company generated EBITDA of $93.2 million, an increase of $1.8 million over 1998. Interest Coverage improved to 5.9 times, due primarily to reduced interest expense associated with lower average borrowings and generally lower market rates of interest. Debt Capitalization improved 3.4 percentage points to 51.8% due to a relatively stable debt level and higher net income retained in the business during 1999. Forward-looking statements Statements in this annual report that are not strictly historical may be "forward-looking statements," which involve risks and uncertainties. Risk factors include general economic and industry conditions, effects of leverage, environmental matters, technological developments, product pricing, raw material cost changes, and international operations, among others, which are set forth in the Company's SEC filings. Consolidated Statements of Income (in thousands, except per share data) [Enlarge/Download Table] Year Ended November 30 1999 1998 1997 ------------------------------------------------------------------------------------------ Net sales $ 656,201 $ 619,002 $ 601,296 Costs and expenses: Cost of products sold 401,286 379,641 373,015 Selling, general and administrative 160,861 146,763 139,467 Research and development 21,154 20,567 18,680 ---------------------------------------- 583,301 546,971 531,162 ---------------------------------------- Operating income 72,900 72,031 70,134 Other expenses: Sundry expense (633) (666) (4) Interest expense, net (15,791) (16,919) (18,967) ---------------------------------------- (16,424) (17,585) (18,971) ---------------------------------------- Income before income taxes 56,476 54,446 51,163 Income taxes 23,155 22,867 23,068 ---------------------------------------- Net income $ 33,321 $ 31,579 $ 28,095 ======================================== Net income per share: Basic $ 1.44 $ 1.36 $ 1.22 Diluted $ 1.43 $ 1.35 $ 1.20 See accompanying notes.
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Consolidated Balance Sheets (in thousands) [Enlarge/Download Table] November 30 1999 1998 ------------------------------------------------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 5,714 $ 13,326 Accounts receivable, less allowance for doubtful accounts (1999, $1,775; 1998, $1,981) 91,369 82,039 Inventories 58,500 50,796 Deferred income taxes 2,848 3,251 Other 3,426 2,620 ------------------------- Total current assets 161,857 152,032 Other assets: Goodwill, less amortization (1999, $27,769; 1998, $21,547) 210,811 214,960 Other intangibles, less amortization (1999, $23,129; 1998, $22,621) 23,067 26,068 Deferred income taxes 3,974 8,838 Sundry 18,781 12,419 ------------------------- 256,633 262,285 Property and equipment: Land 13,872 11,845 Buildings 75,232 62,725 Equipment 110,610 87,787 Accumulated depreciation (67,778) (60,189) ------------------------- 131,936 102,168 ------------------------- $ 550,426 $ 516,485 ========================= Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 60,317 $ 56,958 Salaries and payroll related items 20,975 21,624 Other 27,293 21,651 Income taxes payable 4,552 1,728 ------------------------- Total current liabilities 113,137 101,961 Long-term debt 206,803 203,700 Other liabilities 38,315 45,249 Shareholders' equity: Capital stock, $.55 stated value per share: Class A (limited voting) - 27,969 shares issued (1998, 27,825 shares) 15,539 15,459 Class B (voting) - 540 shares issued 300 300 Additional capital 83,833 81,890 Retained earnings 133,807 107,914 Accumulated other comprehensive loss (3,509) (4,096) Cost of capital stock in treasury (37,799) (35,892) ------------------------- 192,171 165,575 ------------------------- $ 550,426 $ 516,485 ========================= See accompanying notes.
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Consolidated Statements of Cash Flows (in thousands) [Enlarge/Download Table] Year Ended November 30 1999 1998 1997 ---------------------------------------------------------------------------------------------------- Operating Activities Net income $ 33,321 $ 31,579 $ 28,095 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,391 9,102 8,850 Amortization 10,544 10,922 13,140 Deferred income taxes 5,267 209 4,085 Changes in operating assets and liabilities net of effects from acquired business: Accounts receivable (9,162) (422) 4,581 Inventories (7,680) (2,574) 1,842 Accounts payable and accrued expenses 11,101 5,985 2,933 Sundry (15,044) 418 (4,226) ------------------------------------- Net cash provided by operating activities 38,738 55,219 59,300 Investing Activities Purchases of property and equipment (41,472) (17,015) (12,673) Payment for acquired business (2,721) (11,253) - Sundry 2,052 3,367 5,716 ------------------------------------- Net cash used by investing activities (42,141) (24,901) (6,957) Financing Activities Dividends paid (7,428) (7,410) (7,340) Proceeds from senior notes - - 99,200 Proceeds from short-term and long-term borrowings 3,103 - - Principal payments on short-term and long-term borrowings - (20,470) (136,590) Sundry 116 809 (4,324) ------------------------------------- Net cash used by financing activities (4,209) (27,071) (49,054) ------------------------------------- (Decrease) increase in cash and cash equivalents (7,612) 3,247 3,289 Cash and cash equivalents at beginning of year 13,326 10,079 6,790 ------------------------------------- Cash and cash equivalents at end of year $ 5,714 $ 13,326 $ 10,079 ===================================== See accompanying notes.
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Consolidated Statements of Shareholders' Equity (in thousands) [Enlarge/Download Table] Cost of Accumulated Class A Class B Capital Other Common Common Additional Retained Stock in Comprehensive Stock Stock Capital Earnings Treasury Income (Loss) Total ------------------------------------------------------------------------------------------------------------------------------------ Balance at December 1, 1996 $15,103 $ 300 $ 75,433 $ 62,990 $ (32,025) $ 88 $ 121,889 Comprehensive income: Net income -- -- -- 28,095 -- -- 28,095 Currency translation adjustments -- -- -- -- -- (2,342) (2,342) ---------- Total comprehensive income -- -- -- -- -- -- 25,753 Stock options exercised 272 -- 3,834 -- (2,119) -- 1,987 Disqualifying disposition of stock options -- -- 150 -- -- -- 150 Cash dividends paid -- -- -- (7,340) -- -- (7,340) ------------------------------------------------------------------------------------- Balance at November 30, 1997 15,375 300 79,417 83,745 (34,144) (2,254) 142,439 Comprehensive income: Net income -- -- -- 31,579 -- -- 31,579 Currency translation adjustments -- -- -- -- -- (1,842) (1,842) ---------- Total comprehensive income -- -- -- -- -- -- 29,737 Stock options exercised 84 -- 1,820 -- (1,018) -- 886 Disqualifying disposition of stock options -- -- 653 -- -- -- 653 Cash dividends paid -- -- -- (7,410) -- -- (7,410) Repurchase of common stock -- -- -- -- (730) -- (730) ------------------------------------------------------------------------------------- Balance at November 30, 1998 15,459 300 81,890 107,914 (35,892) (4,096) 165,575 Comprehensive income: Net income -- -- -- 33,321 -- -- 33,321 Currency translation adjustments -- -- -- -- -- 587 587 ---------- Total comprehensive income -- -- -- -- -- -- 33,908 Stock options exercised 80 -- 1,870 -- (1,421) -- 529 Disqualifying disposition of stock options -- -- 73 -- -- -- 73 Cash dividends paid -- -- -- (7,428) -- -- (7,428) Repurchase of common stock -- -- -- -- (486) -- (486) ------------------------------------------------------------------------------------- Balance at November 30, 1999 $15,539 $ 300 $ 83,833 $ 133,807 $ (37,799) $ (3,509) $ 192,171 ===================================================================================== See accompanying notes.
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Notes to Consolidated Financial Statements November 30, 1999 1. Summary of Significant Accounting Policies Business. Lilly Industries, Inc. and its subsidiaries (the "Company") are principally in the business of formulating, manufacturing, and marketing industrial coatings and specialty chemicals to original equipment manufacturers on a worldwide basis. Primary manufacturing operations are located in North America, Europe and Asia-Pacific. The Company operates within three business segments which serve three end-use markets. Consolidation and Use of Estimates. The consolidated financial statements include the accounts of all subsidiaries after elimination of significant intercompany accounts and transactions. Preparation of these statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Revenue Recognition. Revenue from sales of products is recognized at the time products are shipped to the customer. Cash Equivalents. Cash equivalents include time deposits and certificates of deposit with original maturities of three months or less. Inventories. Coatings inventories in the United States are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or market. All other inventories are stated at the lower of cost, determined by the first-in, first-out (FIFO) method, or market. Intangible Assets. Goodwill, which represents the excess of cost over fair value of net assets of purchased businesses, is amortized by the straight-line method over periods ranging from 20 to 40 years. Other intangible assets consist of noncompete agreements, customer lists and technology and are amortized by the straight-line method over periods ranging from 5 to 20 years. The Company periodically evaluates the carrying value of intangible assets to determine if an impairment has occurred. This evaluation is based on various analyses including reviewing anticipated cash flows. Property and Equipment. Property and equipment is recorded on the basis of cost and includes expenditures for new facilities and items which substantially increase the useful life of existing buildings and equipment. Depreciation is based on estimated useful lives (ranging from 3 to 45 years) and computed primarily by the straight-line method. Interest-Rate Swap Agreements. The Company periodically enters into interest rate swap agreements ("Swaps") to modify the interest characteristics of its outstanding debt. Swap agreements involve the exchange of floating rate and fixed rate interest payment flows between or among counterparties, including the Company, banks and / or other financial intermediaries. Such flows are calculated based upon a predetermined notional principal amount over the life of the Swaps. The notional amount of each Swap represents all or a portion of the principal balance of the Company's underlying debt obligation(s). The differential to be paid or received is accrued and recognized as an adjustment of interest expense. Reclassifications. Certain prior year amounts in the accompanying financial statements have been reclassified to conform with the current year presentation. 2. New Accounting Standards Effective December 1, 1998, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income." This statement establishes new rules for the reporting and display of comprehensive income and its components. The Company has reported, in addition to net income, the components of other comprehensive income in its consolidated statements of shareholders' equity. Prior year financial statements have been reclassified to conform to the requirements of SFAS No. 130. Implementation of this disclosure standard had no impact on the Company's financial position or results of operations. Effective November 30, 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." Statement 131 requires public business enterprises to report information about operating segments in annual financial statements and selected information about operating segments in interim financial reports. Statement 131 also establishes standards for related disclosures about products and services, geographic areas and major customers. The adoption of this statement did not affect the Company's financial position or results of operations. Effective December 1, 1998, the Company adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits." Statement 132 revises the disclosure requirements for employers' pensions and other retiree benefits. Implementation of this disclosure standard did not affect the Company's financial position or results of operations. Effective December 1, 1998, the Company adopted the American Institute of Certified Public Accountants' (AICPA) Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." The SOP requires capitalization of certain costs incurred in the development of internal-use software, including external direct material and service costs, employee payroll and payroll-related costs, and capitalized interest. Prior to adoption of SOP 98-1, the Company expensed certain of these costs as incurred. The effect of the adoption of this statement on consolidated earnings during the current period is immaterial. 3. Inventories The principal inventory classifications at November 30 are summarized as follows (in thousands): 1999 1998 -------------------------------------------------------------------------------- Finished products $33,628 $29,761 Raw materials 30,048 27,411 ------------------ 63,676 57,172 Less adjustment of certain inventories to LIFO basis 5,176 6,376 ------------------ $58,500 $50,796 ================== Inventory cost is determined by the LIFO method of inventory valuation for approximately 61% and 64% of inventories at November 30, 1999 and 1998, respectively. 4. Long-Term Debt Long-term debt consists of the following as of November 30 (in thousands): 1999 1998 -------------------------------------------------------------------------------- 7.75% Unsecured Senior Notes $100,000 $100,000 Revolving Credit Facility 100,100 93,700 German Credit Facility 6,703 10,000 -------------------------- $206,803 $203,700 ========================== In February 1998, the Company's German subsidiary ("Subsidiary") entered into an unsecured Deutsche Mark ("DEM") denominated revolving credit facility ("German Facility") with a bank. The maximum borrowings available under the German Facility are $6,703,000 until November 29, 2000; thereafter, $4,460,000 until November 29, 2001; thereafter, $2,060,000 until maturity of the German Facility in February, 2003. German Facility advances of greater than $52,000 bear interest, at the Subsidiary's option, at either (i) the money market rate of the bank's German affiliate, or (ii) the Frankfurt, Germany Interbank Offered Rate for DEM deposits plus an interest rate margin of between 0.40% and 0.80%, depending on the Subsidiary's leverage at the time of each borrowing. Other advances bear interest at the prime rate of the bank's German affiliate. The principal of the German Facility is due upon maturity in February, 2003. In November 1997, the Company restructured its long-term debt into a $175,000,000 revolving credit facility ("Facility") with a group of financial institutions and $100,000,000 of senior notes ("Notes"). The Notes were issued as a 144A private placement offering and were subsequently registered. The Facility is unsecured and provides for borrowings under a revolving note. Interest is payable upon maturity of each revolving advance under the Facility, but in no case less frequently than quarterly. The principal of the Facility is due in October, 2002. The Notes are unsecured. Interest is payable on June 1 and December 1 of each year the Notes are outstanding. The principle of the Notes is due December, 2007. The Facility bears interest, at the Company's option, (i) the higher of the agent bank's prime rate (8.50% at November 30, 1999) or the Federal Funds rate plus 0.50% or, (ii) the London Interbank Offered Rate for U.S. Dollars plus 0.30% to 0.75%, depending upon the Company's credit rating. A commitment fee ranging from 0.10% to 0.25%, depending upon the Company's credit rating, is payable on the unused portion of the Facility. In April 1996, the Company entered into a forty-four month amortizing interest rate swap agreement with a notional amount of $175,000,000. This agreement expired November 30, 1999. This agreement effectively converted a portion of the Facility from variable rate debt to fixed rate debt. Interest of $15,818,000, $12,369,000 and $20,628,000 was paid in fiscal 1999, 1998 and 1997, respectively. The Company is subject to various debt covenants under the German Facility, Facility and Notes, including affirmative and negative covenants which require the maintenance of certain ratios for maximum leverage, fixed charge coverage and interest coverage. Additionally, such covenants place certain restrictions on the Company's ability to engage in mergers and acquisitions and incur additional indebtedness. 5. Income Taxes Income tax expense for the years ended November 30 is comprised of the following components (in thousands): 1999 1998 1997 -------------------------------------------------------------------------------- Current expense: Federal $ 8,942 $ 12,757 $ 10,612 Foreign 8,126 7,290 7,674 State 820 2,358 697 ----------------------------------------- 17,888 22,405 18,983 Deferred expense (credit): Federal 4,334 593 2,818 Foreign 384 (139) 210 State 549 8 1,057 ----------------------------------------- 5,267 462 4,085 ----------------------------------------- $ 23,155 $ 22,867 $ 23,068 ========================================= A reconciliation of the statutory U.S. federal rate to the effective income tax rate for the years ended November 30 is as follows: [Enlarge/Download Table] 1999 1998 1997 --------------------------------------------------------------------------------------------- Statutory U.S. federal income tax rate 35.0% 35.0% 35.0% Increase resulting from: Goodwill 3.5 3.6 3.9 State income taxes, net of federal income tax benefit 1.6 2.8 2.3 Foreign 1.3 1.8 2.2 Other items (.4) (1.2) 1.7 ---------------------------- Effective income tax rate 41.0% 42.0% 45.1% ============================ Deferred income taxes are recorded based upon differences between the financial statement and tax basis of assets and liabilities. The deferred tax assets and liabilities recorded on the balance sheet at November 30 are as follows (in thousands): 1999 1998 -------------------------------------------------------------------------------- Deferred tax assets: Goodwill and intangibles $ 1,121 $ 1,279 Employee benefits 5,812 5,565 Accounts receivable, inventory and other 11,051 13,839 ------------------ 17,984 20,683 Deferred tax liabilities: Property and equipment 6,582 5,526 Pension 4,580 3,068 ------------------ 11,162 8,594 ------------------ Net deferred tax assets $ 6,822 $12,089 ================== No provision has been made for U.S. federal income taxes on certain undistributed earnings of foreign subsidiaries that the Company intends to permanently invest or that may be remitted tax-free. The total of undistributed earnings that would be subject to federal income tax if remitted under existing law is approximately $24,500,000 at November 30, 1999. Determination of the unrecognized deferred tax liability related to these earnings is not practicable because of the complexities with its hypothetical calculation. Upon distribution of these earnings, the Company will be subject to U.S. taxes and withholding taxes payable to various foreign governments. A credit for foreign taxes already paid would be available to reduce the U.S. tax liability. Income taxes of $16,600,000, $21,800,000 and $20,500,000 were paid in 1999, 1998 and 1997, respectively. 6. Capital Stock The Company has two classes of common stock, Class A stock and Class B stock. Authorized shares of Class A and Class B stock are 97,000,000 and 3,000,000, respectively. The limited voting rights of Class A shareholders are equal to voting rights of Class B shareholders only with regard to voting for merger, consolidation or dissolution of the Company and voting and electing four directors of the Company if there are ten or more directors and two directors if there are nine or fewer directors. With respect to all rights other than voting, Class A shareholders are the same as Class B shareholders. The terms of the Class B stock, which is held only by employees, provide that these shares be exchanged for Class A stock on a share-for-share basis when the shareholder ceases to be an employee or decides to dispose of the shares. Accordingly, 3,000,000 shares of authorized Class A stock are reserved for this purpose. On January 12, 1996, the Company's board of directors ("Board") declared a dividend of one purchase right for each outstanding share of Class A and Class B stock. In addition, one right is distributed for each share issued after January 26, 1996. Upon exercise, each right entitles holders to purchase from the Company one share of stock at $55 per share, subject to certain adjustments. The rights become exercisable when a person or group acquires beneficial ownership of 15 percent or more of Class A stock or becomes the beneficial owner of an amount of Class A stock (but not less than 10 percent) which the Board determines to be substantial and not in the Company's best long-term interests or following the announcement of a tender or exchange offer for 30% or more of the Class A stock. In the event a person acquires 15 percent or more of Class A stock, or is determined by the Board to be a substantial owner whose ownership is not in the Company's best long-term interests or an acquiring person engages in certain self-dealing transactions, each holder will have the right to receive that number of common shares having a market value of two times the exercise price of the right. At any time after a person becomes an acquiring person, but before such person acquires 50 percent or more of outstanding Class A stock, the Board may exchange each right for one common share (subject to adjustment). In the event the Company is involved in certain business combination transactions, or 50 percent or more of the Company's consolidated assets or earning power are sold, each holder will have the right to receive, upon exercise at the then-current exercise price of the right, that number of shares of common stock of the acquiring company having a market value of two times the exercise price of the right.
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The Company may redeem the rights at a price of $.01 per right at any time prior to the time a person or group becomes an acquiring person as defined by the rights agreement. The rights expire in January, 2006. A summary of shares issued and held in treasury follows (in thousands): Capital Stock Capital Stock Issued Held in Treasury Class A Class B Class A Class B -------------------------------------------------------------------------------- Balance at December 1, 1996 27,184 540 4,810 191 Class A exchanged for Class B -- -- 106 (106) Class B exchanged for Class A -- -- (22) 22 Stock options exercised 490 -- 29 75 ------------------------------------- Balance at November 30, 1997 27,674 540 4,923 182 Class A exchanged for Class B -- -- 92 (92) Class B exchanged for Class A -- -- (9) 9 Acquisition for treasury -- -- 39 -- Stock options exercised 151 -- 37 12 ------------------------------------- Balance at November 30, 1998 27,825 540 5,082 111 Class A exchanged for Class B -- -- 36 (36) Class B exchanged for Class A -- -- (13) 13 Acquisition for treasury -- -- 32 -- Stock options exercised 144 -- 56 19 ------------------------------------- Balance at November 30, 1999 27,969 540 5,193 107 ===================================== Incentive stock option plans entitle certain directors, officers and other key employees to buy shares of Class A stock at prices not less than fair market value on the date of grant. The options vest and become exercisable ratably over a three-year period commencing two years after the date of grant and expire five or ten years after the date of grant. Certain options are granted with stock appreciation rights (SAR) and reload options. An SAR entitles the option holder to receive a cash payment equal to the difference between the option price and the current value of Class A stock. The reload option entitles the option holder to the same number of options exercised with an option price equal to the fair market value at the date of exercise. Shares reserved under these plans were 1,785,129 and 1,931,420 at November 30, 1999 and 1998, respectively. A summary of stock option activity for the years ended November 30 follows: Weighted Average Number of Exercise Shares Price -------------------------------------------------------------------------------- Balance at December 1, 1996 1,212,290 $ 11.05 Grants 77,072 18.43 Exercised (489,610) 8.39 Terminated (10,250) 13.39 ------------------------ Balance at November 30, 1997 789,502 13.39 Grants 460,022 18.84 Exercised (151,233) 12.60 Terminated (37,975) 17.41 ------------------------ Balance at November 30, 1998 1,060,316 15.72 Grants 561,095 18.21 Exercised (146,291) 13.57 Terminated (80,230) 18.93 ------------------------ Balance at November 30, 1999 1,394,890 $ 16.76 ========================
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At November 30, 1999 the range of exercise prices and weighted-average remaining contractual life of outstanding options were $12.25 - $21.63 and 6.8 years, respectively. At November 30, 1999 and 1998, the number of options exercisable was 342,000 and 340,000 respectively, and the weighted-average exercise price of those options was $13.32 and $13.49, respectively. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," (SFAS 123) permits companies to continue to apply APB Opinion 25, "Accounting for Stock Issued to Employees" (APB 25) and related Interpretations in accounting for its plans. The Company has elected to follow APB 25 and related Interpretations. Under APB 25, because the exercise price of the Company's employee stock options is not less than fair market price of the share at the date of grant, no compensation expense is recognized in the financial statements. Pro forma information regarding net income and net income per share is required by SFAS 123 and has been determined as if the Company accounted for its employee stock options using the fair value method of that statement. The fair value of options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 1999, 1998 and 1997, respectively: risk-free interest rate of 6.2%, 4.7%, and 5.8%; dividend yields of 1.9% for all years; volatility factors of the expected market price of the Company's Class A stock of .29, .27 and .30; and a weighted average expected life of options of 7 years, 5 years and 4 years. For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the option's vesting period. Pro forma amounts may not be representative of the expected effects on pro forma net income or net income per share in future years. The Company's pro forma information follows (in thousands, except per share amounts): 1999 1998 1997 -------------------------------------------------------------------------------- Net income: As reported $ 33,321 $ 31,579 $ 28,095 Pro forma 32,235 30,924 27,608 Net income per share: As reported $ 1.43 $ 1.35 $ 1.20 Pro forma 1.38 1.32 1.18 Weighted average fair value of options granted during the year $ 6.37 $ 5.76 $ 4.93 7. Net Income Per Share Basic and diluted net income per share are computed by dividing net income as reported by the average number of shares outstanding as follows (in thousands): [Download Table] 1999 1998 1997 --------------------------------------------------------------------------------- Basic Weighted-average common shares outstanding 23,205 23,160 22,940 =========================== Diluted Weighted-average common shares outstanding 23,205 23,160 22,940 Dilutive effect of stock options 115 240 460 --------------------------- Average common shares outstanding assuming dilution 23,320 23,400 23,400 ===========================
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8. Benefit Plans The Company maintains defined benefit retirement plans that cover substantially all employees. The change in benefit obligation, change in plan assets, funded status and amounts recognized in the consolidated balance sheets at November 30 for the Company's defined benefit plans were as follows (in thousands): [Enlarge/Download Table] 1999 1998 -------------------------------------------------------------------------------------------- Change in benefit obligation: Benefit obligation at beginning of the year $ 76,458 $ 82,542 Service cost 400 457 Interest cost 5,020 5,380 Amendments and termination -- 22 Actuarial gain (1,461) (8,085) Benefits paid (4,434) (3,858) ---------------------- Benefit obligation at end of year $ 75,983 $ 76,458 ====================== Change in plan assets: Fair value of plan assets at beginning of year $ 96,571 $ 88,594 Actual return on plan assets 7,061 11,830 Employer contribution 20 5 Benefits paid (4,434) (3,858) ---------------------- Fair value of plan assets at end of year $ 99,218 $ 96,571 ====================== Funded status: Funded status $ 23,235 $ 20,113 Unrecognized net actuarial gain (13,730) (15,317) Unrecognized prior service cost 4,329 4,813 Unrecognized transition asset (731) (933) ---------------------- Net amount recognized $ 13,103 $ 8,676 ====================== Amounts recognized in the consolidated balance sheet consisted of: Prepaid benefit cost $ 13,103 $ 8,676 ---------------------- Net amount recognized $ 13,103 $ 8,676 ====================== Components of net periodic benefit cost: Service cost $ 400 $ 457 Interest cost 5,020 5,380 Expected return on plan assets (9,684) (8,876) Amortization of prior service cost 484 -- Amortization of transition asset (202) (202) Recognized net actuarial gain (424) -- ---------------------- Net periodic benefit $ (4,406) $ (3,241) ====================== Weighted-average assumptions as of year end: Discount rate 6.75% 6.75% Expected return on plan assets 10.25% 10.25% Rate of compensation increase 4.00% 4.00% Certain employees from one of the Company's German subsidiaries participate in a frozen defined benefit retirement plan. The liability related to this plan totaled $4,000,000 and $4,400,000 and the expense related to this plan was $440,000 and $402,000 at November 30, 1999 and 1998, respectively. Accumulated benefits for supplemental executive retirement plans totaled approximately $9,595,000 and $8,765,000 at November 30, 1999 and 1998, respectively. Expense related to this plan amounted to $1,431,000 and $1,321,000 for the years ended November 30, 1999 and 1998, respectively. The Company also has a defined contribution retirement plan to which the Company contributed and charged to expense approximately $4,692,000, and $4,113,000 for the years ended November 30, 1999 and 1998, respectively. 9. Segment Information Lilly formulates, manufactures and markets industrial coatings and specialty chemicals primarily to original equipment manufacturers on a worldwide basis. The Company operates within three business segments which serve three end-use markets: wood coatings; metal coatings; and composites and glass coatings. Products sold to these markets have similar economic characteristics, production processes, distribution methods and regulatory environments. Based on these similarities, the Company's products are aggregated into one reportable segment, Industrial Coatings and Specialty Chemicals, for purposes of this disclosure. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. Net sales of Industrial Coatings and Specialty Chemical products by end-use market are as follows (in thousands): 1999 1998 1997 -------------------------------------------------------------------------------- Wood Coatings $297,741 $269,585 $262,816 Metal Coatings 284,463 274,951 268,826 Composites and Glass Coatings 73,997 74,466 69,654 -------------------------------------- $656,201 $619,002 $601,296 ====================================== The Company maintains operations in the United States, Australia, Canada, China, Germany, Ireland, Malaysia, Mexico, Singapore, Taiwan and the United Kingdom. A summary of geographic data for the years ended November 30 is as follows (in thousands): 1999 1998 1997 -------------------------------------------------------------------------------- Net sales to unaffiliated customers: United States $ 504,875 $ 488,703 $ 491,973 Outside U.S., excluding U.S. exports 151,326 130,299 109,323 ------------------------------------ Consolidated $ 656,201 $ 619,002 $ 601,296 ==================================== Operating income: United States $ 48,473 $ 50,942 $ 51,150 Outside U.S. 24,427 21,089 18,984 ------------------------------------ Consolidated $ 72,900 $ 72,031 $ 70,134 ==================================== Total assets: United States $ 446,259 $ 430,081 $ 453,456 Outside U.S. 101,618 87,165 49,007 Eliminations (deductions) 2,549 (761) (668) ------------------------------------ Consolidated $ 550,426 $ 516,485 $ 501,795 ==================================== 10. Quarterly Results of Operations (Unaudited) Quarterly results of operations are summarized as follows (in thousands, except per share data): Quarter Ended 1999 February 28 May 31 August 31 November 30 -------------------------------------------------------------------------------- Net sales $146,139 $171,375 $169,452 $169,235 Gross profit 56,056 67,118 64,229 67,512 Net income 5,584 9,627 8,677 9,433 Net income per share Basic .24 .41 .38 .41 Diluted .24 .41 .37 .41 Quarter Ended 1998 February 28 May 31 August 31 November 30 -------------------------------------------------------------------------------- Net sales $143,334 $159,198 $159,345 $157,125 Gross profit 53,431 61,794 61,752 62,384 Net income 5,140 8,715 8,674 9,050 Net income per share Basic .22 .38 .37 .39 Diluted .22 .37 .37 .39
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Report of Independent Auditors Shareholders and Board of Directors Lilly Industries, Inc. We have audited the accompanying consolidated balance sheets of Lilly Industries, Inc. and subsidiaries as of November 30, 1999 and 1998, and the related consolidated statements of income, cash flows and shareholders' equity for each of the three years in the period ended November 30, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Lilly Industries, Inc. and subsidiaries at November 30, 1999 and 1998, and the consolidated results of their operations and their cash flows for each of the three years in the period ended November 30, 1999, in conformity with accounting principles generally accepted in the United States. /s/ Ernst & Young LLP January 14, 2000 Indianapolis, Indiana Responsibility for Financial Statements The management of Lilly Industries, Inc. is responsible for the preparation of the financial statements in the Annual Report and for the integrity and objectivity of the information presented. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States and necessarily include amounts which are estimates and judgments. The fairness of the presentation in these statements of the Company's financial position, results of operations, cash flows and shareholders' equity is reported on by the independent auditors. To assist in carrying out the above responsibility, the Company has internal systems which provide for selection of personnel, segregation of duties and the maintenance of accounting policies, systems, procedures and related controls. Although no cost-effective system can insure the elimination of errors, the Company's systems have been designed to provide reasonable but not absolute assurances that assets are safeguarded, that policies and procedures are followed, and that the financial records are adequate to permit the production of reliable financial statements. The Audit Committee of the Board of Directors, which is composed of directors who are not employees of the Company or its subsidiaries, meets regularly with Company officers and independent auditors in connection with the adequacy and integrity of the Company's financial reporting and internal controls. /s/ John C. Elbin /s/ Kenneth L. Mills John C. Elbin Kenneth L. Mills Vice President, Chief Financial Officer Corporate Controller and and Secretary Assistant Secretary
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Investor Information Form 10-K A copy of the Form 10-K, which is filed with the Securities and Exchange Commission, will be sent free to any shareholder upon written request. Contact Kenneth L. Mills, Corporate Controller and Assistant Secretary, at Lilly Industries, Inc. 200 W. 103rd Street Indianapolis, IN 46290; or E-mail: millsk@lillyindustries.com. Registrar and Transfer Agent Communications concerning shareholder records, including address changes, stock transfers, cash dividends or other service needs should be directed to National City Bank, Attn: Corporate Trust Operations, P. O. Box 92301, Cleveland, Ohio 44193-0900, (800) 622-6757. Dividend Reinvestment Plan A dividend reinvestment and voluntary stock purchase plan for Lilly Industries, Inc. shareholders permits purchase of the Company's Class A stock without payment of brokerage commission or service charge. Participants in this plan may have cash dividends on their shares automatically reinvested and, if they choose, invest by making optional cash payments. Additional information on the plan is available by writing or calling: National City Bank, Attn: Corporate Trust Operations, P. O. Box 92301, Cleveland, Ohio, 44193-0900 (800) 622-6757. Analyst Contacts Security analyst inquiries are welcomed. Please call: John C. Elbin, Vice President, Chief Financial Officer, and Secretary (317) 814-8700. Annual Meeting The meeting notice and proxy materials were mailed to shareholders with their copies of this annual report. Lilly urges all shareholders to vote their proxies and thus participate in the decisions that will be made at the annual meeting. The meeting will be held on March 31, 2000 at 10:00 A.M., EST, at the Company's corporate offices located at 200 W. 103rd Street, Indianapolis, Indiana. (317) 814-8700. Stock Trading and Dividend Information The Company's Class A stock is traded on the New York Stock Exchange under the symbol LI. Dividends are traditionally paid on the 1st business day of January, April, July and October to shareholders of record approximately three weeks prior. The following table sets forth the dividends paid per share of stock and the high and low prices in each of the quarters in the past two years ended November 30. Dividends Price Range Fiscal 1999 Per Share High Low -------------------------------------------------------------------------------- 1st quarter ended February 28 $ .08 20 1/8 16 1/4 2nd quarter ended May 31 .08 19 3/8 14 3rd quarter ended August 31 .08 19 3/4 15 5/8 4th quarter ended November 30 .08 16 1/4 13 1/8 ------ $ .32 ====== Dividends Price Range Fiscal 1998 Per Share High Low -------------------------------------------------------------------------------- 1st quarter ended February 28 $ .08 20 5/8 17 7/8 2nd quarter ended May 31 .08 22 3/4 17 3/4 3rd quarter ended August 31 .08 24 5/8 18 1/2 4th quarter ended November 30 .08 19 7/8 14 3/8 ------ $ .32 ====== At November 30, 1999 there were approximately 2,500 registered shareholders of Class A stock and 62 registered shareholders of Class B stock, which is reserved for employees of the Company.
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Locations International Australia 283 Alfred Street North Sydney, NSW 2060 Australia Canada 1915 Second Street West Cornwall, Ontario K6H 5T1 Canada 65 Duke Street London, Ontario N6J 2X3 Canada China Lot 3 Xintang District Administration Dalinshan, Dongguan Guangdon China 511774 England 152 Milton Park Abingdon Oxfordshire OX14 4SD England Germany D-8649 Wallenfels Postfach 1126 Germany Friedensstrasse 40 D-52249 Eschweiler Germany Ireland Willowfield Road Ballinamore Co. Leitrim Ireland Malaysia Lot No. 4963, Jalan Teratai 5H Miles Meru Industrial Zone 41050 Klang Selangor Darul Ehsan Malaysia Mexico Ave. Central No. 223 Los Lermas, Guadalupe N.L. Mexico 67190 Singapore 09-09 International Building 360 Orchard Road Singapore Taiwan, R.O.C. No. 1 Kung Yeh First Road Zenwu Village Kaohsiung Hsien Taiwan, R.O.C.
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United States Arkansas 1900 E. 145th Street Little Rock, AR 72206 California 210 East Alondra Blvd. Gardena, CA 90248 901 West Union Street Montebello, CA 90640 Connecticut 145 Dividend Road Rocky Hill, CT 06067 Florida 2355 S.W. 66th Terrace Davie, FL 33317 Illinois 5400 23rd Avenue Moline, IL 61265 Indiana 28335 Clay Street Elkhart, IN 46517 546 W. Abbott Street Indianapolis, IN 46225 Kentucky 347 Central Avenue Bowling Green, KY 42101 Michigan 411 Darling Street, N. Fremont, MI 49412 4999 36th Street, SE Grand Rapids, MI 49512 Missouri 1136 Fayette N. Kansas City, MO 64116 New Jersey 1991 Nolte Drive Paulsboro, NJ 08066 North Carolina 10300 Claude Freeman Drive Charlotte, NC 28262 2147 Brevard Road High Point, NC 27263 1717 English Road High Point, NC 27262 Texas 2518 Chalk Hill Road Dallas, TX 75212 Washington 13535 Monster Road Seattle, WA 98178
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Corporate Offices 200 W. 103rd Street Indianapolis, Indiana 46290 Corporate Technology CenterOfficers 521 W. McCarty Street Indianapolis, Indiana 46225 Officers and Directors Douglas W. Huemme, 58 Chairman and Chief Executive Officer Robert A. Taylor, 45 President and Chief Operating Officer Hugh M. Cates, 56 Vice President and General Manager, Wood Coatings Larry H. Dalton, 52 Vice President, Manufacturing and Engineering Alain DeBlandre, 43 Vice President and Managing Director - Europe William C. Dorris, 56 Vice President, Corporate Development John C. Elbin, 46 Vice President, Chief Financial Officer and Secretary Ned L. Fox, 58 Vice President, Supply Chain Management A. Barry Melnkovic, 42 Vice President, Human Resources John D. Million, 57 Vice President and Managing Director, Asia-Pacific Kenneth L. Mills, 51 Corporate Controller and Assistant Secretary Gary D. Missildine, 58 Vice President and General Manager, Industrial Coatings Virgil E. Underwood, 48 Vice President and General Manager, Coil Coatings Keith C. Vander Hyde, Jr., 41 Vice President and General Manager, Specialty Jay M. Wiegner, 56 Vice President and General Manager, Composites and Glass Coatings
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Directors James M. Cornelius, Chairman, Guidant Corporation William C. Dorris, Vice President, Corporate Development John C. Elbin, Vice President, Chief Financial Officer and Secretary Paul K. Gaston, Former Chairman, Guardsman Products, Inc. Douglas W. Huemme, Chairman and Chief Executive Officer Harry Morrison, Ph.D., Dean, School of Science Purdue University Norma J. Oman, President and Chief Executive Officer Meridian Insurance Group, Inc. John D. Peterson, Chairman, City Securities Corporation Thomas E. Reilly, Jr., Chairman and Chief Executive Officer Reilly Industries, Inc. Robert A. Taylor, President and Chief Operating Officer

Dates Referenced Herein   and   Documents Incorporated By Reference

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This 10-K Filing   Date First   Last      Other Filings
1/12/966
1/26/966
4/8/9618-K, 8-K/A, SC 14D1/A
12/1/965
11/30/9861010-K
12/1/986
For The Period Ended11/30/99111
1/14/0010
Filed On / Filed As Of2/25/00DEF 14A
3/31/0011
11/29/006
11/29/016
 
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