-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NDuCRXUZGOZB4X+lPHzczBTP3lAmO38e+Z68oPF9AXwgzuX5UpG9iQrJPOVpuuPw QNUk3yQsaK7AzdIBJHOXmA== 0000025793-96-000003.txt : 19960401 0000025793-96-000003.hdr.sgml : 19960401 ACCESSION NUMBER: 0000025793-96-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROSS A T CO CENTRAL INDEX KEY: 0000025793 STANDARD INDUSTRIAL CLASSIFICATION: PENS, PENCILS & OTHER ARTISTS' MATERIALS [3950] IRS NUMBER: 050126220 STATE OF INCORPORATION: RI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06720 FILM NUMBER: 96541923 BUSINESS ADDRESS: STREET 1: ONE ALBION RD CITY: LINCOLN STATE: RI ZIP: 02865 BUSINESS PHONE: 4013331200 MAIL ADDRESS: STREET 1: ONE ALBION ROAD STREET 2: 50 KENNEDY PLAZA CITY: LINCOLN STATE: RI ZIP: 02865 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________to __________ Commission File Number 1-6720 A. T. CROSS COMPANY (Exact name of registrant as specified in its charter) Rhode Island 05-0126220 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One Albion Road, Lincoln, Rhode Island 02865 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (401) 333-1200 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered: Class A Common Stock ($1. Par Value) American Stock Exchange 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, and (2) has been subject to such filing requirements for the past 90 days. Yes X No______ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10K or any amendment to this Form 10-K. [ X ] The aggregate market value of the voting stock held by non-affiliates of the registrant as of February 29, 1996: Class A common stock - $199,650,000 (For this purpose all directors have been treated as affiliates). The number of shares outstanding of each of the issuer's classes of common stock as of February 29, 1996: Class A common stock - 14,751,010 shares Class B common stock - 1,804,800 shares DOCUMENTS INCORPORATED BY REFERENCE Portions of the annual report to shareholders for the year ended December 31, 1995 are incorporated by reference into Parts I, II and IV. Portions of the definitive proxy statement for the 1996 annual meeting of shareholders are incorporated by reference into Part III. PART I Item 1. BUSINESS A. T. Cross Company (the "registrant") currently operates predominantly in one business segment, the manufacture and sale of high quality writing instruments. The registrant manufactures fine writing instruments consisting of ball- point and fountain pens, Selectip roller-ball pens (which also accommodate a porous point refill), mechanical pencils, desk sets and ball-point refills. The registrant's writing instruments are offered in a variety of styles and materials, including the traditional, narrow girth Century line and the wider girth Townsend line, both fabricated primarily in metal, and the new Solo and Solo Classic lines introduced in 1995, fabricated in resin. In addition, the registrant markets certain writing instrument accessories. The registrant continues to be the leading company in the United States in fine writing instruments priced from $10 to $50. Products in this price range include Century, Solo and Solo Classic. The Townsend collection has given the registrant a notable presence in the $55 to $250 price range of products. In 1996, the Company will introduce another metal based product, Metropolis, which will retail in the United States from $30 to $90. The registrant emphasizes styling, craftsmanship and quality control in the design and production of its products. All of the registrant's writing instruments carry a full warranty of unlimited duration against mechanical failure. The registrant's writing instruments are packaged and sold as individual units or in matching sets. The registrant also sells single and double unit desk sets with bases made of various materials such as onyx, marble and wood. The registrant's writing instrument products are distributed throughout the United States by approximately 39 manufacturer's agents or representatives to about 7,100 active retail and wholesale accounts. Retail accounts include gift stores, department stores, jewelers, stationery and office supply stores, mass merchandisers and catalogue showrooms. The wholesale accounts distribute the registrant's products to retail outlets which purchase in smaller quantities. Advertising specialty representatives market the registrant's writing instruments in the United States to business and industry. Typically, such products are engraved or carry the purchaser's name or emblem and are used for gifts, sales promotions, incentive purposes or advertising. The registrant also sells its products to United States military post exchanges, service centers and central buying operations. Sales of the registrant's writing instrument products outside the United States during 1995 were made by the registrant and by its wholly-owned subsidiaries to foreign distributors and to retailers principally in Canada, Latin America, Europe, Africa, the Middle East, Asia, and the Far East. The registrant also markets fine quality leather goods (primarily ladies handbags) and accessories through its wholly-owned subsidiary, Manetti- Farrow, Incorporated. Manetti-Farrow is the exclusive wholesale distributor for Fendi and Echo brands of leather products and fashion accessories in the United States. In 1993, the registrant sold its Mark Cross trademark and selected assets of its wholly-owned subsidiary, Mark Cross, Inc. and discontinued its Mark Cross retail business. See Note J to the registrant's financial statements included in its annual report to shareholders for the year ended December 31, 1995 (filed herewith as Exhibit 13 and hereinafter referred to as the "1995 Annual Report"), which note to such financial statements is incorporated by reference herein. Raw Materials: Most raw materials for production of writing instruments in the United States are obtained domestically. Some desk set base materials, some fountain pen nibs and front sections, certain finished caps and barrels, and some lacquer coating of metal shells are imported from Germany and France. Complete pencil mechanisms, some porous point refill components and leads, resin caps and barrels and some fountain pen nibs and front sections are imported from Japan. Raw materials for production of writing instruments in Ireland are obtained largely from Ireland, Germany, Japan and the United States. Patents and Trademarks: The registrant, directly and through its subsidiaries, has certain trademark registrations in the United States and many foreign countries, including but not limited to, its principal trademark "CROSS", and related trademarks, and the frustoconical top of its writing instruments. The principal trademark "CROSS" and related goodwill is of fundamental importance to the business. The registrant also holds certain United States and foreign patents covering its desk set units, Townsend series writing instruments, Solo series writing instruments, Solo Classic series writing Instruments, Metropolis series writing instruments, Signature series writing instruments, fountain pens, mechanical pencils, and fountain pen cartridges, and has filed United States and foreign patent applications on certain of the foregoing writing instruments and other writing instruments and related items. While the registrant pursues a practice of seeking patent protection for novel inventions or designs, the Company's business is not significantly dependent upon obtaining and maintaining patents. As discussed above, the registrant sold its Mark Cross trademark in 1993. However, under the terms of that sale, the registrant retained the right to use the CROSS trademark in certain non-writing instruments categories, without challenge by the purchaser of the Mark Cross trademark. Seasonal Business: Retail demand for the registrant's products is traditionally highest immediately prior to Christmas and other gift-giving occasions. However, seasonal fluctuations have not materially affected continuous production of writing instrument products. Working Capital Requirements: The Company utilizes just-in-time inventory techniques. Inventory balances tend to be highest in anticipation of new product launches and just before peak selling seasons. The registrant has offered in the past, and may offer in the future, extended payment terms to domestic customers who meet minimum purchase levels at certain points during the year, usually September through November. See the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the 1995 Annual Report, which section of the 1995 Annual Report is incorporated by reference herein. Customers: The registrant is not dependent for a material part of its business upon any single customer or a small number of customers. Backlog of Orders: The backlog of orders is not a significant factor in the registrant's business. Government Contracts: Sales of the registrant's writing instrument products are made to military post exchanges and service centers, but no contracts are entered into which are subject to renegotiation or termination by the United States Government. Competition: The writing instrument field is highly competitive. In particular, competition is strong with respect to product quality and brand recognition. There are numerous manufacturers of ball-point, roller-ball and fountain pens and mechanical pencils in the United States and abroad. Many of such manufacturers produce lower priced writing instruments than those produced by the registrant. Although the registrant is a major producer of ball-point, roller-ball and fountain pens and mechanical pencils in the $10 to $50 price range, other writing instrument companies have significantly higher sales volumes from a broader product line or have greater resources as divisions of larger corporations. Research and Development: The registrant had expenditures for research and development of new products and improvement of existing products of approximately $2,991,000 in 1995, $2,036,000 in 1994, and $2,213,000 in 1993. Environment: The registrant believes it is in substantial compliance with all Federal, State and local environmental laws and regulations. It is believed that future capital expenditures for environmental control facilities will not be material. Employees: The registrant had approximately 1,300 employees at December 31, 1995, of which 249 were employed by foreign subsidiaries or branches. Foreign Operations and Export Sales: Approximately 42% of the registrant's sales in 1995 were in foreign markets. The registrant's primary foreign markets are in Europe and the Far East. Sales of writing instrument products to foreign distributors are subject to import duties in many countries although sales by the registrant's wholly-owned manufacturing and distribution facilities in Ireland into European Common Market countries are duty free. The operations of the registrant's foreign subsidiaries and branches are subject to the effects of currency fluctuations, to the availability of dollar exchange, to exchange control and to other restrictive regulations. Undistributed earnings of the foreign manufacturing and marketing subsidiaries prior to Revenue Reconciliation Act of 1993 (i.e., the "1993 Act") generally are not subject to current United States federal income and state income taxes. However, repatriation to the registrant of the accumulated earnings of foreign subsidiaries would subject such earnings to United States federal and state income taxes. It is not the intention of the registrant to repatriate these earnings. The 1993 Act added Internal Revenue Code Section 956A which had the effect of subjecting a portion of current foreign earnings (i.e., earnings generated subsequent to the 1993 Act) to United States federal taxation. See Note F to the registrant's financial statements included in the 1995 Annual Report, which note to such financial statements is incorporated by reference herein. See geographic information and export sales data in Note G to the registrant's financial statements included in the 1995 Annual Report, which note to such financial statements is hereby incorporated by reference. ___________________________________________________________________________ See the first paragraph under the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the 1995 Annual Report incorporated herein by reference. In addition to statements in this document that may be construed as forward-looking statements, there may be statements in other documents of the registrant and oral statements by representatives of the registrant to security analysts or investors that may be construed as forward-looking statements about the business and new products, sales and expenses, and operating and capital requirements. Any such statements are subject to risks that could cause the actual results or needs to vary materially. These risks are discussed in the section referred to above. Item 2. PROPERTIES The registrant currently occupies approximately 269,000 square feet of manufacturing, warehouse and office space in its facility in Lincoln, Rhode Island. The registrant's wholly-owned subsidiary, A. T. Cross Limited, owns and operates an approximately 64,000 square foot manufacturing plant in Ballinasloe, County Galway, Ireland. Substantially all of these facilities, which are well maintained and in good repair, are currently being utilized in either a manufacturing, distribution or administrative capacity. The productive capacity of these facilities is sufficient to meet the registrant's needs for the foreseeable future. The registrant also owns an approximately 130,000 square foot facility in Lincoln, formerly the site of the registrant's distribution center and certain administrative offices, which it is offering for sale, and which currently is partially rented. The registrant's operations in Germany, Japan, France, Italy, the United Kingdom, Spain and Hong Kong, all lease their administrative offices and warehouse space. Manetti-Farrow leases administrative office space in New York, New York and warehouse and office space in Oakland, California. Item 3. LEGAL PROCEEDINGS No material legal proceedings are pending by or against the registrant or any of its subsidiaries which would have a material effect upon the consolidated business and financial condition. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS See the "Market and Dividend Information" section of the 1995 Annual Report, which section is incorporated by reference herein. Item 6. SELECTED FINANCIAL DATA See the "Five-Year Summary" section of the 1995 Annual Report, which section is incorporated by reference herein. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS See the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the 1995 Annual Report, which section is incorporated by reference herein. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the registrant and its subsidiaries and the report of the independent auditors thereon, set forth in the 1995 Annual Report, are incorporated herein by reference. Quarterly Results of Operations in Note K of the registrant's financial statements included in the 1995 Annual Report are incorporated herein by reference. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT In addition to the directors and executive officers listed on pages 5 and 6 of the registrant's definitive proxy statement for the 1996 annual meeting of shareholders, which pages are incorporated by reference herein, the following are executive officers of the registrant (each of whom serves until his or her successor is elected and has qualified): Year in Which Name Age Title First Held Office Joseph F. Eastman 59 Vice President-Human Resources 1981 David A. Rogers 47 Vice President-U.S. Marketing and Sales 1988 Michael El-Hillow 44 Vice President-Finance; Treasurer; 1990 Chief Financial Officer Donald W. Reilly (1) 37 Corporate Controller 1992 Chief Accounting Officer Tina C. Benik (2) 36 Vice President-Legal, General 1993 Counsel and Corporate Secretary Steven T. Henick (3) 53 Vice President- 1993 Worldwide Marketing and Sales J. John Lawler (4) 58 Vice President- 1993 Worldwide Tax and Duty Free John T. Ruggieri (5) 39 Vice President- 1993 Corporate Development and Planning Stephen A. Perreault (6) 48 Vice President-Manufacturing 1995 David J. Arthur (7) 37 Director, Engineering 1995 (1) Prior to becoming Corporate Controller in 1992, Donald W. Reilly was a senior manager with the auditing firm of Ernst & Young. (2) Prior to becoming Vice President-Legal, General Counsel and Corporate Secretary, Tina C. Benik was the general counsel of the registrant from 1989 to 1991 and corporate secretary from 1991 to 1993. (3) Prior to becoming Vice President-Worldwide Marketing and Sales in 1993, Steven T. Henick held various senior executive positions in large multi-national consumer goods companies, including Procter & Gamble, Inc., Tambrands, Inc., and Del International Incorporated. (4) Prior to becoming Vice President-Worldwide Tax and Duty Free in 1993, J. John Lawler was the Vice President International of the registrant. (5) Prior to becoming Vice President-Corporate Development and Planning in 1993, John T. Ruggieri was the Executive Vice President of the registrant's wholly-owned subsidiary Mark Cross, Inc. (6) Prior to becoming Vice President-Engineering in 1995, Stephen A. Perreault held various senior executive positions in the jewelry, cosmetics, and gift manufacturing and distribution companies, including Weingeroff Enterprises, Inc., Lantis Corporation, Swarovski Jewelry U.S. Ltd., and Avon Products, Inc. (7) Prior to becoming Director, Engineering in 1995, David J. Arthur was the Manager, New Business Development of the registrant. From 1991-1994 Mr. Arthur was Group Manager, Corporate R&D and Product Line Manager, Composite Materials Division, at Rogers Corporation. Item 11. EXECUTIVE COMPENSATION See pages 7 through 13 of the registrant's definitive proxy statement for its 1996 annual meeting of shareholders, which pages are incorporated by reference herein. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT See pages 3 and 4 of the registrant's definitive proxy statement for the 1996 annual meeting of shareholders, which pages are incorporated by reference herein. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS See pages 5 and 6 of the registrant's definitive proxy statement for the 1996 annual meeting of shareholders, which pages are incorporated by reference herein. PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) and (2) - The response to this portion of Item 14 is submitted as a separate section of this report. (3) Listing of Exhibits (3) Restated Articles of Incorporation and By-laws (incorporated by reference to Exhibit (3) to the registrant's report on Form 10-K for the year ended December 31, 1980); Amendment to Restated Articles of Incorporation, Amendment to By-laws adopted December 2, 1988 (incorporated by reference to Exhibit (3) to the registrant's report on Form 10-K for the year ended December 31, 1989); Amendment to By-laws adopted February 6, 1992 (incorporated by reference to Exhibit (3) to the registrant's report on Form 10-K for the year ended December 31, 1991) (10.1) A. T. Cross Company Executive Compensation Program Performance Cash Plan, January 1, 1995 (incorporated by reference to Exhibit (10.1) to the registrant's report on Form 10-K for the year ended December 31, 1994)* (10.2) A. T. Cross Company Executive Compensation Program Annual Incentive Plan, January 1, 1995 (incorporated by reference to Exhibit (10.2) to the registrant's report on Form 10-K for the year ended December 31, 1994)* (10.3) A. T. Cross Company Non-Qualified Stock Option Plan, 1975 (as amended and restated February 4, 1988, as amended December 10, 1991, as amended October 21, 1993, and as further amended and restated December 6, 1994)* (10.4) A. T. Cross Company Incentive Stock Option Plan, 1981 (as amended February 6, 1992 and as further amended April 28, 1994) (incorporated by reference to Exhibit (10.4) to the registrant's report on Form 10-K for the year ended December 31, 1994)* (10.5) A. T. Cross Company Deferred Compensation Plan (incorporated by reference to Exhibit (10.5) to the registrant's report on Form 10-K for the year ended December 31, 1994)* (10.6) A. T. Cross Company Unfunded Excess Benefit Plan (as amended) (incorporated by reference to Exhibit (10.6) to the registrant's report on Form 10-K for the year ended December 31, 1994)* (10.7) A. T. Cross Company Restricted Stock Plan* (11) Statement Re: Computation of Per Share Earnings (13) Annual Report to Shareholders for the year ended December 31, 1995. Filed only in respect to the portions incorporated by reference in this Form 10-K. (21) Subsidiaries - incorporated by reference to the "Subsidiaries and Branches" section of the registrant's 1995 Annual Report (23) Consent of Ernst & Young (27) Financial Data Schedules - filed electronically (b) No reports on Form 8-K were filed in the fourth quarter of 1995. (c) Exhibits--See Item (a)(3) above (d) Financial Statement Schedules--The response to this portion of Item 14 is submitted as a separate section of this report. SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. A. T. CROSS COMPANY By: BRADFORD R. BOSS Bradford R. Boss Chairman Dated: March 29, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated: Signature Title Date BRADFORD R. BOSS Chairman & Director March 29, 1996 (Bradford R. Boss) RUSSELL A. BOSS President & Director March 29, 1996 (Russell A. Boss) (Chief Executive Officer) JOHN E. BUCKLEY Executive Vice President March 29, 1996 (John E. Buckley) & Director (Chief Operating Officer) MICHAEL EL-HILLOW Vice President, Finance March 29, 1996 (Michael El-Hillow) Treasurer (Chief Financial Officer) DONALD W. REILLY Corporate Controller March 29, 1996 (Donald W. Reilly) (Chief Accounting Officer) BERNARD V. BUONANNO, JR. Director March 29, 1996 (Bernard V. Buonanno, Jr.) H. FREDERICK KRIMENDAHL, II Director March 29, 1996 (H. Frederick Krimendahl, II) THOMAS C. MCDERMOTT Director March 29, 1996 (Thomas C. McDermott) TERRENCE MURRAY Director March 29, 1996 (Terrence Murray) JAMES C. TAPPAN Director March 29, 1996 (James C. Tappan) EDWIN G. TORRANCE Director March 29, 1996 (Edwin G. Torrance) ANNUAL REPORT ON FORM 10-K ITEM 14 (a)(1) and (2), (c) and (d) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES CERTAIN EXHIBITS FINANCIAL STATEMENT SCHEDULES YEAR ENDED DECEMBER 31, 1995 A. T. CROSS COMPANY LINCOLN, RHODE ISLAND FORM 10-K - ITEM 14(a)(1) and (2) A. T. CROSS COMPANY AND SUBSIDIARIES LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES The following consolidated financial statements of A. T. Cross Company and its subsidiaries, included in the annual report of the registrant to its shareholders for the year ended December 31, 1995, are incorporated by reference in Item 8: Consolidated Balance Sheets - December 31, 1995 and December 31, 1994 Consolidated Statements of Income and Retained Earnings - Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements - December 31, 1995 The following consolidated financial statement schedule of A. T. Cross Company and its subsidiaries is included in Item 14(d): Schedule II - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, or the information required therein has otherwise been disclosed in the consolidated financial statements referred to above, or are inapplicable, and therefore have been omitted. SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS A. T. CROSS COMPANY AND SUBSIDIARIES COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E Additions (A) Balance at Charged to Charged to Balance Beginning Costs and Other Accounts Deductions at End of DESCRIPTION of Period Expenses Describe Describe Period Year Ended December 31, 1995 Deducted from asset account: Allowance for doubtful accounts $1,828,000 $360,755 $443,755(A) $1,745,000 Year Ended December 31, 1994 Deducted from asset account: Allowance for doubtful accounts $1,632,000 $405,592 $209,592(A) $1,828,000 Year Ended December 31, 1993 Deducted from asset account: Allowance for doubtful accounts $1,550,000 $422,719 $340,719(A) $1,632,000 (A) Uncollectible accounts written off.
EX-10.3 2 EXHIBIT 10.3 A. T. CROSS COMPANY NON-QUALIFIED STOCK OPTION PLAN (1975) (As amended and restated February 4, 1988, as amended December 10, 1991, amended October 21, 1993, and as further amended and restated December 6, 1994) 1. Purpose: This Non-Qualified Stock Option Plan (herein called the "Non-Qualified Plan") of A. T. CROSS Company, a Rhode Island corporation with its principal place of business in Lincoln, Rhode Island (herein called the "Company"), constitutes the A. T. CROSS Company Non-Qualified Stock Option Plan (1975) as amended and restated to February 4, 1988, and further amended by the Board of Directors on December 10, 1991, and as further amended by the Board of Directors on October 21, 1993, and as further amended and restated by the Board of Directors to December 6, 1994, and is designed to provide, through the medium of options for the purchase of shares of Class A common stock of the Company, additional incentives for Directors of the Company and key employees of the Company and its subsidiaries and, by encouraging stock ownership, to increase their proprietary interest in the progress of the Company. The Non-Qualified Plan is intended to supplement the Company's Incentive Stock Option Plan adopted in 1981, as amended and restated. 2. Administration: a. The Non-Qualified Plan will be administered by a Compensation Committee appointed by the Board of Directors from time to time and consisting of not less than two members of the Board of Directors of the Company who are not full-time employees of the Company. The Compensation Committee's interpretation of the terms and provisions hereof shall be final and conclusive. b. The Compensation Committee may, in its sole discretion, subject to the terms and provisions hereof, grant options to purchase shares of the Company's Class A common stock and issue shares of such common stock upon the exercise of any such options so granted. c. The Board of Directors shall adopt as the option to be granted hereunder such form of Option Agreement with such provisions consistent with the Non-Qualified Plan as the Board of Directors shall deem appropriate. d. No Director or member of the Compensation Committee shall be liable for any action or determination made in good faith under the Non-Qualified Plan. 3. Eligibility: The Directors of the Company and such key employees of the Company or of any subsidiary of the Company (as hereinafter defined) as shall have been designated by the Board from time to time shall be eligible to participate in the Non-Qualified Plan. For purposes of the Non-Qualified Plan, a Company shall be deemed to be a "subsidiary" if a majority of its outstanding shares of voting stock are owned or controlled by the Company. Key employees (herein collectively called "Employees") shall be those employees who, together with officers of the Company or any such subsidiary, are deemed by the Board to be of primary importance in the operation of the business of the Company or any such subsidiary. The Compensation Committee may, in its discretion, but subject to the terms and provisions hereof, from time to time grant options to any or all eligible Directors and Employees to purchase such number of shares as the Compensation Committee shall determine. 4. Stock Subject to Options: a. The maximum number of shares of Class A common stock which may on or after December 6, 1994 be made the subject of options under the Non-Qualified Plan is seven hundred forty-two thousand, three hundred seven (742,307) shares. Of such number, a maximum of fifty thousand (50,000) shares shall be eligible for options granted after December 6, 1994 to members of the Board of Directors of the Company pursuant to paragraph 5, below. b. The maximum number of shares which may be made the subject of option grants to a Director of the Company who at the time of the grant of such option is a full-time employee of the Company shall, in any calendar year, not exceed the number of shares which are the subject of grants to such director during such calendar year under paragraph 5, below, plus eighty thousand (80,000) shares." c. The maximum number of shares fixed in subparagraphs (a) and (b), above, shall be appropriately adjusted for stock splits, stock dividends and recapitalizations effected after the approval of the Non-Qualified Plan by the shareholders of the Company. d. The shares of Class A common stock which may be the subject of option grants hereunder may be either authorized and unissued shares or issued shares reacquired by the Company and held in the Company's treasury. Any shares which are made the subject of an option which is for any reason unexercised prior to its expiration may again be subjected to an option or options under the Non-Qualified Plan. 5. Grants to Directors: On October 1 of each year, or if such day shall not be a trading day on the American Stock Exchange or such other principal stock exchange on which the Company's Class A common stock shall be listed for trading at the time, on the next such trading day, an option for the purchase of shares of Class A common stock of the Company shall, without further action of the Board of Directors or the Committee, be granted automatically to each member of the Board of Directors of the Company. The number of shares which shall be the subject of an option granted to a Director pursuant to the foregoing shall be derived by dividing (i) the compensation paid or payable to such Director for his or her services to the Company in his or her capacity as Director during the next preceding calendar year by (ii) the mean between the high and low trading prices, on the American Stock Exchange or such other principal stock exchange referred to above, for a share of Class A common stock of the Company on the last business day of such next preceding calendar year, or if no shares of such common stock shall have been traded on such day, on the next previous day on which shares of such common stock shall have been traded. A Director of the Company who is not a full-time employee of the Company shall be ineligible to receive options under the Non-Qualified Plan in addition to those provided for in this paragraph 5. 6. Purchase Price: a. The purchase price per share with respect to an option granted hereunder shall be the mean between the high and the low trading prices of the Company's Class A common stock on the date that such option is granted, or, if no shares of such common stock shall have been traded on such date, on the next previous date on which shares of such common stock shall have been traded. 7. Term and Exercise of Options: a. The term of each option shall be ten (10) years, or such shorter period as may be determined by the Compensation Committee, from the date of grant of the option, unless sooner terminated under the provisions of paragraph 10. Each option shall become vested and exercisable at such time or times, in installments or otherwise, as may be determined by the Compensation Committee and set forth in a written agreement evidencing the grant of such option, provided, that no option granted to a Director hereunder may be exercised in whole or in part prior to the first anniversary of the date of such grant. No option shall be granted after the termination of the Non-Qualified Plan, but options theretofore granted may be exercised thereafter in accordance with their terms and the provisions of the Non- Qualified Plan. Any option granted under the Non-Qualified Plan may be exercised notwithstanding the fact that the Director or Employee holds stock options granted under the Company's Incentive Stock Option Plan or prior non-qualified options granted under the Non-Qualified Plan. b. When any shares are purchased, the purchase price for the number of shares purchased shall be paid in full. The purchase price may be paid in cash (including personal check) or by the delivery to the Company of other shares of Class A common stock of the Company already owned by the individual exercising the option, or by any combination of cash and such shares. Shares so delivered will be credited against the purchase price in an amount equal to their fair market value on the date of delivery, and their fair market value shall be deemed to be the mean between the high and low trading prices of the Company's Class A common stock on the date of delivery or, if no shares of such common stock shall have traded on such date, on the next previous date on which shares of such common stock shall have been traded. c. Until payment in full and the issuance of stock certificates, an Employee or Director shall have no right to vote or receive dividends or any other rights as a stockholder with respect to shares which he has an option to purchase. No adjustment will be made for dividend or other rights for which the record date is prior to the date the stock certificate is issued. 8. Issuance of Stock: Shares of stock will be issued and certificates therefor will be delivered to a Director or an Employee upon his making payment for shares for which he has exercised his option to purchase, but less than five (5) shares will not be issued. 9. Transferability of Options. Options under the Non-Qualified Plan shall not be transferable other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income Security Act, or the rules thereunder, and are exercisable during the lifetime of the grantee only by such grantee. 10. Termination of Employment and Death: If the employment of an Employee (including an Employee who is also a Director) holding options under the Non-Qualified Plan shall terminate, or if the office of a Director who is not a full-time employee of the Company or a subsidiary shall terminate, in either case for any reason whatsoever (including retirement, resignation, dismissal, or death), the options of such Employee or Director under the Non-Qualified Plan shall end automatically six (6) months after the date of such termination, unless sooner ended by their term. Prior to the expiration of such six (6) month period, during the term of such options, such Director or Employee (or his executor or administrator in the event of his death during such period) shall have the right to exercise such options to purchase the shares of stock which are subject thereto. 11. Readjustment of Stock or Recapitalization: Upon any recapitalization or readjustment of the Company's capital stock whereby the character of the present Class A common stock shall be changed, appropriate adjustments shall be made so that the stock to be purchased under the Non-Qualified Plan shall be the equivalent of the present Class A common stock of the Company, after such readjustment or recapitalization. In the event of a subdivision or combination of the shares of Class A common stock of the Company, the number of shares that may be optioned and sold to Directors and Employees under the Non-Qualified Plan will be proportionately increased or decreased and the price will be proportionately adjusted by the Board of Directors and, in case of reclassification or other change in the shares of Class A common stock of the Company, such action will be taken as in the opinion of the Board of Directors will be appropriate under the circumstances. Accordingly, in such cases the maximum number of authorized but unissued shares, or shares purchased by the Company and held as treasury stock, to be covered by the Non-Qualified Plan may be increased by the Board of Directors without stockholder or any other action. 12. Term of the Non-Qualified Plan. The Non-Qualified Plan shall become effective on the date of its adoption by the Board of Directors, subject to approval by the stockholders, and shall continue in effect until terminated under paragraph 13. The powers of the Board of Directors shall continue in effect after the termination of the Non-Qualified Plan, until exercise or expiration of all options then outstanding. 13. Amendment and Termination: The Board of Directors at any time may amend, suspend or terminate the Non-Qualified Plan. No action of the Board, however, may without the consent of the holder alter or impair any option previously granted under the Non-Qualified Plan (except pursuant to paragraph 11). In addition, no action of the Board may, unless duly approved by both the Class A and Class B common stockholders voting as a single class: (i) increase the maximum number of shares which may be optioned and sold under the Non-Qualified Plan (except pursuant to paragraph 11); (ii) change the option price (except pursuant to paragraph 11); or (iii) permit granting options for a period longer than herein provided. The provisions of paragraph 5 shall not be amended more than once every six months, other than to comport with changes in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder. 14. Obligation of the Company to Issue Shares: Notwithstanding any other provision of the Non-Qualified Plan the Company shall not be obligated to issue any shares pursuant to any stock option unless or until: a. the shares with respect to which the option is being exercised have been registered under the Securities Act of 1933, as amended, or are exempt from such registration in the opinion of the Company's counsel; b. the prior approval of such sale or issuance has been obtained from any state regulatory body having jurisdiction; c. in the event the stock has been listed on any stock exchange, the shares with respect to which the option is being exercised have been duly listed on such exchange in accordance with the procedures specified therefor; d. the Company has in its possession an amount required to be withheld under provisions of the Internal Revenue Code on account of the exercise of such option as more particularly set forth in paragraph 15 of the Non-Qualified Plan. 15. Withholding of Taxes Upon Exercise: Pursuant to the provisions of the Internal Revenue Code and regulations thereunder, the holder of a non-qualified stock option realizes ordinary taxable income ("realized income") at the time of exercise of the option measured by the difference between the exercise price and the fair market value of the purchased shares at the time of exercise. Such regulations also provide that the Company must withhold and pay over directly to the Internal Revenue Service a specified percentage of such realized income. The Company may withhold such amount (as varied from time to time by the Internal Revenue Code or regulations thereunder) from any salary, bonus, compensation or other property due or belonging to the holder as a condition precedent to issuing any shares of stock on account of the exercise of any option granted hereunder. EX-10.7 3 EXHIBIT 10.7 A. T. CROSS COMPANY RESTRICTED STOCK PLAN This A. T. Cross Company Restricted Stock Plan (the "Plan") is adopted by A. T. Cross Company, a Rhode Island corporation (the "Company"), for the purpose of providing restricted stock awards in payment of certain bonuses earned under the A.T. Cross Company Annual Incentive Plan. 1. Definitions. For purposes of the Plan, the following terms shall have the meanings set forth below: "Board" means the Board of Directors of A. T. Cross Company. "Change in Control" means (i) a change in the beneficial ownership (as defined in Rule 16a-1(a)(2)) of more than 50% of the Class B Common Stock of the Company, (ii) approval by Company stockholders of a consolidation, a merger in which the Company will not be the surviving corporation, or the sale of substantially all of the Company's assets. "Class B Common Stock" means the Class B Common Stock, $1.00 par value of the Company. "Committee" means the Compensation Committee of the Board or a substitute committee appointed by the Board of the Company, consisting of at least two directors, each of whom is a "disinterested person", as defined in Rule 16b-3, with respect to the Plan. "Common Shares" means the Class A Common Stock, $1.00 par value, of the Company. "Disability" means a determination by the Committee that a Participant is unable to perform the duties required of the Participant by the Company as a result of physical or mental impairment. "Market Price" means the average of the highest and lowest price of the Company's Common Shares as reported by the American Stock Exchange. "OIBT" for any period means the audited operating income before taxes of the Company's writing instrument division for such period. "Participant" means an employee who receives an award of Restricted Shares under the Plan as determined by the Committee. "Restricted Period" means the period commencing with the award of Restricted Shares and terminating in accordance with the provisions of Paragraph 7 or Paragraph 9 hereof. "Restricted Shares" means Common Shares which are awarded subject to the restrictions described in Paragraph 7 hereof. "Rule 16a-1(a)(2)" means Rule 16a-1(a)(2) promulgated by the Securities and Exchange Commission under Section 16(a) of the Securities Exchange Act of 1934. "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16(b) of the Securities Exchange Act of 1934. 2. Administration. The Plan shall be administered by the Committee. The Committee may establish, subject to the provisions of the Plan, such rules and regulations as it deems necessary for the proper administration of the Plan, and make such determinations and take such actions in connection therewith or in relation to the Plan as it deems necessary or advisable, consistent with the Plan. 3. Eligibility. Employees of the Company who are eligible to participate in the Annual Incentive Plan shall be eligible to participate in the Plan as determined by the Committee. 4. Shares Subject to the Plan. The Common Shares to be issued as Restricted Shares under the Plan may be either authorized but unissued shares or treasury shares. The aggregate number of Common Shares of the Company which may be issued under the Plan shall not exceed 60,000 shares; subject, however, to the adjustment provided in Paragraph 11 in the event of stock splits, stock dividends, exchanges of shares or the like occurring after the effective date of the Plan. No Restricted Shares may be issued under the Plan which could cause such maximum limit to be exceeded. 5. Awards of Restricted Shares. Awards of Restricted Shares pursuant to the Plan shall be made to eligible employees in full or partial payment of bonuses earned under the Annual Incentive Plan as determined by the Committee. The number of Restricted Shares awarded in the case of any bonus shall be equal to the cash value of the bonus earned under the Annual Incentive Plan which is to be paid in Restricted Shares divided by the Market Price on the last trading day of the fiscal year for which the bonus was earned. Fractional shares shall be paid in cash. Each award of Restricted Shares shall be embodied in a "Restricted Share Agreement" signed by the Participant and the Company and providing that the Restricted Shares shall be subject to the provisions of the Plan and containing such other provisions as the Committee may prescribe not inconsistent with the Plan. 6. Rights and Obligations with Respect to Stock. Upon the award of Restricted Shares pursuant to the Plan, there shall be issued in the name of each Participant a certificate or certificates representing the Restricted Shares awarded, and the Participant shall thereupon be a stockholder and have all the rights of a stockholder with respect to such shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such shares; provided however, that such Restricted Shares, and any new, additional or different securities the Participant may become entitled to receive with respect to such Restricted Shares by virtue of a stock split, dividend or any other change in the corporate or capital structure of the Company, shall be subject to the restrictions described in Paragraph 7 hereof. Certificates for Restricted Shares shall be held by the Company on behalf of a Participant until the termination of the Restricted Period as provided in Paragraph 7(b) or Paragraph 9 hereof. 7. Specific Restrictions. All Restricted Shares held by a Participant shall be subject to the following restrictions: (a) During the Restricted Period, the shares may not be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of by the Participant other than by will or the laws of descent and distribution. (b) If OIBT for the fiscal year immediately preceding the fiscal year in which an award of Restricted Shares is made is less than $25,000,000, the Restricted Period shall terminate with respect to one-half of such award at the end of the fiscal year for which OIBT equals or exceeds $25,000,000; the Restricted Period for the remaining one-half of the Restricted Shares will terminate at the end of the fiscal year for which OIBT is equal to or greater than two times OIBT for the calendar year 1994. If OIBT for the fiscal year immediately preceding the fiscal year in which an award of Restricted Shares is made is equal to or greater than $25,000,000, the Restricted Period shall terminate at the end of the fiscal year for which OIBT is equal to or greater than two times OIBT for the fiscal year 1994. If OIBT is not at least two times the 1994 OIBT by the end of the 1999 fiscal year, any remaining Restricted Shares will be forfeited by the Participant and revert to the Company. (c) Upon the termination of the Restricted Period with respect to Restricted Shares, such shares shall no longer be considered Restricted Shares and shall be delivered to the Participant or the Participant's permitted assigns as soon as reasonably practicable following the determination by the Committee that such termination is in accordance with the terms of the Plan. (d) Restricted Shares awarded by the Committee under the Plan shall be issued only in full compliance with all applicable securities laws, including laws, rules and regulations of the Securities and Exchange Commission and applicable state Blue Sky laws. With respect thereto, the Committee may impose such conditions on transfer, restrictions and limitations as it may deem necessary and appropriate to assure compliance with such applicable securities laws. 8. Termination of Employment During Restricted Period. Unless the Committee determines otherwise at the time of award or any time subsequent thereto, if a Participant's employment with the Company is terminated during the Restricted Period other than by reason of death or Disability, the Participant shall thereupon forfeit all Restricted Shares and all rights with respect thereto shall terminate. Unless the Committee shall otherwise determine at the time of award or any time subsequent thereto, if a Participant's employment with the Company is terminated during the Restricted Period because of death or Disability, the restrictions contained in Paragraph 7(a) hereof shall terminate as provided in Paragraph 7 (b) hereof. 9. Change in Control. Unless the Committee in its sole discretion shall determine otherwise, upon a Change in Control, all Restricted Periods shall end, and the restrictions applicable to all previous awards of Restricted Shares shall terminate. 10. Section 83(b) Elections. A Participant who files an election with the Internal Revenue Service to include the fair market value of any Restricted Shares in gross income during a Restricted Period shall promptly furnish the Company with a copy of such election together with the amount of any federal, state, local or other taxes required to be withheld to enable the Company to claim an income tax deduction with respect to such election. 11. Share Adjustments. In the event there is any change in the Company's Common Shares resulting from stock splits, stock dividends, combinations or exchanges of shares, or other similar capital adjustments, equitable proportionate adjustments shall automatically be made without further action by the Committee in (i) the number of shares available for award under the Plan, and (ii) the number of Restricted Shares then held for the accounts of Participants under the Plan. 12. Amendment or Termination. The Committee may terminate this Plan at any time, and may amend the Plan at any time or from time to time; provided, however, that any amendment that would increase the aggregate number of shares that may be issued under the Plan, materially increase the benefits accruing to employees under the Plan, or materially modify the requirements as to eligibility for participation in the Plan shall be subject to the approval of the Company stockholders to the extent required by Rule 16b-3, or other applicable laws or any other governing rules or regulations, except that any such increase or modification that may result from adjustments authorized by Paragraph 11 hereof shall not require such approval. If the Plan is terminated, any Restricted Shares shall continue to be subject to the terms of this Plan for the duration of the Restricted Period. 13. Tax Withholding. Any award of Restricted Shares hereunder shall provide appropriate arrangements for the satisfaction by the Company and Participant of all federal, state, local or other income, excise or employment taxes or tax withholding requirements applicable to the receipt of Restricted Shares as determined by the Committee. 14. No Effect on Employment Status. The fact that an employee has been granted Restricted Shares under this Plan shall not limit or otherwise qualify the right of the Company to terminate the employee's employment at any time. 15. Effective Date of the Plan. The Plan shall become effective upon the approval of the Plan by the Company's Board and the holders of the Class B Common Stock. 16. Rhode Island Law to Govern. This Plan shall be construed and administered in accordance with and governed by the laws of the State of Rhode Island. IN WITNESS WHEREOF, the Company has caused this Restricted Stock Plan to be executed by its duly authorized officer as of this 27th day of April, 1995. A. T. CROSS COMPANY By:_/s/ John E. Buckley_____________________ Title: Executive Vice President and Chief Operating Officer EX-11 4 EXHIBIT 11--STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS A. T. CROSS COMPANY AND SUBSIDIARIES Year Ended December 31 1995 1994 1993 Earnings (loss) per common share: Weighted average shares outstanding 16,528,876 16,872,505 16,927,411 Net income (loss) $13,365,353 $10,533,922 $(3,480,926) Per share amount * $0.81 $ 0.62 $(0.21) Primary: Weighted average shares outstanding 16,528,876 16,872,505 16,927,411 Dilutive stock options--based on the treasury stock method using average market price 77,320 78,315 - TOTAL 16,606,196 16,950,820 16,927,411 Net income (loss) $13,365,353 $10,533,922 $(3,480,926) Per share amount $0.80 $ 0.62 $(0.21) Fully diluted: Weighted average shares outstanding 16,528,876 16,872,505 16,927,411 Dilutive stock options--based on the treasury stock method using the market price at the end of each quarter, if higher than average market price 77,659 78,477 - TOTAL 16,606,535 16,950,982 16,927,411 Net income (loss) $13,365,353 $10,533,922 $(3,480,926) Per share amount $ 0.80 $ 0.62 $(0.21) * Stock options are not included in the computation of per share earnings as the effect is not material. EX-13 5 A. T. CROSS 1995 ANNUAL REPORT 150 Years of Excellence A.T. CROSS COMPANY PROFILE The A. T. Cross Company is a major international manufacturer of fine writing instruments which are sold to the consumer market through fine stores worldwide, and to the business gift market via a network of companies specializing in recognition and awards programs. Cross presently markets five lines of writing instruments: CenturyRegistration Mark, Cross TownsendRegistration Mark, soloRegistration Mark, Solo classicRegistration Mark, and Metropolistrademark. Each series is designed to meet the preferences and tastes of a particular audience. Each offers distinctive styles, appointments and finishes - from precious metals to composite resin - - and is priced to meet specific market requirements. Cross also produces desk sets which feature bases crafted from walnut, onyx, cherry and marble. Leather and gift business is conducted by Manetti-Farrow, Incorporated. Based in New York City, this wholly-owned subsidiary of the A .T. Cross Company distributes Fendi and Echo brand leather products and fashion accessories in the U.S. under exclusive agreements. Five-Year Summary, Market & Dividend Information - page 1 Shareholders' Letter - pages 2-3 Cross Highlights - pages 4-9 Financial Highlights - page 10 Consolidated Balance Sheets - page 11 Consolidated Statements of Income & Retained Earnings - page 12 Consolidated Statements of Cash Flows - page 13 Notes to Consolidated Financial Statements - pages 14-20 Report of Ernst & Young - page 21 Management's Discussion & Analysis - pages 21-24 Corporate Information - Inside Back Cover For our one hundred and fiftieth anniversary, we've created our very first limited edition collection. Shown on our cover, this design features a striking engraved flamestitch pattern accented by inlaid barrel bands and a distinctive ball clip. Faithfully recreated from a popular design of the 1930's in a fountain pen, ball-point pen, and pencil. Five-Year Summary A.T. Cross Company & Subsidiaries (Thousands of Dollars) 1995 1994 1993 1992 1991 Operations: Net Sales From Continuing Operations $191,090 $177,136 $164,606 $187,130 $205,248 Income From Continuing Operations Before Income Taxes 20,253 19,016 1,618 19,012 31,964 Income Taxes 6,888 8,482 1,099 6,239 9,200 Income From Continuing Operations 13,365 10,534 519 12,773 22,764 Loss From Discontinued Operations - - (4,000) (1,955) (1,577) Net Income (Loss) 13,365 10,534 (3,481) 10,818 21,187 Cash Dividends Declared 10,581 10,738 13,544 21,648 21,589 Capital Expenditures 10,839 7,662 8,494 4,603 7,094 Depreciation 6,578 5,899 5,495 5,000 5,032 (Thousands of Dollars) Financial Position: Current Assets 135,143 130,727 130,126 143,632 156,906 Current Liabilities 52,439 46,758 40,226 39,831 42,700 Total Assets 189,362 180,369 178,994 194,455 207,635 Working Capital 82,704 83,969 89,900 103,801 114,206 Net Property, Plant and Equipment 38,237 33,950 32,130 40,162 40,594 Shareholders' Equity (Net Worth) 131,714 128,702 134,160 150,616 161,174 (Dollars) Per Share Data: Net Income (Loss): From Continuing Operations 0.81 0.62 0.03 0.76 1.35 From Discontinued Operations - - (0.24) (0.12) (0.09) Total 0.81 0.62 (0.21) 0.64 1.26 Cash Dividends Declared 0.64 0.64 0.80 1.28 1.28 Shareholders' Equity (Book Value) 7.96 7.79 7.92 8.90 9.55 See notes I and J to consolidated financial statements.
Market & Dividend Information The Company's Class A common stock is traded on the American Stock Exchange. At December 31, 1995, there were approximately 2,000 shareholders of record of the Company's Class A common stock and 2 shareholders of record of Class B common stock. The weighted average numbers of shares outstanding were 16,528,876 and 16,872,505 during 1995 and 1994, respectively. High and low stock prices and dividends for the last two years were: Cash Cash Dividends Dividends Quarter High Low Declared Quarter High Low Declared 1995 1994 First 15 1/4 13 1/8 $.00 First 15 7/8 13 3/8 $.00 Second 17 1/4 14 1/4 .16 Second 17 5/8 15 1/8 .16 Third 17 1/4 14 1/2 .16 Third 16 7/8 15 1/2 .16 Fourth 16 7/8 14 .32* Fourth 17 1/8 12 3/4 .32* *One half paid in the fourth quarter and balance paid in the subsequent year first quarter.
To the Shareholders of A.T. Cross Company Entering 1996, our 150th anniversary, we are pleased to report that the A.T. Cross Company is well positioned to continue the growth in sales and earnings experienced over the last two years. We currently have the broadest product offering in the Company's history, with a major new product launch scheduled for the second quarter of 1996. Sales for 1995 were $191.1 million and net income was $13.4 million, or 81 cents per share, compared with sales of $177.1 million and net income of $10.5 million, or 62 cents per share for 1994. Writing instrument sales were $175.6 million, an increase of 8.5% over 1994. Our domestic writing instrument sales were $95.3 million, up 2.6% and foreign sales were $80.3 million, an increase of 16.6%. Manetti-Farrow sales were $15.5 million, essentially unchanged from the prior year. As recently as 1993, Cross had only one viable product line, Century - the cornerstone of our Company's success and growth and a product we have sold since the 1940's. While the writing instrument market changed dramatically during the late 1980's, Cross did not - and our operating results suffered as a result. Beginning in 1993, Cross embraced the philosophy of bringing ongoing excitement and innovation to our market place through new product offerings and new marketing programs. Since then, we have added four new product lines - Townsend, Solo, Solo Classic, and Metropolis. Each of these lines is aimed at a different market, consumer, and distribution channel. Century, our slim-line metal product, represents Cross writing instruments in the minds of virtually all retailers and consumers who are aware of the Cross brand and is arguably the most successful quality writing instrument in history. Its appeal has declined in recent years in the U.S. because of the longevity of the product line and new products made available by our competition. Internationally, Century's position varies among regions and countries; but in general, the product line is not mature and continues to offer growth potential. By introducing new metal and lacquer finishes, Century will meet the needs of consumers who desire a traditional classic slim-line quality writing instrument. Townsend was introduced in 1993 to meet the demand for increasingly popular wide-girth writing instruments. Patterned after the traditional Century line, it is offered in a variety of colorful and unique finishes such as marbleized lacquers, titanium and most recently, lapis lazuli. Townsend has positioned Cross in the upper end of the quality writing instrument market and has bolstered Cross's value and image. In the U.S., this upscale image is being reinforced by strong marketing efforts to carriage trade accounts, strengthening our relationship with these retailers and regaining strategic distribution within department stores and jewelry stores. Solo and Solo Classic represent Cross's first major resin-based product. Solo, offered in vibrant colors and black appointments, appeals to a younger, more casual audience desiring a wide-girth writing instrument at a reasonable price. The acceptance of this line has been slow, but we are currently developing plans to increase its visibility and distribution. Solo Classic, with its more traditional colors and gold electroplated appointments, is targeted to the consumer who wants an elegant looking resin-based writing instrument at a reasonable price. While full retail distribution of this product line will not be achieved until mid-1996, preliminary feedback is that both the trade and the consumer are quite receptive to this product line. Metropolis is a new collection of writing instruments combining polished lacquered caps and fluted-metal barrels designed in a contemporary style, including the fountain pen's nib, which has an engraved sky-scraper silhouette. Metropolis is designed to appeal to progressive professionals - youthful, creative doers and thinkers. With its more contemporary look and feel, Metropolis writing instruments will significantly expand our audience for Cross products. We had a positive limited introduction of the ball- point pen in late 1995 with an expanded launch, in all four writing technologies, scheduled for the second quarter of 1996. On a geographic basis, the U.S. remains our largest market. Our new products allow us to segment the domestic market by demographics and distribution channels, thereby leveraging Cross's strong position as the nation's number one manufacturer of quality writing instruments. Our objective is not just to maintain, but to increase, at least moderately, our sizable U.S. market share. Meanwhile, Cross writing instrument sales outside the U.S. are growing vigorously, despite erratic economic performance in many parts of the world. Last year our foreign sales rose to nearly 46% of total writing instrument sales. Our new product lines, each of which includes a fountain pen, are creating excitement abroad. We expect them to continue to support strong expansion by Cross into potentially large foreign markets. While the last two years have seen a resumption in sales and earnings growth, we have also used this time to stabilize our business and begin to develop the flow of new products that will bring us continued growth in the future. With five distinct product lines, all different, yet carrying the valuable lifetime mechanical guarantee of Cross, we are now positioned to attract consumers at various ages and income levels in all major markets worldwide. All Cross employees are to be commended for their contributions to our renewed growth over the past two years. Their efforts have resulted in tremendous improvements in our production, engraving, marketing and information systems areas. Thank you for your support and continued interest in our Company. As 1996 unfolds, we look forward to reporting the impact of our many new products. Cordially yours, Russell A. Boss Bradford R. Boss President Chairman February 13, 1996 Elegant designs, intricate craftsmanship and innovative genius have been the hallmark of the A. T. Cross Company since it was founded by Richard Cross and Edward Bradbury. They created cases to hold pencils and fountain pen nibs, offering delicate metalwork and beautiful detailing that reflected their training in the art of jewelry making. When Richard's son, Alonzo Townsend Cross, joined the firm, he began to look for ways to improve existing writing instruments. Fountain pens were fragile and messy, and did not have interior ink supplies. Pencils were easier to use and strong enough to create carbon copies, but they left an original that was erasable. In 1877, Alonzo Cross was granted his first patent for a stylographic pen with an ink reservoir and a pencil-like tip - a design that would prove popular with business. Many more patents followed. By 1885, Alonzo Cross was advertising "every pen fully guaranteed." That promise was to become part of the Cross tradition of excellence. [CAPTION] Vintage Cross writing instruments, left to right: sterling silver pencil, 1860-1880; rolled-motif sterling silver telescopic pencil, 1880-1910; engraved thin sterling silver pencil, 1860-1880; engine-turned, rolled-gold pencil case, 1890-1915; vulcanized rubber stylographic pen, 1876-1884; engine-turned, rolled-gold telescopic pencil with black enamel bands, 1916- 1935; rolled-gold, magazine clutch pencil, 1914-1942; jade green marbled pyroxylin pencil with rolled-gold fittings, 1923-1935; blue pyroxylin pencil with rolled-gold fittings, 1927-1935; engine-turned, rolled-gold Cross Coronet pencil, 1946-1957; engine-turned, rolled-gold Cross Zip pencil and hand-engraved reel, 1950-1957; engine-turned, rolled-gold plate pencil with clip and aluminum frustro-conical top and point section 1940- 1952; sterling silver ruler and chrome nail novelty pencils, 1890-1910. The ball-point pen that is synonymous with the name A. T. Cross was first produced in 1952. By that time, there had been major changes at the Company, which had been purchased by Walter Russell Boss, Sr. in 1916. While he guided the cross pencil company through the great depression, his sons Ellery and Russell displayed a talent for design and marketing, respectively. In 1935, the Company introduced a conical-topped, slim-bodied pencil that anticipated the Cross silhouette. During the late 1940's, the company produced pencil mechanisms, while working to create the propel- repel ball-point pen. When introduced in 1952, the ball-point pen and its matching mechanical pencil were aggressively marketed to businesses through a new special markets division. In 1964, Russ became president and set the foundation for the tremendous growth that the Company would experience over the next two decades. In 1971, with Russ, Chairman of the Board, and his sons Brad and Ron, President and Vice President/Treasurer, respectively, the Company sold its initial public offering of stock. [CAPTION] Since its introduction, the Century line of fine writing instruments, with its unique, slim profile has been recognized the world over. Today's Century line includes ball-point pen, mechanical pencil, Rolling Ball SelectipRegistration MarkPen, introduced in 1979, and fountain pen, introduced in Europe in 1982. Cross writing instruments, left to right: Women's Burgundy 0.5mm pencil; Pedrara Onyx double desk set with our 10 karat gold filled, ball-point pen; 10 karat gold filled, ball-point pen and 0.5mm pencil; MedalistRegistration Mark Rolling Ball Selectip Pen, featuring a die-struck Cross emblem; Classic BlackRegistration MarkRolling Ball Selectip Pen, featuring a die-struck Cross emblem; Lustrous Chrome ball-point pen featuring a die-struck Cross emblem; Women's Blue ball-point pen and 0.5mm pencil set in its attractive Pen Purse. In the 1970's, Cross began a global expansion, opening a manufacturing facility in Ballinasloe, Republic of Ireland and then sales offices in Europe and Asia. In the States, new writing technologies were developed - - the felt-tip and the rolling-ball selectipRegistration Mark pen. A woman's line was added and new epoxy shades created. 1985 marked the end of an era with Russ's retirement. His sons, Brad and Ron, continued as Chairman and President, respectively. Competition in the field grew, and Cross responded with cellular manufacturing, a state of the art information system, and extensive marketing and customer research. In 1993, the wider girth Townsend series was launched, with overwhelming success. Solo and Solo Classic, the Company's first resin-based products, followed in 1994. Today, on the 150th anniversary of A. T. Cross, the Company is both strong and vibrant. With the introduction of the new metropolis design we find ourselves with five distinctive lines of writing instruments, each one carrying the time-honored Cross name. [CAPTION] Shown left to right. Our Cross Townsend series of wider girth writing instruments - a Rolling Ball Selectip Pen in marbled green lacquer with 22 karat gold electroplate appointments, a fountain pen in lapis lazuli and a Medalist Rolling Ball Selectip Pen. In our Solo series of wide diameter, composite resin-based writing instruments - a blue Solo Classic fountain pen with 22 karat gold electroplate appointments and a die-struck Cross emblem, and a bright red Solo Rolling Ball Selectip Pen with black matte accents. In our Century line - a 14 karat gold filled ball-point pen. In the new Metropolis series - a blue lacquer and chrome fountain pen, and a black lacquer and 23 karat gold electroplate ball-point pen. All Cross writing instruments come with an unquestioned lifetime mechanical guarantee. Financial Highlights A.T. Cross Company & Subsidiaries{graphs} Net Sales (millions of dollars) '95 191,090 '94 177,136 '93 164,606 '92 187,130 '91 205,248 Net Income (Loss) (millions of dollars) '95 13,365 '94 10,534 '93 ( 3,481) '92 10,818 '91 21,187 Net Income (Loss) per share (dollars) '95 0.81 '94 0.62 '93 (0.21) '92 0.64 '91 1.26 Cash, Cash Equivalents & Short-Term Investments (millions of dollars) '95 53,896 '94 72,021 '93 71,134 '92 65,210 '91 65,930 Working Capital (millions of dollars) '95 82,704 '94 83,969 '93 89,900 '92 103,801 '91 114,206 Shareholders' Equity Book Value Per Share (dollars) '95 7.96 '94 7.79 '93 7.92 '92 8.90 '91 9.55 Consolidated Balance Sheets A.T. Cross Company & Subsidiaries December 31 1995 1994 Assets Current Assets Cash and cash equivalents $ 32,469,549 $ 15,689,564 Short-term investments 21,426,585 56,331,324 Accounts receivable, less allowances for doubtful accounts of $1,745,000 in 1995 and $1,828,000 in 1994 48,017,341 37,435,562 Inventories - Note B: Finished goods 14,499,263 9,612,598 Work in process 7,837,532 2,831,720 Raw materials 7,128,544 4,280,690 29,465,339 16,725,008 Other current assets 3,764,664 4,545,636 Total Current Assets 135,143,478 130,727,094 Property, Plant and Equipment Land and land improvements 1,256,426 1,269,185 Buildings 16,359,227 15,162,030 Machinery and equipment 77,973,736 68,547,378 95,589,389 84,978,593 Less allowances for depreciation 57,352,065 51,028,995 Net Property, Plant and Equipment 38,237,324 33,949,598 Intangibles and Other Assets 15,981,397 15,692,413 $189,362,199 $180,369,105 Liabilities and Shareholders' Equity Current Liabilities Accounts payable $ 12,275,420 $ 8,872,850 Accrued compensation and related taxes 5,308,445 5,158,039 Accrued expenses and other liabilities 17,879,607 17,726,537 Cash dividends payable 2,648,323 2,643,855 Contributions payable to employee benefit plans 9,443,292 8,055,367 Income taxes payable 4,883,640 4,301,670 Total Current Liabilities 52,438,727 46,758,318 Accrued Warranty Costs 5,209,000 4,909,000 Shareholders' Equity - Notes C and D: Common stock, par value $1 per share: Class A - authorized 40,000,000 shares, 15,243,316 shares issued and 14,747,216 shares outstanding in 1995, and 15,194,293 shares issued and 14,719,293 shares outstanding in 1994 15,243,316 15,194,293 Class B - authorized 4,000,000 shares, issued and outstanding 1,804,800 shares 1,804,800 1,804,800 Additional paid-in capital 11,319,614 10,721,412 Retained earnings 110,743,135 107,958,596 Accumulated foreign currency translation adjustment 215,950 328,423 139,326,815 136,007,524 Treasury stock, at cost, 496,100 shares in 1995 and 475,000 shares in 1994 (7,612,343) (7,305,737) Total Shareholders' Equity 131,714,472 128,701,787 $189,362,199 $180,369,105 See notes to consolidated financial statements.
Consolidated Statements of Income & Retained Earnings A.T. Cross Company & Subsidiaries Year Ended December 31 1995 1994 1993 Revenues Net sales $191,090,409 $177,135,770 $164,606,391 Interest and other income 3,617,193 3,943,234 2,516,161 194,707,602 181,079,004 167,122,552 Costs and Expenses Cost of goods sold 94,422,106 88,691,081 84,392,881 Selling, general and administrative expenses 72,553,706 66,794,430 62,846,578 Service and distribution costs 4,487,692 4,542,003 5,042,168 Research and development expenses 2,990,745 2,035,568 2,212,851 Restructuring charges - Note I - - 11,010,000 174,454,249 162,063,082 165,504,478 Income from Continuing Operations Before Income Taxes 20,253,353 19,015,922 1,618,074 Provision for income taxes - Note F 6,888,000 8,482,000 1,099,000 Income From Continuing Operations 13,365,353 10,533,922 519,074 Discontinued Operations, Less Income Tax Benefit - Note J Loss from operations - - (1,500,000) Loss on disposal - - (2,500,000) Loss from Discontinued Operations - - (4,000,000) Net Income (Loss) 13,365,353 10,533,922 (3,480,926) Retained earnings at beginning of year 107,958,596 108,162,260 125,186,939 121,323,949 118,696,182 121,706,013 Cash dividends declared (per share: $0.64 in 1995, $0.64 in 1994, and $0.80 in 1993)-Note C 10,580,814 10,737,586 13,543,753 Retained Earnings at End of Year $110,743,135 $107,958,596 $108,162,260 Income (Loss) Per Share: From Continuing Operations $0.81 $0.62 $0.03 From Discontinued Operations - - (0.24) Net Income (Loss) Per Share $0.81 $0.62 ($0.21) See notes to consolidated financial statements.
Consolidated Statements of Cash Flows A.T. Cross Company & Subsidiaries Year Ended December 31 1995 1994 1993 Cash Provided by (Used in): Operating Activities: Income from continuing operations $ 13,365,353 $ 10,533,922 $ 519,074 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization 7,012,931 6,346,690 6,184,774 Provision for losses on accounts receivable 360,755 405,592 422,719 Deferred income taxes (287,000) 458,000 (2,365,000) Provision for warranty costs 1,050,103 1,195,595 1,454,029 Provision for write-down of fixed assets - - 3,500,000 Changes in operating assets and liabilities: Accounts receivable (11,141,399) (6,806) 1,236,622 Inventories (12,855,331) 2,643,810 9,695,628 Other assets-net 773,518 (1,143,887) (1,542,327) Accounts payable 3,354,448 4,733,123 (1,220,084) Other liabilities-net 2,153,170 2,663,867 7,087,033 Warranty costs paid (750,103) (895,595) (854,029) Foreign currency transaction (gain) loss (194,763) (82,495) 165,544 Net Cash Provided by Continuing Operations 2,841,682 26,851,816 24,283,983 Discontinued operations: Loss from discontinued operations - - (4,000,000) Changes in operating assets and liabilities - - 4,656,906 Net Cash Provided by Discontinued Operations - - 656,906 Net Cash Provided by Operating Activities 2,841,682 26,851,816 24,940,889 Investing Activities: Proceeds from sales of assets of Mark Cross - - 7,023,000 Additions to property, plant and equipment (10,839,460) (7,662,300) (8,493,669) Additional acquisition payment - (687,086) (520,485) Acquisition of minority interest in subsidiary - - (985,211) Purchase of short-term investments (42,638,815) (86,088,263) (32,749,856) Sale or maturity of short-term investments 77,543,554 48,068,902 57,241,963 Net Cash Provided by (Used in) Investing Activities 24,065,279 (46,368,747) 21,515,742 Financing Activities: Cash dividends paid (10,576,346) (10,802,656) (16,248,949) Proceeds from sale of Class A common stock 647,225 262,033 189,631 Purchase of treasury stock (306,606) (7,305,737) - Net Cash Used in Financing Activities (10,235,727) (17,846,360) (16,059,318) Effect of exchange rate changes on cash and cash equivalents 108,751 230,490 18,675 Increase (decrease) in cash and cash equivalents 16,779,985 (37,132,801) 30,415,988 Cash and cash equivalents at beginning of year 15,689,564 52,822,365 22,406,377 Cash and Cash Equivalents at End of Year $ 32,469,549 $ 15,689,564 $ 52,822,365 See notes to consolidated financial statements.
Notes to Consolidated Financial Statements A.T. Cross Company & Subsidiaries December 31, 1995 Note A - Significant Accounting Policies Principles of consolidation: The consolidated financial statements include the accounts of the Company and all of its subsidiaries. Upon consolidation, all material intercompany accounts and transactions are eliminated. The preparation of financial statements in conformity with generally accepted accounting principles requires the use of management estimates. Cash equivalents and short-term investments: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Short-term investments are stated at cost, which approximates market, and consist of interest bearing investments with a maturity of greater than three months when purchased. Cash equivalents and short-term investments are placed only with high-credit quality financial institutions. At December 31, 1995, approximately 66% of the Company's cash, cash equivalents and short-term investments were placed with one financial institution. Short-term investments at December 31, 1995 and 1994 include time deposits, certificates of deposit and certain municipal bonds ("Held-to- Maturity" securities) and other municipal bonds ("Trading" securities) which have a maturity greater than three months. The Company has the positive intent and ability to hold its "Held-to-Maturity" securities until maturity and has stated these investments at cost which approximates market. Trading securities are stated at fair market value. Inventories: Substantially all domestic inventories are priced at the lower of last-in, first-out cost or market. The remaining inventories are priced at the lower of first-in, first-out cost or market. Properties, equipment and related depreciation: Property, plant and equipment are stated on the basis of cost. Provisions for depreciation are computed using a combination of accelerated and straight-line methods which are intended to amortize the cost of such assets over their estimated useful lives. Foreign currency translation: The Company has a program in place to manage foreign currency risk. As part of that program, the Company has entered into foreign currency exchange contracts to hedge anticipated foreign currency transactions or commitments, primarily purchases of materials and products from foreign suppliers, and certain foreign currency denominated balance sheet positions. The terms of the contracts generally correspond with the dates of the anticipated foreign currency transactions. Realized and unrealized gains and losses on those contracts intended to hedge specific foreign currency transactions or commitments are deferred and accounted for as part of the transaction, while gains and losses on other contracts are included in net income. At December 31, 1995, the Company held forward exchange contracts approximating $4,734,000. The fair value of these contracts, which hedge commitments becoming due at various times through August 1996, approximated $4,870,000, based on the December 31, 1995 market prices of comparable instruments. Foreign currency exchange gains (losses) are included in selling, general and administrative expenses and approximated $88,000, $189,000 and $(230,000) in 1995, 1994 and 1993, respectively. Industry segment and nature of operations: The Company predominately operates in one industry segment, writing instruments, and sells to retailers and wholesale distributors throughout the world, principally in North America, Europe and the Far East/Asia. Advertising costs: The costs of advertising are charged to expense as incurred and amounted to $22,245,000, $20,718,000 and $18,145,000 for the years ended December 31, 1995, 1994 and 1993, respectively. Warranty costs: The Company's writing instruments are sold with a full warranty of unlimited duration against mechanical failure. Estimated warranty costs are accrued at the time of sale. Discretionary product repair and replacement costs, not related to mechanical failure, are classified as marketing costs. Net income (loss) per share: Net income (loss) per share is computed based upon the weighted average number of shares of Class A and Class B common stock outstanding during the year (16,528,876, 16,872,505 and 16,927,411 in 1995, 1994 and 1993, respectively). The exercise of outstanding stock options would not result in a material dilution of net income per share. Note B - Inventories Domestic inventories approximating $19,245,000 and $9,107,000 at December 31, 1995 and 1994, respectively, are priced at the lower of last-in, first- out (LIFO) cost or market. The remaining inventories are priced at the lower of first-in, first-out cost or market. If the first-in, first-out method of inventory valuation had been used by the Company for those inventories priced using the last-in, first- out method, inventories would have been approximately $12,907,000 and $13,196,000 higher than reported at December 31, 1995 and 1994, respectively. Note B - Inventories (continued) During 1993 inventory quantities were reduced resulting in the liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of current purchases. The effect of this liquidation was to increase net income by approximately $719,000 or $0.04 per share. The Company believes the LIFO method of inventory valuation ordinarily results in a more appropriate matching of its revenues to their related costs since current costs are included in costs of goods sold and distortions in reported income due to the effect of changing prices are reduced. Note C - Common Stock The Class A and Class B common stock are identical, except for differences with respect to certain voting rights. They are entitled to share equally in dividends that may be declared by the Board of Directors and, upon liquidation, to share ratably in any assets which remain available for distribution on the Class A and Class B common stock. Holders of Class A common stock are entitled to elect one-third of the number of directors. Changes in Class A common stock and additional paid-in capital are shown below (there were no changes in Class B common stock): Class A Common Stock Number Additional of Paid-In Shares Amount Capital Balances at January 1, 1993 15,114,328 $15,114,328 $ 9,101,785 Stock option activity 3,400 3,400 155,100 Stock purchase plan 8,254 8,254 132,877 Balances at December 31, 1993 15,125,982 15,125,982 9,389,762 Stock option activity 10,753 10,753 523,766 Stock purchase plan 8,636 8,636 116,860 Issued to profit sharing trust 48,922 48,922 691,024 Balances at December 31, 1994 15,194,293 15,194,293 10,721,412 Stock option activity 40,984 40,984 484,808 Stock purchase plan 8,039 8,039 113,394 Balances at December 31, 1995 15,243,316 $15,243,316 $11,319,614
Note D - Stock Option and Stock Purchase Plans The Company has an incentive stock option plan and a non-qualified stock option plan under which options to purchase shares of Class A common stock may be granted to key employees. Options to purchase Class A shares may also be granted under the non-qualified plan to members of the Company's Board of Directors. Under the incentive plan, the option price is the mean between the high and low prices of the stock on the date that the option is granted. Under its present terms, the plan will expire in 1998. The term of each option is ten years or such shorter period as may be determined by the Board of Directors. Prior to 1995, the non-qualified stock option plan had an option price of 10% less than the mean between the high and low prices of the stock on the date the option was granted. Compensation expense relating to non-qualified stock options amounted to $399,000 in 1994 and $110,000 in 1993. In 1995, the Company's shareholders approved amendments to the non- qualified stock option plan to increase the number of shares of Class A common stock reserved for issuance by 675,000, and to provide that the option price shall be the mean between the high and low price on the date of grant. The plan has no definite expiration date, but may be terminated by the Board of Directors. The term of each option is ten years or such shorter period as may be determined by the Board of Directors. Note D - Stock Option and Stock Purchase Plans (continued) Stock option activity during the two years ended December 31, 1995 was as follows: Price Shares Options Per Share Reserved Incentive Stock Option Plan: Outstanding at January 1, 1994 405,470 $12.63 to $36.69 610,390 Granted 117,750 $13.88 to $15.44 - Exercised (2,250) $12.63 to $13.88 (2,250) Canceled (59,850) $12.63 to $36.69 - Outstanding at December 31, 1994 461,120 $12.63 to $36.69 608,140 Granted 32,250 $15.75 - Exercised (3,334) $15.44 (3,334) Canceled (62,149) $13.88 to $36.69 - Outstanding at December 31, 1995 427,887 $12.63 to $36.69 604,806 Approximately 385,000 options outstanding were exercisable at December 31, 1995 and 378,000 were exercisable at December 31, 1994. Non-Qualified Stock Option Plan: Outstanding at January 1, 1994 589,719 $11.38 to $33.02 795,300 Granted 176,860 $12.49 to $14.91 - Exercised (8,503) $11.76 to $13.89 (8,503) Canceled (53,069) $11.76 to $32.23 - Outstanding at December 31, 1994 705,007 $11.38 to $33.02 786,797 Addition to shares reserved 675,000 Granted 677,226 $15.19 to $16.75 - Exercised (37,650) $11.38 to $14.85 (37,650) Canceled (83,993) $12.09 to $32.23 - Outstanding at December 31, 1995 1,260,590 $11.38 to $33.02 1,424,147 Approximately 629,000 options were exercisable at December 31, 1995 and approximately 546,000 options were exercisable at December 31, 1994.
The Company also has an employee stock purchase plan allowing eligible employees, other than officers and directors, to purchase shares of the Company's Class A common stock at 10% less than the mean between the high and low prices of the stock on the date of purchase. A maximum of 320,000 shares is available under the plan and the aggregate number of shares reserved was 153,677 and 161,716 at December 31, 1995 and 1994, respectively. Note E- Employee Benefit Plans The Company has a noncontributory defined benefit pension plan, a savings plan and a noncontributory profit sharing plan which cover substantially all domestic employees. Employees of non-U.S. subsidiaries generally receive retirement benefits from company sponsored defined benefit or defined contribution plans or from statutory plans administered by governmental agencies in their countries. The Company does not provide its employees any post-retirement benefits other than those described above. Benefits under the defined benefit plans are based on the employee's years of service and compensation, as defined. The Company's funding policy is consistent with applicable local laws and regulations. The savings plan, established under Section 401(k) of the Internal Revenue Code, allows participants to contribute up to 10% of their annual compensation. The Company will contribute 50% of the participant's contribution, to a maximum of 3% of the participant's salary and bonus. The Company's annual accrual and contribution for both the savings plan and profit sharing retirement trust will not exceed the maximum amount deductible for such year for federal income tax purposes. Note E - Employee Benefit Plans (continued) The following table sets forth the defined benefit plans' combined funded status and amounts recognized in the Company's consolidated balance sheet at December 31 of each year: 1995 1994 1993 Actuarial present value of benefit obligations: Accumulated benefit obligation including vested benefits of $16,331,000 in 1995, $12,297,000 in 1994, and $11,155,000 in 1993 $ 16,877,000 $ 12,667,000 $ 11,720,000 Projected benefit obligation $(23,023,000) $(18,383,000) $(17,204,000) Plan assets at fair value (marketable securities and short-term cash investments) 18,553,000 14,847,000 11,652,000 Projected benefit obligation in excess of plan assets (4,470,000) (3,536,000) (5,552,000) Unrecognized net gain (1,316,000) (1,296,000) (651,000) Unrecognized prior service cost 174,000 161,000 130,000 Unrecognized net transition obligation, net of amortization 421,000 327,000 233,000 Accrued pension cost included in contributions payable to employee benefit plans $ (5,191,000) $(4,344,000) $ (5,840,000) The principal assumptions used in computing the above amounts are as follows: Weighted average discount rate 7.00% 8.00% 7.00% Increase in future compensation 4.00% 5.00% 4.50% Expected long-term return on plan assets 9.00% 8.00% 9.00% Expenses for each of the employee benefit plans are as follows: Service cost-benefits earned during the year $1,316,000 $ 1,519,000 $1,263,000 Interest cost on projected benefit obligation 1,590,000 1,389,000 1,244,000 Actual return on plan assets (3,278,000) 131,000 (635,000) Net amortization and deferral 1,893,000 (1,185,000) (327,000) Net pension cost of defined benefit plans 1,521,000 1,854,000 1,545,000 Savings plan 686,000 621,000 641,000 Profit sharing plan 1,000,000 1,000,000 750,000 Total $3,207,000 $ 3,475,000 $2,936,000 The expense for the profit sharing plan in 1993 represents the approximate market value of Class A common stock which the Company contributed to the plan in 1994.
Note F - Income Taxes The provision (benefit) for income taxes consists of the following: 1995 1994 1993 Currently Payable: Federal $6,673,000 $5,349,000 $ 657,000 State 414,000 637,000 276,000 Foreign 88,000 1,717,000 161,000 7,175,000 7,703,000 1,094,000 Deferred: Federal (236,000) 857,000 (1,912,000) State (60,000) 93,000 (304,000) Foreign 9,000 (171,000) 18,000 (287,000) 779,000 (2,198,000) Total $6,888,000 $8,482,000 $(1,104,000) Income tax (benefit) included in: Continuing operations $6,888,000 $8,482,000 $ 1,099,000 Discontinued operations - - (2,203,000) Total $6,888,000 $8,482,000 $(1,104,000) The reconciliation of income taxes computed at the statutory federal income tax rate to the provision for income taxes from continuing operations is as follows: Statutory federal income tax $7,089,000 $6,656,000 $ 550,000 State income tax expense, less federal tax benefit 230,000 475,000 81,000 Foreign operations 170,000 1,779,000 643,000 Benefit of Foreign Sales Corporation (575,000) (553,000) (300,000) Miscellaneous (26,000) 125,000 125,000 Provision for income taxes $6,888,000 8,482,000 $ 1,099,000
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 are presented below: 1995 1994 Deferred Tax Assets: Accounts receivable $ 516,000 $ 515,000 Additional costs inventoried for tax purposes and inventory reserves not deductible for tax purposes 1,465,000 1,802,000 Excess benefit plan 874,000 654,000 Accrued warranty costs 2,021,000 1,905,000 Accrued pension costs 1,215,000 1,049,000 Intangible assets 575,000 535,000 Net operating loss carryforward 1,325,000 1,334,000 Other 636,000 605,000 8,627,000 8,399,000 Less: valuation allowance (1,325,000) (1,334,000) Total deferred tax assets 7,302,000 7,065,000 Deferred Tax Liabilities: Plant and equipment, principally due to differences in depreciation (174,000) (321,000) Other (97,000) - Total deferred tax liabilities (271,000) (321,000) Net deferred tax asset $ 7,031,000 $ 6,744,000
Note F - Income Taxes (continued) The Company's wholly-owned subsidiary, A. T. Cross Limited ("ATCL") is not subject to the Republic of Ireland statutory income tax rate. Through 2010, ATCL is subject to the 10% rate on profits from sales of Irish manufactured goods, as defined. This lower tax rate reduced income tax expense and increased net income by approximately $625,000 ($0.04 per share) in 1995, $1,692,000 ($0.10 per share) in 1994, and $879,000 ($0.05 per share) in 1993. Beginning in 1994, the earnings of ATCL are subject to taxation in the United States pursuant to anti-deferral legislation. This had the effect of decreasing net income by approximately $549,000 ($0.03 per share) in 1995 and $1,375,000 ($0.08 per share) in 1994. Undistributed earnings of foreign subsidiaries amounted to approximately $70,089,000 and $71,666,000 (including approximately $46 million in 1995 and $54 million in 1994 of cash, cash equivalents and short- term investments). These earnings could become subject to additional tax if they are remitted as dividends, if foreign earnings are lent to the Company or a U.S. affiliate, or if the Company should sell its stock in the subsidiaries. Since it is generally the intention of the Company to invest the undistributed earnings of foreign subsidiaries in the growth of business outside the United States, deferred income taxes have not been provided on such earnings. The amount of additional taxes that might be payable on the foreign earnings approximates $21,700,000. At December 31, 1995, net operating loss carryforwards for certain foreign subsidiaries were approximately $3,389,000 for tax purposes. These losses begin to expire in 1997. Income taxes paid in 1995, 1994 and 1993 were approximately $7,275,000, $4,533,000 and $2,115,000, respectively. Note G - Geographic Information The following table sets forth geographic information for the Company: 1995 1994 1993 Sales to unaffiliated customers: United States $138,749,427 $132,177,946 $122,518,640 Europe and Far East 52,340,982 44,957,824 42,087,751 Total $191,090,409 $177,135,770 $164,606,391 Income (loss) from continuing operations before income taxes: United States $ 15,507,613 $ 14,314,316 $ 2,089,882 Europe and Far East 4,745,740 4,701,606 (471,808) Total $ 20,253,353 $ 19,015,922 $ 1,618,074 Identifiable assets: United States $106,934,644 $ 96,145,653 $ 95,431,780 Europe and Far East 82,427,555 84,223,452 83,562,478 Total $189,362,199 $180,369,105 $178,994,258
Identifiable assets outside the United States include cash, cash equivalents and short-term investments of $46,259,000, $54,178,000 and $53,613,000 at December 31, 1995, 1994 and 1993, respectively. United States sales to unaffiliated customers include export sales of approximately $27,972,000, $23,950,000 and $16,105,000 in 1995, 1994 and 1993, respectively. Note H - Line of Credit The Company has an unsecured line of credit agreement with a bank under which it may borrow up to $50,000,000. Any amounts borrowed under the agreement will be payable on demand and will bear interest at one half of one percent (1/2 of 1%) per annum in excess of the London Interbank Offering Rate (LIBOR). The agreement is cancelable at any time by the Company or the bank. The highest amount borrowed at any time during the year was $4,700,000, however, no amount was outstanding at the end of 1995. Note H - Line of Credit (continued) The Company also has a multi-currency credit arrangement with a bank under which it may borrow up to the equivalent of 7,000,000 U.S. dollars to meet short-term foreign currency needs. This agreement is on an "offering basis", in that the terms and conditions of any transaction shall be mutually agreed upon at the time of each specific transaction. There were no amounts outstanding under this agreement at any time in 1995. Note I - Restructuring and Other Charges The Company recorded restructuring charges of $11,010,000 in 1993 in connection with the consolidation of production and distribution facilities and the reduction of excess manufacturing capacity ($4,600,000); the worldwide reduction of personnel and corporate reorganization ($3,810,000); and the discontinuation of certain product lines ($2,600,000). Assets held for sale, including the Company's distribution center in Lincoln, R.I., are classified in Intangibles and Other Assets in the balance sheet at December 31, 1995. Substantially all other aspects of the restructuring were completed in 1994 as planned. Note J - Discontinued Operations On June 30, 1993, the Company completed the sale of the Mark Cross trademark and selected assets of its wholly-owned subsidiary Mark Cross, Inc. and discontinued its retail business. The following table sets forth summary information relating to Mark Cross: Six Months Ended June 30, 1993 Net sales $ 5,257,470 Costs and expenses 7,577,836 Operating loss before income tax benefit (2,320,366) Income tax benefit relating to operations 820,366 Operating loss (1,500,000) Loss on disposal before income taxes (3,882,634) Income tax benefit relating to loss on disposal 1,382,634 Loss on disposal (2,500,000) Loss from discontinued operations $(4,000,000)
Note K - Quarterly Results of Operations (Unaudited) The following is a tabulation of the unaudited quarterly results of operations for the years ended December 31, 1995 and 1994: (thousands of dollars, except per share data) March 31 June 30 September 30 December 31 1995: Net sales $35,407 $44,883 $44,859 $65,941 Gross profit 17,597 21,668 21,660 35,743 Net income 1,554 1,647 2,751 7,413 Net income per share 0.09 0.10 0.17 0.45 1994: Net sales $35,193 $40,620 $45,928 $55,395 Gross profit 16,686 18,723 21,606 31,430 Net income 1,361 689 2,674 5,810 Net income per share 0.08 0.04 0.16 0.34 Report of Ernst & Young LLP Independent Auditors To the Shareholders of A.T. Cross Company: We have audited the accompanying consolidated balance sheets of A.T. Cross Company and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income and retained earnings, and cash flows for each of the three years in the period ended December 31, 1995. 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of A.T. Cross Company and subsidiaries at December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Providence, Rhode Island January 30, 1996 Management's Discussion and Analysis of Financial Condition and Results of Operations This section, as well as other portions of this document, includes certain statements which are or may be construed as forward looking about the Company's business and new products, sales and expenses, and operating and capital requirements. Any such statements are subject to risks that could cause the actual results or needs to vary materially. These risks are discussed in this document and in the Company's 10-K for its fiscal year ended December 31, 1995 filed with the Securities and Exchange Commission. Results of Operations Comparison of 1995 With 1994 Consolidated net sales increased 7.9% in 1995 compared to 1994. Overall, the increase is attributable to the favorable consumer response to the Company's new product offerings. Domestic net sales increased by $2.5 million, or 2.4%, while foreign net sales, including export sales from the United States, were $11.4 million, or 16.6%, improved over the prior year. United States export sales increased $4.0 million or 16.8% over 1994. The higher domestic sales are largely the result of new products launched this year, in particular the new Solo and Solo Classic lines, and the growing success of the Townsend line, the Company's highest priced product line. While overall domestic unit volume increased 6.2%, most of this increase was derived from Solo which earns lower average selling prices than many of the Company's traditional products. Aggressive promotional pricing on certain older products helped maintain unit volume for those items. Domestic sales in 1995 benefited somewhat from a modest mid-year price increase on selected products. While foreign sales increased in nearly every major market, European sales increased dramatically (20.9%), followed closely by Asia and the Far East (15.0%). The Company has aggressively pursued opportunities to increase its market share in these areas of the world. In addition to new product offerings and promotions which have stimulated international consumer recognition of and demand for Cross products, over the last several years the Company has devoted significant effort toward identifying and replacing poor performing international distributors, and has worked more closely with its distributors to improve the merchandising and promotion of the Cross brand. International sales have benefited further by higher marketing support expenditures, consistent with the Company's efforts to increase market share in key foreign markets. Overall, favorable foreign exchange rates against the lower dollar, particularly in Japan, added to the improvement in sales. The overall consolidated gross margin increased to 50.6% in 1995 from 49.9% in 1994. As cost controls have been effective at keeping production cost increases consistent with general inflation, the higher sales and production volume have had a direct and positive impact on the Company's worldwide margins. Selling, general and administrative expenses increased $5.8 million (8.6%) in 1995 compared to 1994, and were 38.0% of net sales in 1995, as compared to 37.7% in 1994. The increase was due in part to higher marketing support expenses of $1.5 million, as well as higher personnel costs principally in the sales and marketing areas. Some of the personnel costs, and certain other administrative costs, are attributable to the establishment of a European Headquarters facility in Paris, France, organized in connection with the Company's efforts to maximize its growth opportunities in the lucrative European writing instruments market. The weaker dollar also contributed to higher expenses in 1995. Research and development expenses increased $1.0 million or 46.9% from a year ago, reflecting the Company's commitment to developing new products and improving processes and technologies. Service and distribution costs were 1.2% lower than 1994 due to ongoing cost reduction efforts in this area. Interest and other income decreased $0.3 million (8.3%) from 1994. Interest income was higher due to higher interest rates earned on lower average invested funds, and to interest earned on a state income tax refund claim. The higher interest income was offset by lower other income resulting from certain non-recurring gains recorded in the prior year. Income before income taxes improved $1.2 million or 6.5% over 1994. The effective income tax rate in 1995 was 34.0% as compared to the 1994 rate of 44.6%. The Company implemented a reorganization of certain of its European operations at the end of 1994 to reflect a change of functions performed by both its manufacturing and distribution affiliates, and to more closely align the responsibilities of management in each area to their operational objectives. These operational changes had the effect of more closely conforming the Company's effective tax rate with its historical tax rate of 31% (average effective tax rate from 1988 to 1992). The Company expects its effective tax rate in 1996 to be approximately 35%. Comparison of 1994 with 1993 Consolidated net sales increased 7.6% in 1994 compared to 1993. The increase was primarily the result of an approximate 1.0% increase in unit sales combined with higher average unit selling prices, due both to a favorable change in product mix and to an approximate 4.0% mid-year price increase. Domestic sales increased by $1.8 million, or 1.7%, while foreign sales were $10.7 million, or 18.4%, improved over the prior year. The higher 1994 domestic sales reflected the favorable consumer response to many of the Company's new products and marketing initiatives. The Townsend line, the Company's wide-girth product, created new excitement at the prestige end of the high priced writing instrument line. The use of impulse packaging had a positive effect on the Century line. The increase in foreign sales was due, in part, to working closely with foreign distributors to enhance the image of the Cross brand, particularly at the point-of-sale, as well as several new product introductions, aggressive promotional campaigns and an increase in advertising. Foreign sales included United States export sales which increased 48.7% over 1993, due partially to significant growth in the Company's Asian market, and also to a transfer to the United States of certain markets which were previously supplied from the Company's Irish manufacturing plant. Consequently, sales supplied from the Company's Irish manufacturing plant declined 6.8% since 1993. In addition to Asia, growth in the Company's European market was also particularly strong. Overall, favorable foreign exchange rates against the dollar in the Company's key foreign markets added to the improvement in sales. The overall consolidated gross margin increased from 48.7% in 1993 to 49.9% in 1994. The increase over the prior year was due, in part, to the mid-year price increase mentioned earlier, and higher production. Selling, general and administrative expenses increased $3.9 million (6.3%) in 1994 compared to 1993. The increases were primarily due to higher marketing support expenses of $2.6 million combined with higher personnel costs. The weaker dollar also contributed to higher 1994 expenses. Research and development expenses decreased 8.0% from the previous year due principally to the timing of product development expenses and the use of contracted suppliers for certain components of the new Solo line. Although research and development expenses were lower in 1994 than in 1993, the Company remains committed to its product development efforts, as evidenced by the significant increase in 1995. Service and distribution costs were 9.9% lower than the prior year as a result of the closure in 1993 of the Company's separate distribution operation and the consolidation of its distribution operations into its Lincoln manufacturing facility. Interest and other income increased $1.4 million (56.7%) from 1993. Interest income was higher due to higher interest rates earned on higher average invested funds. Other income included certain minor non-recurring gains. The effective income tax rate in 1994 was 44.6% as compared to the 1993 rate of 67.9% on income from continuing operations. The 1994 rate was higher than the Company's historical tax rate of 31% (average effective tax rate from 1988 to 1992) due to changes in U.S. tax laws which resulted in the taxation of income earned by the Company's subsidiary in Ireland at the higher U.S. rate as compared to the 10% effective rate in 1993. The tax rate for 1993 was unusually high due to the effect of operating losses sustained by the Company's foreign subsidiaries for which no current income tax benefit was available on the low level of 1993 pretax income from continuing operations. The Company completed a reorganization at the end of 1994 which resulted in a lower effective tax rate of 34.0% for 1995. Liquidity and Capital Resources Cash, cash equivalents and short-term investments (i.e., cash) decreased $18.1 million in total in 1995 to $53.9 million. Higher inventories and accounts receivable at the end of the year contributed significantly to the lower cash generated from operating activities of $2.8 million, as compared to $26.9 million in 1994. Cash was further reduced by expenditures for additions to fixed assets and cash dividends. Accounts receivable increased $10.6 million primarily due to the higher sales volume in the last months of the year as compared to the same months of 1994, as well as to the higher number of domestic customers who elected to take advantage of the Company's extended payment terms. The Company ordinarily offers domestic retail customers a program whereby they may either delay payment on certain third and fourth quarter purchases until January of the next year, or may earn a greater discount on these purchases if payment is made earlier. As a result, the Company's cash level is lowest at the end of the year when accounts receivable is at its highest. Inventory increased $12.7 million primarily as a result of new products and packaging alternatives. It is the Company's intention to meet certain stringent inventory turnover ratios once the new products have established themselves in the market place and the ordering patterns become more predictable. Also, proportionately more materials are foreign sourced, particularly materials used in some of the Company's newer products, and lead times for these materials are necessarily longer than for domestic sourced materials, resulting in the need for higher inventory levels for these materials. Additions to property, plant and equipment were $10.8 million in 1995, compared to $7.7 million in 1994. The 1995 additions included tooling and equipment costs for new products under development and scheduled for launch in 1996, particularly Metropolis, ongoing improvements and upgrades to manufacturing equipment and facilities, and the continued expansion of the Company-wide integrated information systems network. The Company expects capital expenditures will approximate $10.0 million in 1996, as compared with expected depreciation expense of approximately $7.5 million. The Company's working capital was $82.7 million at the end of 1995, a decrease of $1.3 million from 1994, and its current ratio declined slightly to 2.58:1 at the end of 1995 from 2.80:1 at the end of 1994. The Company has a $50.0 million bank line of credit to meet any temporary cash flow shortages that may arise. The highest amount borrowed against this line at any time during the year was $4.7 million. The Company also has a multi- currency credit arrangement under which it may borrow up to the equivalent of 7.0 million U.S. dollars to meet short-term foreign currency needs. At the end of 1995 there were no outstanding amounts under either credit arrangement. The Company believes that funds from operations and existing cash, cash equivalents and short- term investments supplemented, as appropriate, by the Company's existing short-term borrowing arrangements, will be adequate to finance its foreseeable operating and capital requirements. At the end of 1995, cash available for domestic operations amounted to $7.6 million while cash held offshore for use in international operations amounted to $46.3 million. If in the future the Company determines that the cash held offshore is not necessary for international operations, it may repatriate such cash for use in domestic operations. However, repatriated offshore funds will be subject to additional federal and state income taxes of approximately 32% of the remitted amounts. Impact of Inflation and Changing Prices The Company's operations are subject to the effects of general inflation as well as fluctuations in foreign currencies. In addition, the Company is exposed to volatility in the price of gold and silver as those precious metals are used in the manufacture of its products. The potential risks in these areas are each managed proactively. The Company has generally been successful in controlling cost increases due to precious metal fluctuations and due to general inflation. For example, in recent years the Company completed a restructuring program designed, in part, to reduce worldwide product costs by streamlining the manufacturing process and converting to a just-in-time mode of operation, and to eliminate excess manufacturing capacity. In addition, a new integrated business system has been implemented to help monitor and control costs more effectively. Because of volatility in both the gold bullion and foreign currency markets, the Company has followed the practice of making advance commitments for approximately one year's projected requirements for its gold needs and for a portion of its foreign currency needs. In addition, the Company normally enters into foreign currency forward exchange contracts to hedge that portion of its net financial position that is exposed to foreign currency fluctuations. As noted above, the Company has a multi-currency credit arrangement which may help the Company meet some of its foreign currency needs and may serve as an additional tool for hedging assets and liabilities exposed to foreign currency fluctuations. The Company has adopted accounting practices which tend to reflect current costs in its income statement. Approximately 65%, 54% and 55% of total inventories at the end of 1995, 1994 and 1993, respectively, were accounted for using the last-in, first-out (LIFO) valuation method. Normally under this method, the cost of goods sold reported in the financial statements approximates current costs and, thus, helps reduce distortions in reported income due to the effect of changing prices. Depreciation expense is based on historical costs and, therefore, is lower than if based on the current cost of productive capacity. However, the Company uses accelerated depreciation methods for most assets, thereby reducing operating income by a greater amount than would be the case if the more generally used straight-line method was employed. Assets acquired in prior years will, of course, be replaced at higher costs, but this will take place over many years. These new assets will result in higher depreciation charges, but in many cases, due to technological improvements, there quite likely will be operating cost savings as well. Risks and Uncertainties New Products: The Company's ability to sustain its recent rate of growth in sales depends largely on consumer acceptance of various new products recently introduced and planned for introduction in the coming months. While the Company is optimistic about the prospects of favorable consumer reaction to these new products, the market in which the Company sells is highly competitive, and there is no assurance that such consumer acceptance will be realized to the degree necessary to sustain the Company's growth. Dependence on Certain Suppliers: To maintain the highest level of product quality, the Company relies on a limited number of domestic and foreign suppliers for certain raw materials and manufacturing technologies. The Company may be adversely affected in the event that these suppliers cease operations, or if pricing terms become less favorable. The Company believes, but cannot be assured, that the raw materials currently supplied by these vendors could be obtained from other sources and that the manufacturing technologies could be developed internally or that suitably similar technologies could be located. twenty-fourBoard of Directors Bradford R. Boss Chairman of the Board Class B Director.1,4 Russell A. Boss President and Chief Executive Officer Class B Director.1,4 John E. Buckley Executive Vice President Chief Operating Officer Class B Director. 1,4 Bernard V. Buonanno, Jr. Partner, Edwards & Angell, Providence, Rhode Island Class B Director. 3 H. Frederick Krimendahl, II Limited Partner, The Goldman Sachs Group, L.P., New York, New York Class B Director. 3 Thomas C. McDermott President and Chief Executive Officer, Goulds Pumps, Inc., Fairport, New York Class A Director. 2 Terrence Murray Chairman, President and Chief Executive Officer, Fleet Financial Group, Inc., Boston, Massachusetts Class A Director. 3 James C. Tappan President, Tappan Capital Partners, Hobe Sound, Florida Class A Director. 2 Edwin G. Torrance Partner, Hinckley, Allen & Snyder, Providence, Rhode Island Class B Director. 2 Corporate Officers Bradford R. Boss Chairman of the Board Russell A. Boss President Chief Executive Officer John E. Buckley Executive Vice President Chief Operating Officer David J. Arthur Director, Engineering Tina C. Benik Vice President, Legal General Counsel and Corporate Secretary Joseph F. Eastman Vice President, Human Resources Michael El-Hillow Vice President, Finance Treasurer, Chief Financial Officer Steven T. Henick Vice President, Worldwide Marketing and Sales J. John Lawler Vice President, Worldwide Tax and Duty Free Stephen A. Perreault Vice President, Manufacturing Donald W. Reilly Corporate Controller David A. Rogers Vice President, U.S. Marketing and Sales John T. Ruggieri Vice President, Corporate Development and Planning Corporate Information Corporate Headquarters A.T. Cross Company One Albion Road Lincoln, Rhode Island 02865 U.S.A. Tel. (401) 333-1200 Fax (401) 334-2861 Subsidiaries and Branches ATX Marketing Company, Lincoln, Rhode Island ATX International, Inc., Wilmington, Delaware A.T. Cross Export Company Limited, St. Thomas, Virgin Islands A.T. Cross Limited, Ballinasloe, Republic of Ireland A.T. Cross Distribution, Ballinasloe, Republic of Ireland ATX Ireland, Limited, Ballinasloe, Republic of Ireland A.T. Cross Italia, S.r.l. Milan, Italy A.T. Cross Company, French Branch Paris, France A.T. Cross Company, Hong Kong Branch HongKong A.T. Cross (U.K.) Limited, Luton, Bedfordshire, England A.T. Cross (Europe), Limited, Luton, Bedfordshire, England A.T. Cross Company, Spanish Branch Malaga, Spain A.T. Cross Deutschland GmbH, Mainz, Federal Republic of Germany Cross Company of Japan, Limited, Tokyo, Japan Manetti-Farrow, Incorporated, New York, New York Annual Meeting The Annual Meeting of Shareholders of A.T. Cross Company will be held on Thursday, April 25, 1996 at 10:00 a.m. at the offices of the Company, One Albion Road, Lincoln, Rhode Island 02865. Legal Counsel Hinckley, Allen & Snyder, Providence, Rhode Island 02903 Auditors Ernst & Young LLP, Providence, Rhode Island 02903 Stock Symbol American Stock Exchange Symbol: ATX.A Transfer Agent and Registrar Fleet National Bank of Rhode Island, Providence, Rhode Island 02903 10-K Report A copy of the Company's report to the Securities and Exchange Commission on Form 10-K will be furnished free of charge to any security holder upon written request to the Vice President, Finance, at One Albion Road, Lincoln, Rhode Island 02865. Board Committees: 1. Executive; 2. Audit; 3. Compensation; 4. Employee Benefits.Printed in the U.S.A. on recycled paper.
EX-23 6 Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10- K) of A. T. Cross Company of our report dated January 30, 1996, included in the 1995 Annual Report to Shareholders of A. T. Cross Company. Our audits also included the financial statement schedule of A. T. Cross Company listed in Item 14. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in Post-Effective Amendment Number 6 to Registration Statement Number 2-54429 on Form S-8, Post-Effective Amendment Number 9 to Registration Statement Number 2-42388 on Form S-8, Registration Statement Number 33-23709 on Form S-8, Registration Statement number 33-23710 on Form S-8, Registration Statement Number 33-54176 on Form S-8, Registration Statement Number 33-64729 on Form S-8, and Registration Statement Number 33-64731 on Form S-8 of our report dated January 30, 1996, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of A. T. Cross Company. ERNST & YOUNG LLP Providence, Rhode Island March 26, 1996 EX-27 7
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS INCLUDED IN THE A. T. CROSS COMPANY ANNUAL REPORT TO SECURITY HOLDERS FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1995 DEC-31-1995 53,896,134 0 49,762,341 1,745,000 29,465,339 135,143,478 95,589,389 57,352,065 189,362,199 52,438,727 0 0 0 17,048,116 114,666,356 189,362,199 191,090,409 194,882,103 94,422,106 0 79,671,388 360,755 174,501 20,253,353 6,888,000 13,365,353 0 0 0 13,365,353 0.81 0.80
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