-----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, E96m81ix/Ti+l4+Xmc7VVamMaUUyQkjkLSKf+c+iqiMJ294MbsOoPgWRu9JPOUJX eaZldEtNqtT1Zjve6nZnbQ== 0000912057-96-021150.txt : 19960926 0000912057-96-021150.hdr.sgml : 19960926 ACCESSION NUMBER: 0000912057-96-021150 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960925 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROBINSON NUGENT INC CENTRAL INDEX KEY: 0000276747 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 350957603 STATE OF INCORPORATION: IN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-09010 FILM NUMBER: 96634473 BUSINESS ADDRESS: STREET 1: 800 E EIGHTH ST STREET 2: PO BOX 1208 CITY: NEW ALBANY STATE: IN ZIP: 47151-1208 BUSINESS PHONE: 8129450211 MAIL ADDRESS: STREET 1: PO BOX 1208 STREET 2: 800 E EIGHTH ST CITY: NEW ALBANY STATE: IN ZIP: 47151-1208 10-K 1 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 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 JUNE 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EX-CHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _______________ to __________________ Commission file number 0-9010 ROBINSON NUGENT, INC. (Exact name of registrant as specified in its charter) Indiana 35-0957603 (State or other jurisdiction of (I.R.S. Employer organization or incorporation) Identification Number) 800 East Eighth Street, New Albany, Indiana 47151-1208 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (812) 945-0211 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Shares, Common Share Without Par Value Purchase Rights Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any Amendment to this Form 10-K. [ ] The Index of Exhibits is located at page 18 in the sequential numbering system. Total pages: 22. The aggregate market value of Common Shares held by nonaffiliates of the registrant, based on the closing price of the Common Shares as of September 16, 1996, was approximately $23,541,619. As of September 16, 1996, the registrant had outstanding 4,891,765 Common Shares, without par value. DOCUMENTS INCORPORATED BY REFERENCE: PARTS OF FORM 10-K INTO WHICH IDENTITY OF DOCUMENT DOCUMENT IS INCORPORATED 1996 Annual Report to Shareholders Parts I and II Definitive Proxy Statement with respect to Parts II and III the 1996 Annual Meeting of Shareholders of registrant. PART I ITEM 1. BUSINESS GENERAL Robinson Nugent, Inc. (the "Company"), an Indiana corporation organized in 1955, designs, manufactures and markets electronic devices used to interconnect components of electronic systems. The Company's principal products are integrated circuit sockets; connectors used in board-to-board, wire-to-board, and wire-to-wire applications; and custom molded-on cable assemblies. The Company also offers application tooling that is used in applying wire and cable to its connectors. The Company's products are used in electronic telecommunication equipment including switching and networking equipment such as servers and routers, modems and PBX stations; data processing equipment such as mainframe computers, personal computers, workstations, CAD systems and peripheral equipment such as printers, disk drives, plotters and point-of-sale terminals; industrial controls and electronic instruments, both medical and industrial; consumer products; automotive electronics; and in a variety of other applications. Major markets are the United States, Europe, Japan, and the southeast Asian countries including Singapore and Malaysia. Manufacturing facilities are located in New Albany, Indiana; Dallas, Texas; Kings Mountain, North Carolina; Fremont, California; Delemont, Switzerland; Sungai Petani, Malaysia; Inchinnan, Scotland; and Hamont-Achel, Belgium. Corporate headquarters are located in New Albany, Indiana, which also is the site for the Company's engineering, research and development, preproduction and testing of new products. International headquarters are located in s-Hertogenbosch, Netherlands; Singapore; and Tokyo, Japan. RECENT DEVELOPMENTS In April 1996, the Company's Board of Directors authorized the purchase of up to 500,000 Common Shares of the Company in open market, or privately negotiated transactions. The share repurchase program was completed in June 1996, as the Company purchased 499,843 of its Common Shares. In February 1995, the Company acquired Teckino Manufacturing b.v.b.a. (Robinson Nugent, Belgium), a manufacturing and engineering development company located in Hamont-Achel, Belgium. Robinson Nugent, Belgium produces connectors and other specialized electronic molded parts. The acquisition has been accounted for by the purchase method of accounting and the results of operations of Robinson Nugent, Belgium have been included in the Company's consolidated financial statements since the date of acquisition. In June 1996, Teckino Manufacuturng b.v.b.a.'s name was changed to Robinson Nugent, Belgium b.v.b.a. The Company formed ISOCON L.C., a joint venture with Components Circuits Inc. of Tempe, Arizona in May, 1995. The new company, ISOCON L.C., was established to merge the technical and marketing resources of the two companies for the development and sale of special electronic connector products. In December 1995, this joint venture was dissolved by mutual consent. PRODUCTS The Company produces a broad range of sockets that accommodate a variety of integrated circuit package styles. Sockets are offered for dual-in-line package (DIP) and pin grid array (PGA) devices, as well as leaded and leadless chip carriers. Dual in-line memory module (DIMM) sockets were introduced in fiscal 1992. These sockets, which are designed to interconnect dual in-line memory modules, continue to be among the fastest growing electronic interconnect products in the world market. During 1996, the industry acceptance of this technology resulted in a migration of DIMM products from a customer specific to a standardized component. The enlarged worldwide market volume resulted in increased competition and rapid price erosion. The Company has redesigned the DIMM product line to be more competitive at the lower market prices. Sockets are used in a wide variety of applications within electronic equipment but are primarily used to interface integrated circuits, such as microprocessors and memory devices, to an electronic printed circuit board. In many applications, semiconductor devices are subject to replacement, which encourages the use of a socket rather than soldering the device directly to the printed circuit board. The demand for sockets is directly related to the demand for products which employ integrated circuits. The worldwide demand for dual in-line package (DIP) sockets is decreasing due to the maturity of the semiconductor package, while the demand for high-density and surface-mount sockets is increasing. The growing demand is due to the development of semiconductor package styles with very large counts of signal ports and new technologies such as ball grid and land grid array packages and interstitial pin patterns. The Company's newest socket products are designed to meet high-density and surface-mount requirements. The Company provides a broad range of electronic connectors, such as insulation displacement flat cable connectors (IDC), used in cable-to-cable and cable-to-board applications. The use of insulation displacement connectors in electronic hardware increases productivity by eliminating labor involved in stripping insulation from wires prior to attachment to the leads, and permits automation of the manufacture of cable assemblies. The range of connectors also includes several product styles that provide for board-to-board or board-stacking (parallel-mounting) applications. The Company manufacturers a line of personal computer memory card sockets and headers which provide interconnect for faxing, networking and computer expansion capabilities. In 1995, the Company broadened this line to include type III card kits and other options which enhanced the interchangability of this product line within this industry. The Company offers several product families in the two-piece style of connectors. These connectors are used to connect printed circuit boards which are positioned either at right angles, in-line, or parallel stacked at close intervals. The products offered include .025 inch square post connectors and receptacle sockets; DIN series connectors; high-density, high-pin-count connectors (HDC); half-pitch, high-density (PAK-50) connectors; 2-millimeter-spaced, high-density connectors (PAK-2); and a new higher pin count 2-millimeter-spaced connector (METPAK-Registered Trademark-2) used in backplane applications. In 1995, a new line of high density 1.0mm, .8mm and .5mm board stacking interconnects were introduced by the Company to address the growing demand for miniaturized connectors in the portable computer and communication equipment markets. The DIN series of connectors has many variations in connecting configurations and pin count. The product is based on a European standard, but has gained wide acceptance in the U.S. and other markets worldwide. While there are a large number of producers of DIN connectors in Europe, the Company is one of a limited number of manufacturers producing the product in the U.S. The high-pin-count, high-density connector (HDC) includes pin counts ranging from 60 to 492 in a three- and four-row configuration. This connector family, along with DIN connectors, is widely used on backplane applications and frequently requires the terminals to be press-fit to the backplane. This is accomplished by forming a compliant section in the tails of the connector contacts that, when pressed into a plated through-hole on a backplane, forms a reliable gas-tight connection without soldering. The Company has become recognized as a leader in press-fit backplane connectors and has focused marketing efforts in promoting its products for this type of application. The Company's half-pitch (PAK-50) connector family has been accepted as one of the industry's most reliable .050 inch spaced connectors. The contact design and compact shape has gained wide acceptance in applications, such as small form factor computers that require connectors that are highly reliable yet consume little space. The design of a low profile, surface-mounted socket, called PAK-2 serves the requirements of miniature disk drives and PDA (personal digital assistance) sectors of this industry. The METPAK-Registered Trademark-2 series of connectors includes four and five row versions of both standard and inverse configurations. The METPAK-Registered Trademark-2 is a new industry standard connector style used in board-to-board and board-to-back plane applications and over time will displace some of the more mature product types. This product line has wide acceptance in new designs, primarily in the computer workstation, communication and networking markets. The inverse METPAK-Registered Trademark-2 is a patented Company design which is gaining acceptance in mid-range computer and communications equipment. Technology continues to move the industry to an ever-increasing number of circuits per socket or connector to meet the increasing complexity of electronics systems or the increased capacity and processing speed of semiconductor devices. This results in increased demand for high-density connector products. Just as in sockets, the Company is focusing its new product development in connector products that meet these technology trends. Customers expect connector manufacturers to provide special tools required to utilize sockets and connectors. The Company offers a line of insertion and extraction tools in support of the socket, IDC, input/output (I/O), and two-piece connector lines. Cablelink, Incorporated, a wholly-owned subsidiary of the Company, produces cable assemblies of various types including IDC, fabricated and molded-on cable assemblies. Cablelink utilizes Robinson Nugent connectors whenever possible, but also provides cable assemblies with other manufacturers' connectors if the customer is specific regarding its requirements. In addition to standard products, the Company provides engineering assistance and product design and manufacturing of custom and derivative products. These products may require special production tooling that, in some cases, is paid for by the customer, shared, or amortized over future orders, depending upon contractual agreements reached with the customer. In some cases, the customer supplies the Company with a complete product design, but more often the design is produced solely by Company engineers. Current trends in the market indicate a growing demand for custom and derivative products. There is also an increased demand for the Company's engineers to be involved in the early development of the customer's product design. RESEARCH, DEVELOPMENT AND ENGINEERING The Company's engineering efforts are directed toward the development of new products to meet customer needs, the improvement of manufacturing processes and the adaptation of new materials to all products. New products include new creations as well as the design of derivative products to meet both the needs of the general market and customer proprietary custom designs. Engineering development covers new or improved manufacturing processes, assembly and inspection equipment, and the adaptation of new plastics and metals to all products. In recent years, the Company's products have become more sophisticated and complex in response to developments in semiconductors and their application. In 1994, the Company added the engineering capability to analyze customer high-speed applications and to design connectors that reduce electrical interference that can result from very high processing speeds of newer and more powerful microprocessors. In 1995, the Company's European operation's development capabilities were expanded with the acquisition of Robinson Nugent Belgium. Robinson Nugent Belgium's developmental skills in precision miniature connecting systems and electronic molded parts will enhance Europe's ability to produce unique designs to fulfill customer requirements. The Company's expenditures for research, development and engineering were approximately $3.7 million in 1996, $3.1 million in 1995, and $2.5 million in 1994. Consistent with industry direction, the Company is active in improving manufacturing processes through automation and also designs and builds its proprietary assembly equipment. The Company continues to apply advanced technologies, such as laser and video devices, to automatically inspect products during the assembly process. All new assembly machines are direct microcomputer-controlled, which provides greater flexibility in the manufacturing process. The Company continues to incorporate the latest technology in its electroplating process and to replace older injection molding machines with new machines that utilize the latest programmable controls. SALES AND DISTRIBUTION The Company sells its products in the United States and international markets. The major market is the U.S. which produces approximately two-thirds of the consolidated sales of the Company. Its principal markets outside the U.S. are Europe, including the United Kingdom, Japan, Singapore, Malaysia, Hong Kong, and the emerging market of China. The southeast Asian countries continue to grow rapidly, and the Company has established a marketing and sales headquarters in Singapore. Sales to other Far East countries provide business opportunities and are expected to grow moderately. Sales in China have been initiated and have resulted in the Company doing business in China through its Hong Kong distributor. Sales outside the U.S. accounted for 36 percent of total sales in 1996, 40 percent in 1995 and 34 percent in 1994. The Company believes that development of global markets is essential to support the customer base. This is particularly the case in Asia where the market is the fastest growing in the world and is currently considered the second largest market for electronics and connector products. The Company does not believe that its international business presents any unusual risks other than with respect to changes in currency exchange rates. The following table sets forth the percentage of Company sales by major geographical location for the periods shown: YEARS ENDED JUNE 30 ------------------------ 1996 1995 1994 ---- ---- ---- United States 64% 60% 66% Europe 24 25 19 Asia 10 13 14 Other 2 2 1 ---- ---- ---- 100% 100% 100% ---- ---- ---- ---- ---- ---- No sales to a single customer exceeded 10% of total net sales in 1996 or 1994. During 1995, the Company had sales to a single customer in excess of 10% of total net sales. Other financial data relating to domestic and foreign operations are included in Note (17), Business Segment and Foreign Sales, of Notes to Consolidated Financial Statements and the Management's Discussion and Analysis of the Results of Operations and Financial Condition, included herein or incorporated by reference as a part of this Report. Principal markets in North America, Europe, and Asia are served by the Company's direct sales force and a network of distributors serving the electronic industry. The Company has U.S. regional offices located in the San Francisco, California and Chicago, Illinois metropolitan areas. Other Company sales offices are located in Japan, Singapore, England, Germany, Sweden, Netherlands, France, and Italy. These offices service customers to whom the Company sells directly, provide coordination between the plants and customers, and provide technical training and assistance to distributors and manufacturers' representatives in their respective territories. Additional marketing expertise is provided by the product marketing specialists located in New Albany, Indiana; Kings Mountain, North Carolina; London, England; and s.Hertogenbosch, Netherlands, who provide assistance and technical information in support of all field requirements. The Company engages independent manufacturers' representative firms in the United States, Canada and several Far East countries, who are granted exclusive territories and agree not to carry competing products. These firms are paid on a commission basis on sales made to original equipment manufacturers and to distributors. All representative relationships are subject to termination by either party on short notice. The Company has an international network of distributors who are responsible for serving their respective customers from an inventory of the Company's products. Approximately 31 percent of the Company's worldwide sales are made through the distributor network. No distributor is required to accept only the franchise of the Company. All distributor agreements are subject to termination by either party on short notice. BACKLOG The Company's backlog was approximately $15.9 million at June 30, 1996, $15.3 million at June 30, 1995, and $13.6 million at June 30, 1994. These amounts represent orders with firm shipment dates acceptable to the customers. The Company does not manufacture pursuant to long-term contracts, and purchase orders are generally cancelable subject to payment by the customer for charges incurred up to the date of cancellation. With just-in-time delivery objectives, customers have reduced order quantities, but are placing orders more frequently and expecting shorter lead times from point of order to point of shipment. COMPETITION There is active competition in all of the Company's standard product lines. The Company's competitors include both large corporations having significantly more resources than the Company and smaller, highly specialized firms. The Company competes on the basis of customer service, product performance, quality, and price. Worldwide price erosion continued in a variety of the Company's product lines, reflecting a migration of some products to a commodity category, and the leveraging of higher volume purchases. Management believes that the Company's capabilities in customer service, new product design and its continued efforts to reduce cost of products are significant factors in maintaining the Company's competitive position. MANUFACTURING The Company's manufacturing operations include plastic molding, electroplating and assembly. The Company designs and builds the majority of its automated and semiautomated assembly machines for use in-house and utilizes subcontractors on a limited basis for product assembly where volume does not warrant the cost of automation. RAW MATERIALS AND SUPPLIES The Company utilizes copper alloys, precious metals, and plastics in the manufacture of its products. Although some raw materials are available from only a few suppliers, the Company believes it has adequate sources of supply for its raw material and component requirements. Raw material prices did not increase or decrease materially during fiscal year 1996. Use of gold is significant, but has declined in demand over the past several years. Plating processes using ROBEXTM, a palladium nickel alloy, and tin have accelerated in demand from customers of the Company. As a result of a gold consignment agreement with a bank, the Company is not exposed to a significant market risk of carrying gold inventories. The Company is not required to procure its gold under this arrangement, and may acquire gold from other sources. The Company is not obligated beyond one year with any supplier. HUMAN RESOURCES As of June 30, 1996, the Company had approximately 806 full-time employees; 505 in the United States, 142 in Europe and 159 in Asia and Japan. PATENTS AND TRADEMARKS Management believes that success in the electronic connector industry is dependent upon engineering and production skills and marketing ability; however, there is a trend in the industry toward more patent consideration and protection of proprietary designs and knowledge. The Company has pursued patent applications more frequently. The Company reviews each new product design for possible patent application. The Company has been granted several patents over the past three years and is presently awaiting acceptance on other pending applications. The Company has obtained registration of its trade and service marks in the United States and in major foreign markets. ENVIRONMENT The Company's manufacturing facilities are subject to several laws and regulations designed to protect the environment. In the opinion of management, the Company is complying with those laws and regulations in all material respects and compliance has not had and is not expected to have a material effect upon its operations or competitive position. EXECUTIVE OFFICERS OF THE COMPANY The current executive officers of the Company are: SERVED IN PRESENT NAME AGE POSITIONS HELD CAPACITY SINCE - ------------------ --- ------------------ ---------------- Larry W. Burke 56 President & Chief 1990 Executive Officer Anthony J. Accurso 46 Vice President, 1994 Treasurer & Chief Financial Officer W. Michael Coutu 45 Vice President of 1992 Operations Franklin D. Banet 59 Vice President and 1996 Plant Manager William D. Gruhn 58 Vice President 1996 North America Sales The Bylaws of the Company provide that the officers are to be elected at each Annual Meeting of the Board of Directors. Under the Indiana Business Corporation Law, officers may be removed by the Board of Directors at any time, with or without cause. Mr. Thomas E. Merten, Vice President of Marketing, resigned as of June 1996. ITEM 2. PROPERTIES The Company owns a 36,000-square-foot building used for its executive offices, engineering department, quality assurance and administrative operations, and an adjacent 83,000-square-foot manufacturing facility located on approximately four acres in New Albany, Indiana. Manufacturing operations at New Albany were terminated on June 30, 1988 as a result of the consolidation of U.S. manufacturing of connectors and sockets in the Company's Dallas, Texas facility. A portion of the New Albany manufacturing facility is utilized by the Company's engineering, research and preproduction development groups. Manufacturing operations were reinstituted in 1990 on a limited basis and brokered product is inventoried at the New Albany site. In addition, the New Albany facility is instrumental in training plant personnel on new equipment prior to release to the manufacturing facilities in Dallas, Europe and Malaysia. The Company owns a 60,000-square-foot manufacturing facility located on approximately five acres in Dallas, Texas, and a 50,000-square-foot manufacturing facility located on approximately two acres in Delemont, Switzerland. In July, 1993, the Company acquired a facility with approximately 25,000 square feet in Inchinnan, Scotland under a long-term lease and relocated connector assembly operations from Delemont, Switzerland. Today, the Company's Delemont, Switzerland plant is utilized primarily for plating with a limited amount of manufacturing. In February, 1995, the Company acquired a manufacturing and engineering facility with approximately 14,000 square feet in Hamont-Achel, Belgium as part of the Robinson Nugent Belgium acquisition. In February, 1992, the Company occupied a manufacturing facility with approximately 10,000 square feet in Issogne, Italy under a three-year lease in connection with the acquisition of its new cable assembly operation. The Company closed this facility in October, 1993 and relocated manufacturing operations to other plant sites. The Company's Cablelink operations are located in leased facilities of approximately 40,000 square feet in Kings Mountain, North Carolina and approximately 10,000 square feet in Fremont, California. In June, 1991, a new manufacturing facility with approximately 21,000 square feet was acquired under a long-term lease arrangement in Sungai Petani, Malaysia. This facility was originally leased to establish the Cablelink operation in Asia, and currently, both cable assemblies and connectors are manufactured there. ITEM 3. LEGAL PROCEEDINGS. Other than ordinary routine litigation incidental to the business, there are no pending legal proceedings to which the Company is a party. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders of the Company during the fourth quarter of the fiscal year covered by this report. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information included under the caption "Price Range and Dividend Information" on page 9 of the Company's 1996 Annual Report to Shareholders (the "1996 Report") is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. The information contained in the columns "1992-1996" in the table under the caption "Ten-Year Financial Summary" on pages 4 and 5 of the 1996 Report is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULTS OF OPERATIONS. The information contained under the caption "Management's Discussion and Analysis of the Results of Operations and Financial Condition" on pages 6 through 8 of the 1996 Report is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information contained in the "Consolidated Financial Statements of the Company and Notes thereto" and the report of independent accountants on pages 10 through 23 in the 1996 Report is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information included under the captions "Nominees," "Business Experience of Directors," "Family Relationships," and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Company's definitive 1996 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION. The information included under the captions "Compensation of Directors," "Compensation Committee Interlocks and Insider Participation," "Executive Compensation," "Report of the Compensation and Stock Option Committees," and "Stock Performance Graph" in the Company's definitive 1996 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information contained under the captions "Beneficial Ownership of Common Shares" and "Nominees" in the Company's definitive 1996 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information contained under the caption "Certain Transactions" in the Company's definitive 1996 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) DOCUMENTS FILED AS A PART OF THIS REPORT. (1) FINANCIAL STATEMENTS Reports of Independent Accountants Consolidated Balance Sheets as of June 30, 1996, 1995, and 1994 Consolidated Statements of Income for the years ended June 30, 1996, 1995, and 1994 Consolidated Statements of Shareholders' Equity for the years ended June 30, 1996, 1995, and 1994 Consolidated Statements of Cash Flows for the years ended June 30, 1996, 1995, and 1994 Notes to Consolidated Financial Statements (2) FINANCIAL STATEMENT SCHEDULE Schedule for the years ended June 30, 1996, 1995, and 1994: II Valuation and Qualifying Accounts All other schedules are omitted, as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. (3) EXHIBITS 3.1 Articles of Incorporation of Robinson Nugent, Inc. (Incorporated by reference to Exhibit 3.1 to Form S-1 Registration Statement No. 2-62521.) 3.2 Articles of Amendment of Articles of Incorporation of Robinson Nugent, Inc. filed September 1, 1978 (Incorporated by reference to Exhibit B(1) to Form 10-K Report for year ended June 30, 1980.) 3.3 Articles of Amendment of Articles of Incorporation of Robinson Nugent, Inc. filed November 14, 1983 (Incorporated by reference to Exhibit 3.3 to Form 10-K Report for year ended June 30, 1984.) 3.4 Amended and Restated Bylaws of Robinson Nugent, Inc. adopted November 7, 1991. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for year ended June 30, 1992). 4.1 Specimen certificate for Common Shares, without par value. (Incorporated by reference to Exhibit 4 to Form S-1 Registration Statement No. 2-62521.) 4.2 Rights Agreement dated April 21, 1988 between Robinson Nugent, Inc. and Bank One, Indianapolis, NA. (Incorporated by reference to Exhibit I to Form 8-A Registration Statement dated May 2, 1988.) 4.3 Amendment No. 1 to Rights Agreement dated September 26, 1991. (Incorporated by reference to Exhibit 4.3 to Form 10-K Report for year ended June 30, 1991.) 4.4 Amendment No. 2 to Rights Agreement dated June 11, 1992. (Incorporated by reference to Exhibit 4.4 to Form 8-K Current Report dated July 6, 1992.) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.1 to Form 10-K Report for year ended June 30, 1983.) 10.2 Robinson Nugent, Inc. 1983 Non Tax- Qualified Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.2 to Form 10-K Report for year ended June 30, 1983.) 10.3 1993 Robinson Nugent, Inc. Employee and Non-Employee Director Stock Option Plan. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for the year ended June 30, 1993.) 10.4 Summary of The Robinson Nugent, Inc. Stock Employee Stock Purchase Plan. (Incorporated by reference to Exhibit 19.2 to Form 10-K Report for the year ended June 30, 1993.) 10.5 Deferred compensation agreement dated May 10, 1990 between Robinson Nugent, Inc. and Larry W. Burke, President and Chief Executive Officer, and related agreement dated May 10, 1990 between Robinson Nugent, Inc. and PNC Bank, Kentucky, Inc.(formerly Citizens Fidelity Bank and Trust Company of Louisville, Kentucky) as trustee. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for year ended June 30, 1990.) 10.6 Summary of Robinson Nugent, Inc. Bonus Plan for the fiscal year ended June 30, 1997. 13.0 1996 Annual Report to Shareholders of Robinson Nugent, Inc. 21.0 The subsidiaries of the registrant are: JURISDICTION NAME OF ORGANIZATION ---- --------------- Cablelink, Incorporated Indiana RNL, Inc. Indiana Robinson Nugent-Dallas, Inc. Texas Robinson Nugent, S.A.R.L. France Robinson Nugent, GmbH Germany Robinson Nugent, Ltd. Great Britain Nihon Robinson Nugent K.K. Japan Robinson Nugent dba Cablelink Malaysia (Malaysia) Sdn. Bhd. Robinson Nugent (Malaysia) Sdn. Bhd. Malaysia Robinson Nugent, S.A. Switzerland Robinson Nugent (Scotland) Limited Scotland Robinson Nugent International, Inc. Virgin Islands Robinson Nugent (Europe) B.V. Netherlands Robinson Nugent Belgium, b.v.b.a. Belgium Robinson Nugent (Asia Pacific) Pte. Ltd. Singapore Robinson Nugent Nordic, filial Sweden till Robinson Nugent (Europe) B.V. The Netherlands 23.0 Consent of Coopers & Lybrand L.L.P. Independent Accountants 27.0 Financial Data Schedule. (b) REPORTS ON FORM 8-K The Company filed a Form 8-K report during the last quarter of fiscal 1996, relating to a common share repurchase program initiated in April and completed in June 1996. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. ROBINSON NUGENT, INC. Date: ____________________ By: _______________________________________ Larry W. Burke, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: ___________________ By: _______________________________________ Samuel C. Robinson, Director Date: ___________________ By: _______________________________________ Larry W. Burke, Director, President and Chief Executive Officer (Principal Executive Officer) Date: ___________________ By: _______________________________________ Patrick C. Duffy, Director Date: ___________________ By: _______________________________________ Richard L. Mattox, Director Date: ___________________ By: _______________________________________ Diane T. Maynard, Director Date: ___________________ By: _______________________________________ Jerrol Z. Miles, Director Date: ___________________ By: _______________________________________ James W. Robinson, Director Date: ___________________ By: _______________________________________ Richard W. Strain, Director Date: ___________________ By: _______________________________________ Anthony J. Accurso, Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Robinson Nugent, Inc. We have audited the accompanying consolidated balance sheets of Robinson Nugent, Inc. and Subsidiaries, as of June 30, 1996, 1995 and 1994, the related consolidated statements of operations, shareholders' equity and cash flows and the financial statement schedule for each of the three years then ended as listed in Item 14 of this Form 10-K for the year ended June 30, 1996. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Robinson Nugent, Inc. and Subsidiaries, as of June 30, 1996, 1995 and 1994, and the results of their operations and their cash flows for each of the three years then ended in conformity with generally accepted accounting principles. In addition, 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 required to be included therein for the years ended June 30, 1996, 1995 and 1994. COOPERS & LYBRAND L.L.P. Louisville, Kentucky August 2, 1996 ROBINSON NUGENT, INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES JUNE 30, 1996, 1995, AND 1994 Financial Statement Schedule for the years ended June 30, 1996, 1995, and 1994 is included herein: II Valuation and Qualifying Accounts All other schedules are omitted, as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS ROBINSON NUGENT, INC. AND SUBSIDIARIES (IN THOUSANDS OF DOLLARS)
Col. A Col. B Col. C Col. D Col. E -------------- ------------- ------------------------------------ ------------ ---------- Balance Additions Balance Description at Beginning Charged to Costs Charged to Other Deductions - at End of Period and Expenses Accounts-Describe Describe of Period - ------------------------ ------------- ---------------- ----------------- ------------ --------- YEAR ENDED JUNE 30, 1996 Deducted from asset accts Allowance for doubtful accounts $ 651 $ 205 $ -- $ 117(A) $ 739 Allowance for inventory obsolescence & valuation 1,585 1,071 -- 1,043(B) 1,613 ------- ------- ------- --------- ------- Total $ 2,236 $ 1,276 $ -- $1,160 $ 2,352 ------- ------- ------- --------- ------- ------- ------- ------- --------- ------- YEAR ENDED JUNE 30, 1995 Deducted from asset accts Allowance for doubtful accounts $ 697 $ 83 $ -- $ 129(A) $ 651 Allowance for inventory obsolescence & valuation 1,567 643 -- 625(B) 1,585 ------- ------- ------- --------- ------- Total $ 2,264 $ 726 $ -- $ 754 $ 2,236 ------- ------- ------- --------- ------- ------- ------- ------- --------- ------- YEAR ENDED JUNE 30, 1994 Deducted from asset accts Allowance for doubtful accounts $ 887 $ 127 $ -- $ 317(A) $ 697 Allowance for inventory obsolescence & valuation 1,261 737 -- 431(B) 1,567 ------- ------- ------- --------- ------- Total $ 2,148 $ 864 $ -- $ 748 $ 2,264 ------- ------- ------- --------- ------- ------- ------- ------- --------- -------
See footnotes on following page. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (CONT'D.) ROBINSON NUGENT, INC. AND SUBSIDIARIES (IN THOUSANDS OF DOLLARS)
1996 1995 1994 ------- --------- ------- (A)Summary of activity in Column D follows: Reduction of requirements in allowance for doubtful accounts $ 63 $ 85 $ 202 Uncollectible accounts written off, net of recoveries 30 62 141 Currency Translation - (gains)/losses 24 (18) (26) ------- --------- ------- $ 117 129 $ 317 ------- --------- ------- ------- --------- ------- (B)Summary of activity in Column D follows: Discontinued and obsolete inventory written off, net of recoveries $ 896 $ 684 $ 505 Currency translation - (gains)/losses 147 (59) (74) ------- --------- ------- $ 1,043 625 $ 431 ------- --------- ------- ------- --------- -------
ROBINSON NUGENT, INC. FORM 10-K FOR FISCAL YEAR ENDED JUNE 30, 1996 INDEX TO EXHIBITS NUMBER SEQUENTIAL ASSIGNED IN NUMBERING SYSTEM REGULATION S-K PAGE NUMBER ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT - ------------- -------------------------------- --------------- (3) 3.1 Articles of Incorporation of Robinson Nugent, Inc. (Incorporated by reference to Exhibit 3.1 to Form S-1 Registration Statement No. 2-62521.) 3.2 Articles of Amendment of Articles of Incorporation of Robinson Nugent, Inc. filed September 1, 1978 (Incorporated by reference to Exhibit B(1) to Form 10-K Report for year ended June 30, 1980.) 3.3 Articles of Amendment of Articles of Incorporation of Robinson Nugent, Inc. filed November 14, 1983 (Incorporated by reference to Exhibit 3.3 to Form 10-K Report for year ended June 30, 1984.) 3.4 Amended and Restated Bylaws of Robinson Nugent, Inc. adopted November 7, 1991. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for year ended June 30, 1992). (4) 4.1 Specimen certificate for Common Shares, without par value. (Incorporated by reference to Exhibit 4 to Form S-1 Registration Statement No. 2-62521.) 4.2 Rights Agreement dated April 21, 1988 between Robinson Nugent, Inc. and Bank One, Indianapolis, NA. (Incorporated by reference to Exhibit I to Form 8-A Registration Statement dated May 2, 1988.) 4.3 Amendment No. 1 to Rights Agreement dated September 26, 1991. (Incorporated by reference to Exhibit 4.3 to Form 10-K Report for year ended June 30, 1991.) 4.4 Amendment No. 2 to Rights Agreement dated June 11, 1992. (Incorporated by reference to Exhibit 4.4 to Form 8-K Current Report dated July 6, 1992.) (9) No exhibit. (10) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.1 to Form 10-K Report for year ended June 30, 1983.) 10.2 Robinson Nugent, Inc. 1983 Non Tax- Qualified Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.2 to Form 10-K Report for year ended June 30, 1983.) 10.3 1993 Robinson Nugent, Inc. Employee and Non-Employee Director Stock Option Plan. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for the year ended June 30, 1993.) 10.4 Summary of The Robinson Nugent, Inc. Stock Employee Stock Purchase Plan. (Incorporated by reference to Exhibit 19.2 to Form 10-K Report for the year ended June 30, 1993.) 10.5 Deferred compensation agreement dated May 10, 1990 between Robinson Nugent, Inc. and Larry W. Burke, President and Chief Executive Officer, and related agreement dated May 10, 1990 between Robinson Nugent, Inc. and PNC Bank, Kentucky, Inc.(formerly Citizens Fidelity Bank and Trust Company of Louisville, Kentucky) as trustee. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for year ended June 30, 1990.) 10.6 Summary of Robinson Nugent, Inc. Bonus 23 Plan for the fiscal year ended June 30, 1997. (11) No exhibit. (12) No exhibit. (13) 1996 Annual Report to Shareholders of 24 Robinson Nugent, Inc. (16) No exhibit. (18) No exhibit. (21) The subsidiaries of the registrant are: JURISDICTION NAME OF ORGANIZATION ----- --------------- Cablelink, Incorporated Indiana RNL, Inc. Indiana Robinson Nugent-Dallas, Inc. Texas Robinson Nugent, S.A.R.L. France Robinson Nugent, GmbH Germany Robinson Nugent, Ltd. Great Britain Nihon Robinson Nugent K.K. Japan Robinson Nugent dba Cablelink Malaysia (Malaysia) Sdn. Bhd. Robinson Nugent (Malaysia) Sdn. Bhd. Malaysia Robinson Nugent, S.A. Switzerland Robinson Nugent (Scotland) Limited Scotland Robinson Nugent International, Inc. Virgin Islands Robinson Nugent (Europe) B.V. Netherlands Robinson Nugent Belgium, b.v.b.a. Belgium Robinson Nugent (Asia Pacific) Pte. Ltd. Singapore Robinson Nugent Nordic, filial Sweden till Robinson Nugent (Europe) B.V. The Netherlands (22) No exhibit. (23) Consent of Coopers & Lybrand L.L.P. 46 Independent Accountants (24) No exhibit. (27) Financial Data Schedule. (28) No exhibit. EX-10.6 2 EXH. 10.6 SUMMARY OF ROBINSON BONUS PLAN Exhibit 10.6 ROBINSON NUGENT, INC. SUMMARY OF ROBINSON NUGENT, INC. BONUS PLAN TO EXECUTIVE OFFICERS The Board of Directors has adopted a bonus plan for executive officers and key employees for fiscal year 1997. The terms of the plan are the same as the Company's bonus plan for the prior year, or fiscal year 1996. Executive officers are eligible for a first tier bonus award provided the consolidated pretax income of the Company and subsidiaries for fiscal year 1997 exceeds the reported pretax income for fiscal year 1996. A second tier, or added, bonus award is payable to executive officers provided the consolidated pretax income for fiscal year 1997 exceeds the pretax income objectives outlined in the fiscal year 1997 annual financial plan. The bonus awards under both tiers are predicated upon a formula whereby bonuses increase in proportion to the level of pretax income over the prior year and financial plan objectives, respectively. The maximum bonus award for executive officers approximates 26 percent to 36 percent of base compensation. No bonuses were paid under this plan for fiscal year 1996. EX-13 3 EXH. 13. 1996 A/R TO SHAREHOLDERS ROBINSON NUGENT, INC. AND SUBSIDIARIES TEN-YEAR FINANCIAL SUMMARY IN THOUSANDS, EXCEPT PER SHARE DATA - -------------------------------------------------------------------------------- Years ended June 30 1996 1995 1994 -------------------------------------------- OPERATING RESULTS: - ----------------------------------------------------------------------------- Net sales $80,964 80,679 67,557 Cost of sales 65,604 59,329 49,642 -------------------------------------------- Gross profit 15,360 21,350 17,915 Selling, general and administrative expenses 16,749 15,586 13,727 Provision for restructuring -- -- -- Provision for plant consolidation -- -- -- -------------------------------------------- Operating income (loss) (1,389) 5,764 4,188 Other income (expense) (305) (170) 841 -------------------------------------------- Income (loss) before income taxes, extraordinary item and change in accounting principle (1,694) 5,594 5,029 Income taxes (benefit) 465 1,855 2,410 Extraordinary item - gain on fire insurance recovery -- -- -- Cumulative effect of change in accounting principle -- -- -- -------------------------------------------- Net income (loss) $ (2,159) 3,739 2,619 -------------------------------------------- Return on net sales (2.7%) 4.6% 3.9% PER SHARE INFORMATION: - ----------------------------------------------------------------------------- Net income (loss) $ (.40) .69 .49 Cash dividends .12 .12 .12 Weighted average shares outstanding (in thousands) 5,333 5,383 5,368 Book value at year-end* 6.13 6.79 5.91 BALANCE SHEET: - ----------------------------------------------------------------------------- Working capital $10,328 15,875 15,014 Property, plant and equipment - net 23,618 24,609 19,344 Total assets 51,466 54,169 45,377 Long-term debt 3,036 4,143 2,408 Shareholders' equity 29,968 36,480 31,419 OTHER DATA: - ----------------------------------------------------------------------------- Current ratio to 1.0 1.6 2.3 2.4 Return on shareholders' average equity (6.0%) 11.0% 8.8% Capital additions 7,474 5,929 5,793 Depreciation and amortization 6,135 3,714 3,003 * On the basis of year-end outstanding common shares. See Note 18 of Notes to Consolidated Financial Statements for Selected Quarterly Financial Data, including dividend payments on common shares. 4
1993 1992 1991 1990 1989 1988 1987 -------------------------------------------------------------------------------------------- OPERATING RESULTS: - ----------------------------------------------------------------------------------------------------------------------------- Net sales 58,671 50,759 53,061 55,031 53,149 52,730 46,201 Cost of sales 42,986 38,750 41,529 41,802 39,504 37,673 34,467 -------------------------------------------------------------------------------------------- Gross profit 15,685 12,009 11,532 13,229 13,645 15,057 11,734 Selling, general and administrative expenses 12,039 10,985 11,153 12,724 11,531 10,736 10,563 Provision for restructuring 620 -- -- -- -- -- 2,934 Provision for plant consolidation -- -- -- -- -- 1,700 -- -------------------------------------------------------------------------------------------- Operating income (loss) 3,026 1,024 379 505 2,114 2,621 (1,763) Other income (expense) (464) 214 438 (259) 236 593 (596) -------------------------------------------------------------------------------------------- Income (loss) before income taxes, extraordinary item and change in accounting principle 2,562 1,238 817 246 2,350 3,214 (2,539) Income taxes (benefit) 900 290 250 (450) 400 800 (800) Extraordinary item - gain on fire insurance recovery -- -- -- -- -- 1,379 -- Cumulative effect of change in accounting principle -- -- -- -- -- 160 -- -------------------------------------------------------------------------------------------- Net income (loss) 1,662 948 567 696 1,950 3,953 (1,739) -------------------------------------------------------------------------------------------- Return on net sales 2.8% 1.9% 1.1% 1.3% 3.7% 7.5% (3.8%) PER SHARE INFORMATION: - ----------------------------------------------------------------------------------------------------------------------------- Net income (loss) .31 .18 .10 .13 .33 .57 (.25) Cash dividends .08 .08 .08 .08 .08 .07 .06 Weighted average shares outstanding (in thousands) 5,331 5,315 5,315 5,296 5,840 6,845 6,856 Book value at year-end* 5.31 5.52 5.17 5.34 4.96 5.27 4.75 BALANCE SHEET: - ----------------------------------------------------------------------------------------------------------------------------- Working capital 14,780 17,431 16,210 16,595 14,609 22,806 20,146 Property, plant and equipment - net 15,871 15,506 15,216 16,077 15,843 18,571 17,949 Total assets 40,727 40,520 38,743 40,823 38,170 50,413 45,087 Long-term debt 2,166 3,409 3,234 3,589 3,519 4,273 4,667 Shareholders' equity 28,231 29,346 27,490 28,370 26,179 36,082 32,582 OTHER DATA: - ----------------------------------------------------------------------------------------------------------------------------- Current ratio to 1.0 2.5 3.4 3.2 3.0 2.9 3.5 3.9 Return on shareholders' average equity 5.8% 3.3% 2.0% 2.6% 6.3% 11.5% (5.2%) Capital additions 4,060 2,382 2,488 1,994 1,036 4,512 2,373 Depreciation and amortization 3,031 2,809 2,897 2,752 3,100 3,393 3,988
5 ROBINSON NUGENT, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION - ------------------------------------------------------------------------------- 1996 VERSUS 1995 Customer orders for the fiscal year ended June 30, 1996, were $81.6 million, down $.7 million or 1%, compared to customer orders of $82.3 million in the prior year. Sales in fiscal 1996 were $81.0 million, slightly ahead of sales of $80.7 million in the prior year. A pretax loss of $1.7 million in fiscal 1996 compares to a $5.6 million pretax profit in fiscal year 1995. The Company's net loss for fiscal 1996 was $2.2 million or 40 cents per common share compared to net income of $3.7 million or 69 cents in the prior fiscal year. Included in the net loss were special charges of approximately $2.1 million after tax, or 40 cents per share, recorded in the fourth quarter of 1996. These charges included the reduction of carrying values on various production equipment due to shorter product life cycles and increasing competitive market conditions ($1.2 million after tax), the elimination of goodwill associated with a European subsidiary ($.6 million after tax), and provisions for workforce reductions and associated personnel charges ($.3 million after tax). The slight increase in worldwide sales reflected higher sales at the Company's domestic cable assembly operation, the effect of the full year of sales at Robinson Nugent, Belgium b.v.b.a. (formerly Teckino Manufacturing b.v.b.a.), and higher sales of the Company's backpanel connector products. The higher revenue items were offset by world-wide price erosion of memory module sockets and a lower volume of screw machine products. The worldwide price erosion in memory module sockets reflects the changing marketplace as this product migrates from a customer specific to a commodity component. Customer sales in the United States of $51.7 million increased 8% from the prior year and represented 64% of consolidated sales in 1996, compared to 60% in 1995. Higher sales of METPAK-Registered Trademark- 2 connectors, high-density connectors and cable assemblies were major contributors to the increase revenue. European sales of $19.6 million in fiscal year 1996 decreased by $.1 million, and represented 24% of the Company's consolidated sales. This decrease reflects lower memory module socket sales, which were partially offset by a full year of sales for Robinson Nugent, Belgium (acquired in February 1995), and increased sales of PC memory card products. Asia sales (from the Company's Japan, Malaysia and Singapore operations) of $8.2 million in fiscal 1996 decreased $2.4 million primarily due to lower socket sales in Japan and lower cable assembly and connector sales in Malaysia. Gross profits of $15.4 million in fiscal 1996 decreased $6.0 million or 28.1% compared to fiscal 1995. The reduced gross profits reflected the lower gross profits from operations in the United States, Europe and Asia Pacific, higher research, development and engineering expenses, and an adjustment in the fourth quarter that reduced the carrying values of various production equipment. During the fourth quarter the Company determined that shorter product life cycles and increasing competitive market conditions negatively affected the carrying values of various production equipment. Therefore, a charge of $1.8 million pretax ($1.2 million after-tax) was recorded. Gross profits from operations during fiscal 1996 were also negatively affected by worldwide price erosion in the industry, lower factory utilization in both the United States and Europe, and higher costs on some newer products reflecting start-up phase production techniques. Gross profits were higher in the backpanel connector line, reflecting higher volume and the effect of manufacturing cost reduction programs. Direct costs consisting of materials, direct production labor and related production expenses were up as a percentage of sales reflecting reduced pricing and an unfavorable product mix. Fixed costs also increased as a percent of sales reflecting higher equipment depreciation, increased factory overheads and lower utilization of the Company's production facilities. Research, development and engineering expenses, which were included in gross profit, were $3.7 million for fiscal 1996 compared to $3.1 million for fiscal 1995. Engineering represented 4.5% of sales in 1996, compared to 3.8% in the prior year, as the Company continues to expand its product development efforts. 6 - ------------------------------------------------------------------------------- Selling, general and administrative expenses of $16.7 million increased by $1.2 million or 7.5% in 1996 compared to 1995. The increase in SG&A reflects a fourth quarter charge of $.6 million relating to the elimination of goodwill associated with Robinson Nugent, Belgium and higher operating expenses in Europe and Asia Pacific. Management's decision to eliminate the goodwill at Robinson Nugent, Belgium was based on the departure of key personnel and the reduction in revenues of non-connector products. Expenses in Europe increased primarily due to the inclusion of a full year of expenses in Robinson Nugent, Belgium. Asia Pacific's increase reflects the additional expenses associated with the establishment of a regional head-quarters office in Singapore. Other income (expense) in fiscal 1996 was a net expense of $.3 million, compared to a net expense of $.2 million in fiscal 1995. The increase in 1996 reflected higher net interest expense (increased borrowings), lower royalty income, and expenses relating to the Isocon L.C. joint venture, which was dissolved during the year. These increased expenses were mitigated by a foreign currency exchange gain of $.1 million in 1996, compared to a currency exchange loss of $.3 million in 1995. The currency fluctuations were primarily related to intercompany receivable and payable positions between the Company's subsidiaries. The provisions for income taxes in 1996 and 1995 were provided on the basis of effective tax rates in the respective countries. The elimination of goodwill in the 1996 fourth quarter was not currently deductible. The Company also did not recognize tax benefits resulting from losses at certain foreign operations. These tax benefits will not be recognized until management is able to project the probable utilization of all or part of these losses. 1995 VERSUS 1994 Customer orders for the fiscal year ended June 30, 1995, were $82.3 million, up 18 percent over customer orders of $69.9 million in the prior year. Sales in fiscal 1995 were $80.7 million, up 19 percent over sales of $67.6 million in the prior year. Pretax profits advanced to $5.6 million in fiscal 1995, an increase of 11 percent over $5.0 million pretax profit in the prior year. Net income for fiscal 1995 was $3.7 million, or 69 cents per common share, compared to $2.6 million or 49 cents per common share, in fiscal 1994. The operating results for 1994 included income in the second quarter of $1.0 million ($.6 million after related income taxes) from an out-of-court settlement of a lawsuit with a competitor for alleged breach of contract and the appropriation of trade secrets. The Company increased sales in all major markets in fiscal 1995. Sales growth was primarily the result of increased sales of newer products, a strengthened European operation, continued growth in the computer, network and communications markets, and the acquisition of Robinson Nugent, Belgium. Customer sales in the United States increased by 8 percent, or $3.7 million, and represented 60 percent of consolidated sales in 1995, compared to 66 percent in 1994. The increase in the United States reflects increased sales of the Company's high-density connector lines, including strong memory module sockets sales. European sales increased by $7.1 million or 56 percent, and represented 25 percent of the Company's sales in 1995 compared to 19 percent in 1994. The increase in European sales reflects the growth in the Company's Scotland operation, improved European economic conditions and the acquisition of Robinson Nugent, Belgium. Robinson Nugent, Belgium, an engineering and manufacturing development company located in Belgium, was acquired in February 1995. Asia sales, principally to Japan, Malaysia and Singapore, increased by $1.5 million or 16 percent in fiscal 1995. The sales growth in Malaysia and Singapore continues to reflect the demand of the Company's U.S. customers with multinational locations. To broaden the customer base in this region, the Company has expanded manufacturing operations in Malaysia and established an administrative, marketing and sales headquarters in Singapore in the fourth quarter of 1995. Gross profits of $21.4 million in fiscal 1995 increased by $3.4 million or 19 percent compared to fiscal 1994. Expressed as a percent of sales, gross profit was at 26.5 percent for both fiscal periods. The higher gross profit dollars were the result of the higher 7 - ------------------------------------------------------------------------------- sales, improved margins on newer products and favorable manufacturing efficiencies at the plant level. Included in gross profit were expenditures for research, development and engineering of $3.1 million in 1995 compared to $2.5 million in 1994. The increase in engineering of $.6 million or 24 percent reflects the Company's continued commitment to develop new and improved products. Direct cost consisting of materials, direct production labor and associated production costs were down slightly as a percent of sales reflecting improved manufacturing efficiencies and a favorable product mix. Fixed costs decreased as a percent of sales reflecting the improved utilization of the Company's productive base. Selling, general and administrative expenses increased by $1.9 million or 14 percent in 1995 compared to 1994. The increase in expenses reflects the higher sales related expenses, such as commissions, a full year's expense for the Company's European headquarters operations and costs associated with the establishment of the Asia Pacific headquarters in Singapore. Selling, general and administrative expenses were $15.6 million, or 19.4 percent of net sales in 1995, and $13.7 million, or 20.3 percent of net sales in 1994. Other income (expense) in 1995 was a net expense of $.2 million compared to income of $.8 million in the prior 1994 fiscal year. Other income in 1994 included the out-of-court settlement of $1.0 million previously noted. In 1995 other income (expense) included $.3 million from currency exchange losses associated with the fluctuations of certain European currencies primarily in the third quarter of 1995, $.3 million of royalty income, and net interest expense of $.1 million. Provisions for income taxes in 1995 and 1994 were provided on the basis of effective rates in the respective countries. The effective rate of 33 percent in fiscal 1995 was lower than the 48 percent rate in the prior year. The decrease in the effective tax rate, when compared to the prior year, reflects a research and experimental tax credit recorded in 1995, and prior year results included significantly higher losses without recognition of tax benefits as compared to a marginal profit in the current year at the Company's Scotland operations. At such time as management is able to project the probable utilization of all or part of the net operating loss carryforward provision, the valuation allowance for the deferred tax asset will be reversed. LIQUIDITY AND CAPITAL RESOURCES Working capital, as of June 30, 1996, was at $10.3 million compared to $15.9 million at June 30, 1995. The Company's current ratio at June 30, 1996 was 1.6 to 1, compared to 2.3 to 1 at June 30, 1995. Cash balances at June 30, 1996, were $2.4 million compared to $2.5 million at year-end June 30, 1995. The decrease in working capital primarily reflects the use of funds to finance a $3.4 million common share repurchase program (completed in the fourth quarter of 1996), higher inventory levels, up $2.2 million, and higher capital expenditures. The Company's funding requirements were primarily provided by increased short-term borrowings and accounts receivable collections. The short-term borrowing level averaged $2.2 million over the year and reached $6.4 million at its highest level at year-end. The Company's inventory level increased primarily due to lower fourth quarter revenues resulting from delayed shipments requested by several key customers, a decline in sales through distributors, and the general slowness of the European market. Accounts receivable decreased by $1.8 million, reflecting the reduced fourth quarter sales volume. The Company's long-term debt as a percentage of stockholders equity was 10.1 percent at year-end 1996, compared to 11.4 percent at year-end 1995. Capital expenditures, primarily for new mold tools, contact dies and assembly equipment, were $7.5 million in the fiscal year 1996, compared to $5.9 million in 1995. The capital investments primarily relate to the development and production of new products, and manufacturing cost reduction programs. The Company believes future cash requirements for capital expenditures and working capital can be funded from operations and supplemental midterm debt, if required. The Company currently has available bank lines of credit of $7.2 million and unused bank lines of credit of $.8 million. 8 ROBINSON NUGENT, INC. AND SUBSIDIARIES OPERATING RESULTS AS A PERCENTAGE OF NET SALES - ------------------------------------------------------------------------------- 1996 1995 1994 - ------------------------------------------------------------------------ Net Sales 100.0% 100.0% 100.0% Cost of sales 81.0 73.5 73.5 ------------------------------------- Gross profit 19.0 26.5 26.5 Selling, general and administration expenses 20.7 19.4 20.3 ------------------------------------- Operating income (loss) (1.7) 7.1 6.2 Other income (expense) (0.3) (0.2) 1.2 ------------------------------------- Income (loss) before income taxes (2.0) 6.9 7.4 Income taxes 0.7 2.3 3.5 ------------------------------------- Net income (loss) (2.7%) 4.6% 3.9% - ------------------------------------------------------------------------ PRICE RANGE AND DIVIDEND INFORMATIOn - ------------------------------------------------------------------------------- The following table sets forth the high and low closing price of the Company's common shares, which are traded over the Nasdaq National Market under the symbol: RNIC, and the cash dividends declared per share in each of the quarters during the past two fiscal years ended in June 30, 1996. Price Range Cash Dividends - ------------------------------------------------------------------------------- FISCAL 1996 High Low - ------------------------------------------------------------------------------- First quarter ended September 30 $10 7/8 8 1/8 $ .03 Second quarter ended December 31 9 7/8 5 3/8 .03 Third quarter ended March 31 6 3/8 4 1/2 .03 Fourth quarter ended June 30 7 4 3/4 .03 - ------------------------------------------------------------------------------- FISCAL 1995 - ------------------------------------------------------------------------------- First quarter ended September 30 $ 6 7/8 5 3/8 $ .03 Second quarter ended December 31 8 7/8 6 3/8 .03 Third quarter ended March 31 9 3/8 7 5/8 .03 Fourth quarter ended June 30 9 1/2 6 7/8 .03 - ------------------------------------------------------------------------------- As of June 30, 1996, the Company had approximately 750 holders of record of its common shares. 9 ROBINSON NUGENT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS IN THOUSANDS, EXCEPT SHARE DATA - ------------------------------------------------------------------------------- June 30 ASSETS 1996 1995 1994 - ------------------------------------------------------------------------------ Current Assets: Cash and cash equivalents $ 2,368 2,460 2,991 Receivables, less allowance for doubtful receivables of $739 in 1996, $651 in 1995 and $697 in 1994 10,433 12,209 10,539 Inventories 13,446 11,278 9,807 Other current assets 1,532 2,418 2,634 -------------------------------- Total current assets 27,779 28,365 25,971 Property, plant and equipment, at cost less accumulated depreciation and amortization 23,618 24,609 19,344 Other assets 69 1,195 62 -------------------------------- Total assets $51,466 54,169 45,377 - ------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------ Current liabilities: Current installments of long-term debt $ 713 924 341 Short-term bank borrowings 6,400 538 800 Accounts payable 5,692 6,131 5,356 Accrued expenses 4,557 4,456 3,689 Income taxes payable 89 441 771 -------------------------------- Total current liabilities 17,451 12,490 10,957 Long-term debt, excluding current installments 3,036 4,143 2,408 Deferred income taxes 1,011 1,056 593 -------------------------------- Total liabilities 21,498 17,689 13,958 Shareholders' equity: Common shares without par value Authorized 15,000,000 shares; issued 6,851,250 shares in 1996 and 6,850,000 shares in 1995 and 1994 20,950 20,896 20,775 Retained earnings 19,521 22,325 19,299 Equity adjustment from foreign currency translation 2,847 3,774 2,513 Employee stock purchase plan loans and deferred compensation (354) (768) (1,094) Less cost of common shares in treasury; 1,959,485 shares in 1996, 1,479,586 shares in 1995 and 1,532,630 shares in 1994 (12,996) (9,747) (10,074) -------------------------------- Total shareholders' equity 29,968 36,480 31,419 -------------------------------- Total liabilities and shareholders' equity $51,466 54,169 45,377 - ------------------------------------------------------------------------------ See accompanying notes to consolidated financial statements. 10 ROBINSON NUGENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS IN THOUSANDS, EXCEPT PER SHARE DATA - ------------------------------------------------------------------------------- Years ended June 30, 1996 1995 1994 - ------------------------------------------------------------------------------ Net sales $80,964 80,679 67,557 Cost of sales 65,604 59,329 49,642 -------------------------------- Gross profit 15,360 21,350 17,915 Selling, general and administrative expenses 16,749 15,586 13,727 -------------------------------- Operating income (loss) (1,389) 5,764 4,188 Other income (expense): Interest income 129 134 192 Interest expense (511) (262) (274) Currency exchange gain (loss) 81 (286) (39) Settlement of lawsuit -- -- 1,000 Royalty income 118 295 -- Other (122) (51) (38) -------------------------------- Total other income (expense) (305) (170) 841 -------------------------------- Income (loss) before income taxes (1,694) 5,594 5,029 Income taxes 465 1,855 2,410 -------------------------------- Net income (loss) $ (2,159) 3,739 2,619 - ------------------------------------------------------------------------------ Net income (loss) per common share $ (.40) .69 .49 - ------------------------------------------------------------------------------ 11 See accompanying notes to consolidated financial statements. ROBINSON NUGENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY IN THOUSANDS, EXCEPT PER SHARE DATA
- ----------------------------------------------------------------------------------------------------------------------------------- Employee Stock Purchase Foreign Plan Loans Common shares Retained currency and Deferred Treasury shares Years ended June 30, 1996, 1995 and 1994 Shares Amount earnings translation Compensation Shares Amount - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE AT JUNE 30, 1993 6,850 $ 20,775 17,327 1,584 (1,366) (1,535) $(10,089) Net income -- -- 2,619 -- -- -- -- Dividends ($.12 per share) -- -- (638) -- -- -- -- Equity adjustments from foreign currency translation -- -- -- 929 -- -- -- Stock purchase plan loans and deferred compensation -- -- -- -- (81) -- -- Stock purchase plan repayments -- -- -- -- 95 -- -- Amortization of deferred compensation -- -- -- -- 155 -- -- Stock purchase plan terminations -- -- -- -- 103 -- -- Stock options exercised -- -- (9) -- -- 2 15 ----------------------------------------------------------------------------------- BALANCE AT JUNE 30, 1994 6,850 $ 20,775 19,299 2,513 (1,094) (1,533) $(10,074) Net income -- -- 3,739 -- -- -- -- Dividends ($.12 per share) -- -- (640) -- -- -- -- Equity adjustments from foreign currency translation -- -- -- 1,261 -- -- -- Stock purchase plan repayments -- -- -- -- 91 -- -- Amortization of deferred compensation -- -- -- -- 153 -- -- Stock purchase plan terminations, including the gain on disposition of stock held by the plan trust -- 48 -- -- 82 -- -- Stock options exercised -- -- (73) -- -- 25 152 Investment in RN Belgium -- 73 -- -- -- 28 175 ----------------------------------------------------------------------------------- BALANCE AT JUNE 30, 1995 6,850 $20,896 22,325 3,774 (768) (1,480) $(9,747) Net loss -- -- (2,159) -- -- -- -- Dividends ($.12 per share) -- -- (645) -- -- -- -- Equity adjustments from foreign currency translation -- -- -- (927) -- -- -- Stock purchase plan repayments -- -- -- -- 192 -- -- Amortization of deferred compensation -- -- -- -- 151 -- -- Stock purchase plan terminations, including the loss on disposition of stock held by the plan trust -- (5) -- -- 71 -- -- Stock awards 1 7 -- -- -- -- -- Purchase of treasury stock -- -- -- -- -- (499) (3,372) Stock options exercised -- 3 -- -- -- -- -- Investment in RN Belgium -- 49 -- -- -- 20 123 ----------------------------------------------------------------------------------- BALANCE AT JUNE 30, 1996 6,851 $20,950 19,521 2,847 (354) (1,959) $(12,996) - ----------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. 12 ROBINSON NUGENT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS IN THOUSANDS - ------------------------------------------------------------------------------- Years ended June 30 1996 1995 1994 - ------------------------------------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(2,159) 3,739 2,619 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Elimination of RN Belgium goodwill 636 -- -- Depreciation and amortization 6,135 3,714 3,003 Reduction and disposal of capital assets 1,971 71 81 (Increase) decrease in receivables 1,776 (1,330) (1,214) Increase in inventories (2,168) (1,136) (1,108) (Increase) decrease in other current assets 731 350 (626) Increase (decrease) in accounts payable and accrued expenses (338) 631 1,048 Decrease in income taxes payable (352) (330) (215) Decrease in deferred income taxes 110 197 102 Employee stock purchase plan deferred compensation -- -- (33) ----------------------------- Net cash provided by operating activities 6,342 5,906 3,657 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (7,474) (5,929) (5,793) Investment in RN Belgium, net of cash acquired -- (186) -- Increase (decrease) in other assets 41 (26) 57 ----------------------------- Net cash used in investing activities (7,433) (6,141) (5,736) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term bank borrowings 6,262 738 3,200 Repayment of short-term bank borrowings (389) (1,150) (2,400) Proceeds from long-term debt 193 -- 2,034 Repayment of long-term debt (723) (201) (2,688) Cash dividends (645) (640) (638) Issuance of common shares 5 -- -- Purchase of treasury shares (3,372) -- -- Repayment of employee stock purchase plan loans 192 91 95 Employee stock purchase plan loans -- -- (48) Proceeds from stock purchase plan terminations 66 130 -- Proceeds from exercised stock options 3 79 6 ----------------------------- Net cash provided by (used in) financing activities 1,592 (953) (439) EFFECT OF EXCHANGE RATE CHANGES ON CASH (593) 657 583 Decrease in cash and cash equivalents (92) (531) (1,935) Cash and cash equivalents at beginning of year 2,460 2,991 4,926 ----------------------------- Cash and cash equivalents at end of year $ 2,368 2,460 2,991 - ------------------------------------------------------------------------------ SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES FOR THE YEAR ENDED JUNE 30, 1995: Fair value of assets acquired, other than cash $ 3,660 Liabilities assumed (2,164) Treasury shares (28,408) issued to former owners (248) Payable to former owners of acquired business (1,062) ------ Cash paid for Teckino 186 ------ ------ See accompanying notes to consolidated financial statements. 13 ROBINSON NUGENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS, EXCEPT PER SHARE DATA - ------------------------------------------------------------------------------- NOTE 1 NATURE OF OPERATIONS AND ORGANIZATIONS Robinson Nugent, Inc. designs, manufactures, and markets electronic connectors, integrated circuit sockets and cable assemblies. Its products are sold throughout the world for use by manufacturers of computers, networks and telecommunications equipment and industrial controls, and a wide variety of other products to interconnect components of electronic systems. - ------------------------------------------------------------------------------- NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The assets, liabilities and operations of foreign subsidiaries have been generally translated into U.S. dollars in accordance with Statement of Financial Accounting Standards No. 52 - "Foreign Current Translation." STATEMENT OF CASH FLOWS. Cash and cash equivalents are defined as cash in banks and investment instruments having maturities of ninety one days or less on their acquisition date. INVENTORIES. Inventories are stated at the lower of cost (first-in, first-out method) or market (net realizable value). PROPERTY, PLANT AND EQUIPMENT. Depreciation is provided by the straight-line method over the estimated useful lives of buildings, machinery, and equipment for financial reporting purposes. Depreciation expenses include the amortization of buildings capitalized under lease obligations in accordance with Statement of Financial Accounting Standards No. 13 - "Accounting for Leases." Depreciation expense was $5,901 in 1996, $3,530 in 1995 and $2,848 in 1994. INCOME TAXES. In 1994, the Company changed its accounting for income taxes to comply with the requirements of the Statement of Financial Accounting Standards (SFAS) No. 109 - "Accounting for Income Taxes." The adoption of SFASNo. 109 did not have a material effect on the consolidated financial position or results of operations. No U.S. Federal income taxes have been provided at June 30, 1996 on approximately $7,206 of accumulated earnings of non-U.S. subsidiaries since the Company plans to reinvest such amounts for an indefinite future period. RESEARCH, DEVELOPMENT AND ENGINEERING. Research, development, and engineering expenditures for the creation and application of new and improved products and manufacturing processes were approximately $3,700 in 1996, $3,100 in 1995, $2,500 in 1994. Research, development and engineering costs are charged to operations as incurred. GOVERNMENT INCENTIVE GRANTS. The Company received grants for its establishment of manufacturing operations in Scotland in 1994, consisting of reimbursement of employee training and hiring costs during start-up of operations and employment of certain personnel, which aggregated $270. In addition, the Company will receive a grant related to expected capital expenditures for equipment and machinery over the period of 1994-97. The Company's policy is to recognize this capital expenditure grant over the estimated useful life of the equipment and machinery. The financial statements include grant income of approximately $231 in 1996, $239 in 1995 and $160 in 1994. DISCLOSURE OF CERTAIN SIGNIFICANT RISKS AND UNCERTAINTIES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Company's periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and concentrations in products, sources of supply and markets which could affect the financial statements and future operations of the Company. CONCENTRATION OF CREDIT RISK. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash investments and trade receivables. The Company has cash investment policies that limit the amount of credit exposure to any one issuer and restrict placement of these investments to issuers evaluated as credit worthy. Concentrations of credit risk with respect of trade receivables are limited due to the large number of customers comprising the Company's customer base and their dispersion across many different industries and geographies. FOREIGN CURRENCY TRANSLATION. The accounts of foreign subsidiaries are measured using local currency as the functional currency. For these operations, assets and liabilities are translated into U.S. dollars at period-end exchange rates, and income and expense accounts are translated at average monthly exchange rates. Net exchange gains or losses resulting from such translation are excluded from net income and accumulated in a separate component of shareholders' equity. Gains and losses from foreign currency transactions are included as a separate component of other income (expense) in the consolidated statements of operations. ACCOUNTING FOR STOCK-BASED COMPENSATION. The Financial Accounting Standards Board has issued FAS 123, "Accounting for Stock-Based Compensation." FAS 123 encourages, but does not require, companies to recognize compensation expense for grants of stock, stock options, and other equity instruments to employees based on new fair value accounting rules. Companies that choose not to adopt the new accounting rules will continue to apply the existing rules, but will be required to disclose in the footnotes to the financial statements the pro forma net income and earnings per share as if the new rules had been adopted. As permitted by FAS 123, the Company will adopt the new standard in fiscal 1997, choose to continue the current accounting for stock-based compensation and disclose in the footnotes to the financial statements the pro forma net income and earnings per share calculated using the new accounting rules. 14 ROBINSON NUGENT, INC. AND SUBSIDIARIES - -------------------------------------------------------------------------------- NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INTERNATIONAL OPERATIONS. In connection with its international operations, the Company is subject to various risks inherent in foreign activities. These risks may include unstable economic and political conditions, changes in trade policies and regulations of countries involved, fluctuations in currency exchange rates and requirements for letters of credit or bank guarantees. Most of the Company's international operations are in western European countries, mainly Great Britain, Switzerland, Belgium and the Netherlands and to a lesser degree in the Asian countries of Japan, Singapore and Malaysia. These countries have experienced relatively stable political conditions and regulatory environments. The Company is exposed to risks associated with fluctuations in exchange rates including the Swiss franc, British pound sterling, Deutsche mark, Malaysian ringgit and the Netherlands guilder. The Company limits its exposure to these risks by incurring and paying for its expenses in the same currencies as those of its revenue. It is the Company's policy not to enter into derivative financial instruments for speculative purposes. There were no derivative financial instruments outstanding as of June 30, 1996. COMMON SHARE DATA. Per common share data for 1996 is based on the weighted average number of common shares outstanding. Per common share data for 1995 and 1994 are based on weighted average number of common shares outstanding plus common share equivalents resulting from dilutive stock options (see note 12). The number of shares used in computing per common share data was 5,333,338 in 1996, 5,382,998 in 1995 and 5,367,892 in 1994. - -------------------------------------------------------------------------------- NOTE 3 INVENTORIES Inventories consist of the following: 1996 1995 1994 - ------------------------------------------------------------------------------ Finished goods $ 4,526 2,687 2,729 Work in process 7,021 6,861 5,774 Raw material and supplies 1,899 1,730 1,304 --------------------------------- Total $13,446 11,278 9,807 - ------------------------------------------------------------------------------ A portion of the gold and gold content in inventories is provided under a consignment agreement with a bank. Under terms of the gold consignment agreement, the Company has pledged certain inventories with gold content as collateral. Such inventories were approximately $347 at June 30, 1996. - -------------------------------------------------------------------------------- NOTE 4 PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment follows: 1996 1995 1994 - ------------------------------------------------------------------------------ Land $ 836 839 793 Buildings 12,886 13,379 11,663 Machinery and equipment 47,122 45,262 37,725 --------------------------------- 60,844 59,480 50,181 Less accumulated depreciation and amortization 37,226 34,871 30,837 --------------------------------- Total $23,618 24,609 19,344 - ------------------------------------------------------------------------------ - -------------------------------------------------------------------------------- NOTE 5 ACCRUED EXPENSES A summary of accrued expenses follows: 1996 1995 1994 - -------------------------------------------------------------------------------- Compensation $ 1,394 1,129 1,266 Commissions 719 798 603 Distributor allowances 692 683 601 Pension and retirement plans 25 22 280 State and local taxes 548 347 299 Deferred grant income 300 229 -- Other 879 1,248 640 --------------------------------- Total $ 4,557 4,456 3,689 - ------------------------------------------------------------------------------ 15 ROBINSON NUGENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS, EXCEPT PER SHARE DATA - -------------------------------------------------------------------------------- NOTE 6 SHORT-TERM AND LONG-TERM DEBT At June 30, 1996, the Company had $7.2 million in available bank lines of credit of which approximately $.8 million was unused and available for working capital purposes. The weighted average interest rate on short term debt was 7.2% for 1996 and is generally payable monthly. The Company's lines of credit are renewable on an annual basis. Total interest paid on short-term debt was $252 in 1996, $25 in 1995 and $1 in 1994. Long-term debt consists of the following:
1996 1995 1994 - --------------------------------------------------------------------------------------------------------- United States' obligations: 8.125% capitalized lease obligations under economic development first mortgage revenue bonds, payable monthly through November 1996 $ 38 147 247 Obligation under purchase agreement for the acquisition of RN Belgium, interest imputed at 8%, payable at various dates through February 1998 567 1,062 -- Foreign obligations: 6.875% fixed-rate real estate mortgage, payable in annual installments through 2004, with interest 2,092 2,522 2,175 10.3% fixed-rate real estate mortgage, payable in quarterly installments through 2000 318 433 -- 7.65% fixed-rate real estate mortgage payable in quarterly installments through 2001 217 289 -- 10.0% capitalized lease obligation, payable to bank in monthly installments through 2002 274 314 327 Other long-term debt 243 300 -- ----------------------------- Total 3,749 5,067 2,749 Less current installments of long-term debt 713 924 341 ----------------------------- Long-term debt $ 3,036 4,143 2,408 - ---------------------------------------------------------------------------------------------------------
The aggregate maturities of long-term debt for the five years ending June 30, 2001, amount to $713 in 1997, $789 in 1998, $448 in 1999, $452 in 2000, $375 in 2001 and $972 thereafter. Total interest paid under long-term debt agreements was $259 in 1996, $237 in 1995 and $273 in 1994. Property, plant and equipment with an approximate net book value of $7,207 is pledged as collateral under the various long-term debt agreements. - -------------------------------------------------------------------------------- NOTE 7 FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of the Company's noncurrent financial liabilities are shown below. The fair values of current assets and current liabilities are assumed to be equal to their reported carrying amounts. 1996 1995 - ------------------------------------------------------------------------------ CARRYING FAIR Carrying Fair AMOUNT VALUE Amount Value - ------------------------------------------------------------------------------ Long term debt $ 3,749 3,587 5,067 4,756 - ------------------------------------------------------------------------------ The valuations for long-term debt are determined based on the expected future payments discounted at risk-adjusted rates. The fair value of short-term debt is assumed to be equal to carrying value. - -------------------------------------------------------------------------------- NOTE 8 INCOME TAXES The Company follows SFAS No. 109 - "Accounting for Income Taxes" which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. In estimating future tax consequences, SFAS No. 109 generally considers all expected future events other than enactments of changes in the tax laws or rates. 16 ROBINSON NUGENT, INC. AND SUBSIDIARIES - -------------------------------------------------------------------------------- NOTE 8 INCOME TAXES (CONTINUED) The provision (benefit) for income taxes follows: 1996 1995 1994 -------------------------------------------------------------------------- Current: Federal $ 65 1,173 1,893 State (8) 245 188 Foreign 298 240 227 ------------------------------- Total current 355 1,658 2,308 Deferred: Federal 216 197 120 State 40 (15) 2 Foreign (146) 15 (20) ------------------------------- Total deferred 110 197 102 ------------------------------- Total $ 465 1,855 2,410 - ------------------------------------------------------------------------------- The following reconciles income taxes computed at the U.S. Federal statutory rate to income taxes reported for financial reporting purposes: 1996 1995 1994 - ------------------------------------------------------------------------------- Income tax expense (benefit) at statutory rate $ (576) 1,902 1,710 Non-U.S. tax-exempt (earnings) losses 791 (213) 503 Tax-exempt earnings of FSC 33 (139) (78) Foreign taxes 175 255 207 State and local taxes, net of U.S. Federal income tax 21 152 125 Research and experimentation credit -- (165) -- Other 21 63 (57) ------------------------------- Income taxes as reported $ 465 1,855 2,410 - ------------------------------------------------------------------------------- No U.S. Federal income taxes have been provided at June 30, 1996, on approximately $7,206 of accumulated earnings of certain foreign subsidiaries since the Company plans to reinvest such amounts for an indefinite future period. The Company made income tax payments of $805 in 1996, $1,805 in 1995 and $2,580 in 1994. The net current and non-current components of deferred income taxes recognized in the balance sheet at June 30 follows: 1996 1995 1994 - ------------------------------------------------------------------------------- Net current assets $ 696 851 879 Net non-current liabilities 1,011 1,056 593 ------------------------------- Net assets (liabilities) $ (315) (205) 286 - ------------------------------------------------------------------------------- The tax effect of the significant temporary differences which comprise the deferred tax assets and liabilities at June 30 follows: 1996 1995 1994 - --------------------------------------------------------------------------- Deferred tax assets: Net operating loss carryforwards $ 900 501 450 Employee compensation and benefits 276 306 327 Inventories and other current assets 275 311 410 State and local income taxes, net of U.S. Federal income tax benefit 43 68 47 Other accrued expenses 32 90 38 ------------------------------- Total deferred tax assets 1,526 1,276 1,272 Deferred tax liabilities: Depreciation and amortization (941) (894) (445) Foreign taxes -- (86) (74) Deferred tax on DISC earnings -- -- (17) ------------------------------ Total deferred tax liabilities (941) (980) (536) ------------------------------- Net deferred tax assets before valuation allowance 585 296 736 Deferred tax assets valuation allowance (900) (501) (450) ------------------------------ Net deferred tax assets (liabilities) $ (315) (205) 286 - ------------------------------------------------------------------------------- 17 ROBINSON NUGENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS, EXCEPT PER SHARE DATA - -------------------------------------------------------------------------------- NOTE 8 INCOME TAXES (CONTINUED) At June 30, 1996, certain foreign subsidiaries have accumulated net operating loss carryforwards of approximately $3,264. Management is unable at this time to project as being more probable than not future taxable income which will utilize these loss carryforwards. As a result, a valuation allowance was established in the amount of $900 in 1996, $501 in 1995 and $450 in 1994. The tax benefit of these carryforwards will be recognized when management is able to project future taxable income of these foreign subsidiaries. The change in the deferred income tax expense represents the effect of changes in the amounts of temporary differences. The tax effect of changes in those temporary differences are presented below: 1996 1995 1994 - -------------------------------------------------------------------------------- Depreciation and amortization $ 47 181 6 State and local income taxes, net of U.S. Federal income tax benefit 25 (21) 5 Accrued expenses 98 (45) 169 Deferred tax on DISC earnings -- (17) (17) Foreign tax (86) -- -- Minimum tax credit (10) -- -- Inventories and other current assets 36 99 (61) ---------------------------- Total 110 197 102 Basis differential related to the acquisition of RN Belgium -- 294 -- ----------------------------- Total $ 110 491 102 - -------------------------------------------------------------------------------- NOTE 9 LEASED ASSETS AND LEASE COMMITMENTS The consolidated financial statements include land and buildings under capital leases as follows: 1996 1995 1994 - -------------------------------------------------------------------------------- Land and buildings $ 1,807 1,742 1,596 Less accumulated amortization 594 564 489 ----------------------- Net assets under capitalized leases $ 1,213 1,178 1,107 - -------------------------------------------------------------------------------- The Company leases office and plant facilities, automobiles, computer systems, and certain other equipment under noncancelable operating leases, which expire at various dates. Taxes, insurance, and maintenance expenses are normally obligations of the Company. Rental expenses charged to operations under operating leases amounted to $1,342 in 1996, $1,109 in 1995 and $888 in 1994. A summary of future minimum lease payments follows: Year ending June 30 CAPITAL OPERATING LEASES LEASES 1997 $ 101 1,128 1998 62 902 1999 62 684 2000 62 531 2001 62 424 Later Years 38 581 ---------------------- Total minimum lease payments 387 4,250 ----- Less amount representing interest 75 ---------- Present value of net minimum lease payments (included in long-term debt) $ 312 - ------------------------------------------------------------------------- 18 ROBINSON NUGENT, INC. AND SUBSIDIARIES - ------------------------------------------------------------------------- NOTE 10 EMPLOYEE BENEFITS The Company has a defined contribution pension plan and a defined contribution 401(k) plan for eligible employees in the U.S. Annual contributions by the Company to the defined contribution pension plan are based upon specified percentages of the annual compensation of participants. Under the terms of the 401(k) plan, employees may contribute a portion of their compensation to the plan and the Company makes matching contributions up to a specified level. The contributions charged to expense under the defined contribution plans were $488 in 1996, $433 in 1995 and $401 in 1994. Personnel in Europe and Asia are provided retirement benefits under various programs which are regulated by foreign law. Annual contributions are generally regulated in amount and shared equally by the Company and its employees. The Company's share of annual contributions to the aforementioned foreign defined contribution plans was $335 in 1996, $346 in 1995 and $173 in 1994. - ------------------------------------------------------------------------------ NOTE 11 STOCK OPTION PLANS In September 1993, a stock option plan for eligible employees and nonemployee directors was adopted by the Board of Directors and subsequently approved, in November 1993, by the shareholders of the Company. The new plan replaced plans that expired in April 1993. Under the terms of the new plan, the Board of Directors is authorized to grant options in the aggregate of 500,000 common shares of the Company to eligible employees and a predetermined annual number of shares to nonemployee directors at prices not less than the market value at the date of grant. Options are exercisable within the period prescribed by the Board of Directors at the time of grant, but not later than ten years from the date of grant. Terms and conditions of the new plan are similar to those of the expired plans. At June 30, 1996, the Company had outstanding stock options for 384,747 common shares of the Company. The following is a summary of the option transactions under the expired plans and the new plan adopted in 1993. 1996 SHARES OPTION PRICE PER SHARE - ------------------------------------------------------------------------------ Shares under option at beginning of year 291,197 $ 7.16 Granted 102,850 9.08 Expired (1,000) 13.25 Cancelled (7,800) 9.14 Exercised (500) 6.63 ----------- Shares under option at end of year 384,747 7.62 - ------------------------------------------------------------------------------ 1995 SHARES OPTION PRICE PER SHARE - ------------------------------------------------------------------------------ Shares under option at beginning of year 260,147 $ 6.92 Granted 88,600 7.77 Expired (3,500) 13.93 Cancelled (29,414) 8.26 Exercised (24,636) 4.57 ----------- Shares under option at end of year 291,197 7.16 - ------------------------------------------------------------------------------ 1994 SHARES OPTION PRICE PER SHARE - ------------------------------------------------------------------------------ Shares under option at beginning of year 227,647 $ 7.52 Granted 69,000 8.71 Expired (23,500) 16.16 Cancelled (10,500) 11.94 Exercised (2,500) 2.50 ----------- Shares under option at end of year 260,147 6.92 - ------------------------------------------------------------------------------ At June 30, 1996, a total of 242,397 shares at an average option price per share of $7.00 were exercisable and 252,150 shares were available for future grants. 19 ROBINSON NUGENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS, EXCEPT PER SHARE DATA - -------------------------------------------------------------------------------- NOTE 12 STOCK PURCHASE PLAN In 1993, the Company adopted an employee stock purchase plan for key employees that provided for participants of the plan to purchase common shares of the Company on the open market through an independent trustee. The plan permitted the Board of Directors to authorize interest-free loans to the participants for the purchase of stock. Shares are held in trust as collateral for the loans, which are payable by the participants of the plan over a period not to exceed ten years. The plan also provided for participants to receive from the Company a matching number of common shares of the Company, based upon a vesting schedule and the participants' level of purchased shares. The plan terminated in 1994 with respect to new participation. The loans ($284 in 1996, $547 in 1995 and $660 in 1994) and deferred compensation charges ($70 in 1996, $221 in 1995 and $434 in 1994) associated with the plan are classified as a reduction of shareholders' equity. The amortization of the deferred compensation charged to expense was $151 in 1996, $153 in 1995 and $155 in 1994. - -------------------------------------------------------------------------------- NOTE 13 SHAREHOLDER RIGHTS PLAN The Company adopted a shareholder rights plan in April 1988 for the purpose of deterring coercive or unfair takeover tactics and encouraging a potential acquirer to negotiate with the Board of Directors before attempting to gain control of the Company. Under the terms of the plan, rights to purchase additional common shares were distributed as a dividend to shareholders of record on May 6, 1988, and will be distributed with respect to shares which are issued after May 6, 1988. The rights are attached to each issued and outstanding share and expire on April 15, 1998. At issuance, the rights are not exercisable and are not detachable from common shares. Accordingly, the rights do not provide any immediate value to shareholders. The Company may redeem the rights for one cent per right at any time prior to becoming exercisable. The rights become exercisable ten days after public disclosure that a person acquired 20% or more, or commenced a tender offer or exchange offer for 30% or more, of the issued and outstanding common shares, unless such acquisition or tender offer was approved in advance by the disinterested directors of the Company. Thereafter, the rights will trade separately from the common shares, and separate certificates representing the rights will be issued. Each right grants an eligible holder the right to purchase for $40.00 additional common shares of the Company, or in the event of certain mergers or business combinations, additional shares of the survivor's common shares. The number of common shares to be issued upon exercise of a right is based upon the then current market value of the common shares, subject to certain adjustments. - -------------------------------------------------------------------------------- NOTE 14 SETTLEMENT OF LAWSUIT In December 1993, the Company recognized pretax income of $1,000 ($620 after related income taxes) from an out-of-court settlement of a lawsuit related to damage claims against a competitor. - -------------------------------------------------------------------------------- NOTE 15 ACQUISITION OF ROBINSON NUGENT, BELGIUM B.V.B.A. On February 21, 1995, the Company acquired 100% of Robinson Nugent, Belgium b.v.b.a. (formerly Teckino Manufacturing b.v.b.a.), an engineering and manufacturing development company, for $1,538. The purchase agreement required a payment of $228 in cash, plus $248 of company stock (28,408 shares at $8.75 per share) at closing. In addition, the agreement provided for future payments of cash and company stock at various dates through February 1998 totaling $1,062. On August 18, 1995, the Company paid the former owners of RN Belgium $177 in cash and $172 in company stock (19,944 shares). In March 1996, the parties agreed to a $189 reduction in the amount of future payments, and that all future payments will be made in cash as part of a severance agreement with the former owner of RN Belgium. The acquisition has been accounted for by the purchase method of accounting and the results of operations of RN Belgium have been included in the accompanying consolidated financial statements since the date of acquisition. The excess of the purchase price over the fair value of net assets acquired (goodwill) was $923. This goodwill was included in other assets in 1995. Amortization expense was $83 in 1996 and $31 in 1995. In March 1996, this goodwill was reduced by $189 as a result of the future payment reduction noted above. The remaining balance of this goodwill was determined by management to have no continuing value and was charged to operations. On an unaudited pro forma basis, assuming the purchase of RN Belgium had occurred on July 1, 1993, net sales would have increased approximately $3,100 in 1995 and $1,800 in 1994, whereas net income and net income per common share would not have been significantly different from reported amounts. - -------------------------------------------------------------------------------- NOTE 16 SIGNIFICANT CUSTOMER No sales to a single customer exceeded 10% of total sales in 1996 or 1994. During 1995, the Company had sales of approximately $8,900 to a single customer which was in excess of 10% of total net sales for that year. 20 ROBINSON NUGENT, INC. AND SUBSIDIARIES - -------------------------------------------------------------------------------- NOTE 17 BUSINESS SEGMENT AND FOREIGN SALES The Company operates within the electronic connectors segment of the electronics industry. Products are sold throughout the world for use by manufacturers of computers, telecommunications equipment, automobiles, industrial controls, medical instrumentation, and a wide variety of other products to interconnect components of electronic systems. The sales and marketing operations outside the United States are conducted in Japan, Malaysia, Singapore, Great Britain, Germany, France, Sweden and Italy. During 1996, the Company had manufacturing operations located in the United States, Switzerland, Scotland, Belgium, and Malaysia. SALES 1996 1995 1994 - --------------------------------------------------------------------------- UNITED STATES Domestic $51,664 47,724 44,031 Export: Europe 58 2,176 958 Asia 1,285 4,987 5,931 Rest of World 1,447 1,625 833 ----------------------------------- Total sales to customers 54,454 56,512 51,753 Intercompany 6,813 5,544 2,713 ----------------------------------- Total United States 61,267 62,056 54,466 - --------------------------------------------------------------------------- EUROPE Domestic 19,553 17,613 11,711 Export: Asia 1,752 2,908 2,352 Rest of World -- 20 20 ----------------------------------- Total sales to customers 21,305 20,541 14,083 Intercompany 3,517 3,495 3,234 ----------------------------------- Total Europe 24,822 24,036 17,317 - --------------------------------------------------------------------------- ASIA Domestic 5,120 2,711 838 Export to rest of world 85 915 883 ----------------------------------- Total sales to customers 5,205 3,626 1,721 Intercompany 2,448 1,018 441 ----------------------------------- Total Asia 7,653 4,644 2,162 - ---------------------------------------------------------------------------- Eliminations (12,778) (10,057) (6,388) ----------------------------------- Consolidated $80,964 80,679 67,557 - --------------------------------------------------------------------------- IDENTIFIABLE ASSETS - --------------------------------------------------------------------------- United States $38,984 39,668 33,145 Europe 17,349 21,584 15,443 Asia 4,704 3,562 1,544 Eliminations (9,571) (10,645) (4,755) ----------------------------------- Consolidated $51,466 54,169 45,377 - --------------------------------------------------------------------------- INCOME (LOSS) BEFORE INCOME TAXES - --------------------------------------------------------------------------- United States $ 384 5,126 6,442 Europe (1,546) 288 (1,743) Asia (532) 180 330 ------------------------------------ Consolidated $(1,694) 5,594 5,029 - --------------------------------------------------------------------------- Intercompany sales of finished products were generally priced to "share" profits based upon current market conditions. Items requiring further processing were priced at cost plus a fixed percentage. 21 ROBINSON NUGENT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS, EXCEPT PER SHARE DATA - -------------------------------------------------------------------------------- NOTE 18 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
THREE MONTHS ENDED For the year ended June 30, 1996 SEPT. 30, 1995 DEC. 31, 1995 MAR. 31, 1996 JUNE 30, 1996 TOTAL - --------------------------------------------------------------------------------------------------------------- Net sales $20,500 20,047 21,178 19,239 80,964 Gross profit $ 5,261 4,272 4,744 1,083 15,360 Net income (loss) $ 800 (56) 332 (3,235) (2,159) - --------------------------------------------------------------------------------------------------------------- Net income (loss) per common share $ .15 (.01) .06 (.63) (.40) - --------------------------------------------------------------------------------------------------------------- Dividends $ .03 .03 .03 .03 .12 - --------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED For the year ended June 30, 1995 SEPT. 30, 1994 DEC. 31, 1994 MAR. 31, 1995 JUNE 30, 1995 TOTAL - --------------------------------------------------------------------------------------------------------------- Net sales $19,603 18,921 20,434 21,721 80,679 Gross profit $ 5,569 5,269 5,066 5,446 21,350 Net income $ 1,098 937 742 962 3,739 - --------------------------------------------------------------------------------------------------------------- Net income per common share $ .20 .17 .14 .18 .69 - --------------------------------------------------------------------------------------------------------------- Dividends $ .03 .03 .03 .03 .12 - ---------------------------------------------------------------------------------------------------------------
Net income (loss) per share amounts are calculated independently for each of the periods presented. The sum of the quarters may not equal the full year net income (loss) per share amounts. Fourth quarter 1996 revenue was down $2.5 million compared to fourth quarter 1995. This revenue decrease reflected a reduction of memory module socketrevenues in the United States and sales at Robinson Nugent, Belgium. Gross profit decreased due to the lower volume, as well as a $1.8 million pre-tax charge ($1.2 million after-tax) relative to the reduction of carrying values of various production equipment due to shorter product life cycles. In addition to the above factors, net income was also negatively affected by a $.6 million charge to eliminate goodwill associated with Robinson Nugent, Belgium (no current tax benefit), and a $.4 pre-tax provision for workforce reductions and associated personnel charges ($.3 million after tax). Net income in the fourth quarter of 1995 reflected approximately $400 of tax benefits resulting from the utilization of foreign net operating loss carryforwards generated in prior quarters, and from a research and experimental tax credit in the United States. 22 ROBINSON NUGENT, INC. AND SUBSIDIARIES REPORT OF MANAGEMENT - -------------------------------------------------------------------------------- To the Shareholders of Robinson Nugent, Inc.: The management of Robinson Nugent, Inc., is responsible for the preparation, presentation, and integrity of the consolidated financial statements and other information included in this annual report. The consolidated financial statements have been prepared by the Company in accordance with generally accepted accounting principles and, as such, include amounts based on management's best estimates and judgements. The 1996 consolidated financial statements have been audited by Coopers & Lybrand L.L.P., independent accountants. Their audit was made in accordance with generally accepted auditing standards and included such reviews and tests of the Company's internal accounting controls as they considered necessary. The Company maintains a system of internal accounting controls designed to provide reasonable assurance at reasonable cost that Company assets are protected against loss or unauthorized use and that transactions and events are properly recorded. The Board of Directors, through its Audit Committee, comprised solely of directors who are not employees of the Company, meets with management, the internal audit staff, and the independent accountants to assure that each is properly discharging its respective responsibilities. The independent accountants have free access to the Audit Committee, without management present, to discuss the results of their work and their assessment of the adequacy of internal accounting controls and the quality of financial reporting. /s/ Larry W. Burke Larry W. Burke President and Chief Executive Officer /s/ Anthony J. Accurso Anthony J. Accurso Vice President, Treasurer, and Chief Financial Officer September 16, 1996 REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- The Board of Directors and Shareholders of Robinson Nugent, Inc.: We have audited the accompanying consolidated balance sheets of Robinson Nugent, Inc. and Subsidiaries, as of June 30 1996, 1995 and 1994, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Robinson Nugent, Inc. and Subsidiaries as of June 30, 1996, 1995, and 1994, and the results of their operations and their cash flows for each of the three years then ended in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. Louisville, Kentucky August 2, 1996 23 EX-23 4 EXH 23 CONSENT OF INDEPENDENT ACCT. EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Robinson Nugent, Inc. on Form S-8 (File No. 33-3822) of our report dated August 2, 1996 on our audits of the consolidated financial statements and the financial statement schedule of Robinson Nugent, Inc. as of June 30, 1996, 1995 and 1994 and for the years ended June 30, 1996, 1995 and 1994, which report is included in this Annual Report on Form 10-K. COOPERS & LYBRAND L.L.P. Louisville, Kentucky September 24, 1996 EX-27 5 EXH 27 FDS
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ROBINSON NUGENT, INC. 10-K FOR THE YEAR ENDING JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS JUN-30-1996 JUL-01-1995 JUN-30-1996 2,368 0 11,172 739 13,446 27,779 60,844 37,226 51,466 17,451 3,036 0 0 20,950 9,018 51,466 80,964 80,964 65,604 65,604 16,749 0 511 (1,694) 465 (2,159) 0 0 0 (2,159) (.40) (.40)
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