-----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, E1pB283Dvx/SlMvKcnjD/218WDJJYX4H2LzzF4KPFqueHKR55Pj4z+gchsBLpxxJ QD+5RbcqzHRrGN2MJKY+pw== 0000898430-96-000719.txt : 19960301 0000898430-96-000719.hdr.sgml : 19960301 ACCESSION NUMBER: 0000898430-96-000719 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960229 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEASUREX CORP /DE/ CENTRAL INDEX KEY: 0000751190 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 941658697 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08770 FILM NUMBER: 96529197 BUSINESS ADDRESS: STREET 1: ONE RESULTS WAY CITY: CUPERTINO STATE: CA ZIP: 95014 BUSINESS PHONE: 4082551500 MAIL ADDRESS: STREET 1: ONE RESULTS WAY CITY: CUPERTINO STATE: CA ZIP: 95014 10-K 1 FORM 10-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 3, 1995. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to ------------------ ---------------- Commission File Number 1-8770 M E A S U R E X C O R P O R A T I O N (Exact name of Registrant as specified in its charter) DELAWARE 94-1658697 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Results Way, Cupertino, California 95014 (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code: (408) 255-1500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- Common Stock, $0.01 par value New York Stock Exchange Pacific Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained 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. [ ] Aggregate market value of voting stocks held by non-affiliates as of January 31, 1996 $454,291,969 Number of shares of common stock outstanding as of January 31, 1996 15,804,647 -------------------------------- DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Shareholders for the fiscal year ended December 3, 1995, are incorporated by reference into Parts I, II and IV. Portions of the Proxy Statement for registrant's 1996 Annual Meeting of Shareholders to be held April 12, 1996, are incorporated into Part III. ================================================================================ PART I ITEM 1. BUSINESS GENERAL DEVELOPMENT OF BUSINESS Measurex Corporation (the "Company") is engaged worldwide in the design, manufacture and servicing of computer-integrated measurement, control and information systems. The Company's wide range of products are designed to increase productivity, reduce raw material and energy consumption and improve quality and uniformity. Industries served by the Company include paper, plastics, nonwovens, aluminum, steel and rubber. The Company's customers are served by sales and service subsidiaries located in 50 offices and 34 countries around the world. More than half of Measurex's 2,360 employees are dedicated to the sales, support and servicing of the Company's customers. The Company is a corporation organized under the laws of the State of Delaware as the successor to a California Corporation organized in 1968. The Company's principal executive offices are located at One Results Way, Cupertino, California 95014-5991 (telephone number: 408-255-1500). The term "the Company" as used hereinafter means Measurex Corporation or Measurex Corporation and its subsidiaries, as the context requires. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. The response to this section of Item 1 is incorporated by reference to "Business Segments" under Notes to Consolidated Financial Statements in the Company's 1995 Annual Report to Shareholders. NARRATIVE DESCRIPTION OF BUSINESS. The Company is a leading worldwide supplier of computer-integrated measurement, control and information systems for continuous manufacturing processes. The Company's systems are primarily used to control the manufacturing processes in those industries in which the manufactured product is made in a flat sheet; e.g. paper, plastics, nonwovens, aluminum, steel and rubber. The Company provides measurement and control systems and services that enhance the productivity and efficiency of its customers' processes and improve the quality of its customers' products. These integrated systems utilize sensors and scanners to measure the quality properties of the product. Software running in computers and workstations use these measurements to provide control of the process, computer graphic operator displays and management information. Actuators are regulated by the software to provide precision adjustments to the process. The Company also provides management information systems which integrate the manufacturing process with such functions as order entry, inventory control, product tracking, production scheduling, shipping and invoicing. The Company's systems use international industry communications and computing standards which allow connectivity between the Company's systems and other standards-based measurement and control products. The following table shows the annual revenues and the percentages of annual revenues during the last three fiscal years attributable to the sale of computer-integrated measurement, control and information systems to the paper and industrial systems industries (plastics, nonwovens, aluminum, steel and rubber) and the services provided to customers in those industries.
Year Ended (amounts in millions) -------------------------------------------------- 1995 1994 1993 ------------------ --------------- ------------ Revenue from: System sales - paper industry $ 185.4 56% $ 133.0 51% $128.6 51% System sales - industrial systems industries $ 34.9 10% $ 23.3 9% $ 24.2 9% Service and other $ 114.9 34% $ 103.7 40% $101.2 40% -------- -------- ------ Total revenues $ 335.2 $ 260.0 $254.0 ======== ======== ======
2 PAPER SYSTEMS BUSINESS In 1995, approximately 56% of the Company's revenues were generated from system sales to the paper industry. The Company's systems are used to control the production of practically all kinds of paper and paperboard products including: fine paper used for stationary and books; xerographic paper for copy machines; glossy stock for magazines; paperboard and linerboard for boxes; sack grades for paper bags; newsprint and tissue. In the paper industry, the Company's MXOpen(R) product line includes: . Integrated Control Systems and Sensors . Distributed Control Systems . Cross Direction (CD) Profile Control Systems and Actuators . Web Inspection Systems . Integrated Machine Monitoring Systems . Millwide Production and Information Management Systems A key component of the Company's measurement and control systems is its proprietary sensor technology. The Company currently offers a wide variety of on-line sensors to its customers in the paper industry which measure many aspects of product quality including basis weight, moisture, caliper, ash content, coatweight, smoothness, gloss, formation, opacity, strength and color. These on-line sensors, generally non-contacting, probe the product with radiation from various parts of the electromagnetic spectrum including infrared, visible light, beta, x-ray and gamma radiation. The Company's web-inspection systems use Charge Couple Device (CCD) camera technology to detect visual defects in paper and other web-produced material. The Company is a leader in the complex technology of cross-direction (CD) profile control. The Company's Cross Direction Profile Control Systems and Actuators allow precise control of paper characteristics in small segments across the entire width of the sheet resulting in optimum quality levels, reduced material and energy use and lower scrappage rates. The Company's products are sold individually as add-ons or upgrades to existing measurement and control systems (the Company or competitor systems) or as complex integrated systems designed for specific applications or processes. The Company's systems are primarily sold by the Company's worldwide sales organization. In addition, the Company has established certain alliances and OEM relationships to provide customers with turnkey paper automation projects. The systems are generally installed at the customer's site by the Company's worldwide service organization. INDUSTRIAL SYSTEMS BUSINESS In 1995, approximately 10% of the Company's revenues were generated from system sales to customers in the plastics, nonwovens, aluminum, rubber and other industries. The Company's systems are used to control the materials used in or the production of many products including: . Plastics, films and coated products - candy wrap, magnetic media base, food and liquid packaging, vinyl products, labels and tapes. . Nonwoven products - diaper liners, wipes, surgical drapes, roofing, filters, clothing, floor mats and carpet backing. . Rubber products - tire fabrics, roofing, tank liners and belts. . Aluminum products - beverage and food can stock, foil and siding. . Other - chemical, fiberglass, plastic resin and pharmaceuticals. The Company's MXOpen product offering to Industrial Systems' customers include: . Measurement Control Systems (MCS) and Sensors . Distributed Control Systems . Profile Control Systems . Web Inspection Systems In December 1994, the Company acquired the Webart Division of The Ohmart Corporation and its ConceptOne(R) measurement and control products. This acquisition added a low-priced PC based system to the Industrial Systems product line, opening a new market for smaller plastics and sheet applications. 3 In January 1996, the Company acquired Data Measurement Corporation (DMC) a manufacturer of measurement systems for the steel industry. The Company intends to expand DMC's gauging system into a full computer-integrated control and information system. Prior to the acquisition, the Company did not participate in the steel market. Industrial Systems products are distributed through the Company's worldwide sales organization and other distribution channels such as OEMs, distributors and agents. SERVICE BUSINESS In 1995, service revenues represented approximately 34% of the Company's total revenue. The Company's worldwide sales and service organization supports customers in both the paper and industrial systems businesses. The Company has over 4,000 systems installed in 54 countries, primarily located in North America, South America, Europe and Asia. The Company's service offering includes both resident service contracts and on-demand service for spare parts, preventive and emergency maintenance. Value added services such as process optimization and software enhancements are growing parts of this business. Also, the Company maintains systems of its direct competitors as well as third party non-competitive products. RESEARCH AND PRODUCT DEVELOPMENT The Company's systems are the result of the integration of a number of complex technologies including electronics, physics, mechanical design and software. Central to the Company's strategic goals is a commitment to research and development. The Company strongly believes the continued investment in new product development is key to its long-term success. During fiscal year 1995, 1994 and 1993, the Company spent approximately $19.4 million, $20.0 million and $21.1 million, respectively, on research and development. Those amounts represented 6%, 8% and 8%, respectively, of total revenues and 9%, 13% and 14%, respectively, of system revenue. BACKLOG System backlog at December 3, 1995, was $143 million, 55% higher than the backlog of $92 million at the end of fiscal 1994. Approximately 90% of the $143 million year-end 1995 backlog is scheduled to be shipped during fiscal 1996. PATENTS The Company follows a policy of filing appropriate patent applications on inventions it considers significant. As of December 3, 1995, the Company had 69 United States patents and 132 foreign patents in effect. Although important to the business, the Company believes that the invalidity or expiration of any single such patent would not have a material adverse effect on its operations. SUPPLY OF MATERIALS AND PURCHASED COMPONENTS The Company produces most of the application software, sensors, scanners, digital logic circuits and actuators used in its systems. Many components, such as integrated circuits, video monitors, printers, cameras, disks, and microcomputers are purchased from other manufacturers and integrated into the systems. The Company currently purchases certain components from single sources of supply. In each instance, components performing similar functions are available from alternative sources, except for radioactive source material which is available from only two suppliers. Use of these alternative components might require a change in the design of certain portions of the system which could result in production delays, additional expenses and contract cancellations while changing vendors. The Company has contracts with certain vendors which entitle, but do not require, the Company to purchase specific quantities of components. 4 COMPETITION The market for process measurement and control is highly competitive and is subject to technological change in both hardware and software development. The principal competitive factors in this market are product quality and reliability, product features, customer support, corporate reputation and relative price/performance. The Company's competitive strategy is to provide customers with greater economic results than available from competitors by focusing on quality and the unique performance characteristics of the customers' systems. However, any inability of the Company to match or exceed the price/performance or other features of the systems offered by its competitors could adversely affect future operating results. The Company's principal competition is from distributed control systems suppliers and packaged system suppliers, as well as factory automation system suppliers, many of which have substantially greater resources than the Company. In the supervisory measurement and process control business area, competition includes Asea Brown Boveri Process Automation Inc. (ABB); Lippke, a wholly owned subsidiary of Honeywell; the Valmet Automation Group, a division of Valmet Oy; and Yokogawa-YEW in Japan. The distributed control system business area competition includes Honeywell, Fisher, Foxboro (a subsidiary of Siebe, Inc.), Siemens, and many other companies. In the web-inspection products area, the Company faces competition from ABB and other smaller companies. Competition for production management and process analysis and quality management is very fragmented. EMPLOYEES As of December 3, 1995, the Company had approximately 2,360 full-time employees. With the acquisition of DMC in January, 1996, the Company added approximately 340 full-time employees. NUCLEAR REGULATORY LICENSES In the United States, the Company and its customers are subject to licensing and regulation by the United States Nuclear Regulatory Commission (NRC) under the Atomic Energy Act of 1954 (the Act) with respect of those parts of its products and systems which utilize nuclear radiation. The NRC has transferred a portion of its licensing and regulatory functions to several state governments, including California, pursuant to Section 274 of the Act. The Company holds all such licenses necessary for its current operations. Licenses are renewed periodically as required. The Company also holds all necessary foreign licenses regarding nuclear radiation for the applicable countries in which it operates. United States customers possessing the Company's systems containing radioactive sources hold the radioactive material under a General or Specific License issued by their state or federal regulatory authority. Similarly, foreign customers hold licenses issued by their local authorities for radioactive material in the Company's systems. ENVIRONMENT The operations of the Company involve the use of substances regulated under various federal, state and international laws governing the environment. It is the Company's policy to apply strict standards for environmental protection to sites inside and outside the U.S., even if not subject to regulations imposed by local governments. Liability for environmental remediation is accrued when it is considered probable and costs can be reasonably estimated. Environmental expenditures are presently not material to the Company's operations or financial position. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES The Company engages in operations in many foreign countries. A large portion of the Company's foreign business is in Europe, Canada, Latin America and Asia. Although there are risks attendant to foreign operations, such as potential nationalization of facilities, currency fluctuation and restrictions on movement of funds, the Company has taken action to mitigate such risks. For information regarding geographic operations in 1995, 1994, and 1993, see "Business Segments" included in the Notes to Consolidated Financial Statements in the Company's 1995 Annual Report to Shareholders. 5 RISK FACTORS The Company's future operations are subject to a number of risks and uncertainties including, but not limited to, the following: Fluctuations in Quarterly Orders - The Company's quarterly orders have fluctuated in the past and may fluctuate significantly in the future due to a number of factors, including the timing of orders from its customers, changes in pricing by the Company or its competitors, discount levels, new product introductions by the Company or its competitors, foreign currency exchange rates, and changes in the economic and political environments of the countries and industries it serves. Fluctuations in Financial Results - The Company's quarterly and annual financial results have fluctuated in the past and may fluctuate significantly in the future due to a number of factors, including the scheduling of factory shipments, changes in pricing and discount levels, utilization levels of the Company's manufacturing facilities and personnel, amount and growth in operating expenses, changes in applicable tax rates, changes in product mix of system revenue, amount of spares shipments, changes in interest rates, changes in foreign currency exchange rates and the ability of the Company to mitigate the impact of such changes with foreign currency forward contracts. Cyclicality of the Paper Industry - A substantial portion of the Company's sales have historically come from the paper industry. While the Company has recently expanded its presence in the industrial systems component of its business through its acquisition of Data Measurement Corporation, the paper industry will continue to account for most of the Company's revenues. This industry has in the past, and will likely in the future, be subject to substantial cyclicality and economic downturns. This cyclicality may in turn materially impact the Company's order rate and results of operations. Risks Associated with International Operations - A majority of the Company's revenues are typically generated from sales outside of the United States. The Company's international orders, revenues and profitability are subject to inherent risks including timing in obtaining import licenses and letters of credit, fluctuations in local economies, difficulties in staffing and managing foreign operations, changes in foreign currency exchange rates, changes in regulatory requirements, tariffs and other trade barriers, difficulties in repatriation of earnings, and burdens of complying with a wide variety of foreign laws. Risks of Serving other Cyclical Industries - The Company's orders and operating results are impacted by the capital expenditure cycles in the plastics, rubber, non-wovens, aluminum and steel industries, all of which are subject to substantial cyclicality. Ability to Integrate Acquisitions - A key element of the Company's strategy for growth is the acquisition of products that can be distributed through its worldwide sales and service organization. The success of this component of the Company's strategy is dependent upon the ability of the Company to identify acquisition candidates that meet its acquisition criteria, acquire the acquisition target at a fair price, integrate the acquired operations into the Company and implement its business plan after acquisition. There can be no assurance that the Company will be successful in achieving these goals in every instance. ITEM 2. PROPERTIES As of December 3, 1995, the Company owned the major facilities described below:
Total Location Sq.Ft. Use - -------- ------ --- Cupertino, California 360,000 The Company's Headquarters, offices, research and manufacturing operations. Cincinnati, Ohio 43,000 The Company's Management Systems Division's offices, research and manufacturing operations. Atlanta, Georgia 32,000 The US Sales and Service Headquarters. North Vancouver, 94,000 The Measurex Devron Division's offices, research and British Columbia, Canada manufacturing operations. Waterford, Ireland 60,000 Offices and manufacturing operations.
As of December 3, 1995, the Company also leased a facility in Waterford, Ireland totaling approximately 20,000 square feet and two facilities in Kuopio, Finland for manufacturing, engineering and sales support. The Company leases office space for sales and service operations throughout the United States and various countries. 6 With the acquisition of DMC in January 1996, the Company also acquired an additional 45,000 square feet leased facilities used by DMC for offices, research and manufacturing operations. During 1995, the Company was productively utilizing the space in its facilities, while disposing of space determined to be under-utilized. The Company believes current facilities provide adequate production capacity to meet the Company's planned business activities. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Company or any of its subsidiaries are a party or of which any of their property is the subject, other than ordinary routine litigation incidental to the business. Management believes that the final outcome of such matters will not have a material adverse effect on the Company's consolidated financial position and results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable 7 EXECUTIVE OFFICERS OF REGISTRANT The following table and notes thereto identify and set forth information about the Company's eight executive officers as of January 31, 1996 (ages are as of December 3, 1995):
Name Positions with the Company - ----- -------------------------- David A. Bossen (1) Chairman and Chief Executive Officer John G. Gingerich (2) President and Chief Operating Officer Robert McAdams, Jr.(3) Executive Vice President and Chief Financial Officer William J. Weyand (4) Executive Vice President, Worldwide Sales and Service Glenn R. Wienkoop (5) Executive Vice President and Division President, Industrial Systems Division Lance M. Lissner (6) Vice President, Corporate Planning and Development John G. Preston (7) Vice President, General Manager, Integrated Control Systems Business Unit Charles Van Orden (8) Vice President, General Counsel and Secretary
(1) Mr. Bossen, age 68, has been Chairman and Chief Executive Officer and Director since December 1993; President and Chief Executive Officer and Director from 1968 to December 1993. (2) Mr. Gingerich, age 59, has been President and Chief Operating Officer and Director since December 1993; Executive Vice President, Worldwide Sales and Service from 1992 to December 1993; President, Americas and Pacific from 1991 to 1992; Executive Vice President from 1990 to 1991. (3) Mr. Robert McAdams, Jr., age 56, has been Executive Vice President and Chief Financial Officer since April 1995; Senior Vice President and Chief Financial Officer from September 1994 to April 1995; Senior Vice President Operations and Information Services from 1992 to September 1994; Senior Vice President-Finance and Administration and Chief Financial Officer from 1985 to 1992. (4) Mr. William J. Weyand, age 51, has been Executive Vice President, Worldwide Sales and Service since April 1995; Senior Vice President of Worldwide Sales and Service from December 1994 to April 1995; President, North and South America from February to December 1994; Senior Vice President, U.S. and Canada Sales and Service from 1993 to February 1994; Senior Vice President, U.S. Sales and Service from 1991 to 1993. (5) Mr. Wienkoop, age 48, has been Executive Vice President, President Industrial Systems Division since September 1994; Executive Vice President, Engineering and Marketing from 1991 to September 1994; President, Measurex Automation Systems from 1985 to 1991. (6) Mr. Lance M. Lissner, age 45, has been Vice President, Corporate Planning and Development since 1991; Vice President, Engineering and Marketing, Industry Groups from 1989 to 1991. (7) Mr. John G. Preston, age 52, has been Vice President, General Manager, Integrated Control Systems Business Unit since September 1994; President, Measurex Europe from 1992 to September 1994; President, Devron Division from 1991 to 1992; President, Measurex Canada from 1990 to 1991. (8) Mr. Charles Van Orden, age 41, has been Vice President, General Counsel and Secretary since April 1995; General Counsel and Secretary from 1988 to April 1995. Officers are elected annually but may be removed at any time at the discretion of the Board of Directors. There are no family relationships among any of the above officers. 8 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The information under the heading "Market for the Registrant's Common Stock and Related Security Holder Matters," which appears on page 31 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. The Company paid quarterly dividends of $0.11 per share in 1995 and 1994. While the Company intends to pay regular quarterly dividends, the payment of any future dividends is within the discretion of the Board of Directors of the Company. ITEM 6. SELECTED FINANCIAL DATA The information under the heading "Selected Financial Data," which appears on page 32 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information under the heading "Management's Discussion and Analysis" which appears on pages 18 to 19 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information under the heading "Financial Statements and Supplemental Financial Data," which appears on pages 20 to 31 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable 9 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning the directors of the Company appears in Registrant's definitive Proxy Statement for the annual meeting of shareholders to be held April 12, 1996, under the caption "Election of Directors" and is incorporated herein by reference. Information concerning the executive officers of the Company appears at the end of Part I, page 8 of this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 12, 1996. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 12, 1996. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 12, 1996. 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. The consolidated financial statements of Measurex Corporation included herein are set forth in the Index to Financial Statements and Schedules submitted as a separate section of this Report. 2. The Financial Statement Schedules are contained in the accompanying Index to Financial Statements and Schedules submitted as a separate section of this Report. 3. Exhibits See Index to Exhibits, page 16. (b) Reports on Form 8-K. The Company filed a report on Form 8-K dated September 16, 1995 in which the Company reported that it had entered into an agreement to acquire Data Measurement Corporation (DMC). 11 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. MEASUREX CORPORATION (Registrant) Date: February 29, 1996 By /S/ DAVID A. BOSSEN --------------------------- David A. Bossen Chairman Know all persons by these presents, that each person whose signature appears below constitutes and appoints David A. Bossen and Robert McAdams, Jr., jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof. 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.
Signature Title Date --------- ----- ---- /S/ DAVID A. BOSSEN Chairman, Chief Executive February 29, 1996 - ----------------------------- Officer and Director (David A. Bossen) (Principal Executive Officer) /S/ JOHN C. GINGERICH President, Chief Operating February 29, 1996 - ----------------------------- Officer and Director (John C. Gingerich) /S/ ROBERT MCADAMS, JR. Executive Vice President February 29, 1996 - ----------------------------- (Principal Financial and Accounting Officer) (Robert McAdams, Jr.) /S/ PAUL BANCROFT, III Director February 29, 1996 - ----------------------------- (Paul Bancroft, III) /S/ DWIGHT C. BAUM Director February 29, 1996 - ----------------------------- (Dwight C. Baum) /S/ JEFFERY T. GRADE Director February 29, 1996 - ----------------------------- (Jeffery T. Grade) /S/ ORION L. HOCH Director February 29, 1996 - ----------------------------- (Orion L. Hoch) /S/ JOHN W. LARSON Director February 29, 1996 - ----------------------------- (John W. Larson) /S/ J.W. MCKITTRICK Director February 29, 1996 - ----------------------------- (John W. McKittrick) /S/ GRAHAM TYSON Director February 29, 1996 - ----------------------------- (Graham Tyson)
12 MEASUREX CORPORATION INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Fiscal Year 1995 ------------------
Exhibit 13 Page ---- 1. Consolidated Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations 1-3 Consolidated Statements of Income Three years ended December 3, 1995 4 Consolidated Balance Sheets December 3, 1995 and November 27, 1994 5 Consolidated Statements of Shareholders' Equity Three years ended December 3, 1995 6 Consolidated Statements of Cash Flows Three years ended December 3, 1995 7 Notes to Consolidated Financial Statements 8-17 Report of Independent Accountants 18 Supplemental Financial Data 19 Selected Financial Data 20
With the exception of the aforementioned information, the 1995 Annual Report to Shareholders is not to be deemed filed as part of this report unless otherwise noted. 2. Financial Statement Schedules for fiscal years 1995, 1994 and 1932 Report of Independent Accountants on Financial Statement Schedules 14 VIII Valuation and Qualifying Accounts 15 X Supplementary Income Statement Information 16
Other schedules have not been filed because the conditions requiring the filing do not exist or the required information is given in the financial statements or notes thereto. 13 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders Measurex Corporation Our report on the consolidated financial statements of Measurex Corporation and Subsidiaries as of December 3, 1995 and November 27, 1994 and for each of the three fiscal years in the period ended December 3, 1995, has been incorporated by reference in this Form 10-K from page 30 of Measurex Corporation's 1995 Annual Report to Shareholders. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 13 of this Form 10-K. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. /S/ COOPERS & LYBRAND L.L.P. ----------------------------- COOPERS & LYBRAND L.L.P. San Jose, California December 19, 1995 14 SCHEDULE VIII MEASUREX CORPORATION VALUATION AND QUALIFYING ACCOUNTS (1) Fiscal years 1995, 1994 and 1993 (Amounts in thousands)
Balance at Additions Write-offs Balance Beginning Charged to and at End Description of Year Expenses Deductions Other of Year ----------- --------- ---------- ---------- ----- ------- 1995 - ------------------ Allowance for noncollection and system returns $8,642 $ 544 $(2,248) (2) $(1,255) (4) $5,683 (6) ====== ====== ======= ======= ====== Inventory reserves $3,000 $ 674 $(1,072) (3) - $2,602 ====== ====== ======= ======= ====== 1994 - ------------------ Allowance for noncollection and system returns $7,147 $1,659 $ (164) (2) - $8,642 (6) ====== ====== ======= ======= ====== Inventory reserves $8,896 $1,343 $(3,660) (3) $(3,579) (5) $3,000 ====== ====== ======= ======= ====== 1993 - ------------------ Allowance for noncollection and system returns $7,250 $2,051 $(2,154) (2) - $7,147 (6) ====== ====== ======= ======= ====== Inventory reserves $6,999 $3,473 $(1,576) (3) - $8,896 ====== ====== ======= ======= ======
NOTES: (1) See the Notes to Consolidated Financial Statements. (2) Deductions for returns of systems or parts of systems and for write-off of noncollectible amounts. (3) Deductions for write-offs of obsolete and scrapped parts and translation adjustments. (4) Represents the reclass to accrued liabilities of reserves relating to certain leases sold with recourse to a financial institution. (5) Represents the reclassification of reserves from current inventories to service parts. (6) Includes allowance on contracts receivable. 15 SCHEDULE X MEASUREX CORPORATION SUPPLEMENTARY INCOME STATEMENT INFORMATION Fiscal Years 1995, 1994, and 1993 (Amounts in thousands) 1995 1994 1993 ------- ------- ------- Charged to costs and expenses: (1) Amortization of intangible assets (2) $ 4,530 $ 5,218 $ 4,380 ======= ======== ======= NOTES: (1) Items omitted are less than 1% of revenues. (2) Intangible assets include goodwill, patents and capitalized software. 16 MEASUREX CORPORATION INDEX TO EXHIBITS Fiscal Year 1995 Exhibits - -------- 2.1 Copy of the Amended and Restated Agreement and Plan of Reorganization dated as of September 16, 1995 among Measurex, Data Measurement Corporation and Mx Acquisition Company (incorporated by reference from Exhibit 2.1 on Form 8-K reporting on event occurring on January 10, 1996). 3.1 Certificate of Incorporation of Registrant (incorporated by reference from Exhibit 3.1 on page 30 of Report on Form 10-K for the fiscal year ended November 29, 1987). 3.2 Bylaws of Registrant, restated and amended as of April 19, 1994 (incorporated by reference from Exhibit 3.2 on page 21 of Report on Form 10-K for the fiscal year ended November 27, 1994). 4.1 Copy of Registrant's Rights Agreement dated as of December 14, 1988, as amended by Amendment No. 1 thereto dated May 30, 1990, (incorporated by reference from Exhibit 4.1 on page 47 of Report on Form 10-K for the fiscal year ended December 2, 1990). 10.1 Copy of Registrant's Employee's Stock Option Plan (1993) (incorporated by reference from Form S-8 Registration Statement No. 33-65762 filed with the SEC on July 8, 1993). 10.2 Copy of Registrant's Management Incentive Plan. 10.3 Copy of Registrant's Employee Stock Purchase Plan, amended and restated effective December 14, 1993 (incorporated by reference from Exhibit 10.4 on page 21 of Report on Form 10-K for fiscal year ended November 27, 1994) 10.4 Copy of Registrant's Affiliation Agreement dated as of May 30, 1990, between Measurex Corporation and Harnischfeger Industries, Inc. (incorporated by reference from Exhibit 4.1 to Form 8-K filed with the SEC on June 12, 1990) 10.5 Copy of Registrant's Repurchase Agreement dated December 29, 1994 (which contains certain amendments to the Affiliation Agreement referred to in Exhibit 10.4) (incorporated by reference from Exhibit 10.6 on page 21 of Report of Form 10-K for fiscal year ended November 27, 1994). 10.6 Copy of Registrant's Joint Marketing, Sales and Development Agreement dated May 30, 1990 between Measurex Corporation and Beloit Corporation (incorporated by reference from Exhibit 10.1 to Form 8K filed with the SEC on June 12, 1990). 10.7 Copy of Registrant's Stock Option Agreement (Special Acceleration Grant) dated as of December 14, 1993 (incorporated by reference from Exhibit 10.10 on page 45 of Report on Form 10-K for the fiscal year ended November 25, 1993) 10.8 Copy of Stock Repurchase Agreement and Amendment to Joint Marketing Sales and Development Agreement dated June 22, 1995 among Measurex, Harnischfeger, HIHC and Beloit Corporation (incorporated by reference from Exhibit 2.1 on Form 8-K filed with the SEC on July 6, 1995) 10.9 Copy of Letter Agreement for a special severance benefit program for key executives dated May 15, 1995 (incorporated by reference from Exhibit 10.20 on Form 8-K filed with the SEC on October 10, 1995). 10.10 Copy of Credit Agreement dated as of February 10, 1995 among Measurex Corporation, Bank of America National Trust and Savings Association, as Agent, and the other financial institutions party hereto (incorporated by reference from Exhibit 10.16 on page 22 of Report on Form 10-K for fiscal year ended November 27, 1994). 10.11 Copy of First Amendment dated June 21, 1995 to Credit Agreement referred to on Exhibit 10.10 (incorporated by reference from Exhibit 10.18 on Form 10-Q for period ended June 4, 1995). 10.12 Copy of Second Amendment dated October 31, 1995 to Credit Agreement referred to on Exhibit 10.10. 11.0 Computation of Net Income per Share of Common Stock of the Registrant. 13.0 Registrant's Annual Report to Shareholders (In accordance with item 601(B)(13) of Regulation S-K, such Annual Report is not filed as part of this Form 10-K, except to the extent incorporated by reference). 21.0 Subsidiaries of Registrant. 23.0 Consent of Independent Accountants. 24.0 Power of Attorney (included on page 12). 27.0 Financial Data Schedule Other exhibits have not been filed because conditions requiring filing do not exist. EX-10.2 2 REGISTRANT'S MGMT INCENTIVE PLAN EXHIBIT 10.2 MANAGEMENT INCENTIVE PLAN (MIP) ------------------------------- MEASUREX CORPORATION -------------------- OBJECTIVES - ---------- 1. To attract, motivate and retain key management personnel who can, through their collective and individual efforts, help achieve the Company's growth and profit objectives. 2. To provide the means for individual executives to share in the success of the Company to the extent that the Company is successful and their relative performance so warrants. ELIGIBLE PARTICIPANTS - --------------------- 1. Key management personnel eligible to participate in the program are determined each year by the Chairman and CEO and approved by the Compensation Committee of the Board of Directors. 2. Each participant prepares a detailed set of objectives for the year. They should be as quantitative as possible. These objectives, when approved by the Chairman and CEO, will constitute the primary measure of performance during the year in question. DETERMINATION OF INCENTIVE FUND - ------------------------------- 1. The total amount available for distribution to the MIP incentive fund is determined at the beginning of each year by the Compensation Committee of the Board of Directors. The total amount may not exceed 80% of all participants' base salaries. If the earned payout exceeds the capped payout of 80% of salaries, the difference may be accrued for distribution in the future as determined by the Compensation Committee. 2. The basis for determining each year's actual distribution to the MIP incentive fund is established and approved by the Compensation Committee of the Board of Directors annually. The basis is determined by a composite of factors critical to the company's performance and can include orders, sales and earnings growth; as well as inventory and receivables management. MANAGEMENT INCENTIVE PLAN (MIP) Page 2 DETERMINATION OF INDIVIDUAL AWARDS - ---------------------------------- 1. The Chairman and CEO will recommend to the Compensation Committee of the Board of Directors for approval the amount to be awarded each individual. The amount will be determined on the basis of appraisals measuring the relative contribution made by each eligible participant. 2. The award will be the composite result of a position factor and a performance rating. 3. Each position is given a position factor representing the relative opportunity of the incumbent of the position to contribute to the Company's major objectives under the Plan. 4. Each participant will be assigned a performance rating based on careful appraisal of performance against individualized objectives. The following scale will be used as a guide to provide numerical performance rating:
PERFORMANCE SCALE ----------- ----- Outstanding 4 Superior 3 Above Standard 2 Standard 1 Below Standard 0
Participants terminating within the fiscal year will receive "0" rating. Ratings may be in .1 increments. 5. Individual payouts from the fund will be distributed on the basis of the combination of the previously defined elements - Position Factor and Performance Ratings. The various Position Factors are multiplied by the Performance Rating on an individual basis and a number of "shares" of the Management Incentive Fund is derived for each participant. 1996 MANAGEMENT INCENTIVE PLAN (MIP) Page 3 6. Modifications of awards can be proposed to the Compensation Committee of the Board of Directors when, in the judgment of the Chairman and CEO, such adjustments more fairly represent the relative contribution of eligible participants to Company objectives. 7. Participants who enter or leave the Plan during the fiscal year, but remain with the Company, will receive pro-rated shares based on the length of their participation. 8. Payments, assuming Compensation Committee approval, will be made as soon after the end of the fiscal year as possible. Audited financial results will be utilized. Payments under the Plan will be received in one lump sum. 9. The Compensation Committee of the Board of Directors shall have the right to alter the fund, based upon extraordinary circumstances, which in their view are beyond the control of corporate management, to reflect the "true evaluation performance" relative to original plans. 10. After a participant has been with Measurex for one year, the company will make a pretax Automatic Contribution to the participant's account in the Measurex Retirement Result$ Plan. This contribution will reduce dollar-for-dollar the amount of the bonus paid under the Management Incentive Plan. EX-10.12 3 COPY OF SECOND AMENDMENT EXHIBIT 10.12 SECOND AMENDMENT TO CREDIT AGREEMENT ------------------------------------ THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("Amendment"), dated as of --------- October 31, 1995, is entered into by and among MEASUREX CORPORATION (the "Company"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for - -------- itself and the Banks (the "Agent"), and the several financial institutions party ----- to the Credit Agreement (collectively, the "Banks"). RECITALS -------- A. The Company, Banks, and Agent are parties to a Credit Agreement dated as of February 10, 1995, as amended by that First Amendment to Credit Agreement dated as of June 21, 1995 (the "Credit Agreement") pursuant to which ---------------- the Agent and the Banks have extended certain credit facilities to the Company and its Subsidiaries. B. The Company proposes to (1) enter into a receivables financing program with BA Credit Corporation, an affiliate of the Agent and (2) acquire all of the outstanding common stock of DMC (as defined below). C. The Company has requested that the Banks consent to amendment of the Credit Agreement in connection with such receivables financing program and acquisition and certain other amendments of the Credit Agreement. D. The Banks are willing to make certain amendments to the Credit Agreement, subject to the terms and conditions of this Amendment. NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms ------------- used herein shall have the meanings, if any, assigned to them in the Credit Agreement. 2. Amendments to Credit Agreement. ------------------------------ (a) The following definitions shall be added to Section 1.01 of the Credit Agreement: "DMC" means Data Measurement Corporation, a Delaware corporation. --- -1- "Receivables Finance Program" means that certain revolving receivables --------------------------- finance program between the Company and BA Credit Corporation pursuant to which the Company shall finance certain of its lease receivables through an assignment of such lease receivables, all collateral related thereto and proceeds thereof to BA Credit Corporation or its assignee. "Reverse Triangular Merger" has the meaning specified in subsection ------------------------- 7.03(d). (b) The definition of "Acquisition" in Section 1.01 of the Credit Agreement shall be amended by adding the following language at the end thereof: "unless such transaction is a Reverse Triangular Merger." (c) Section 7.01 of the Credit Agreement shall be amended by replacing the "." appearing at the end of clause (p) thereof with ";" and adding new clauses (q) and (r) at the end thereof which shall read in their entirety as follows: "(q) Liens on Margin Stock consisting of common stock of DMC; and (r) Liens incurred in connection with the Receivables Finance Program, including without limitation, Liens on lease receivables, the underlying equipment and all collateral related thereto, all money due and to become due with respect to the foregoing and all proceeds thereof." (d) Section 7.02 of the Credit Agreement shall be amended by deleting the word "and" appearing at the end of clause (g) thereof, replacing the "." appearing at the end of clause (h) thereof with "; and" and adding a new clause (i) at the end thereof which shall read in its entirety as follows: "(i) dispositions of Margin Stock consisting of common stock of DMC." (e) Section 7.03 of the Credit Agreement shall be amended by (1) deleting the word "and" appearing at the end of clause (b) thereof, (2) adding the parenthetical "(including in connection with an Acquisition permitted hereunder)" after the word "entity" appearing in the first line of clause (c) thereof and replacing the "." appearing at the end of clause (c) thereof with "; and" and (3) adding a new clause (d) at the end thereof which shall read in its entirety as follows: "(d) any Subsidiary may merge with (i) DMC or (ii) any other Person in connection with an Acquisition of 100% of -2- the capital stock, partnership interests or equity of any Person (a "Reverse Triangular Merger")." (f) Section 7.05 of the Credit Agreement shall be amended by deleting the word "and" appearing at the end of clause (f) thereof, replacing the "." appearing at the end of clause (g) thereof with "; and" and adding a new clause (h) at the end thereof which shall read in its entirety as follows: "(h) Indebtedness of corporations which become Subsidiaries after the date of this Agreement, provided, however, that such Indebtedness existed at the -------- ------- time the respective corporations became Subsidiaries and were not created in anticipation thereof." (g) Section 7.07 of the Credit Agreement shall be amended by adding the following language on the third line thereof after the words "Schedule 7.05": ------------- "and except in connection with the acquisition of the common stock of DMC". (h) Section 7.08 of the Credit Agreement shall be amended by deleting the word "and" appearing at the end of clause (e) thereof, replacing the "." appearing at the end of clause (f) thereof with "; and" and adding a new clause (g) at the end thereof which shall read in its entirety as follows: "(g) Contingent Obligations incurred in connection with the Receivables Finance Program in an aggregate amount not to exceed $15,000,000 at any time outstanding." (i) Section 7.16 of the Credit Agreement shall be amended and restated to read in its entirety as follows: "7.16 Tangible Net Worth. At the end of each fiscal quarter of the ------------------ Company, the Company shall not permit on a consolidated basis the Tangible Net Worth for the Company to be less than the sum of (a) $137,000,000, plus (b) 75% ---- of quarterly net income for the Company for each fiscal quarter ending subsequent to the fiscal quarter ended March 5, 1995 through the first fiscal quarter of 1996, with no reduction for net losses, and 65% of quarterly net income for the Company for each fiscal quarter ending subsequent to the first fiscal quarter of 1996, with no reduction for net losses, provided, however, -------- ------- that if at the end of any fiscal quarter of the Company ending subsequent to the first fiscal quarter of 1996, the Company's fiscal quarter end financial statements indicate that the Company's Quick Ratio is greater than 1.10 to 1.00 and the Company's Leverage Ratio is less than 1.00 to 1.00, then commencing upon receipt by the Agent -3- of such financial statements and continuing until the Agent receives any subsequent financial statements indicating that either such ratio is not met, 50% of quarterly net income for the Company, with no reduction for net losses, shall be the applicable amount pursuant to this clause (b) of this Section 7.16, minus (c) 90% of the net purchase price paid by the Company for repurchases of - ----- its outstanding shares of common stock from HIHC, Inc. subsequent to June 1, 1995 and through July 15, 1995, provided, however, that the amount subtracted -------- ------- pursuant to this clause (c) shall not exceed a total amount of $50,000,000, minus (d) 80% of the total goodwill generated by the Company's purchase of DMC, - ----- provided, however, that the amount subtracted pursuant to this clause (d) shall - -------- ------- not exceed a total of $20,000,000, plus (e) the sum of (1) 100% of the net ---- proceeds for any capital stock issued by the Company after the fiscal quarter ended March 5, 1995 less (2) 100% of the net purchase price paid by the Company after the fiscal quarter ended March 5, 1995 for repurchases of its outstanding shares of common stock (other than repurchases pursuant to clause (c) of this Section 7.16) pursuant to the Company's stock option and employee stock option plans, provided, however, that if the amount determined pursuant to clause (2) -------- ------- of this clause (e) exceeds the amount under clause (1) of this clause (e) and such excess is greater than $5,000,000, then for purposes of this calculation, $5,000,000 shall be subtracted from the sum of clauses (a), (b), (c) and (d) of this Section 7.16; and provided, further, that the aggregate amount subtracted -------- ------- from the sum of clauses (a), (b), (c) and (d) for any calendar year shall be limited to $5,000,000." (j) Schedule 2 to Exhibit C to the Credit Agreement is hereby amended by replacing Paragraph 2 therein with the Paragraph 2 attached hereto as Annex II, which Paragraph 2 shall, for all purposes of the Credit Agreement, amend and restate and replace in its entirety Paragraph 2 of Schedule 2 attached to Exhibit C to the Credit Agreement. 3. Representations and Warranties. The Company hereby represents and ------------------------------ warrants to the Agent and the Banks as follows: (a) After giving effect to this Amendment, no Default or Event of Default has occurred and is continuing. (b) The execution, delivery and performance by the Company of this Amendment have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of, notice to, or action by, any Person (including any Governmental Authority) in order to be effective and enforceable. The Credit Agreement as amended by this Amendment constitutes the legal, valid and -4- binding obligations of the Company, enforceable against it in accordance with its terms, without defense, counterclaim or offset. (c) All representations and warranties of the Company contained in the Credit Agreement are true and correct. (d) The Company is entering into this Amendment on the basis of its own investigation and for its own reasons, without reliance upon the Agent and the Banks or any other Person. 4. Effective Date. This Amendment will become effective as of the date -------------- specified in the first paragraph hereof (the "Effective Date"), provided that -------------- -------- each of the following conditions precedent is satisfied: (a) The Agent has received from the Company and the Majority Banks a duly executed original (or, if elected by the Agent, an executed facsimile copy) of this Amendment, together with a duly executed Guarantor Acknowledgment and Consent in the form attached as Annex I hereto (the "Consent"). ------- (b) The Agent has received from the Company a copy of a resolution passed by the board of directors of the Company, certified by the Secretary or an Assistant Secretary of the Company as being in full force and effect on the date hereof, authorizing the execution, delivery and performance of this Amendment and the Consent. (c) All representations and warranties contained herein are true and correct as of the Effective Date. 5. Miscellaneous. ------------- (a) Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement are and shall remain in full force and effect and all references therein to the Credit Agreement shall henceforth refer to the Credit Agreement as amended by this Amendment. This Amendment shall be deemed incorporated into, and a part of, the Credit Agreement. (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns. No third party beneficiaries are intended in connection with this Amendment. (c) This Amendment shall be governed by and construed in accordance with the law of the State of California. -5- (d) This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Each of the parties hereto understands and agrees that this document (and any other document required herein) may be delivered by any party hereto either in the form of an executed hard copy original or an executed original sent by facsimile transmission to be followed promptly by mailing of a hard copy original, and that receipt by the Agent of a facsimile transmitted document purportedly bearing the signature of a Bank or the Company shall bind such Bank or the Company, respectively, with the same force and effect as the delivery of a hard copy original. Any failure by the Agent to receive the hard copy executed original of such document shall not diminish the binding effect of receipt of the facsimile transmitted executed original of such document of the party whose hard copy original was not received by the Agent. (e) This Amendment, together with the Credit Agreement, contains the entire and exclusive agreement of the parties hereto with reference to the matters discussed herein and therein. This Amendment supersedes all prior drafts and communications with respect hereto. This Amendment may not be amended except in accordance with the provisions of Section 10.01 of the Credit Agreement. (f) If any term or provision of this Amendment shall be deemed prohibited by or invalid under any applicable law, such provision shall be invalidated without affecting the remaining provisions of this Amendment or the Credit Agreement, respectively. (g) The Company covenants to pay to or reimburse the Agent and the Banks, upon demand, for all costs and expenses (including allocated costs of in- house counsel) incurred in connection with the development, preparation, negotiation, execution and delivery of this Amendment. [Signature Page Follows] -6- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written. MEASUREX CORPORATION By: ______________________ Title: ___________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _________________________ Title: ______________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank By: _________________________ Title: ______________________ ABN AMRO BANK By: _________________________ Title: ______________________ By: _________________________ Title: ______________________ THE BANK OF NEW YORK By: _________________________ Title: ______________________ -7- Annex I ------- GUARANTOR ACKNOWLEDGMENT AND CONSENT ------------------------ The undersigned, the guarantor under that certain Continuing Guaranty (Multicurrency) dated February 10, 1995 (the "Guaranty"), with respect to the Borrowers' obligations to the Agent and the Banks under the Credit Agreement, hereby reaffirms and agrees that the Guaranty is in full force and effect, without defense, offset or counterclaim, and applies to the Credit Agreement as amended by that Second Amendment to Credit Agreement dated as of October 31, 1995. (Capitalized terms used herein have the meanings specified in the Guaranty.) MEASUREX CORPORATION Dated: _____________ By:____________________________ Title: ________________________ -8- Annex II --------
Actual Required/Permitted 2. Section 7.16 Minimum Tangible ----------------------------- Net Worth. --------- Tangible Net Worth = Not to be less than the sum of: A. $137,000,000 plus ---- B. 75% of quarterly net income, commencing with the fiscal quarter ending subsequent to the 3/5/95 quarter (not reduced by any quarterly loss) through the first fiscal quarter of 1996 and 65% of quarterly net income (not reduced by any quarterly loss) commencing with the second fiscal quarter of 1996, except that commencing with the second fiscal quarter of 1996 and for so long as the Company's Quick Ratio is greater than 1.10 to 1.00 and the Leverage Ratio is less than 1.00 to 100, then 50% of quarterly net income (not reduced by any quarterly loss) $__________ minus ----- C. 90% of net purchase price for repurchases of Company's outstanding shares of common stock from HIHC, Inc. subsequent to 6/1/95 and through 7/15/95; provided that amount subtracted pursuant to this clause C shall not exceed a total amount of $50,000,000 minus ----- D. 80% of the total goodwill generated by the Company's purchase of Data Measurement Corporation, provided, however, that the amount subtracted pursuant to this clause D shall not exceed a total of $20,000,000, plus ---- E. (1) 100% of net proceeds arising from the sale of capital stock
i
Actual Required/Permitted occurring after 3/5/95 $__________ , less (2) 100% of the net purchase price paid by the Company after 3/5/95 for repurchases of capital stock pursuant to stock option plans $____________, except that if the amount in (2) exceeds the amount in (1) by more than $5,000,000, then $5,000,000 is subtracted from the sum of clauses A, B, C and D and provided, that the aggregate amount subtracted from the sum of clauses A, B, C and D for any calendar year shall be limited to $5,000,000 $________ = A + B + C + D + E =_________
ii EX-11 4 COMPUTATION OF NET INCOME PER SHARE Exhibit 11 -- MEASUREX CORPORATION COMPUTATION OF NET INCOME PER SHARE Fiscal years 1995, 1994 and 1993 (Amounts in thousands except per share data)
1995 1994 1993 ------- ------- ------- Primary: Average shares outstanding 16,176 17,953 17,913 Net effect of dilutive stock options and warrants based on treasury stock method using average market price 711 236 138 ------- ------- ------- Average common and common equivalent shares outstanding 16,887 18,189 18,051 ======= ======= ======= Income before cumulative effect of accounting change $26,946 $ 5,583 $ 8,215 ------- ======= ======= Net income $26,946 $ 6,107 $ 8,215 ------- ======= ======= Income per share before cumulative effect of accounting change $ 1.60 $ 0.31 $ 0.46 ------- ======= ======= Net income per share $ 1.60 $ 0.34 $ 0.46 ------- ======= ======= Fully diluted: Average shares outstanding 16,176 17,953 17,913 Net effect of dilutive stock options and warrants based on treasury stock method using quarter-end market price or average market price when greater than quarter-end market price 753 270 184 ------- ------- ------- Average common and common equivalent shares outstanding 16,929 18,223 18,097 ======= ======= ======= Income before cumulative effect of accounting change $26,946 $ 5,583 $ 8,215 ------- ======= ======= Net income $26,946 $ 6,107 $ 8,215 ------- ======= ======= Income per share before cumulative effect of accounting change $ 1.59 $ 0.31 $ 0.45 ------- ======= ======= Net income per share $ 1.59 $ 0.34 $ 0.45 ------- ======= =======
Note A: Fully diluted earnings per share have been calculated in accordance with Accounting Principles Board EX-13 5 REGISTRANT'S ANNUAL REPORT EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF - -------------------------------------------------------------------------- OPERATIONS - ---------- RESULTS OF OPERATIONS - --------------------- System orders for 1995 were $270 million, which represented a 69% increase from $160 million in 1994 and a 79% increase from $151 million in 1993. This was the highest order total in the Company's history. Paper Systems orders increased as a result of the industry's rebound from recession and the Company's ongoing efforts to expand its product offering through internal development and acquisition. Industrial Systems orders increased as a result of the acquisition of the Webart division of The Ohmart Corporation at the beginning of 1995 and the Company's ongoing focus on this business. The industry and geographic breakdown of system orders is as follows:
Year Ended(amounts in millions) --------------------------------------- December 3, November 27, November 28, 1995 1994 1993 ----------- ------------ ------------ United States $ 105.0 $ 66.0 $ 53.0 Europe 79.0 45.0 43.0 Rest of World 86.0 49.0 55.0 -------- --------- --------- Total $ 270.0 $ 160.0 $ 151.0 -------- --------- --------- Paper Systems $ 234.0 $ 138.0 $ 127.0 Industrial Systems 36.0 22.0 24.0 -------- --------- --------- Total $ 270.0 $ 160.0 $ 151.0 -------- --------- ---------
System backlog at the end of 1995 was $143 million, up from $92 million at the end of 1994 and $91 million at the end of 1993. Approximately 90% of the 1995 backlog is scheduled to be shipped in 1996. System revenue was $220.3 million in 1995, a 41% increase from $156.3 million in 1994, and a 44% increase from $152.8 million in 1993. The increase resulted from the growth in orders. Service and other revenue of $114.9 million increased 11% from $103.7 million in 1994 and 14% from $101.2 million in 1993. Growth in the installed base of systems, additional process optimization services and foreign currency movements accounted for the increase. System margins for 1995 were 41% compared to 36% in 1994 and 35% in 1993. This improvement resulted from better utilization of existing capacity and fixed overhead, a favorable product mix with higher margin products being sold and improved pricing. Service and other margins for 1995 were 38% compared to 37% in 1994 and 36% in 1993. The continued improvement in service margins in 1995 and 1994 reflects better utilization of field service resources as the installed base increases and a wider range of services are sold to customers. Product development costs of $19.4 million in 1995 decreased 3% and 8% from 1994 and 1993, respectively. This reflected savings achieved from the restructuring that took place in the fourth quarter of 1994. Selling and administrative expense of $76.7 million for 1995 increased $13.3 million or 21% from 1994 and $15.6 million or 25% from 1993. The increase resulted from higher sales commissions, profit sharing and bonuses consistent with the increase in the Company's revenue and income, additional sales personnel to provide improved sales coverage, extra travel and stronger foreign currencies. As a result of these changes, earnings from operations for 1995 increased to $36.7 million from $4.8 million in 1994 and $7.5 million in 1993. The 1994 earnings from operations included a charge of $6.4 million relating to a restructuring plan. 1 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF - -------------------------------------------------------------------------- OPERATIONS (CONT.) - ------------------ RESULTS OF OPERATIONS (CONT.) - ----------------------------- Interest expense of $2.8 million increased over the 1994 level of $1.3 million and the 1993 level of $0.9 million as a result of higher debt levels during the year. Interest income of $7.0 million was $1.3 million higher than 1994 and $0.8 million higher than 1993. The increase over 1994 was due to a smaller loss on available-for-sale investments and interest income relating to a favorable foreign tax settlement. The effective tax rate for 1995 was 34% compared to 39% and 35% in 1994 and 1993, respectively. The lower rate resulted from changes in the geographic mix of earnings and the return to profitability in 1995 of several subsidiaries for which no tax benefit for losses could be taken in 1994. Net income for 1995 was $26.9 million, a $20.8 million increase from $6.1 million in 1994 and an increase of $18.7 million from $8.2 million in 1993. Earnings per share for the year were $1.60 per share compared to $0.34 per share in 1994 and $0.46 per share in 1993. During October 1995, the Financial Accounting Standards Board issued Statement No. 123(SFAS No.123), "Accounting for Stock-Based Compensation." This standard, which establishes a fair value-based method of accounting for stock-based compensation plans also permits an election to continue following the requirements of APB Opinion No. 25, "Accounting for Stock Issued to Employees" with disclosures of pro forma net income and earnings per share under the new method. The Company is reviewing the alternatives under SFAS No. 123 but does not expect there will be any effect on the financial condition and results of operations of the Company. Disclosure requirements of SFAS No.123 will be effective for the Company's fiscal year 1997. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Measurex continues to maintain a strong financial position with cash and cash equivalents and short-term investments of $64.1 million as of the 1995 year-end. In addition, the Company had unsecured revolving bank lines of credit available of $88 million of which $12 million was committed to letters of credit. The Company believes that its existing cash balances, lines of credit and cash provided by operations will provide adequate flexibility to fund the Company's operating needs, capital expenditures and cash dividends through fiscal year 1996, and the DMC acquisition identified below. Subsequent to year-end, on January 10, 1996, the Company acquired Data Measurement Corporation (DMC), located in Gaithersburg, Maryland, a leading manufacturer of measurement systems for the steel industry, for $18.625 per share or $31.3 million in cash. DMC will operate as a separate subsidiary of the Company, and as part of the Industrial Systems Division, with manufacturing, engineering, product marketing and sales support continuing in Gaithersburg. In the year ended December 3, 1995, the Company generated $50.0 million of cash from operating activities compared to $11.1 million in 1994 and $2.3 million in 1993. In 1995, $42.8 million was generated by net income after adjustments for non-cash items, and $22.0 million as a result of discounting certain contracts receivable with a financial institution. These cash inflows were offset by increases in working capital of $14.9 million, including a $24.0 million increase in accounts and contracts receivable before the discounting transaction and a $12.4 million increase in inventory and service parts. These cash outflows were partially offset by increases in accounts payable and accrued expenses of $12.6 million and in income taxes payable of $4.8 million. Increased orders, revenue and profit before tax resulted in the increased working capital requirements. 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF - -------------------------------------------------------------------------- OPERATIONS (CONT.) - ------------------ LIQUIDITY AND CAPITAL RESOURCES (CONT.) - ---------------------------------------- Cash of $11.2 million was generated from investing activities compared to usage of $1.2 million in 1994 and usage of $6.9 million in 1993. In 1995, the Company sold its available-for-sale securities for $11.3 million and reduced its holding in held-to-maturity securities by $18.1 million. Investments in property, plant and equipment totaled $9.4 million during fiscal year 1995, up from $6.7 million in 1994 and up from $8.3 million in 1993. The increase was the result of additional investment in equipment to support the Company's growth. On December 14, 1994, the Company acquired the Webart Division of The Ohmart Corporation and its family of on-line measurement and control systems for $3.4 million in cash and a $0.7 million note payable. Capitalized software decreased by $0.9 million from 1994 to approximately $1.9 million in 1995. Cash used in financing activities was $81.0 million compared to $4.1 million during 1994 and to cash provided of $8.7 million in 1993. During 1995, the Company paid $100.3 million to repurchase 3.8 million shares of its own stock of which $96.0 million was to repurchase all 3.6 million shares owned by Harnischfeger Industries, Inc. at the then current market value, reducing Harnischfeger's holdings of the Company's stock from 20% at November 27, 1994 to zero. Offsetting the cash outflow for this transaction and $7.0 million for dividends, the Company received $27.6 million cash in connection with its Employee Stock Purchase Plan and stock options exercised. The Company's current ratio was approximately 1.9 at fiscal year-end 1995 compared to 2.5 at fiscal year-end 1994. The debt to capitalization ratio was 11% at year-end 1995 compared to 9% at year-end 1994. As a result of the above activities, and excluding exchange rate fluctuations, the Company's cash and cash equivalents decreased by $19.3 million from $82.3 million at year-end 1994 to $62.9 million at year-end 1995. 3 CONSOLIDATED STATEMENTS OF INCOME
Three years ended December 3, 1995 (Dollar amounts in thousands except per share data) 1995 1994 1993 - -------------------------------------------------------------------------------- REVENUES Systems $220,292 $156,294 $152,839 Service and other 114,924 103,685 101,158 -------- -------- -------- Total revenues 335,216 259,979 253,997 -------- -------- -------- OPERATING COSTS AND EXPENSES Systems 130,650 100,077 99,728 Service and other 71,803 65,288 64,501 Product development 19,368 19,992 21,146 Selling and administrative 76,708 63,441 61,122 Exit costs - 6,381 - -------- -------- -------- Total operating costs and expenses 298,529 255,179 246,497 -------- -------- -------- Earnings from operations 36,687 4,800 7,500 -------- -------- -------- OTHER INCOME (EXPENSE) Interest expense (2,817) (1,335) (948) Interest income and other, net 6,958 5,687 6,127 -------- -------- -------- Total other income, net 4,141 4,352 5,179 -------- -------- -------- Income before income taxes and cumulative effect of accounting change 40,828 9,152 12,679 Provision for income taxes 13,882 3,569 4,464 -------- -------- -------- Income before cumulative effect of accounting change 26,946 5,583 8,215 Cumulative effect of accounting change - 524 - -------- -------- -------- Net income $ 26,946 $ 6,107 $ 8,215 ======== ======== ======== Net income per share: Income before cumulative effect of accounting change $1.60 $ .31 $.46 Cumulative effect of accounting change - .03 - -------- -------- -------- Net income per share $1.60 $ .34 $.46 ======== ======== ======== Dividends per share $.44 $ .44 $.44 ======== ======== ======== Average number of common and common equivalent shares (thousands) 16,887 18,189 18,051 ======== ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 4 CONSOLIDATED BALANCE SHEETS
December 3, 1995 and November 27, 1994 (Dollar amounts in thousands except per share data) 1995 1994 - ---------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 62,924 $ 82,254 Short-term investments 1,138 27,030 Accounts receivable 76,702 61,583 Inventories 33,349 24,685 Prepaid and other 13,574 11,957 -------- -------- Total current assets 187,687 207,509 Contracts receivable 16,208 32,139 Service parts 13,773 12,286 Property, plant and equipment, net 49,752 49,655 Other assets 19,285 18,234 -------- -------- Total assets $286,705 $319,823 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 4,458 $ 4,387 Short-term debt - 4,063 Accounts payable 8,004 5,989 Accrued expenses 77,326 65,686 Income taxes payable 8,590 3,848 -------- -------- Total current liabilities 98,378 83,973 Long-term debt 15,348 12,167 Deferred income taxes 6,934 6,500 -------- -------- Total liabilities 120,660 102,640 -------- -------- Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value; authorized: 10,000,000 shares; issued and outstanding: none Common stock, $.01 par value; authorized: 50,000,000 shares; outstanding: 1995 - 18,932,013 shares, 1994 - 19,019,975 shares 189 190 Additional capital 79,584 75,115 Retained earnings 176,296 162,836 Cumulative translation adjustments (1,939) (3,301) Less: Treasury stock at cost: 1995 - 3,218,568 shares, 1994 - 889,562 shares (88,085) (17,657) -------- -------- Total shareholders' equity 166,045 217,183 -------- -------- Total liabilities and shareholders' equity $286,705 $319,823 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. 5 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Cumulative Common Additional Retained Translation Treasury Stock Capital Earnings Adjustments Stock Total ------- ----------- --------- ------------ ---------- ---------- Three years ended December 3, 1995 (Dollar amount in thousands except per share data) Balance November 29, 1992 $190 $75,181 $168,098 $(2,019) $ (22,997) $ 218,453 Proceeds from treasury stock issued under employee stock purchase and stock option plans (115,103 shares) including related tax benefits - 21 - - 3,125 3,146 Excess of cost of treasury shares issued over proceeds received - - (1,216) - - (1,216) Foreign currency translation - - - (3,688) - (3,688) Net income - - 8,215 - - 8,215 Dividends ($.44 per share) - - (7,886) - - (7,886) Treasury stock acquired (298,600 shares) - - - - (5,160) (5,160) ------ ---------- -------- ----------- --------- --------- Balance November 28, 1993 190 75,202 167,211 (5,707) (25,032) 211,864 Proceeds from treasury stock issued under employee stock purchase and stock option plans (303,164 shares) including related tax benefits - (87) - - 7,375 7,288 Excess of cost of treasury shares issued over proceeds received - - (2,596) - - (2,596) Foreign currency translation - - - 2,406 - 2,406 Net income - - 6,107 - - 6,107 Dividends ($.44 per share) - - (7,886) - - (7,886) ------ ---------- -------- ----------- --------- --------- Balance November 27, 1994 190 75,115 162,836 (3,301) (17,657) 217,183 Proceeds from treasury stock issued under employee stock purchase and stock option plans (1,456,044 shares) including related tax benefits (1) 4,469 - - 29,837 34,305 Excess of cost of treasury shares issued over proceeds received - - (6,487) - - (6,487) Foreign currency translation - - - 1,362 - 1,362 Net income - - 26,946 - - 26,946 Dividends ($.44 per share) - - (6,999) - - (6,999) Treasury stock acquired (3,785,050 shares) - - - - (100,265) (100,265) ------ ---------- -------- ----------- --------- --------- Balance December 3, 1995 $189 $79,584 $176,296 $(1,939) $ (88,085) $ 166,045 ------ ---------- -------- ----------- --------- ---------
The accompanying notes are an integral part of the consolidated financial statements. 6 CONSOLIDATED STATEMENTS OF CASH FLOWS
Three years ended December 3, 1995 (Dollar amounts in thousands) 1995 1994 1993 - --------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 26,946 $ 6,107 $ 8,215 Non-cash items included in net income: Depreciation and amortization: Service parts 1,835 1,032 1,055 Property, plant and equipment 9,200 9,343 9,997 Capitalized software and goodwill 4,539 4,921 3,935 Deferred income taxes (772) (3,883) (2,307) Translation loss 392 133 396 Inventory reserves 674 2,216 3,473 Exit costs - 4,662 - Net decrease (increase) in: Accounts and contracts receivable 1,980 (8,795) (7,420) Inventories and service parts (12,360) (374) (3,912) Prepaid and other (593) 2,034 792 Net increase (decrease) in: Accounts payable and accrued expenses 12,626 (4,289) (12,333) Income taxes payable 4,752 (2,901) 468 Other, net 737 846 (80) --------- -------- -------- Net cash provided by operating activities 49,956 11,052 2,279 --------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of held-to-maturity securities (3,475) (37,009) (33,781) Purchase of available-for-sale securities - (3,360) (31,684) Sale of available-for-sale securities 11,255 11,864 25,155 Maturities of held-to-maturity securities 18,111 36,846 45,176 Acquisition of property, plant and equipment (9,434) (6,716) (8,329) Acquisition of technology (3,418) - - Acquisition of subsidiary, net of cash acquired - - (1,668) Capitalized software (1,874) (2,787) (1,725) --------- -------- -------- Net cash provided by (used in) investing activities 11,165 (1,162) (6,856) --------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Additions to short-term debt - 4,063 - Payment of short-term debt (4,063) - - Additions to long-term debt 60,095 - 21,971 Payment of long-term debt (57,419) (4,975) (2,191) Dividends (6,999) (7,886) (7,886) Stock issued under employee stock purchase and stock option plans 27,628 4,692 1,930 Payment for treasury stock (100,265) - (5,160) --------- -------- -------- Net cash (used in) provided by financing activities (81,023) (4,106) 8,664 --------- -------- -------- Effect of exchange rate fluctuations on cash and cash equivalents 572 430 (2,415) --------- -------- -------- Net (decrease) increase in cash and cash equivalents (19,330) 6,214 1,672 Cash and cash equivalents at beginning of year 82,254 76,040 74,368 --------- -------- -------- Cash and cash equivalents at end of year $ 62,924 $ 82,254 $ 76,040 ========= ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 2,817 $ 1,335 $ 948 Income taxes $ 5,514 $ 8,167 $ 5,509 Note exchanged for intangible assets $ 700 $ - $ -
The accompanying notes are an integral part of the consolidated financial statements. 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FISCAL YEAR - The Company uses a 52-53 week fiscal year. References to 1995, 1994 and 1993 are for fiscal years ended December 3, 1995, November 27, 1994 and November 28, 1993, respectively. Fiscal year 1995 was a 53 week year and 1994 and 1993 were 52 week years. CONSOLIDATION - The consolidated financial statements include the accounts of all subsidiaries after elimination of intercompany balances and transactions FOREIGN CURRENCY TRANSLATION - The functional currency of foreign sales and service operations (except certain operations in hyper-inflationary countries) is the local currency. For all other operations, the functional currency is the U.S. dollar. The effects of translating local functional currency financial statements are included in shareholders' equity. The effects of foreign currency transactions and remeasuring the financial position and results of operations into the functional currency are included in interest income and other. The Company enters into foreign currency forward contracts to hedge certain non- U.S. dollar system orders and to reduce its overall exposure to the effects of currency fluctuations related to the remeasurement of non-functional currency net asset or liability positions. Gains and losses on forward contracts, which are not designated as hedges for accounting purposes, are included in interest income and other. REVENUE RECOGNITION - The Company generally recognizes revenue from system sales at the time of shipment provided any remaining obligations are insignificant and collection is probable. Revenue on certain software contracts are recognized on a percentage-of-completion basis. Service and other revenues are recognized as the services are provided or ratably over the life of the contracts. PRODUCT DEVELOPMENT EXPENSES - The Company is actively engaged in basic technology and applied research and development programs which are designed to develop new or improved products and process applications. The cost of these programs is charged to expense as incurred except for certain software development costs which are capitalized as described in the "Capitalized Software" policy below. CAPITALIZED SOFTWARE - Costs related to the conceptual formulation and design of software products are expensed as product development. Costs incurred subsequent to establishing the technological feasibility of software products are capitalized. Amortization of capitalized software costs, which begins when products are available for general release to customers, is computed on a straight-line basis over the expected product lives, generally estimated to be three years. INCOME TAXES - The Company adopted Statement of Financial Accounting Standard No. 109, "Accounting for Income Taxes," at the beginning of fiscal year 1994, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Prior to 1994, taxes were provided for items included in the consolidated statements of income regardless of the period when such items may be reported for tax purposes ("deferred" method). The Company provides U.S. and foreign income taxes on the portion of the accumulated earnings of the Company's foreign subsidiaries which are intended to be remitted to the parent company within the foreseeable future. CASH AND CASH EQUIVALENTS - Cash and cash equivalents generally consist of cash and highly liquid short-term investments with original maturities of 90 days or less. 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) SHORT-TERM INVESTMENTS - Short-term investments include investments held-to- maturity and investments available-for-sale. Investments held-to-maturity are stated at amortized cost with original maturities between 3 and 12 months. Investments that are considered available-for-sale are carried at market value. Unrealized gains and losses are reported net of tax as a separate component of shareholders' equity until realized. INVENTORY VALUATION - Inventories are stated at the lower of standard cost (which approximates actual cost determined on a first-in, first-out basis) or market. Inventory costs include raw materials, direct labor and manufacturing overhead. DEPRECIATION - Property, plant and equipment are depreciated on a straight-line basis over estimated useful lives which range as follows: buildings and improvements - 3 to 40 years; machinery and equipment - 3 to 20 years. Service parts are depreciated on a 7 year declining balance basis. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are included in income. GOODWILL - Goodwill is amortized on a straight-line basis over periods up to 25 years. NET INCOME PER SHARE - Net income per share is computed based on the weighted average number of common shares outstanding during the year adjusted to reflect the assumed exercise of outstanding employee stock options to the extent these items had a dilutive effect on the computation. RECLASSIFICATION - The Company has reclassified the presentation of certain prior year information to conform with the current year presentation format. These changes had no effect on the financial condition or results of operations as previously reported. RECENT PRONOUNCEMENT - During October 1995, the Financial Accounting Standards Board issued Statement No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation." This standard, which establishes a fair value-based method of accounting for stock-based compensation plans, also permits an election to continue following the requirements of APB Opinion No. 25, "Accounting for Stock Issued to Employees," with disclosures of pro forma net income and earnings per share under the new method. The Company is reviewing the alternatives under SFAS No. 123 but does not expect there will be any effect on the financial condition and results of operations of the Company. Disclosure requirements of SFAS No. 123 will be effective for the Company's fiscal year 1997. SHORT-TERM INVESTMENTS The carrying value of held-to-maturity securities at December 3, 1995 and November 27, 1994 approximates market and comprises the following securities:
1995 1994 ------- ------- Commercial paper $ 200 $ 4,220 Canadian government obligations - 4,123 Foreign certificates of deposits 938 7,433 ------ ------- $1,138 $15,776 ====== =======
At November 27, 1994, the Company also held a preferred stock portfolio classified as available-for-sale with a cost of $11.1 million, a market value of $10.6 million, and gross unrealized holding losses of $0.5 million. During 1995, the Company sold this investment and the related future contracts used to hedge the portfolio. The realized losses on this portfolio were $0.9 million in 1995 and $0.7 million in 1994. 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) ACCOUNTS RECEIVABLE Accounts receivable consist of the following:
1995 1994 ---------- --------- Accounts receivable $72,588 $ 56,619 Contracts receivable, current portion 7,332 11,547 Less: Allowances for noncollection and system returns (3,218) (6,583) ------- -------- $76,702 $ 61,583 ======= ======== INVENTORIES Inventories consist of the following: 1995 1994 ------- -------- Purchased parts and components $14,579 $ 12,417 Work-in-process 12,843 7,724 Finished subassemblies and systems 5,927 4,544 ------- -------- $33,349 $ 24,685 ======= ======== CONTRACTS RECEIVABLE Contracts receivable consist of the following: 1995 1994 ------- -------- Contracts receivable $30,217 $ 51,483 Less: Unearned financing income (4,212) (5,738) Allowance for noncollection and system returns (2,465) (2,059) ------- -------- 23,540 43,686 Current portion (7,332) (11,547) ------- -------- $16,208 $ 32,139 ======= ========
The aggregate amount of payments receivable by the Company in fiscal years subsequent to 1995 is set forth below: 1996 - $8,902 1999 - $3,695 1997 - $8,068 2000 - $2,712 1998 - $4,830 Thereafter - $2,010 During 1995, the Company entered into an agreement to discount certain contracts receivable with a financial institution. As contracts receivable are discounted, a sale is recorded and gains, the difference between proceeds received and the net book value of the contracts receivable, are reflected in interest income and other, net. Proceeds from discounting contracts receivable were $22.0 million in 1995. A portion of discounting gains is deferred to offset future administration costs and is amortized over the remaining term of the discounted contracts receivable. Under the terms of this agreement, the Company is contingently liable for losses in the event of non-payment by the contract receivable obligor. The agreement provides for limited recourse of up to 20% or full recourse at 100% of discounting proceeds, depending on the credit risk associated with specific contracts receivable. At December 3, 1995 the total amount of contracts subject to recourse was $13.1 million. Under the agreement, the Company has granted a security interest to the financial institution in the equipment as collateral. The Company retains ownership of the equipment and its residual value. 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) The discounting agreements contains certain termination events which allow the financial institution to assume administrative control of the lease portfolio and could prohibit further discounting. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are recorded at cost and consist of the following: 1995 1994 -------- -------- Land $ 5,537 $ 5,533 Buildings and improvements 39,008 38,680 Machinery and equipment 75,170 69,922 -------- -------- 119,715 114,135 Less: Accumulated depreciation (69,963) (64,480) -------- -------- $ 49,752 $ 49,655 ======== ======== OTHER ASSETS Other assets, net of amortization, consist of the following: 1995 1994 ------- ------- Goodwill $ 9,828 $ 7,978 Capitalized software 4,681 5,852 Other 4,776 4,404 ------- ------- $19,285 $18,234 ======= ======= The increase in goodwill is attributable to the acquisition of the Webart Division of The Ohmart Corporation. ACCRUED EXPENSES Accrued expenses consist of the following: 1995 1994 ------- ------- Accrued payroll and related items $29,272 $24,321 Accrued labor service 11,538 9,393 Customer deposits 17,767 12,377 Exit costs 1,354 4,862 Other 17,395 14,733 ------- ------- $77,326 $65,686 ======= ======= 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) FINANCIAL INSTRUMENTS On December 3, 1995, the Company had two credit agreements that provide for unsecured borrowings up to $95 million. These agreements include a $20 million revolving credit agreement that provides for variable interest rate borrowings based on the London Interbank Offer Rate (LIBOR) and a $75 million multi- currency credit agreement with a group of banks providing borrowings at variable interest rates including a base rate borrowing, an offshore rate borrowing and local currency rate borrowing. The agreements expire July 1996 and February 1998, respectively. There was $88 million available in connection with these agreements at December 3, 1995, of which $12 million was committed to letters of credit. The Company also has a 5.35% five-year unsecured term loan agreement with a bank. Interest is payable quarterly, with principal payable in equal quarterly installments of $1.0 million through June 1998. These agreements contain certain covenants regarding working capital, indebtedness and tangible net worth. The Company was in compliance with all covenants at December 3, 1995.
Debt consists of the following: 1995 1994 -------- -------- Bank credit agreements $ 6,907 $ - Term loan 11,000 15,000 Other borrowings 1,899 1,554 ------- ------- 19,806 16,554 Less amounts due within one year (4,458) (4,387) ------- ------- $15,348 $12,167 ======= =======
Based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the difference between the carrying amount and fair value of the loans is immaterial. The aggregate future principal payments of long-term debt are as follows: 1996 - $4,458 1999 - $ 139 1997 - $4,695 2000 - $ 100 1998 - $3,346 Thereafter - $7,068 At December 3, 1995, the Company had foreign exchange forward contracts valued at $54.1 million, maturing from December 1995 to June 1997, denominated in the following currencies: 75% European, 20% Canadian and 5% Yen. The value of the foreign currency forward contracts approximates fair value, which was based on estimated foreign exchange rates as of December 3, 1995. Approximately 99% of the contracts are with one financial institution. 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) COMMITMENTS AND CONTINGENCIES The Company leases various facilities and equipment under noncancelable lease agreements. Rent expense under all operating leases was approximately $4.9 million, $4.7 million and $4.4 million in 1995, 1994 and 1993, respectively. Future minimum lease payments under these noncancelable operating leases as of December 3, 1995 are approximately $4.7 million, $3.3 million, $2.0 million, $1.4 million and $1.4 million for fiscal years 1996, 1997, 1998, 1999 and 2000, respectively, and approximately $2.6 million in total for years following 2000. At December 3, 1995, the Company was contingently liable for approximately $12.0 million relating principally to letters of credit issued to support collections. The Company is subject to legal proceedings and claims that arise in the normal course of its business. In the opinion of management, these proceedings will not have a material adverse effect on the financial position and results of operations of the Company. EXIT COSTS In the fourth quarter of 1994, the Company recorded a $6.4 million charge for exit costs relating to a restructuring plan. This charge included $5.1 million for employee termination costs of which $4.7 million was paid out by the end of fiscal year 1995. The charge also included $1.3 million to consolidate certain long-term leasehold facilities of which $0.3 million was used by the end of fiscal year 1995. INTEREST INCOME AND OTHER Interest income and other consists of the following:
1995 1994 1993 -------- -------- -------- Interest income $7,680 $ 7,040 $6,523 Loss on short-term investments (330) (1,220) --- Foreign exchange loss (392) (133) (396) ------ ------- ------ $6,958 $ 5,687 $6,127 ====== ======= ======
13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) STOCK OPTION AND STOCK PURCHASE PLANS Under the Company's Stock Option Plan, 5,110,240 shares of common stock have been reserved for issuance to officers and key employees. Options may be granted at prices not lower than the fair market value of the Company's common stock at the date of grant. Options generally become exercisable in four equal annual installments commencing one year from the date of grant. Options generally expire, if not exercised, within ten years from the date of grant. The Stock Option Plan includes an automatic option grant program for the Company's non-employee directors. Such options expire 10 years from the date of grant. A summary of transactions relating to options during fiscal years 1993, 1994 and 1995 is set forth below:
Options Outstanding - --------------------------- (Amounts in thousands except per share data) Shares Price Per Share Amount -------- --------------- -------- November 29, 1992 2,400.3 $ 5.63-$32.44 $ 44,598 Granted 594.7 16.31- 19.69 11,099 Terminated (290.5) 5.63- 32.44 (5,791) Exercised (44.5) 15.63- 17.00 (749) -------- ------------- -------- November 28, 1993 2,660.0 5.63- 31.13 49,157 Granted 622.0 17.88- 21.88 11,705 Terminated (72.6) 15.63- 31.13 (1,483) Exercised (233.7) 7.02- 21.06 (3,926) -------- ------------- -------- November 27, 1994 2,975.7 5.63- 29.00 55,453 Granted 961.7 25.63- 34.50 21,186 Terminated (122.0) 15.63- 23.63 (2,603) Exercised (1,388.8) 5.63- 23.63 (24,509) -------- ------------- -------- December 3, 1995 2,426.6 $ 5.63-$34.50 $ 49,527 ======== ============= ========
At year-end 1995 and 1994, options to purchase 702,234 shares and 1,401,532 shares, respectively, were exercisable at prices ranging from $5.63 to $29.00 for both years. Shares available for option grants at year-end 1995 and 1994 were 1,018,074 and 1,857,922, respectively. The Company has an Employee Stock Purchase Plan which covers substantially all employees of the parent company and certain subsidiaries. Common stock purchases are paid through periodic payroll deductions of up to 10% of eligible compensation. The participant's purchase price is 85% of the lower of the closing market price on the first trading day or the last trading day of the quarter in which the stock is purchased by the employee. The Company has issued 1,038,356 shares of its stock (including 482,003 treasury shares) under this plan as of December 3, 1995. The Company has approximately 187,000 shares available for future issuance under the Employee Stock Purchase Plan. These shares may be issued from treasury shares or authorized but unissued common stock. EMPLOYEE BENEFIT PLANS The Company has a profit sharing plan in which all eligible U.S. employees participate. The Company makes contributions to profit sharing funds based upon a percentage of consolidated pretax income as defined in the Plan. In addition, the Company matches employees pretax contributions to the Plan. 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) Certain foreign employees are eligible to participate in similar profit sharing programs or local pension plans. With respect to these plans, the pension benefit obligations and plan assets were not material. The Company contributions to all these plans totaled $4.8 million, $3.0 million and $2.7 million for 1995, 1994 and 1993, respectively. INCOME TAXES The Company adopted FAS Statement No. 109, "Accounting for Income Taxes," as of November 29, 1993, and the cumulative effect of this change in accounting for income taxes was to increase 1994 net income by $0.5 million. Prior years' financial statements were not restated. Total income tax expense was allocated as follows:
1995 1994 -------- -------- Income from continuing operations $13,882 $ 3,569 Goodwill, for initial recognition of acquired tax benefits - (829) Shareholders' equity, for compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes (4,346) (286) ------- ------- $ 9,536 $ 2,454 ======= ======= The provision for income taxes before cumulative effect of the accounting change was as follows: 1995 1994 1993 ------- ------- ------- Current income taxes: United States $ 5,251 $ 753 $ 386 Foreign 8,493 6,265 6,059 State 679 434 326 ------- ------- ------- 14,423 7,452 6,771 ------- ------- ------- Deferred income taxes: United States 2,215 (2,682) (3,862) Foreign (2,756) (1,201) 1,555 ------- ------- ------- (541) (3,883) (2,307) ------- ------- ------- Provision for income taxes $13,882 $ 3,569 $ 4,464 ======= ======= =======
The foreign provision for income taxes is based on foreign pretax earnings of approximately $30.5 million, $15.5 million, and $19.3 million in 1995, 1994 and 1993, respectively. The Company has not provided for United States income taxes on the cumulative earnings of certain foreign subsidiaries that are considered invested indefinitely outside the United States in the amount of $51.0 million at December 3, 1995. At December 3, 1995, the Company has a capital loss carryforward of $1.7 million which expires in 2000. The Company also has in various tax jurisdictions net operating loss carryforwards of approximately $10.7 million and tax credit carryforwards of approximately $3.2 million at current exchange rates. Approximately $4.5 million of the net operating loss carryforwards and all the tax credit carryforwards will expire in varying amounts between 1996 and 2002. A valuation allowance has been provided for a portion of the deferred tax assets related to these carryforwards. 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) The principal items accounting for the difference between income taxes computed at the United States statutory rate and the provision for income taxes are as follows:
1995 1994 1993 -------- -------- ------- United States statutory tax $14,289 $ 3,112 $4,310 Effect of: Foreign sales corporation (259) (354) (322) Current and prior earnings of foreign operations taxed at differing rates 5,957 396 592 State income taxes 530 288 215 Valuation allowance (7,369) 322 --- Other items 734 (195) (331) ------- ------- ------ Provision for income taxes $13,882 $ 3,569 $4,464 ======= ======= ====== The components of deferred tax assets and liabilities are as follows: 1995 1994 ------- ------- Deferred income tax assets: Inventory and revenue-related reserves $ 5,500 $ 6,324 Accrued expenses 5,939 6,575 Net operating loss and tax credit carryforwards 7,784 9,831 Other 1,437 348 ------- ------- Gross deferred tax assets 20,660 23,078 ------- ------- Deferred income tax liabilities: Financial leases 3,639 3,370 Capitalized software 2,303 1,989 Depreciation 987 1,175 Undistributed earnings of foreign subsidiaries 7,880 4,486 Other 1,203 481 ------- ------- Gross deferred tax liabilities 16,012 11,501 ------- ------- Valuation allowance for deferred tax assets (1,225) (8,594) ------- ------- Net deferred tax assets $ 3,423 $ 2,983 ======= =======
The net change in the total valuation allowance for the year ended December 3, 1995, includes a reduction of approximately $7.4 million in the valuation allowance established at the beginning of 1994 for certain net operating loss carryforwards and deferred tax assets which, due to a change in circumstances, were either utilized during 1995 or are expected to be utilized. TRANSACTIONS WITH AFFILIATED COMPANY The Company has a cooperative marketing and sales arrangement with Beloit Corporation, a subsidiary of Harnischfeger Industries, Inc. At November 27, 1994, Harnischfeger owned 20% of the Company's common stock. During 1995, the Company repurchased all 3.6 million shares owned by Harnischfeger for $96.0 million in cash. Transactions with Beloit for the year ended December 3, 1995 were not material. SUBSEQUENT EVENT On January 10, 1996, the Company acquired Data Measurement Corporation (DMC) for $18.625 per share or $31.3 million in cash. DMC, located in Gaithersburg, Maryland, is a leading manufacturer of measurement systems for the steel industry. 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands unless otherwise noted) BUSINESS SEGMENTS The Company operates in one principal industry segment: the design, development, manufacture, sales and service of computer-integrated manufacturing systems. The Company sells these products to the paper, plastics, metals, rubber and chemical industries. Approximately 85% of the Company's system revenue is from the paper industry in 1995, 1994 and 1993. No single customer accounted for 10% or more of revenues during 1995, 1994 or 1993. The Company's products are principally distributed and serviced through its own marketing and service organizations. Operations are conducted worldwide and are grouped into three geographic areas: United States, Europe, and Other International (primarily Canada, Asia/Pacific and the Latin American countries). The following table summarizes the geographic operations of the Company:
(Dollar amounts in millions) 1995 1994 1993 - --------------------------------------- ------- ------- ------- Revenues from unaffiliated customers: United States $136.4 $112.8 $ 94.5 Europe 104.8 77.7 79.5 Other International 94.0 69.5 80.0 ------ ------ ------ Consolidated $335.2 $260.0 $254.0 ====== ====== ====== Transfers between geographic areas: United States $ 52.7 $ 41.5 $ 43.7 Europe 6.7 5.2 - Other International 30.2 20.2 21.4 ------ ------ ------ Consolidated $ 89.6 $ 66.9 $ 65.1 ====== ====== ====== Earnings (loss) from operations: United States $ 19.2 $ 3.3 $ (3.4) Europe 13.5 5.5 4.7 Other International 10.2 2.3 11.5 Corporate (6.2) (6.3) (5.3) ------ ------ ------ Consolidated $ 36.7 $ 4.8 $ 7.5 ====== ====== ====== Identifiable assets: United States $111.1 $120.6 $116.6 Europe 73.7 60.6 48.5 Other International 53.3 54.5 55.1 Corporate 48.6 84.1 98.1 ------ ------ ------ Consolidated $286.7 $319.8 $318.3 ====== ====== ======
Internal selling prices are designed to allocate manufacturing profits to manufacturing entities and sales and service profits to sales and service entities. The United States revenues from unaffiliated overseas customers in 1995, 1994 and 1993, were not significant. Corporate identifiable assets include short-term cash investments. 17 REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS, MEASUREX CORPORATION We have audited the accompanying consolidated balance sheets of Measurex Corporation as of December 3, 1995 and November 27, 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three fiscal years in the period ended December 3, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits 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 aforementioned financial statements present fairly, in all material respects, the consolidated financial position of Measurex Corporation as of December 3, 1995 and November 27, 1994, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended December 3, 1995, in conformity with generally accepted accounting principles. /S/ COOPERS & LYBRAND LLP San Jose, California December 19, 1995 18 SUPPLEMENTAL FINANCIAL DATA INTERIM FINANCIAL INFORMATION (UNAUDITED)
(Dollar amounts in thousands 1995 Quarter Ended ------------------------------------- except per share data) March 5 June 4 Sept.3 Dec.3 - --------------------------------- ------- -------- -------- -------- Revenues $73,435 $76,987 $91,643 $93,151 Gross margin 26,191 30,183 36,559 39,830 Income before income taxes 5,195 7,992 12,859 14,782 Net income 3,481 5,224 8,485 9,756 Net income per share .20 .30 .51 .59 Dividends per share .11 .11 .11 .11 (Dollar amounts in thousands 1994 Quarter Ended ------------------------------------ except per share data) Feb. 27 May 29 Aug. 28 Nov. 27 - --------------------------------- ------- ------- ------- ------- Revenues $61,645 $62,578 $65,654 $70,102 Gross margin 22,664 22,981 23,674 25,295 Income(loss) before income tax and cumulative effect of accounting change 3,366 3,135 4,161 (1,510) Income(loss) before cumulative effect of accounting change 2,188 1,778 2,538 (921) Cumulative effect of accounting change 524 - - - Net income(loss) 2,712 1,778 2,538 (921) Net income (loss) per share .15 .10 .14 (.05) Dividends per share .11 .11 .11 .11
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS The Company's common shares are listed on the New York and Pacific Stock Exchanges. As of December 3, 1995, there were 1,223 shareholders of record. Dividends of $.44 per share were paid in 1995 and 1994.
1995 Price 1994 Price ---------------- ------------------- High Low High Low ------- ------- ---------- ------- 1st Quarter $24 1/4 $20 3/8 $20 5/8 $18 1/2 2nd Quarter 27 3/4 22 3/8 19 3/4 17 7/8 3rd Quarter 33 1/8 25 1/2 21 1/4 17 3/8 4th Quarter 35 3/4 27 1/8 22 1/2 19 1/2
19 SELECTED FINANCIAL DATA
Five years ended December 3, 1995 (Dollar amounts in thousands except per share data) 1995 1994 1993 1992 1991 - --------------------------------------- -------- -------- -------- -------- -------- REVENUE Systems $220,292 $156,294 $152,839 $148,367 $148,249 Service and other 114,924 103,685 101,158 104,220 105,730 - --------------------------------------- -------- -------- -------- -------- -------- Total revenues 335,216 259,979 253,997 252,587 253,979 - --------------------------------------- -------- -------- -------- -------- -------- GROSS MARGIN: Systems $ 89,642 $ 56,217 $ 53,111 $ 49,123 $ 54,534 Service and other 43,121 38,397 36,657 36,406 33,312 - --------------------------------------- -------- -------- -------- -------- -------- Total gross margin 132,763 94,614 89,768 85,529 87,846 - --------------------------------------- -------- -------- -------- -------- -------- Earnings from operations before exit and restructuring costs $ 36,687 $ 11,181 $ 7,500 $ 1,222 $ 3,247 Earnings (loss) from operations 36,687 4,800 7,500 (7,752) (8,448) Income before income taxes, extraordinary credit and cumulative effect of accounting change 40,828 9,152 12,679 1,678 519 Net income 26,946 6,107 8,215 1,625 389 Net income per share 1.60 .34 .46 .09 .02 Dividends per share .44 .44 .44 .44 .44 System orders 270,000 160,000 151,000 156,000 127,000 System backlog 143,000 92,000 91,000 95,000 91,000 - --------------------------------------- -------- -------- -------- -------- -------- Gross margin: Systems 40.7% 36.0% 34.7% 33.1% 36.8% Service and other 37.5% 37.0% 36.2% 34.9% 31.5% Total gross margin 39.6% 36.4% 35.3% 33.9% 34.6% Earnings (loss) from operations 10.9% 1.8% 3.0% (3.1%) (3.3%) Net income 8.0% 2.3% 3.2% 0.6% 0.2% Income tax rate 34.0% 39.0% 35.2% 57.4% 25.0% - --------------------------------------- -------- -------- -------- -------- -------- Working capital $ 89,309 $123,536 $137,720 $133,305 $154,744 Total assets 286,705 319,823 318,316 322,884 339,539 Total debt 19,806 20,617 21,299 891 5,033 Shareholders' equity 166,045 217,183 211,864 218,453 231,718 - --------------------------------------- -------- -------- -------- -------- -------- Current ratio 1.9:1 2.5:1 2.8:1 2.6:1 2.9:1 Return on beginning equity 12.4% 2.9% 3.8% .7% .2% Return on beginning assets 8.4% 1.9% 2.5% .5% .1% Book value per share $ 10.57 $ 11.98 $ 11.87 $ 12.12 $ 12.82 - --------------------------------------- -------- -------- -------- -------- -------- Total product development costs $ 21,242 $ 22,779 $ 22,871 $ 25,248 $ 25,331 Capitalized software costs (1,874) (2,787) (1,725) (4,636) (2,332) - --------------------------------------- -------- -------- -------- -------- -------- Product development expense $ 19,368 $ 19,992 $ 21,146 $ 20,612 $ 22,999 - --------------------------------------- -------- -------- -------- -------- -------- Capital expenditures $ 9,434 $ 6,716 $ 8,329 $ 7,781 $ 8,211 Number of employees 2,360 2,090 2,250 2,310 2,530 Shares outstanding (thousands) 15,713 18,130 17,844 18,028 18,077
20 EX-21 6 SUBSIDIARIES OF REGISTRANT Exhibit 21 -- MEASUREX CORPORATION LISTING OF SUBSIDIARIES The following table sets forth the name and jurisdiction of incorporation of each subsidiary of the Registrant as of December 3, 1995. Each subsidiary is wholly owned by the Registrant or a subsidiary of the Registrant (except in certain instances for directors' qualifying shares or as noted below) and is included in the Registrant's Consolidated Financial Statements. Subsidiary Name Incorporated In --------------- -----------------
(2) Measurex Pty. Limited Australia (2) Measurex International GmbH Austria (1) Measurex Foreign Sales Corporation Barbados (2) Measurex do Brasil Ltda. Brazil (1) Measurex Systems, Inc. California (1) Measurex International Corporation California (2) Measurex Latin America California (2) Measurex Asia, Inc. California (2) Measurex Korea, Inc. California (2) Measurex Taiwan, Inc. California (4) Measurex Devron Inc. Canada (2) Measurex Inc. Canada (1) Measurex Acquisition Company Delaware (5) BCF Holding Oy Finland (2) Measurex Oy Finland (7) Roibox Oy Finland (2) Measurex S.A.R.L. France (2) Measurex GmbH Germany (2) Measurex Italia S.R.L. Italy (1) Measurex Japan Limited Japan (6) Measurex S.A. de C.V. Mexico (2) Measurex B.V. The Netherlands (2) Measurex Credit International B.V. The Netherlands (2) Measurex Systems N.Z. Limited New Zealand (2) Measurex Norway A.S. Norway (2) Measurex International Financial, Inc. Panama (2) Measurex (Portugal) Sistemas De Controle, Lda Portugal (2) Measurex (Ireland) Limited Republic of Ireland (2) Measurex Service Company Limited Republic of Ireland (3) Measurex Ireland Finance Republic of Ireland (2) MAP Results Pte. Ltd. Singapore (2) Measurex Africa Propriety Limited South Africa (2) Measurex Sweden A.B. Sweden (2) Measurex, A.G. (Switzerland) Switzerland (2) Measurex International Systems Limited United Kingdom (2) Measurex De Venezuela, C.A. Venezuela
Exhibit 21 -- MEASUREX CORPORATION LISTING OF SUBSIDIARIES (CONTINUED) NOTES: (1) Subsidiary of Measurex Corporation (2) Subsidiary of Measurex International Corporation (3) Subsidiary of Measurex (Ireland) Limited (4) Subsidiary of Measurex Inc. (5) Subsidiary of Measurex Oy (6) 51% owned by Measurex Latin America, 49% owned by Measurex International Corporation (7) 99.9% owned by Measurex Oy and BCF Holding Oy, 0.1% owned by unrelated parties EX-23 7 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23 -- CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Measurex Corporation and Subsidiaries on Form S-8 (File Nos. 33-65762, 33-22589, 2-76707 and 2-67736) of our report dated December 19, 1995 on our audits of the consolidated financial statements of Measurex Corporation and Subsidiaries as of December 3, 1995 and November 27, 1994 and for each of the three fiscal years in the period ended December 3, 1995 appearing on page 30 of Measurex Corporation's 1995 Annual Report to Shareholders and incorporated by reference in this Annual Report on Form 10-K and our report dated December 19, 1995 on the financial statement schedules of Measurex Corporation and Subsidiaries as of December 3, 1995 and November 27, 1994 and for each of the three fiscal years in the period ended December 3, 1995, which report is included in this Annual Report on Form 10-K. /S/ COOPERS & LYBRAND L.L.P. ---------------------------- COOPERS & LYBRAND L.L.P. San Jose, California February 29, 1996 EX-27 8 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ____________________ AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 12-MOS DEC-03-1995 NOV-28-1994 DEC-03-1995 62,924 1,138 76,702 3,218 33,349 187,687 49,752 69,963 286,705 98,378 15,348 0 0 189 165,856 286,705 220,292 335,216 130,650 298,529 4,141 0 2,817 40,828 13,882 26,946 0 0 0 26,946 1.60 1.59
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