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 is designed to increase productivity, reduce raw material and energy consumption and improve quality and uniformity. Industries served by the Company include paper, plastics, nonwovens, rubber, steel and non-ferrous metals. 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 2,840 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.
FORWARD-LOOKING STATEMENTS
With the exception of the actual reported financial results, some of the statements made in this Form 10-K are forward-looking, reflect the Company's current expectations and involve certain risks and uncertainties. There can be no assurance that the Company's actual future performance will meet the Company's expectations. Specific risks are discussed in "Risk Factors" on page 5 of this Form 10-K.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
Financial information about industry segments is set forth in the Note to the Consolidated Financial Statements titled "Business Segments" in Part II, Item 8 at page 24.
NARRATIVE DESCRIPTION OF BUSINESS.
The Company is a leading worldwide supplier of computer-integrated measurement, control and information systems for sheet and 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 product qualities during the manufacturing process such as weight, coating, color, formation, opacity, strength, thickness and chemical content. Software running in computers and workstations uses 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 in order to maintain product quality.
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.
PAPER SYSTEMS BUSINESS
In 1996, approximately 54% 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 . Cross Direction (CD) Profile Control Systems and Actuators . Web Inspection Systems . Distributed Control Systems . Total 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, coat weight, 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 Charged 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 1996, approximately 15% of the Company's revenues were generated from system sales to customers in the plastics, nonwovens, aluminum, rubber, steel 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, siding and heat exchangers. . Steel - automobiles, building materials, beverage cans and major appliances. . Other - chemical, fiberglass, plastic resin and pharmaceuticals.
The Company's product offering to Industrial Systems' customers includes:
. Measurement Control Systems (MCS) and Sensors . Distributed Control Systems . Profile Control Systems . Web Inspection Systems
The Company's products include a low-priced PC based system, ConceptOne(R), for smaller plastics and sheet applications, and also complex integrated systems (the MXOpen (R) product family) designed for specific applications or processes.
In January 1996, the Company expanded its participation in the metals industry with the acquisition of Data Measurement Corporation (DMC), a manufacturer of measurement systems for the steel industry. In March 1996, the Company acquired the Measurement Systems Business of Loral Control Systems. This business was integrated into DMC. 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. The systems are generally installed at the customer's site by the Company's worldwide service organization.
SERVICE BUSINESS
In 1996, service revenues represented approximately 31% 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 5,000 systems installed in 60 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 years 1996, 1995 and 1994, the Company spent approximately $21.0 million, $19.4 million and $20.0 million, respectively, on research and development. Those amounts represented 5%, 6% and 8%, respectively, of total revenues and 7%, 9% and 13%, respectively, of system revenue.
BACKLOG
System backlog at December 1, 1996, was $157 million, 10% higher than the backlog of $143 million at the end of fiscal 1995. The DMC acquisition increased the backlog at the beginning of the year by $20 million. Approximately 95% of the $157 million year-end 1996 backlog is scheduled to be shipped during fiscal 1997.
PATENTS
The Company follows a policy of filing appropriate patent applications on inventions it considers significant. As of December 1, 1996, the Company had 92 United States patents and 220 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.
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 paper machine integrated control system market, competition includes Asea Brown Boveri Process Automation Inc. (ABB); Lippke, a wholly owned subsidiary of Honeywell Inc.; the Valmet Automation Group, a division of Valmet Oy; and Yokogawa-YEW in Japan. Competition in the distributed control system business area includes Fisher Controls (a division of Emerson Electric Co.), Foxboro (a subsidiary of Siebe, Inc.), Honeywell Inc., Siemens A.G., 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. In the industrial systems market, the Company competes with a number of companies, typically focused on a specific geographic area or customer type, including ABB, Eurotherm Gauging Systems and NDC. The Company's major competitors in the steel industry include IMS, THI (a division of Thermo Instrument Systems) and Toshiba in Japan.
EMPLOYEES
As of December 1, 1996, the Company had approximately 2,840 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.
Financial information regarding geographic operations is set forth in the Note to the Consolidated Financial Statements titled "Business Segments" in Part II, Item 8 at page 24.
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.
ITEM 2. PROPERTIES
As of December 1, 1996, the Company owned the major facilities described below:
The following major facilities were leased as of December 1, 1996:
The Company also leases office space for sales and service operations throughout the United States and various countries.
During 1996, 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.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
This information is set forth in the note to the financial statements headed "Market for the Registrant's Common Stock and Related Security Holder Matters", in Part II, Item 8 at page 26.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
System orders for 1996 were $289 million, which represented a 7% increase from $270 million in 1995 and an 81% increase from $160 million in 1994. For the year, total Paper System orders were $216 million, a decrease of 8% from 1995. Record orders for Paper Systems in Europe, Japan and Latin America were partially offset by lower orders in the United States, due to the downturn in the United States paper industry, and fewer orders in Asia Pacific reflecting a decline in new paper machine projects in that region. Total orders for Industrial Systems more than doubled in 1996 to $73 million. Excluding orders from Data Measurement Corporation (DMC), which was acquired in January 1996, Industrial Systems orders for fiscal year 1996 were $43 million, a 19% increase over fiscal year 1995.
The industry and geographic breakdown of system orders is as follows:
System backlog at the end of 1996 was $157 million, up from $143 million at the end of 1995 and $92 million at the end of 1994. Approximately 95% of the 1996 backlog is scheduled to be shipped in 1997. The ending backlog includes $20 million relating to DMC.
System revenue was $288.0 million in 1996, a 31% increase from $220.3 million in 1995, and an 84% increase from $156.3 million in 1994. The increase resulted from the acquisition of DMC, which was responsible for $27.0 million of 1996 revenues, and from increased system shipments from the Company's historic businesses.
Service and other revenue of $128.0 million increased 11% from $114.9 million in 1995 and 23% from $103.7 million in 1994, due to growth in the installed base of systems and the acquisition of DMC which accounted for $9.0 million of the increase.
System margins for 1996 were 39% compared to 41% in 1995 and 36% in 1994. The decrease in margins from 1995 is primarily due to unfavorable product mix, with a higher proportion of lower margin smaller systems, and also reflects the impact of relatively lower margin DMC shipments.
Service and other margins for 1996 were 37%, essentially unchanged from 1995 and 1994.
Product development costs of $21.0 million in 1996 increased 9% and 5% from 1995 and 1994, respectively. To maintain its competitive position in the industry, the Company continues its investments in new products.
Selling and administrative expenses of $85.6 million for 1996 increased $8.9 million or 12% from 1995 and $22.1 million or 35% from 1994, although they were lower as a percentage of revenue than in both previous years. The increase over 1995 is mainly due to the inclusion of DMC. The increase over 1994 resulted from incremental sales commissions as a result of the higher order level and additional sales personnel to provide improved sales coverage, as well as the inclusion of DMC.
As a result of these changes, earnings from operations for 1996 increased to $54.6 million from $36.7 million in 1995 and $4.8 million in 1994. The 1994 earnings from operations included a charge of $6.4 million relating to a restructuring plan.
Interest expense of $2.5 million was essentially unchanged over 1995 and was higher than the 1994 level of $1.3 million as a result of higher debt levels during the year. Interest income of $3.9 million was $3.0 million lower than 1995 and $1.7 million lower than 1994. The decrease is due to lower cash balances during the year, primarily as a result of the acquisition of DMC, and the discounting of certain contracts receivable with a financial institution at the end of 1995, the proceeds of which were also used to fund the DMC acquisition.
The effective tax rate for 1996 was 34%, unchanged from 1995 and compared to 39% in 1994. The lower rate from 1994 resulted from changes in the geographic mix of earnings and the return to profitability in 1995 and 1996 of several subsidiaries for which no tax benefit for losses could be taken in 1994.
Net income for 1996 was $37.0 million, a $10.1 million increase from $26.9 million in 1995 and an increase of $30.9 million from $6.1 million in 1994. Earnings per share for the year were $2.25 per share compared to $1.60 per share in 1995 and $0.34 per share in 1994.
During March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," (SFAS No. 121), which requires the review for impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In certain situations, an impairment loss would be recognized. The Company has adopted SFAS No. 121.
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.
During June 1996, the Financial Accounting Standards Board issued Statement No. 125 (SFAS No. 125), "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." This standard establishes consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. SFAS No. 125 will become effective for transactions that the Company enters into after December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Measurex continues to maintain a strong financial position with cash and cash equivalents and short-term investments of $37.7 million as of the 1996 year-end. In addition, the Company had unsecured revolving bank lines of credit available of $78.0 million of which $17.6 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 1997.
In the year ended December 1, 1996, the Company generated $20.9 million of cash from operating activities compared to $50.0 million in 1995 and $11.1 million in 1994. In 1996, $56.8 million was generated by net income after adjustments for non-cash items. These cash inflows were offset by increases in working capital of $35.9 million, including a $30.7 million increase in accounts and contracts receivable. The increased business level and the acquisition of DMC resulted in the increased working capital requirements.
The Company continued to scrap obsolete inventory and service parts during the year. The amount scrapped in 1996 was $7.4 million compared to $4.1 million in 1995.
Cash used in investing activities was $48.3 million for the fiscal year 1996 compared to $11.2 million received from investing activities in 1995 and usage of $1.2 million in 1994. On January 10, 1996, the Company acquired DMC for $31.3 million. On April 24, 1996, the Company acquired the Measurement Systems Business Unit of Loral Fairchild Corp.'s Loral Control Systems Division for $4.5 million. With these acquisitions, the Company now supplies measurement and control systems and services for flat rolled products to the steel industry. Investments in property, plant and equipment totaled $10.4 million during fiscal year 1996, up from $9.4 million in 1995 and from $6.7 million in 1994. The increase was the result of additional investment in equipment to support the Company's growth. Investments in capitalized software increased by $2.8 million from 1995 to approximately $4.7 million in 1996 due to additional product development expenditures.
Cash generated in financing activities was $0.3 million in fiscal year 1996 compared to cash used of $81.0 million during 1995 and cash used of $4.1 million in 1994. During 1995, the Company paid $96.0 million to repurchase approximately 20% of its own stock from Harnischfeger Industries.
The Company's current ratio was approximately 1.9 at fiscal year-end 1996 and at fiscal year-end 1995. The debt to capitalization ratio was 11% at year-end 1996 , the same as at year-end 1995.
As a result of the above activities, and excluding exchange rate fluctuations, the Company's cash and cash equivalents decreased by $25.3 million from $62.9 million at year-end 1995 to $37.6 million at year-end 1996.
On January 27, 1997 the Company announced that it had entered into a definitive agreement to merge with a wholly-owned subsidiary of Honeywell Inc. in an all- cash transaction. Honeywell Inc. has commenced an all-cash tender offer for all outstanding shares of the Company's stock at a price of $35 per share.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF INCOME
Three years ended December 1, 1996 (Dollar amounts in thousands except per share data)
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the consolidated financial statements.
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 1996, 1995 and 1994 are for fiscal years ended December 1, 1996, December 3, 1995 and November 27, 1994, respectively. Fiscal year 1996 was a 52 week year, 1995 was a 53 week year and 1994 was a 52 week year.
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.
For operations in countries that are considered to have highly inflationary economies, gains and losses from translation and transactions are determined using a combination of current and historical rates and are included in net income.
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.
ESTIMATES - The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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 accounts for income taxes using the liability method, 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. 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.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 PRONOUNCEMENTS - During March 1995, the Financial Accounting Standards Board issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," (SFAS No. 121), which requires the review for impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In certain situations, an impairment loss would be recognized. The Company has adopted SFAS No. 121.
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.
During June 1996, the Financial Accounting Standards Board issued Statement No. 125 (SFAS No. 125), "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." This standard establishes consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. SFAS No. 125 will become effective for transactions that the Company enters into after December 31, 1996.
ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
1996 1995 --------- -------- Accounts receivable $106,333 $72,588 Contracts receivable, current portion 9,905 7,332 Less: Allowances for noncollection and system returns (4,763) (3,218) -------- ------- $111,475 $76,702 ======== =======
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
INVENTORIES
Inventories consist of the following:
1996 1995 --------------- --------------
Purchased parts and components $19,010 $14,579 Work-in-process 12,867 12,843 Finished subassemblies and systems 6,066 5,927 --------------- -------------- $37,943 $33,349
CONTRACTS RECEIVABLE
Contracts receivable consist of the following:
1996 1995 --------------- -------------- Contracts receivable $32,839 $30,217 Less: Unearned financing income (3,988) (4,212) Allowance for noncollection and system returns (1,047) (2,465) --------------- -------------- 27,804 23,540 Current portion (9,905) (7,332) --------------- -------------- $17,899 $16,208 =============== ==============
The aggregate amount of payments receivable by the Company in fiscal years subsequent to 1996 is set forth below:
1997 - $10,861 2000 - $3,606 1998 - $ 8,211 2001 - $2,320 1999 - $ 4,714 Thereafter - $3,127
During 1996 and 1995, the Company entered into agreements 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 $3.4 million in 1996 and $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 these agreements, the Company is contingently liable for losses in the event of non-payment by the contract receivable obligor. The agreements provide 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 1, 1996 the total amount of contracts subject to recourse was $13.6 million and at December 3, 1995 was $13.1 million. Under the agreements, 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.
The discounting agreements contain certain termination events which allow the financial institution to assume administrative control of the lease portfolio and could prohibit further discounting.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and consist of the following:
1996 1995 --------- --------- Land $ 5,579 $ 5,537 Buildings and improvements 41,023 39,008 Machinery and equipment 82,230 75,170 -------- -------- 128,832 119,715 Less: Accumulated depreciation (78,307) (69,963) -------- -------- $ 50,525 $ 49,752 ======== ========
GOODWILL
Goodwill consists of the following: 1996 1995 -------- -------- DMC $ 25,889 $ - Other 18,843 13,808 -------- -------- 44,732 13,808 Less: Accumulated amortization (6,405) (3,980) -------- -------- $ 38,327 $ 9,828 ======== ========
OTHER ASSETS
Other assets consist of the following:
1996 1995 --------- -------- Capitalized software $ 8,152 $ 4,681 Other 6,303 4,776 -------- -------- $ 14,455 $ 9,457 ======== ========
ACQUISITION
On January 10, 1996, the Company acquired Data Measurement Corporation (DMC) for $31.3 million in cash, net of cash acquired. DMC, located in Gaithersburg, Maryland, is a leading manufacturer of measurement systems for the steel industry. The acquisition was accounted for using the purchase method. Accordingly, the cost of the acquisition was allocated to assets acquired and liabilities assumed based on their estimated fair values. The net assets and results of operations of DMC are included in the consolidated financial statements from the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired was approximately $25.9 million, which has been substantially accounted for as goodwill and is being amortized over 25 years using the straight line method.
The following unaudited pro forma income statement information for the fiscal year 1995 presents a summary of the consolidated results of operations of the Company and DMC as though the acquisition of DMC had occurred on November 28, 1994, and includes adjustments to conform revenue recognition and service parts amortization policies, to adjust goodwill amortization expense, to increase expense as a result of the additional borrowing required to finance the transaction, to reduce interest income reflecting the sale of contracts receivable to fund the acquisition, and to record income tax benefits for these adjusting transactions. No pro forma figures are provided for fiscal year 1996 as there would be no significant difference from the results reported in the Consolidated Statement of Income for 1996.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
Fiscal year ended (in thousands, except per share amount) December 3, 1995 ---------------- (pro forma)
Total revenues $365,438 Net income $ 25,075 Net income per share $ 1.48
The pro forma financial information is presented for informational purposes only and does not necessarily indicate the operating results that would have occurred had the acquisition of DMC been consummated as of November 28, 1994, nor does it purport to predict future operating results.
ACCRUED EXPENSES
Accrued expenses consist of the following:
1996 1995 ------- -------
Accrued payroll and related items $32,686 $29,272 Accrued labor service 13,711 11,538 Customer deposits 15,164 17,767 Other 22,815 18,749 ------- ------- $84,376 $77,326 ======= =======
FINANCIAL INSTRUMENTS
On December 1, 1996, 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 1997 and February 1998, respectively. There was $78 million available in connection with these agreements at December 1, 1996, of which $17.6 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 1, 1996.
Debt consists of the following: 1996 1995 -------- -------- Bank credit agreements $17,378 $ 6,907 Term loan 6,000 11,000 Other borrowings 1,346 1,899 ------- ------- 24,724 19,806 Less amounts due within one year (3,447) (4,458) ------- ------- $21,277 $15,348 ======= =======
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
The aggregate future principal payments of long-term debt are as follows:
1997 - $ 3,447 2000 - $100 1998 - $20,841 2001 - $100 1999 - $ 136 Thereafter - $100
At December 1, 1996, the Company had various foreign exchange forward contracts maturing during 1997. For each closed position, a sale contract of a particular currency was matched with a purchase contract for the same currency at the same amount, counterparty and settlement date. Open positions were valued at fair value, using estimated foreign exchange rates as of December 1, 1996. The foreign currency positions, both open and closed, as of December 1, 1996, by major currency are:
Currency Buy Contracts Sell Contracts at Fair Value at Fair Value
Japanese Yen $ - $13,956 Austrian Schilling 467 8,982 Canadian Dollar 7,275 4,459 German Deutsche Mark 976 4,263 French Franc 371 6,145 All other currencies 4,099 12,707 ------- ------- $13,188 $50,512 ======= =======
Management believes that these forward contracts should not subject the Company to undue risk due to foreign exchange movements because gains and losses on these contracts should offset losses and gains on the assets, liabilities and transactions being hedged.
COMMITMENTS AND CONTINGENCIES
The Company leases various facilities and equipment under noncancelable lease agreements. Rent expense under all operating leases was approximately $6.1 million, $4.9 million and $4.7 million in 1996, 1995 and 1994, respectively. Future minimum lease payments under these noncancelable operating leases as of December 1, 1996 are approximately $6.1 million, $4.9 million, $3.0 million, $1.6 million and $1.6 million for fiscal years 1997, 1998, 1999, 2000 and 2001, respectively, and approximately $1.7 million in total for years following 2001.
At December 1, 1996, the Company was contingently liable for approximately $17.6 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, which was fully paid out by the end of fiscal year 1996. The charge also included $1.3 million to consolidate certain long- term leasehold facilities of which $0.4 million was used by the end of fiscal year 1996.
INTEREST INCOME AND OTHER
Interest income and other consists of the following:
1996 1995 1994 ------- ------- --------
Interest income $4,193 $7,680 $ 7,040 Loss on short-term investments - (330) (1,220) Foreign exchange loss (253) (392) (133) ------ ------ ------- $3,940 $6,958 $5,687 ======= ====== ======
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
STOCK OPTION AND STOCK PURCHASE PLANS
Under the Company's Stock Option Plan, 7,110,240 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 1994, 1995 and 1996 is set forth below:
At year-end 1996 and 1995, options to purchase 954,953 shares and 702,234 shares, respectively, were exercisable at prices ranging from $5.63 to $34.50 for both years. Shares available for option grants at year-end 1996 and 1995 were 2,197,759 and 1,018,074, 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 1,113,485 shares of its stock (including 557,132 treasury shares) under this plan as of December 1, 1996.
The Company has approximately 112,000 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.
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 $6.6 million, $4.8 million and $3.0 million for 1996, 1995 and 1994, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
INCOME TAXES
The Company adopted SFAS 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:
The provision for income taxes before cumulative effect of the accounting change was as follows:
The foreign provision for income taxes is based on foreign pretax earnings of approximately $35.8 million, $30.5 million, and $15.5 million in 1996, 1995 and 1994, 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 $63.5 million at December 1, 1996.
At December 1, 1996, 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 $6.3 million and tax credit carryforwards of approximately $0.8 million at current exchange rates. Approximately $1.2 million of the net operating loss carryforwards and all the tax credit carryforwards will expire in varying amounts between 1997 and 2003. A valuation allowance has been provided for a portion of the deferred tax assets related to these carryforwards.
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:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (Dollar amounts in thousands unless otherwise noted)
The components of deferred tax assets and liabilities are as follows:
The net change in the total valuation allowance for the year ended December 1, 1996, includes a reduction of approximately $0.6 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 1996 or are expected to be utilized.
SUBSEQUENT EVENT
On January 27, 1997 the Company announced that it had entered into a definitive agreement to merge with a wholly-owned subsidiary of Honeywell Inc. in an all- cash transaction. Honeywell Inc. has commenced an all-cash tender offer for all outstanding shares of the Company's stock at a price of $35 per share.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (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 75% of the Company's system revenue is from the paper industry in 1996, and approximately 85% in 1995 and 1994.
No single customer accounted for 10% or more of revenues during 1996, 1995 or 1994.
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) 1996 1995 1994 ------- ------- -------
Revenues from unaffiliated customers: United States $158.9 $136.4 $112.8 Europe 126.8 104.8 77.7 Other International 130.3 94.0 69.5 ------ ------ ------ Consolidated $416.0 $335.2 $260.0 ====== ====== ======
Transfers between geographic areas: United States $ 66.9 $ 52.7 $ 41.5 Europe 7.1 6.7 5.2 Other International 34.0 30.2 20.2 ------ ------ ------ Consolidated $108.0 $ 89.6 $ 66.9 ====== ====== ======
Earnings (loss) from operations: United States $ 31.1 $ 19.2 $ 3.3 Europe 15.8 13.5 5.5 Other International 14.8 10.2 2.3 Corporate (7.1) (6.2) (6.3) ------ ------ ------ Consolidated $ 54.6 $ 36.7 $ 4.8 ====== ====== ======
Identifiable assets: United States $153.0 $111.1 $120.6 Europe 76.2 73.7 60.6 Other International 79.9 53.3 54.5 Corporate 28.0 48.6 84.1 ------ ------ ------ Consolidated $337.1 $286.7 $319.8 ====== ====== ======
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 1996 were $15.3 million. In 1995 and 1994 they were not significant.
Corporate identifiable assets include short-term cash investments.
REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS, MEASUREX CORPORATION
We have audited the accompanying consolidated balance sheets of Measurex Corporation as of December 1, 1996 and December 3, 1995, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three fiscal years in the period ended December 1, 1996. 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 1, 1996 and December 3, 1995, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended December 1, 1996, in conformity with generally accepted accounting principles.
/S/ COOPERS & LYBRAND LLP
San Jose, California December 17, 1996, except for the note titled "Subsequent Event", as to which the date is January 27, 1997.
SUPPLEMENTAL FINANCIAL DATA
INTERIM FINANCIAL INFORMATION (UNAUDITED)
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 1, 1996, there were 1,260 shareholders of record. Dividends of $.44 per share were paid in 1996 and 1995.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company may be added by amendment. The following table and notes thereto identify and set forth information about the Company's eight executive officers as of January 31, 1997 (ages are as of December 1, 1996):
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
Robert H. Bucher (7) Senior Vice President, Paper Control Systems Division
Charles Van Orden (8) Vice President, General Counsel and Secretary
(1) Mr. Bossen, age 69, 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 60, 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.
(3) Mr. McAdams, age 57, 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. Weyand, age 52, 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 49, has been Executive Vice President, President Industrial Systems Division since September 1994; Executive Vice President, Engineering and Marketing from 1991 to September 1994.
(6) Mr. Lissner, age 46, has been Vice President, Corporate Planning and Development since 1991.
(7) Mr. Bucher, age 41, has been Senior Vice President, Paper Control Systems Division since October 1996; Vice President, General Manager, Measurex Devron, Inc. from December 1992 to October 1996; Vice President, Marketing from 1991 to December 1992.
(8) Mr. Van Orden, age 42, 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.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information may be added by amendment.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information may be added by amendment.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information may be added by amendment.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS A PART OF THIS REPORT
1. FINANCIAL STATEMENTS
The financial statements required to be filed as part of this Annual Report on Form 10-K are listed below with their location in this report.
2. FINANCIAL STATEMENT SCHEDULES
The financial statements required to be filed as part of this Annual Report on Form 10-K are listed below with their location in this report.
Page ----
Report of Independent Accountants.............................. 32 Schedules for the Fiscal Years 1996, 1995 and 1994: II - Valuation Reserves...................................... 33
All schedules, other than indicated above, are omitted because of the absence of the conditions under which they are required or because the information required is shown in the financial statements or notes thereto.
3. 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 (incorporated by reference from Exhibit 10.2 on Form 10-K for the fiscal year ended December 3, 1995).
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 (incorporated by reference from Exhibit 10.12 on Form 10-K for the fiscal year ended December 3, 1995).
11.0 Computation of Net Income per Share of Common Stock of the Registrant.
21.0 Subsidiaries of Registrant.
23.0 Consent of Independent Accountants.
24.0 Power of Attorney (included on page 31).
27.0 Financial Data Schedule
Other exhibits have not been filed because conditions requiring filing do not exist.
(b) REPORTS ON FORM 8-K.
None.
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 21, 1997 By /S/ DAVID A. BOSSEN --------------------------- David A. Bossen Chairman, Chief Executive Officer
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.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS, MEASUREX CORPORATION
Our report on the consolidated financial statements of Measurex Corporation and subsidiaries is included on page 25 of this Form 10-K. In connection with our audit of such financial statements, we have also audited the related financial statement schedules listed in the index on page 29 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 LLP
San Jose, California December 17, 1996, except for the note titled "Subsequent Event", as to which the date is January 27, 1997.
SCHEDULE II
MEASUREX CORPORATION VALUATION RESERVES (1) Fiscal years 1996, 1995 and 1994 (Amounts in thousands)
NOTES:
(1) See the Notes to Consolidated Financial Statements. (2) Deductions for returns of systems or parts of systems and for write-off of non-collectible amounts. (3) Deductions for write-offs of obsolete and scrapped parts and translation adjustments. (4) Represents the reclassification 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. (7) Relates to DMC acquisition.