____________________________________________________________________________
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]
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended: December 31, 1994 Commission File Number: 0-1252
JOSLYN CORPORATION
_____________________________________________________________________
(Exact name of Registrant as specified in its charter)
Illinois 36-3560095
_______________________________________ ___________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
30 South Wacker Drive-Chicago, Illinois 60606
_______________________________________ ___________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 454-2900
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.25 par value
Common Stock Purchase Rights
_____________________________
(Title of class)
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.
X
Yes _____ No ______
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 1, 1995 (based upon the closing price on that day)
was $180,810,680.
As of March 1, 1995, 7,160,819 shares of the Registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders report for the year ended December 31,
1994, ("Annual Report") are incorporated by reference into Parts I and II.
Portions of the definitive proxy statement dated March 28, 1995 ("Proxy
Statement") are incorporated by reference into Part III.
Page 1 of 75 Exhibit Index on Page 18
PART I
ITEM 1. BUSINESS
1(a) GENERAL DEVELOPMENT OF BUSINESS
Joslyn Corporation, an Illinois corporation (together with its
subsidiaries, the "Registrant") is a holding company formed in 1988 in
connection with a share exchange with its principal operating subsidiary,
Joslyn Manufacturing Co. Joslyn Manufacturing Co., founded by Marcellus L.
Joslyn, was incorporated in Illinois on December 6, 1902 as the Independent
Arm and Pin Co.
The Registrant is a holding company for a number of subsidiaries which
are engaged primarily in the manufacturing and supplying of electrical
hardware, apparatus, protective equipment, air pressurization and dehydration
products, and services used in the construction and maintenance of transmission
and distribution facilities to electric power and telephone companies. The
Registrant's subsidiaries also manufacture and supply vacuum switchgear and
electrical controls to commercial and industrial markets as well as
protective equipment, connector backshells, and air and gas dehydration
systems to aerospace and defense companies.
The Registrant has eleven wholly owned operating subsidiaries.
* JOSLYN MANUFACTURING CO., a Delaware corporation, manufactures and supplies
electrical hardware, apparatus, and protective equipment used in the
construction and maintenance of electric power transmission and distribution
facilities and telephone and cable television communication lines.
* JOSLYN CLARK CONTROLS, INC., a Delaware corporation, manufactures
electrical controls, fire pump controllers, general purpose contactors and
starters for industrial and commercial markets.
* JOSLYN CANADA INC., organized under the laws of the Province of Ontario,
Canada, supplies electrical apparatus and protective equipment, high-voltage
vacuum and sulfur hexaflouride (SF-6) switching equipment for commercial,
heavy industrial and electrical utility markets within Canada.
Page 2
* JOSLYN HI-VOLTAGE CORPORATION, a Delaware corporation, manufactures and
supplies high-voltage vacuum and air switching equipment for commercial, heavy
industrial and electrical utility markets.
* JOSLYN ELECTRONIC SYSTEMS CORPORATION, a Delaware corporation,
manufactures and supplies electric power equipment, electronic protection
equipment, and field test equipment designed and produced primarily for the
telecommunications, industrial, aerospace and defense industries.
* JOSLYN POWER PRODUCTS CORPORATION, a Delaware corporation, manufactures
and supplies sulfur hexaflouride (SF-6) fuses and medium voltage switchgear
for commercial, industrial and electrical utility markets.
* JOSLYN JENNINGS CORPORATION, a Delaware corporation, manufactures and
supplies vacuum capacitors for aerospace and defense markets and vacuum
interrupters for industrial,commercial and electrical utility markets.
* JOSLYN RESEARCH AND DEVELOPMENT CORPORATION, a Delaware corporation,
conducts research and product development jointly with other Joslyn
subsidiaries.
* ADK PRESSURE EQUIPMENT CORPORATION, a Delaware corporation, manufactures
and distributes air dehydrators and associated equipment to provide and monitor
pressurized dry air. Most products are used to prevent moisture intrusion in
telephone cables, antenna lines and wave guides and are sold to telephone
markets worldwide.
* THE SUNBANK FAMILY OF COMPANIES, INC., a California holding corporation,
and its two subsidiaries, JOSLYN SUNBANK CORPORATION and AIR-DRY CORPORATION
OF AMERICA, Delaware corporations, supply custom designed electrical connector
accessories and flexible conduits, multi-conductor cable and air and gas
dehydration systems for aerospace and defense markets.
* JOSLYN FOREIGN SALES CORPORATION, organized under the laws of the Virgin
Islands of the United States, exports the Registrant's products throughout the
world.
1(b) FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
Note 12, Segment of Business Reporting, on page 26 of the Annual Report
is incorporated herein by reference.
Page 3
1(c) NARRATIVE DESCRIPTION OF BUSINESS
The Registrant's business is composed of two business segments: Utility
Line Products and Electrical Switches and Controls. The products and services
of Registrant's subsidiaries have been grouped as business segments in a manner
consistent with the types of markets existing for the products and services.
UTILITY LINE PRODUCTS
(a) PRINCIPAL PRODUCTS AND SERVICES
The Registrant designs and manufactures construction and maintenance
materials and electric power protection equipment principally for electric
power distribution and overhead telecommunications and cable television
communication lines. These products are manufactured from metal, polymers,
fiberglass, engineered materials and porcelain and include hardware, earth
anchors, power surge arresters, cable termination devices and other products.
Sales of these materials and products by Registrant's subsidiaries are made
directly to ultimate users, distributors for resale to ultimate users,
contractors, and to original equipment manufacturers by a direct sales force
of approximately twenty people. In addition, independent sales agents are
used for selective international and domestic markets. Distribution is made
directly from manufacturing plants or through a network of distribution
centers operated by Registrant's subsidiaries.
(b) RAW MATERIALS
Materials used in the manufacture of the products of this segment are
basic commodities, primarily various types of steel, polymer, zinc, zinc oxide
powder and components which are readily available and are purchased by
Registrant's subsidiaries from numerous sources, none of which is material to
the business in this segment as a whole.
(c) PATENTS, LICENSES AND TRADEMARKS
The Registrant does not consider that the business of the Utility Line
Products segment is dependent to a material extent upon patent protection,
although certain features of the products of this segment are protected by
patents and trademarks. Licensing of these products to others plays no
material role in the Registrant's earnings.
Page 4
(d) SEASONAL ASPECTS OF BUSINESS
Although the level of business of the Utility Line Products segment
varies modestly throughout the year, the business of this segment is not
seasonal.
(e) CUSTOMERS
The business of this segment is not dependent upon any single customer or
a few customers, the loss of which would have a material adverse effect on this
segment as a whole.
(f) BACKLOG ORDERS
The Registrant does not believe information related to backlog orders to be
material to the understanding of the business of this segment.
(g) RENEGOTIATION OF PROFITS
The business of the Utility Line Products segment is not subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
(h) COMPETITION
There are several competitors in every product line of this segment
resulting in strong competition. Because of the range of products manufactured
by Registrant's subsidiaries, it is difficult to determine accurately its
overall competitive position in these lines. The Registrant believes,
however, that it is one of the principal suppliers of transmission,
distribution and communication hardware, electric power surge arresters and
terminating devices in the United States and Canada.
Some of the products manufactured by this segment, however, are commodity
products with respect to which the Registrant experiences competition with
directly competing products. The Registrant competes on the basis of its
service, product quality, marketing technique and price and believes that its
ability in these areas permits it to compete effectively.
ELECTRICAL SWITCHES AND CONTROLS
(a) PRINCIPAL PRODUCTS AND SERVICES
Electric power and electronic protection equipment and switchgear are
designed and produced primarily for use by the telecommunications, industrial,
aerospace, defense, and electric utility industries. These products include a
variety of specialty devices that protect, control, monitor, test or perform
Page 5
switching functions for users of electric power. The Registrant's defense
products include electrical flexible conduits, vacuum capacitors, air and gas
dehydration systems and specialty products. Such products are primarily sold
by Registrant's subsidiaries own sales force directly to end users or to
original equipment manufacturers, although some sales are made to distributors
for resale.
(b) RAW MATERIALS
Materials used in the manufacture of the products of the Electrical
Switches and Controls segment are basic commodities and components which are
readily available and are purchased by Registrant's subsidiaries from
numerous sources, none of which is material to the business of this segment
as a whole.
(c) PATENTS, LICENSES AND TRADEMARKS
The Registrant does not consider that the business of the Electrical
Switches and Controls segment is dependent to a material extent upon patent
protection, although certain features of the products of the segment are
protected by patents and trademarks. Licensing of these products to others
is not material to the Registrant's earnings.
The Registrant has obtained licenses to utilize various patents in some of
the lines of business of this segment. However, no product manufactured by the
Electrical Switches and Controls segment under licenses from others makes a
significant contribution to sales or earnings.
(d) SEASONAL ASPECTS OF BUSINESS
Although the level of the business of the Electrical Switches and Controls
segment varies modestly throughout the year, the business of this segment is
not seasonal.
(e) CUSTOMER
The business of this segment is not dependent upon any single customer or
a few customers, the loss of which would have a material adverse effect on the
segment as a whole.
(f) BACKLOG ORDERS
The Registrant does not believe information related to backlog orders to be
material to the understanding of the business of this segment.
(g) RENEGOTIATION OF PROFITS
The business of the Electrical Switches and Controls segment is not subject
to renegotiation of profits or termination of contracts or subcontracts at the
election of the Government.
Page 6
(h) COMPETITION
There are several competitors in most product lines of this segment
resulting in competition. Because of the range of products manufactured by the
Registrant's subsidiaries, it is difficult to determine accurately its overall
competitive position in these lines.
Some of the electrical products manufactured by this segment are high
technology products with respect to which Registrant's subsidiaries experience
competition with products utilizing competing technology. The Registrant
competes on the basis of its advanced technology, services, product quality,
marketing technique and price and believes that its ability in these areas
permits it to compete effectively.
EFFECT OF ENVIRONMENTAL PROTECTION
Compliance with federal, state and local provisions which have been enacted
or adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has had no material
adverse impact upon capital expenditures, earnings and the competitive position
of the Registrant and its subsidiaries, except to the extent as described in
Item 3, "Legal Proceeding." The Registrant regularly makes provision in its
budgeted capital expenditures for environmental control facilities; however,
for the current fiscal year ending December 31, 1994, the Registrant has not
incurred any capital expenditures, and for future periods, the Registrant has
not planned any capital expenditures for environmental control facilities which
are expected to be material to current operations. See also Item 3, "Legal
Proceeding."
NUMBER OF EMPLOYEES
As of March 1, 1995, the Registrant had approximately 1,975 employees.
1(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
AND EXPORT SALES
Note 12, Segment of Business Reporting, on page 26 of the Annual Report
is incorporated herein by reference.
Page 7
ITEM 2. PROPERTIES
EXPIRATION
OF TERM
PLANT OR FACILITY AND LOCATION GENERAL CHARACTER IF LEASED
(a) CORPORATE HEADQUARTERS
Allen County, Indiana Undeveloped Property Sold 3/9/95
Bonner County, Idaho Undeveloped Property
Chicago, Illinois Office 4/30/05
Goleta, California Undeveloped Property
Santa Maria, California Undeveloped Property
(b) UTILITY LINE PRODUCTS
Birmingham, Alabama Distribution Center
Brooklyn Center, Minnesota Undeveloped Property
Chicago, Illinois Manufacturing Plant and
Distribution Center
Chicago, Illinois Manufacturing Plant
Franklin Park, Illinois Office, Manufacturing
Plant
Franklin Park, Illinois Undeveloped Property
Richmond, Virginia Distribution Center and 9/1/96
Sales Office
Vernon, California Distribution Center 10/31/97
(c) ELECTRICAL SWITCHES AND CONTROLS
Alsip, Illinois Manufacturing Plant
Cleveland, Ohio (116th Street) Manufacturing Plant
Cleveland, Ohio (Harvard Avenue) Manufacturing Plant
Goleta, California Manufacturing Plant
Lachine, Quebec Manufacturing Plant
and Office 12/31/96
Lancaster, South Carolina Manufacturing Plant
Maui, Hawaii Investment Property
Moorpark, California Manufacturing Plant 1/31/98
Paso Robles, California Manufacturing Plant 1/31/98
San Jose, California Manufacturing Plant
Spokane, Washington Manufacturing Plant 9/30/95
Page 8
Somerset, New Jersey Distribution Center and
Sales Office 4/30/97
Woodstock, Illinois Office, Manufacturing
Plant and Test Facility
The Registrant believes that its properties are in good condition and are
adequate to meet its current and reasonably anticipated needs.
ITEM 3. LEGAL PROCEEDINGS
Registrant's subsidiary, Joslyn Manufacturing Co., (the Company)
previously operated wood treating facilities that chemically preserved utility
poles, pilings and railroad ties. Environmental reserves for estimated
remedial actions and clean-up costs for known sites either currently under
investigation or not known to be under investigation pursuant to environmental
laws and regulations has been made. Note 6, Environmental Matters, on
page 23 of the Annual Report is incorporated herein by reference.
Joslyn Manufacturing Co. executed a Consent Order effective May 30, 1985,
with the Minnesota Pollution Control Agency pertaining to a former wood
treating facility located in Brooklyn Center, Minnesota. The Consent Order
binds the Company to undertake soil and groundwater investigation and clean-up
of the site. The Company is currently performing its obligations under the
Consent Order and is continuing the clean-up of the site. The Company has
completed a significant portion of the clean-up at the site.
The Louisiana Department of Environmental Quality issued administrative
orders against potentially responsible parties, including Joslyn Manufacturing
Co., to perform a clean-up at a former wood treating facility located in
Bossier City, Louisiana. The Company has complied with the administrative
order and has unilaterally implemented the remedial action plan substantially
remediating the site. Additional offsite soil remediation may be required.
The Company has begun preliminary investigation of offsite areas. The site has
been proposed for listing on the National Priorities List by the U.S.
Environmental Protection Agency. The Company is opposing the proposed listing.
The Company unsuccessfully appealed adverse decisions against other potentially
responsible parties as well as its insurance carrier for allocation,
contribution and indemnification for remediation efforts which have been or
will be performed by the Company. Those cases are now concluded without
recoveries.
The Company is a defendant in a purported class action lawsuit entitled,
Johnson et al. v. Lincoln Creosote Co. Inc. filed with the 26th Judicial Court
for Bossier Parish, Louisiana, No. 70481 on February 23, 1987. Plaintiffs are
seeking damages allegedly sustained from the disposal of materials on the
former wood treating site previously owned and operated by the Company prior
to 1970 and located in Bossier City, Louisiana. The damages sought are
unspecified. The Court held a hearing for the purpose of determining class
Page 9
certification and issued a ruling favorable to the Company by narrowing and
defining the geographic area of the class and excluding non-cancerous, non-
life threatening injuries from the class litigation. However, after an appeal
by the plaintiffs, the judge modified its prior ruling to allow all personal
injury claims within the defined geographic area upon proof of causation and
injury. The Company has tendered the defense of the suit to its insurance
carrier.
On November 20, 1986, the Illinois Environmental Protection Agency issued
an Immediate Removal Order for Company's former wood treating facility in
Franklin Park, Illinois. In compliance with that Order, Registrant has
completed a significant portion of the clean-up at the site. As a result of
successful litigation, all future expenditures will be the responsibility of
the Company's insurance carrier.
In 1990, the Company entered into a Consent Order with the current property
owner and the Oregon Department of Environmental Quality pertaining to a former
wood treating facility located in Portland, Oregon. The Consent Order requires
an investigation of the site which was completed in 1994. The implementation
of a remedy is scheduled to begin in 1995. The Company has entered into a cost
sharing agreement with the current owner whose share is 27%.
The Company has been named as a third party defendant in a suit filed on
September 11, 1992 entitled UNITED STATES OF AMERICA, ET AL. V. SCA SERVICES
OF INDIANA V. OMNISOURCE CORP., F89-29, U.S. District Court Northern District
Indiana (Ft. Wayne Division). The suit seeks contribution for the remediation
of the Ft. Wayne Reduction Superfund Site. The Company is one of over 65
potentially responsible parties. The Company is defending the suit.
The Company was initially notified in July, 1994 by the U.S. Environmental
Protection Agency that it is a potentially responsible party (PRP) at a former
wood treating site known as Rab Valley located in Panama, Oklahoma. The
Company sold the site in 1955, after operating it for 16 years. Although one
prior and three subsequent owners have operated a wood treating facility at the
site, it initially appears that the Company may be the only significant
financially viable PRP and the Company's insurance coverage during such period
may be minimal. The Company believes that approximately 20% of the remediation
costs at the Oklahoma site will be expended over the next couple of years and
that most of the remediation will take place during a period five to ten years
from now. Determining the Company's ultimate cost associated with remediating
sites is subject to many variables, including the availability of economical
remediation technologies, the volume of contaminated soil, contributions from
other PRPs, insurance recoveries and changes in applicable laws and
regulations. The Company's investigation of the Oklahoma site is still in the
preliminary stages. The estimated costs were prepared by the Company's
environmental consultants based on the limited data about the Oklahoma site
that is currently available, the Company's experience with nearly completed
clean-ups and recent action by USEPA at other sites. This estimate assumes
Page 10
that the Company will be allowed to apply the remediation technologies at the
Oklahoma site that it has applied elsewhere. Certain of such technologies are
among the least expensive of various alternatives. If technologies other than
those assumed to be available are utilized at the Oklahoma site, or if the
volume of contaminated soil at that site is significantly greater than that
suggested by preliminary data, remediation costs could more than double.
The Registrant received a complaint entitled JANCO V. SUNBANK ELECTRONICS,
INC. in January 1995, alleging contribution for contamination present in the
groundwater aquifer beneath the City of Burbank, California. Numerous
potentially responsible parties (PRP) are involved in litigation with the lead
PRP, Lockheed Corporation, to allocate costs associated with the remediation.
An investigation into the extent of contribution and participation in costs
sharing by Sunbank has been initiated. Sunbank is a wholly-owned subsidiary
of the Registrant and the activities alleged against Sunbank apparently
occurred in a 10-year period between 1971 and 1981, prior to the Registrant's
acquisition of Sunbank in 1988. Preliminary indications are that Sunbank is a
DE MINIMIS PRP.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Listed below are the names, titles, offices, positions and ages of all
executive officers of the Registrant. There are no family relationships
between them. The officers' terms in office expire on April 26, 1995, the date
of the meeting of the Board of Directors, which is held immediately before the
1995 Annual Meeting of Shareholders.
LAWRENCE G. WOLSKI Director, Acting Chief Executive Officer
and Executive Vice President - Age 50
Experience
1993 Elected Executive Vice President
1987 Elected Senior Vice President
Page 11
GEORGE W. DIEHL Vice President, Power Switching and Controls
Group - Age 55
Experience
1991 Appointed Vice President; Elected President
and Chief Operating
Officer, Joslyn Hi-Voltage Corporation
1988 General Manager, Joslyn Hi-Voltage Corporation
DANIEL DUMONT Vice President - Age 47
Experience
1990 Appointed Vice President; Elected President and
Chief Operating Officer, Joslyn Canada Inc.
1987 General Manager, Joslyn Canada Inc.
WAYNE M. KOPROWSKI Vice President, General Counsel and Secretary -
Age 48
Experience
1990 Elected Vice President
STEVEN L. THUNANDER Vice President - Age 44
Experience
1988 Appointed Vice President; Elected President
and Chief Operating Officer,
Joslyn Manufacturing Co.
Page 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED SECURITY STOCKHOLDER MATTERS
Information regarding the price of Registrant's common stock, dividend
payments and numbers of shareholders is included in Common Stock Prices and
Dividends on page 14 of the Annual Report which is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data, which is included in the Five Year Comparative
Financial Data on page 14 of the Annual Report, is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations on pages 12 through 13 of the Annual Report is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and
its subsidiaries, included in the Annual Report, are incorporated herein by
reference:
ANNUAL REPORT
PAGE NO.
_____________
Consolidated Statement of Income for the Years Ended
December 31, 1994, 1993 and 1992 15
Consolidated Balance Sheet -- December 31, 1994 and 1993 16
Consolidated Statement of Shareholders' Equity for the
Years Ended December 31, 1994, 1993 and 1992 17
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 18
Notes to Consolidated Financial Statements 19-27
Report of Independent Public Accountants 27
Page 13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information regarding directors of the Registrant required by
this Item 10 is contained under the caption "Nominees For Election As
Director" on pages 2 and 3 of the Proxy Statement, and is incorporated
herein by reference.
(b) Information regarding executive officers of the Registrant
required by this Item 10 is included on pages 11 and 12 in Part I of
this Report pursuant to General Instructions G of Form 10-K. in Part I
of this Report.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation required by this Item 11
is contained under the following captions in the Proxy Statement, and is
incorporated herein by reference:
PROXY
STATEMENT
PAGE NO.
__________
Compensation of Directors 6
Summary Compensation Table 7
Stock Option/SAR Grants in 1994 8
Defined Benefit Pension Plan 9
Employment and Severance Agreements 9-10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item 12 is contained in the Proxy
Statement under the captions "Principal Holders of Voting Securities" on
page 5 and "Security Ownership of Management on March 1, 1995" on page 4
and is incorporated herein by reference.
Page 14
PART IV
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
Included in Part II of this report:
Consolidated Statement of Income for the years ended
December 31, 1994, 1993 and 1992
Consolidated Balance Sheet as of December 31, 1994 and 1993
Consolidated Statement of Shareholders' Equity for the years
ended December 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
3. Exhibits
The exhibits filed in response to Item 601 of Regulation
S-K and Item 14(c) of Form 10-K are listed in the Exhibit
Index on page 18. Management contracts or compensatory
plans or arrangements are identified in the Exhibit Index
by "+".
(b) Reports on Form 8-K
Two reports on Form 8-K were filed during the fourth quarter
of the period ended December 31, 1994.
Registrant filed a Form 8-K on September 20, 1994, regarding
1. an anticipated 4th Quarter environmental charge;
2. changes in the severance arrangements and benefit plans; and
3. amended and restated By-Laws.
Page 15
The Registrant also filed a Form 8-K on October 19, 1994, regarding
a third quarter net loss as a result of a $35 million charge for
increase environmental reserves.
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.
March 30, 1995
JOSLYN CORPORATION
By:/s/ Lawrence G. Wolski
______________________
Acting Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/William E. Bendix Chairman of the Board March 30, 1995
_______________________
William E. Bendix
/s/Lawrence G. Wolski Acting Chief Executive
_________________________ Officer, Director March 30, 1995
Lawrence G. Wolski
/s/John H. Deininger Director March 30, 1995
_______________________
John H. Deininger
/s/Donald B. Hamister Director March 30, 1995
_______________________
Donald B. Hamister
/s/Richard C. Osborne Director March 30, 1995
_______________________
Richard C. Osborne
Page 16
/s/ Raymond E. Micheletti Director March 30, 1995
_________________________
Raymond E. Micheletti
/s/ Raymond G. Bjorseth Chief Accounting Officer March 30, 1995
_________________________
Raymond G. Bjorseth
Page 17
EXHIBIT INDEX
Page
3(i) Articles of Incorporation (Exhibit D to Registrant's
Form S-4 Registration Statement filed March 17, 1988)*
3(ii) By-Laws, as amended and restated (Exhibit 3
to Registrant's Form 8-A filed September 20, 1994)*
4 (a) Rights Agreement with the First National
Bank of Chicago dated February 10, 1988
(Exhibit 4 to Registrant's 1987 Form 10-K)*
(b) Amendment dated September 2, 1994 to Rights
Agreement Exhibit 2A to Form 8-A/A filed
September 9, 1994)*
10 Material Contracts
(a) Form of Employment Agreement with Mr. Wolski
(Exhibit 10(c) to Registrant's 1991 Form 10-K)*+
(b) Form of Severance Agreement with Mr. Wolski
(Exhibit 10.1 to Form 8-K filed September 20, 1994)*+
(c) Form of Severance Agreement with Messrs. Diehl and
Koprowski (Exhibits 10.2 and 10.3 to Form 8-K filed
September 20,1994)*+
(d) Severance Policy for Corporate Managers
(Exhibit 10.4 to Form 8-K filed September 20, 1994)*+
(e) Joslyn Corporation Executive Management Incentive Plan
(Exhibit 10(c) to Registrant's 1980 Form 10-K)*+
(f) Amendment to Executive Management Plan
(Exhibit 10.6 to Form 8-K filed September 20, 1994)*+
(g) Joslyn Corporation Parity Compensation Plan
(Exhibit 10(c) to Registrant's 1989 Form 10-K)*+
(h) Amendment to Parity Compensation Plan
(Exhibit 10.7 to Form 8-K filed September 20, 1994)*+
(i) Joslyn Mfg. and Supply Co. Employee Stock Benefit Plan,
as amended (Exhibit A to Registrant's Proxy Statement
dated March 25, 1983)*+
Page 18
(j) Joslyn Corporation Stock Option Plan (Exhibit A to
Registrant's Proxy Statement dated
March 28, 1989)*+
13 Portions of the Annual Report for the year ended
December 31,1994 incorporated by reference 20 - 47
21 Subsidiaries of the Registrant 48
24 Consent of Independent Public Accountants
dated and manually signed 49
27 Financial Data Schedule 50
99 Proxy Statement dated March 28, 1995 51 - 75
_______________
* Incorporated by reference
+ Management contract or compensatory plan or arrangement.
Page 19
Financial Highlights
Joslyn Corporation and Subsidiaries
1994 1993
========================================================================
Net Sales $216,177,000 $217,707,000
Income from Business Segments before
Special Charges * 24,396,000 27,793,000
Income from Business Segments 20,346,000 27,793,000
Income (Loss) before Income Taxes (20,430,000) 22,770,000
Income Tax (Provision) Benefit 9,250,000 (7,900,000)
Net Income (Loss) (11,180,000) 14,870,000
Cash Dividends 8,551,000 8,224,000
- ------------------------------------------------------------------------
Per Share Amounts:
Net Income (Loss) $ (1.57) $ 2.10
Cash Dividends 1.20 1.16
Book Value 11.27 13.97
- ------------------------------------------------------------------------
Working Capital $ 75,959,000 $ 73,041,000
Net Property, Plant and Equipment 37,955,000 39,984,000
Capital Expenditures 3,434,000 3,428,000
Depreciation 5,313,000 5,178,000
Total Assets 177,504,000 162,282,000
Shareholders' Equity 80,626,000 99,235,000
- ------------------------------------------------------------------------
Number of Employees 1,975 2,025
Number of Shareholders 3,075 3,225
Average Shares Outstanding 7,124,000 7,086,000
========================================================================
* See Note 10 in the Notes to Consolidated Financial Statements.
Page 20 1
Management's Discussion and Analysis of
Financial Condition and Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
The financial condition of the corporation remains strong with
a working capital ratio of 2.7 to 1 at December 31, 1994
compared to 2.8 to 1 at December 31, 1993.
In the third quarter of 1994, the corporation recorded a $35.0
million pre-tax tax charge, or $21.0 million after tax, for
increased environmental reserves, primarily related to the
clean-up of a former wood treating site located at Panama,
Oklahoma. Approximately 20% is expected to be spent in the
next couple of years and most of the remediation will take
place during a period 5 to 10 years from now. It is
anticipated that approximately $7.0 to $10.0 million may be
spent in the next twelve months for all environmental
remediation and, accordingly, almost $10.0 million has been
recorded in current Accrued Liabilities, an $8.0 million
increase from the $1.9 million current accrual at December 31,
1993. In 1994, the corporation also received $6.2 million in
recoveries from insurance and other parties. Environmental
matters are discussed in greater detail in Note 6 of the Notes
to Consolidated Financial Statements. The increases in the
long-term Environmental Accrual, Deferred Tax and Other
Current Assets and Net Deferred Tax and Other Assets balance
sheet accounts resulted primarily from the third quarter
environmental charge.
The corporation also recorded a fourth quarter charge of $6.2
million before tax, or $4.1 million after tax, to write down
the assets of two non-core businesses that are disposition
candidates to net realizable value, for subleasing the current
corporate office space and for severance payments related to
administrative staff reductions. The sublease and severance
charges result from actions being taken to streamline and
reduce the cost of administration.
In 1994, Joslyn acquired, for $2.5 million in cash, the assets
of the Poleline Hardware Division of Stanley G. Flagg, a
wholly-owned subsidiary of Amcast Industrial Corporation.
Other sources and uses of cash are summarized in the
Consolidated Statement of Cash Flows.
Joslyn Corporation has no long-term debt. The $39.8 million of
cash and cash equivalents, together with internally generated
funds and unused lines of credit with a bank, should provide
adequate liquidity and financial flexibility for 1995 and
beyond to fund planned operations, environmental remedial
expenditures, normal capital expansion and acquisitions. The
corporation reduced its current lines of credit with banks in
1994 from $15.0 million to $10.0 million.
In addition to the balance sheet fluctuations related to the
$35.0 million environmental charge, there were other changes.
Receivables were $2.8 million higher due to greater sales in
the last two months of 1994 than in the corresponding period
of 1993 and some slower collections primarily related to
certain international customers. Accounts Payable and Income
Taxes were $1.6 million and $.9 million, respectively, lower
than the comparable balances at December 31, 1993 due to
timing differences.
Page 21
Although inflation has not been a significant factor in the
last several years, the corporation continually seeks to
minimize its effects by controlling costs and improving
productivity. Costs are passed on by increasing selling
prices when competitive conditions permit.
RESULTS OF OPERATIONS 1994
Net sales in 1994 were $216.2 million or .7% lower than the
1993 net sales of $217.7 million. In 1994, there was a a net
loss of $11.2 million compared to net income of $14.9 million
in 1993, a decrease of $26.1 million, reflecting two charges
totaling $25.1 million after tax. Excluding the two charges,
net income was $13.9 million or 6.4% lower than net income in
1993 of $14.9 million. The charges have been previously
discussed in the "Liquidity and Capital Resources" section of
this analysis and are also discussed in Notes 6 and 10 in the
Notes to Consolidated Financial Statements. Increases in both
sales and operating income of the Utility Line Products
business segment in 1994 were more than offset by decreases in
the Electrical Switches and Controls business segment.
The Utility Line Products segment sales increased $8.4 million
or 11.2% and its operating income increased $.5 million or
9.1% compared to 1993. There were general improvements in the
sales volume of the product offerings, including new sales
related to the Stanley G. Flagg product line acquired in the
first quarter. The 9.1% improvement in operating income was
achieved because the increase in sales more than compensated
for some arrester production problems, shifts in product mix
to lower margin products and start-up costs related to the
Flagg acquisition.
The Electrical Switches and Controls business segment sales in
1994 decreased $9.9 million or 6.9% and its related operating
income declined $3.9 million or 16.9% from 1993, before the
$4.0 million charge in the fourth quarter discussed in Note 10
in the Notes to Consolidated Financial Statements. The income
of this segment was further reduced by the $4.0 million charge
to Other Expense, Net, to write down to net realizable value,
Page 22 12
the assets of two non-core businesses that are disposition
candidates. Joslyn Hi-Voltage contributed strong performances
in both sales and operating income and Joslyn Jennings
generated double digit improvements in both sales and
operating income. These performances and other increases were
more than offset by continuing weakness in the defense market
businesses, where sales fell 11.4% and there was a sizable
loss at Air-Dry Corporation. Power Products sales and earnings
declined, especially in its international business where
certain customers are reducing inventories and purchasing
products locally. Sales of new products to replace maturing
technologies did not materialize as early as expected at
Joslyn Electronic Systems and resulted in lower sales and
earnings.
The gross profit margin decreased to 26.0% in 1994 from 27.3%
in 1993 primarily because of some shifts in sales mix and
some unfavorable production variances.
Investment income in 1994 of $1.7 million increased $.4
million or 29.0%, primarily because of higher average interest
rates.
The $5.1 million increase in other expense, net resulted from
the $6.2 million charge discussed previously in this analysis
and in Note 10 in the Notes to Consolidated Financial
Statements.
RESULTS OF OPERATIONS 1993
Net income of $14.9 million was 4% higher than in 1992 and was
$2.10 per share. In 1993, sales of $217.7 million and income
from business segments of $27.8 million were flat compared to
1992. Increases in the Electrical Switches and Controls
segment of business offset decreases in the Utility
Line Products segment.
The Electrical Switches and Controls business segment sales of
$142.7 million were $6.5 million or 4.7% greater than in 1992
and operating income of $22.8 million was $1.5 million or 7.1%
greater than in 1992. Joslyn Jennings, acquired during the
second quarter of 1992, made a significant contribution not
only because it was included for the entire year in 1993, but
also because its operating results improved. Joslyn
Electronic Systems had an excellent year by increasing sales
more than 14% and improving profit margins. Joslyn
Hi-Voltage, Joslyn Clark Controls and Joslyn Sunbank had
increased sales and earnings. Joslyn Power Products' sales
and earnings were lower due to decreased volume related to
significant competition and because of delays in obtaining new
orders. Air-Dry and ADK Pressure Equipment operations had
lower sales and earnings because of continued softness in
defense and some areas of the telecommunications markets.
Page 23
The Utility Line Products business segment had a difficult
year with sales down $6.6 million from $81.7 million in 1992
and operating income down $1.7 million from $6.7 million in
the prior year. The segment's markets were weak, which led to
reduced sales and increased competition. In addition,
operating inefficiencies and start-up problems were
encountered due to closing the Birmingham, Alabama hardware
plant and relocating the production to the Chicago, Illinois
hardware plant.
The gross profit margin improved to 27.3% in 1993 from 26.3%
in 1992 by selling higher margin products and reducing certain
production costs.
Selling, distribution and administrative expense of $33.8
million increased $3.0 million over 1992, primarily because of
the inclusion of Joslyn Jennings and Sierra for the entire
year in 1993 versus a partial year in 1992, and increased
research and development expense.
Other expense, net in 1993 includes charges related to plant
consolidations and certain postemployment costs, as well as
other miscellaneous charges.
In 1993, Congress enacted the Revenue Reconciliation Act of
1993 (RRA) which, among other things, increased the federal
statutory tax rate to 35% retroactive to January 1, 1993.
In the third quarter of 1993, the corporation recorded the
effects of the RRA which increased net income and earnings per
share by approximately two cents ($.02) per share because the
corporation has significant net deferred tax assets. The
related tax benefit contributed to a portion of the
improvement in the corporation's effective income tax rate
from 36.2% in 1992 to 34.7% in 1993.
Page 24 13
<TABLE>
<CAPTION>
Five-Year Comparative Financial Data
Joslyn Corporation and Subsidiaries
(dollar amounts in thousands
except per share figures) 1994 1993** 1992 1991 1990
=================================================================================================
<S> <C> <C> <C> <C> <C>
Summary of Operations
Net Sales $216,177 $217,707 $217,889 $203,736 $197,006
Income (Loss) before Income Taxes
and Cumulative Effect of
Change in Accounting (20,430)* 22,770 22,408 20,480 (6,990)****
Cumulative Effect of Change
in Accounting -- -- -- (6,268)*** (3,067)**
Net Income (Loss) (11,180)* 14,870 14,308 6,937 (14,057)**
Cash Dividends 8,551 8,224 7,965 7,521 7,554
- -------------------------------------------------------------------------------------------------
Per Share Amounts
Income (Loss) before Cumulative
Effect of Change in Accounting $(1.57) $ 2.10 $ 2.03 $ 1.87 $ (1.55)
Cumulative Effect of Change
in Accounting -- -- -- (.89)*** (.43)**
Net Income (Loss) (1.57) 2.10 2.03 0.98 (1.98)**
Cash Dividends 1.20 1.16 1.13 1.06 2/3 1.06 2/3
Book Value at End of Year 11.27 13.97 13.03 12.26 12.35
- -------------------------------------------------------------------------------------------------
Balance Sheet Data
Current Assets $119,625 $114,098 $107,761 $105,953 $ 91,656
Current Liabilities 43,666 41,057 42,833 44,289 32,187
Working Capital 75,959 73,041 64,928 61,664 59,469
Net Property, Plant and Equipment 37,955 39,984 41,550 36,889 38,319
Total Assets 177,504 162,282 158,159 149,607 136,842
Non-current Liabilities:
Postretirement Medical Liability 14,712 13,990 13,229 10,831 --
Environmental Accrual 38,500 8,000 10,000 8,000 17,500
Shareholders' Equity 80,626 99,235 92,097 86,487 87,155
- -------------------------------------------------------------------------------------------------
Other Statistics
Number of Employees 1,975 2,025 2,000 1,900 1,950
Number of Shareholders 3,075 3,225 3,425 3,025 3,125
Average Shares Outstanding 7,124,000 7,086,000 7,045,000 7,047,000 7,083,000
=================================================================================================
</TABLE>
*Includes a charge of $35.0 million before taxes and $21.0
million after taxes for increased environmental reserves
(See Note 6) and a charge of $6.2 million before taxes and
$4.1 million after taxes to Other Expense, Net to write
down two businesses and for costs related to the reduction
of corporate expense (See Note 10).
**The corporation adopted SFAS No. 109, "Accounting for
Income Taxes", in 1993 (See Note 4) and elected to apply
it retroactively to 1990.
***Relates to accounting change for postretirement medical
benefits in 1991.
****Includes non-recurring charges of $23.5 million before
taxes and $21.5 million after taxes, primarily related to
a write-down of goodwill and other intangibles.
Page 25
<TABLE>
<CAPTION>
Common Stock Prices and Dividends
Shares Traded on the NASDAQ National Market System
(in dollars per share)
==================================================================================================
1994 1993
- ----------------------------------------------------------- -----------------------------------
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
- ----------------------------------------------------------- -----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common Stock Prices:
High Bid 25 1/4 25 31 27 27 28 27 1/2 25
Low Bid 22 3/4 23 25 24 3/4 23 1/4 22 1/2 24 3/4 23 1/2
Cash Dividends .30 .30 .30 .30 .29 .29 .29 .29
==================================================================================================
</TABLE>
The bid market price quotations were obtained from the NASDAQ
National Market System. The bid prices represent prices
between broker-dealers, do not include retail markups and
markdowns or any commission to the broker-dealers and may not
reflect prices in actual transactions. The approximate number
of holders of the corporation's common stock at March 1, 1995
was 3,050 (including employee shareholders under the
Employees' Savings and Profit Sharing Plan, but excluding the
number of shareholders of record whose shares are held in
"nominee" or "street" name).
Page 26 14
Consolidated Statement of Income
Joslyn Corporation and Subsidiaries
For the Years Ended December 31, 1994 1993 1992
===============================================================================
Net Sales $216,177,000 $217,707,000 $217,889,000
- -------------------------------------------------------------------------------
Costs and Expenses:
Cost of Goods Sold $159,924,000 $158,232,000 $160,614,000
Selling, Distribution and
Administrative Expense 34,013,000 33,842,000 30,875,000
Profit Sharing Expense 2,308,000 2,191,000 2,596,000
Interest Expense 113,000 135,000 213,000
Investment (Income) (1,668,000) (1,293,000) (1,246,000)
Other Expense, Net 6,917,000 1,830,000 2,429,000
Environmental Expense 35,000,000 - -
- -------------------------------------------------------------------------------
Income (Loss) before Income Taxes $(20,430,000) $ 22,770,000 $ 22,408,000
Income Tax (Provision) Benefit 9,250,000 (7,900,000) (8,100,000)
- -------------------------------------------------------------------------------
Net Income (Loss) $(11,180,000) $ 14,870,000 $ 14,308,000
===============================================================================
Net Income (Loss) Per Share $(1.57) $2.10 $2.03
===============================================================================
The accompanying Notes to Consolidated Financial Statements
are an integral part of this statement.
Page 27 15
Consolidated Balance Sheet
Joslyn Corporation and Subsidiaries
December 31, 1994 1993
===============================================================================
Assets
- -------------------------------------------------------------------------------
Current Assets:
Cash and Cash Equivalents $ 39,775,000 $ 41,102,000
Receivables, Less Allowance ($1,582,000 in 1994
and $1,116,000 in 1993) for Doubtful Accounts 28,482,000 25,676,000
Inventories 35,564,000 36,360,000
Deferred Tax and Other Current Assets 15,804,000 10,960,000
- -------------------------------------------------------------------------------
Total Current Assets $119,625,000 $114,098,000
Net Deferred Tax and Other Assets 19,924,000 8,200,000
Net Property, Plant and Equipment 37,955,000 39,984,000
- -------------------------------------------------------------------------------
Total Assets $177,504,000 $162,282,000
===============================================================================
Liabilities and Shareholders' Equity
- -------------------------------------------------------------------------------
Current Liabilities:
Accounts Payable $ 10,674,000 $ 12,308,000
Accrued Liabilities 30,548,000 25,454,000
Income Taxes 2,444,000 3,295,000
- -------------------------------------------------------------------------------
Total Current Liabilities $ 43,666,000 $ 41,057,000
- -------------------------------------------------------------------------------
Postretirement Medical Liability $ 14,712,000 $ 13,990,000
- -------------------------------------------------------------------------------
Environmental Accrual $ 38,500,000 $ 8,000,000
- -------------------------------------------------------------------------------
Shareholders' Equity:
Common Stock, $1.25 Par Value;
Authorized 20,000,000 Shares, Issued 7,154,000
Shares in 1994 and 7,104,000 Shares in 1993 $ 8,943,000 $ 8,880,000
Retained Earnings 72,321,000 91,124,000
Equity Adjustments (638,000) (769,000)
- -------------------------------------------------------------------------------
Total Shareholders' Equity $ 80,626,000 $ 99,235,000
- -------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $177,504,000 $162,282,000
===============================================================================
The accompanying Notes to Consolidated Financial Statements
are an integral part of this balance sheet.
Page 28 16
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity
Joslyn Corporation and Subsidiaries
Common Stock
------------ Equity Retained
For the Three Years Ended December 31, 1994 Shares Dollars Adjustments Earnings
===================================================================================================
<S> <C> <C> <C> <C>
Balance, December 31, 1991 7,055,000 $8,818,000 $ 154,000 $77,515,000
1992 Net Income -- -- -- 14,308,000
1992 Cash Dividends ($1.13 Per Share) -- -- -- (7,965,000)
Exercise of Stock Options 84,000 105,000 -- 1,398,000
Purchase of Common Stock (92,000) (115,000) -- (1,817,000)
Common Stock Transferred to Profit Sharing Plans 21,000 27,000 -- 399,000
Equity Adjustments -- -- (730,000) --
- ---------------------------------------------------------------------------------------------------
Balance, December 31, 1992 7,068,000 $8,835,000 $(576,000) $83,838,000
1993 Net Income -- -- -- 14,870,000
1993 Cash Dividends ($1.16 Per Share) -- -- -- (8,224,000)
Exercise of Stock Options 43,000 54,000 -- 794,000
Purchase of Common Stock (17,000) (21,000) -- (392,000)
Common Stock Transferred to Profit Sharing Plans 10,000 12,000 -- 238,000
Equity Adjustments -- -- (193,000) --
===================================================================================================
Balance, December 31, 1993 7,104,000 $8,880,000 $(769,000) $91,124,000
1994 Net (Loss) -- -- -- (11,180,000)
1994 Cash Dividends ($1.20 Per Share) -- -- -- (8,551,000)
Exercise of Stock Options 50,000 63,000 -- 928,000
Purchase of Common Stock (20,000) (25,000) -- (530,000)
Common Stock Transferred to Profit Sharing Plans 20,000 25,000 -- 530,000
Equity Adjustments -- -- 131,000 --
===================================================================================================
Balance, December 31, 1994 7,154,000 $8,943,000 $(638,000) $72,321,000
===================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of this statement.
Page 29 17
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
Joslyn Corporation and Subsidiaries
For the Years Ended December 31, 1994 1993 1992
=======================================================================================================
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $(11,180,000) $ 14,870,000 $ 14,308,000
Adjustments to Reconcile Net Income to
Net Cash Flows from Operating Activities:
Depreciation and Amortization 5,364,000 5,230,000 5,057,000
Deferred Income Tax Provision (Benefit) (16,777,000) 7,000 1,045,000
Change in Assets and Liabilities, Net of
Effects of Acquisitions and Dispositions:
(Increase)Decrease in Receivables (2,806,000) 588,000 (468,000)
Decrease(Increase) in Inventories 2,418,000 (3,506,000) 3,154,000
(Decrease)Increase in Current Liabilities
except Current Environmental Accrual (5,371,000) (1,725,000) 1,582,000
Increase(Decrease) in Current and Long-term
Environmental Accruals, Net 38,487,000 (2,671,000) (5,377,000)
Increase in Postretirement Medical
Liability 722,000 761,000 899,000
Other, Net 465,000 23,000 (2,517,000)
- -------------------------------------------------------------------------------------------------------
Net Cash Flows from Operating Activities $ 11,322,000 $ 13,577,000 $ 17,683,000
=======================================================================================================
Cash Flows from Investing Activities:
Capital Expenditures $ (3,434,000) $ (3,428,000) $ (2,742,000)
Acquisitions of Businesses (2,500,000) (429,000) (9,851,000)
Proceeds from Sales of Property, Plant and
Equipment and Dispositions 845,000 693,000 2,786,000
- -------------------------------------------------------------------------------------------------------
Net Cash Flows from Investing Activities $ (5,089,000) $ (3,164,000) $ (9,807,000)
=======================================================================================================
Cash Flows from Financing Activities:
Cash Dividends $ (8,551,000) $ (8,224,000) $ (7,965,000)
Purchase of Joslyn Common Stock (555,000) (413,000) (1,932,000)
Transfer of Joslyn Common Stock to Profit
Sharing Plans 555,000 250,000 426,000
Exercise of Stock Options 991,000 848,000 1,503,000
- -------------------------------------------------------------------------------------------------------
Net Cash Flows from Financing Activities $ (7,560,000) $ (7,539,000) $ (7,968,000)
=======================================================================================================
Net (Decrease)Increase in Cash and Cash Equivalents $ (1,327,000) $ 2,874,000 $ (92,000)
Cash and Cash Equivalents at Beginning of Year 41,102,000 38,228,000 38,320,000
- -------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 39,775,000 $ 41,102,000 $ 38,228,000
=======================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of this statement.
Page 30 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JOSLYN CORPORATION and SUBSIDIARIES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation: The Consolidated Financial Statements include
accounts of the corporation and all subsidiaries, after elimination of
intercompany accounts and transactions.
Cash and Cash Equivalents: Cash and cash equivalents of $39,775,000 and
$41,102,000 at December 31, 1994 and 1993, respectively, include cash
equivalents which are highly liquid investments with original maturities
or put dates of three months or less. They are recorded at cost which
approximates market.
Also included in this balance sheet caption are equity securities, all of
which are classified as "available-for-sale", as defined in Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". This new standard, which became
effective in 1994 on a prospective basis, was adopted by the corporation in
the first quarter of 1994 and requires certain securities to be recorded at
market and their unrealized holding gains or losses to be recorded in
shareholders' equity. (See the Equity Adjustments section of this note.)
Joslyn's available-for-sale securities have a market value of $3,727,000 and
$4,704,000 and an aggregate cost of $3,793,000 and $4,089,000 on December 31,
1994 and 1993, respectively. At December 31, 1994 and December 31, 1992,
there were immaterial gross unrealized gains and immaterial gross unrealized
losses. At December 31, 1993, there were gross unrealized gains of $633,000
and immaterial gross unrealized losses. SFAS No. 115 also requires several
new disclosures about investments, if they are material. None of these
disclosures are material.
At December 31, 1994 and 1993, cash and cash equivalents also included
$1,984,000 and $608,000, respectively, of restricted funds used to guarantee a
self-insurance program with an insurance company.
Equity Adjustments: Included in equity adjustments are cumulative foreign
currency translation adjustments, pension liability adjustments and a valuation
reserve required by SFAS No. 115 in 1994 to adjust investments classified as
available-for-sale securities from cost to market. The valuation reserve at
December 31, 1994 and the net change for 1994 was an immaterial debit of
$40,000. The cumulative foreign currency translation adjustments at
December 31, 1994, 1993 and 1992 were debit balances of $364,000, $260,000 and
$131,000, respectively. The pension liability adjustments consisted of debit
balances of $234,000, $509,000 and $445,000 at December 31, 1994, 1993 and
1992, respectively.
Inventories: At December 31, 1994 and 1993, inventories of $18,190,000 and
$18,424,000, respectively, are valued using the last-in, first-out (LIFO)
method. The remaining inventories are valued at the lower of first-in,
first-out (FIFO) cost or market. If FIFO inventory methods had been used for
all inventories, the December 31, 1994 and 1993 inventories would have been
$9,440,000 and $9,069,000 higher, respectively. During 1994, 1993 and 1992,
certain inventories were reduced, which resulted in a liquidation of some LIFO
inventories valued at lower costs prevailing in prior years. These
liquidations resulted in increasing income before taxes by immaterial amounts
in 1994 and 1993 and by $875,000 in 1992.
Page 31
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Depreciation is computed using the straight-line method for financial
statement purposes and accelerated methods for income tax purposes. When
properties are retired or otherwise disposed of, the related cost and
accumulated depreciation are removed from the respective accounts and any gain
or loss from disposition is recognized. Maintenance and repair costs are
expensed when incurred and were $4,483,000, $4,261,000 and $3,650,000 in 1994,
1993 and 1992, respectively.
Research and Development: Costs related to research and development activities
are charged against income as incurred. These costs were approximately
$6,400,000 in 1994, $6,200,000 in 1993 and $5,000,000 in 1992.
Cash Flow Information: Cash paid for interest was $113,000 in 1994, $135,000
in 1993 and $212,000 in 1992. Cash paid for income taxes was $10,029,000 in
1994, $7,999,000 in 1993 and $5,737,000 in 1992.
Net Income Per Share: Net income per share of common stock was computed based
on weighted average shares of 7,124,000 in 1994, 7,086,000 in 1993 and
7,045,000 in 1992.
2. FINANCING ARRANGEMENTS:
At December 31, 1994, 1993 and 1992, the corporation had unused lines of credit
established with banks of $10.0 million, $15.0 million and $17.5 million,
respectively, that may be drawn as needed. The lines of credit were not used
during 1994, 1993 or 1992. In connection with the line of credit agreements,
the corporation was not required to maintain compensating cash balances in
1994 or 1993. In 1992, the corporation maintained an immaterial cash balance
on certain unused credit lines and paid fees on certain other unused credit
lines. The corporation has complied with the compensating cash balance
requirements of all credit agreements with banks.
Page 32 19
3. PROFIT SHARING AND PENSION BENEFITS:
Most domestic subsidiaries of Joslyn participate in one of two Profit Sharing
Plans. The plans distribute Unit Contributions primarily in relationship to
covered compensation and years of service. For both plans, Company Unit
Contributions are at the discretion of the Board of Directors of each
participating corporation and are related to profit sharing income, as defined,
for each Company Unit. Company Unit Contributions are made partly in cash and
partly in common stock of Joslyn Corporation. The plans have similar
provisions requiring one year of service for eligibility and five years of
service for vesting. Each member of the Profit Sharing Plans is entitled
to vote the number of Joslyn Corporation shares allocated to that member's
account. Additionally, a 401(k) savings feature is part of the plans which
provides proportionate, fully-vested, Company matching contributions. Profit
sharing expense for both plans was $2,308,000 in 1994, $2,191,000 in 1993 and
$2,596,000 in 1992.
Additional retirement benefits are provided through a frozen non-contributory,
defined benefit pension plan for eligible domestic, salaried employees of
participating units. Effective December 31, 1988, this plan was frozen and no
employees may qualify for participation in the plan thereafter. Benefits are
based on years of service and an average of the five highest consecutive years
of defined compensation, both as accrued at the plan freeze date. No amounts
were contributed in 1994, 1993 and 1992 because of the full funding limitation
in the 1974 Employee Retirement Income Security Act (ERISA). If a qualified
defined benefit pension plan is terminated and all accrued liabilities to
employees and their beneficiaries are satisfied, in general, all remaining
assets in the plan's trust may revert to the employer as income, subject to
significant excise and income taxes.
Joslyn Clark Controls, Inc. and Joslyn Jennings Corporation each also has a
non-contributory, defined benefit pension plan for eligible hourly employees.
The benefits are based on negotiated amounts per year of service. The
corporation's funding policy is to make the contribution required by ERISA.
The three pension plans include provisions limiting benefits in accordance
with the Internal Revenue Code and ERISA. The assets of the three pension
plans consist primarily of stocks and bonds in a Master Trust account which
is managed by an independent investment manager.
Following is a schedule reconciling the aggregate funded status of the pension
plans with the amounts included in the applicable consolidated balance sheet:
Page 33
<TABLE>
<CAPTION>
(in thousands)
- -----------------------------------------------------------------------------------------------
As of As of
October 1, 1994 October 1, 1993
- -----------------------------------------------------------------------------------------------
Overfunded Underfunded Overfunded Underfunded
Plan Plans Plan Plans
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets and Obligations:
Plan Assets at Fair Value $ 40,594 $ 3,499 $ 41,391 $ 3,385
Accumulated Benefit Obligation * (29,481) (3,866) (32,740) (4,258)
- -----------------------------------------------------------------------------------------------
Plan Assets in Excess of (Less than)
Benefit Obligation $ 11,113 $ (367) $ 8,651 $ (873)
===============================================================================================
Vested Benefit Obligation * $(28,675) $(3,650) $(31,866) $(3,981)
===============================================================================================
Funded Status:
Plan Assets at Fair Value $ 40,594 $ 3,499 $ 41,391 $ 3,385
Projected Benefit Obligation * (29,481) (3,866) (32,740) (4,258)
Items Not Yet Recognized
in Earnings:
Unrecognized Net Asset at
January 1, 1985 being
Recognized over 14 Years (1,468) (113) (1,813) (141)
Unrecognized Net (Gain) Loss (6,037) 556 (3,385) 1,053
Unrecognized Prior Service Cost - 156 - 173
Adjustment to Recognize Minimum
Liability - (543) - (1,042)
- -----------------------------------------------------------------------------------------------
Prepaid (Accrued) Pension Cost $ 3,608 $ (311) $ 3,453 $ (830)
===============================================================================================
</TABLE>
* Actuarial present values
Page 34 20
The discount rate used in determining the actuarial present value of the
projected benefit obligation as of October 1, 1994 was 7.50% and as of
October 1, 1993 and 1992 was 6.25%. The expected long-term rate of return
on assets for 1994, 1993 and 1992 was 8.0%.
The components of net pension income (cost) in 1994, 1993 and 1992 are as
follows:
(in thousands)
- --------------------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------
Service Costs-Benefits
Earned During the Period $ (213) $ (218) $ (314)
Interest Cost on Projected
Benefit Obligation (2,286) (2,231) (2,187)
Actual Return on Plan Assets 1,521 3,004 4,189
Net Amortization and Deferrals 965 (549) (1,664)
- --------------------------------------------------------------
Net Pension (Cost) Income $ (13) $ 6 $ 24
==============================================================
4. INCOME TAXES:
In the 1994 third quarter, Joslyn recorded a charge of $35.0 million for
increased environmental reserves, as discussed in Note 6, and a related
deferred tax benefit of $14.0 million. In the 1994 fourth quarter, Joslyn
recorded a $6.2 million charge to other expense, as discussed in Note 10,
and a related deferred tax benefit of $2.1 million.
In the third quarter of 1993, Congress enacted the Revenue Reconciliation Act
of 1993 (RRA) which, among other things, increased the federal statutory rate
from 34% to 35% retroactively to January 1, 1993. In the 1993 third quarter,
the corporation recorded the tax effects of the RRA which increased net income
and earnings per share by approximately two cents ($.02) per share. The
increase reflects the benefits related to the corporation's significant net
deferred tax assets.
Income (loss) before income taxes consists of the following:
(in thousands)
- --------------------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------
Domestic $(21,268) $20,409 $20,467
Foreign 838 2,361 1,941
- --------------------------------------------------------------
$(20,430) $22,770 $22,408
==============================================================
Page 35
The provision for income taxes consists of the following:
(in thousands)
- --------------------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------
Current:
U.S. Federal $ 5,843 $ 5,801 $ 5,318
Foreign 222 787 594
State and Local 1,462 1,305 1,143
- --------------------------------------------------------------
$ 7,527 $ 7,893 $ 7,055
- --------------------------------------------------------------
Deferred:
U.S. Federal $(13,923) $ (6) $ 822
Foreign 59 15 46
State and Local (2,913) (2) 177
- --------------------------------------------------------------
$(16,777) $ 7 $ 1,045
- --------------------------------------------------------------
Total Income Tax
Provision (Benefit) $( 9,250) $ 7,900 $ 8,100
==============================================================
Page 36 21
A reconciliation of the statutory U.S. federal income tax
rates to the corporation's effective income tax rates is as
follows:
- --------------------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------
Expected Tax Rates (35.0)% 35.0% 34.0%
State Income Taxes, Net of
Federal Income Tax (4.6) 3.9 4.1
Tax Reductions Related to:
Foreign Sales Corporation (1.3) (1.5) (1.4)
U.S. Tax-exempt Interest (1.6) (1.2) (1.2)
Research and Development
Credit (0.9) (0.5) (0.4)
U.S. Taxes on Foreign Operations - 0.2 0.1
All Other, Net (1.9) (1.2) 1.0
- --------------------------------------------------------------
Effective Tax Rates (45.3)% 34.7% 36.2%
==============================================================
Deferred tax assets and liabilities arise from the tax effects of timing
differences in the recognition of income and expenses for financial
statement and tax purposes. Significant deferred tax assets and liabilities
as of December 31, 1994 and 1993 are as follows:
(in thousands)
- --------------------------------------------------------------
1994 1993
- --------------------------------------------------------------
Assets:
Postretirement Medical $ 5,994 $ 5,077
Environmental Matters 18,867 3,705
Other Employee Benefits 1,658 1,868
Warranties 1,073 1,421
All Other 5,480 4,063
- --------------------------------------------------------------
Gross Deferred Tax Assets $33,072 $16,134
Valuation Allowance (200) (200)
- --------------------------------------------------------------
$32,872 $15,934
==============================================================
Liabilities:
Depreciation $ 4,190 $ 4,552
Pension 1,327 1,246
- --------------------------------------------------------------
Gross Deferred Tax Liabilities $ 5,517 $ 5,798
==============================================================
The corporation's policy is to provide deferred U.S. federal income taxes on
the undistributed cumulative income of its foreign subsidiaries, to the extent
that foreign tax credits are not available. The corporation's tax credit
carry-forwards are not significant.
Page 37
5. STOCK OPTIONS:
The shareholders have approved two stock option plans for key employees which
include Incentive Stock Options (ISOs), non-qualified stock options and non-
qualified stock options with tandem stock appreciation rights. Stock options
granted after 1991 and ISOs do not have tandem stock appreciation rights. These
plans provided for a maximum of 2,081,250 shares that could be delivered upon
exercise of stock options and stock appreciation rights (SARs). Stock options
and SARs are granted at the market value of the corporation's stock on the date
of grant. Options granted prior to 1990 and in 1994 are exercisable not less
than six months nor more than ten years after the date of the grant. Options
granted from 1990 through 1993 are exercisable not less than six months nor
more than five years after the date of the grant.
An SAR entitles an option holder to elect to receive, in lieu of the exercise
of an option and without payment to the corporation, an amount equal to the
difference between the option price and the market value of the common stock on
the date the right is exercised. This amount may be paid in cash, in common
shares, or in a combination thereof, subject to approval of a committee of
non-participants. Immaterial expense in 1994 and 1993 and expense of $282,000
in 1992 are included in other expense, net with respect to SARs. The
corporation made payments or issued stock related to the exercise of SARs as
follows:
- --------------------------------------------------------------
Year Number of Rights Option Prices
- --------------------------------------------------------------
1994 10,073 $14.92 to 19.50
1993 12,435 15.29 to 21.17
1992 45,764 14.92 to 21.17
==============================================================
Page 38 22
A summary of activity in the plans is presented below:
- -------------------------------------------------------------------------------
Stock Options and
Stock Appreciation Rights
Shares Option Prices
===============================================================================
Options Outstanding, December 31,1991 322,092 $13.09 to 21.17
Granted in 1992 134,431 21.17 & 27.00
Exercised in 1992 (129,308) 14.92 to 21.17
Cancelled in 1992 (7,812) 19.50 to 21.17
- -------------------------------------------------------------------------------
Options Outstanding, December 31, 1992 319,403 $13.09 to 27.00
Granted in 1993 77,808 24.75
Exercised in 1993 (56,067) 14.92 to 21.17
Cancelled in 1993 (3,054) 13.09 & 18.63
- -------------------------------------------------------------------------------
Options Outstanding, December 31, 1993 338,090 $14.92 to 27.00
Granted in 1994 65,665 25.50
Exercised in 1994 (59,747) 14.92 to 27.00
Cancelled in 1994 - -
- -------------------------------------------------------------------------------
Options Outstanding, December 31, 1994 344,008 $14.92 to 27.00
===============================================================================
Options Exercisable at:
December 31, 1994 278,343 $14.92 to 27.00
December 31, 1993 260,282 14.92 to 27.00
===============================================================================
6. ENVIRONMENTAL AND LEGAL MATTERS:
The corporation previously operated wood treating facilities that chemically
preserved utility poles, pilings and railroad ties. All such treating
operations were discontinued or sold prior to 1982. These facilities used
wood preservatives that included creosote, pentachlorophenol and chromium-
arsenic-copper. While preservatives were handled in accordance with all
appropriate procedures called for at the time, subsequent changes in
environmental laws now require the generators of these spent preservatives
to be responsible for the cost of remedial actions at the sites where spent
preservatives have been deposited.
In the 1994 third quarter, Joslyn recorded an environmental charge of $35.0
million ($21.0 million after tax or $2.95 per share) for increased
environmental reserves. The 1994 charge relates principally to the clean-up
of a former wood treating site located at Panama, Oklahoma. Joslyn was first
notified by the U.S. Environmental Protection Agency (USEPA) in July 1994 that
it is a potentially responsible party (PRP) at the Oklahoma site. Joslyn sold
the site in 1955, after operating it for 16 years. Although one prior and
three subsequent owners have operated a wood treating facility at the site, it
initially appears that Joslyn may be the only significant financially viable
PRP and Joslyn's insurance coverage during such period may be minimal. Joslyn
believes that approximately 20% of the remediation costs at the Oklahoma site
will be expended over the next couple of years and that most of the
remediation will take place during a period five to ten years from now.
Page 39
Determining Joslyn's ultimate cost associated with remediating former wood
treating sites is subject to many variables, including the availability of
economical remediation technologies, the volume of contaminated soil,
contributions from other PRPs, insurance recoveries and changes in applicable
laws and regulations. Joslyn's investigation of the Oklahoma site is still
in the preliminary stages. Most of the charge reflects an estimate prepared
by Joslyn's environmental consultants of the costs for environmental response
at the Oklahoma site, based on the limited data about the Oklahoma site that
is currently available, Joslyn's experience with nearly completed clean-ups
and recent actions by USEPA at other sites. This estimate assumes that Joslyn
will be allowed to apply the remediation technologies at the Oklahoma site that
it has applied elsewhere. Certain of such technologies are among the least
expensive of various alternatives. The balance of the charge reflects
estimates of Joslyn's exposure at certain other locations, for which very
little information is available, that are not currently known to be under
investigation by environmental agencies. Accordingly, there can be no
assurance that Joslyn's estimates of its environmental liabilities will not
change. For instance, if technologies other than those assumed to be available
are utilized at the Oklahoma site, or if the volume of contaminated soil at
that site is significantly greater than that suggested by preliminary data,
remediation costs could more than double.
In addition to the $35.0 million charge taken in 1994, Joslyn currently has a
$13.5 million reserve remaining (after expenditures and recoveries, including
$6.2 million received in 1994 from insurance and other sources) from a $30.0
million charge in 1987 for estimated remediation costs for known sites then
under investigation by environmental agencies. None of the 1987 charge relates
to the sites covered by the 1994 charge.
Page 40 23
As of December 31, 1994, the corporation has environmental accruals of
approximately $48.5 million. It is anticipated that approximately $7.0
million to $10.0 million may be spent in 1995 on clean-up and related
activities. Consequently, approximately $10.0 million is classified as a
current liability and the remaining $38.5 million of the reserve is classified
as a long-term liability at December 31, 1994.
There were expenditures of approximately $2.7 million, $2.8 million and $15.0
million in 1994, 1993 and 1992, respectively, on environmental clean-up and
related activities, of former wood treating sites. There were recoveries from
insurance and other parties of $6.2 million, $0.1 million and $9.6 million in
1994, 1993 and 1992, respectively. The total charge to expense in 1994 was
$35.0 million and there were no charges to expense in 1993 and 1992 related
to the environmental accruals.
Joslyn Manufacturing Co., a subsidiary of the corporation, is a defendant in a
class action tort suit. The suit alleges exposure to chemicals and property
devaluation resulting from wood treating operations previously conducted at a
Louisiana site. Both the size of the class and the damages are unspecified.
The corporation has tendered the defense of the suit to its insurance carrier.
The corporation believes that it may have adequate insurance coverage for the
litigation, however, because of the above uncertainties, the corporation is
unable to determine at this time the potential liability, if any.
The corporation is involved in various other claims, legal actions and
complaints arising in the normal course of business. It is the opinion of
Management that such actions and claims will not have a material adverse
effect on the results of operations or financial condition of the corporation.
7. POSTRETIREMENT MEDICAL BENEFITS:
The corporation and its participating domestic subsidiaries provide optional
health care benefits for retired employees under a frozen contributory plan.
Employees may become eligible for these benefits if they were employed by the
corporation at the defined retirement age, were employed at least ten years
and were hired prior to January 1, 1989. The benefits are subject to
deductibles, co-payment provisions and other limitations, which are amended
periodically. Also, the corporation assumed a frozen retiree medical
coverage plan as a result of its acquisition of the Jennings business in 1992.
The following data is for these coverages in aggregate. These benefits are
discretionary and are not a commitment to long-term benefit payments. The
plans are funded as claims are paid.
The net periodic postretirement medical benefit cost for 1994, 1993 and 1992
was as follows:
(in thousands)
- --------------------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------
Service Cost $ 475 $ 434 $ 486
Interest Cost 851 762 889
Other (66) (93) (25)
- --------------------------------------------------------------
Net Medical Benefit Cost $1,260 $ 1,103 $ 1,350
==============================================================
Page 41
The accumulated postretirement medical benefit obligation at
December 31, 1994 and 1993 was as follows:
(in thousands)
- --------------------------------------------------------------
1994 1993
- --------------------------------------------------------------
Retirees $ 3,975 $ 4,129
Fully Eligible Active Plan Participants 1,551 1,138
Other Active Plan Participants 5,604 6,049
- --------------------------------------------------------------
Total Accumulated Medical Obligation $11,130 $11,316
Unrecognized Net Gain 3,599 2,816
- --------------------------------------------------------------
Accrued Medical Benefit Cost $14,729 $14,132
==============================================================
The assumed health care cost trend rate used in the calculation for measuring
the accumulated postretirement medical benefit obligation was 13.1% in 1994
and 15.4% in 1993. This rate was assumed to decrease by 2.3% per year to 8.5%
in 1996 and remain at that level thereafter. The effect on the accumulated
medical benefit obligation at January 1, 1994 of a one-percentage-point
increase for each year in the health care cost trend rate used would result
in an increase of $2,039,000 in the total obligation and a $226,000 increase
in the aggregate service and interest cost components of the 1994 expense.
The weighted average discount rates used to determine the accumulated
postretirement medical benefit obligation as of December 31, 1994 and 1993
were 8% and 7%, respectively.
Page 42 24
8. ACQUISITIONS:
In the first quarter of 1994, Joslyn acquired, for $2.5 million in cash,
the assets of the Poleline Hardware Division of Stanley G. Flagg, a wholly-
owned subsidiary of Amcast Industrial Corporation. Flagg products consist
of fiberglass conductor support systems and malleable and ductile iron poleline
hardware for use on electrical power and telephone systems. The assets were
relocated to a Joslyn Manufacturing Co. plant in Chicago, Illinois from Stowe,
Pennsylvania. Revenues from the Flagg products in 1994 were approximately
$5.5 million.
In the second quarter of 1993, Joslyn Jennings Corporation purchased a vacuum
capacitor product line from EEV Limited in Chelmsford, England. The product
line was relocated to Joslyn Jennings' facility in San Jose, California. The
purchase price was not material.
In April 1992, Joslyn Corporation purchased, for cash, the stock of Lear
Siegler Jennings Corp., a San Jose, California based manufacturer of high-
voltage vacuum products and telecommunications test instrumentation. A wholly-
owned subsidiary of Joslyn Corporation also purchased certain real estate,
some of which is being used in the business and some of which was sold in 1993.
The corporation paid $9.9 million for this acquisition.
Each of these acquisitions was accounted for by the purchase method. The
operating results of these acquisitions are included in the corporation's
consolidated financial statements from the date of acquisition.
9. SHAREHOLDERS' RIGHTS:
The corporation has a Shareholders' Right attached to each share of common
stock. Each Right entitles the holder to buy from the corporation one newly
issued share of common stock at an exercise price of $60. The Rights become
exercisable upon the acquisition of a certain percentage of corporation stock
or a tender offer or exchange offer for corporation stock by a person or group.
The corporation is entitled to redeem the Rights at $.05 per Right at any time
prior to fifteen days after a public announcement that a person or group has
acquired a certain percentage of the corporation's common stock. Depending
on the occurrence of certain specific events, each exercisable Right, other
than Rights held by the acquiring party, either entitles the holder to purchase
the corporation's common stock at an adjusted per-share price equal to 20% of
the then market price or entitles the holder to purchase a share of the
acquiring company common stock at a 50% discount. The Rights will expire on
March 3, 1998.
10. OTHER EXPENSE, NET:
In the fourth quarter of 1994, the corporation recorded a charge to Other
Expense, Net of $6.2 million before taxes, $4.1 million after taxes, or $.58
per share. The pre-tax charge includes 1) a $4.1 million charge to write down
to estimated net realizable value the net assets of two businesses that are
disposition candidates and 2) a charge of $2.1 million primarily for estimated
losses on subleasing the corporation headquarters and severance costs for staff
reductions.
Other Expense, Net in 1993 and 1992 includes primarily charges related to plant
consolidations and to actions to eliminate marginal products as part of
management's continuing effort to simplify the organization, reduce costs and
improve efficiencies. In 1992, the expenses were partially offset by a gain
on the sale of certain property.
Page 43
Also included in 1994, 1993 and 1992 are certain post-employment benefit
expenses and other miscellaneous items.
11. DETAILS OF CONSOLIDATED BALANCE SHEET:
(in thousands)
- ----------------------------------------------------------
1994 1993
- ----------------------------------------------------------
Inventories:
Finished Goods $ 7,703 $ 6,788
Work in Process 13,893 11,407
Raw Materials 13,968 18,165
- ----------------------------------------------------------
$ 35,564 $ 36,360
==========================================================
Deferred Tax and
Other Current Assets:
Deferred Tax Assets $ 11,816 $ 8,693
Other Current Assets 3,988 2,267
- ----------------------------------------------------------
$ 15,804 $ 10,960
==========================================================
Net Deferred Tax and
Other Assets:
Net Deferred Tax Assets $ 15,539 $ 1,443
Other Assets 4,385 6,757
- ----------------------------------------------------------
$ 19,924 $ 8,200
==========================================================
Net Property, Plant and Equipment:
Land $ 7,525 $ 7,525
Buildings 24,942 24,510
Machinery and Equipment 49,857 47,768
Construction in Progress 760 486
- ----------------------------------------------------------
$ 83,084 $ 80,289
Less Accumulated Depreciation 45,129 40,305
- ----------------------------------------------------------
$ 37,955 $ 39,984
==========================================================
Accrued Liabilities:
Reserve for Environmental Matters $ 9,876 $ 1,889
Accrued Wages, Bonuses and
Vacation Expenses 3,696 3,616
Accrued Taxes, Other than
Income Taxes 1,435 1,543
Accrued Warranties and
Workers' Compensation 4,427 6,088
Advance Payments 1,430 2,279
Other Accrued Liabilities 9,684 10,039
- ----------------------------------------------------------
$ 30,548 $ 25,454
==========================================================
Page 44 25
12. SEGMENT OF BUSINESS REPORTING:
The operations of the corporation are divided into the following business
segments for financial reporting purposes:
Electrical Switches and Controls: Includes power quality protection and
control products and power switches and related controls. Electronic
protection equipment, high-voltage vacuum products, sulfur hexafluoride
switches and switchgear are designed and produced primarily for use by the
electric utility, telecommunications and industrial markets. These products
include electronic transient suppression devices, telecommunications test
instrumentation, monitor systems and control equipment, electric switching
and interrupting systems, vacuum capacitors, relays, starters, contactors,
fire pump controllers, dehydration products and electrical connector
accessories.
Utility Line Products: Includes power and communication line protection and
support products. Construction and maintenance materials and electric power
protection equipment are designed and produced principally for electric power
distribution and for overhead telephone communication lines. These products
are manufactured and assembled from metal, polymers, fiberglass, engineered
materials and porcelain and include hardware, earth anchors, power surge
arresters, cable accessories, electrical terminating devices and other
products. In addition, the corporation sells complementary goods produced by
other manufacturers.
Intersegment sales are not material. Foreign operations of the corporation,
which are not material, are located in Canada and primarily serve markets in
that country. No single customer accounts for 10% or more of the corporation's
sales. General corporate assets are principally cash and cash equivalents,
land and deferred tax and other assets.
Page 45
<TABLE>
<CAPTION>
Financial information by business segments is as follows:
(in thousands)
- ---------------------------------------------------------------------------------------
Net Income from Identi- Capital
Customer Business fiable Depreci- Expendi-
Sales Segments Assets ation tures
- ---------------------------------------------------------------------------------------
1994
=======================================================================================
<S> <C> <C> <C> <C>
Electrical Switches and Controls $132,776 $14,879 $69,226 $3,278 $2,200
Utility Line Products 83,401 5,467 31,365 1,905 1,112
General Corporate - - 76,913 130 122
- ---------------------------------------------------------------------------------------
Consolidated $216,177 $20,346 $177,504 $5,313 $3,434
=======================================================================================
1993
- ---------------------------------------------------------------------------------------
Electrical Switches and Controls $142,677 $22,781 $74,649 $3,134 $2,092
Utility Line Products 75,030 5,012 31,391 1,912 1,305
General Corporate - - 56,242 132 31
- ---------------------------------------------------------------------------------------
Consolidated $217,707 $27,793 $162,282 $5,178 $3,428
=======================================================================================
1992
- ---------------------------------------------------------------------------------------
Electrical Switches and Controls $136,217 $21,276 $ 71,648 $2,780 $1,804
Utility Line Products 81,672 6,679 33,614 2,025 898
General Corporate - - 52,897 154 40
- ---------------------------------------------------------------------------------------
Consolidated $217,889 $27,955 $158,159 $4,959 $2,742
=======================================================================================
</TABLE>
Export sales from the corporation's United States operations
to unaffiliated customers were as follows:
(in thousands)
- --------------------------------------------------------------
1994 1993 1992
- --------------------------------------------------------------
Asia $10,173 $11,249 $13,584
Europe 8,391 9,333 7,047
Western Hemisphere 11,310 9,635 8,708
Other 1,645 2,805 3,148
- --------------------------------------------------------------
Total $31,519 $33,022 $32,487
==============================================================
Page 46 26
13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
The following table sets forth certain unaudited quarterly financial
information for 1994 and 1993:
(in thousands except per share figures)
- -------------------------------------------------------------------------------
1994
- -------------------------------------------------------------------------------
* **
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
- -------------------------------------------------------------------------------
Net Sales $53,919 $54,472 $55,803 $51,983 $216,177
Gross Profit 14,768 14,476 15,010 11,999 56,253
Net Income (Loss) 3,746 3,356 (17,000) (1,282) (11,180)
Net Income (Loss) Per Share .53 .47 (2.39) (.18) (1.57)
===============================================================================
- -------------------------------------------------------------------------------
1993
- -------------------------------------------------------------------------------
1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr. Total
- -------------------------------------------------------------------------------
Net Sales $57,430 $56,111 $53,689 $50,477 $217,707
Gross Profit 15,736 15,460 14,187 14,092 59,475
Net Income 3,918 3,940 3,832 3,180 14,870
Net Income Per Share .55 .56 .54 .45 2.10
===============================================================================
* Environmental charge discussed in Note 6.
** Special Charge to Other Expense, Net discussed in Note 10.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Joslyn Corporation:
We have audited the accompanying consolidated balance sheets of Joslyn
Corporation (an Illinois corporation) and Subsidiaries as of December 31, 1994
and 1993, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three fiscal years in the period ended
December 31, 1994. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Joslyn Corporation and
Subsidiaries as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the three fiscal years in the
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 8, 1995
Page 47 27
SUBSIDIARIES OF THE REGISTRANT
* JOSLYN MANUFACTURING CO., a Delaware corporation
* JOSLYN CLARK CONTROLS, INC., a Delaware corporation
* JOSLYN CANADA INC., organized under the laws of the Province
of Ontario, Canada
* JOSLYN HI-VOLTAGE CORPORATION, a Delaware corporation
* JOSLYN ELECTRONIC SYSTEMS CORPORATION, a Delaware corporation
* JOSLYN JENNINGS CORPORATION, a Delaware corporation
* JOSLYN RESEARCH AND DEVELOPMENT CORPORATION, a Delaware
corporation
* THE SUNBANK FAMILY OF COMPANIES, INC., a California holding
corporation and its two subsidiaries, JOSLYN SUNBANK CORPORATION
and AIR-DRY CORPORATION OF AMERICA, Delaware Corporations
* JOSLYN FOREIGN SALES CORPORATION, organized under the laws of
the Virgin Islands of the United States.
Page 48
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form 10-K of our report dated February 8, 1995 included
in Registration Statement File No. 33-32571. It should be noted that we have
not examined any financial statements of the company subsequent to December 31,
1994 or performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 30, 1995
Page 49
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 39,775
<SECURITIES> 0
<RECEIVABLES> 28,482
<ALLOWANCES> 0
<INVENTORY> 35,564
<CURRENT-ASSETS> 119,625
<PP&E> 37,955
<DEPRECIATION> 0
<TOTAL-ASSETS> 177,504
<CURRENT-LIABILITIES> 43,666
<BONDS> 0
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<COMMON> 8,943
<OTHER-SE> 71,683
<TOTAL-LIABILITY-AND-EQUITY> 177,504
<SALES> 216,177
<TOTAL-REVENUES> 216,177
<CGS> 159,924
<TOTAL-COSTS> 159,924
<OTHER-EXPENSES> 41,917
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 113
<INCOME-PRETAX> (20,430)
<INCOME-TAX> (9,250)
<INCOME-CONTINUING> (11,180)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,180)
<EPS-PRIMARY> (1.57)
<EPS-DILUTED> (1.57)
</TABLE>
Joslyn Corporation
JOSLYN 30 South Wacker Drive
CORPORATION Chicago, Illinois 60606
Telephone: (312) 454-2900
Telecopier: (312) 454-2930
Notice of Annual Meeting of Shareholders
To Be Held April 26, 1995
____________________________________________________________________________
The Secretary of Joslyn Corporation hereby gives notice that the Annual
Meeting of Shareholders of Joslyn Corporation will be held in the Assembly
Room, 6th Floor, The Northern Trust Company Building, 50 South LaSalle Street,
Chicago, Illinois 60675 on Wednesday, April 26, 1995, at 10:00 o'clock a.m.,
for the following purposes:
(1) the election of six Directors;
(2) the ratification of the appointment of Arthur Andersen LLP as
independent public accountants for the year 1995;
(3) the approval of a proposed Joslyn Corporation Non-Employee Director
Stock Plan;
(4) the transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Only Shareholders of record at the close of business on March 1, 1995 will
be entitled to vote at the meeting.
The Annual Report of the Corporation for the year 1994, including
financial statements, accompanies this Proxy Statement.
Each Shareholder, whether or not he or she expects to be present at the
meeting, is requested to sign, date and return the enclosed Proxy in the
envelope which is supplied with this Notice.
By order of the Board of Directors,
Joslyn Corporation
Wayne M. Koprowski
Secretary
Page 51
JOSLYN
CORPORATION
30 South Wacker Drive
Chicago, Illinois 60606
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Joslyn Corporation (the
"Corporation") for the Annual Meeting of Shareholders to be held in the
Assembly Room, 6th Floor, The Northern Trust Company Building, 50 South LaSalle
Street, Chicago, Illinois 60675 on Wednesday, April 26, 1995, at 10:00 o'clock
a.m., or any adjournment thereof. On or before March 28, 1995, this Proxy
Statement and the enclosed Proxy were first sent or given to the Corporation's
Shareholders. The 1994 Annual Report to Shareholders, including financial
statements for the fiscal year ended December 31, 1994, accompanies this Proxy
Statement.
The executive offices of the Corporation are located at 30 South Wacker
Drive, Chicago, Illinois 60606.
The only voting securities of the Corporation are its Common Shares, of
which there were 7,160,819 shares outstanding on March 1, 1995, the record
date. A majority of such shares will constitute a quorum for the transaction
of business at the Annual Meeting. Shareholders are entitled to one vote for
each Common Share of the Corporation held. The Board of Directors is
soliciting discretionary authority to accumulate votes. In the election of the
Board of Directors, shareholders have the right to vote the number of shares
owned by them for each of the six nominees, or they may cumulate their votes
and give six votes to one nominee for each share owned, or they may distribute
their votes on the same principle among as many nominees as they choose. No
act need be done or notice given prior to the exercise of such cumulative
voting rights. For the purpose of counting votes, abstentions, broker non-
votes and other shares not voted have the same effect as a vote against the
proposal.
Each proxy received by the Board of Directors of the Corporation will be
voted as specified by the Shareholder thereon. Any Shareholder may revoke his
or her proxy at any time prior to the voting thereof by (1) giving written
notice of such revocation to the Secretary of the Corporation, (2) properly
submitting to the Corporation a duly executed proxy bearing a later date or
(3) appearing in person at the 1995 Annual Meeting and voting in person.
The cost of preparation of proxy solicitation materials and solicitation
of proxies will be paid by the Corporation. In addition to use of the mails,
proxies may be solicited by any Director, Officer, or employee of the
Corporation either personally or by such other means as he may choose, and any
such solicitation shall be made without additional compensation.
The Corporation may reimburse brokers and others for their expenses in
forwarding proxy solicitation materials to beneficial owners. The Corporation
has retained Morrow & Co., Inc. to assist in the solicitation of proxies at an
estimated fee of less than $10,000, plus reasonable expenses.
Page 52 1
NOMINEES FOR ELECTION AS DIRECTOR
The Board of Directors has designated the six persons hereinafter listed
to be nominees for election as Directors of the Corporation at the Annual
Meeting. Proxies solicited by the Board of Directors will be voted as directed
therein with respect to the election of Directors; but if no choice is
specified in any proxy, then such proxies will be voted for such nominees.
The entire Board of Directors is elected annually and each Director is elected
to serve until his successor is duly elected and qualified unless the
Directorship is eliminated, in which case the Directorship will expire at the
next Annual Meeting.
Each of the nominees has consented to serve as a Director if he is
elected. If for any reason any such nominee for election should become
unavailable for election, a circumstance the Board of Directors does not
anticipate, discretionary authority may be exercised for a substitute nominee.
The persons named in proxies hereby solicited reserve the right, exercisable
in their sole discretion, to vote proxies cumulatively so as to elect all or
as many as possible of such nominees depending upon circumstances at the
meeting.
NEW NOMINEES FOR ELECTION AS DIRECTOR:
James M. Reed
Mr. Reed is Vice Chairman and Chief Financial Officer of Union Camp
Corporation, a forest products company. Mr. Reed started his business career
in 1954 with the public accounting firm of Arthur Andersen & Co. In 1964, he
left Arthur Andersen to become Vice President-Finance of a client company, The
Branigar Organization, Inc., which had interests in real estate development
and manufacturing. Branigar was acquired by Union Camp in 1969 and Mr. Reed
subsequently became Executive Vice President and President of that subsidiary.
In 1977, he transferred to Corporate Headquarters of Union Camp as Vice
President - Finance and Chief Financial Officer of Union Camp Corporation.
He subsequently became a Senior Vice President, an Executive Vice President
and in April 1993, was elected Vice Chairman. Mr. Reed is a member of the
Board of Directors of Union Camp Corporation (NYSE), Bush Boake Allen, Inc.
(NYSE) and Martin Marietta Materials, Inc. (NYSE). He is also on the Board of
the Bulgarian-American Enterprise Fund (a U.S. State Department sponsored non-
profit organization) and is a member of the Board of Trustees of Simpson
College. Mr. Reed is 62 years of age.
Lawrence A. Reed
Mr. Reed is the retired President and Chief Executive Officer of Dow
Corning Corporation, a manufacturer of specialty materials and chemicals. He
joined Dow Corning in 1964 and held various positions in Process Engineering
and Economic Evaluation. In 1973, he was appointed Financial Director for
Europe and returned to the U.S. in 1976, as Corporate Controller. He was named
a Vice President of Dow Corning and Chief Financial Officer in 1978, and became
Executive Vice President responsible for Dow Corning's global businesses in
1981. Mr. Reed was named President and Chief Operating Officer and a Director
of the Corporation in 1984. He was named President and Chief Executive Officer
in 1988, retired in 1992, but continues as a Director of the Corporation. Mr.
Reed is also a Director of the Chemical Financial Corporation, as well as CPI
Engineering Services, Inc. Mr. Reed is 55 years of age.
Page 53 2
NOMINEES FOR REELECTION AS DIRECTOR
William E. Bendix
Mr. Bendix is Chairman of the Board of Joslyn Corporation and an
independent business consultant. He was President, Chief Executive Officer
and a Director of Mark Controls Corporation, a NASDAQ listed company from 1987
to 1994. Mark Controls Corporation is a manufacturer of industrial valves,
liquid temperature control devices and electronic controllers. Prior to that,
Mr. Bendix was Group Vice President and a Director and was responsible for
five of the company's business units. Mr. Bendix joined Mark Controls as Vice
President of Manufacturing in 1969, was subsequently named Vice President of
Operations and was elected a Director in 1973. Prior to joining Mark Controls,
Mr. Bendix was a principal at Theodore Barry and Associates, a management
consulting firm with a practice emphasizing operations management. Mr. Bendix
is a Director of DEP Corporation, the former Chairman of the Valve
Manufacturers Association of America, and a former Director of Sargent-Welch
Scientific Company. Mr. Bendix is 60 years of age.
John H. Deininger
Mr. Deininger was most recently Chief Executive Officer and President of
Union City Body Company, L.P., a manufacturer of truck bodies. He is a retired
Executive Vice President of Illinois Tool Works, Inc., a manufacturer of
engineered components and industrial systems. He was formerly President, Chief
Operating Officer and a Director of Signode Industries, Inc., now a wholly-
owned subsidiary of Illinois Tool Works, Inc. Mr. Deininger is currently a
Director of Eljer Industries, a New York Stock Exchange listed company which
manufactures and markets plumbing and heating ventilation products.
Mr. Deininger is also a Director of Life Fitness, Inc., a maker of exercise and
fitness equipment and a Director of Wayn-Tex, Inc., a manufacturer of plastic
woven for the carpet and food packaging industries. He formerly was a Director
for Allied Tube & Conduit, a manufacturer of metal tubing for plumbing and
electrical use. He is also a part-time consultant on industrial business
operations. Mr. Deininger is 63 years of age.
Richard C. Osborne
Mr. Osborne is President, Chief Executive Officer and Chairman of the
Board of Scotsman Industries, Inc., a New York Stock Exchange listed company.
Scotsman is a leading manufacturer of refrigeration products primarily serving
the foodservice, hospitality, beverage, bakery and healthcare industries, with
a secondary focus on luxury appliances for the consumer market. Mr. Osborne
previously held the position of Executive Vice President of Household
Manufacturing, Inc. from 1982 to 1989, and from 1979 to 1982 was President of
Structo and Halsey Taylor, a division of Household Manufacturing, Inc. Mr.
Osborne was the Director of Manufacturing of Pillsbury Company from 1967 to
1979, and began his career as an Engineer with the Chevrolet Division of
General Motors. Mr. Osborne is 51 years of age.
Lawrence G. Wolski
Mr. Wolski is Acting Chief Executive Officer and a Director of Joslyn
Corporation. He joined Joslyn in 1974 as Controller, having been employed
previously by Arthur Andersen & Co. for eight years, his last position being
that of Audit Manager. In 1976, he was elected Vice President, Finance, of
the Corporation. He was elected Chief Financial Officer of the Corporation
in 1980, Senior Vice President in 1987, and Executive Vice President of the
Utility Systems Group in 1993. Mr. Wolski was elected a Director of the
Corporation in 1981. Mr. Wolski is 50 years of age.
Page 54 3
SECURITY OWNERSHIP OF MANAGEMENT ON MARCH 1, 1995
The following table sets forth information about the beneficial
ownership of the Corporation 's Common Shares for each Director and nominees
for Director, each Executive Officer named in the Summary Compensation Table in
this Proxy Statement, and all Directors and Executive Officers of the
Corporation as a group as of March 1, 1995.
Directors and Number
Nominees of Shares(a)
______________ ____________
William E. Bendix . . . . . . . . . . . . . . . . . . . . . . .2,000
John H. Deininger . . . . . . . . . . . . . . . . . . . . . . 900
Donald B. Hamister. . . . . . . . . . . . . . . . . . . . . . 12,000
Raymond E. Micheletti . . . . . . . . . . . . . . . . . . . . 29,149
Richard C. Osborne. . . . . . . . . . . . . . . . . . . . . . 750
James M. Reed . . . . . . . . . . . . . . . . . . . . . . . 500
Lawrence A. Reed. . . . . . . . . . . . . . . . . . . . . . . 400
Lawrence G. Wolski. . . . . . . . . . . . . . . . . . . . . . 42,717
Certain Executive
Officers
_________________
George W. Diehl . . . . . . . . . . . . . . . . . . . . . . . 16,132
Wayne M. Koprowski. . . . . . . . . . . . . . . . . . . . . . 23,438
Steven L. Thunander . . . . . . . . . . . . . . . . . . . . . 25,281
Directors and Officers as a Group . . . . . . . . . . . . . 167,330
______________________
(a) Includes shares Executive Officers have the right to acquire pursuant
to the Corporation's Employee Stock Benefit and Stock Option Plans. The number
of shares which each of the above individuals have the right to acquire are:
Mr. Micheletti 19,273 shares; Mr. Wolski 28,717 shares; Mr. Diehl 14,037
shares; Mr. Koprowski 16,660 shares; Mr. Thunander 20,046 shares.
In addition to the shares shown as owned by the nominees and Executive
Officers in the preceding table, the following approximate number of shares are
held by the Profit Sharing Plan in which the individuals named have
shared voting power as to those shares: Mr. Micheletti 1,802; Mr. Wolski 1,555
shares; Mr. Diehl 1,498 shares; Mr. Koprowski 904 shares; and Mr. Thunander
1,181 shares;
None of the Director nominees or Executive Officers hold 1.0% or more of
the outstanding shares of the Corporation.
All Directors and Executive Officers complied with the reporting
requirements of Section 16(a) except for one inadvertent late Form 4 filing
(10 days) regarding one transaction by Mr. Micheletti.
Page 55 4
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information regarding the
beneficial ownership of the Corporation's Common Shares on December 31, 1994,
by each person known by management to be the beneficial owner of more than 5%
of the outstanding shares of the Corporation:
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
___________________ ____________________ ________
Robert D. MacDonald,
James H. Ingersoll &. . . . . . . . . 646,754(a). . . . . . . . 9%
David L. Everhart, Trustees
150 N. Michigan Avenue, Suite 2500
Chicago, Illinois 60601
Danaher Corporation . . . . . . . . . 543,550(b). . . . . . . . 7.6%
1250 24th Street, N. W.
Washington, D. C. 20037
Joslyn Retirement Plans'
Company Stock Trust . . . . . . . . . 445,188(c) . . . . . . . 6.2%
30 South Wacker Drive
Chicago, Illinois 60606
Pioneering Management Corporation . . 430,337(d) . . . . . . . 6%
60 State Street
Boston, Massachusetts 02109
______________________
(a) Includes 480,085 shares held by Messrs. MacDonald, Ingersoll and
Everhart as co-trustees of the Alice Newell Joslyn Trust and the Marcellus
Lindsey Joslyn Trust. These trusts have sole voting and dispositive power
with respect to the shares in each trust. In addition to the 480,085 shares
held with co-trustees Messrs. Ingersoll and Everhart, Mr. MacDonald holds
166,669 shares as a trustee of other trusts.
(b) Danaher Corporation has reported in its Form 13D filed on August 2,
1994, that it has sole voting power as to 543,550 shares.
(c) Joslyn Retirement Plans' Company Stock Trust ("Trust") has sole voting
and investment power for 43,173 of such shares and shared voting and investment
power for 402,015 of such shares. The Trust beneficially owns certain of the
above shares for the Corporation's Employees' Savings and Profit Sharing Plan
("Profit Sharing Plan") and the Trustee has power to dispose of such shares;
provided, however, that in the event of a tender or exchange offer, the
participants generally have the right to direct the Trustee on how to respond
to the tender or exchange offer.
(d) Pioneering Management Corporation has reported in its Form 13G that it
has sole voting power as to 430,337 shares and shared dispositive power as to
430,337 shares.
Page 56 5
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors has standing Audit, Compensation and Nominating
Committees. Messrs. William E. Bendix, Donald B. Hamister and Richard C.
Osborne were the members of the Audit Committee during 1994. Messrs. John H.
Deininger, Hamister and Osborne were members of the Compensation Committee
during 1994. Messrs. Raymond E. Micheletti, Bendix, Deininger, and Hamister
were members of the Nominating Committee during 1994. In addition, the Board
of Directors formed an ad hoc Succession Committee for the purpose of
identifying qualified candidates for the position of President and Chief
Executive Officer to succeed Mr. Micheletti upon his retirement. Messrs.
Deininger, Hamister and Osborne were members of the Succession Committee in
1994. After the election of Mr. Wolski by the Board of Directors, the
Succession Committee was disbanded.
Among other responsibilities, the Audit Committee recommends the selection
of the independent public accountants, reviews the scope and procedures of the
planned audit activities and reviews the results of the audits. The Audit
Committee considers and approves in advance non-audit services performed by
the independent public accountants to determine that such services do not
compromise their independence. The Compensation Committee recommends the
compensation to be paid for the services of the Directors and Executive
Officers of the Corporation. The Nominating Committee develops criteria for
Directors, evaluates the qualifications of and interviews prospective
candidates for the Board of Directors of the Corporation and makes
recommendations to the Directors of nominees for election to the Board of
Directors of the Corporation.
During 1994, there were two meetings for each of the Audit and Succession
Committees. There were five meetings of the Compensation Committee. There were
eight meetings of the Board of Directors in 1994. All members of the Board
attended more than seventy-five percent of the meetings of the Board, and
all members of the Committees attended all meetings of the Committees of the
Board.
COMPENSATION OF DIRECTORS
Directors of the Corporation who are employees serve without additional
compensation. Directors of the Corporation who are not employees of the
Corporation each receive an annual retainer fee of $19,000. These Directors
also receive $700 for each meeting of the Board of Directors or a Committee
thereof attended. The Chairman of the Board of Directors receives an
additional retainer of $100,000 per year to serve in that capacity.
In addition to his annual retainer and meeting fees, Mr. Deininger also
performed consulting services for the Corporation in 1994 earning $2,775.
Directors who are not employees may elect to become participants in the
Deferred Compensation Plan in order to defer all or a portion of their fees.
Deferred fees otherwise payable are credited to a participant's Deferred Fee
Account bearing an annual interest rate. Upon termination of their services,
payment from the Deferred Fee Account will be paid to the former Directors in
installments.
Page 57 6
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid or to be paid for
the fiscal year 1994 to the Chief Executive Officer and to the four most
highly compensated Executive Officers of the Corporation. A more detailed
explanation follows the table.
<TABLE>
<CAPTION>
Long-Term Compensation
______________________
Awards
Securities
Under- All
lying Other
Name and Principal Fiscal Options Compen-
Position Year Salary(1) Bonus SARs(#) sation(2)
__________________ ______ _________ _____ _______ _________
<S> <C> <C> <C> <C> <C>
Raymond E. Micheletti 1994 $308,851 $ 53,550 0 $ 8,860
President and Chief 1993 299,224 91,125 15,485
Executive Officer 1992 250,557 107,800 16,078
Lawrence G. Wolski 1994 $245,393 $ 61,000 8,167 $ 8,860
Executive Vice 1993 237,548 73,552 15,485
President, Chief 1992 233,001 82,854 16,078
Financial Officer
George W. Diehl 1994 $148,246 $ 18,948 3,271 $10,398
Vice President 1993 138,371 15,989 10,284
1992 122,792 26,148 10,901
Wayne M. Koprowski 1994 $155,651 $ 18,574 3,388 $ 8,860
Vice President, 1993 148,610 32,400 10,716
General Counsel 1992 145,157 40,625 13,845
& Secretary
Steven L. Thunander 1994 $165,358 $ 667 3,529 $ 5,814
Vice President 1993 164,882 25,000 5,839
1992 163,800 28,529 7,997
</TABLE>
Mr. Micheletti retired on December 31, 1994. Upon his retirement, Mr.
Micheletti will receive an annual sum in the amount of $20,500 per year as
part of a non-qualified, unfunded supplemental retirement payment. He
will receive this amount until the year 2004. The final payment of $13,146
will be made in 2005. In the event of his prior death, Mr. Micheletti's
spouse will continue to receive the payments until 2005 or until her death at
which time the payments will cease.
____________________
1) Salary includes base compensation and contributions made under the
Joslyn Corporation Retirement Parity Compensation Plan ("Parity Plan").
Certain Executive Officers of Joslyn Corporation are participants in the
Parity Plan. The Parity Plan provides annual payments to eligible employees
who may elect to deposit their payments in an individual trust. Each trust
provides for distribution upon: (1) retirement after attaining age 60, (2)
disability or death, (3) attaining age 65, or (4) termination of employment
prior to age 60. The 1994 Parity Plan amounts for eligible individuals listed
in the Summary Compensation Table were: Mr. Micheletti $38,251; Mr. Wolski
$30,793; Mr. Diehl $12,646; Mr. Koprowski $15,051; and Mr. Thunander $14,758.
2) "All Other Compensation" is comprised of contributions on behalf of the
Executive Officers to the Corporation's Profit Sharing Plan, a defined plan,
except that it also includes a $1,000 director fee for Messrs. Diehl and
Thunander for being subsidiary company board members.
Page 58 7
STOCK OPTION/SAR GRANTS IN 1994
The following tables show, as to the Chief Executive Officer and the four
most highly compensated Executive Officers of the Corporation, information with
respect to grants of non-qualified stock options and stock exercises for the
period January 1, 1994 to December 31, 1994.
Non-Qualified Option grants awarded December 30, 1994
<TABLE>
<CAPTION>
Securities % of Total Potential Realizable Value of
Underlying Granted to Assumed Annual Rates of Stock Price
Options Employees Base Price Expiration Appreciation for Option Term
Name Granted(1) in 1994 $/share)(2) Date at 0% at 5% at 10%
______________________ __________ ___________ ___________ __________ _____ ________ ________
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond E. Micheletti* 0 0 0 - 0 $ 0 0
Lawrence G. Wolski 8,167 12.4% $25.50 6/26/05 0 139,453 $358,940
George W. Diehl 3,271 4.9% $25.50 6/26/05 0 55,852 143,760
Wayne M. Koprowski 3,388 5.1% $25.50 6/26/05 0 57,850 148,903
Steven L. Thunander 3,529 5.3% $25.50 6/26/05 0 60,258 155,100
</TABLE>
* Mr. Micheletti retired in December 1994.
___________________
(1) All options were granted on December 30, 1994, and first become
exercisable on June 26, 1995.
2) The Base Price equals the average of the last reported high and low
transactions of Common Shares on the NASDAQ National Market System on the
date of the grant of options.
Aggregated Option/SAR Exercises in 1994 and Fiscal Year-end Option/SAR
Values
This table provides the number of shares acquired by stock option exercise
during 1994. The value realized is the difference between the market price on
the date of exercise and the base price multiplied by the number of shares
exercised. The table also provides the year-end value of all stock options
and Stock Appreciation Rights ("SARs") granted to but not yet exercised by each
executive. The value represents the difference of the market price on December
30, 1994 and the base price multiplied by the number of outstanding options.
This value may go up or down as the stock price fluctuates and is not realized
until exercised.
<TABLE>
<CAPTION>
Securities Value
Underlying of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
1994 Fiscal Year-end: 1994 Fiscal Year-end:
Share Acquired Exercisable Exercisable
Name On Exercise Value Realized Unexercisable Unexercisable
_____________________ _______________ ______________ _____________ _____________
<S> <C> <C> <C> <C>
Raymond E. Micheletti 0 0 19,273/0 $ 31,762/0
Lawrence G. Wolski 0 0 28/717/8,167 114,240/0
George W. Diehl 2,712 $23,585 14,037/3,271 46,970/0
Wayne M. Koprowski 1,778 16,891 16,660/3,388 58,962/0
Steven L. Thunander 1,946 12,649 20,046/3,529 86,698/0
</TABLE>
Page 59 8
DEFINED BENEFIT PENSION PLAN
Salaried employees participated in the Employees' Supplemental Retirement
Plan of Joslyn Corporation ("Pension Plan") until December 31, 1988 when the
Pension Plan was frozen. Therefore, no additional benefit accruals for either
additional employment service or compensation increases will be incurred. The
estimated annual benefits payable upon retirement at age 65 for each of the
individuals named in the Summary Compensation Table are as follows: Mr.
Micheletti $40,158; Mr. Wolski $76,068; Mr. Diehl $19,937; Mr. Koprowski
$13,687; and Mr. Thunander $34,976.
EMPLOYMENT AGREEMENTS
The Corporation has entered into an employment agreement with Mr. Lawrence
G. Wolski (Acting Chief Executive Officer, Executive Vice President, and a
Director). The agreement provides for an annual salary to be paid to the
employee at least equal to that being received at the date of the agreement.
The agreement expires on December 31, 1997. This agreement may be earlier
terminated by Joslyn upon 180 days written notice. Mr. Wolski is entitled to
receive salary at the rate in effect at the date of notice for a period of 18
months following termination of employment conditioned upon his rendition of
consulting services to Joslyn for the remaining term of his Agreement.
However, Joslyn may terminate the agreement within such period if the employee
accepts other employment prior to the expiration of the period, and Joslyn
reasonably determines the new employment to be in conflict or competition with
Joslyn. Upon the death of Mr. Wolski, his legal representative is entitled to
receive his salary payable to the end of the month following the month in
which death occurs, plus incentive compensation for the fiscal year extended
to the last day of the month following date of death, plus an amount equal to
the monthly base salary in effect at the time of death multiplied by three.
Mr. Wolski has also entered into a separate severance agreement (the
"Severance Agreement") under which Mr. Wolski will be entitled to receive a
single cash payment equal to 2.5 times the sum of (a) his highest annual base
salary in effect during the prior 12-month period, (b) his Plan Accomplishment
level bonus under the Executive Management Incentive Plan for the full year,
(c) his Parity Plan payment for the full year, and (d) his maximum Profit
Sharing Plan contribution for the full year, if Mr. Wolski's employment with
the Corporation is terminated or he resigns for "good reason" following a
"change in control" of the Corporation. The Corporation is also obligated to
maintain medical, dental and life insurance for a period of 2.5 years following
his termination. Any payments made and benefits provided to Mr. Wolski under
the Severance Agreement will be in lieu of those payments and benefits to which
Mr. Wolski would otherwise be entitled under his employment agreement.
For purposes of the Severance Agreement, a "change in control" will be
deemed to have occurred if any of the following events occurs:
(i) any individual, entity, or group, including any "person" (as defined
in Section 13(d)(3) or (14(d)(2) of the Securities Exchange Act of 1934, as
amended (Exchange Act") acquires beneficial ownership of 25% or more of the
outstanding common stock or of the combined voting power of the then
outstanding securities of the Corporation entitled to vote generally in the
election of directors (the "Voting Securities");
(ii) individuals who were directors of the Corporation as of the
effective date of the Severance Agreement shall cease to constitute a majority
of such Board of the Corporation;
Page 60 9
(iii) the Shareholders shall approve a reorganization, merger or
consolidation of the Company, unless, following such reorganization, merger or
consolidation, (A) at least 60% of the common stock and 60% of the Voting
Securities are owned by all or substantially all of the same persons who were
beneficial owners of such securities immediately prior to such reorganization,
consolidation or merger, in substantially the same proportions relative to one
another, (B) no person beneficially owns 25% or more of the common stock or
voting securities of the surviving corporation, other than specified entities
controlled by the Company or a person who had beneficial ownership of 25% or
more of the common stock or the Voting Securities immediately prior to the
reorganization, consolidation or merger, and (C) at least a majority of the
members of the board of directors of the surviving corporation were members
of the Incumbent Board; or (iv) the Shareholders approve a plan of complete
liquidation or dissolution of the Corporation or the sale or disposition of all
or substantially all of the assets of the Corporation to another corporation
other than a corporation which meets the following requirements: (A)
more than 60% of the common stock and 60% of the voting securities of the
corporation are owned by all or substantially all of the same persons who were
beneficial owners of the common stock and the Voting Securities immediately
prior to such sale or disposition, in substantially the same proportions
relative to one another, (B) no person beneficially owns 25% or more of the
common stock or voting securities of the corporation, other than specified
entities controlled by the Company or a person who had beneficial ownership
of 25% or more of the common stock or the Voting Securities immediately
prior to such sale or disposition, and (C) at least a majority of the members
of the board of directors of the corporation were members of the Incumbent
Board.
Mr. Wolski will be deemed to have had "good reason" to terminate his
employment with the Corporation following a change in control if, among other
things, without his written consent, he is assigned to duties inconsistent
with his duties or responsibilities with the Corporation immediately prior to
the change in control, his salary or benefits are reduced, he is reassigned to
any location more than 50 miles from the facility where he is located at the
time of the change in control or, following a merger or consolidation in which
the Corporation is not the surviving corporation or the transfer of all or
substantially all of the assets of the Corporation to another corporation,
the corporation fails to obtain from such corporation an agreement to assume
all of the Corporation's obligations under the Severance Agreement.
In addition to Mr. Wolski, Mr. Koprowski and Mr. George Diehl, Vice
President, each have severance agreements with the Corporation. The provisions
of those agreements are identical to the provisions of Mr. Wolski's Severance
Agreement except that each of these officers will be entitled to receive a
single cash payment equal to the sum of 2 (rather than 2.5) times the sum of
their base salary, Plan Accomplishment under the Executive Management Incentive
Plan, Parity Plan payment for the full year and maximum Profit Sharing Plan
contribution for the full year.
Mr. Thunander and Mr. Daniel Dumont, Vice President and President of
Joslyn Canada, Inc., are eligible under the Corporation's Severance Policy for
Corporate Managers to receive one year's annual base salary and benefit
continuation for one year upon termination following a change in control.
The Corporation has the right to terminate any of the severance agreements
and the severance policy prior to a change in control upon 120 days notice.
Page 61 10
JOSLYN CORPORATION STOCK PERFORMANCE GRAPH
The graph provided below compares Joslyn Corporation's cumulative
shareholder total return with that of the NASDAQ Composite Index and
the Dow Jones Electrical Equipment Group. The comparison is made by
calculating the difference in share price from December 31, 1989, and
December 31, 1994 and including the cumulative amount of dividends,
assuming reinvestment, during this five year period. An initial
investment of $100.00 has been used as a common point of reference.
- GRAPH -
For ease of comparison, the table below provides the data utilized in the
graph. The table assumes an investment of $100.00 on December 31, 1989 and
indicates the appreciation or depreciation of each investment over a five year
period.
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
_______ ______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C> <C>
Joslyn Corporation $100.00 $81.85 $123.10 $167.65 $163.97 $172.61
NASDAQ Market Index 100.00 84.36 93.09 90.85 110.98 131.11
Dow Jones Electrical 100.00 81.12 104.14 105.16 126.14 132.44
</TABLE>
Page 62 11
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
reviewing and recommending to the Board compensation for the Executive Officers
of the Corporation, including the Chief Executive Officer and the four most
highly compensated Executive Officers. The Committee reviews base salaries and
corporate and individual bonus goals of the Chief Executive Officer and of the
Executive Officers as recommended by the Chief Executive Officer. The Committee
also approves all grants of stock options under the Corporation's Stock Option
Plan. All Committee members are non-employee, outside directors of the
Corporation.
Compensation Philosophy
The Corporation seeks to link Executive Officer compensation to
profitability resulting in enhanced shareholder value. The compensation
philosophy has the following objectives:
- to attract and retain quality management
- to encourage and reward performance on an individual, business unit
and corporate basis
- to reward both short term and long term performance
- to tie executive compensation to long term growth of shareholder value
The Corporation's executive compensation program is comprised of a base
salary, an annual incentive bonus program and a long term incentive
compensation plan in the form of stock options. In addition, Executive Officers
are eligible to participate in various benefit plans, including medical
insurance coverage and profit sharing, which are available to all employees.
While the Compensation Committee is aware of the deductibility limitation for
compensation paid to Executive Officers, current compensation levels are not
expected to approach the one million dollar limitation.
Base Salary
Base salaries for Executive Officers are determined in consideration of
each Executive Officer's position, responsibilities, experience and
performance. In setting compensation, the Committee takes into account the
national marketplace for a group of companies consisting of electrical and
electronics manufacturing companies of similar size (annual sales between $100
and $600 million) in the Corporation's labor market ("Labor Market Group").
The Committee decided against using the companies in the industry peer group
as reflected in the Performance Graph because the Committee believes that the
comparatively large size of many of the peer group companies distorts
compensation levels for similar positions. Each Executive Officer's base
salary range is initially set at the median for similar positions within the
Labor Market Group.
The Committee annually reviews and may adjust individual salaries of all
Executive Officers including the Chief Executive Officer and the four highest
compensated Executive Officers taking into account compensation guidelines
(utilizing executive compensation surveys, outside compensation specialists, or
both), business performance and individual performance. Business performance is
evaluated in reference to actual corporate earnings results compared to an
annual business plan submitted by Management and approved by the Board of
Directors. The factors impacting base salary are not independently assigned
Page 63 12
specific weights. Rather, the Committee reviews all the factors and makes
salary recommendations which reflect the Committee's analysis of the aggregate
impact of these factors.
Mr. Micheletti's 1994 base salary was $270,000 which was the same base
salary that he earned in 1993. The Compensation Committee retained the
services of a compensation consultant in 1994 to advise it in setting
compensation levels for the Chief Executive Officer and each of the Executive
Officers. The study indicated that Mr. Micheletti's base salary was about 20%
below the median for chief executive officers in the Labor Market Group.
However, in light of Mr. Micheletti's announced retirement, the Committee
decided not to adjust his base salary for 1994.
Annual Incentive Bonus Program
In addition to base salary, each Executive Officer is eligible for an
annual incentive cash bonus award under the Executive Management Incentive
Plan. The Compensation Committee believes that the plan provides an additional
short term incentive to those executives who have a greater potential impact
on business performance by having a larger portion of their total compensation
in variable bonus opportunities. Annual cash bonuses are paid based on
formulas which take into consideration attainment of corporate and business
unit earnings goals and individual goals designed to improve the Corporation's
overall performance. Individual performance goals are tailored to each
Executive Officer's position and vary from person to person. For Executive
Officers, excluding the Chief Executive Officer, potential bonus payments range
from 0% to a maximum of 60% of base salary depending on the Executive Officer's
position with generally half of the bonus potential based upon corporate or
business unit earnings performance and the other half based upon individual
performance. However, since actual payouts are dependent on achieving pre-
determined performance goals, failure to attain those goals could result in
no bonus. Despite non-operating charges taken in 1994, the Corporation did
achieve a level of operating income resulting in minimal bonus awards for the
Chief Executive Officer and the Executive Officers.
For 1994, Mr. Micheletti's potential bonus ranged from 0% to 70% of base
salary with a target payment of 35% of base salary. Fifty percent (50%) of his
annual potential bonus was based upon the attainment of targeted net income
goals for the 1994 plan year, with the remaining 20% bonus based upon the
achievement of individual goals. For 1994, Mr. Micheletti was awarded a bonus
of $53,550, which is 19.8% of base salary.
Long Term Incentive Compensation Plan (Stock Option Plan)
The Compensation Committee believes that by providing key employees,
including the Chief Executive Officer and the four highest compensated
Executive Officers, who have substantial responsibility over the management
and growth of the Corporation, with an opportunity to increase their ownership
of the Corporation's stock, the interests of the shareholders and key
employees, including Executive Officers, will be more closely aligned.
The Stock Option Plan meets this objective by permitting the Corporation
through the Compensation Committee to make annual grants of non-qualified stock
options to key employees, including the Chief Executive Officer and the four
highest paid Executive Officers. Stock options are granted with an exercise
price equal to the fair market value of the Corporation's common stock on the
date of grant and typically may be exercised over a period of five or ten
years. This approach is intended to motivate the key employees to contribute
to the creation and growth of shareholder value over the long term. Value to
the optionee is dependent upon an increase in the stock price above the
exercise price. The size of each person's stock option grant is based upon
a formula, originally recommended by an outside compensation consultant, which
provides a range of possible grants utilizing a multiple of the optionee's base
salary. The formula for determining the number of stock option grants is the
base salary times a multiplier (ranging from .3 to .85), divided by the then
Page 64 13
market price of the Corporation's stock. The Compensation Committee also
considers previous options granted but unexercised as well as actual ownership
in the Corporation's stock in making additional grants of options. The
compensation study referred to above indicated that stock options grants
awarded for 1994 are below the median compared to grants awarded to optionees
in the Labor Market Group.
Due to his retirement at the end of 1994, Mr. Micheletti was not awarded
option grants in 1994.
Richard C. Osborne, Chairman
John H. Deininger
Donald B. Hamister
PROPOSED NON-EMPLOYEE DIRECTOR STOCK PLAN
On February 8, 1995, the Board of Directors adopted, subject to approval
by the Corporation's Shareholders, the Non-Employee Director Stock Plan (the
"Plan"). The Plan is designed to assist the Corporation in attracting,
retaining and compensating highly qualified individuals who are not employees
of the Corporation for service as members of the Board and to provide them with
a proprietary interest in the Corporation's common shares. The Board believes
the Plan will be beneficial to the Corporation and its Shareholders by allowing
non-employee directors to have a personal financial stake in the Corporation,
in addition to underscoring their common interest with Shareholders in
increasing the value of the Corporation's common shares over the long term.
Non-employee directors currently also receive cash remuneration for their
services as described above under "Compensation of Directors".
Description of the Plan
The following summary description of the Plan is qualified in its
entirety by reference to the full text of the Plan, which is attached to this
Proxy Statement as Exhibit A.
If approved by the Corporation's Shareholders, fifty percent (50%) of each
non-employee director's annual retainer is to be paid in common shares of the
Corporation. The remaining fifty percent (50%) shall be paid in cash. In
addition, the Plan will provide for automatic yearly grants of options to
purchase 1,000 common shares (subject to adjustment as provided in the Plan)
to each active non-employee director serving on the Board at the time of the
grant who is not an employee of the Corporation or any of its subsidiaries or
affiliates. Each option grant, having a ten-year term, will permit the holder
to purchase shares at their fair market value on the date the option was
granted subject to a vesting requirement which may be accelerated in the event
of a change in control (as defined in the Plan). Payment for shares will be in
cash to the Corporation. The Plan will expire, unless earlier terminated,
on December 31, 2004.
Option grants under the Plan will be made on the date of the Annual
Shareholders' Meeting of each year commencing at the 1995 Annual Shareholders'
Meeting.
All options will expire ten years after the date of grant, subject to Plan
provisions relating to death, retirement or disability. If a participating
non-employee director terminates service on the Board as the result of
disability or death, previously granted options will continue to become
exercisable as described above but must be exercised within one year of
such termination and in any event within ten years of grant. In the event of
mandatory retirement, previously granted options will continue to become
exercisable but must be exercised within two years of such termination and
in any event within ten years of grant. If a participating non-employee
Page 65 14
director terminates service on the Board for any reason other than retirement,
disability or death, his or her outstanding options may be exercised only to
the extent that they were exercisable at the time of such termination and
expire six months after such termination. Each option will be non-assignable
and non-transferable other than by will or the laws of descent and
distribution.
An aggregate of 125,000 common shares will be subject to the Plan. Common
shares subject to options that terminate unexercised will be available for
future option grants. Adjustments will be made in the number of shares subject
to the Plan, the outstanding options, and in the purchase price of outstanding
options, in the event of any change in the Corporation's outstanding shares by
reason of any stock split or stock dividend, recapitalization, merger,
consolidation, combination or exchange of shares or other similar corporate
change.
Administration
The Plan will be administered by the Compensation Committee of the Board.
The Committee will be authorized to interpret the Plan, establish and amend
rules relating to the Plan and make other determinations necessary or advisable
for the administration of the Plan, but will have no discretion with respect
to the selection of Directors to receive options, the number of common shares
subject to the Plan or to each grant, or the purchase price for common shares
subject to option. The Committee will also have no authority to increase the
Plan benefits materially.
The Board of Directors may terminate the Plan at any time or amend it in
whole or in part, except that the provisions specifying amounts, pricing and
timing of grants may not be amended more than once every six months, other than
to comport with specified changes in applicable law. In addition, any
amendment that increases the number of common shares subject to the Plan or to
any option or extends the period during which options may be granted will
require approval by the Corporation's Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE NON-
EMPLOYEE DIRECTOR STOCK PLAN. PROXIES SOLICITED HEREBY WILL BE VOTED IN FAVOR
OF ADOPTION OF THE PLAN UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE.
Approval of this proposed will require the affirmative vote of a majority
of the outstanding common shares of the Corporation, present or represented,
and entitled to vote at the Annual Meeting.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Shareholders will be asked to ratify the appointment by the Board of
Directors of Arthur Andersen LLP as independent public accountants for the
Corporation and its subsidiary companies for the year 1995. Arthur Andersen
LLP served in this capacity in 1994, and has been retained by the Corporation
in this capacity since 1933.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT BY THE BOARD OF DIRECTORS OF ARTHUR ANDERSEN LLP AS INDEPENDENT
ACCOUNTANTS FOR THE YEAR 1995.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they wish
and will be available to respond to any questions at the Annual Meeting. The
Chairman of the Meeting will refer appropriate questions from Shareholders to
the representatives of Arthur Andersen LLP for response.
Page 66 15
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
The 1996 Annual Meeting of the Shareholders of the Corporation is expected
to be held on April 24, 1996. If any Shareholder wishes a proposal to be
considered for presentation at the 1996 Annual Meeting, such proposal must be
received by the Corporation at its offices at 30 South Wacker Drive, Chicago,
Illinois 60606 not later than November 29, 1995.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
meeting other than those mentioned in the Notice of Annual Meeting of
Shareholders. However, if other matters come before the meeting, it is the
intention of each person named in the accompanying Proxy to vote said Proxy in
accordance with his judgment of such matters.
The Notice of Annual Meeting of Shareholders and Proxy Statement are
hereby sent by order of the Board of Directors.
Chicago, Illinois
March 28, 1995
Page 67 16
Exhibit A
JOSLYN CORPORATION
NON-EMPLOYEE DIRECTOR STOCK PLAN
1. Purposes.
The Non-Employee Director Stock Plan (the "Plan") is established to
attract, retain and compensate highly qualified individuals who are not
employees of Joslyn Corporation (the "Company") for service as members of the
Board of Directors ("Non-Employee Directors") and to provide them with an
ownership interest in the Company's common shares. The Plan will be beneficial
to the Company and its Shareholders by allowing these Non-Employee Directors
to have a personal financial stake in the Company through an ownership interest
in the Company's common shares, in addition to underscoring their common
interest with Shareholders in increasing the value of the Company's common
shares over the long term.
2. Effective Date.
The Plan as adopted by the Board of Directors of the Company shall be
effective as of the date it is approved by the holders of at least a majority
of the outstanding common shares of the Company, present or represented, and
entitled to vote at the 1995 Annual Meeting of Shareholders.
3. Administration of the Plan
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"). Subject to the provisions of the Plan, the
Committee shall be authorized to interpret the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan;
provided, however, that the Committee shall have no discretion with respect
to the eligibility or selection of Non-Employee Directors to receive options
or common shares under the Plan, the number of common shares subject to any
such options, or the purchase thereunder, or the percentage of the annual
retainer to be paid in common shares; and provided further, that the Committee
shall not have the authority to take any action or make any determination that
would materially increase the benefits accruing to Non-Employee Directors under
the Plan. The Committee's interpretation of the Plan, and all actions taken
and determinations made by the Committee pursuant to the powers vested in it
hereunder, shall be conclusive and binding upon all parties concerned including
the Company, its Shareholders and persons granted options or issued common
shares under the Plan. The Chairman of the Board and the Chief Executive
Officer of the Company shall be authorized to implement the Plan in accordance
with its terms and to take or cause to be taken such actions of a ministerial
nature as shall be necessary to effectuate the intent and purposes of the Plan.
4. Participation in the Plan.
All active members of the Company's Board of Directors who are not as of
the date of any option grant or common share issuance employees of the Company
or any of its subsidiaries or affiliates shall be eligible to participate in
the Plan. Directors emeritus shall not be eligible to participate.
A1
Page 68
5. Awards Under the Plan.
Awards under the Plan shall consist of common shares and non-qualified
stock options ("options") to purchase common shares.
6. Terms, Conditions and Form of Option
(a) Option Grant Dates. Options to purchase 1,000 common shares (as
adjusted pursuant to Paragraph 9) shall automatically be granted on the date
of the Annual Shareholders' Meeting of each year, commencing at the 1995 Annual
Shareholders' Meeting, to each person who is a Non-Employee Director
immediately after such meeting, or if later, on the date on which a person is
first elected or begins to serve as a Non-Employee Director other than by
reason of termination of employment. If such person is elected or begins
service as a Non-Employee Director between the date of the Annual Shareholders'
Meeting and October 31 of that year, options to purchase 1,000 common shares
shall automatically be granted on the date of commencement of such services.
If such person is elected or begins service after October 31 of that year but
before the next Annual Shareholders' Meeting, options to purchase 500 common
shares shall automatically be granted on the date of commencement of such
services.
(b) Exercise Price. The exercise price to be paid for any common share
for which an option is exercisable shall be 100% of the fair market value of
such common share on the date the option is granted, which shall be the average
of the high and low price of the common shares on such date as generally
reported on the NASDAQ National Market System.
(c) Exercisability and Term of Options. Each option granted under the
Plan shall become exercisable commencing on the day before the Company's next
Annual Shareholders' Meeting following the date of grant. Each option granted
under the Plan shall expire ten years from the date of grant, and shall be
subject to earlier termination as hereinafter provided. Notwithstanding the
foregoing, (1) any option granted under the Plan shall become exercisable as of
the date of a Change in Control of the Company (as set forth in Paragraph
10(e) hereof); and (ii) any option granted under the Plan shall automatically
become exercisable on the date the rights ("Rights") issued pursuant to the
Rights Agreement, dated as of February 10, 1988, between The First National
Bank of Chicago and Joslyn Manufacturing Co. (formerly "Joslyn Corporation"),
and succeeded to by the Company, become exercisable for common shares
("Distribution Date"). In the event an option is exercised within ten days
following the Distribution Date, its exercise shall be effective as of the
day before the Distribution Date unless the optionee specifies a later
effective date.
(d) Termination of Directorship.
1. Disability. Subject to Paragraph 10(e), if the holder of an
option granted under the Plan ceases to be a Non-Employee Director of the
Company by reason of disability, each such option held by such holder
shall be exercisable only to the extent that such option is exercisable
on the effective date of such holder's ceasing to be a Director and may
thereafter be exercised by such holder (or such holder's guardian, legal
representative or similar person) until the earlier to occur of the (i)
date which is one year after the effective date of such holder's ceasing
to be a Director and (ii) the expiration date of the term of such option.
A2
Page 69
2. Retirement. Subject to Paragraph 10(e), if the holder of an
option granted under the Plan ceases to be a Non-Employee Director of the
Company by reason of mandatory retirement, each such option held by such
holder shall be exercisable only to the extent that such option is
exercisable on the effective date of such holder's ceasing to be a Non-
Employee Director and may thereafter be exercised by such holder (or such
holder's guardian, legal representative or similar person) until the
earlier to occur of the (i) date which is two years after the effective
date of such holder's ceasing to be a Non-Employee Director and (ii) the
expiration date of the term of such option.
3. Death. Subject to Paragraph 10(e), if the holder of an option
granted under the Plan ceases to be a Non-Employee Director of the Company
by reason of death, each such option held by such holder shall be
exercisable only to the extent that such option is exercisable on the date
of such holder's death and may thereafter be exercised by such holder's
executor, administrator, legal representative, beneficiary or similar
person, as the case may be, until the earlier to occur of the (i) date
which is one year after the date of death and (ii) the expiration date of
the term of such option.
4. Other Termination. Subject to Paragraph 10(e), if the holder of
an option granted under the Plan ceases to be a Director of the Company
for any reason other than disability, mandatory retirement or death, each
such option held by such holder shall be exercisable only to the extent
such option is exercisable on the effective date of such holder's ceasing
to be a Director and may thereafter be exercised by such holder (or such
holder's guardian, legal representative or similar person) until the
earlier to occur of the (i) date which is six months after the effective
date of such holder's ceasing to be a Non-Employee Director and (ii) the
expiration date of the term of such option.
(e) Payment. The option price shall be paid in cash.
7. Award of Shares in Lieu of Retainer Fee
(a) Percentage. Fifty percent (50%) of each Non-Employee Director's
annual retainer fee for service as a member of the Company's Board of Directors
for the ensuing year shall be paid in common shares of the Company. Such
common shares shall be awarded on the date of the Annual Shareholders'
Meeting of each year. The number of shares to be awarded shall be equal to
fifty percent (50%) of the annual retainer fee divided by the fair market value
of a common share as determined in Paragraph 7(b) below. No fractional shares
shall be issued, and the number of shares shall be rounded down to the nearest
whole share and the remaining amount shall be paid in cash. The remaining
fifty percent (50%) of the annual retainer fee shall be paid in cash.
(b) Price. The common shares awarded shall be valued at the average of
the high and low price for common shares of the Company on the NASDAQ
National Market System on the date of the award of such common shares to the
Non-Employee Directors.
8. Common Shares Subject to the Plan.
The common shares that will be available under the Plan for issuance upon
the exercise of option or the award of common shares shall not exceed an
aggregate of 125,000 common shares (as adjusted pursuant to Paragraph 9).
Any common shares subject to an option grant which for any reason expires or
is terminated unexercised as to such common shares shall again be available
for issuance under the Plan.
A3
Page 70
9. Dilution and Other Adjustment.
In the event of any change in the outstanding common shares of the
Company stock by reason of any stock split, stock dividend, recapitalization,
merger, consolidation or exchange of shares or other similar corporate change,
such adjustments shall be made in the grants under the Plan, including the
exercise price of outstanding options, as the Committee determines are
necessary or appropriate to preserve the rights of Non-Employee Directors under
the Plan, including, if necessary, any adjustments in the maximum number of
shares referred to in Paragraph 8 of the Plan. Such adjustments shall be
conclusive and binding for all purposes of the Plan.
10. Miscellaneous Provisions.
(a) Rights as Shareholder. A Non-Employee Director shall have no rights
as a holder of Company common shares with respect to option grants hereunder,
unless and until certificates for common shares are issued to the Non-Employee
Director.
(b) Assignment or Transfer. No option granted under the Plan or any
rights or interests therein shall be assignable or transferable by a Non-
Employee Director except by will or the laws of descent and distribution.
During the lifetime of a Non-Employee Director, options granted hereunder are
exercisable only by, and payable only to, the Non-Employee Director.
(c) Agreements. All options granted under the Plan shall be evidenced by
agreements in such form and containing such terms and conditions (not
inconsistent with the Plan) as the Committee shall adopt.
(d) Costs and Expenses. The costs and expenses of administering the Plan
shall be borne by the Company and not charged to any option or to any Non-
Employee Director receiving an option.
(e) Change in Control.
1. Notwithstanding any provision in the Plan or any agreement, in
the event of a Change in Control as defined below in connection with which
the Non-Employee Directors as holders of common shares receive shares of
common stock that are registered under Section 12 of the Securities and
Exchange Act of 1934 ("Exchange Act"), all outstanding options shall
immediately become exercisable in full, and there shall be substituted
for each common share available under this Plan, whether or not then
subject to an outstanding award, the number of shares into which each
outstanding common share shall be converted pursuant to such Change in
Control. In the event of any such substitution, the purchase price
per share in the case of an option shall be appropriately adjusted by the
Committee, such adjustments to be made in the case of outstanding options
without a change in the aggregate purchase price.
2. Notwithstanding any provision in the Plan or any agreement, in
the event of a Change in Control in connection with which the Non-
Employee Directors as holders of common shares receive consideration other
than shares of common stock that are registered under Section 12 of the
Exchange Act, each outstanding award shall be surrendered to the Company
by the Non-Employee Director as holder thereof, and each such award shall
immediately be cancelled by the Company, and the holder shall receive,
within ten days of the occurrence of a Change in Control or within ten
days of the approval of the Shareholders of the Company , a cash payment
A4
Page 71
from the Company in an amount equal to (i) in the case or an option, the
number of common shares then subject to such option, multiplied by the
excess, if any, of the greater of (A) the highest per share price offered
to Shareholders of the Company in any transaction whereby the Change in
Control takes place or (B) the fair market value of a common share on the
date of occurrence of the Change in Control, over the purchase price per
common share subject to the option. The Company may, but is not required
to, cooperate with any person who is subject to Section 16 of the Exchange
Act to assure that any cash payment in accordance with the foregoing to
such person is made in compliance with Section 16 and the rules and
regulations thereunder.
3. For purposes of the Plan, a "Change in Control" of the
Company shall occur at the earliest of:
i) The acquisition by any entity, person, or group, of
beneficial ownership, as that term is defined in Rule 13d-3
under the Exchange Act, as amended, of more than 20% of the
outstanding capital stock of the Company entitled to vote for
the election of directors ("voting stock").
ii) The commencement by any entity, person or group (other
than the Company or a subsidiary of the Company) of a tender
offer or an exchange offer for more than 20% of the outstanding
voting stock of the Company.
iii) The effective time of (i) a merger or consolidation of
the Company with one or more other companies as a result of
which the holders of the outstanding voting stock of the Company
immediately prior to such merger or consolidation hold less than
60% of the voting stock of the surviving or resulting company,
or (ii) a transfer of substantially all of the property of the
Company other than to an entity of which the Company owns at
least 60% of the voting stock; or
iv) The election to the Board, without the recommendation or
approval of the incumbent Board, of the lesser of (i) three
directors or (ii) directors constituting a majority of the
number of directors of the Company then in office.
11. Amendment and Termination
The Board of Directors of the Company may amend, terminate or suspend the
Plan at any time, in its sole and absolute discretion; provided, however, to
the extent required to qualify the Plan under Rule 16b-3 promulgated under
Section 16 of the Exchange Act, no amendment shall be made more than once
every six months that would change the amount, price or timing of the annual
grants or the common shares issued in lieu of annual retainer fee, the
purchase price of options granted hereunder, determination provisions relating
to options granted hereunder, or the category of persons eligible to receive
grants of options and awards of common shares hereunder, other than to comport
with changes in the Internal Revenue Code of 1986, as amended, or the Employee
Retirement Income Security Act of 1974 or the rules and regulations promulgated
thereunder; and provided, further, to the extent required to qualify the Plan
under Rule 16b-3, no amendment that would (a) materially increase the number
of common shares that may be issued under the Plan, (b) materially modify the
requirements as to eligibility for participation in the Plan, or (c) otherwise
materially increase the benefits accruing to participants under the Plan, shall
be made without the approval of the Company's Shareholders. The Plan (but not
the options previously granted under the Plan) shall in any event terminate on,
and no options shall be granted after, December 31, 2004.
Page 72 A5
12. Compliance with SEC Regulations.
It is the Company's intent that the Plan comply in all respects with Rule
16b-3 under the Exchange Act and any related regulations. If any provisions
of the Plan are found not to be in compliance with such Rule and regulations,
the provision shall be deemed null and void. All grants and exercises of
options and issuance of common shares under the Plan shall be executed in
accordance with the requirements of Section 16 of the Exchange Act and
regulations promulgated thereunder.
13. Governing Law.
The validity and construction of the Plan and any agreements entered into
thereunder shall be governed by the laws of the State of Illinois.
Page 73
(PROXY CARD)
JOSLYN CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints L. G. Wolski and W. M. Koprowski or either of
them with full power of substitution, the proxies of the undersigned, to vote
all of the Common Shares of Joslyn Corporation, which the undersigned may be
entitled to vote at the Annual Meeting of Shareholders to be held in the
Assembly Room, 6th Floor, The Northern Trust Company Building, 50 South
LaSalle Street, Chicago, Illinois 60675 on Wednesday, the 26th of April, 1995
at 10:00 a.m., and at any adjournment thereof, with all the powers the
undersigned would possess if he were personally present, as follows:
Election of Directors: COMMENTS: (change of address)
William E. Bendix _____________________________________________
John H. Deininger _____________________________________________
Richard C. Osborne _____________________________________________
James M. Reed _____________________________________________
Lawrence A. Reed _____________________________________________
Lawrence G. Wolski (If you have written in the above space,
please mark the corresponding box on the
reverse side of this card)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATION. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
Page 74
___
: X : Please mark your vote
:___: as in this example.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE OTHER SIDE OF PROXY OR, IF NO
SPECIFICATION IS MADE AS TO THE ELECTION OF DIRECTORS, WILL BE VOTED "FOR" THE
NOMINEES OF THE BOARD OF DIRECTORS NAMED IN THE PROXY STATEMENT (CUMULATIVELY
IF THE PROXIES ABOVE SHALL SO DETERMINE AT THEIR SOLE DISCRETION), AND, IF NO
SPECIFICATION IS MADE AS TO ITEMS (2) AND (3), WILL BE VOTED "FOR".
<TABLE>
<CAPTION>
________________________________________________________________________________________________________________________________
: :
: The Board of Directors recommends a vote "FOR" proposals 1, 2 and 3. :
: :
:_______________________________________________________________________________________________________________________________:
: <S> <C> <C> <C> <C> <C> :
: WITH- :
: FOR HELD FOR AGAINST ABSTAIN :
: ___ ___ ___ ___ ___ ___ :
:1. Election of : : : : 2. Ratification of the appoint- : : : : : : Change of Address/ : : :
: Directors. :___: :___: ment of Arthur Andersen LLP :___: :___: :___: Comments on Reverse Side. :___: :
:(see reverse) as independent public :
: accountants for the year 1995 :
:For, except vote withheld ___ ___ ___ ___ :
:from the following nominee(s): 3. Approval of a Proposed Joslyn : : : : : : Please mark this box if : : :
: Corporation Non-Employee :___: :___: :___: you will personally be :___: :
:_____________________________ Director Stock Plan. attending the meeting. :
: :
: 4. In their discretion on such :
: other matters as may properly :
: come before the meeting. :
: :
:_______________________________________________________________________________________________________________________________:
</TABLE>
Please sign exactly as your name appears on this proxy. If you are signing for
estates, trusts, or corporations, title or capacity should be stated. If shares
are held jointly, each holder should sign. Please date, sign and mail this
proxy in the enclosed envelope. No postage is required for mailing in the
United States.
____________________________________________________
1995
____________________________________________________
SIGNATURE(S) DATE
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