UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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ANNUAL REPORT pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 |
For the fiscal year ended December 31, 2002
Commission file Number 0-15582
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Minuteman International, Inc. |
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(Exact name of registrant as specified in its Articles of Incorporation) |
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Illinois |
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36-2262931 |
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(State or other jurisdiction of |
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(I.R.S. Employer |
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111 South Rohlwing Road, Addison, Illinois |
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60101 |
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(Address of principal executive offices) |
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(Zip Code) |
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Registrant’s telephone number, including area code (630) 627-6900 |
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Securities registered pursuant to Section 12(g) of the Act:
Common stock, no par value
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 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. ý Yes o 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. o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes o No ý
The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 7, 2003 was $7,362,670.
The number of shares outstanding of the registrant’s class of common stock as of March 7, 2003 was 3,574,279.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31, 2002 (the “2002 Annual Report”), are incorporated by reference into Part II.
Portions of the Proxy Statement for the 2003 Annual Shareholders Meeting to be filed with the Securities and Exchange Commission within 120 days after the close of the Registrant’s fiscal year (the “2003 Proxy Statement”), are incorporated by reference into Part III.
MINUTEMAN INTERNATIONAL, INC.
FORM 10-K
For the Fiscal Year Ended December 31, 2002
TABLE OF CONTENTS
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Item 1. Business
General Development of Business
Minuteman International, Inc. an Illinois corporation incorporated in 1951 as American Cleaning Equipment Corporation, manufactures and distributes one of the most complete lines of commercial and industrial vacuums, floor and carpet care, chemical cleaning and coating products and complementary accessories in the United States and Canada. Its products are exported to more than sixty countries around the world.
Products
The Company’s product line consists of hard surface floor care equipment, carpet care and maintenance products, sweepers, scrubbers, commercial and industrial specialized vacuums, and complementary accessories. Included in the specialized vacuum area are the hazardous location/explosive environment vacuums and the clean/room nuclear vacuums.
Minuteman PowerBoss, Inc. (PowerBoss), acquired in 1998, is a wholly-owned subsidiary of Minuteman International, Inc. that designs, manufactures and distributes ride-on and walk-behind sweepers and scrubbers for hard-surface floor and carpet care for use in industrial applications.
Multi-Clean, the chemical division of Minuteman International, Inc. formulates, manufactures and distributes chemical cleaning and floor coating products including multi-surface cleaners and degreasers, finishes and waxes, carpet care products, concrete and wood coatings and finishes, plus a full array of specialized chemicals.
Parker Sweeper Company, acquired in 1992, manufactures a full line of litter vacuums as well as an extensive array of lawn and turf debris handling equipment. Effective December 30, 1994, Parker Sweeper Company, formerly a wholly-owned subsidiary, was merged into the Company and operates as a division.
Marketing and Distribution
The Company markets and distributes its products throughout the world. The distribution process in the United States is primarily through the more than 450 active dealers and its two sales branches. The Company distributes its products in Canada through Minuteman Canada, Inc. and in Europe through Minuteman European, B.V., both of which are wholly owned subsidiaries. The Company sells its products to Hako-Werke subsidiaries in Japan, Australia and certain European countries. Export of other products is conducted through the headquarter office in Addison, Illinois. Sales to affiliated and unaffiliated customers in foreign countries aggregated to $14,064,000 $15,918,000, $18,078,000 in 2002, 2001 and 2000, respectively.
The Company’s equipment is sold under Minuteman International, Minuteman, Minuteman PowerBoss and Parker Sweeper trade names. The chemical cleaning and coating products are manufactured by Minuteman International, Inc. and sold under Multi-Clean trade name. Substantially all of the Company’s commercial equipment is manufactured at its Illinois production facilities in Addison and Hampshire. Substantially all of the Company’s industrial equipment is manufactured at its Aberdeen, North Carolina production facilities. The remainder of the Company’s industrial equipment is imported from Germany. All of the Company’s chemical cleaning and coating products are produced at its Shoreview, Minnesota facility.
The manufacture, production and demand for the Company’s products and services are not considered to be seasonal in nature. No part of the Company business depends on any one single customer, the loss of which would adversely affect the Company. The Company does not believe any material portion of its business to be subject to renegotiation of profits or termination of contracts at the election of the Government.
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Raw Materials
The Company purchases castings, electric motors, cord sets, switches, brushes, wheels, injection molded plastics, sheet steel, paint pigment, chemicals and other raw materials from a number of suppliers. The Company considers its ability to obtain raw materials and supplies to be readily available. It does not believe that the loss of any supplier would adversely affect the Company’s business.
Competition
Minuteman International, Inc. competes with many regional, national and international manufacturers throughout the industry. These competitive markets include industrial and plant maintenance, sanitation supply, critical filter, floor coating and chemical fields. The principal competitive factors within each of these markets are product quality, reliability, service and fair price. The Company believes it will continue to compete effectively in the marketplace and continue its sales growth in the future.
Patents and Trademarks
Currently, the Company has 21 United States and 10 international patents. Although the Company generally seeks to obtain patents where appropriate, it does not consider the successful conduct of its business in general to be dependent on any of its patents or patent applications.
Minuteman International, Inc. is owner of the United States and Canadian registrations for the Multi-Clean and Parker Sweeper trade names. The Minuteman trademark is registered in the United States and Canada. The Parker trademark is registered in the United States and Canada.
Working Capital
The Company had working capital of $35.5 million at December 31, 2002. Cash, cash equivalents and short-term investments represented 17.5% of the working capital which when not in use, is invested in bank certificates of deposit and Eurodollar certificate investments.
Backlog
The Company’s backlog of orders was approximately $3.0 million at December 31, 2002 and 2001. The Company anticipates that substantially all of the 2002 backlog will be delivered during 2003. In the opinion of Management, fluctuations in the amount of its backlog are not necessarily indicative of intermediate or long-term trends in the Company’s business.
Research and Development
The Company expended approximately $1,512,000, $1,587,000, and $1,459,000 on research and development activities during 2002, 2001 and 2000, respectively.
Employees
The Company has approximately 400 full time employees. The facilities in Addison, Illinois and Shoreview, Minnesota, have approximately 90 hourly paid employees who are covered by local collective bargaining agreements. These agreements expire in May, 2003 and October, 2003, respectively. The Company believes that the current employee relations are excellent. The Company may hire additional employees during 2003 as are justified by the needs of the business.
Environmental Matters
The Company’s operations are subject to various federal, state and local laws and regulations regarding the environmental aspects of the manufacture and distribution of chemical components. The Company believes that it is currently in compliance in all material respects with the environmental laws and regulations affecting its operations. Capital expenditures for the purpose of environmental protection are not expected to be material in amount for 2003 or thereafter.
Forward-Looking Statements
SAFE HARBOR STATEMENT. This Annual Report on Form 10-K contains not only historical information, but also forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Statements that are not historical are forward-looking and reflect expectations about the Company’s future performance. In addition, forward-looking statements may be made orally or in press releases, conferences, reports, on the Company’s worldwide web site, or otherwise, in the future by the Company or on our behalf. The Company has tried to identify such statements by using words such as
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“expect”, “foresee”, “looking ahead”, “anticipate”, “estimate”, “believe”, “should”, “intend”, and similar expressions to identify forward-looking statements.
Forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Actual future results may differ materially from those discussed in forward looking statements. These uncertainties include factors that affect all businesses operating in a global market as well as matters specific to the Company. The following are some of the factors that could cause the Company’s financial condition to differ materially from what the Company has anticipated in forward-looking statements: the effectiveness of operating and technology initiatives and advertising and promotional efforts, as well as changes in: global and local business and economic conditions; currency exchange and interest rates; labor and other operating costs; political or economic instability in local markets; disruptions from outbreak of hostilities, war or terrorists’ attacks; competition; customer preferences; effects of unanticipated materially adverse litigation or product claims; unexpected product failures or non acceptance of new products by the market; legislation and governmental regulation; and accounting policies and practices. The foregoing list of important factors is not exclusive.
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Item 2. Properties
The Company owns or leases the following properties in its operations:
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Location |
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Size (sq. ft.) |
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Use |
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Owned |
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Aberdeen, NC |
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135,000 |
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(Bldg.) |
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Office, manufacturing, |
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Leased |
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Warehouse, sales, service |
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Addison, IL |
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112,230 |
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(Bldg.) |
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Office, manufacturing, |
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254,300 |
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(Land) |
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Warehouse, sales, service |
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Owned |
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Villa Park, IL |
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18,000 |
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(Bldg.) |
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Warehouse, sales, service |
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Leased |
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Taylor, MI |
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8,000 |
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(Bldg.) |
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Warehouse, sales, service |
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Leased |
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Hampshire, IL |
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100,000 |
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(Bldg.) |
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Manufacturing, warehouse |
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871,200 |
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(Land) |
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Owned |
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Shoreview, MN |
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34,952 |
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(Bldg.) |
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Office, manufacturing, |
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133,830 |
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(Land) |
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Warehouse, sales, service |
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Owned |
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Nieuw-Vennep, |
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9,957 |
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(Bldg.) |
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Warehouse, sales, service |
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Leased |
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The Netherlands (1) |
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Mississauga, |
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18,486 |
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(Bldg.) |
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Warehouse, sales, service |
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Leased |
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Ontario, Canada |
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Approximately 90% of the Company’s Addison, Illinois facility, 95% of the Company’s Hampshire, Illinois facility and 85% of the Company’s Aberdeen, North Carolina and Shoreview, Minnesota facilities are devoted to manufacturing.
(1) In September 2002, the Company entered into a lease for an Amsterdam, Netherlands 16,469 square foot warehouse, sales and service facility, the lease term expires November 14, 2007. After build-out is completed, approximately April 2003, the Company will begin to make lease payments and occupy the Amsterdam facility. Until that time, the Company is on a month to month lease for the Nieuw-Vennep, Netherlands facility.
The Villa Park, Illinois lease term expires December 31, 2003. The Taylor, Michigan lease term expires December 31, 2003. The Mississauga, Ontario lease term expires on November 30, 2007. The Aberdeen, North Carolina lease term expires May 23, 2005. The Company believes that failure to obtain the renewal of any lease would not have a material adverse effect on its business.
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Item 3. Legal Proceedings
In November, 2001, the Securities and Exchange Commission (“SEC”) issued a formal order of investigation to the Company. The Company has been fully cooperating with the SEC by producing documents and providing testimony from various employees. In December, 2001, the Company was requested by the NASDAQ Stock Market (“NASDAQ”) to supply information in connection with NASDAQ’s responsibilities to ensure ongoing compliance of issuers with the requirements for inclusion on the NASDAQ. The Company has provided the requested documents and has cooperated fully with NASDAQ. The Company believes that the investigations relate to the recognition of revenue in the results of operations for its interim periods. The Company has submitted an Offer of Settlement to the Securities and Exchange Commission for its consideration. The Company is in discussion with the Securities and Exchange Commission with regards to the offer of settlement. The Company is not able to predict the outcome of the investigations or assess their ultimate impact on the Company.
The Company is a party to various legal proceedings arising in the ordinary course of its business. The outcome of these matters will not, in the opinion of Management, have a material adverse effect on the business or financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year ended December 31, 2002, the Company did not submit any matter to a vote of shareholders through the solicitation of proxies or otherwise.
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Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters
Common stock market prices and dividends on page 23 of the 2002 Annual Report are incorporated herein by reference.
Item 6. Selected Financial Data
The Selected Consolidated Financial Data on page 24 of the 2002 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 14 of the 2002 Annual Report is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information appearing under the caption “Market Risk” on page 14 of the 2002 Annual Report is incorporated herein by reference (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations).
Item 8. Financial Statements and Supplementary Data
The Report of Independent Auditors and the Consolidated Financial Statements, including the Notes to the Consolidated Financial Statements, included on pages 15 through 24 of the 2002 Annual Report are incorporated herein by reference.
Quarterly Results of Operations on page 23 of the 2002 Annual Report is incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None
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Item 10. Directors and Executive Officers of the Registrant
The information required to be set forth herein is contained under “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2003 Proxy Statement, with respect to directors and executive officers of the Company and is incorporated herein by reference in response to this item.
Item 11. Executive Compensation
The information required to be set forth herein is under “Election of Directors—Executive Management Compensation” in the 2003 Proxy Statement is incorporated herein by reference in response to this item.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required to be set forth herein is contained under “Security Ownership of Certain Beneficial Owners and Management” in the 2003 Proxy Statement and is incorporated herein by reference in response to this item.
Item 13. Certain Relationships and Related Transactions
The information required to be set forth herein is contained under “Board of Director Interlocks, Insider Participation and Related Transactions” in the 2003 Proxy Statement and is incorporated herein by reference in response to this item.
Item 14. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Within 90 days prior to the filing of this annual report, the Company’s Chief Executive Officer, its Chief Financial Officer and its Chief Accounting Officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-14(c) of the Securities Exchange Act). Based on their evaluation, they have concluded that the Company’s disclosure controls and procedures are adequate and effective to ensure that material information relating to the Company is made know to them by others within the Company, particularly during the period in which this annual report was prepared.
(b) Changes in Internal Controls
There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls subsequent to the evaluation referred to under the foregoing paragraph.
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Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) and (2) Financial Statements and Financial Statement Schedules
The Report of Independent Auditors, the financial statements and the financial statement schedule listed in the accompanying index to financial statements are filed herewith.
(a) (3) and (c) Exhibits
The Exhibits required by Item 601 of Regulation S-K and filed herewith are listed in the Exhibit Index which follows the financial statement schedules and immediately precedes the exhibits filed.
(b) Reports on Form 8-K:
The Company filed one report on Form 8-K for the quarter ended December 31, 2002. Information regarding the items reported on is as follows: On November 14, 2002 the Company issued a press release announcing quarterly results of operations, a quarterly dividend and a new board member.
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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 on March 25, 2003.
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Minuteman International, Inc. |
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