-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HwLAqXaHZihVZJ4O9rjfx6AvN7XuzuWtZnWesbPxaT7Xdwzgc9sHBhrxIHsC2GiY ekUrRaKcyyMNuFrir6qpjQ== 0000950123-96-001438.txt : 19960401 0000950123-96-001438.hdr.sgml : 19960401 ACCESSION NUMBER: 0000950123-96-001438 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960329 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAXAR CORP CENTRAL INDEX KEY: 0000075681 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 135670050 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-09493 FILM NUMBER: 96541138 BUSINESS ADDRESS: STREET 1: 105 CORPORATE PARK DRIVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 914697-6800 MAIL ADDRESS: STREET 1: 275 N MIDDLETOWN ROAD CITY: PEARL RIVER STATE: NY ZIP: 10965 FORMER COMPANY: FORMER CONFORMED NAME: PACKAGING SYSTEMS CORP DATE OF NAME CHANGE: 19870401 10-K405 1 PAXAR CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the Fiscal Year Ended December 31, 1995 ------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to ------------ ------------ Commission File Number 0-5610 --------------------------------------------- PAXAR Corporation - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New York 13-5670050 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 105 Corporate Park Drive, White Plains, New York 10605 - -------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (914) 697-6800 -------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class: on which registered: Common Stock, New York Stock Exchange, Inc. par value $.10 per share Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.10 per share - -------------------------------------------------------------------------------- (Title of Class) 2 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. / X / The aggregate market value of the Registrant's Common Stock held by non-affiliates of the Registrant as of March 22, 1996 was approximately $282,993,218. On such date, the closing price of the Registrant's Common Stock, as quoted on the New York Stock Exchange was $16.125. The Registrant had 22,225,322 shares of Common Stock outstanding as of March 22, 1996. DOCUMENTS INCORPORATED BY REFERENCE Part III of this Annual Report on Form 10-K is herein incorporated by reference from the Registrant's Definitive Proxy Statement to be filed with the Securities and Exchange Commission with respect to the Registrant's Annual Meeting of Shareholders scheduled to be held in April 1996. In addition, certain exhibits to this Annual Report on Form 10-K are herein incorporated by reference from the Registrant's Annual Reports on Form 10-K for the 1980, 1985 and 1987-92 fiscal years and from the Registrant's Current Reports on Form 8-K dated March 30, 1994 and June 29, 1995. -2- 3 PART I Item 1. Description of Business (a) General Development of Business PAXAR Corporation ("PAXAR" or the "Company") is a fully integrated manufacturer and distributor of label systems, bar code systems, labels, tags and related supplies and services for apparel manufacturers and retailers. The Company's products are manufactured in North America, Europe and Asia and distributed in over 50 countries. Label systems, consisting mainly of hot-stamp printers and related supplies and services, are sold to Company customers for in-plant label printing. Bar code systems, consisting of electronic printers and related supplies, print data on labels and tags to provide accurate product, inventory and point of sale information for integration with sophisticated data systems. Labels and tags are attached to apparel by manufacturers and retailers to identify and promote their products, allow automated data collection and provide brand identification and consumer information such as size, fabric content and care instructions. Labels are attached to garments early in the manufacturing process and must withstand all production processes and remain legible through washing and dry cleaning by the end user. To a limited extent, the Company's products also include tags and labels for sheets, towels, pillow cases and other white goods. In May 1994, the Company acquired the corporate capital of Collitex S.r.l. ("Collitex") and the corporate capital of Astria S.r.l. ("Astria"), two related Italian companies in the woven label business. The Collitex and Astria acquisition provided the Company with European-based woven label manufacturing capability. In October 1994, the Company acquired the corporate capital of Orvafin S.r.l. ("Orvafin"), an Italian company engaged in the production and distribution of inks and coated fabrics for labeling systems. The Orvafin acquisition provided the Company with additional manufacturing capacity for these products as well as access to a complementary distribution network. In January 1996, the Company acquired all of the outstanding stock of Brian Pulfrey Limited ("Brian Pulfrey"). Brian Pulfrey is located in Nottingham, England where it manufactures printed labels and tags. In addition, Brian Pulfrey sells woven labels and operates a service bureau for quick response to its customer's needs for labels and tags with variable information. The acquisition of Brian Pulfrey is expected to enhance the Company's goal of replicating its United States capabilities as a one-stop source for apparel and textile identification products in Europe. -3- 4 Joint Venture for Monarch Marking Systems, Inc. On June 29, 1995, the Company invested $15 million to acquire a 49.5% interest in Monarch Marking Systems, Inc. and related companies ("Monarch") from Pitney Bowes Inc. The other purchasers of Monarch were Odyssey Partners, L.P. ("Odyssey"), which acquired a 49.5% interest, and Thomas Loemker, a Director of the Company and Chairman of the Board of Monarch, who acquired a 1% interest. In 1995, the interests of the Company and Odyssey were each reduced to 49% as a result of stock issued to Monarch's Chief Executive Officer. The interests of the Company and Odyssey in Monarch may be reduced further to 45% as a result of options granted to such person and other members of Monarch's senior management. In connection with the acquisition of Monarch, the Company and Odyssey executed a Stockholders' Agreement (the "Stockholders' Agreement"). The Stockholders' Agreement governs the composition of Monarch's Board of Directors, all significant corporate actions and future dispositions of Monarch's stock owned by the Company and Odyssey, including puts and calls by the Company and puts by Odyssey, through 1999. Monarch manufactures, markets and distributes (i) tabletop label dispensers and handheld, mechanical labeling guns which print pressure-sensitive (i.e., adhesive-backed) price and other identification labels and affix them onto merchandise for retailers (collectively, "conventional labelers"), and (ii) electronic bar code printers ("bar code printers"), which are used in a wide range of retail and industrial applications, including inventory management and distribution systems. Monarch also manufactures and markets supplies used in both its conventional labelers and bar code printers and provides extensive service to its installed base of machines. The breadth of Monarch's machine, supplies and service offerings allows it to meet most of its customers' marking needs. Monarch is the leading manufacturer and marketer of retail price marking equipment and supplies in the United States. Monarch also sells, directly and through distributors in 75 other countries around the world. (b) Financial Information about Industry Segments The Company engages in only one industry segment: the design, development, manufacture and sale of apparel and textile identification materials. Whether the end-use product is manufactured by the Company or the Company provides the customer with the bar code or label system and related supplies is dependent upon the individual customer preference or need. The Company believes that all of its products and services, including printed and woven labels, in-plant bar code and label systems, coated fabrics and ink foils fall within one class of similar products and services, in that the end-use product is similar. All products are marketed and sold through a centralized distribution system in the United States, with a similar centralized distribution systems in Europe. -4- 5 (c) Narrative Description of Business Products The Company is vertically integrated in its major product lines which permits it to better serve its customers, control quality, reduce costs and speed delivery of products. It designs and builds most of its systems equipment, develops most of the operating software and all of the application software for its systems. The Company also formulates coatings and inks, coats fabrics, weaves narrow label fabrics, dyes and finishes fabrics and designs and prints tags and labels. Tag and Label Systems The Company's tag and label systems consist primarily of bar code tag systems and hot-stamp label printers. These systems include complete hardware and software packages that enable customers to print, cut and batch large volumes of labels and tags in their plants. The sale of a system to a customer generally results in ongoing sales of inks, fabrics, tags and other supplies to the customer. In 1995 and 1994, tag and label systems, supplies and related services accounted for approximately 54% and 53%, respectively, of the Company's sales. Manufacturers may use both a hot-stamp printing system and a bar code system, since the systems provide complementary functions. Bar Code Systems The Company has experienced substantial growth in its bar code systems business in the United States. Such systems have not reached the same stage of widespread use in Europe. Apparel retailers require bar coded tags on their products to permit more accurate tracking of the products in stores which, in turn, allows retailers to better monitor consumer demand and more effectively control inventories. PAXAR's bar code tags and in-plant bar coding systems enable manufacturers to accommodate retailers' demands in a rapid and cost-effective manner. Bar codes consist of a series of lines or bars printed on a contrasting background. By varying the width of the bars and the spaces between bars, the bar code is encoded with information to identify an item, which enables the user's data system to provide the user with relevant information about that item, such as its location, cost, selling price and manufacturer. Bar codes are read by a fixed or hand-held scanning device, which transmits information to data collection systems, including computers, electronic cash registers and portable data collection devices. The Company has specialized in producing clearly readable and accurate tags, from which a variety of bar code readers can capture accurate data. The bar code tag systems manufactured by the Company include personal computers, electronic bar code printers, thermal -5- 6 ink, pre-printed tag stock and supporting software. The printers are controlled by computers and print variable information on tags, including bar codes and garment sizes. Data can be input to the bar code printer through simple stand-alone keyboards with a built-in display, personal computers with PAXAR's application software or downloading from the manufacturer's central computer. Hot-Stamp Printing Systems Hot-stamp printing systems include hot-stamp printers, fabrics, inks and printing accessories, which are used by manufacturers for in-plant printing of care labels and labels that carry brand logo, size and other information for the retail customer. Such systems provide manufacturers with the flexibility to imprint labels quickly in response to production order specifications. Tags and Labels The Company designs and produces tags and woven and printed labels in its various manufacturing facilities in the United States, England, Italy and Hong Kong and ships them to domestic and foreign manufacturers. The Company's labels are printed on a wide range of fabrics and other materials. Its woven labels consist of jacquard, multi-color labels woven on broad looms and needle looms. They are primarily used to build brand identification for apparel and to provide information to consumers. The Company's multi-color printed labels are printed on coated fabrics and narrow woven fabrics using various types of high-speed equipment and are used primarily for product identification and consumer information on apparel. These labels are produced in large runs with few changes. Merchandise tags are multi-color printed tags and bar code price tags used primarily for promotion and customer information and inventory control. Sales and Marketing The Company employs salespersons who are compensated on a salary and bonus basis. These salespersons are located in leased offices across the United States, at the Company's Canadian branch, and at subsidiary companies in the United Kingdom, Germany, Belgium, Italy, Poland, Spain, Mexico, Hong Kong and Singapore. In addition, there are non-exclusive manufacturer's representatives located throughout the United States who sell the Company's products on a commission basis, as well as international and export distributors and commission agents, located in Europe, Africa, the Far East and Latin America. Sales promotion activities include direct mail campaigns, publication of brochures, participation in trade shows, publicity and advertising principally in trade journals. The business of the Company is not highly seasonal in nature. -6- 7 Sources and Availability of Raw Materials The Company purchases fabrics, inks, chemicals, yarns and other raw materials from major suppliers located throughout the United States and abroad. The Company believes that such materials are in good supply and are available from multiple sources. Patents, Trademarks and Licenses The Company relies upon trade secrets and confidentiality to protect the proprietary nature of its technology. The Company owns a trademark for the name FASCO in the United States and in certain foreign countries. The Company holds certain patents and trademarks which the Company does not deem to be material to its operations. Working Capital Practices The Company does not engage in unusual practices regarding inventories, receivables or other items of working capital. Customers The Company has more than 10,000 customers, including major retailers and apparel manufacturers such as Levi Strauss, Sears, J.C. Penney, The Limited, Liz Claiborne, Fruit-of-the-Loom, Sara Lee, Jockey, Land's End, The Lee Co. and L.L. Bean. For the fiscal year ended December 31, 1995, Levi Strauss represented approximately 12% of the Company's total sales. Backlog The Company's total backlog of orders at December 31, 1995 was approximately $15.7 million, as compared with $20.4 million at December 31, 1994. Management estimates that more than fifty percent (50%) of annual sales are comprised of orders which the Company typically fills within one month of receipt. The balance of orders are for products which are ordered to individual customer specifications and are for delivery within two to six months. Competitive Conditions The Company competes in both the domestic and international markets by means of price, product quality, innovation and customer services. The Company competes with a large number of independent, often family-owned, companies and a division of a large corporation. This large corporation possesses greater financial resources than the Company. Environmental Compliance Environmental aspects of the Company's business are regulated primarily by the ordinances of the localities where the -7- 8 Company's properties are situated. See "Item 3 - Legal Proceedings." Employees As of December 31, 1995, the Company employed worldwide 1,923 persons. Approximately 261 production persons of the Company in several locations in the United States are covered by four different union contracts, which expire at various times from July 1997 to October 1998. The Company has no recent history of material labor disputes. The Company believes that it has good employee relations. -8- 9 (d) Financial Information about Foreign and Domestic Operations and Export Sales Certain financial information for operations in the United States, Europe and Asia is set forth below.
Year Ended December 31 --------------------------------------- 1995 1994 1993 --------------------------------------- (in thousands) Sales to Unaffiliated Customers: United States - Domestic $ 130,371 $ 117,647 $ 103,572 - Export 8,359 9,347 7,709 Europe 42,653 26,685 17,038 Asia 20,053 12,933 10,528 --------- --------- --------- $ 201,436 $ 166,612 $ 138,847 ========= ========= ========= Operating Income: United States - Domestic $ 18,012 $ 15,364 $ 13,988 - Export 2,347 2,570 2,141 Europe 6,912 3,372 1,621 Asia 4,993 3,126 3,071 --------- --------- --------- 32,264 24,432 20,821 Corporate Expenses (9,127) (6,451) (5,871) --------- --------- --------- $ 23,137 $ 17,981 $ 14,950 ========= ========= ========= Assets Employed: United States and Export $ 96,054 $ 75,803 $ 70,536 Europe 47,591 43,807 8,775 Asia 13,495 9,093 6,182 --------- --------- --------- $ 157,140 $ 128,703 $ 85,493 ========= ========= =========
- -------------------- United States assets employed are used to manufacture products sold to domestic U.S. customers, export customers and in certain situations to non-U.S. intercompany customers. -9- 10 Item 2. Properties The Company utilizes the following facilities as of the date hereof:
Square Owned/ Lease Location Footage Leased Expiration Used for - -------- ------- ------ ---------- -------- White Plains, 29,538 Leased 2003 Executive New York and Adminis- trative Offices Sayre, 36,000 Leased Month- Manufacturing Pennsylvania to- Month Sayre, 58,000 Owned Administrative Pennsylvania and Manufacturing Orangeburg, 60,000 Owned Manufacturing New York Milan, Italy 1,937 Leased 1998 Office space Milan, Italy 3,767 Leased 1997 Warehouse Ancarano, Italy 86,368 Owned Administrative and Manufacturing Pero, Italy 2,691 Leased 2000 Warehouse Carpi, Italy 18,837 Leased 2004 Manufacturing Nottingham, England 17,000 Owned Administrative and Manufacturing Runcorn, England 37,237 Leased 2005 Administrative and Manufacturing Runcorn, England 23,131 Leased 2011 Manufacturing Paterson, 53,833 Owned Administrative New Jersey and Manufacturing Hillsville, 39,144 Owned Manufacturing Virginia
-10- 11 Lenoir, 120,000 Owned Administrative North Carolina and Manufacturing Lenoir, 17,180 Leased 1997 Warehouse North Carolina Lenoir, 11,600 Leased 1996 Warehouse North Carolina Warsaw, Poland 1,800 Leased 1996 Administrative and Manufacturing Lohne, 8,910 Leased 2002 Warehouse and West Germany office space Vandalia, Ohio 40,590 Leased 2001 Administrative and Manufacturing Troy, Pennsylvania 60,000 Owned Unoccupied Canton, North Carolina 32,665 Owned Manufacturing Rock Hill, 56,000 Owned Manufacturing South Carolina Hong Kong 26,536 Leased 1996 Administrative and Manufacturing Hong Kong 3,195 Leased 1996 Office space Hong Kong 5,625 Leased 1997 Warehouse Hong Kong 5,262 Leased 1997 Warehouse
In addition to the facilities described above, the Company has, as of March 1, 1996, thirteen sales offices located in Huntington Beach, CA; San Francisco, CA; Mission Viejo, CA; Greensboro, NC; Paletine, IL; Dallas, TX; New York, NY; Canton, GA; Singapore; Montreal, Canada; Mexico City, Mexico; Barcelona, Spain; and Ghent, Belgium. These offices are subject to leases expiring between June 1996 and February 2001. The Company believes that its facilities are adequate to maintain its existing business activities. -11- 12 Item 3. Legal Proceedings The Company is one of numerous parties to a consent order with the U.S. Environmental Protection Agency (the "EPA") that provides for the clean up of alleged contamination of a site in Carlstadt, New Jersey. In August 1989, the Company was also joined as one of a large number of defendants in a related action brought by potentially responsible parties in the United States District Court for the District of New Jersey. Management of the Company believes that its potential liability in connection with the clean up and litigation relating to the Carlstadt site and two other sites will not have a material adverse effect on the financial condition or the results of operations of the Company. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of the shareholders of the Company during the fourth quarter of the fiscal year ended December 31, 1995. -12- 13 PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters (a) The Company's Common Stock has been traded on the New York Stock Exchange using the symbol "PXR." The following table sets forth the 1995 and 1994 high, low and closing sales prices of the Company's Common Stock as reported on the New York Stock Exchange for the periods indicated, as adjusted to reflect any stock splits or stock dividends effectuated by the Company.
Calendar Year 1995 Sales Prices High Low Closing ---- --- ------- First Quarter 10 1/8 7 5/8 9 7/8 Second Quarter 15 7/8 9 5/8 14 3/8 Third Quarter 16 1/8 11 5/8 13 3/4 Fourth Quarter 15 1/4 11 3/8 13 1/4 Calendar Year 1994 First Quarter 10 1/8 7 7/8 7 7/8 Second Quarter 9 3/8 7 7/8 8 1/4 Third Quarter 9 8 5/8 9 1/4 Fourth Quarter 9 1/2 7 3/4 8
(b) As of March 1, 1996, there were approximately 919 record holders of the Company's Common Stock. (c) The Company has never paid any cash dividends on its Common Stock and has no present intention of doing so. The Company intends to retain all of its earnings for use in its business. -13- 14 Item 6: Selected Consolidated Financial Data The selected consolidated financial data as of and for the five-year period ended December 31, 1995 have been derived from the Company's Consolidated Financial Statements audited by Arthur Andersen LLP, independent public accountants. This data should be read in conjunction with Consolidated Financial Statements and related Notes for the year ended December 31, 1995, and the Management's Discussion and Analysis of Financial Condition and Results of Operations.
1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Operating Results Sales $201,436 $166,612 $138,847 $132,556 $ 88,860 Gross profit 73,024 59,219 50,622 47,557 30,755 Operating income 23,137 17,981 14,950 14,706 7,051 Net income 15,709 11,601 9,358 8,374 3,442 Earnings per share (a) $ 0.70 $ 0.53 $ 0.43 $ 0.42 $ 0.20 Financial Condition Working capital $ 46,679 $ 38,972 $ 30,213 $ 28,235 $ 17,172 Current ratio 2.9 2.6 2.7 3.0 2.3 Property, plant and equipment, net $ 53,856 $ 50,047 $ 36,215 $ 28,269 $ 19,546 Total assets 157,140 128,703 85,493 72,756 51,139 Long-term debt 23,121 13,796 718 2,107 10,243 Shareholders' equity 95,196 77,853 62,457 52,801 24,953 Debt as a percent of total capital 19.5% 15.0% 1.1% 3.8% 29.1% Financial Statistics Gross profit as a percent of sales 36.3% 35.6% 36.5% 35.9% 34.6% SG&A as a percent of sales 24.8% 24.8% 25.7% 24.8% 26.7% Operating income as a percent of sales 11.5% 10.8% 10.8% 11.1% 7.9% Net income as a percent of sales 7.8% 7.0% 6.7% 6.3% 3.9% Effective income tax rate 28.9% 32.0% 35.3% 39.8% 42.2% Return on shareholders' equity 18.2% 16.5% 16.2% 21.5% 15.0% Other Data Operating cash flow $ 23,052 $ 16,443 $ 11,671 $ 7,583 $ 7,000 Capital expenditures 12,328 11,218 11,937 9,228 5,252 Depreciation and amortization 8,138 6,781 4,810 3,740 2,900 Stock dividends 25% 25% 25% 25% 25% Additional stock dividend -- -- -- 25% -- Cash dividends None None None None None Number of employees 1,923 1,891 1,477 1,492 969 Weighted average shares outstanding(a) 22,422 21,938 21,779 20,213 17,157 Shares outstanding(a) 22,208 21,945 21,491 21,395 17,008 Book value per share(a) $ 4.29 $ 3.55 $ 2.91 $ 2.47 $ 1.47
(a) Retroactively adjusted to reflect stock dividends. -14- 15 Item 7.: Management's Discussion and Analysis of Financial Condition and Results of Operations OPERATING RESULTS: The following table shows each element of the income statement as a percent of sales for the years indicated:
1995 1994 1993 ---- ---- ---- Sales 100.0% 100.0% 100.0% Cost of sales 63.7 64.4 63.5 ----- ----- ----- Gross Margin 36.3 35.6 36.5 Selling, general and administrative expense 24.8 24.8 25.7 ----- ----- ----- Operating income 11.5 10.8 10.8 Equity in net income of affiliate 0.3 -- -- Interest expense, net (0.8) (0.5) (0.4) ----- ----- ----- Income before taxes 11.0 10.3 10.4 Taxes on income 3.2 3.3 3.7 ----- ----- ----- Net income 7.8% 7.0% 6.7% ===== ===== =====
1995 COMPARED WITH 1994 Sales in 1995 increased by 21% over 1994 reaching a record $201.4 million. Domestic sales increased $12.7 million or 11%; European sales increased $16.0 million or 60%; and Asian sales increased $7.1 million or 55%. Total non-U.S. and export sales were $71.1 million in 1995 or 35% of consolidated sales, up from $49.0 million or 29% in 1994. Acquisitions made in 1994 contributed $19.4 million in 1995 and $8.9 million in 1994 to European sales. In 1995, the Company's apparel identification products business grew 20% and its systems business grew 22%, as compared with 1994. The gross profit for the year 1995 increased to $73.0 million compared to $59.2 million for 1994, an increase of 23%. The gross margin increased to 36.3% for the year 1995 compared to 35.6% for the year 1994. Selling, general and administrative ("SG&A") expenses increased to $49.9 million for the year 1995, compared to $41.2 million for the 1994 period, an increase of 21%. As a percent of sales, SG&A was 24.8% for the years 1995 and 1994. Operating income increased 29% to $23.1 million (11.5% of sales) for the year 1995 compared to $18.0 million (10.8% of sales) for the year 1994. Equity in net income of affiliate was $592,000 for the year ended December 31, 1995, reflecting the Company's investment in Monarch Marking Systems, Inc. (Monarch) effective June 1995. (See Note 3 of Notes to Consolidated Financial Statements.) Interest expense, net increased to $1.6 million in 1995 compared to $0.9 million in 1994. The increase was attributable to higher levels of bank borrowings arising from the acquisitions in May and October 1994 and the $15.0 million invested in Monarch. -15- 16 Income before taxes increased to $22.1 million (11.0% of sales) for the year 1995, as compared with $17.1 million (10.3% of sales) for the year 1994. The increase in pretax profit for the year 1995 compared to the year 1994 is summarized as follows:
(in millions) Sales increase, net of increased SG&A expenses $ 4.0 Improvement in gross margin 1.1 Equity in net income of affiliate 0.6 Increased interest expense, net (0.7) ------ Net increase $ 5.0 ======
The effective income tax rate was 29% for the year ended December 31, 1995 compared to 32% for the year 1994. The overall effective tax rate is impacted by many factors including different statutory rates on foreign income. The lower rate is mainly attributable to lower rates on income derived from foreign sources, particularly from Hong Kong and in Italy where the companies acquired in 1994 receive special tax abatement incentives which expire from 1996 through 1999. Net income for the year ended December 31, 1995 increased 35% to $15.7 million (7.8% of sales) from $11.6 million (7.0% of sales) in 1994. Income per share was $0.70 in 1995, up from $0.53 in 1994. 1994 COMPARED WITH 1993 Sales in 1994 increased by 20% over 1993 reaching a record $166.6 million. Acquisitions made during 1994 added $8.9 million or 6% to the growth in sales for the year, while the Company's base business increased by 14% over the prior year. Market conditions improved considerably in the United States beginning in the second quarter; the European marketplace was soft throughout 1994, but began to show signs of improvement in the fourth quarter; and sales in Asia increased following an expansion of the Company's manufacturing capabilities in Hong Kong. Domestic sales increased $14.1 million or 14%; European sales (exclusive of the gains attributable to acquisitions) increased $0.7 million or 4%; and Asian sales increased $2.4 million or 23%. Total non-U.S. and export sales were $49.0 million in 1994 or 29% of consolidated sales, up from $35.3 million or 25% in 1993. In 1994, the Company's apparel identification products grew 28% and its systems business grew 13%, as compared with 1993. The gross margin for the year ended December 31, 1994 decreased to 35.6% from 36.5% in 1993. The decline primarily reflects materials cost increases stemming from both the need to out source certain semi-finished products pending expansion of manufacturing capacity and inflationary cost increases on purchased raw materials. The Company is adjusting selling prices where possible to recover the margin lost to the increased prices being charged by its suppliers. Of the net increase in gross profit for the year 1994 of $8.6 million, an increase of $9.9 million resulted from -16- 17 sales increases and a decrease of $1.3 million resulted from the margin decline. SG&A expenses were $41.2 million for the year ended December 31, 1994, compared to $35.7 million for the 1993 period, an increase of 16%. In addition to volume-related increases, the increase reflects the expenses of the acquired companies, the addition of Company-operated businesses in Canada, Mexico and Spain, and expenditures to strengthen the Company's infrastructure in the United States and Hong Kong. As a percent of sales, SG&A declined to 24.8% for the year ended December 31, 1994 from 25.7% in 1993. Operating income was $18.0 million in 1994 as compared with $15.0 million in 1993. Operating income was 10.8% of sales in both 1994 and 1993. Interest expense, net, was $0.9 million in 1994 compared to $0.5 million in 1993 due principally to a higher level of outstanding indebtedness related to the current year acquisitions. Income before taxes increased to $17.1 million (10.3% of sales) in 1994 as compared with $14.5 million (10.4% of sales) in 1993. As previously noted, operating income as a percent of sales was identical in both years at 10.8%; however, interest expense, net, was 0.5% of sales in 1994 versus 0.4% in 1993. The increase in pretax profit for the year 1994 compared to the year 1993 is summarized as follows:
(in millions) Sales increase, net of increased SG&A expenses $ 4.3 Decrease in gross margin (1.3) Increased interest expense, net (0.4) ------ Net increase $ 2.6 ======
The effective income tax rate was 32% for the year ended December 31, 1994, compared to 35% in 1993. The lower rate in 1994 is mainly attributable to the increasing percentage of pretax income derived from non-U.S. subsidiaries with tax rates below the 34% statutory rate in the United States. For the reasons discussed above, net income increased 24% to a record $11.6 million (7.0% of sales) in 1994 from $9.4 million (6.7% of sales) in 1993. Income per share was $0.53 in 1994, up from $0.43 in 1993. -17- 18 LIQUIDITY AND CAPITAL RESOURCES: The table below presents summary cash flow information for the years indicated:
(in millions) 1995 1994 1993 ---- ---- ---- Net cash provided by operating activities $ 23.1 $ 16.5 $ 11.7 Net cash used by investing activities (31.0) (28.4) (12.1) Net cash provided by financing activities 8.2 14.5 0.8 ------- ------- ------- Total change in cash (a) $ 0.3 $ 2.6 $ 0.4 ======= ======= =======
(a) Before exchange rate effects. OPERATING ACTIVITIES Cash provided by operating activities continues to be the Company's primary source of funds to finance operating needs and internal growth opportunities. The net cash provided by operating activities increased to $23.1 million in 1995, up $6.6 million or 40% as compared to 1994. Cash provided in 1994 was $16.5 million, an increase of $4.8 million or 41% from $11.7 million in 1993. Depreciation and amortization was $8.1 million in 1995 compared to $6.8 million in 1994. The increase is due mainly to increased capital expenditures and increased amortization of goodwill as a result of 1994 acquisitions. INVESTING ACTIVITIES In 1995, cash provided by operating activities was used to fund capital expenditures of $12.3 million. These expenditures were made to expand the Company's printed label operations, its woven label operation in Italy and its systems business with the completion of a plant in Rock Hill, S.C., as well as for general upgrading and replacement of productive capacity throughout its businesses. Other than projects for employee safety and environmental improvement, all new capital projects are carefully analyzed and are required to make a positive contribution on a net present value basis, generating an attractive internal rate of return on invested capital. Capital expenditures were $11.2 million in 1994. Management anticipates capital expenditures of $15.0 million for 1996. The Company invested $15.0 million on June 29, 1995, for a 49% interest (initially 49.5%) in a new joint venture company which acquired Monarch Marking Systems, Inc. from Pitney Bowes. (See Note 3 of Notes to Consolidated Financial Statements.) On January 22, 1996, the Company through its United Kingdom subsidiary, purchased the outstanding capital stock of Brian Pulfrey Limited. (See Note 2 of Notes to Consolidated -18- 19 Financial Statements.) The Company intends to continue its growth, in part by acquisitions of other complementary or related businesses, and believes that further acquisitions outside the United States would be of important strategic value. FINANCING ACTIVITIES The table below shows the components of total capital for the years indicated:
(in millions) 1995 1994 1993 ---- ---- ---- Long-term debt $ 23.1 $ 13.8 $ 0.7 Shareholders' equity 95.2 77.9 62.5 -------- ------- ------- Total capital $ 118.3 $ 91.7 $ 63.2 ======== ======= ======= Total debt as a percent of total capital 19.5% 15.0% 1.1% ======== ======= =======
Long-term debt increased by $9.3 million during 1995 to $23.1 million from $13.8 million in 1994 in order to finance the Company's investing activities described above. At December 31, 1995, long-term debt as a percent of total capital was 19.5% as compared to 15.0% at December 31, 1994. The Company has a revolving credit agreement allowing it to borrow up to $43.0 million. At December 31, 1995, there was $22.1 million available under the revolving credit agreement. The revolving credit agreement provides for the reduction of the commitment at the rate of $1.25 million per quarter commencing on March 30, 1996. Any remaining balance outstanding will be due March 30, 1999. At December 31, 1995, the Company was in compliance with all provisions of the loan agreement. The Company expects that cash from operations and available credit facilities will continue to be sufficient to meet the future needs of its business. Item 8: Financial Statements and Supplementary Data The financial information required by Item 8 is included elsewhere in this report. (See Part IV, Item 14). Item 9: Changes in and Disagreements with Accountants on Accounting and on Financial Disclosure None. -19- 20 PART III Item 10. Directors and Executive Officers of the Registrant Incorporated herein by reference to the Company's Definitive Proxy Statement with respect to the Company's Annual Meeting of Stockholders scheduled to be held on April 24, 1996. Item 11. Executive Compensation Incorporated herein by reference to the Company's Definitive Proxy Statement with respect to the Company's Annual Meeting of Stockholders scheduled to be held on April 24, 1996. Item 12. Security Ownership of Certain Beneficial Owners and Management Incorporated herein by reference to the Company's Definitive Proxy Statement with respect to the Company's Annual Meeting of Stockholders scheduled to be held on April 24, 1996. Item 13. Certain Relationships and Related Transactions Incorporated herein by reference to the Company's Definitive Proxy Statement with respect to the Company's Annual Meeting of Stockholders scheduled to be held on April 24, 1996. -20- 21 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents 1. Financial Statements - Report of Independent Public Accountants F-1 Consolidated Balance Sheets December 31, 1995 and 1994 F-2 Consolidated Statements of Income Years ended December 31, 1995, 1994 and 1993 F-3 Consolidated Statements of Shareholders' Equity Years ended December 31, 1995, 1994 and 1993 F-4 Consolidated Statements of Cash Flows Years ended December 31, 1995, 1994 and 1993 F-5 Notes to Consolidated Financial Statements F-6 to F-17 2. Financial Statement Schedule - Schedule II - Valuation and Qualifying F-18 Accounts Notes: All other schedules called for under Regulation S-X are not submitted because they are not applicable or not required, or because the required information is included in the financial statements or notes thereto. Separate financial statements of the Registrant have been omitted because the Registrant is primarily an operating company. All subsidiaries included in the consolidated financial statements are totally owned, and none of the subsidiaries have indebtedness which is not guaranteed by the Registrant. 3. Exhibits 3.1 Amended and Restated Certificate of Incorporation. (H) 10.1 Lease, dated October 1, 1974, for executive offices of Registrant in Pearl River, New York. (A) -21- 22 10.2 Employment Agreement, dated as of December 16, 1986, between Registrant and Arthur Hershaft. (C) 10.3 Employment Agreement, dated February 13, 1989, between Registrant and Victor Hershaft. (D) 10.4 Stock Purchase Agreement, by and between Arthur Hershaft and Registrant, dated as of December 19, 1989. (E) 10.5 Registrant's 1981 Incentive Stock Option Plan. (B) 10.6 Registrant's 1990 Employment Stock Option Plan. (F) 10.7 Shareholders Agreement dated November 11, 1974 and amendment thereto, dated March 12, 1992. (G) 10.8 Amended and Restated Stock Purchase Agreement, by and between Arthur Hershaft and the Registrant. (H) 10.9 Multi-Currency Revolving Credit Agreement, dated March 30, 1994 (I) 10.10 Omnibus Purchase and Sale Agreement dated June 6, 1995 by and between Pitney Bowes Inc., Monarch Marking Systems, Inc., Pitney Bowes Marking Systems Ltd., Pitney Bowes International Holdings Inc., Pitney Bowes France S.A. and Monarch Acquisition Corp. (J) 10.11 Stockholders' Agreement dated June 29, 1995 among Monarch Acquisition Corp., Paxar Corporation and Odyssey Partners, L.P. (J) 11.1 Statement re Computation of Per Share Earnings 21.1 List of Subsidiaries of Registrant. -22- 23 23.1 Consent of Independent Public Accountants. 27 Financial Data Schedule (A) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1980. (B) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1985. (C) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1987. (D) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1988. (E) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1989. (F) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990. (G) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1991. (H) Incorporated herein by reference from Exhibits to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992. (I) Incorporated herein by reference from Exhibits to the Registrant's Current Report on Form 8-K dated March 30, 1994. (J) Incorporated herein by reference from Exhibits to Registrant's Current Report on Form 8-K dated June 29, 1995. (b) Reports on Form 8-K None. -23- 24 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders of Paxar Corporation: We have audited the accompanying consolidated balance sheets of Paxar Corporation (a New York corporation) and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Paxar Corporation and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as whole. The schedule listed in the index of financial statements is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Stamford, Connecticut February 14, 1996 F-1 25 PAXAR CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
Dec. 31, 1995 Dec. 31, 1994 ------------- ------------- (in thousands, except share amounts) ASSETS Current assets: Cash $ 3,466 $ 3,136 Short-term investments 3,219 1,365 Receivables, less allowance for doubtful accounts of $585 in 1995 and $506 in 1994 31,321 28,880 Inventories 29,322 27,045 Other current assets 3,082 2,780 Deferred income taxes 527 803 --------- --------- Total current assets 70,937 64,009 --------- --------- Property, plant and equipment, at cost 83,918 73,580 Accumulated depreciation (30,062) (23,533) --------- --------- Net property, plant and equipment 53,856 50,047 --------- --------- Investment in affiliate 15,969 -- Goodwill 15,802 14,010 Other assets 576 637 --------- --------- $ 157,140 $ 128,703 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Due to banks $ 2,991 $ 5,344 Current maturities of long-term debt 529 641 Accounts payable and accrued liabilities 19,143 18,253 Accrued taxes on income 1,595 799 --------- --------- Total current liabilities 24,258 25,037 --------- --------- Long-term debt 23,121 13,796 Deferred income taxes 11,136 10,391 Other liabilities 3,429 1,626 Shareholders' equity: Preferred Stock, $0.01 par value, 5,000,000 shares authorized, none issued and outstanding -- -- Common Stock, $0.10 par value, 30,000,000 shares authorized, 22,207,820 and 17,556,061 shares issued and outstanding in 1995 and 1994, respectively 2,221 1,756 Paid-in capital 36,723 35,432 Retained earnings 57,002 41,742 Foreign currency translation adjustments (750) (1,077) --------- --------- Total shareholders' equity 95,196 77,853 --------- --------- $ 157,140 $ 128,703 ========= =========
See Notes to Consolidated Financial Statements F - 2 26 PAXAR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
1995 1994 1993 ---- ---- ---- (in thousands, except per share amounts) Sales $ 201,436 $ 166,612 $ 138,847 Cost of sales 128,412 107,393 88,225 --------- --------- --------- Gross profit 73,024 59,219 50,622 Selling, general and administrative expenses 49,887 41,238 35,672 --------- --------- --------- Operating income 23,137 17,981 14,950 Equity in net income of affiliate 592 -- -- Interest expense, net (1,628) (921) (490) --------- --------- --------- Income before taxes 22,101 17,060 14,460 Taxes on income 6,392 5,459 5,102 --------- --------- --------- Net income $ 15,709 $ 11,601 $ 9,358 ========= ========= ========= Weighted average shares outstanding 22,422 21,938 21,779 ========= ========= ========= Earnings per share $ 0.70 $ 0.53 $ 0.43 ========= ========= =========
See Notes to Consolidated Financial Statements F - 3 27 PAXAR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Years Ended December 31, 1995, 1994 and 1993 (in thousands, except share amounts)
Foreign Currency Common Stock Paid-in Retained Translation Shares Amount Capital Earnings Adjustments ------ ------ ------- -------- ----------- Balance, December 31, 1992 10,954,479 $ 1,095 $ 31,286 $ 21,419 $ (999) Net income -- -- -- 9,358 -- Stock split 2,744,937 275 -- (284) -- Tax benefit from exercise of stock options -- -- 485 -- -- Exercise of stock options 54,907 5 174 -- -- Translation adjustments -- -- -- -- (357) ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1993 13,754,323 $ 1,375 $ 31,945 $ 30,493 $ (1,356) Net income -- -- -- 11,601 -- Stock split 3,473,958 347 -- (352) -- Tax benefit from exercise of stock options -- -- 207 -- -- Stock issued - acquisitions 225,000 23 2,737 -- -- Exercise of stock options 77,320 8 249 -- -- Employee stock purchase plan 25,460 3 294 -- -- Translation adjustments -- -- -- -- 279 ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1994 17,556,061 $ 1,756 $ 35,432 $ 41,742 $ (1,077) Net income -- -- -- 15,709 -- Stock split 4,427,860 443 -- (449) -- Tax benefit from exercise of stock options -- -- 53 -- -- Exercise of stock options 173,147 17 536 -- -- Employee stock purchase plan 50,752 5 702 -- -- Translation adjustments -- -- -- -- 327 ---------- ---------- ---------- ---------- ---------- Balance, December 31, 1995 22,207,820 $ 2,221 $ 36,723 $ 57,002 $ (750) ========== ========== ========== ========== ==========
See Notes to Consolidated Financial Statements F - 4 28 PAXAR CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 ------------- ------------- ------------- (in thousands) OPERATING ACTIVITIES: Net income $ 15,709 $ 11,601 $ 9,358 Depreciation and amortization 8,138 6,781 4,810 Deferred income taxes 1,021 2,398 1,124 Equity in net income of affiliate (592) -- -- Changes in assets and liabilities, net of businesses acquired in 1994: Receivables (2,441) (1,811) (4,112) Inventories (2,277) (2,511) (688) Other current assets (302) (51) (407) Accounts payable and accrued liabilities 1,197 (268) 3,036 Taxes on income 796 (547) (1,450) Other liabilities 1,803 851 -- -------- -------- -------- 7,343 4,842 2,313 -------- -------- -------- Net cash provided by operating activities 23,052 16,443 11,671 -------- -------- -------- INVESTING ACTIVITIES: Purchases of short-term investments, net (1,854) (1,365) -- Purchases of property, plant and equipment (12,328) (11,218) (11,937) Investment in affiliate (15,377) -- -- Acquisitions, excluding $2,760 of stock issued in 1994, net of cash acquired (2,226) (15,957) -- Other 876 129 (141) -------- -------- -------- Net cash used in investing activities (30,909) (28,411) (12,078) -------- -------- -------- FINANCING ACTIVITIES: Increase (decrease) of short-term debt (2,465) 2,853 1,549 Additions of long-term debt 21,603 22,163 9,550 Reductions of long-term debt (12,278) (11,271) (10,939) Exercise of stock options/stock purchase plan 1,313 761 664 Cash paid in lieu of fractional shares (6) (5) (9) -------- -------- -------- Net cash provided by financing activities 8,167 14,501 815 -------- -------- -------- OTHER ACTIVITIES: Effect of exchange rate on cash 20 (134) (1) -------- -------- -------- Increase in cash 330 2,399 407 Cash, at beginning of year 3,136 737 330 -------- -------- -------- Cash, at end of year $ 3,466 $ 3,136 $ 737 ======== ======== ========
See Notes to Consolidated Financial Statements F - 5 29 NOTES TO CONSOLIDATED FINANCIAL STATEMENT Dollars in thousands, except share data. NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation: The consolidated financial statements include those of Paxar Corporation (the "Company") and its wholly-owned subsidiaries. The effects of all significant intercompany transactions have been eliminated. Short-term investments: Short-term investments consist of foreign lending institution and government bonds pledged as collateral against foreign debt, as well as certain other foreign financial institution commercial paper. Inventories: Inventories are stated at the lower of cost or market. The cost of all U.S. inventory is determined using the last-in, first-out (LIFO) method. The cost of all foreign inventories of $9,049 and $7,578 as of December 31, 1995 and 1994, respectively, is determined using the first-in, first-out (FIFO) method. Property, plant and equipment: Property, plant and equipment is stated at cost, and is depreciated by the straight-line method over the estimated useful lives of the assets. Upon retirement or other disposition, the cost and accumulated depreciation are removed from the asset and accumulated depreciation accounts, and the net gain or loss is reflected in income. Beginning with 1993 additions, the Company adopted the composite method of depreciation, and accordingly, the cost of property retired or disposed, reduced by net salvage proceeds, will be charged against accumulated depreciation and no gain or loss will be recognized. Expenditures for maintenance and repairs are charged against income as incurred. Significant expenditures for betterments and renewals are capitalized. Income taxes: Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The Company had previously been accounting for income taxes under SFAS No. 96. There was no material effect on the Company's financial position or results of operations as a result of the adoption of this new accounting principle. Deferred income taxes result from temporary differences between the time certain items of income and expense are recognized for financial reporting purposes and when the items are reported for income tax purposes. The classification of deferred tax assets and liabilities corresponds with the classification of the underlying assets and liabilities giving rise to the temporary difference. Revenue recognition: Revenue is recognized when title passes to the customer, generally upon shipment. F - 6 30 Earnings per share: Primary earnings per share is based on the weighted average number of shares of common stock and common stock equivalents outstanding during each year. Earnings per share for 1995, 1994 and 1993 includes the dilutive effect (320,000, 248,000 and 349,000 shares, respectively) of outstanding stock options. Primary and fully diluted earnings per share are the same. Earnings per share for 1994 and 1993 have been adjusted to reflect additional shares issued in connection with the stock dividends declared in 1995 (Note 10). Financial instruments: All financial instruments of the Company are carried at cost, which approximates fair value, with the exception of interest rate swaps. During 1995, the Company entered into two notional value interest rate swap transactions to manage its exposure to interest rate fluctuations. At December 31, 1995, the Company has interest rate swaps with a notional amount of $19.5 million, which it uses to convert variable rates based on 1-month and 3-month London Interbank Offered Rates to a weighted average fixed interest rate of 6.6% on certain of its revolving bank debt. The weighted average remaining duration of the swaps is approximately two years. Net receipts or payments under the agreements are recognized as an adjustment to interest expense. Fair value estimates of interest rate swaps are based on the difference in the present value of variable rate future receipts and fixed rate future payments. At December 31, 1995, the net fair value of the Company's interest rate swaps was a loss of approximately $372. Goodwill: Goodwill represents the excess of the cost of acquired companies over the sum of identifiable net assets. Goodwill is being amortized on a straight-line basis over periods up to forty years. Subsequent to acquiring goodwill, the Company continually evaluates whether events and circumstances, including anticipated future operating results, indicate the remaining estimated useful life of goodwill may warrant revision. Based upon its most recent analysis, the Company believes that no material impairment of goodwill exists at December 31, 1995. Amortization charged to operations amounted to $574, $377 and $136 for 1995, 1994 and 1993 respectively. Foreign currency translation: Assets and liabilities of the Company's foreign subsidiaries are translated into U.S. dollars using the exchange rate in effect at the balance sheet date. Results of operations are translated using the average exchange rate prevailing throughout the period. The effects of exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are included in shareholders' equity as foreign currency translation adjustments. Gains and losses resulting from foreign currency transactions are included in net income and were not significant in the past three years. F - 7 31 Use of Estimates: The preparation of these consolidated financial statements required the use of certain estimates and assumptions by management in determining the Company's assets, liabilities, revenues and expenses. Actual results could differ from those estimates. Reclassifications: Certain reclassifications have been made to prior year amounts to conform to the current year presentation. Newly Issued Accounting Standards: In March 1995, Statement of Financial Accounting Standards (SFAS) No.121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", was issued. The Company plans to adopt SFAS No. 121 in 1996, and believes that this accounting standard will not have a material impact on the Company's financial position and its results of operations. In October 1995, Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation" was issued. The Company plans to adopt SFAS No. 123 in 1996. The Company currently does not plan to change its method of accounting for stock-based compensation, however, SFAS No. 123 will require additional footnote disclosures relating to the effect of using a fair value-based method of accounting for stock-based compensation. NOTE 2: BUSINESS ACQUISITIONS On May 2, 1994, the Company acquired, through its wholly-owned subsidiaries, ownership of Collitex, S.r.l. and its affiliates (the Collitex Group), an Italian company. The total purchase price, net of cash acquired, was approximately $12.6 million, which included issuance of 156,250 shares of the Company's common stock valued at $8.96 per share (share amounts adjusted for subsequent stock split) and $619 due in April 1997. In addition, up to $1.5 million of additional consideration may be paid in April 1997, if the average earnings of the Collitex Group in the 1994-96 period exceeds a stipulated base level. The Company believes such payments are assured based on the earnings of Collitex through 1995 and, accordingly, has accrued the additional purchase price of $1.5 million as of December 31, 1995. This resulted in an increase to goodwill and other long-term liabilities. On October 10, 1994, the Company acquired, through its wholly-owned subsidiaries, Orvafin S.r.l. and its affiliates (Orvac), an Italian company. The total purchase price, net of cash acquired, was $6.1 million, which included issuance of 156,250 shares of the Company's common stock, valued at $8.70 per share (share amounts adjusted for subsequent stock split) and $761 which was paid in October 1995. These acquisitions are being accounted for as purchases with assets acquired and liabilities assumed recorded at their estimated fair values at the date of acquisition. The excess of the purchase price and transaction costs over the fair value of net assets acquired is recorded as goodwill. F - 8 32 The operating results of the Collitex Group and Orvac are included in the accompanying consolidated statements of income beginning May 2, 1994 and October 10, 1994, respectively. The following unaudited proforma results of operations assumes the acquisitions occurred at the beginning of 1993. These proforma results do not purport to be indicative of the results of operations which may result in the future.
Years Ended December 31 (Unaudited) 1994 1993 ---- ---- Sales $175,643 $155,346 Net income $ 12,753 $ 10,700 Earnings per share $ 0.58 $ 0.49
In January 1996, the Company, through its United Kingdom subsidiary, purchased the outstanding capital stock of Brian Pulfrey Limited (Pulfrey). The purchase price was approximately $4.3 million and is subject to adjustment for changes in shareholders' equity, as defined. Pulfrey manufactures printed labels and tags principally for U.K. apparel and retail companies. The Pulfrey acquisition is not expected to have a material effect on the Company's financial statements. NOTE 3: INVESTMENT IN AFFILIATE On June 29, 1995, the Company invested $15.0 million in a new joint venture company, which simultaneously acquired Monarch Marking Systems, Inc. and related companies (Monarch). Monarch manufactures and markets marking equipment and supplies in the U.S., United Kingdom, Germany, France, Mexico, Canada, Hong Kong and Australia, and sells and distributes marking equipment and supplies in 75 other countries around the world. The Company's investment, which represents a 49% interest (initially 49.5%) is being accounted for using the equity method. As of December 31, 1995, the Company's investment in Monarch represents the initial investment, together with related costs and expenses, plus the Company's equity in Monarch's net income for the period June 29, 1995 to December 31, 1995. The following unaudited proforma results of operations assume the investment and acquisition occurred at the beginning of 1994, and include the proforma results of the Collitex and Orvac acquisitions discussed in Note 2 above. The Monarch purchase price allocation is not complete, and adjustments, which are not expected to be material to the Company's share of Monarch's net income, may be necessary. In the 1995 period, Monarch's results include $6.1 million of non-recurring charges for adjustments to operating items and accordingly, the proforma results shown below reflect the Company's share of these charges. These proforma results do not purport to be indicative of the results of operations which may result in the future. F - 9 33
Years Ended December 31, (Unaudited) 1995 1994 ---- ---- Sales $201,436 $175,643 -------- -------- Net income $ 14,537 $ 14,771 -------- -------- Earnings per share $ 0.65 $ 0.67 -------- --------
Following is condensed financial information for Monarch as of December 31, 1995 and for the period from the June 29, 1995 acquisition date through December 31, 1995.
Income Statement Data: Net revenues $128,123 -------- Gross profit $ 49,115 -------- Net income $ 1,209 -------- Balance Sheet Data: Current assets $107,203 Non-current assets 86,642 -------- $193,845 ======== Current liabilities $ 57,877 Long-term debt 100,000 Other long-term liabilities 6,014 Shareholders' equity 29,954 -------- $193,845 ========
Monarch's ability to pay dividends is restricted under the terms of its revolving bank credit agreement. NOTE 4: INVENTORIES The components of inventories are set forth below:
Dec. 31, 1995 Dec. 31, 1994 ------------- ------------- Raw materials $16,603 $13,484 Work-in-Process 2,850 3,267 Finished goods 9,869 10,294 ------- ------- $29,322 $27,045 ======= =======
If all inventories were reported on a FIFO basis, inventories would be approximately $1,070 and $648 higher at December 31, 1995 and 1994, respectively. F - 10 34 NOTE 5: PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment is set forth below:
Dec. 31, 1995 Dec. 31, 1994 ------------- ------------- Machinery and equipment $ 65,328 $ 58,408 Buildings and building improvements 17,148 14,023 Land 1,442 1,149 -------- -------- 83,918 73,580 Accumulated depreciation (30,062) (23,533) -------- -------- $ 53,856 $ 50,047 ======== ========
Estimated useful lives are principally: Buildings and building improvements 10 to 40 years Machinery and equipment 10 years NOTE 6: DUE TO BANKS A summary of amounts due to banks is set forth below:
Dec. 31, 1995 Dec. 31, 1994 ------------- ------------- Unsecured bank line of credit (a) $ -- $1,000 Bank overdraft 1,623 1,035 Foreign bank loan (b) 1,355 2,860 Other foreign 13 449 ------ ------ $2,991 $5,344 ====== ======
(a) In June 1994, the Company entered into an unsecured line of credit with a bank which provides for a maximum of $5.0 million of borrowings. The Company has the option of electing the lending bank prime rate (8.5% at December 31, 1995 and 1994) or the London Interbank Offering Rate plus .65% - 1.15% depending on the fixed charge coverage ratio of the Company at the date of the borrowings, as defined by the credit agreement (6.8% at December 31, 1994). The bank requires the Company to remain in compliance with the provisions of the unsecured revolving bank facility described in Note 7 below. The average outstanding debt for the years ended 1995 and 1994 was $573 and $940, respectively, with average interest rates of 7.2% and 6.0%, respectively. (b) The foreign bank loan represents a borrowing incurred in October 1994 to finance a portion of the acquisition of Orvac. The loan bears interest at the lending bank prime rate (11.75% and 9.5% at December 31, 1995 and 1994, respectively). The average outstanding debt for the years ended 1995 and 1994 was $1.7 million and $1.9 million, respectively, with average interest rates of 11.9% and 9.5%, respectively. F - 11 35 NOTE 7: LONG-TERM DEBT A summary of long-term debt is set forth below:
Dec. 31, 1995 Dec. 31, 1994 ------------- ------------- Unsecured revolving bank facility (a) $20,900 $11,100 Secured and unsecured loans on foreign property, plant and machinery (b) 2,309 2,795 Other 441 542 ------- ------- 23,650 14,437 Less current maturities 529 641 ------- ------- $23,121 $13,796 ======= =======
Maturities of long-term debt for the five years subsequent to December 31, 1995 are: $529, $589, $647, $21,313, $168 and $403 thereafter. (a) The unsecured revolving bank facility provides for a maximum of $43.0 million (up to $30.0 million to finance acquisitions) of borrowings and expires in 1999. On borrowings under this revolver, the Company has the option of electing the lending bank prime rate (8.5% at December 31, 1995 and 1994) or the London Interbank Offering Rate plus .75% - 1.25% (6.4% and 6.9% at December 31, 1995 and 1994, respectively), depending on the fixed charge coverage ratio of the Company at the date of the borrowings, as defined by the credit agreement. At December 31, 1995 and 1994, there was $22.1 million and $31.9 million available under this facility. The credit agreement provides for the reduction of the commitment at the rate of $1.25 million per quarter commencing in March, 1996. There is a commitment fee of .25% - .375% on the average unused portion. The agreement requires the Company, among other things, to maintain working capital of no less than $31.0 million and tangible net worth (as defined) of no less than $70.0 million from December 31, 1995 through December 30, 1996; a current ratio of no less than 2.0 to 1; and a ratio of total liabilities to net worth of no greater than 1 to 1. The Company is in compliance with all covenants as of December 31, 1995 and believes that the covenants will not restrict its future operations. (b) The balances outstanding at December 31, 1995 and 1994 are payable by the Collitex Group, bear interest at rates ranging from 4.75% - 13.5%, mature serially through 2003 and are secured by property, plant, machinery and lending institution bonds. F - 12 36 NOTE 8: INCOME TAXES The provision for income taxes consists of the following:
Years Ended December 31 1995 1994 1993 ---- ---- ---- Federal Current $ 3,042 $ 2,480 $ 2,584 Deferred 974 1,165 903 Foreign Current 1,850 831 933 Deferred (117) 214 (25) State 643 769 707 ------- ------- ------- $ 6,392 $ 5,459 $ 5,102 ======= ======= =======
The cumulative amounts of each temporary difference that comprise the net deferred tax liability are as follows:
Years Ended December 31 1995 1994 1993 Depreciation and other property basis differences $ 11,042 $ 10,391 $ 4,689 Costs capitalized to inventory for income tax purposes (424) (470) (483) Accrued liabilities and allowances not currently deductible (56) (333) (390) Other 47 -- -- -------- -------- -------- $ 10,609 $ 9,588 $ 3,816 ======== ======== ========
An analysis of the differences between the federal statutory income tax rate and the effective tax rate is set forth below:
Years Ended December 31 1995 1994 1993 ---- ---- ---- Federal statutory tax rate 35.0% 34.0% 34.0% State income tax, net of federal income tax benefit 1.9 2.9 3.2 Foreign taxes less than Federal rate (10.5) (6.5) (4.2) All other, net 2.5 1.6 2.3 ----- ---- ---- 28.9% 32.0% 35.3% ===== ==== ====
Collitex and Orvac currently benefit from tax incentives in Italy which significantly reduce the companies' effective tax rate. These incentives expire from 1996 through 1999. F - 13 37 United States income taxes have not been provided on undistributed foreign earnings of $27.2 million since the Company intends to permanently reinvest such earnings in expanding foreign operations. The unrecognized U.S. tax liability on the undistributed earnings is approximately $4.1 million at December 31, 1995. Total foreign based pre-tax income was approximately $11.5 million, $6.3 million and $4.4 million for 1995, 1994 and 1993, respectively. NOTE 9: COMMITMENTS AND CONTINGENT LIABILITIES A manufacturing facility in Sayre, Pennsylvania, owned beneficially by the principal shareholders of the Company, is leased at an annual rental of $108 through 1996. An office building in Pearl River, New York, also owned beneficially by the principal shareholders, was leased at an annual rental of $100 through 1995. Total rental expense for all operating leases amounts to $2,373 in 1995, $1,934 in 1994 and $1,700 in 1993. Minimum rental commitments for all noncancelable operating leases for the years 1996-2000 are: $2,274, $1,639, $1,326, $1,225 and $1,157, respectively. The minimum total rental commitment for all years subsequent to 2000 is $4,120. The Company accrues severance expense for employees of its Italian subsidiaries, as required by Italian statute, and these amounts are included in other liabilities in the accompanying financial statements. The Company has been named a potentially responsible party related to contamination which occurred at certain superfund sites. Management believes the ultimate outcome of settling these contingencies is not likely to exceed $100. In the ordinary course of business, the Company and its subsidiaries are involved in certain disputes and litigation, none of which will in the opinion of management, have a material adverse effect on the Company's financial position or results of operations. NOTE 10: SHARES OUTSTANDING AND SHAREHOLDERS' EQUITY On April 24, 1990, the Company's shareholders approved the 1990 Employee Stock Option Plan under which 1,997,660 shares of common stock, as adjusted for subsequent stock dividends, are reserved for issuance upon the exercise of options to be granted to key employees and directors. The plan provides for such issuances in the form of qualified or non-qualified stock options, and stock appreciation rights may be granted in tandem with non-qualified stock options. The option price per share of qualified stock options cannot be less than 100% of the market value at the date of grant. The option price per share of non-qualified stock options and stock appreciation rights are determined by the Board of Directors at its sole discretion. F - 14 38 The following is a summary of outstanding stock options:
Number of Shares(a) Option Price(a) ------------------- --------------- 1993 - ---- Granted 168,355 $ 8.96 - 9.86 Exercised 54,907 2.66 - 6.32 Canceled 7,813 6.31 - 16.27 Outstanding and exercisable, end of year 653,776 1.38 - 10.30 1994 - ---- Granted 93,750 $ 8.80 Exercised 77,320 2.35 - 5.01 Canceled 8,986 11.20 - 13.87 Outstanding and exercisable, end of year 661,220 1.38 - 10.30 1995 - ---- Granted 275,125 $ 8.00 - 12.10 Exercised 173,147 1.51 - 11.20 Canceled 1,911 1.50 Outstanding and exercisable, end of year 761,287 1.38 - 12.10
(a) Adjusted for subsequent stock splits. On August 9, 1995, August 15, 1994 and August 10, 1993, the Board of Directors declared 25% stock splits, effected in the form of stock dividends. All per share information presented in the accompanying financial statements has been adjusted to reflect these stock dividends. NOTE 11: EMPLOYEE SAVINGS PLAN The Company maintains a voluntary employee savings plan adopted pursuant to Section 401(k) of the Internal Revenue Code. Pursuant to the Plan, the Company, at its option, contributes 40% of employee savings up to 4% of salary. The Company's contribution under the Plan was $339, $320 and $274 during 1995, 1994 and 1993, respectively. The Company does not provide post-retirement or post-employment benefits. NOTE 12: BUSINESS SEGMENTS The Company operates as a one-segment business, engaged in the design, development, manufacture and distribution of label systems, bar code systems, labels, tags and related supplies and services for apparel manufacturers, retailers and other soft goods industries. The Company's manufacturing facilities are located in North America (principally the U.S.), Europe (principally Germany, Italy and the United Kingdom) and Asia (principally Hong Kong). Included in the Company's consolidated balance sheet at December 31, 1995 are the net assets of the Company's European and Asian operations of approximately $29.6 million and $11.8 million, respectively. F - 15 39 The following presents financial information for domestic, foreign and export operations:
Years Ended December 31 1995 1994 1993 ---- ---- ---- Sales to unaffiliated customers: United States - Domestic $ 130,371 $ 117,647 $ 103,572 - - Export 8,359 9,347 7,709 Europe 42,653 26,685 17,038 Asia 20,053 12,933 10,528 --------- --------- --------- Total $ 201,436 $ 166,612 $ 138,847 ========= ========= ========= Operating income: United States - Domestic $ 18,012 $ 15,364 $ 13,988 - - Export 2,347 2,570 2,141 Europe 6,912 3,372 1,621 Asia 4,993 3,126 3,071 --------- --------- --------- 32,264 24,432 20,821 Corporate expenses (9,127) (6,451) (5,871) --------- --------- --------- Total $ 23,137 $ 17,981 $ 14,950 ========= ========= ========= Assets employed: United States $ 96,054 $ 75,803 $ 70,536 Europe 47,591 43,807 8,775 Asia 13,495 9,093 6,182 --------- --------- --------- Total $ 157,140 $ 128,703 $ 85,493 ========= ========= =========
United States assets employed are used to manufacture products sold to domestic U.S. customers, export customers and, in certain situations, to non-U.S. intercompany customers. During 1995, 1994 and 1993, one customer represented 12%, 11% and 12%, respectively, of the Company's total sales. NOTE 13: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES A summary of accounts payable and accrued liabilities is set forth below:
Dec. 31, 1995 Dec. 31, 1994 ------------- ------------- Accounts payable $ 9,984 $ 9,551 Accrued payroll costs 4,729 3,838 Other accrued liabilities 4,430 4,864 ------- ------- $19,143 $18,253 ======= =======
F - 16 40 NOTE 14: SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest and income taxes is set forth below:
Years Ended December 31 1995 1994 1993 Interest $1,507 $ 690 $ 129 Income taxes 4,600 2,444 4,002
Cash paid and stock issued for business acquisitions and the fair value of assets acquired and liabilities assumed is set forth below:
Dec. 31, 1994 ------------- Fair value of assets acquired, including goodwill of $13,627 in 1994 $ 30,835 Liabilities assumed (12,118) -------- Purchase price 18,717 Stock issued for acquisition (2,760) -------- Cash paid, net of cash acquired $ 15,957 ========
At December 31, 1995, the goodwill relating to assets acquired in 1994 was increased by an additional $2.2 million. This increase represents contingent payments (including any additional costs associated with these transactions) required under the purchase agreements (Note 2). NOTE 15. CONDENSED QUARTERLY FINANCIAL DATA (Unaudited)
(in thousands, except per share) First Quarter Second Quarter Third Quarter Fourth Quarter ------------- -------------- ------------- -------------- 1995 Sales $50,524 $52,899 $49,307 $48,706 Gross Profit 18,492 19,362 17,974 17,196 Operating income 6,114 6,736 5,549 4,738 Net income 3,941 4,408 3,631 3,729 ------- ------- ------- ------- Earnings per share $ 0.17 $ 0.20 $ 0.16 $ 0.17 ======= ======= ======= ======= 1994 Sales $35,982 $42,462 $41,006 $47,162 Gross profit 12,584 15,722 14,126 16,787 Operating income 3,398 5,523 4,157 4,903 Net income 2,178 3,410 2,739 3,274 ------- ------- ------- ------- Earnings per share $ 0.10 $ 0.15 $ 0.13 $ 0.15 ======= ======= ======= =======
Earnings per share have been adjusted to reflect stock dividends. F - 17 41 PAXAR CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 1995, 1994 and 1993 (in thousands)
Additions Charged Balance at (credited) to Beginning Costs and Balance at Description of Year Expenses Other Charges Deductions End of Year ----------- ---------- ------------- ------------- ---------- ----------- Year ended December 31, 1995 Allowance for doubtful accounts $ 506 $ 252 $ -- $173 (2) $ 585 Year ended December 31, 1994 Allowance for doubtful accounts $ 411 $ (24) $476 (1) $357 (2) $ 506 Year ended December 31, 1993 Allowance for doubtful accounts $ 372 $ 332 $ -- $293 (2) $ 411
(1) Allowance established related to acquisitions. (2) Write-off of uncollectible accounts, net of recoveries and other. F - 18 42 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PAXAR CORPORATION By:/s/ Arthur Hershaft --------------------------- Arthur Hershaft, Chairman of the Board of Directors, and Chief Executive Officer Dated: March 27, 1996 24 43 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. By: /s/ Arthur Hershaft By: /s/ Jack Plaxe ----------------------------- --------------------------- Arthur Hershaft, Chairman Jack Plaxe, Chief Financial of the Board of Directors, Officer and Secretary and Chief Executive Officer (Principal Financial and (Principal Executive Officer) Accounting Officer) Dated: March 27, 1996 Dated: March 27, 1996 By: /s/ Victor Hershaft By: /s/ Leo Benatar ----------------------------- --------------------------- Victor Hershaft, Leo Benatar, Director President, Chief Operating Officer and Director Dated: March 27, 1996 Dated: March 27, 1996 By: /s/ Jack Becker By: /s/ Robert Laidlaw ----------------------------- --------------------------- Jack Becker, Director Robert Laidlaw, Director Dated: March 27, 1996 Dated: March 27, 1996 By: /s/ Robert T. Puopolo By: /s/ Sidney Merians ----------------------------- --------------------------- Robert T. Puopolo, Sidney Merians, Director Director Dated: March 27, 1996 Dated: March 27, 1996 By: /s/ David E. McKinney By: /s/ Walter W. Williams ----------------------------- --------------------------- David E. McKinney, Walter W. Williams, Director Director Dated: March 27, 1996 Dated: March 27, 1996 By: /s/ Thomas R. Loemker ----------------------------- Thomas R. Loemker, Director Dated: March 27, 1996 25 44 EXHIBIT INDEX Exhibit No. Description - ---------- ---------------------------------------------- EX-11.1 Statement re Computation of Per Share Earnings EX-21.1 List of Subsidiaries of Registrant EX-23.1 Consent of Independent Public Accountants EX-27 Financial Data Schedule EX-11.1 2 STATEMENT RE COMPUTATION OF EARNINGS 1 Exhibit 11.1 PAXAR CORPORATION STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share amounts) 1995 1994 1993 ---- ---- ---- Net income $15,709 $11,601 $ 9,358 ======= ======= ======= Earnings per share $ 0.70 $ 0.53 $ 0.43 ======= ======= ======= Earnings per share assuming full dilution $ 0.70 $ 0.53 $ 0.43 ======= ======= ======= Weighted average number of common shares outstanding 22,102 21,690 21,430 Common stock equivalents: Add: Net shares assumed to be issued for dilutive stock options 320 248 349 ------- ------- ------- Total weighted average common and common equivalent shares outstanding 22,422 21,938 21,779 ======= ======= ======= Weighted average number of common shares outstanding 22,102 21,690 21,430 Common stock equivalents, assuming full dilution: Add: Net shares assumed to be issued for dilutive stock options 363 248 369 ------- ------- ------- Total weighted average number of shares outstanding assuming full dilution 22,465 21,938 21,799 ======= ======= =======
2 EXHIBIT 21.1 PAXAR CORPORATION SUBSIDIARIES Company Jurisdiction of Organization - ------- ---------------------------- North Middletown Road Netherlands Holdings, B.V. Packaging Systems International, U.S. Virgin Islands Incorporated North America: - ------------- Paxar Capital Corporation New York Woven Label Holdings, Inc. New York Systems Holdings, Inc. New York Paxar Latin America, S.A. de C.V. Mexico Europe: - ------ Paxar Europe Limited England Collitex S.r.l. Italy Tessitura Italiana Etichette S.r.l. Italy Astria S.r.l. Italy Orvac S.r.l. Italy Orvac Sud S.r.l. Italy Paxar Italia S.r.l. Italy Paxar Deutschland, GmbH Germany Paxar Polska Sp.zo.o. Poland Paxar Iberia S.A. Spain Paxar Benelux BVBA Belgium Brian Pulfrey, Ltd. England Asia: - ---- Paxar Far East Ltd. Hong Kong Paxar (Singapore) Pte Ltd. Singapore EX-21.1 3 LIST OF SUBSIDIARIES 1 EXHIBIT 21.1 PAXAR CORPORATION SUBSIDIARIES Company Jurisdiction of Organization - ------- ---------------------------- North Middletown Road Netherlands Holdings, B.V. Packaging Systems International, U.S. Virgin Islands Incorporated North America: - ------------- Paxar Capital Corporation New York Woven Label Holdings, Inc. New York Systems Holdings, Inc. New York Paxar Latin America, S.A. de C.V. Mexico Europe: - ------ Paxar Europe Limited England Collitex S.r.l. Italy Tessitura Italiana Etichette S.r.l. Italy Astria S.r.l. Italy Orvac S.r.l. Italy Orvac Sud S.r.l. Italy Paxar Italia S.r.l. Italy Paxar Deutschland, GmbH Germany Paxar Polska Sp.zo.o. Poland Paxar Iberia S.A. Spain Paxar Benelux BVBA Belgium Brian Pulfrey, Ltd. England Asia: - ---- Paxar Far East Ltd. Hong Kong Paxar (Singapore) Pte Ltd. Singapore EX-23.1 4 CONSENT 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report, dated February 14, 1996, on the consolidated financial statements and schedule of Paxar Corporation included in this Form 10-K, into the Company's previously filed registration statements. ARTHUR ANDERSEN LLP Stamford, Connecticut March 27, 1996 EX-27 5 FINANCIAL DATA SCHEDULE
5 0000075681 PAXAR CORPORATION 12-MOS DEC-31-1995 DEC-31-1995 3,466 0 31,321 0 29,322 70,937 83,918 30,062 157,140 24,258 0 0 0 2,221 92,975 157,140 201,436 201,436 128,412 128,412 0 0 1,628 22,101 6,392 15,709 0 0 0 15,709 .70 0
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