Document ByZ8R2jEEy9RBjDgz2x85rMa4

a FAW 03053 FAW1 C 1C CORPORATION AND SUBSIDIARIES SUMMARY OF FINANCIAL OPERATIONS Net sales................................... Net income............................... Per share common stock . . Dividends declared Fawick Corporation .... 1964-- 52^ff per share. 1963--42^ per share Fawick Flexi-Grip Company, paid prior to merger . . . Expenditures for property, plant and equipment............... Provision for depreciation Year Ended December 31. 1964 1963 $11,430,365 $10,194,893 $ 1,166,602 95j $ 1,082,414 84 $ 609,258 408,428 3tbOQ $; ^M6J58;: . 90,000 498,428 4 1,155,749 f ^294116 ? 683,404 $ 252,058 Norn: Financial results for 1964;,andY963 are lor. the combined operations of Fawick Corporation and Fawick Flexi-drip Conipanypwhich was merged with Fawick as a division on May 31, 19,64-. `Y ' v- * t ^ ^ O O * * * * * tt * 'V DIRECTORS: ' ThoM'AS-X,. Fawick, Cleveland, Ohio Harry F. Burmbster, Cleveland, Ohio JoHN Y. Bakin, Cleveland, Ohio William Guier, Tulsa, Oklahoma Jambs A. Karns, Akron, Ohio William E. Rutz, Fond du Lae, Wisconsin Charles W. Steadman, Cleveland, Ohio Fred M. Young, Racine, Wisconsin OFFICERS Thomas L. Fawick, Chairman of the Board and President John V. Bakin, Executive Vice President James A. Karns, Vice President Carl Da.utel, Vice President and Treasurer Edward C. Crouch, Assistant Secretary CORPORATE COUNSEL Marshman, Hornbeck, Hollington, Steadman and McLaughlin, Cleveland, Ohio ACCOUNTANTS Lybrand, Eoss Bros. & Montgomery Cleveland, Ohio TRANSFER AGENTS Chemical Bank New York Trust Company, New York> New York Union Commerce Bank, Cleveland, Ohio EXCHANGES Shares of Fawick Corporation are listed for trading upon the New York Stock Exchange ' Pacific Coast Stock Exchange FAW H Sales and earnings of your company once again reached new high ]evels;-m-i:964. We made excellent progress toward improving and expanding our.plant facilities, "broadening our operations in foreign countries, developing new producbs'apd achieving deeper pene tration of domestic markets for industrial clutches, brakes`ahdrhy.draulic; products of our Airfiex and Hydraulic Divisions, and for the sporting ..gdods and. hapd tool grips of our Plexi-Grip Division. *^ Consolidated net income for the year ended 'Deeemhe-r.%1, 1964 amounted to $1,166,602. This was equivalent to 95 cents a share- op..oruj papital stock and compares with $1,032,414 or 84 cents a share in 1963. l^t'saiesjncreased 12% to $11,430,365 from $10,194,893 in the preceding year. 1" ` i, Financial results for both 1964 and 1963'dre for the combined operations of Fawick Corporation and Fawick Flexi-Grip Company of"'Akron, Ohio, which was merged with Fawick as a division on May 31,1964.. ' In the course of our progress'in expanding and improving operations, we spent $1,156,000 on plant expansions:and,equipment improvements during 1964. These expendi tures were financed out of the company's-resources, except that $84,000 was contributed by minority interests in a .subsidiary:.^ Capital expenditures for 1965 will be substantially less than those of 1964,,.,. " f The plant and eqiiLpnient additions for last year resulted in a modest decrease in our working capital. This^noweVer, remains more than adequate for our requirements. In addition, we have-afilnvestment in the common stock of a listed company with a present market value ^of approximately $900,000. We are currently receiving a good return on this investment, ' - *. Comme^urate. with, the steady improvement in earnings, Fawick Directors recently increased:t:he dividend for the second time in a year to a current quarterly rate of 15 cents a share.'It is significant that this new rate is 50% greater than the 10 cent quarterly rate declared duririgmost of 1963. ./'% The''"CurTdnt`year has started on a strong note. The order backlog for clutches, brakes and hydraulic products amounted to $1,950,000 on January 1, 1965, a new high for the Corporation. Sales for the first two months of 1965 showed a sizeable gain over the same period-last year. Barring any sharp changes in the country's economy, we expect that sales- and profits for 1965 will show substantial increases over 1964. Respectfully yours. March 23, 1965 Chairman of the Board and President 3 FAW 03055 FAWICK CORPORATION AND SUBSIDIARIES A STORY OF GROWTH . .TVW' ; yT V 'i; i. .^vTV '%. '5 iv ' ' S ; ' - ,.r ^ V' Fawick CORPORATION was founded in 1938 by a man with an idea for a radically new clutch. It employed a tire-like rubber tube with friction shoes and attached to a steel rim. When the tube was inflated with - compressed air, it engaged the clutch. This was the Airflex clutch, ^ invented by Thomas L. Fawick. It, and many modifications of this basic patented principle, is still the primary product of the rapidly . I' ^ expanding Fawick Corporation, which today also manufacturer 'T' r!` magnetic clutches and brakes, hydraulic control products, friction. \-r materials and rubber grips for the sporting goods and .hand Tool': industries. .r" t The Airflex clutch proved itself during World War 41. It, was liked in the propulsion system of over 4,000 diesel-powered landing and patrol craft of the United States Navy. Market acceptance, after World War II, came rapidly. Today Fawick products are';, the accepted standard of excellence in the petroleum, marine, paper, metalworking, and many other industries vital to,,therindustrial..strength of. our country. "T* /V`V In 1956 to broaden our base, we.added magnetic clutches and brakes to our standard line. These aro used' primarily in the machine tool, computer, and packaging industries. Thereds'also an increasing trend in many industries to rely more and more-ompower and control through ' hydraulic mediums. To,-serve ' this iprojiuct area, we established the Hydraulic-Electronic Division in. 1959.' This division produces valves and other components^or the^ rriachine tool, material handling, con struction, and farm;equipm,enfe industries. Closely allied-1 with clutches;and brakes, and used extensively in them, are fricti'bn materials*-In 1964 we established National Friction Products Company, Logansport, Indiana. We have controlling interest in this: company. The general area of industrial friction products is largei.-We expect this subsidiary to grow and contribute its share to our expanding,operations. Fawick tq.dayis not only a name known widely throughout industry 'for'its power-transmission and hydraulic control products, but also in the sporting-.goods field. Fawick Flexi-Grip Company was merged into The corporation in 1964 as an operating division. Flexi-Grip manu facturerthe rubber portion of the Airflex clutches and rubber grips for the gjblf .club, fishing rod, ski pole, tennis racket, and hand tool indus tries. The golf grips are sold to major manufacturers of clubs and are used extensively. Production capacity has kept pace with our expanding product line and market acceptance. Manufacturing facilities are located in Cleve land and Akron, Ohio on 100 acres of prime property. Over 50% of our building space is less than ten years old. In 1963 and 1964, we spent approximately $1,840,000, mainly for a new Banbury mixing plant and equipment for the Flexi-Grip Division, and new automatic and numerically controlled machines for the Airflex Division. Fawick sales and engineering offices are in most major U.S. cities, ' Canada, India and Australia. To better serve the market areas of the. British Isles, Europe and Africa, Fawick A.G. was established with offices and warehouse in Roosendaal, The Netherlands. Joint venture companies are being established in Mexico and Japan to better serve the Central American and Asiatic areas. Fawick Growth--Products, facilities, sales and profits--during these years of development and diversification into complementary and divergent areas has been most gratifying and will be continued as profitable opportunities arise. 4 FAW 03056 FAWICK CORPORATION AND SUBSIDIARIES 0* A O STATEMENT OF CONSOLIDATED OPERATIONS AND EARNINGS RETAINED IN THE BUSINESS J>ivk1c*uc1 and mlrrasi imomC e iliscellan^ote other jb.come i%4 ;^SlWISS mmm l*`J *; V;>`U/S.'S! .v ?L0,l<M,89r IlilSli' SgSss ..* .*': >.> r i*. , ' Wm$W4W>Mssisii \ COST AND EXPENSES ' 4 AJatenals, "Wages, and other ctots of `productsvgofd ,, HS#1SI *1 ill Stlhnr athmmsfraljvo and enmeerinp Vn;H^:v^vHv.r,-yy;; J^^coenn'- ...... ; 2,160,934: 294,115 : INCOME BEFORE. INCOME TAXES ' ' United Slates and Canadian income $ 9,234,6/5 t 2,188,28 > A*PiP: l;'''S'**'!'V.ypP lif^SSfe^ppSS 1,155,871! NET INCOME + 3,166,602 i /V': iW ' -S V .,.1 S.W. J . -M:- C. ' S-*. /.? .-r-r. - i- ?. . % M. CP C y .f EARNINGS RETAINED IN THE BUSINESS -y:Vi-Z..:-:;.5; y-.-' -H H H-yv,;; 1i9 d 52 H; v ^ ';.Sp ^,:ger.shar6" ^:0030j$O/ .>5,357,724 $ 408,428; Ipl -9o;dod ::$--i6^p58l1 $ 498,428 v./;: ; exiti;.^oi: ^jaV; V- ,;f; V: .,:; t::;V;;; - v';: y: i::H v:0 ; p 6,379, wo P ;$p859,296 FAW 03057 FAWICK CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET December 31, ASSETS 1964 1963 CURRENT ASSETS Cash..................................................................................$ 571,041 Certificates of deposit '................................................. 360,025 United States Treasury Bills..................................... ., Trade accounts receivable, less allowance for doubtful accounts..................................................... ; l,192,17<k;/ Inventories--raw materials, work in process, and finished parts and products--at lower of cost (generally first-in, fii-st-out) or market................ . 2,166,792 ;. Prepaid insurance and other expenses .... 119,649:. TOTAL CURRENT ASSETS $4,4h.9,l6.g3'' 817,347 561,489?' i,20099 s 1,877,111 98,196 $4,860,430 4, INVESTMENTS AND OTHER ASSETS 1 Capital stock of domestic company--,ab post .. % . (quoted market, December 31, 19^A-$806/250i ' V" $ 831,250 Miscellaneous investments and.recbivables .. . . 390,838 TOTAL INVESTMENTS AISID OTHER ASSETS $1,222,088 PROPERTY, PLANT, AND EQUIR|^ENT/at cost . . $6,182,332 Less allowances for depreciation-.. 4............................. 2,234,711 NET PROPERTY, PLANT AND EQUIPMENT $3,947,621 $9,579,392 $ 831,250 336,348 $1,167,598 $5,114,877 2,040,086 $3,074,791 $9,102,819 ' CURRENT LIABILITIES ... Trade accounts payable................................ $ 538,484 , ,,..;4.. 'Dividend payable................ ................................ ,i; C. '* *, '* ,;V. Salaries, wages, commissions, and amounts v4 " > 'withheld therefrom......................................... 183,423 246,485 *:V V< '"A-cefued taxes--other than income taxes................. i ``United States and Canadian income taxes .... 150,149 551,656 j<-n. < %; TOTAL CURRENT LIABILITIES $1,670,197 /-- 3-: r'.iy f,'':* -r v -4,..r r C* ,,.vr . -.*'*Vxy is MINORITY INTEREST IN SUBSIDIARY, Note 1 $ 84,419 SHAREHOLDERS' EQUITY Common capital stock, par value $2.00 a share: Authorized 2,500,000 shares Outstanding 1,222,818 shares . ............................. $2,445,636 Earnings retained in the business. Note 2 ................. 5,379,140 TOTAL SHAREHOLDERS' EQUITY $7,824,776 $9,579,392 $ 512,691 120,128 218,485 100,523 _ 846,060 $1,79.7,887 $2,445,636 4,859,296 $7,304,932 $9,102,819 The accompanying notes are an integral part of these financial statements. FAW 03058 FAWICK CORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS ;i4'4u^e^tKe'.:a^^mUs:>pf-: the-.Corporation's^^ Rjiiyiek Camsda>vkt<t:imdira'w .okT^atioriaTfi^icli&Q'.^ dates ^acquisition-;^ ' 'iNQv2.;;f:i^eygeti:';.w?tiv;'FaW^ .Fa'wipk'.iGqrpprabibivrisliue'd^ 3Q;,0G0;::&ar;es';.of:,Fa%ick;^ ltky;'eprpbr$ibnV:;Th'pitn^^ :fin&iici2d;;stat<^e'n;t#;as;:4'/po.6li^ ;Me^0npV'ifcnaudit'e9fior-''-iy63');:h^ ;Fkirick:to;ri:;ti%-yeare:v;i964-.'a^ jaimarjKl^lQCS^Yesfefced^icbnri^ exch^i^.ipr: of- .?'. ^':\r" ^a^^Gcifp.6rati6ti;; ;'::;F; ijeSSC^^fB^^ .:.,::;E.xce&3-'of.;.jiai: v^ue^'of :26i,8;i8.':'share^'::- of Fawick Corporation common stuck, i i/iViteued^nyf^p^;^ v'xFlmdrGrip^ : Ctheriiierger^^^^ :'V/^pi;tai'-.inVpxc%'s:pi:i^^ ^TSxpenss?^ .Balancedjaiiu'ary;' iy.'19.^y,:as'testoife'd.' '-.I.:'; $3;40&iS9^^ 08^,97^1; ?44S;i02.; 49,810 . U9-?^: .$4-825,310;': Cap.tt.4fm:exci^.B;o{;paK:vaue,/^;^tetEd Jamiarj'-.1,':1963, of '?578i0.57;(.Fa-tvtcfc ::GorpbratiQn.$55.'ftQQ9j:;|1^^^ iharfe&TJf $i;54|4$;3^^g^ and $423I69.4!m.connectaon;wa1;h:is6ruance ofFawLcksbaresforFiexs-Gripishares:. Note X Slock Option Plan: On October 9, J964, the Board of Direct orjt adqptedy^yqhMpkd^fcb^bptipip'.p^ 'th'emMt^bhput.ifmbbtlhgx^ :.tb.;seIdcted;::ehiplbyeesv.raVphr.cHke.;8^ .'pe^.'sf^re;(4oO%;bf;.Bb ';, $'6te 4/ Peraibn\iIMpni:V;Fhi|;yGbrporati6;^ :plaiiis Ibrtits; .saten^d^d-hotuiy binpiqyees. ^e.uhf^ raS;of';D'e^^.e^;3i;'''d96^;wCTq;$539;0b0|^d^qajlqp'3#s^ai^ed;:^a.m^;;income.; fbr ftie'yyWt:i964;^ounted:'to.i06;Q'6Q^ :r"* * FT,P r .," t. ,: ,i T F' T f-4',r-r"\ \ ' .% .:< * ;7--;': :''>;S ''X?'st.T'*?',Vsj ' i ,% T:. V! 'S: Ngtttcifc.;^nydstft^eril:;fax ;:Credtt:'^The'.Hbyenue^'Acfi .;of ; i9^\';elim^ated-' tlie.' .fdm&^uirement'tKat'the/ihvEstmenticr^^ .depreciatiohjbk.m^hmery^cFetiiti^^ pf'predpudyeara-'mtidam.opntrb^ SIS 11 Si cv.;,*.' At- F;-.v:: v> KvFF ACCOUNTANTS' REPORT Board of Directors Fawick Corporation Cleveland, Ohio We have examined the consolidated balance sheet of Fawick Corporation and subsidiaries as of December 31,1964, and the related statement of consolidated operations and earnings retained in the business for the year then ended. Our examination was made in accordance with generally accepted auditing standards, and accordingly.induded such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the accompanying balance sheet and statement of operations and earnings retained in the business present fairly the consolidated financial position of Fawick Corporation and subsidiaries at December 31,1964, and the consolidated results of their operations for the year then ended, in conformity with generally accepted accounting principles applied on. a basis consistent with that of the preceding year. LYBRAND, ROSS BROS. & MONTGOMERY Cleveland, Ohio February 25, 1965 D 9* FAWICK CORPORATION AND SUBSIDIARIES 4 Q * IS * * * 10-YEAR SUMMARY OF OPERATIONS NET SALES Operating Divisions-. ..... . . - .. . _ ^64 _ "\7*7...... . $11,430,365 J963 "" $ 9,779,326 'Divisions sold ' . ;. Brake Division . - . . Federal Motor Truck Division1. 415,567 " .-- . ' 'DaughertyMachme Division . . '- ' Total Net Sales .' V. .. . ; . $11,430,365. $10,194v$98`; Income before income taxes ... ; . . $ 2,301,602' $ 2,i88;2'3o United States and. Canadian income.taxes . ;. .. . : 1,13.5',000 , T,1.65,871 Income from operations.; , , Per share'. coramon:stdck 1,166',602' ' 1,032,414 v ". . M? Net ribri-reeumhg income ... i.J V -- ' Per share common stock'. ' Net income . . . . . ii- v, . ; . $a;i66,602 $ 1,032,414 . Per share common stock \J 95? OO Dividends declared C V -f 5Vv" . ' Fawick Corporation Vi'- v' r . . .$ ` 609,258 ' $ 408,4.28 : "Per share common-stock yv;.v' .1 . 52 .` ' . . ' ** . Number of shares.of common 1 stock outstanding .. . . . . . 1,222,818 ' ' 1,222,818 SOURCES AND APPLICATION OF WORKING CAPITAL YEAR ENDED DECEMBER 31, 1964 . SOURCES OF WORKING CAPITAL 'Net income'--................ ................................................................ $1,166,602 r'?-| Pr.ojHsipn'for depreciation, net of Investment f TaxrCredit of previous years of $43,790 ............................. ^ Othir.............................................................................................. 250,325 32,594 $1,449,521 <J APPLICATION OF WORKING CAPITAL Expenditures for property, plant and equipment, less portion provided by minority interests in a subsidiary amounting to $84,419..........................................$1,071,330 Other expenditures ............................ 54,490 . 1,125,820 Dividends declared Fawick Corporation--per share . . Fawick Flexi-Grip Company, paid prior to merger..................................................... $ 609,258 37,500 DECREASE IN WORKING CAPITAL . . 646,758. $1,772,578 $ 323,057 FAW 03060 1962 1961 I960 1959 1958 1957 1956 1955 $.-'6,720,917 ' $.5,876,651 $ .5,614,857 $ 4,939,340 ' $ 3,489,931 . $ 4,781,760 $ 4,905,515 .$ 3,678,841 1,190,932 " $.7,911,849 ' 316,618 -- , --: $ 6,193,269 1.67,1.93 : -- .. . $ 5,782,050 233,199 86,087 . 171,558 ' ' ~r ` I' V,:- $ 5,172,539 $ 3,5.76,018:/ ..$ 4,953,318 . 57;966 41,602 . 1,443,308 . .42,404 . . ' 153,944 $ 5,005,885 ' $'. 5,-317,695 ; '$ 1,068,258 $ .873,722.. 602,000 ` 500,317 . 466,258 . 373,405' 49^ ' 39 447,198 79,835- : 46 : '8t $ 9.13,456 $ - 453,240 - . . 95 ' \$ii. 467,928278,600: 494,080 88,000 81,004 ' 587,284' ' $ ; 876,895 - ;---. \ . !. ' -- ; ' $ '823,439 : 189,328 : .406,080 1 61,004 .587,284 ' .. 876,898. ,423,439 - 20^ ~ '' A ' ' - ; , 42^ ;' --:' ' .. -H . , . ' V- -- ' ; 6i(i . 90*! ' 84*! ('1: *v" '-- . . : 189,328 ; $ :406,080 $ . 81,004 $ 587,284' ' $' 876,898 :$ ' 823,439 . " '.2Q*f : . - 42^ , ' 8^ .. ' . .;'61^' ' i ' ' 84** $ 384,400 $ 288,300 . ' 4Q - 80*1 ' 288,300 $ 288,300 $' 288,300 - '..30*'. . ' -30d ` . 30j 290,850; isT ; 293,400. .!I 245,000 . . 30j 25 i 961,000 . 961,000 961,000 , 961,000 rOfiiiOO'O .. . * 961,000 . 978,000 980,000 Notes to Ten Year Summary? 1) The results for both 196^and. 1963 a!rb,for the combined operations of Fawick Corporation and Fawick ~Jlexi-4Jrip:CampaQy,. which, was merged with Fawick as a division on May.31';T9&4. The other operating divisions are the Fawick Airflex division, formed-''m-1942, .and'Fatfick Hydraulic-Electronic Division, which was started in 1959: i r 2) The income -in-the ye^rs.1955 through 1958, and part of the income in 1959 were not euhjhcb to United States income taxes at the time because of an income tax loss catTy-forward'arising from the Federal Motor Truck operations. FAW 03061 INDUSTRIES WHERE FAWI C 1C PRODUCTS ARE USED AIRFLEX DIVISION CLUTCHES AND BRAKES Canning Ceramics and Building Material Earthmoving and Construction Equipment Hoisting and Mining Equipment Lumber and Woodworking Equipment Machine Tools Marine Material Handling Equipment Metai Forming, Fabricating and Processing Machinery Papermaking Equipment Petroleum Drilling and Well Servicing Equipment Rubber and Plastics Machinery Sugar and Starch Mills HYDRAULIC-ELECTRONIC DIVISION VALVES AND COMPONENTS Farm Equipment Floor Sweepers * Hydraulic Presses Machine Tools Material Handling Trucks-and Cranes, Off-the-road Construction. Equipment' FLEX'l-GRIP DIVISION, * RUBBER GRIPS - ` t ^r Recreation Industries (grilf/bowling, fishing,.skiing and'tennis)" Hand Tool. Manufacturers./ FAW 03062 Fawick Airflex clutches and brakes are used by major ;manufacturers.of oil well drilling equipment FAW 03063 FAWICK CORPORATION 9919 CLINTON ROAD CLEVELAND, OHIO 44111 BULK RATE U. 5. POSTAGE PAID CLEVELAND, OHIO PERMIT NO. U36 FAW 03064