Document daaX2oavQpoqbdQ6oQj8kMj89

1985 VOL. 1 A-I MOODY'S INDUSTRIAL MANUAL COVERING NEW YORK, AMERICAN & REGIONAL STOCK EXCHANGES SHEILA S LAMBERT, Publisher HOWARD G. KIEDAISCH, Associate Publisher MICHAEL A RABBIA, Manager Manual Dept. BRLA.N T COFFEY, Manager Supplement Dept ROBERT P. HANSON, Edltor-lll-Chief Editorial Staff DANIEL ARCHILLA ANGELICA R. CARROLL ALFRED G ELLINGHAM ALVIN E. COUVIA JOHN J IERACl DIANE R KRIJTZ " WILLIAM H MOORE WILLIAM M. PACCIONE FRANK R. PLATAROTE BERNARDO C SCEHI, JR EARL STEPHENS MARK L, ZWIEBACK Moody's Investors Service nn a company of 1511 The Dun & BradstreetCorporation SEE FOLLOWING PAGE FOR COMPLETE LIST OF OFFICES Copv nght 1985 bv MOODY S IN\ ESTORS SERVICE, INC New York Ml rights reserved . SCF-ABEX-2861 472 MOODTS INDUSTRIAL MANUAL IC INDUSTRIES, INC. CAPITAL STRUCTURE i iries LONGTERM DEBT Amount Charges Earned Interest Cal] Pnce Range Issue Rating Outstanding i984 198J Dates Price Long 'sn debt - (TtSl 614 400 000 Amer Brake Shoe Si deb 4*A*. 87 ! 790 000 F8c A 15 T100J4 80-65 80 . 58 Pepsi-Cola Gen. 3ol cv deb Sl/t$, 88 1015 000 J &t D 1 100-58 JOS 95 105 - 76 Pet Inc. sJ deb 5%s 92 . 4 700000 0 CD J fit D 1 Sl00,9 65 A- 59 64 - SO Pet Inc si deb fis 91 II 600 000 IC P-oducta Co Si deo 9Vis, 94 A3 11 714 000 II IC Products Co. Si deb 10lAs.95 A3 29 488 000 M8cS 1 MfieN 1 MficNlS Tioi oo 'Tiolqo ElW.62 7S`/r 70>A 100 76J/4 85A- 77 74 - Tl 87V,. 8lYt 85 - 85 CAPITAL STOCK Par Amount Earned per Sh. Div per Sh. Call Pnce Range Issue Value Outstanding 1984 1983 1984 1983 Pnee 1984 198J !i 1 8*4% Seres A. 1st pfd. 2 9l/*%, senes B 1st pfd J 3.50 cum conv 2nd p/d.ser l 4 Common No par No par No par No par 750 000 shat 250 000 shs.} rrj!J89JSS shs din17 460 000 shs. 0. 367 49 (35.17 0. *42 78 (32-50 j 3LS0 G32.1SV4 8 SJJ0 S78 2-32 V4- 62Va S28V<- 21 73 - S2'/4 48V%- 45 ESubject to change, see text. EBasedon average shares as reported by Co on connnumg operations adjusted for 2 for-! split in 1984 For other per share data > i rede_se_t_ma__et_diic, aa__sl.o.retvcMoar.dr.av8jjirr1tlf9elp8id5rnpn.Avrf.at_et_er"lty2-EioSr-eiie.sTpleitx: tkb. e.[tOi.oamrete_*rem83s//*t-1ni2oi.trQs7hgsolnrwc..nliu.d.sjeuespa3*1r.a.8ste3ily_p_uQTdjjl_pn_dr_iuo__dr_etos .2isstfou__er.s1 lsisp.tiel.i.dt. below fQAU share* converted irvo Co rs com. stk. or HISTORY _ ta Max. 1979 acquired ?epsi-Cola Bottling Pet Inc. (DeL) Incorporated In Delaware Aug. 31 1962. as go. of Kenosha fie Racine, Inc. and Pepsi-Cola Helvetia Redevelopment Corp (Mo ) Illinois Central Industries. Inc. present title K^ntor Bottling, Inc. Hussmann Corp (Del.) adopted in May 1975 Apr. 19/9 sold Benjamin Franklin Sav Alton Manufacturing Co (Texas) On June 1 1965 acquired Chandeysson j"# Association of Houston. Lincoln Liberty American Refrigeration Products. Electric Co , St. Louis, maker of heavy electn- Investment Coip and IC Financial Develop- S.A. (Mexico) 11 mi equipment and products Now operated as ^^vt Corp. to Miseller Corp. for 316 400 000 "`inApr* 1967 ICC Authorized acquisition of lr> May 1979 reached definitive agreement Chesley Industries (Mich.) Krack Corp (111) Hussmann Refrigeration Inc (Mo ) control of Chicaco St Illiroia Western R.R. by ssuance of 40 000 common shares (after spUt) Hussman Group of Pet Inc. Co through Hussmann Store Equipment Ltd. (Canada) for ail common fit preier-ed stock of C-&I.W In July 1979 Midas International Corp Star Cooler Corp (Mo ) R.R. if On Aug 30 1968 acquired assets and liabili ties of Waukesha Foundry Co a manufactur ft er of precision casting* and corrosion resistant pumps In Dec 1968 purchased Illinois Center On Dec 26 1968 merged Abex Corp by is suance of 2 615,439 shares 33 50 cumulative convertible second preferred senes 1 at rate of 0.72 share of 33-SO preferred for each share merged wholly-owned European retail outlets with those of TI Silencers. Ltd. to operate re tail outlets to be known as Midas Silencer Centres. In Dec. 1979, acquired Applied Air Systems ihrougn Hussman Group ot Pet Inc. In Apr. 1980 acquired BlancHard-Ness Ltee. for 71.875 common shares. In Aug. 1981 Co sold the Musselman Fruit Products division of its Pet Inc* unit to MFP Enterprises Inc The transaction was valued Turner Refrigeration Ltd Refrigerator Contracts Ltd Riordan Holdings Lai. (U K.) IC Acquisition Co. (DeL) William Underwood Co (Mass.) Ae'cent International Inc. (DeL) Almacenes Refngerantes S.A. de C.V. (Mexico) C. Shippam Ltd (Great Britain) CintaAzul S.A. (Costa Rica) (50%) 'bT^S,,nt?SS Thnni. Tnr " *527000 000 including *28 000 000uTcaah . acquired Seay fit Thomas. Inc. In June 1982 acquired Wm Underwood Co Harry Peck 6c Co. Pty Ltd (Aus tralia) ^fl0?^*haLesAlso m **** 1982 Union Panc Corp sold and brokerage *nanaKement business ^ 2.149 319 shs. of Co com. stk Lakes Entrance Processors Pty. Ltd. (Australia) were sold in Apr. 1979 and name of residual owned by Union Pacific Corp. The purchase William Underwood Co. (Canada) operauons changed to South Properties IncO pnce o{ 573 000.000 is equivalent to appro- Ltd. (Canada) On Feb 2 1970 merged Pepsi-Cola General mately 333 50 per sh. Diablitos Venezolanos CA. (Vene lnc- b,y.th' of 7`?.2',s> *haret In Aug 1982. sold to Coachmen Industries, zuela) of S5_SO cumulative convertible 2nd preferred Ihc_ ^ remaining assets of the Venicle Group PV Foods Inc. (Minn.) stock at a rate of 0 40 shares of *3.80 preferred 0f Midas International, a subsidiary. Details for each share of Pepsi-Cola general common. were not disclosed. Southland Canning 6c Packing Co- Inc. (La.) On Mar. tl 1970 acquired H.F. Philipsbom In Apr 1983 acquired 5.1% of Trane Co. Co Chicago mortgage banking and real es Details were not disclosed. Spartanburg Dairy Inc. (Ga.) St. Louis Lithographing Co. (Mo.) tate firm for common shares. In July 1983 acquired additional Trane Co In Dec. 1970 acquired Perfect Plus Hosiery, stock, bringing total holdings to 24.54% (sold Stuckey's lnc. (Del) Stuckey s Stores. Inc. (Dei ) Inc ,, manufacturer and distributor of women s in Jan 1984) Midas International Corp. (Dei ) hosiery and related soft goods (liquidated in In Sept>J9S3. acquired Havana Pepsi-Cola Midas U K. Ltd. (U.K.) 1973). Bottling Co, Havana. I1L Cosmic Enterprises. Inc. (DeL) In Aug. 1971, acquired Signal-Stat Division In June 1984, through a subsidiary, ac Cosmic Stores Inc. (N Y.) of Lehigh Valley Industries for 37 200 000. q__u_i_r_e_d___T__u_r_n__e_r__R__e__f_rig_eration Ltd. and Refng- Frolic Homes Inc. (Ind.) In Sept. 1971 acquired Dad s Root Beer Co. e-rator C~ontracts Ltd from ~Turner fit Co., Midas Euro Inc (Dei) in exchange for 160 000 common shares. Ltd.. Glasgow, Scotland. Auto Service GmbH (West Ger On Jan. 25 1972 merged Midas-Interna- In Oct. 1984 through subsidiaries acquired many) uonal Carp by the issuance of 1 910 763 Pepsi-Cola Bottling Co of Springfield Mo,, 1,2,3 Auto Service GmbH Se Co shares of Co common stock for each 0 6568 and Pepsi-Cola Bottling Company of Flat (West Germany) shares of Midas common stock. River. Mo a 100% interest in a Mexican joint In Dec. 197! acquired "Hunter Moss 3t Co . venture. Infnsa. a 100% interest in a German Kuth Manufacturing Corp (Cal.) International Stamping Co Inc. (Wise.) Miami. Fla. (merged with* Philipsbom Equi ties of Florida in 1974) In Apr 1972 merged Lincoln Financial Inc. by the issuance of 777 769 shares of Co. com mon stock for each 0.35 shares of Lincoln common stock. (Sold in 1979) On Aug 10. 1972 Illinois Centra] R.R.. a Co. subsidiary and Gulf, Mobile fit Ohio RR. Co. formally merged to form a new line Illinois Central Gulf R.R. Co., which is now a subsidi ary. Under merger terms Co issued 585,657 shares of 36 00 first preferred stock and 367 677 shares of- its coimmmmoonns__t_o_c__k__t_o___e__ff_e__c_t the merger and also purchase minority inter est in three small Mississippi railroads. In May 1973 acquired Bubble Up Corp. for joint venture. 1 2J AutoService: and Riordan Holdings Ltd.. United Kingdom. In Nov* 1984 through subsidiary, acquired 100% interest m United Kingdom joint ven ture Midas U K. Ltd. SUBSIDIARIES The following subsidiaries are wholly- owned except as noted. Hussmann Distributing Ca* Inc (DeL) 1C Equities. Inc. (DeL) IC_la__nIn,ddsuAsntrtiiellsesF)tint-va-ni c\e Corp N V. (Nether Bolingbrook 55 Corp (IH ) IC Equipment Leasing Co. (XIL) IC Industries insurance Co. Ltd. (Bermu da) International Parts Mfg Ltd (Canada) Midas Australia Pty Ltd. (Australia) Midas Automotive Ltd. (Canada) Midas Canada. Inc. (Canada) Midas Realty Corp (DeL) Midas Silencers Ltd (Great Britain) TI Midas Ltd. (Great Britain) (51%) Midas S.A. (Belgium) Muffler Corp ot America (111 ) Pepsi-Cola General Bottlers, Inc. (Del ) Pepsi-Cola Bottling Co of Springfield Pepsi-Cola Bottling Co of Flat River - Genadco Advertising Agency. Inc. (QL) -1 Kolmar Products Corp (Wise.) Pneumo Corp. a Cleveland Pneumatic Co. *7^ Claud S Gordon Co. ?8tC Food Markets In June 1973 acquired Midwest Life Insur- iifelSSCentralGulf an Co . Lincoln, Nob. for *15.200 000 (.old m rv, m^i i ^ <D'` > Carls Drug Co. . The names of certain subsidiaries are omit ted, as such subsidiaries, considered in the ag On Feb 26. 1974 acquired Consolidated Ac- fcUPn5jS5fSf^E!)(I^"> ceptance Corp. Minneapolis. Minn, (sold m Ab^C^^Del) gregate as a single subsidiary, would not coa-. sutute a significant subsidiary - In May 1974 acquired A L. Hansen Manu facturing Co. On Jan. 1. 1975 Signal-Stat Corp.. Waukes- ka Foundry Co~ Inc. and Chandeysson Elec tric Co became divisions of Abex Corp. On Mar. 3! 1976 A L. Hansen Mfg. Co be came a division of Abex Corp In Apr. 1977 acquired Stanray Corp The purchase cost of 338 271 000 including ex penses consisted of cash payments of 36 363 000 and the issuance of 765 804 shs. of Industries 33 50 Second Preferred Stock. In Feb 1978 Co issued 987 805 shs. of com. stk for all outstg shs of Security Investment Co- which owns Pepsi-Cola Bottling Co of Cincinnati, Ohio In Aug. 1978 acquired voting common stock not previously owned of Pet Inc. for ' 3406 000 000 Tn Jan^i479 sold Lincoln Liberty Life In- Abex Industries Ltd. (Canada) Abex International S.A. (Switzerland) Abex A/S (Denmark) Abex Ftrtannaria Sx.L (Italy) Abex Fluid Power Ltd. (Great Britain) Abex Denison Ltd. (Great Britain) Abex Ges m.b H (Austria) Abex GmbH (West Germany) Abex Industries Akpenbolag (Sweden) Abex Industries S-A. (France) (99 87%) Abex International Holdings Ltd (Ba hama Islands) Abex Japan Ltd (Japan) Frendo Abex S_p-A_ (Italy) Frendo Sud S p.A. (Italy) Abex Pagid Equipment SLA. (France) Abex Mead Ltd. (Great Britain) Amsco Mexicana. S A (Mexico) Denison Hydraulics. Japan, Ltd. (Japan) Illinois Central Export Corp (DU) RuSht^CpCo Inc fDel) BUSINESS AND PRODUCTS " IC Industries. Inc. ("Industries") is an in* temationaL diversified holding company, or ganized on the principles of decentrouseo management, whose business is conductec through operating subsidiaries and divisions which are, for the most part, integral, autono mous operations. ,. _ . In Oct., 1984 Industries acquired the -- mo Corporation ( `Pneumo ) whose head quarters are in Boston Massachusetts Pneu mo is engaged in the design and manufacture of landing gear and flight controls for nulitary and commercial aircraft, and in food and drug retailing and wholesaling. __^ In aoaiuon to Pneumo. Industries Operate* ^ in three diversified business areas Consumer 1 Product*. Commercial Products and Railroad Activities. The principal companies ui the. Consumer Products business are Pet Incorpornted ("Pet ) Pepsi-Cola General Bottlers. MOODTS INDUSTRIAL MANUAL 473 p-oducta operations ire conducted by Ahex Beer and Bubble Up in Chicago and in most of including scheduling of energy usage to avoid Corporation ( Abex ') and Hussmann Corpo- its other ma-keting areas peak periods, cycling ot refrigerator compres -at-on ( `Hussmann ) Rau*oad Activities are Dunng 1984 diet soft dnnks accounted for sors and recapture ot heat. The dollar amount conducted by he Illinois Central Gull Rail approximately 16% of Pepsi General's of {I'm backlog increased 47% from year-end road Company ( ICG ) "The businesses of Substantially all diet soft dnnks including 1983 to 894 million at Decemoer 31 1984 Sub Consumer Products and Commercial Prod those ot Pepsi General, contain aspartame stantially all such backlog is expected to be ucts are operated by IC Products Company, a and/or saccharin. In 19gJ. the United States filled within one year wholly owned subsidiary of Industries. Food and Drug Administration (the Products of Hussmann are marketed inter CONSUMER PRODUCTS Consumer P-oducts consists of the food business conducted by Pet, the soft drink busi ness earned on through Pepsi General Dad's and Bubble Up. and die automotive services business conducted by Midas. Pot Pet's specialty food products are comprised of three operating groups. Grocery, Specialty and International The Grocery Group markets Old El Paso Mexican products the largest: selling line of shelf-stable Mexican foods in the United States Orleans canned shrimp clams and oystern, GuLf Belle frozen shrimp, Underwood canned meat spreads, B&M baked beans and Ac'cent lavor ennancer. The Grocery Group also markets evaporated milk Pet's original product, as well as diet products under the Sego brand. Specialty foods include ?et-Ritx pie crusts, the largest selhrg frozen pie shells m the Unit ed Suites Downyflake waffles. Old El Paso frozen Mexican entrees and other frozen foods Whitman s chocolates and confections, and Pet and Aunt Fanny's bakery items. This group also markets fresh dairy products in cluding milk ice cream and specialty dairy products m the Southeastern states. The International Group manufactures and markets canned meats and other products in the United Kingdom. Venezuela. Australia. Mexico and Canada and s responsible for ex porting ail Pet products. Pet markets its products principally to su permarkets and grocery stores throughout the United States through brokers and company sales personnel. These product tines are also marketed to restaurants and other institutions in the food service industry and directly to consumers through specialty retailing outlets. In the case of chocolate and confection items, the products also are marketed through drug stores and mass merchandise stores. Pec s milk and dairy products and its other food and grocery items compete with nation ally recognized brand names, as well as with local and private label products, on the basis of price quality and product innovations. "USFDA") approved the use of aspartame .n diet soft dnnks Since February, 1978 the USFDA has required precautionary 'abeling on soft dnnk products containing saccharin. The USFDA m 1977, also proposed regula tions to prohibit the use of saccharin in soft dnnks which Congress has suspended indefi nitely Industries Goes not believe that such a ban. if made effective, will have a materially adverse effect on the business of Industries and its subsidiaries Midas Midas provides automotive exhaust system, suspension system and brake service through approximately l BOO franchised and company- owned Midas shops in the United States Can ada. England, France. Australia. Belgium, Germany. Austria, Panama and Mexico Mi das manufactures over 900 different types of mufflers and exhaust tail pipes to service ap proximately 1,800 makes and models of auto mobiles. Midas* principal market is its of fran chised Midas shops. An initial franchise fee is charged and dealers pay a royalty fee based upon gross revenues. Franchise agreements, which generally are for a 20-year term and provide for renewals, can be canceled by Mi das only for failure of the dealer to comply with the provisions of the agreement. An im portant part of the Midas marketing program is its warranty of mufflers, brakes ana shocks. Midas manufactures the majority of mufflers and tubing sold by its franchised dealers. Mi das also distributes its exhaust system parts under other brand names to automotive parts distributors Jobbers and automobile accesso ry stores and its tube bending equipment to jobbers and retail installers. The raw materials and supplies used in Mi das products are purchased from many sup pliers and the company Is not dependent on any single source for any of its raw material or supplies. ___ COMMERCIAL PRODUCTS The products within Commercial Products are manufactured and sold through Abcx and Hussmann and their respective subsidiaries. Abes nationally by both company-employed sales personnel and independent distnoutors. Dur ing 1984, Hussmann acquired several compa nies tn the United Kingdom which will provide Hussmann with the same kind of integrated engineering manutartunng and marxeung organization ui Europe as it has established in the U.S RAILROAD ACTIVITIES The ICG is a major rail freight carrer oper ating m the central United States. As of De cember 31. 1984. the ICG had approximately 6 500 route miles in ten states, including a ma jor north-south height line with trackage ex tending from Chicago to the Guif of Mexico, together with east-west -outes crossing Illi nois Iowa and Missouri. The prmepai metro politan markets served by the ICG wnxch also constitute important wtc-changc points with other railroads, include Chicago, Illinois New Orleans and Shreveport. Louisiana; Kansas City and St. Louis, Missouri: Indianapolis, In diana; Louisville, Kentucky; Birmingham. Montgomery and Mobile Alabama; Memphis. Tennessee; Jackson. Mississippi, and Omaha, Neoraska. In addition to its transportation ac tivities the ICC owns substantial real estate which is not used tn railroad operations. The sale or lease of such real estate contributes significant Income to the ICG The principal commodities transported by the ICG include grain grain mill products, coal, chemicals, paper and other bulk prod ucts, Intermodal (piggyback) operations also contribute an important portion of the ICG's revenues. The ICG operates commuter services tn the Chicago area under contract with the sixcounty Regional Transportation Authority The ICG also operates several passenger trains under contract with the National Rail road Passenger Corporation f AMTRAK") These operations are not considered material to the results of the ICG. ICG finances its own capital requirements. Management believes that the physical condi tion ofits main line railway ana yards is main tained at standards that permit efficient per formance and is confident that the company is Agricultural commodities, raw millt. raw The products of Abex are divided into four meeting the current service requirements ot its materials and packaging are purchased from principal product line categories; Automotive customers. farmers, fisherman, importers dairy coopera Products, Cast Products, rtuid Power Prod Industries is unable to predict what effect tives otner food processors and various pack ucts and Railroad Products. Automotive the present trend toward consolidation of rail aging manufacturers. Except for normal fluc- products include braking materials and light roads into large regional systems may have on t jauons in crop sizes Pet has experienced lit ing equipment for the automotive original its revenues or operating results. While no for tle difficulty in obtaining raw materials for its equipment and replacement markets. Abex is mal plan for disposition of the ICG currently products. a major source of brake linings and disc brake exists, the merger or sale for the ICG is an Soft Drinks pads fdr cars, trucks and buses. It is also a important goal of Industries. Dunng 1984, In Pepsi General packages and distributes, un manufacturer of metallic brake discs for com dustries retained the services of an investment der exclusive franchises. Pepsi-Cola products mercial and military aircraft, signal lights, banking firm to review Industries' own work and other brand name soft drinks, including Dad's Root Beer, Bubble Up, Sunkist Orange Soda. 7-Up Mountain Dew, Dr. Pepper Or ange Crush Canada Dry and Hawaiian Punch In mid-1984 Pepsi General introduced lamps, reflectors, mirrors and other safety de vices for trucks, automobiles and recreational vehicles. Abex also produces a wide variety of cast ings in iron steel, copper and aluminum al on assessing the options of the ICG These op tions include merger with another railroad, sale to a nonrailroad investor, spm-otf to shareholders, sale to employees, sale of stock to the public and retaining the ICG in whole its own brand of aseptic juice drink, "Orchard Sun." It is a naturally flavored t09 juice loys for use m mining, earthmovmg, steel making, petrochemical, nuclear, rock crush or m part. No accurate prediction can be made as to whether the ICG will be involved drink in four flavors orange grape, fruit * punch and apple. Pepsi General presently sells Pepst-Cola products m five areas in the Mid west with a total population of over 16 million people and sells its other dnnk products in certain of these areas. Pepsi General's franchises grant it the ex clusive right to produce and sell the products and use the related trade names and trade marks in the franchised terntones. The fran ing, dredging, food processing and other ap in a consolidation or other transaction in the plications. It is an important supplier of man foreseeable future, or the amount which ganese steel castings having high impact-re would be realised. Depending on many fac sistant properties as well as of both centnfu- tors, including the timing and structure of gally and statically cast products in proprie such a transaction. Industries may realise tary heat-resistant ferrous alloys. amounts substantially less than the net book Fluid power products indude hydraulic value of the assets of the ICG, which approxi Eumps, motors, valves and complete hydrau- mated 31,013 4 million at December 31,1984. e systems which sre used in construction and ?NEUMO CORPORATION mobile equipment, industrial and marine ma Pneumo Corporation consists of two busi chises require Pepsi General, among other chinery, materials-handling equipment, off ness groups: the Aerospace/Industrial Group things, to purchase its concentrate require shore drilling and nuclear power plants. Hy and the Food/Drug Group. ments solely from the franchisor, at prices draulic pumps, motors, servo-valves jet air The Aerospace/Industruu Group designs fixed by the franchisor, and to promote dili craft noise suppressors, electric power invert and manufactures landing gear for military gently the sale and distnbution of the fran ers and passenger loading bndges are manu and commeraad aircraft, proprietary flight chised products. Packaging materials (bottles, factured for the aerospace and general avia controls and engine controls for manned and bottle caps cans, cartons, cases) are obtained tion markets. unmanned military aircraft and thrust reverse from manufacturers approved by the franchi Abex is a leading supplier of iron and com er actuation systems, engine controls and sor and other items are purchased in the gen position brake shoes, cast steel wheels and flight controls for commercial airlines. This Eeral market. The franchises are for an indefi custom-made trackwork. such as frogs, nite term and are subject to termination upon switches crossings and turnouts, for United failure to comply with the provisions of the States and Canadian railroads. It also supplies oup also manufactures and distributes mau led thermocouple wire and related accesso ries which control and measure temperatures franchise agreement. , bearings for freight can and remanufactures in hostile environments. Products are distributed by Pepsi General and upgrades electric traction motor* and Pneumo's Food/Drug Group consists of to retail outlets primarily by trucks operated generators for the railroad industry F8eC Food Markets Co, Inc. (MP&C'>, a by Pepsi General route salesmen. Pepsi Gen Distribution of Abex products is made prin group of 90 retail food markets operating in eral owns leases or sells the vending machines cipally through its own salesmen, however, upstate New York and portions of New En which dispense its soft dnnk products m fac Abex does sell certain products, principally gland. and Carls Drug Co.. Inc. ("Carla"), a tories offices, schools, stores, filling stations automobile brake linings and lighting equip fSm of 36 promotional drugstores located and other locations. Pepsi General s business is seasonal and weather conditions dunng the ment, to independent wholesalers and dealers for resale. primarily in central and upstate New York serving many of the same market areas aa peak summer months have a significant effect on sales. Dad's Root Beer Company manufactures and sells root beer concentrate and extract to 125 franchised licensees who package and dis Abex holds a number of patents related to its products. While Abex believes that certain of such patents are valuable us its ousineaa, it does not believe that any major product lines are significantly independent on patent pro PficC. F&C also franchises 63 supermarkets and operates a large wholesale food distribu tion system m central and uestate New York and portions of Vermont, New Hampshire and M*TftsrhinrttTi tribute Dad s Root Beer in marketing areas ui duction. The materials used by the Aerospace/Za- the United States. Bubble Up Company sells Hussmann , ,, dustrial Group generally are available from a lemon-lime concentrate and extract to 126 do Hussmann designs, manufactures, installs number of suppliers. While this group is not mestic and 30 foreign franchised licensees. In and maintains refrigeration equipment, dis dependent upon any single supplier of materi addition. Dad a Root Beer and Bubble Up play run shelving and environmental con als for the operation of the business, there are product is distributed through food brokers in trol systems. In addition. Hussmann has de a limited number of suppliers of forgings, met markets where there are no franchise agree veloped various energy-saving systems which al parts and special metals, and any halt* or ments pep-t General di^tnbucea Dsd s Root control the total energy usage in food stores delays ui their production, or aa unexpected 474 MOODY'S INDUSTRIAL MANUAL ncrease in ce**iand for the -natenais tney pro To Our Shareholders: C.H. Connolly Vice-Pres ----Corp Contnun- duce would interfere with, orderly production In 1984 IC Inoustnes set records for sales, R_A_ Wright, Vice-Pres --Hurraa Resources b> th-s segment. pre-tax income income from continuing oper W F Ceme. Vice-P-es.--Real Estate No single patent or group of patents is mi- ations, and fully-diluted earnings per common J.R. Copper Vice-Pres --Corp P'an. 8c DeveL teral to either business group Pneumo has share. In addinoa n spite of several substan J F. Palmer. Vtee-Pres.---Taxes * pursued the policy or seeking patent produc tial acquisitions the company ended the year RJ Switzer Vice-Pres. fic Trees tion for inventions and discoveries relating to m the strongest financial condition m its iislo ?Jvt. O'Hara. Vice-Pres.--Corp Fin the Aerospace/Industnal Group whicn are in corporated into its products or fail wuhin its field of interest. None of the patents has ever been adjudicated, and there can be no assur ry. with a healtny balance sheet and extensive lines of credit. For the year, IC Industries* Increased consolidated sales and revenues G A. Lee. D.C. V*ce*Pres --Govt. Directors Affairs Wash. ance regarding the validity of any patents. to 54 2 billion. 13 percent over 1983 (Showing Age fic Pr*nc*pal Corporate^ Under various research and development con Increased pre-tax income to 5247 8 million. Affiliations) -- tracts. the Government is entitled to a nonex clusive license for governmental purposes to inventions arising under such contracts. Where it is thougnt that busmens advantages might be gamed patent protection is obtained in toreign countries as well as in me United States. The Food/Drug Group makes use of a number of trademarks and trade names, 42 percent over 1983 Increased income from continuing opera tions by J8 percent over 1983 5133.3 million. Increased fully-diluted per-share income from continuing operations by 30 percent--to 52.92, and increased primary per-share in come from continuing operations by 27 per cent to 53.17 tended the year with more than 5800 million Archie R. Dykes, (54) Pres, fic Chief Exec. Off.. Security Benefit Group, Inc. Chmn fic Chief Exec. Off.. First Pyramid Life Insurance Co of America. Dir Boatmen's First Nation al Bank of Kansas City First National Bank. Topeka. Fleming Companies Inc. \mer*c*n Council of Life Insurance and Midwest Re search Insutute. largely private label food and health items, in unused committed bank credit lines; Gerald A Fulham, Omni.. Pneumo Corp.. and it operates a franchising program for re tail food stores. Such rights are considered to Lowered debt-to-capitalixation ra.no to 45.7 percent. Dir. Aeronca, Inc-, Pneumo Cora , Woods Hole. Mass., Oceanographic Institution, be of material importance to this business group The company has no reason to believe that it is not fully protected in its use and en joyment of such rights. The Aerospace/Industnal Group partici pates as a suocontractor on many programs with most major U.S manufacturers or mili tary and commercial aircraft. The loss of busi ness on any of several major programs of the Boeing Company, McDonneU Douglas Corpo ration and General Dynamics Corporation would have an adverse effect upon Pncumo'i Aerospace/Industnal Group ' All ot Pneumo's order backlog is in the Aerospace/Industnal Group and includes firm orders as well as options for additional quantities for which the Company expects to receive future orders. At December il, 1984, Pneumo's total backlog was 51.1 oillion com pared to 5956 million at November JO. 19&3 (Pneumo's former year end). Approximately Fully-diluted net income per share for the year was adversely affected by a 510.5 million loss--or 25 cents per fully-diluted share--pci- manly as a result of the discontinuance of the Abex Corporation's Stanray railroad parts plant in Hammond, InHiana m the fourth quarter The steps our subsidiary companies have taken to streamline operations, reduce costs, and redeploy assets, position them to register further earnings gams. As an 1C Industries company for the full year of 1985. Pneumo Corporation will make a significant contribu tion to sales and earnings. Today IC Industries is in the strongest fi nancial and strategic position in its history* ready to take the next steps in its long-term strategic program. Our corporate objectives have not changed We will continue to divest operations which do not meet our criteria for growth, earnings, or return on invested capi tal - Member of Board of Governors. Aerospace Industries Assoc~ Trustee oc Regis College. Weston. Mass. John P Gallagher, (68) Senior Lecturer Graduate School of Business Unlve-sicy of Chicago. Dir., American National Bank fit Trust Co of Chicago Hamischfeger Corp; Amenfin Corp Pet Inc. Stone Container Corp-. and UNR Industries, Inc. Helen Gefland, (58) Pren,. Helen Galland As sociates Dir. Educational Foundation of the Fashion Institute of Technology; Vice-Pres. fic Dir. City of Hope Hospital and Research Center C. Jackson Grayson. Jr_ (61), Chmn , Ameri can Productivity Center. Inc. Dir-. Hams Corp. Lever Brotite-s Overhead Door Corp-. Potlatch Corp , Sun C04 Tyler Corp- Brown ing-Ferns Industries, and Amenway Bank/ . Woodway N.A. 5803 million of the December 31, 1934 backlog was firm compared to 5684 million at Novem ber JO 1983 The amount of the backlog at December 31, 1984 estimated for shipment in 1985 was 5454 million with the balance to be shipped in future years. Pneumo s backlog at the end of 1984 was made up of about 70% military and 30% commercial business. Cleveland Pneumatic Company, the largest component of the Aerospace/Industnal Group competes primarily with two other producers in the landing gear industry for ma We will devote a major part of our attention this year to integrating Pneumo into the IC Industries family, and to realizing synergies with Abex. We also anticipate possible acqui sitions for both our Consumer and Commer cial Products groups. We have increased our budget for capital expenditures in 1985 by about 25 percent to 5250 million, with the increased resources to be allocated to our growing aerospace and consumer businesses. ICG capital spending will decline slightly. Robert E Harrsh, (68), Former Chmn_ fit Chief Exec. Off. Stanray Corp Dir Abex Corp^ Hussmann Corp-* and Bank of Willits. . Welter K Melmerieh. Ill, (61), Pres and Oi*ef Exec. Off.. Helmench fie Payne, Inc. Dir- At---* "" ~ wood Oceanic*. Inc* Caterpillar Tractor Co,, rrjg&T Combustion Engineering, Inc* First National Bank fic Trust Co. of Tulsa. First Tulsa Ban- *33Sfei corporation, Inc, and Natural Gas Odonzing, --SsfeC Inc, Trustee. Northwestern Mutual Lde In- ~ surance Co ` jor commercial and military programs. Al Abex has closed non-profitable operations William 8. Johnson, (66) Chmn. fic Chief though specific statistics are not available on and introduced products with higher margins. Exec Off T IC Industries, Inc Dir., American the volume of production of landing gear of Pneumo has a backlog of about SU billion, of Productivity Center* Continental Ulmou - these producers. Pneumo believes that aeve- which approximately 5900 million is under Corp.. Continental Illinois National Bank fic land Pneumatic is one of the two principal firm contracts, Hussmann has a substantial Trust Co of Chicago; Esmark, Inc. Abex groducers of such landing gear in the United backlog, and a profitable new European oper Cora Hussmann Corp . Illinois Central Gull tates. Pneumo s National Water Lift Divi ation that provides an additional sues base of Railroad Co . Midas International Corp- Pep* . sion, another principal component of the 5100 million. The ICG has reduced its break si-Coia General Bottlers Incj Pet Inc, and 1 Aerospace/Industnal Group experiences even more than 14 percent in the past two Association of American Railroads ,, competition in each of its product areas, but years Harold R. Logan, (63) Vice-Chmn.. WJL Pneumo knows of no other manufacturer We recently retained the services of an in Grace fic Co.. Dir.. Energy Fund, Inc, General which produces the entire range of products manufactured by this division. Claud S. Gor vestment. banking firm to give us the benefit of its independent judgment on our options for Database Technology, Inc. Voyager Petro- leums Ltd., Abex Corp., and Illinois Central don Company, the smallest component of the Aerospace/Industnal Group, is engaged in a highly competitive business in which there are the Illinois Central Gulf Railroad. These op tions include merger with another railroad, sale to a non-railroad investor, spin-off to Gulf Railroad Co Member, President's Asso- oation of the American Management Assoa*' non. Independent Petroleum Association oc ^ several producers. PROPERTIES Abex operates 40 plants in the United States 4 in Canada and 12 plants m several other foreign locations. Of such plants. 52 are owried and 4 are leased on a long-term basis. Pet operates 38 owned and 9 leased manu facturing plants located in the United States and five foreign countries, 22 owned and 7 leased milk and dairy distribution facilities, 5 owned and 2 leased warehouses and 77 owned, 50 leased and 105 franchise specialty retail outlets. Kusamann operates 15 owned and 6 leased manufacturing 'aeilitifca in the United States. Mexico and Canada. There are J owned and 29 leased branch facilities which sell, install and maintain Hussmann products. Midas operates 3 manufacturing plants in the United States and one manufacturing plant in Canada. Of these plants, one is owned shareholders, sale to employees, sale of stock to the public, or retaining the ICG in whole or in part. Midas has acquired 100 percent ownership of all but one of its foreign joint venture oper ations. Pepsi General has three new franchises which ado 600,000 people to its service base. The Consumer Products Group, with Pet and Pepsi General's aggressive marketing pro grams* has begun the new year with strong gains over 1984. The economy is strong employment is up, inflation Is firmly under control, interest rates have moderated, consumer confidence is high, and both the Congress and the Administration appear committed to controlling the deficit. All our companies should continue to grow in 1985. Early results are quite encouraging. In a strong economic environment, and even con sidering an increase of more than L0 million shares outstanding, we expect our per-share results for the year to exceed the record re America, Pan American Society* Board ol A Governors, University of New Haven. t Harry A. Marks (60), Chmn fie Pres^ Louisl*^ azta-Paofic Corp Dir-, American Paper Ins*-g cute of Western Forestry Center Louisiana-j Pacific Corp., National Forest Products A** soc; Member, Columbia Pacific Council 01 * Boy Scouts of Amer, National Advisory Council of Salvation Army Board of Governs nors. Hugh O'Bnan Youth Foundation, f Trustee, Oregon Museum of Science fic Indus-- try. -W32 Graham X Morgan, (67) Retired Chearu^ Chief Exec. Off., United States Gypsum Co~j Dir.. Abex Corp-* American triformatiotw Technologies Corp4 American Hospital Sups ply Corp*. Illinois Central Gulf Railroad and International Harvester Co., Member *.J advisory board. Kemper Insurance. -^ George V Myers, (68), Former Pres-, States dard Oil Co. (Indiana) Dir United and S are leased. In addition, Midas also maintains 18 warehouses of which one is sults of 1984. Gypsum Co,, CNA Income Shares, Inc-, anAmerican Petroleum Institute; Trustee, Ru*5g| owned and 17 are leased. At Dec. Jl 1983. Mi William B Johnson Presbyter!an-St. Luke's Medical Center. __ das leased and operated 46 Midas Muffler Chairman and Chief Executive Officer C.L Pecehenino (57). Exec. VIce-Prca*L Shops ui the U.S 29 Midas Muffler Shops m Canada and 79 Midas Muffler Shops in 9 for eign countries. Pepsi General's facilities include 8 bottling plants, 2 combination bottling/canxung plants and one canning plant. In addition, Pepsi Gen eral has 29 distribution warehouses and 4 stor age warehouses In addition Industries engages m a wide va riety bf industrial, commercial and residential real estate development activities in the Unit ed States. LETTER TO STOCKHOLDERS March 6, 1985 MANAGEMENT Officera W B Johnson. Chinn. 8c Chief Exec. Off. B F Schenk, Pres. fic Chief Ope* Off. R.F Stewart Senior Exec. Vice-Pres. kP Fagan, Exec. Vice-Pres__ Finance .S. Kirby. Exec. Vice-Pres.. Gen. Counsel, 8c Sec. C.L. Pecehenino Exec. Vlce-Pres. B.S. Chelberg, Senior Vice-Pres.---Consum. Serv Industries. 4nc_, Pres, fit Chief Exec. Ofwcrfjg Pneumo CorpGeo. T. Sctierffenberger, (65). Chinn, fit CbW Exec. Off- City Investing Co,, Dir No*t"r*53 Corpj Earle M Jorgenson Co,, Kidae. Rockefeller Center Inc^ Georgetown Uwv sity* and Home Group Inc^ Trustee, univ sity of Southern California. Boyd F Schenk, (62), Pres, fic Chief Off- IC Industries. Inc_ Dtr,, Pet Inc.: < terre Laclede Gas Co; Illinois * , Co AJS. Staley Manufacturing Co- 9**-; Shippam. Ltd.. Trustee, William Uaderwo* The following Is the letter to stockholder* of William B. Johnson, Chairman and Chief Execx* live Officer of 1C Industries. Inc. m H appeared in the Company's 1984 Annual Report. W W Larsen. Senior Vice-Pres---Corp* Af fairs T T Wertover Senior Vlce-Pres. 8c Contr. AJL Lehmann, Vice-Pecs.----Investor ReL Co ~ Robert F. Stewart, (S7), Senior Exec. , IC Industries, Inc.; Trustee, Worf Polytechnic Institute-