ITEM 2. PROPERTIES
Descriptions of properties owned or utilized by the Partnership are contained in Item 1 of this report and such descriptions are hereby incorporated by reference into this Item 2. Under the captioned "Leases" in notes to the Partnership's financial statements included in Item 8 herein below, additional information is presented concerning obligations for lease and rental commitments. Said additional information is hereby incorporated by reference into this Item 2.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Partnership is a party to several lawsuits arising in the ordinary course of business. Subject to certain deductibles and self-insurance retentions, substantially all the claims made in these lawsuits are covered by insurance policies.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not hold a meeting of stockholders or otherwise submit any matter to a vote of security holders in the fourth quarter of 1995.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S SENIOR PREFERENCE UNITS AND RELATED UNITHOLDER MATTERS
The Partnership's senior preference limited partner interests ("Senior Preference Units") and Preference Units are listed and traded on the New York Stock Exchange. At March 15, 1996, there were approximately 1,081 Senior Preference Unitholders of record and approximately 200 Preference Unitholders of record. Set forth below are prices for Senior Preference Units and Preference Units, respectively, on the New York Stock Exchange and cash distributions per Senior Preference Unit and Preference Unit, respectively, paid for the periods indicated.
The Partnership has paid the Minimum Quarterly Distribution on each outstanding Senior Preference Unit for each quarter since the Partnership's inception. The Partnership has also paid the Minimum Quarterly Distribution on Preference Units with respect to all quarters since inception of the Partnership, except for the failure to pay distributions in the second, third and fourth quarters of 1991 totaling $9,323,000. All such arrearages have since been satisfied and none remain as of December 31, 1995. Prior to 1994, no distributions were paid on the outstanding Common Units, which are not entitled to arrearages in the payment of the Minimum Quarterly. In 1994, distributions totaling $1,738,000 were paid and in 1995, distributions totaling $4,582,000 were paid.
Under the terms of its financing agreements, the Partnership is prohibited from declaring or paying any distribution if a default exists thereunder.
ITEM 6.

ITEM 6. SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA The following table sets forth, for the periods and at the dates indicated, selected historical financial and operating data for Kaneb Pipe Line Partners, L.P. and Subsidiaries (the "Partnership"). The data in the table (in thousands, except per unit amounts) is derived from the historical financial statements of the Partnership and should be read in conjunction with the Partnership's audited financial statements. See also "Management's Discussion and Analysis of Financial Condition and Results of Operations."
(a) Includes the operations of ST since its acquisition on March 2, 1993. (b) Includes the operations of the West Pipeline since its acquisition in February 1995 and the operations of Steuart since its acquisition in December 1995. (c) Subsequent to the acquisition of ST in March 1993, certain operations are conducted in taxable entities. (d) Net income of the Partnership for each reporting period is allocated to the Senior Preference Units ("SPU") and Preference Units ("PU") in an amount equal to the cash distributions to the SPU and PU declared for that reporting period.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the consolidated financial statements of Kaneb Pipe Line Partners, L.P. and notes thereto and the summary historical and pro forma financial and operating data included elsewhere in this report.
GENERAL
In September 1989, Kaneb Pipe Line Company ("KPL"), a wholly-owned subsidiary of Kaneb Services, Inc. ("Kaneb"), formed the Partnership to own and operate its refined petroleum products pipeline business. The Partnership operates through KPOP, a limited partnership in which the Partnership holds a 99% interest as limited partner and KPL owns a 1% interest as general partner in both the Partnership and KPOP. The Partnership is engaged through operating subsidiaries in the refined petroleum products pipeline business and, since 1993, terminaling of petroleum products and specialty liquids.
The Partnership's pipeline business consists primarily of the transportation through the East Pipeline and the West Pipeline, as common carriers, of refined petroleum products. The Partnership acquired the West Pipeline in February 1995 from Wyco Pipe Line Company, a company jointly owned by GATX Terminals Corporation and Amoco Pipeline Company, for $27.1 million plus transaction costs and the assumption of certain environmental liabilities. The acquisition was financed by the issuance of $27 million of first mortgage notes due February 24, 2002, which bear interest at the rate of 8.37% per annum. The East Pipeline and the West Pipeline are collectively referred to as the "Pipelines." The Pipelines primarily transport gasoline, diesel oil, fuel oil and propane. The products are transported from refineries connected to the Pipeline, directly or through other pipelines, to agricultural users, railroads and wholesale customers in the states in which the Pipelines are located and in portions of other states. Substantially all of the Pipelines' operations constitute common carrier operations that are subject to federal or state tariff regulations. The Partnership has not engaged, nor does it currently intend to engage, in the merchant function of buying and selling refined petroleum products.
The Partnership's business of terminaling petroleum products and specialty liquids is conducted under the name ST Services ("ST"). ST is the third largest independent terminaling company in the United States. With the acquisition of Steuart (see below), ST operates 31 facilities in 16 states and the District of Columbia with an aggregate tankage capacity of approximately 16.8 million barrels. The Texas City terminal is a deep-water facility primarily serving the Gulf Coast petrochemical industry. The Westwego terminal, purchased in June 1994 and located on the West bank of the Mississippi River across from New Orleans, handles molasses, animal and vegetable oil and fats, fertilizer, latex and caustic solutions. The Baltimore terminal is the largest independent terminal facility in the Baltimore area and handles asphalt, fructose, latex, caustic solutions and other liquids.
ST acquired the liquids terminaling assets of Steuart Petroleum Company and certain of its affiliates (collectively, "Steuart") in December 1995 for $68 million plus transaction costs and the assumption of certain environmental liabilities. The acquisition was financed with a $68 million bridge loan from a bank. The Steuart terminaling assets consist of seven petroleum product terminal facilities located in the District of Columbia, Florida, Georgia, Maryland and Virginia and the pipeline and terminaling facilities serving Andrews Air Force Base in Maryland. The Piney Point, Maryland terminal is the closest petroleum storage facility to Washington D.C. which has access to deep water. The Jacksonville terminal has 28 tanks with approximately 2.1 million barrels of aggregate storage capacity, which are currently used to store petroleum products. The remainder of ST's terminals primarily handle petroleum products.
The Partnership acquired ST in March 1993 for approximately $65 million (including $2 million in acquisition costs). In connection with the acquisition, the Partnership borrowed $65 million from a group of banks. In April 1993, the Partnership completed a public offering of 2.25 million Senior Preference Units at $25.25 per unit. The bank loan was partially repaid with $50.8 million of the proceeds from the offering, and the balance was refinanced in December 1994. The Partnership continually evaluates other potential acquisitions.
The Pipelines' revenues are based on volumes shipped and the distances over which such volumes are transported. Revenues increased $14.1 million and $2.0 million in 1995 and 1994, respectively. The increase in 1995 is primarily due to the acquisition of the West Pipeline. The Partnership implemented a tariff increase of approximately 5.5% in April 1994, which accounted for more than one-half of its increase in revenues in 1994 over 1993. Because tariff rates are regulated by the FERC, the Pipelines compete primarily on the basis of quality of service, including delivering products at convenient locations on a timely basis to meet the needs of its customers. Barrel miles increased 15% to 16.6 billion barrel miles in 1995 from 14.5 billion barrel miles in 1994, due primarily to the acquisition of the West Pipeline.
Operating costs which include fuel and power costs, materials and supplies, maintenance and repair costs, salaries, wages and employee benefits, and property and other taxes, increased $4.8 million in 1995 and $1.3 million in 1994. The 1995 increase is a result of the West Pipeline acquiaition and the 1994 increase is due to increased barrel miles and utility rates, property taxes and materials, supplies and outside services due to unusually high repair and maintenance expenditures. The 1995 increase in depreciation and amortization is a direct result of the February 1995 acquisition of the West Pipeline. General and administrative costs include managerial, accounting and administrative personnel costs, office rental and expense, legal and professional costs and other non-operating costs.
TERMINALING OPERATIONS
The increases in revenues are attributable to increases in prices charged for storage and tankage volumes utilized. Revenues increased 13% in 1995 and 9% in 1994. Average annual tankage utilized increased 600,000 barrels to 6.7 million barrels compared to 6.1 million barrels in 1994 primarily as a direct result of terminal acquisitions in 1994 and 1995 and increased 200,000 barrels in 1994 over 1993. Average annual revenues per barrel of tankage utilized increased by $0.13 in 1995 to $5.46 per barrel and increased $0.26 per barrel in 1994 over 1993. Total tankage capacity (16.8 million barrels at December 31, 1995) has been, and is expected to remain, adequate to meet existing customer storage requirements. Customers consider factors such as location, access to cost effective transportation and quality of service in addition to pricing when selecting terminal storage. Operating costs increased $2.2 million and $.7 million and depreciation and amortization increased $.4 and $.5 in 1995 and 1994, respectively, as a result of the terminal acquisitions in 1995 and 1994.
LIQUIDITY AND CAPITAL RESOURCES
The ratio of current assets to current liabilities was 0.9 to 1 at December 31, 1995 and 0.8 to 1 at December 31, 1994. Cash provided by operating activities was $44.5 million, $37.9 million and $37.2 million for the years 1995, 1994 and 1993 respectively. The increase in cash flow from operating activities in 1995 was primarily a result of the West Pipeline and the Westwego terminal acquisitions.
Capital expenditures were $8.9 million, $7.1 million and $8.1 million for 1995, 1994 and 1993, respectively. During all periods, adequate pipeline capacity existed to accommodate volume growth, and the expenditures required for environmental and safety improvements were not, and are not expected in the future to be, material. Environmental damages caused by sudden and accidental occurrences are included under the Partnership's insurance coverages. Capital expenditures of the Partnership for maintenance of existing operations during 1996 are expected to be approximately $7.5 million. Capital expenditures for expansionary purposes during 1996 are expected to be approximately $2.0 million.
The Partnership makes distributions of 100% of its Available Cash to Unitholders and the General Partner. Available Cash consists generally of all the cash receipts less all cash disbursements and reserves. A distribution of $2.20 per unit was paid to Senior Preference Unitholders in 1995, 1994 and 1993. During 1995, 1994 and 1993, the Partnership paid distributions of $12.4 million, ($2.20 per unit), $12.3 million ($2.20 per unit) and $19.3 million ($2.20 per unit and $1.20 per unit in arrearages) to the holders of Preference Units. During 1995 and 1994, the Partnership paid distributions of $4.6 million ($1.45 per unit) and $1.7 million ($0.55 per unit) to the holders of Common Units.
The Partnership expects to fund future cash distributions and maintenance capital expenditures with existing cash and cash flows from operating activities. Expansionary capital expenditures and some environmental expenditures are expected to be funded through additional Partnership borrowings.
In 1994, a subsidiary of the Partnership issued $33 million of first mortgage notes ("Notes") to a group of insurance companies. Proceeds from these notes were used to refinance existing debt of the Partnership that was incurred in connection with the ST acquisition in 1993 and the terminal acquisitions in 1994. The notes bear interest at the rate of 8.05% per annum and are due on December 22, 2001. In 1994, the Partnership entered into the Credit Agreement with a group of banks that provides a $15 million revolving credit facility for working capital and other partnership purposes. Borrowings under the Credit Agreement bear interest at variable rates and are due and payable in November 1997. The Credit Agreement has a commitment fee of 0.2% per annum of the unused credit facility. No amounts were drawn under this credit facility at December 31, 1995. The notes and credit facility are secured by a mortgage on the East Pipeline.
The Partnership acquired the West Pipeline in February 1995 from Wyco Pipe Line Company, a company jointly owned by GATX Terminals Corporation and Amoco Pipeline Company, for $27.1 million. The acquisition was financed by the issuance of $27 million of Notes due February 24, 2002, which bear interest at the rate of 8.37% per annum.
The acquisition of the Steuart terminaling assets has been initially financed by a $68 million bank bridge loan. The bridge loan bears interest at a variable rate based on the LIBOR rate plus 50 to 100 basis points and its' maturity has been extended until March 1997. The Partnership expects to refinance this loan under terms similar to the Notes discussed above. The loan is secured, pari passu with the existing Notes and credit facility, by a mortgage on the East Pipeline.
In the FERC's Lakehead decision issued June 15, 1995, the FERC partially disallowed Lakehead's inclusion of income taxes in its cost of service. Specifically, the FERC held that Lakehead was entitled to receive an income tax allowance with respect to income attributable to its corporate partners, but was not entitled to receive such an allowance for income attributable to the partnership interests held by individuals. Both Lakehead and representatives of its customers have filed motions for rehearing. It is possible that either Lakehead or its customers may ultimately seek judicial review of the FERC decision. It is difficult to predict what position would be adopted by a reviewing court on the income tax issue. In another FERC proceeding that has not yet reached the hearing stage, involving a different oil pipeline limited partnership, various shippers have challenged such pipeline's inclusion of an income tax allowance in its cost of service. The FERC Staff has also filed testimony that supports the disallowance of income taxes. If the FERC were to disallow the income tax allowance in the cost of service of the Pipelines on the basis set forth in the Lakehead order, the General Partner believes that the Partnership's ability to pay the Minimum Quarterly Distribution to the holders of the Senior Preference Units, Preference Units and Preference B Units would not be impaired; however, in view of the uncertainties involved in this issue, there can be no assurance in this regard.
NEW ACCOUNTING PRONOUNCEMENT
In March 1995, The Financial Accounting Standards Board issued 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 (SFAS 121). SFAS 121 is effective for financial statements for fiscal years beginning after December 15, 1995 and requires the write-down to market of certain long-lived assets. The Partnership will adopt SFAS 121 in the first quarter of 1996 and such adoption will not have a material effect on the Partnership's financial position or results of operations.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data of the Partnership begin on page of this report. Such information is hereby incorporated by reference into this item 8.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership is a limited partnership and has no directors. The Partnership is managed by the Company as general partner. Set forth below is certain information concerning the directors and executive officers of the Company. All directors of the Company are elected annually by Kaneb, as its sole stockholder. All officers serve at the discretion of the Board of Directors of the Company.
(1) Mr. Doherty, Chairman of the Board of the Company since September 1989, is also Senior Vice President of Kaneb. In addition to the Senior Preference Units and Preference Units set forth above, Mr. Doherty owns 75,000 Common Units representing an aggregate limited partnership interest of less than one percent. (2) Mr. Hutchens assumed his current position in January 1994, having been with KPL since January 1960. Mr. Hutchens had been Vice President since January 1981. Mr. Hutchens was Manager of Product Movement from July 1976 to January 1981. (3) Mr. Easum has served the Company as Vice President of Business Development since August 1988, prior to which he was Director of Purchasing with Union Pacific Railroad Company since August 1980.
(4) Mr. Wadsworth serves as an officer of Kaneb. Mr. Wadsworth, currently Vice President, Treasurer and Secretary, joined Kaneb in October, 1990, prior to which he served as general manager of Dorchester Hugoton, Ltd. for more than five years. (5) Mr. Harrison assumed his present position in November, 1992, prior to which he served in a variety of financial positions including Assistant Secretary and Treasurer with ARCO Pipe Line Company for approximately 19 years. (6) Mr. Barnes, a director of the Company, is also Chairman of the Board, President and Chief Executive Officer of Kaneb. In addition to the Senior Preference Units and Preference Units set forth above, Mr. Barnes owns 79,000 Common Units representing an aggregate limited partner interest of approximately 1%. (7) Mr. Cox, a director of the Company since September 1995, is also a director of Kaneb. Mr. Cox has held senior executive level positions for more than the past five years of his twenty-six year career with Fluor Daniel, Inc. (8) Mr. Ahn, a director of the Company since July 1989, is also a director of Kaneb. Mr. Ahn has been a partner of Morgan Lewis Githens & Ahn, L.P., an investment banking firm, since 1982 and currently serves as a director of Haynes International, Inc., ITI Technologies, Inc., PAR Technology Corporation, Quaker Fabric Corporation, and Stuart Entertainment, Inc. (9) Mr. Peak, a director of the Company since July 1989, is also a director of Kaneb. Mr. Peak has been General Partner of Dorchester Hugoton, Ltd., an oil and gas exploration and production partnership, for more than the past five years. (10) Mr. Whatley, a director of the Company since July 1989, is also a director of Kaneb. In addition to serving as Chairman of the Board of Directors of Kaneb from February 1981 until April 1989, Mr. Whatley was elected and served in the additional offices of President and Chief Executive Officer of Kaneb from June until October 1986. (11) Mr. Ralph Rehm, who is also a director of Kaneb, is President of Northlake Consulting Company, which provides financial consulting services. Mr. Rehm provided consulting services on behalf of one of Kaneb's subsidiaries in 1993 and 1994. Mr. Rehm previously was engaged in financial consulting services for Northlake Consultants from June 1989 to May 1990, prior to which he served as Senior Vice President of Finance and Administration of Kaneb from December 1986. (12) Mr. Biles joined the Company in November 1953 and served as President from January 1985 until his retirement at the close of 1993. (13) Units of the Partnership listed are those which are owned by the person indicated, his spouse or children living at home. None of the directors of the Company owns more than two percent of the outstanding Senior Preference Units or Preference Units, respectively, of the Partnership. Each director had sole power with respect to all or substantially all of the Units attributed to him.
AUDIT COMMITTEE
Messrs. Sangwoo Ahn, Ralph A. Rehm and Preston A. Peak currently serve as the members of the Audit Committee of the Company. Such Committee will, on an annual basis, or more frequently as such Committee may determine to be appropriate, review policies and practices of the Company and the Partnership and deal with various matters as to which conflicts of interest may arise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors does not have a compensation committee or any other committee that performs the equivalent functions. During the fiscal year ended December 31, 1995, none of the Company's officers or employees participated in the deliberations of the Company's Board of Directors concerning executive officer compensation.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no executive officers, but is obligated to reimburse the Company for compensation paid to the Company's executive officers in connection with their operation of the Partnership's business.
The following table sets forth information with respect to the aggregate compensation paid or accrued by the Company during the fiscal years 1995, 1994 and 1993, to the President and each of the most highly compensated executive officers and other key policy making personnel of the Company whose aggregate cash compensation exceeded $100,000.
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(1) Does not include the values of the personal use of Company paid club memberships, nor the personal use of assets, facilities and services of Company employees. The aggregate amount of additional benefits or compensation to any of the individuals listed in the Summary Compensation Table above did not exceed 10% of the reported compensation.
(2) Represents the Company's annual contributions in 1995 to Kaneb's defined thrift plan and the imputed value of Company-paid group term life insurance.
(3) Represents a lump sum payment in lieu of cost-of-living salary increases in 1992 and 1993.
(4) The Compensation for this individual is paid by Kaneb and Kaneb is reimbursed for all or substantially all of such compensation by the Company.
Retirement Plan
Effective April 1, 1991, Kaneb established a defined contribution thrift plan applicable to the Company that permits all full-time employees who have completed one year of service to contribute 2% to 12% of base compensation, on a pre-tax basis, into participant accounts. In addition to mandatory contribution equal to 2% of base compensation per year for each plan participant, the Company makes matching contributions from 25% to 50% of up to the first 6% of base pay contributed by a plan participant. Employee contributions, together with earnings thereon, are not subject to forfeiture. That portion of a participant's account balance attributable to Company contributions, together with earnings thereon, is vested over a five year period at 20% per year. Participants are credited with their prior years of service for vesting purposes, however, no amounts are accrued for the accounts of participants, including the Company's executive officers, for years of service previous to the plan commencement date. Participants may direct the investment of their contributions into a variety of investments, including Kaneb common stock. Plan assets are held and distributed pursuant to a trust arrangement. Because levels of future compensation, participant contributions and investment yields cannot be reliably predicted over the span of time contemplated by a plan of this nature, it is impractical to estimate the annual benefits payable at retirement to the individuals listed in the Summary Cash Compensation Table above.
Director's Fees. During 1995, each member of the Company's Board of Directors who was not also an employee of the Company or Kaneb was paid an annual retainer of $4,000 in lieu of all attendance fees.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
At March 15, 1996, the Company owned a combined 2% General Partner interest in the Partnership and the Operating Partnership, and owned Preference Units, Preference B Units and Common Units representing an aggregate limited partner interest of approximately 31%.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is entitled to certain reimbursements under the Partnership Agreement. For additional information regarding the nature and amount of such reimbursements, see Notes 4 and 5 to the Partnership's financial statements.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) FINANCIAL STATEMENTS
(a) (2) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
(a) (3) LIST OF EXHIBITS
3.1 Amended and Restated Agreement of Limited Partnership dated September 27, 1989, filed as Appendix A to the Registrant's Prospectus, dated September 25, 1989, in connection with the Registrant's Registration Statement on Form S-1, S.E.C. File No. 33-30330 and incorporated herein by reference.
10.1 ST Agreement and Plan of Merger date December 21, 1992 by and between Grace Energy Corporation, Support Terminal Services, Inc., Standard Transpipe Corp., and Kaneb Pipe Line Operating Partnership, NSTS, Inc. and NSTI, Inc. as amended by Amendment of STS Merger Agreement dated March 2, 1993. Said document is on file as Exhibit 10.1 of the exhibits to Registrant's report on Form 8-K filed with the Securities and Exchange Commission on March 16, 1993, and said exhibit is hereby incorporated by reference.
10.2 Note Purchase Agreement dated December 22, 1994. Said document is on file as Exhibit 10.2 of the exhibits to Registrant's report on Form 8-K filed on March 13, 1995, and said exhibit is hereby incorporated by reference.
10.3 Restated Credit Agreement dated December 22, 1994 between Kaneb Pipe Line Operating Partnership, L.P., Texas Commerce Bank National Association, and certain Lenders. Said document is on file as Exhibit 10.3 of the exhibits to Registrant's report on Form 10-K filed for the year ended December 31, 1994, and said exhibit is hereby incorporated by reference.
10.4 Agreement for Sale and Purchase of Assets dated February 19, 1995 by and among Wyco Pipe Line Company and Kaneb Pipe Line Operating Partnership, L.P.. Said document is on file as Exhibit 10.1 of the exhibits to Registrant's report on Form 8-K filed with the Securities and Exchange Commission on March 13, 1995, and said exhibit is hereby incorporated by reference.
10.5 Asset Purchase Agreement by and among Steuart Petroleum Company, SPC Terminals, Inc., Support Terminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. dated August 27, 1995; Piney Point Pipeline Asset Purchase Agreement by and among Piney Point Industries, Inc., Support
Teminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. dated August 27, 1995; Purchase Agreement by and among Steuart Investment Company, Support Terminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. for Cockpit Point dated August 27, 1995; Amendment to Asset Purchase Agreements by and among Steuart Petroleum Company, SPC Terminals, Inc. Piney Point Industries, Inc., Steuart Investment Company, Support Terminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. Said documents are on file as Exhibits 10.1, 10.2, 10.3, and 10.4 of the exhibits to Registrant's report on Form 8-K filed with the Securities and Exchange Commission on January 3, 1996, and said exhibits are hereby incorporated by reference.
10.6 Bridge Financing Agreement between Kaneb Pipe Line Operating Partnership, L.P., as Borrower, Texas Commerce Bank National Association, as Agent and Texas Commerce Bank National Association, as initial Lender, as amended, dated December 18, 1995, filed herewith.
21 List of Subsidiaries, filed herewith.
24 Powers of Attorney, filed herewith.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K - NONE.
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME DECEMBER 31, 1995 AND 1994
See notes to consolidated financial statements.
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1994
See notes to consolidated financial statements.
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
See notes to consolidated financial statements.
KANEB PIPE LINE PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(a) Kaneb Pipe Line Company owns a combined 2% interest in Kaneb Pipe Line Partners, L.P. as General Partner. (b) The Partnership Agreement allows for an additional issuance of up to 7.8 million senior preference units.
See notes to consolidated financial statements.
1. PARTNERSHIP ORGANIZATION
Kaneb Pipe Line Partners, L.P. (the "Partnership"), a master limited partnership, owns and operates a refined petroleum products pipeline business and a petroleum products and specialty liquids storage and terminaling business. The Partnership operates through Kaneb Pipe Line Operating Partnership, L.P. ("KPOP"), a limited partnership in which the Partnership holds a 99% interest as limited partner. Kaneb Pipe Line Company (the "Company"), a wholly-owned subsidiary of Kaneb Services, Inc. ("Kaneb"), as general partner holds a 1% general partner interest in both the Partnership and KPOP. The Company's 1% interest in KPOP is reflected as the minority interest in the financial statements.
In April 1993, the Partnership completed a public offering of 2.25 million Senior Performance Units ("SPU") at $25.25 per unit. The net proceeds from the offering of $52.8 million was allocated among the equity accounts of the unitholders, general partner and minority interest based on the ownership percentages of the partnership subsequent to the offering. The Partnership believes this allocation approximates the distribution of the net assets upon liquidation, assuming the Partnership was liquidated at net book value. However, the actual distribution of the net assets upon liquidation could be significantly different as a result of the fair market value of the net assets being substantially different than the net book value of the Partnership's assets in the accompanying financial statements.
In September 1995, a subsidiary of the Company sold 3.5 million of the Preference Units ("PU") it held in a public offering and exchanged 1.0 million of its PU's for 1.0 million Preference B Units, which are subordinate to the PU's. At December 31, 1995, the Company owns an approximate 31% interest as a limited partner in the form of Preference Units, Preference B Units and Common Units, and as a general partner owns a combined 2% interest. The SPU's represent an approximate 44% interest in the Partnership and the 3.5 million publicly held Preference Units represent an approximate 22% interest. An approximate 1% ownership interest in the form of 60,500 PU's and 154,000 Common Units is held by officers of Kaneb.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are followed by the Partnership in the preparation of the consolidated financial statements. The preparation of the Partnership's financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Partnership's policy is to invest cash in highly liquid investments with maturities of three months or less, upon purchase. Accordingly, uninvested cash balances are kept at minimum levels. Such investments are valued at cost, which approximates market, and are classified as cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are carried at historical cost. Certain leases have been capitalized and the leased assets have been included in property and equipment. Additions of new equipment and major renewals and replacements of existing equipment are capitalized. Repairs and minor replacements that do not materially increase values or extend useful lives are expensed. Depreciation of property and equipment is provided on a straight-line basis at rates based upon expected useful lives of various classes of assets. The rates used for pipeline and storage facilities of KPOP are the same as those which have been promulgated by the Federal Energy Regulatory Commission.
REVENUE AND INCOME RECOGNITION
KPOP provides pipeline transportation of refined petroleum products and liquified petroleum gases. Revenue is recognized upon receipt of the products into the pipeline system.
ST provides terminaling and other ancillary services. Fees are billed one month in advance and are reported as deferred income. Revenue is recognized in the month services are provided.
ENVIRONMENTAL MATTERS
The operations of the Partnership are subject to federal, state and local laws and regulations relating to protection of the environment. Although the Partnership believes its operations are in general compliance with applicable environmental regulations, risks of additional costs and liabilities are inherent in pipeline and terminal operations, and there can be no assurance significant costs and liabilities will not be incurred by the Partnership. Moreover, it is possible that other developments, such as increasingly stringent environmental laws, regulations and enforcement policies thereunder, and claims for damages to property or persons resulting from the operations of the Partnership, could result in substantial costs and liabilities to the Partnership.
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Generally, the timing of these accruals coincides with the completion of a feasibility study or the Partnership's commitment to a formal plan of action. The Partnership has recorded a reserve for environmental claims in the amount of $5.2 million (including $4.4 million relating to the acquisitions of the West Pipeline and Steuart - see Note 3) at December 31, 1995 in other liabilities on the accompanying balance sheet.
The Company has indemnified the Partnership against liabilities for damage to the environment resulting from operations of the pipeline prior to October 3, 1989 (date of formation of the Partnership). The indemnification does not extend to any liabilities that arise after such date to the extent that the liabilities result from changes in environmental laws and regulations. In addition, ST's former owner has agreed to indemnify the Partnership against liabilities for damages to the environment from operations conducted by the former owner prior to March 2, 1993. The indemnity, which expires March 1, 1998, is limited in amount to 60% of any claim exceeding $0.1 million, up to a maximum of $10 million.
INCOME TAX CONSIDERATIONS
Income before income tax expense is made up of the following components:
Partnership operations are not subject to federal or state income taxes. However, certain operations of ST are conducted through wholly-owned corporate subsidiaries which are taxable entities. The provision for income taxes for the periods ended December 31, 1995, 1994 and 1993 consists of deferred U.S. federal income taxes of $.6 million, $.6 million and $.4 million, respectively, and current federal income taxes of $.2 million in 1994. The net deferred tax liability of $1.7 million and $1.1 million at December 31, 1995 and 1994, respectively, consists of deferred tax liabilities of $6.3 million and $4.3 million, respectively, and deferred tax assets of $4.6 million and $3.2 million, respectively. The deferred tax liabilites consists primarily of tax depreciation in excess of book depreciation and the deferred tax assets consists primarily of net operating losses. The corporate operations have net operating losses for tax purposes totaling approximately $12.9 million which expire in years 2008 and 2010.
Since the income or loss of the operations which are conducted through limited partnerships will be included in the tax return of the individual partners of the Partnership, no provision for income taxes has been recorded in the accompanying financial statements on these earnings. The tax returns of the Partnership are subject to examination by federal and state taxing authorities. If such examination results in adjustments to distributive shares of taxable income or loss, the tax liability of the partners would be adjusted accordingly.
The tax attributes of the Partnership's net assets flow directly to each individual partner. Individual partners will have different investment bases depending upon the timing and prices of acquisition of partnership units. Further, each partner's tax accounting, which is partially dependent upon their individual tax position, may differ from the accounting followed in the financial statements. Accordingly, there could be significant differences between each individual partner's tax basis and their proportionate share of the net assets reported in the financial statements. Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," requires disclosure by a publicly held partnership of the aggregate difference in the basis of its net assets for financial and tax reporting purposes. Management does not believe that, in the Partnership's circumstances, the aggregate difference would be meaningful information.
ALLOCATION OF NET INCOME AND EARNINGS
Net income is allocated to the limited partnership units in an amount equal to the cash distributions declared for each reporting period and any remaining income or loss is allocated to the class of units that did not receive full distributions (if any). If full distributions are declared to all classes of units, income will be allocated pro rata based on the aggregate amount of distributions declared.
Earnings per SPU and PU are calculated by dividing the amount of net income allocated to the SPU's and PU's by the weighted average number of SPUs and PUs outstanding, respectively.
CASH DISTRIBUTIONS
The Partnership makes quarterly distributions of 100% of its Available Cash, as defined in the Partnership Agreement, to holders of limited partnership units ("Unitholders") and the Company. Available Cash consists generally of all the cash receipts of the Partnership plus the beginning cash balance less all of its cash disbursements and reserves. The Partnership expects to make distributions of Available Cash for each quarter of not less than $.55 per Unit (the "Minimum Quarterly Distribution"), or $2.20 per Unit on an annualized basis, for the foreseeable future, although no assurance is given regarding such distributions. The Partnership expects to make distributions of all Available Cash within 45 days after the end of each quarter to holders of record on the applicable record date. A distribution of $2.20 per unit was paid to Senior Preference Unitholders in 1995, 1994 and 1993. During 1995, 1994 and 1993, the Partnership paid distributions of $2.20, $2.20, and $3.41 (includes $1.21 of arrearage payments), respectively, to the Preference Unitholders. During 1995 and 1994, the Partnership paid distributions of $1.45 and $.55, respectively, per unit to the Common Unitholders. As of December 31, 1995, no arrearages existed on any class of partnership interest.
Distributions by the Partnership of its Available Cash are made 99% to Unitholders and 1% to the Company, subject to the payment of incentive distributions to the General Partner if certain target levels of cash distributions to the Unitholders are achieved. The distribution of Available Cash for each quarter within the Preference Period, as defined, is subject to the preferential rights of the holders of the Senior Preference Units to receive the Minimum Quarterly Distribution for such quarter, plus any arrearages in the payment of the Minimum Quarterly Distribution for prior quarters, before any distribution of Available Cash is made to holders of Preference Units, Preference B Units or Common Units for such quarter. In addition, for each quarter within the Preference Period, the distribution of any amounts to holders of Common Units is subject to the preferential rights of the holders of the Preference B Units to receive the Minimum Quarterly Distribution for such quarter, plus any arrearages in the payment of the Minimum Quarterly Distribution for prior quarters. The Common Units are not entitled to arrearages in the payment of the Minimum Quarterly Distribution. In general, the Preference Period will continue indefinitely until the Minimum Distribution has been paid to the holders of the Senior Preference Units, the Preference Units, the Preference B Units and the Common Units for twelve consecutive quarters. The Minimum Quarterly distribution has been paid to all classes of Unitholders for the quarters ended September 30 and December 31, 1995. Prior to the end of the Preference Period, up to 2,650,000 of the Preference Units and the Preference B Units may be converted into Senior Preference Units on a one-for-one basis if the Third Target Distribution, as defined, is paid to all Unitholders for four full consecutive quarters. The Third Target distribution is reached when distributions of Available Cash equals $2.80 per Limited Partner ("LP") Unit on an annualized basis. After the Preference Period ends all differences and distinctions between the three classes of units for the purposes of cash distributions will cease.
CHANGE IN PRESENTATION
Certain financial statement items for 1994 and 1993 have been reclassified to conform with the 1995 presentation.
3. ACQUISITIONS
Effective March 1, 1993, the Partnership acquired Support Terminal Services, Inc. ("ST"), a petroleum products and specialty liquids storage and terminaling company headquartered in Dallas, Texas, for approximately $65 million, including transaction costs. The acquisition was accounted for as a purchase and, accordingly, the Partnership's consolidated statements of income include the results of operations of ST since March 1, 1993. In connection with the acquisition, the Partnership borrowed $65 million from a group of banks, which was partially repaid with $50.8 million of the proceeds from a SPU offering. The remaining bank debt was refinanced in December 1994 with the issuance of first mortgage notes.
In February 1995, the Partnership acquired, through KPOP, the refined petroleum product pipeline assets (the "West Pipeline") of Wyco Pipe Line Company for $27.1 million plus transaction costs and the assumption of certain environmental liabilities. The West Pipeline was owned 60% by a subsidiary of GATX Terminals Corporation and 40% by a subsidiary of Amoco Pipe Line Company. The acquisition was financed by the issuance of $27 million of first mortgage notes. The assets acquired from Wyco Pipe Line Company did not include certain assets that were leased to Amoco Pipe Line Company and the purchase agreement did not provide for either (i) the continuation of an arrangement with Amoco Pipe Line Company for the monitoring and control of pipeline flows or (ii) the extension or assumption of certain credit agreements that Wyco Pipe Line Company had with its shareholders.
In December 1995, the Partnership acquired the liquids terminaling assets of Steuart Petroleum Company and certain of its affiliates (collectively, "Steuart") for $68 million plus transaction costs and the assumption of certain environmental liabilities. The acquisition price was financed by a $68 million bank bridge loan. The asset purchase agreement includes a provision for an earn-out payment based upon revenues of one of the terminals exceeding a specified amount for a seven-year period beginning in January 1996. The contracts also include a provision for the continuation of all terminaling contracts in place at the time of the acquisition, including those contracts with Steuart.
The acquisitions have been accounted for using the purchase method of accounting. The total purchase price has been allocated to the assets and liabilities based on their respective fair values based on valuations and other studies. The allocation of the Steuart purchase price presented in the consolidated financial statements is preliminary and subject to adjustment.
The following summarized unaudited pro forma consolidated results of operations for the years ended December 31, 1995 and 1994, assume the acquisitions occurred as of the beginning of each period presented. The unaudited pro forma financial results have been prepared for comparative purposes only and may not be indicative of the results that would have occurred if the Partnership had acquired the pipeline assets of the West Pipeline and the liquids terminaling assets of Steuart on the dates indicated or which will be obtained in the future.
4. PROPERTY AND EQUIPMENT
The cost of property and equipment is summarized as follows:
5. LONG-TERM DEBT AND LEASES
In 1994, a wholly-owned subsidiary of the Partnership issued $33 million of first mortgage notes ("Notes") to a group of insurance companies. The Notes bear interest at the rate of 8.05% per annum and are due on December 22, 2001. Also in 1994, another wholly-owned subsidiary entered into a Restated Credit Agreement with a group of banks that provides a $15 million revolving credit facility through November 30, 1997. The credit facility bears interest at variable interest rates and has a commitment fee of .2% per annum of the unused credit facility. No amounts were drawn under the credit facility at December 31, 1995 or 1994. In 1995, the Partnership financed the acquisition of the West Pipeline with the issuance of $27 million of Notes due February 24, 2002 which bear interest at the rate of 8.37% per annum. The Notes and the credit facility are secured by a mortgage on substantially all of the pipeline assets of the Partnership and contain certain financial and operational covenants. The acquisition of the Steuart terminaling assets has been initially financed by a $68 million bridge loan from a bank. The bridge loan bears interest at a variable rate based on the LIBOR rate plus 50 to 100 basis points and its maturity has been extended until March 1997. The Partnership expects to refinance this obligation under terms similar to the Notes discussed above. The bridge loan is secured, pari passu with the existing Notes and credit facility, by a mortgage on the East Pipeline.
The following is a schedule by years of future minimum lease payments under capital and operating leases together with the present value of net minimum lease payments for capital leases as of December 31, 1995:
(a) The capital lease is secured by certain pipeline equipment and the Partnership has accrued its option to purchase this equipment for approximately $4.1 million at the termination of the lease.
Total rent expense under operating leases amounted to $.9 million for each of the years ended December 31, 1995, 1994 and 1993.
KPOP and the Company entered into a payment priority agreement related to the capital lease obligation for pipeline equipment under which the Company is primarily liable for rental payments of approximately $2.9 million per year through April 1997 and KPOP is primarily liable for the remaining rental payments. KPOP has recorded a receivable of $3.5 million at December 31, 1995 from the Company for the present value of these future lease payments. This receivable bears interest at an annual rate of 13.8%, which reflects the imputed interest rate on the capital lease. KPOP recorded interest income of $.7 million, $.9 million and $1.2 million from the Company on this receivable balance for the periods ended December 31, 1995, 1994 and 1993, respectively. The amount of the capital lease obligation that exceeds the receivable from the Company ($6.7 million at December 31, 1995) represents the present value of the lease obligation and purchase option due subsequent to April 1997.
The Partnership believes the carrying value of the Notes and the bank bridge loan represent their estimated fair value and it is not practicable to estimate the fair value of the capital lease obligation and the associated receivable from the general partner.
6. RELATED PARTY TRANSACTIONS
The Partnership has no employees and is managed and controlled by the Company. The Company and Kaneb are entitled to reimbursement of all direct and indirect costs related to the business activities of the Partnership. These costs, which totaled $9.5 million, $9.0 million and $8.7 million for the years ended December 31, 1995, 1994 and 1993, respectively, include compensation and benefits paid to officers and employees of the Company and Kaneb, insurance premiums, general and administrative costs, tax information and reporting costs, legal and audit fees. Included in this amount is $7.7 million, $7.0 million and $7.0 million of compensation and benefits, including pension costs, paid to officers and employees of the Company for the periods ended December 31, 1995, 1994 and 1993, respectively, which represent the actual amounts paid by the Company or Kaneb. In addition, the Partnership paid $.2 million during each of these respective periods for an allocable portion of the Company's overhead expenses. At December 31, 1995 and 1994, the Partnership owed the Company $1.0 million and $.8 million, respectively, for these expenses which are due under normal invoice terms.
7. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly operating results for 1995 and 1994 are summarized as follows:
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Kaneb Pipe Line Partners, L.P.
In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) and (2) on page 34 present fairly, in all material respects, the financial position of Kaneb Pipe Line Partners, L.P. and its subsidiaries (the "Partnership") at 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. These financial statements are the responsibility of the Partnership's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Dallas, Texas February 27, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Kaneb Pipe Line Partners, L.P. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KANEB PIPE LINE PARTNERS, L.P. By: Kaneb Pipe Line Company ----------------------- General Partner
By: EDWARD D. DOHERTY ------------------------- (Edward D. Doherty) Chairman of the Board and Chief Executive Officer Date: March 28, 1996
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of Kaneb Pipe Line Partners, L.P. and in the capacities with Kaneb Pipe Line Company and on the date indicated.
SIGNATURE TITLE DATE --------- ----- ----
Principal Executive Officer EDWARD D. DOHERTY - ---------------------------- (Edward D. Doherty) Chairman of the Board and March 28, 1996 Chief Executive Officer
Principal Accounting Officer JIMMY L. HARRISON - ---------------------------- (Jimmy L. Harrison) Controller March 28, 1996
Directors SANGWOO AHN - ---------------------------- (Sangwoo Ahn) Director March 28, 1996
JOHN R. BARNES - ---------------------------- (John R. Barnes) Director March 28, 1996
M.R. BILES - ---------------------------- (M.R. Biles) Director March 28, 1996
CHARLES R. COX - ---------------------------- (Charles R. Cox) Director March 28, 1996
EDWARD D. DOHERTY - ---------------------------- (Edward D. Doherty) Director March 28, 1996
PRESTON A. PEAK - ---------------------------- (Preston A. Peak) Director March 28, 1996
RALPH A. REHM - ---------------------------- (Ralph A. Rehm) Director March 28, 1996
JAMES R. WHATLEY - ---------------------------- (James R. Whatley) Director March 28, 1996
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ------- -----------
3.1 Amended and Restated Agreement of Limited Partnership dated September 27, 1989, filed as Appendix A to the Registrant's Prospectus, dated September 25, 1989, in connection with the Registrant's Registration Statement on Form S-1, S.E.C. File No. 33-30330 and incorporated herein by reference.
10.1 ST Agreement and Plan of Merger date December 21, 1992 by and between Grace Energy Corporation, Support Terminal Services, Inc., Standard Transpipe Corp., and Kaneb Pipe Line Operating Partnership, NSTS, Inc. and NSTI, Inc. as amended by Amendment of STS Merger Agreement dated March 2, 1993. Said document is on file as Exhibit 10.1 of the exhibits to Registrant's report on Form 8-K filed with the Securities and Exchange Commission on March 16, 1993, and said exhibit is hereby incorporated by reference.
10.2 Note Purchase Agreement dated December 22, 1994. Said document is on file as Exhibit 10.2 of the exhibits to Registrant's report on Form 8-K filed on March 13, 1995, and said exhibit is hereby incorporated by reference.
10.3 Restated Credit Agreement dated December 22, 1994 between Kaneb Pipe Line Operating Partnership, L.P., Texas Commerce Bank National Association, and certain Lenders. Said document is on file as Exhibit 10.3 of the exhibits to Registrant's report on Form 10-K filed for the year ended December 31, 1994, and said exhibit is hereby incorporated by reference.
10.4 Agreement for Sale and Purchase of Assets dated February 19, 1995 by and among Wyco Pipe Line Company and Kaneb Pipe Line Operating Partnership, L.P.. Said document is on file as Exhibit 10.1 of the exhibits to Registrant's report on Form 8-K filed with the Securities and Exchange Commission on March 13, 1995, and said exhibit is hereby incorporated by reference.
10.5 Asset Purchase Agreement by and among Steuart Petroleum Company, SPC Terminals, Inc., Support Terminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. dated August 27, 1995; Piney Point Pipeline Asset Purchase Agreement by and among Piney Point Industries, Inc., Support Teminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. dated August 27, 1995; Purchase Agreement by and among Steuart Investment Company, Support Terminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. for Cockpit Point dated August 27, 1995; Amendment to Asset Purchase Agreements by and among Steuart Petroleum Company, SPC Terminals, Inc. Piney Point Industries, Inc., Steuart Investment Company, Support Terminals Operating Partnership, L.P. and Kaneb Pipe Line Operating Partnership, L.P. Said documents are on file as Exhibits 10.1, 10.2, 10.3, and 10.4 of the exhibits to Registrant's report on Form 8-K filed with the Securities and Exchange Commission on January 3, 1996, and said exhibits are hereby incorporated by reference.
10.6 Bridge Financing Agreement between Kaneb Pipe Line Operating Partnership, L.P., as Borrower, Texas Commerce Bank National Association, as Agent and Texas Commerce Bank National Association, as initial Lender, as amended, dated December 18, 1995, filed herewith.
21 List of Subsidiaries, filed herewith.
24 Powers of Attorney, filed herewith.
27 Financial Data Schedule


ITEM 1. BUSINESS
GENERAL
Robinson Nugent, Inc. (the "Company"), an Indiana corporation organized in 1955, designs, manufactures and markets electronic devices used to interconnect components of electronic systems. The Company's principal products are integrated circuit sockets; connectors used in board-to-board, wire-to-board, and wire-to-wire applications; and custom molded-on cable assemblies. The Company also offers application tooling that is used in applying wire and cable to its connectors.
The Company's products are used in electronic telecommunication equipment including switching and networking equipment such as servers and routers, modems and PBX stations; data processing equipment such as mainframe computers, personal computers, workstations, CAD systems and peripheral equipment such as printers, disk drives, plotters and point-of-sale terminals; industrial controls and electronic instruments, both medical and industrial; consumer products; automotive electronics; and in a variety of other applications.
Major markets are the United States, Europe, Japan, and the southeast Asian countries including Singapore and Malaysia. Manufacturing facilities are located in New Albany, Indiana; Dallas, Texas; Kings Mountain, North Carolina; Fremont, California; Delemont, Switzerland; Sungai Petani, Malaysia; Inchinnan, Scotland; and, as of February, 1995, Hamont-Achel, Belgium.
Corporate headquarters are located in New Albany, Indiana, which is the plant site for the Company's engineering, research and development, preproduction and testing of new products.
RECENT DEVELOPMENTS
In February 1995, the company acquired Teckino Manufacturing B.V.B.A. ("Teckino"), a manufacturing and engineering development company located in Hamont-Achel, Belgium. The company produces connectors and other specialized electronic molded parts. The acquisition has been accounted for by the purchase method of accounting and the results of operations of Teckino have been included in the company's consolidated financial statements since the date of acquisition.
The Company formed ISOCON L.C., a joint venture with Components Circuits Inc. of Tempe, Arizona in May, 1995. The new company, ISOCON L.C., was established to merge the technical and marketing resources of the two companies for the development and sale of special electronic connector products. These products address the opportunities created by emerging semiconductor packaging types known as area arrays and incorporate potential technology owned by ISOCON, L.C.
PRODUCTS
The Company produces a broad range of sockets that accommodate a variety of integrated circuit package styles. Sockets are offered for dual-in-line and pin grid array devices, as well as leaded and leadless chip carriers. Dual readout (DIMM) sockets were introduced in fiscal 1992. These sockets, which are designed to interconnect in-line memory modules, are among the fastest growing electronic interconnect products in world markets. The design concepts used in the Company's DIMM sockets are unique and involve features that have been protected by U.S. patents.
Sockets are used in a wide variety of applications within electronic equipment but are primarily used to interface integrated circuits, such as microprocessors and memory devices to an electronic printed circuit board. The demand for sockets is directly related to the demand for products which employ integrated circuits. In many applications, semiconductor devices are subject to replacement, which encourages the use of a socket rather than soldering the device directly to the printed circuit board.
The worldwide demand for dual in-line sockets is decreasing due to the maturity of the semiconductor package, while the demand for high-density and surface-mount sockets is increasing. The growing demand is due to the development of semiconductor package styles with very large counts of signal ports and new technologies such as ball grid and land grid array packages and interstitial pin patterns. The Company's newest socket products are designed to meet high-density and surface-mount requirements and contributed to the Company's sales growth in 1995.
The Company provides a broad range of electronic connectors, such as insulation displacement flat cable connectors (IDC), used in wire-to-wire and wire-to-board applications. The range of connectors also includes several product styles that provide for board-to-board or board-stacking (parallel- mounting) applications. The use of insulation displacement connectors in electronic hardware increases productivity by eliminating labor involved in stripping insulation from wires prior to attachment to the leads, and permits automation of the manufacture of cable assemblies.
The Company manufacturers a line of PCMCIA memory card sockets and headers for interconnect faxing, networking and computer expansion capabilities. In 1995, the Company broadened this line to include type III card connectors and other options which enhanced the interchangability of this product line within this industry.
The Company offers several product families in the two-piece style of connectors. These connectors are used to connect printed circuit boards which are positioned either at right angles, in-line, or parallel stacked at close intervals. The products offered include .025 inch square post connectors and receptacle sockets; DIN series connectors; high-density, high-pin-count connectors (HDC); half-pitch, high-density (PAK-50) connectors; 2-millimeter- spaced, high-density connectors (PAK-2); and a new higher pin count 2- millimeter-spaced connector (METPAK-Registered Trademark-2) used in backplane applications. In 1995, a new line of high density 1.0mm, .8mm and .5mm board stacking interconnects were introduced by the Company to address the growing demand for
miniaturized connectors in the portable computer and communication equipment markets.
The DIN series of connectors has many variations in connecting means and pin count. The product is based on a European standard, but has gained wide acceptance in the U.S. and all world markets. While there are a large number of producers of DIN connectors in Europe, the Company is one of a limited number of manufacturers producing the product in the U.S.
The high-pin-count, high-density connector (HDC) includes pin counts ranging from 60 to 492 in a three- and four-row configuration. This connector family, along with DIN connectors, is widely used on backplane applications and frequently requires the terminals to be press-fit to the backplane. This is accomplished by forming a compliant section in the tails of the connector contacts that, when pressed into a plated through-hole on a backplane, forms a reliable gas-tight connection without soldering. The Company has become recognized as a leader in press-fit backplane connectors and has focused marketing efforts in promoting its products for this type of application.
The Company's half-pitch (PAK-50) connector family has been accepted as one of the industry's most reliable .050 inch spaced connectors. The contact design and compact shape has gained wide acceptance in applications, such as small form factor computers that require connectors that are highly reliable yet consume little space.
The design of a low profile, surface-mounted socket, called PAK-2 serves the requirements of miniature disk drives and PDA (personal digital assistance) sectors of this industry.
The METPAK-Registered Trademark-2 series of connectors includes four and five row versions of both standard and inverse configurations. The METPAK- Registered Trademark-2 is a new industry standard connector style used in board- to-board applications and over time will displace some of the more mature product types. This product line has wide acceptance in new designs, primarily in the computer workstation, communication and networking markets.
Technology continues to move the industry to an ever-increasing number of circuits per socket or connector to meet the increasing complexity of electronics systems or the increased capacity and processing speed of semiconductor devices. This results in increased demand for high-density connector products. Just as in sockets, the Company is focusing its new product development in connector products that meet these technology trends. High- density connector products were a major factor for the Company's growth in sales in 1994 and 1995.
Customers expect connector manufacturers to provide special tools required to utilize sockets and connectors. The Company offers a line of insertion and extraction tools in support of the socket, IDC, I/O, and two-piece connector lines.
Cablelink, Incorporated, a wholly-owned subsidiary of the Company, produces cable assemblies of various types including IDC, fabricated and molded-on cable assemblies. Cablelink utilizes Robinson Nugent connectors whenever possible, but also provides cable assemblies with other
manufacturers' connectors if the customer is specific regarding its requirements.
In addition to standard products, the Company provides engineering assistance and design and manufacturing of custom and derivative products. These products may require special production tooling that, in some cases, is paid for by the customer, shared, or amortized over future orders, depending upon contractual agreements reached with the customer. In some cases, the customer supplies the Company with a complete product design, but more often the design is produced solely by Company engineers. Current trends in the market indicate a growing demand for custom and derivative products. There is also an increased demand for the Company's engineers to be involved in the early development of the customer's product design.
RESEARCH, DEVELOPMENT AND ENGINEERING
The Company's engineering efforts are directed toward the development of new products to meet customer needs and improvement of manufacturing processes and adaptation of new materials to all products. New products include new creations as well as design of derivative products to meet both the needs of the general market and customer proprietary custom designs. Engineering development covers new or improved manufacturing processes, assembly and inspection equipment, and the adaptation of new plastics and metals to all products. In recent years, the Company's products have become more sophisticated and complex in response to developments in semiconductors and their application. In 1994, the Company added the engineering capability to analyze customer high-speed applications and to design connectors that reduce electrical interference that can result from very high processing speeds of newer and more powerful microprocessors. In 1995, the Company's European operation's development capabilities were expanded with the acquisition of Teckino. Teckino's developmental skills in precision miniature connecting systems and electronic molded parts will enhance Europe's ability to produce unique designs to fulfill customer requirements. The Company's expenditures for research, development and engineering were approximately $3.1 million in 1995, $2.5 million in 1994, and $2.0 million in 1993.
The Company's joint venture, ISOCON L.C. with Components Circuits, Inc. of Tempe, Arizona, enhances the Company's capabilities in the area array socket market. This technology is designed to connect printed circuit boards to a variety of integrated circuit packages such as land grid arrays, ball grid arrays and multichip modules without the use of solder.
Consistent with industry direction, the Company is also active in improving manufacturing processes through automation and application of the latest technologies and designs to its proprietary assembly equipment. The Company continues to apply advanced technologies, such as laser and video devices, to automatically inspect products during the assembly process. All new assembly machines are direct microcomputer-controlled, which provides greater flexibility in the manufacturing process. The Company continues to install the latest technology in its electroplating process and replace older injection molding machines with the latest programmable controls.
SALES AND DISTRIBUTION
The Company sells its products in the United States and international markets. The major market is the U.S. which produces approximately two-thirds of the consolidated sales of the Company. Its principal markets outside the U.S. are Canada, Europe, including the United Kingdom, Japan, Singapore, Malaysia, Hong Kong, and the emerging market of China. The southeast Asian countries continue to grow rapidly, and the Company has established a marketing and sales headquarters in Singapore. Sales to other Far East countries provide business opportunities and are expected to grow moderately. Sales in China have been initiated and have resulted in the Company doing business in China through its Hong Kong distributor.
Sales outside the U.S. accounted for 40 percent of total sales in fiscal 1995, 34 percent in fiscal 1994 and 33 percent in fiscal 1993. The Company believes that development of global markets is essential. This is particularly the case in Asia where the market is the fastest growing in the world and is currently considered the second largest market for electronics and connector products. The Company does not believe that its international business presents any unusual risks other than with respect to changes in currency exchange rates. The following table sets forth the percentage of Company sales by major geographical location for the periods shown:
YEARS ENDED JUNE 30 --------------------------------------- 1995 1994 1993 ---- ---- ---- United States 60% 66% 67% Europe 25 19 22 Asia 13 14 10 Other 2 1 1 ---- ---- ---- 100% 100% 100% ---- ---- ---- ---- ---- ----
During 1995, the Company had sales to a single customer in excess of 10% of total net sales. No sales to a single customer exceeded 10% of total net sales in 1994 or 1993.
Other financial data relating to domestic and foreign operations are included in Note (16), Business Segment and Foreign Sales, of Notes to Consolidated Financial Statements and the Management's Discussion and Analysis of the Results of Operations and Financial Condition, included herein or incorporated by reference as a part of this Report.
Principal markets in North America, Europe, and Asia are served by the Company's direct sales force and a network of distributors serving the electronic industry. The Company has U.S. regional offices located in the; San Francisco, California; and Chicago, Illinois metropolitan areas. Other Company sales offices are located in Japan, Singapore, England, Germany, Sweden, Netherlands, France, and Italy. These offices service customers to whom the Company sells directly, provide coordination between the plants and customers, and provide technical training and assistance to distributors and manufacturers' representatives in their respective territories. Additional marketing expertise is provided by the product marketing specialists located in New Albany, Indiana; Kings Mountain, North Carolina; London, England; and Eindhoven, Netherlands, who provide assistance and technical information in
support of all field requirements. The Company increased its marketing resources and personnel in 1995 consistent with increased engineering and the launching of new products developed during the year.
The Company engages independent manufacturers' representative firms in the United States, Canada and several Far East countries, who are granted exclusive territories and agree not to carry competing products. These firms are paid on a commission basis on sales made to original equipment manufacturers and to distributors. All representative relationships are subject to termination by either party on short notice.
The Company has an international network of distributors who are responsible for serving their respective customers from an inventory of the Company's products. Approximately 35 percent of the Company's worldwide sales are made through the distributor network. No distributor is required to accept only the franchise of the Company. All distributor agreements are subject to termination by either party on short notice.
BACKLOG
The Company's backlog was approximately $15.3 million at June 30, 1995, $13.6 million at June 30, 1994, and $11.3 million at June 30, 1993. These amounts represent orders with firm shipment dates acceptable to the customers. The Company does not manufacture pursuant to long-term contracts, and purchase orders are generally cancelable subject to payment by the customer for charges incurred up to the date of cancellation. With just-in-time delivery objectives, customers have reduced order quantities, but are placing orders more frequently and expecting shorter lead times from point of order to point of shipment.
COMPETITION
There is active competition in all of the Company's standard product lines. The Company's competitors include both large corporations having significantly more resources than the Company and smaller, highly specialized firms. The Company competes on the basis of customer service, product performance, quality, and price. Management believes that the Company's capabilities in service, in new product design and efforts to reduce cost of products are significant factors in maintaining the Company's competitive position.
MANUFACTURING
The Company's manufacturing operations include plastic molding, electroplating and assembly. The Company designs and builds the majority of its automated and semiautomated assembly machines for use in-house and utilizes subcontractors on a limited basis for product assembly where volume does not warrant the cost of automation.
RAW MATERIALS AND SUPPLIES
The Company utilizes copper alloys, precious metals, and plastics in the manufacture of its products. Although some raw materials are available from
only a few suppliers, the Company believes it has adequate sources of supply for its raw material and component requirements.
Use of gold is significant, but has declined in demand over the past several years. Plating processes using ROBEX-TM-, a palladium nickel alloy, and tin have accelerated in demand from customers of the Company. As a result of a gold consignment agreement with a bank, the Company is not exposed to a significant market risk of carrying gold inventories. The Company is not required to procure its gold under this arrangement, and may acquire gold from other sources. The Company is not obligated beyond one year with any supplier.
HUMAN RESOURCES
As of June 30, 1995, the Company had approximately 650 full-time employees.
PATENTS AND TRADEMARKS
Management believes that success in the electronic connector industry is dependent upon engineering and production skills and marketing ability; however, there is a trend in the industry toward more patent consideration and protection of proprietary designs and knowledge. The Company has pursued patent applications more frequently. The Company reviews each new product design for possible patent application. The Company has been granted several patents over the past three years and is presently awaiting acceptance on other pending applications. The Company has obtained registration of its trade and service marks in the United States and in major foreign markets.
ENVIRONMENT
The Company's manufacturing facilities are subject to several laws and regulations designed to protect the environment. In the opinion of management, the Company is complying with those laws and regulations in all material respects and compliance has not had and is not expected to have a material effect upon its operations or competitive position.
EXECUTIVE OFFICERS OF THE COMPANY
The current executive officers of the Company are:
SERVED IN PRESENT NAME AGE POSITIONS HELD CAPACITY SINCE - - ------------------- --- ----------------- ------------------ Larry W. Burke 55 President & Chief 1990 Executive Officer
Anthony J. Accurso 45 Vice President, 1994 Treasurer & Chief Financial Officer
W. Michael Coutu 44 Vice President of 1992 Operations
Thomas E. Merten 40 Vice President of 1991 Marketing
The Bylaws of the Company provide that the officers are to be elected at each Annual Meeting of the Board of Directors. Under the Indiana Business Corporation Law, officers may be removed by the Board of Directors at any time, with or without cause.
ITEM 2.

ITEM 2. PROPERTIES
The Company owns a 36,000-square-foot building used for its executive offices, engineering department, quality assurance and administrative operations, and an adjacent 83,000-square-foot manufacturing facility located on approximately four acres in New Albany, Indiana. Manufacturing operations at New Albany were terminated on June 30, 1988 as a result of the consolidation of U.S. manufacturing of connectors and sockets in the Company's Dallas, Texas facility. A portion of the manufacturing facility is utilized by the Company's engineering, research and preproduction development groups. Manufacturing operations were reinstituted in 1990 on a limited basis and have been expanded each year thereafter. In addition, the New Albany facility is instrumental in training plant personnel on new equipment prior to release to the manufacturing facilities in New Albany, Dallas, Europe and Malaysia.
The Company owns a 60,000-square-foot manufacturing facility located on approximately five acres in Dallas, Texas, and a 50,000-square-foot manufacturing facility located on approximately two acres in Delemont, Switzerland. The Company's Cablelink operations are in a leased facility of approximately 40,000 square feet in Kings Mountain, North Carolina and a leased facility of approximately 10,000 square feet located in Fremont, California. In June, 1991, a new manufacturing facility with approximately 21,000 square feet was acquired under a long-term lease arrangement in Sungai Petani, Malaysia for expansion of the Cablelink operation. In February, 1992, the Company occupied a manufacturing facility with approximately 10,000 square feet in Issogne, Italy under a three-year lease in connection with the acquisition of its new cable assembly operation. The Company closed this facility in October, 1993 and relocated manufacturing operations to other plant sites.
In July, 1993, the Company acquired a facility with approximately 25,000 square feet in Inchinnan, Scotland under a long-term lease and relocated connector assembly operations from Delemont, Switzerland. In February, 1995, the Company acquired a manufacturing and engineering facility with approximately 14,000 square feet in Hamont-Achel, Belgium as part of the Teckino acquisition.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
Other than ordinary routine litigation incidental to the business, there are no pending legal proceedings to which the Company is a party.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders of the Company during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information included under the caption "Share Price Range and Dividend Information" on page 17 of the Company's 1995 Annual Report to Shareholders (the "1995 Report") is incorporated herein by reference.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
The information contained in the columns "1991-1995" in the table under the caption "Ten-Year Financial Summary" on pages 12 and 13 of the 1995 Report is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE RESULTS OF OPERATIONS.
The information contained under the caption "Management's Discussion and Analysis of the Results of Operations and Financial Condition" on pages 14 through 16 of the 1995 Report is incorporated herein by reference.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information contained in the "Consolidated Financial Statements of the Company and Notes thereto" and the report of independent accountants on pages 18 through 31 in the 1995 Report is incorporated herein by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
The information contained under the caption "Ratification of Selection of Certified Public Accountants" in the Company's definitive 1995 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information included under the captions "Nominees," "Business Experience of Directors," "Family Relationships," and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Company's definitive 1995 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
The information included under the captions "Compensation of Directors," "Compensation Committee Interlocks and Insider Participation," "Executive Compensation," "Report of the Compensation and Stock Option Committees," and "Stock Performance Graph" in the Company's definitive 1995 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the captions "Beneficial Ownership of Common Shares" and "Nominees" in the Company's definitive 1995 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the caption "Certain Transactions" in the Company's definitive 1995 Proxy Statement filed pursuant to Rule 14a-6 is incorporated herein by reference.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS A PART OF THIS REPORT.
(1) FINANCIAL STATEMENTS
Reports of Independent Accountants
Consolidated Balance Sheets as of June 30, 1995, 1994, and 1993
Consolidated Statements of Income for the years ended June 30, 1995, 1994, and 1993
Consolidated Statements of Shareholders' Equity for the years ended June 30, 1995, 1994, and 1993
Consolidated Statements of Cash Flows for the years ended June 30, 1995, 1994, and 1993
Notes to Consolidated Financial Statements
(2) FINANCIAL STATEMENT SCHEDULE
Schedule for the years ended June 30, 1995, 1994, and 1993:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
(3) EXHIBITS
See Index to Exhibits.
(B) REPORTS ON FORM 8-K
The Company did not file a Form 8-K during the last quarter of its fiscal 1995.
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.
ROBINSON NUGENT, INC.
Date: September 21, 1995 By: /s/ Larry W. Burke -------------------- --------------------------------------- Larry W. Burke, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: September 21, 1995 By: /s/ Samuel C. Robinson ------------------- --------------------------------------- Samuel C. Robinson, Director
Date: September 21, 1995 By: /s/ Larry W. Burke ------------------- --------------------------------------- Larry W. Burke, Director, President and Chief Executive Officer (Principal Executive Officer)
Date: September 21, 1995 By: /s/ Patrick C. Duffy ------------------- --------------------------------------- Patrick C. Duffy, Director
Date: September 21, 1995 By: /s/ Richard L. Mattox ------------------- --------------------------------------- Richard L. Mattox, Director
Date: September 21, 1995 By: /s/ Diane T. Maynard ------------------- --------------------------------------- Diane T. Maynard, Director
Date: September 21, 1995 By: /s/ Lawrence Mazey ------------------- --------------------------------------- Lawrence Mazey, Director
Date: September 21, 1995 By: /s/ Jerrol Z. Miles ------------------- --------------------------------------- Jerrol Z. Miles, Director
Date: September 21, 1995 By: /s/ James W. Robinson ------------------- --------------------------------------- James W. Robinson, Director
Date: September 21, 1995 By: /s/ Richard W. Strain ------------------- --------------------------------------- Richard W. Strain, Director
Date: September 21, 1995 By: /s/ Anthony J. Accurso ------------------- --------------------------------------- Anthony J. Accurso, Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
ROBINSON NUGENT, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
JUNE 30, 1995, 1994, AND 1993
Financial Statement Schedule for the years ended June 30, 1995, 1994, and 1993 is included herein:
II Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Robinson Nugent, Inc.
We have audited the accompanying consolidated balance sheets of Robinson Nugent, Inc. and Subsidiaries, as of June 30, 1995, 1994 and 1993, the related consolidated statements of income, shareholders' equity and cash flows and the financial statement schedule for each of the three years then ended as listed in Item 14 of this Form 10-K for the year ended June 30, 1995. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Robinson Nugent, Inc. and Subsidiaries, as of June 30, 1995, 1994 and 1993, and the results of their operations and their cash flows for each of the three years then ended in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein for the years ended June 30, 1995, 1994 and 1993.
COOPERS & LYBRAND L.L.P.
Louisville, Kentucky August 4, 1995
See footnotes on following page.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (CONT'D.) ROBINSON NUGENT, INC. AND SUBSIDIARIES (IN THOUSANDS OF DOLLARS)
ROBINSON NUGENT, INC.
FORM 10-K FOR FISCAL YEAR ENDED JUNE 30, 1995
INDEX TO EXHIBITS
NUMBER SEQUENTIAL ASSIGNED IN NUMBERING SYSTEM REGULATION S-K PAGE NUMBER ITEM 601 DESCRIPTION OF EXHIBIT OF EXHIBIT - - -------------- ---------------------- ----------------
(3) 3.1 Articles of Incorporation of Robinson Nugent, Inc. (Incorporated by reference to Exhibit 3.1 to Form S-1 Registration Statement No. 2-62521.)
3.2 Articles of Amendment of Articles of Incorporation of Robinson Nugent, Inc. filed September 1, 1978 (Incorporated by reference to Exhibit B(1) to Form 10-K Report for year ended June 30, 1980.)
3.3 Articles of Amendment of Articles of Incorporation of Robinson Nugent, Inc. filed November 14, 1983 (Incorporated by reference to Exhibit 3.3 to Form 10-K Report for year ended June 30, 1984.)
3.4 Amended and Restated Bylaws of Robinson Nugent, Inc. adopted November 7, 1991. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for year ended June 30, 1992).
(4) 4.1 Specimen certificate for Common Shares, without par value. (Incorporated by reference to Exhibit 4 to Form S-1 Registration Statement No. 2-62521.)
4.2 Rights Agreement dated April 21, 1988 between Robinson Nugent, Inc. and Bank One, Indianapolis, NA. (Incorporated by reference to Exhibit I to Form 8-A Registration Statement dated May 2, 1988.)
4.3 Amendment No. 1 to Rights Agreement dated September 26, 1991. (Incorporated by reference to Exhibit 4.3 to Form 10-K Report for year ended June 30, 1991.)
4.4 Amendment No. 2 to Rights Agreement dated June 11, 1992. (Incorporated by reference to Exhibit 4.4 to Form 8-K Current Report dated July 6, 1992.)
(9) No exhibit.
(10) 10.1 Robinson Nugent, Inc. 1983 Tax-Qualified Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.1 to Form 10-K Report for year ended June 30, 1983.)
10.2 Robinson Nugent, Inc. 1983 Non Tax- Qualified Incentive Stock Option Plan. (Incorporated by reference to Exhibit 10.2 to Form 10-K Report for year ended June 30, 1983.)
10.3 1993 Robinson Nugent, Inc. Employee and Non-Employee Director Stock Option Plan. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for the year ended June 30, 1993.)
10.4 Summary of The Robinson Nugent, Inc. Stock Employee Stock Purchase Plan. (Incorporated by reference to Exhibit 19.2 to Form 10-K Report for the year ended June 30, 1993.)
10.5 Deferred compensation agreement dated May 10, 1990 between Robinson Nugent, Inc. and Larry W. Burke, President and Chief Executive Officer, and related agreement dated May 10, 1990 between Robinson Nugent, Inc. and PNC Bank, Kentucky, Inc.(formerly Citizens Fidelity Bank and Trust Company of Louisville, Kentucky) as trustee. (Incorporated by reference to Exhibit 19.1 to Form 10-K Report for year ended June 30, 1990.)
10.6 Deferred compensation agreement dated May 10, 1990 between Robinson Nugent, Inc. and Clifford G. Boggs, former Vice President, Treasurer and Chief Financial Officer, and related agreement dated May 10, 1990 between Robinson Nugent, Inc. and PNC Bank, Kentucky, Inc. (formerly Citizens Fidelity Bank and Trust Company of Louisville, Kentucky) as trustee. (Incorporated by reference to Exhibit 19.2 to Form 10-K Report for year ended June 30, 1990.)
10.7 Summary of Robinson Nugent, Inc. Bonus 23 Plan for the fiscal year ended June 30, 1995.
(11) No exhibit.
(12) No exhibit.
(13) 1995 Annual Report to Shareholders of 24 Robinson Nugent, Inc.
(16) No exhibit.
(18) No exhibit.
(21) The subsidiaries of the registrant. 48
(22) No exhibit.
(23) Consent of Coopers & Lybrand L.L.P. 49 Independent Accountants
(24) No exhibit.
(27) Financial Data Schedule.
(28) No exhibit.