Item 1. Business
Aerovox's predecessor, Aerovox Corporation, began in 1922 producing crystal wireless radios. In 1973, the Aerovox AC capacitor operations, including a plant in New Bedford, Massachusetts, together with the Aerovox name, were purchased from Aerovox Corporation by a newly-created corporation, Aerovox Industries, which was headed by Clifford H. Tuttle, Aerovox's current President and Chairman. In 1978, RTE Corporation ("RTE"), a manufacturer of distribution transformers and other utility electrical products, purchased all of the assets of Aerovox Industries through its newly organized subsidiary, Aerovox Incorporated, a Massachusetts corporation ("Aerovox Massachusetts"). In 1988, RTE was acquired by Cooper Industries ("Cooper"), and Aerovox Massachusetts became an indirect wholly-owned subsidiary of Cooper, through Aerovox Holding Company ("AHC"); a Delaware corporation incorporated on May 3, 1988. On May 26, 1989, Aerovox Incorporated was merged into AHC and AHC's name was changed to Aerovox Incorporated. The sole purpose of this merger was to eliminate the passive holding company structure. On February 26, 1990, 5,095,086 shares of Aerovox Common Stock were distributed to Cooper shareholders of record on May 5, 1989.
On March 5, 1993, Aerovox purchased all the stock of Aero M, Inc., an aluminum electrolytic capacitor manufacturer, from Cooper Industries. This company now operates as two divisions: Aero M Group in Juarez, Mexico and the Aerovox Foil Division in Huntsville, Alabama. On March 11, 1993, Aerovox purchased certain assets of British aluminum electrolytic capacitor manufacturer, BH Components Ltd., and formed a new company, BHC Aerovox Ltd. which is headquartered in Weymouth, England.
The Company now consists of four divisions: the Aerovox Group, Aero M Group, BHC Aerovox Ltd., and the Aerovox Foil Division which are more fully described below.
AEROVOX GROUP
The Aerovox Group, headquartered in New Bedford, Massachusetts, is a leading manufacturer of film capacitors. The Group manufactures AC capacitors, used primarily in air conditioners (with both the compressor and fan motor), fluorescent lighting, high intensity discharge (HID) lighting, microwave ovens and other industrial applications. The Group also manufactures DC capacitors primarily for the communications industry and for various power supply applications; electromagnetic interference (EMI) filters used primarily in AC power supplies for electronic equipment;
power factor correction equipment and DC energy discharge capacitors used in medical equipment, photocopiers, fusion power and various government research and development programs.
Products and Markets
Capacitors are basic electrical components that store electrical energy and regulate the frequency, timing and condition of electrical signals. They are used to release predetermined amounts of energy and assist in running an electrical device, to send predetermined amounts of energy to start an electrical device, or to store energy for releases at unscheduled future times. A principal functional element of every capacitor is its dielectric (nonconductive) material, which functions as an insulator separating two electrically charged plates (electrodes). Dielectric systems can be made using a variety of materials, such as air, ceramic, tantalum oxide, aluminum oxide, polypropylene film and paper.
All the Aerovox Group's AC capacitors are manufactured with polypropylene film and/or kraft paper, or polyester film (used in small units) as the dielectric system. DC Film capacitors utilize polyester films and polypropylene (for high frequency applications) as the dielectric system.
EMI filters protect electronic equipment from electrical interference ("noise") coming from the power source and suppress high frequency interference that would otherwise be transmitted out of the equipment along the power cord. EMI filters can also be used to suppress high frequency and unintentional "noise" generated in electronic and electromechanical equipment. Applications for EMI filters include computer and computer peripheral equipment, telecommunications and variable speed drives. They are also used in sensitive electronic test and medical equipment.
The Aerovox Group also produces low and medium voltage AC power factor correction systems. These systems are installed in manufacturing facilities, large office buildings and apartment buildings and hospitals where use of motor- driven equipment, air conditioning and specialized medical equipment is widespread. Power factor correction capacitors improve a facility's electrical system efficiency thus reducing power costs; they can also reduce the incidence of such system problems as brownouts.
The Aerovox Group offers a complete line of high voltage, multipurpose DC energy storage and discharge capacitors for both industrial and government applications. The smaller models in this product line are used as components in photocopiers, laser equipment, defibrillators, power supply systems and welding equipment. The Group's larger DC capacitors are used in government and university fusion power and particle acceleration
research products, government weaponry systems, in equipment for high energy x- rays and in high speed trains.
Competition
AC capacitors are made by several domestic and foreign manufacturers, and competition is intense. Aerovox and the General Electric Company are the primary producers of AC metallized film capacitors in North America, each offering a full line of AC products. The other suppliers of these products are generally smaller and do not offer a full line.
In the North American AC capacitor market, Aerovox competes almost entirely with domestic manufacturers. Offshore competition has not been a major factor in this market because normally the weight of a typical AC capacitor in relation to its cost makes it uneconomical for European and Far Eastern suppliers to ship such capacitors to the United States. The principal competitive factors in the industry include product reliability, competitive prices, delivery, customer service, and the ability to meet customer specifications.
The Aerovox Group is not a major supplier of general purpose AC capacitors in either Europe or Asia and faces strong competition from locally based manufacturers in those markets. However, it is becoming the market leader in various specialty/niche products in the European marketplace.
There are also a significant number of DC wound film capacitor manufacturers, both domestic and international, that serve the North American market and, accordingly, the Aerovox Group faces stiff competition in this market. The competitive factors are primarily price and delivery.
A significant number of EMI custom filter manufacturers serve the North American marketplace for this product providing strong competition to the Aerovox Group. The principal competitive factors are technical support, quality, delivery and price.
Manufacturing
Many of the Aerovox Group manufacturing processes are automated; mechanization is essential to its ability to control costs in order to meet competitive prices and still maintain acceptable profit margins. The control of quality levels is an equally important function throughout all departments of the Group and various tests are conducted to assure continuity of high standards. The Group also utilizes an advanced materials requirement planning system; an on-line closed-loop data based system which manages customer orders from order entry through shipping and invoicing.
Each AC capacitor consists of one or more functional "sections" that are enclosed in a metal or plastic container, or have a wax or pitch coating, or are wrapped in polyester tape. Sections are produced on a five-day basis in two production areas - one that produces metallized polypropylene sections and one that produces other types of dielectric system sections (working two shifts). Container covers are produced in both plastic (on a three shift basis) and metal designs (on a two shift basis) in two production areas and are fed to the assembly lines where the sections are assembled into containers to finalize the packaging process. The assembled product is then filled or impregnated with an oil. Each capacitor is then electrically tested and a visual inspection conducted. Some capacitors are painted, if required, and all are marked prior to packaging and shipping.
The Company formed a maquiladora, Aerovox de Mexico, S.A. in Juarez, Mexico, in December 1992, to transfer high labor content AC capacitor products and EMI filters for assembly.
The DC wound film capacitor operation consists of three production lines: radial box (various sizes); axial leaded capacitors (both round and flat); and special designs and configurations. The basic difference between these three lines is the method of packaging the wound metallized film section for the required application. The section winding is performed in one department. The sections are then separated in a preparation area for zinc end spraying and then distributed to the proper production area for assembly, packaging and testing.
The Group's EMI filter products are designed at the Group's New Bedford, Massachusetts, facility. The filters consist of various components, typically including various capacitors, resistors and a copper wire-wrapped magnetic core, all precisely arranged within a steel or plastic container. The completion processes include filling the remaining space in the container with a petroleum distillate, sealing the container and electrically testing the finished product. Prior to 1993, the actual assembly of filters was performed by two subcontractors at two different locations in Mexico. The Company maquiladora, located in Juarez, Mexico, now performs the assembly operations of the EMI filters.
A special products department in New Bedford assembles the power factor correction systems and energy storage and discharge capacitor product lines on a one-shift basis.
AEROVOX FOIL DIVISION
In 1995, the Aerovox Foil Division, previously part of the Aero M Group, was established as an autonomous organization. This Division etches and forms (chemical and electrical processes) essentially pure aluminum foil to meet the capacitance and voltage specifications of finished
aluminum electrolytic capacitors. Slitting the processed foil to required widths is also completed at the Huntsville, Alabama facility before the foil is sent to Aero M or BHC for assembly into finished capacitors.
AERO M GROUP
The Aero M Group is a leading manufacturer of AC voltage aluminum electrolytic capacitors for the electrical industry as well as various types of DC voltage aluminum electrolytic large can computer grade capacitors for electronic and electrical power supply applications. All products of this group are assembled by Aerovox de Mexico, S.A., a maquiladora formed by the Company in Juarez, Mexico.
Products and Markets
Aero M's AC voltage aluminum electrolytic capacitors, are produced primarily for motor-start applications providing torque for single phase electric motors, or for gear applications used as a short period electric motor run.
Aero M DC voltage aluminum electrolytic capacitors are used in the electronic industry primarily for large can applications such as DC power supplies, uninterruptible power supplies, motor drives and energy discharge applications such as welding, strobes and photoflash. The Group also produces a variety of low profile "snap-ins", radial and axial tubular capacitors.
Competition
In the North American AC motor-start capacitor market, Aero M has only one major competitor - North American Philips. Offshore competition has not been a factor in this market. The principal competitive factors in the industry are delivery, quality, customer service and pricing.
The large can computer grade DC capacitor market is dominated by CDE, and North American Philips and other foreign-owned domestic manufacturers. This very competitive marketplace has minimum to no standardization and is considered an application-specific product normally requiring design-in and qualification testing by its customers. The principal competitive factors in this industry are technical capability and support, quality, delivery and pricing.
Manufacturing
The key material element of an aluminum electrolytic capacitor is an essentially pure aluminum foil that has been processed, chemically and electrically, to meet the capacitance and voltage specifications of the
finished capacitor. This processing, known as etching and forming of the aluminum foil, is done at the Aerovox Foil Division in Huntsville, Alabama. Slitting of the processed foil to required widths is also completed at this plant. The foil is then forwarded to the Aero M Juarez, Mexico facility for assembly into a finished aluminum electrolytic capacitor. On separate assembly lines, the aluminum foil is wound into the required sizes and assembled into containers, filled with the appropriate electrolyte, tested and marked. In-can electrical aging to prevent defects caused by surge currents delivers highly reliable capacitors to the packaging and shipping docks.
BHC AEROVOX LTD.
BHC Aerovox Ltd., located in Weymouth, England, is one of Europe's leading manufacturers of aluminum electrolytic capacitors with sales throughout Europe.
Products and Markets
BHC Aerovox is the major supplier of AC motor-start capacitors to the European market, serving the fractional horsepower motor and the compressor markets. Their leading edge technology high voltage DC capacitors are supplied to all the major European motor drives manufacturers. Other applications include uninterruptible power supplies, telecommunication power supplies, traction units for trains, welding equipment and other general industrial electronics applications.
In 1995, a new building created 40% more space for expansion of the aluminum production and for introduction of a product line for microwave oven capacitors.
Competition
There is keen competition from a number of European and Far Eastern suppliers for all of the aluminum products made by BHC Aerovox. In each of the main countries, there is at least one local supplier. BHC Aerovox has increased its market share by offering technical backup to support a range of high quality, technically advanced products.
There is only one European competitor for microwave capacitors (in Italy). The main competitors are in Korea and the United States. BHC Aerovox will offer the flexibility of a local supplier.
Manufacturing
BHC Aerovox purchases etched aluminum foil from several sources, including the Aerovox Foil Division. The etched foil is processed to form a dielectric (aluminum oxide) layer according to the voltage requirements.
This processed foil is slit to the required width, wound with specially selected tissue, impregnated with an electrolyte fluid and then assembled into containers. A large part of the production is for custom designs to meet the specific customer applications.
The microwave production is based on the proven technology from Aerovox USA, but incorporates state-of-the-art impregnation equipment.
GENERAL
Sales and Distribution
Aerovox sells its products worldwide to over 1,000 customers, primarily original equipment manufacturers ("OEMs"), who purchase capacitors and other products manufactured by the Company for use as components in the products they manufacture. No one customer, in 1995, accounted for 10% or more of the net sales of the Company. In 1995, approximately 38% of the Company's net sales were to its 10 largest customers and 83% were made to its 100 largest customers. The Company expects that sales to these customers will continue to represent a significant portion of its total sales.
Company foreign sales, primarily United Kingdom sales, represented approximately 19% of total sales in 1995.
The Company markets most of its products to domestic OEMs primarily through 21 sales representative organizations which collectively employ over 200 sales people. Aerovox has enjoyed long-term relationships with many of its sales representatives, some of which have sold Aerovox products in excess of twenty- five years. The Company's low and medium voltage power factor correction capacitors, which are manufactured for installation into industrial, commercial and other type facilities, are marketed through a separate group of industrial sales representatives who specialize in these products. In the United Kingdom and Europe, the Company sells direct and also utilizes 16 sales agents to market Company products. In addition, 12 sales organizations facilitate sales in the Far East, Japan, Australia, Mexico, the Middle East and South America. A smaller portion of the Company's sales are made through distributors and a few long-standing customers are handled as house accounts.
The Company's sales are slightly seasonal and are affected by Company production and shipping schedules; the net sales for the first half of the year are based on an aggregate average of 127 shipping days compared to 111 days for the last half of the year. Approximately 75% of the net sales are produced under agreements negotiated on an annual basis, usually during the fourth quarter of the year. The Company sells approximately 95% of its products on a manufactured-to-order basis. If an order is canceled the
Company bills the customer for materials and labor expended on the order prior to cancellation.
A critical element to the Company's strategy is its emphasis on customer service. The Company maintains continual, multilevel contacts with many customers and places a high priority on meeting each customer's requirements in a timely manner.
Backlog
Aerovox's total backlog represents approximately six weeks of production. The Company's manufacturing lead times vary from four to six weeks depending on the product type, although some filter products and special larger EDC products that must be built specifically to order may require longer lead time. Generally, the Company does not book orders as firm, for purposes of calculating backlog, until 90 days before the scheduled delivery date. The total active backlog was $18.2 million at February 24, 1996, and $23.3 million at February 25, 1995. The Company expects to fill all backlog orders in 1996.
Product Development and Quality Control
Product development and improvement are important elements of Aerovox's strategy. The Company's efforts to develop new products and to improve existing products are continuous and benefit from long-term technical relationships with a number of key suppliers and customers. Formal and informal consultation and discussion on technical matters of common interest with key suppliers have resulted in a number of significant product improvements, including the development of thinner dielectric materials resulting in a more cost efficient capacitor and development of improved capacitor fluid impregnants that reduce capacitance loss.
Most recently, technical exchanges between the Company's operating groups has resulted in the development of additional new products and processes, a trend the Company is fostering particularly with the establishment of an electrolytic technical center at the Huntsville plant.
The Company places a high degree of emphasis on quality control both in product design (through improved design specifications) and in the production process by means of continuous testing conducted throughout the manufacturing cycle. Statistical Quality Control (SQC), a program aimed at encouraging employee involvement and participation through decision making, is typical of the programs that have helped Aerovox achieve significant quality improvements.
To meet worldwide quality standards, the Company has established a goal of achieving company-wide International Standards Organization (ISO) certification for all products. The Aerovox Group earned ISO 9002
certification for products manufactured in the U.S., in December 1994, and for those manufactured in Mexico in November 1995. BHC Aerovox Ltd. has been ISO 9001 certified for several years. The Aero M Group capacitor operation in Juarez, Mexico successfully underwent a reassessment in 1995 to verify that the quality systems that were certified in the former Glasgow location have been established in the new location.
Establishing "partnership" programs with customers is another important aspect of Aerovox's quality endeavors. The Company has established such programs with a number of customers wherein the customer commits to placing a major portion of their business with Aerovox, to forecasting that business, and adhering to a forecasted production schedule. Aerovox, in turn, commits to favorable pricing and to quality levels that allow components to be shipped directly to the customer's manufacturing site without customer inspection.
Raw Materials
The Company purchases raw materials from a number of regional, national and international suppliers. All of these raw materials are available from a variety of suppliers with whom the Company has had long-term relationships. The Company purchases its plain and metallized polypropylene from several sources in Europe and Asia and four sources in the United States. There are four Company approved suppliers for metallized polyester, two in the United States and two in Europe. A number of sources are approved to provide aluminum foil for the Company's electrolytic products - three in the United States, four in Europe, and two in Asia.
Patents, Licenses and Trademarks
The Company's most important intellectual property is its capacitor manufacturing processes which have been developed over a period of many years. Aerovox has approximately 29 active patents or pending patents.
Aerovox licenses some of its product technology and process know-how to Lumisistemas in Mexico. This technology licensing activity does not generate material amounts of revenue for Aerovox.
The Aerovox trademark is registered or registration is pending in 23 countries in Europe, North and South America, the Far East, the Middle East and Australia. This trademark has been in force since 1976. In addition, the Company holds or has pending, 18 other United States registered trademarks, some of which are registered in other countries, including the Aero M trademark. The duration of Aerovox's product trademark registrations range from one year to fifty-nine years. The Company believes that its trademark status helps to maintain the proprietary nature of its products.
Employees
As of February 4, l996, Aerovox had 1,607 employees worldwide. An aggregate of 295 employees hold salaried management, supervisory, sales and clerical positions and 1,311 hourly employees are engaged in production and related activities. Unions represent 2.5% of the employees. None of the Company's production departments are unionized. Approximately 275 employees have been with their respective Aerovox company for 10 years or more.
Aerovox considers its employee relations to be good. There have been no labor stoppages in recent years, and union contracts have been renegotiated without difficulty. A new three year agreement was reached with the International Union of Operating Engineers in April 1995, and a new contract with the International Brotherhood of Electrical Workers will be negotiated by the Aerovox Group in April 1996.
Environmental Compliance
The Company has made substantial capital expenditures on environmental controls and compliance at its facilities. See, "Legal Proceedings - Environmental Compliance" below.
Item 2.

Item 2. Properties
The Company has invested in automation and equipment necessary to increase production capability (primarily for the metallized polypropylene product line) in New Bedford. Capital has also been expended on the research and development laboratory at this location and on equipment to manufacture new products at the Aerovox Group maquiladora. In Weymouth, England, a 27,000 square foot building to facilitate expanded aluminum electrolytic capacitor production and commencement of microwave oven capacitor production was completed in 1995. Equipment at the Aero M plant in Juarez continues to be up-graded and new equipment acquired for greater efficiency and capability. A quality control, and research and development labs were installed at the plant in Huntsville, Alabama during 1995. The Company believes that its facilities are adequate for its foreseeable needs.
Item 3.

Item 3. Legal Proceedings:
The Company settled a claim made against it concerning the cost of clean up of a hazardous waste facility ("Resolve") in Massachusetts, in which the Company will pay an amount currently estimated at $1,500,000, but subject to change. Approximately $715,000 of the amount has been reimbursed to the Company by its primary insurers. The Company initiated appropriate action to collect amounts not covered by the primary insurers from its excess/umbrella liability insurer. The excess insurer denied that it is required to cover this matter and brought suit against the Company seeking a declaration that the excess liability insurance policies issued by it to the Company do not cover claims made by the Company for environmental response costs with respect to the so-called Resolve site. In April of 1993, the insurer moved for Summary Judgment on its claims, relying on a "sudden and accidental" pollution exclusion clause. By order, dated October 8, 1993, the Court denied the insurer's motion but stated that the motion would be allowed unless Aerovox submitted additional evidence concerning property damage caused by an earlier fire at the site. A Motion for Reconsideration was filed by the insurer on December 7, 1993. The Company submitted additional evidence on January 6, 1994, in accordance with the Court's Order. On February 28, 1994, the Court released a Memorandum of Decision and Order Denying Plaintiff's Motion for Reconsideration and Denying the Motion for Summary Judgment, stating that Aerovox had complied with the Court's Order of October 8, 1993, and had submitted evidence tending to show a causal link between a "sudden and accidental" occurrence and property damage for which it was held liable. On April 27, 1994, the insurer moved for reconsideration of the February 28, 1994, decision and, on September 26, 1994, the Court granted the Plaintiff's Motion for Summary Judgment. Accordingly, the Company charged approximately $500,000 to earnings in the third quarter of 1994. On December 23, 1994, the Company filed a notice of appeal of this decision of the Court. The Appeal Brief was filed on February 13, 1996. The Company, based on information presently available, does not believe that
this matter will have a material adverse effect on the Company's financial condition.
On February 9, 1990, the Company entered into a settlement agreement (the "Settlement Agreement") with the United States and The Commonwealth of Massachusetts (the "governments") resolving litigation commenced by the governments in the U.S. District Court for the District of Massachusetts, on December 10, 1983 under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, commonly known as the "Superfund" legislation. The litigation concerned the alleged disposal by various defendants of polychlorinated biphenyls ("PCB's") in the Acushnet River and New Bedford Harbor. The Settlement Agreement resolved all of the governments' claims against the Company and Aerovox Industries, Inc. (the Company's predecessor, now known as Belleville Industries, Inc.) arising out of the contamination of the Acushnet River and New Bedford Harbor with PCB's, including cleanup costs, study costs and damages to natural resources, now or hereafter incurred, except that the Settlement Agreement provides that the governments may seek damages from the Company and Aerovox Industries, Inc. for future liability in the event that such future liability arises out of unknown conditions at the site.
Environmental Compliance
The Company is currently subject to a water discharge permit that allows discharges from the New Bedford, Massachusetts facility of up to 10 parts per billion ("ppb") of PCBs in its stormwater and other discharges. For several years, the Company and the United States Environmental Protection Agency ("EPA") have been discussing possible changes to this permit. At one point, EPA tentatively proposed a limit of 1 ppb, a level that would be difficult, if not impossible, to meet at all times. As a result of extensive comments submitted by the Company, the EPA in the most recent draft permit, dated August 26, 1991, has proposed separate limits for each discrete discharge point from a maximum of 2 ppb for non-contact cooling water to 61 ppb for stormwater discharges. The draft permit would also require the Company to conduct studies to determine if further reductions are possible. After a thorough review of the draft permit, the Company submitted comments to the EPA requesting the clarification of several technical issues. The Company tentatively believes the limits in the most recent draft permit are attainable. The draft permit must also be reviewed by several Massachusetts state agencies. The Company has been informed that the Massachusetts Department of Environmental Protection (the "DEP") has taken the position that the draft permit would not comply with state water quality standards and the EPA has concurred in this view. This assertion may prevent the issuance of the permit at the levels currently proposed. An outlined scope of work for a Storm Water Study Plan and a Best Management Practices Plan was provided to EPA by the Company in December 1992. A response was received in January 1993 from DEP noting concurrence with the scope of work. The following plans were submitted to
EPA and DEP in June 1994: Stormwater Study Plan, Quality Assurance Project Plan, and Stormwater Best Management Practices Plan. Aerovox will proceed with implementation of the plans upon receipt of EPA and DEP approvals. The Company cannot predict what further actions the EPA or DEP may take with regard to the permit or what impact any such actions may have on the Company.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
Not applicable. No matter was submitted to stockholders of the Company during the fourth quarter of fiscal 1995.
Item 4A. Executive Officers - Set forth below are the names, ages and positions of the executive officers of Aerovox in 1995:
Mr. Tuttle received a Bachelor of Arts degree from Amherst College in 1952. In 1964, he founded and became President of Marketing Assistance Incorporated, a consulting organization working with small companies offering technological products. He joined Aerovox Corporation (now AVX Corporation) in June of 1970 as Vice President of Marketing and Sales. In 1973, Mr Tuttle participated in the purchase of Aerovox Corporation's Electrical Products Division. Mr. Tuttle became President of the resulting company, Aerovox Industries, which is the predecessor of Aerovox Incorporated.
Mr. Capra graduated from St. Louis University with a Bachelor of Science Degree in 1954. Mr. Capra's career in the electrical industry spans twenty-five years. From 1987 to 1990, he was President and Chief Executive Officer of Philips Lighting Co., a manufacturer of lighting equipment. He was a consultant to the electrical industry from 1991 to 1993, when he became President of Crescent Electric Supply Co., a wholesaler of electrical supplies to contractors and industrial markets. Mr. Capra joined Aerovox in November 1994 as Senior Vice President of the Company and President of the Aero M Group, and became a part- time employee consultant to Aero M and BHC, the Company's electrolytic operations, in October 1995.
Mr. Chmura graduated with a Bachelor of Science degree in Engineering Sciences from the United States Naval Academy in 1967. Mr. Chmura joined Aerovox in 1977 as a product manager. Since then he has held the positions of Regional Sales Manager, Marketing Manager, Director of Marketing, Director of Sales, Vice President of Sales, and since 1986, Vice President of Sales and Marketing, and since 1995, Senior Vice President, Sales and Marketing.
Mr. Fox graduated from the University of Rhode Island with a Bachelor of Science degree in Industrial Engineering in 1967 and joined Aerovox in 1976 as Manager of Manufacturing Engineering progressing to General Manager of the Electrical Group in December 1990. In 1993, he was named Vice President, Operations Support and in 1994, was promoted to Senior Vice President, Operations Support. Mr. Fox is Chairman of the Board of BHC Aerovox Ltd.
Dr. Hudis holds a Bachelor of Science degree from the University of California in Los Angeles (1965), a PhD in Nuclear Engineering from the Massachusetts Institute of Technology (1970), and a Master of Business Administration from the University of Chicago (1981). He was Vice President for Engineering and Marketing of LH Research, a manufacturer of power supplies, from 1989 to 1991. Dr. Hudis joined Aerovox as Vice President, Technology in January, 1992 and became a Senior Vice President
in 1995. He is a senior member of The Institute of Electrical and Electronics Engineers, an international organization of electrical and electronic engineers.
Mr. Hunter studied chemistry at Glasgow University. In 1957, he joined British Drug Houses, in charge of an Organic Analytical Laboratory. He joined Daly Condensers in 1962 as Technical Manager, progressing to Managing Director in 1968, and continued to serve this role for three years after STC acquired Daly condensers in 1979. In 1983, Mr. Hunter founded B.H. Components, a manufacturer of aluminum electrolytic capacitors, which was acquired by Aerovox in 1993. Mr. Hunter remained as Managing Director of the successor company, BHC Aerovox Ltd., and was named a Vice President of Aerovox Incorporated in 1994, and Senior Vice President in 1995.
Mr. Kirschmann graduated from Worcester Polytechnic Institute with a Bachelor of Science in Electrical Engineering in 1965, and received a Master of Business Administration degree from Syracuse University in 1966. Mr. Kirschmann worked for General Electric Co. for twenty-four years, and was appointed Manager - capacitor and power protection operations in 1987. He became President of Lapp Insulator Co., a manufacturer of ceramic and polymer insulators for the electrical utility industry in 1990. In February 1993, Mr. Kirschmann joined Aerovox as Senior Vice President and General Manager of the Electrical Group, and in November 1993 was named Senior Vice President and President of the consolidated Aerovox Group.
Mr. Murphy graduated from Bentley College in Boston, Massachusetts, from the Evening Division in 1959. He started his business career in 1955 after an honorable discharge from the U.S. Air Force. In 1967 he joined the Sippican Corporation, a diversified manufacturing and consulting engineering firm, as Corporate Controller, and was promoted to Vice President of Finance in 1971. In 1976, he joined Aerovox as Senior Vice President and Treasurer.
Mr. Allen studied civil engineering at Roger Williams College. He was Director of Quality for North American operations at the Dresser Valve and Controls Division of Dresser Industries from 1988 to 1992. Following that, he served as Director Quality-Worldwide at Branson Ultrasonics Corporation, a division of Emerson Electric Company. Mr. Allen joined Aerovox early in 1995 as Director, Manufacturing for the Aerovox Group. In September of 1995, he was promoted to Vice President, Manufacturing Operations. He is a senior member of the American Society for Quality Control and a member of the American Society for Testing and Materials.
Dr. Arora holds a Bachelor of Engineering degree in Metallurgy from the Indian Institute of Technology, Bombay, India (1964), and a Ph.D. in Materials Science from McMaster University, Hamilton, Canada (1974). After twelve years with Philips Components, where he was the Manager of Foil Development, he joined Aerovox in 1993 to direct the Foil Operations in
Huntsville. In 1995, he was named Vice President of the newly created Foil Division. Dr. Arora is a member of the Electrochemical Society and the American Society for Metals.
Mr. Bromley graduated from the Franklin Institute in Boston in 1967 with an Associate's degree in Mechanical Engineering. He worked in the capacitor field at General Electric for twenty years and became a Quality Control Manager in 1983, the position he held until joining Aerovox as Director of Quality Assurance in 1988. In 1990, Mr. Bromley was named to the corporate position of Vice President for Quality Assurance.
Mr. Sherman graduated from Bryant College with a Bachelor of Arts degree in 1972. He served as President of Ludell Manufacturing Co., a manufacturer of heat recovery systems and electronic controls for the petro-chemical industry, for 5 years before joining Aerovox as General Manager of the Electronic Group in 1990. In November 1993, he was named Vice President of Marketing for the consolidated Aerovox Group.
PART II. ________________________________________________________________________
Item 5.

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock trades on NASDAQ National Market System under the symbol ARVX. The Company's Common Stock was distributed to the beneficiaries of the Aerovox Liquidating Trust on February 26, 1990. See "Shareholder Information" in the Annual Report to stockholders for the year ended December 30, 1995, incorporated herein by reference, for the quarterly market price range of the Company's Common Stock. The number of record holders of the Company's Common Stock at February 16, 1996 was 7,887. The Company has not declared dividends previously and currently intends to continue to retain earnings for use in its business and does not expect to pay dividends for the foreseeable future. The Company's common stock dividend policy will be reviewed periodically by the Board of Directors as may be appropriate in light of relevant factors.
Item 6.

Item 6. Selected Consolidated Financial Data
The information required by this item appears in the Company's 1995 Annual Report to Stockholders on page 31 and is incorporated herein by reference. Such information should be read in conjunction with the Company's consolidated financial statements and the notes thereto which are included in such Annual Report and are incorporated by reference in Item 8 hereof.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The information required by this item appears in the Company's 1995 Annual Report to Stockholders on pages 14-16 and is incorporated herein by reference.
Item 8.

Item 8. Financial Statements and Supplementary Data
The following financial statements of Aerovox Incorporated appear in the Company's 1995 Annual Report to Stockholders on the pages indicated below and are incorporated herein by reference:
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
PART III. - --------------------------------------------------------------------------------
Item 10.

Item 10. Directors and Executive Officers of the Registrant
(a) Directors - Information with respect to all directors may be found in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders on pages 2 and 3 under the caption "Election of Directors," which Statement is to be filed with the Securities and Exchange Commission. Such information is incorporated herein by reference.
(b) Executive Officers - Information with respect to executive officers appears in Item 4A. of Part I.
Item 11.

Item 11. Executive Compensation
This information is contained in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders on pages 10-15 under the caption "Executive Compensation" and "Compensation Committee Report", which Statement is to be filed with the Securities and Exchange Commission. Such information is incorporated herein by reference.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is contained in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders on page 16 and 17 under the caption "Security Ownership of Certain Beneficial Owners and Management," which Statement is to be filed with the Securities and Exchange Commission. Such information is incorporated herein by reference.
Item 13.

Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV. __________________________________________________________
Item 14.

Item 14. Exhibits, Financial Statements Schedules and Reports on Form 8-K.
(a) Exhibits:
A list of Exhibits filed with or incorporated by reference in this Report on Form 10-K appears at pages 23-25 hereof, which list is incorporated herein by reference.
(b) Financial Statements:
A list of consolidated financial statements is contained in Item 8 and is incorporated here by reference.
Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts for the years 20 20 ended December 30, 1995, December 31, 1994, and January 1, 1994.
Report of Independent Accountants on Financial Statement 21 Schedules.
All other financial statement schedules are inapplicable or the required information is contained in the Company's consolidated financial statements or notes thereto, which have been incorporated by reference herein.
(c) Reports on Form 8-K: None
AEROVOX INCORPORATED VALUATION AND QUALIFYING ACCOUNTS (Amounts In Thousands)
(1) Allowance for doubtful accounts receivable acquired in acquisitions of businesses. (2) Write-off of accounts receivable.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Aerovox Incorporated
Our report on the consolidated financial statements of Aerovox Incorporated has been incorporated by reference in this Form 10-K from page thirty-two of the 1995 Annual Report to Stockholders of Aerovox Incorporated. In connection with our audit of such financial statements, we have also audited the related financial statement schedule listed in Item 14(b) of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements as a whole, presents fairly, in all material respects, the information required to be included therein.
BY /S/ COOPERS & LYBRAND L.L.P. - ------------------------------- COOPERS & LYBRAND L.L.P.
Boston, Massachusetts February 28, 1996
Signatures
Pursuant to the requirements of Section 13 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.
Aerovox Incorporated (Registrant)
BY /S/ CLIFFORD H. TUTTLE, JR. ------------------------------------- Chairman of the Board of Directors President and Chief Executive Officer
March 25, 1996
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.
EXHIBIT INDEX Aerovox Incorporated Form 10-K (for fiscal year ended December 30, 1995)
EXHIBIT INDEX
Aerovox Incorporated Form 10-K (for fiscal year ended December 30, 1995)
EXHIBIT INDEX
Aerovox Incorporated Form 10-K (for fiscal year ended December 30, 1995)
* Filed as an Exhibit to Registration Statement on Form 10 filed with the Securities and Exchange Commission on October 4, 1989, and incorporated herein by reference.
** Filed as an Exhibit to Amendment No. 1 to the Registration Statement to Form 10 filed with the Securities and Exchange Commission on December 1, 1989, and incorporated herein by reference.
*** Filed as an Exhibit to Amendment on Form 8 to the Registration Statement on Form 10, filed with the Securities and Exchange Commission on February 16, 1990.


ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
Measurex Corporation (the "Company") is engaged worldwide in the design, manufacture and servicing of computer-integrated measurement, control and information systems. The Company's wide range of products are designed to increase productivity, reduce raw material and energy consumption and improve quality and uniformity. Industries served by the Company include paper, plastics, nonwovens, aluminum, steel and rubber. The Company's customers are served by sales and service subsidiaries located in 50 offices and 34 countries around the world. More than half of Measurex's 2,360 employees are dedicated to the sales, support and servicing of the Company's customers.
The Company is a corporation organized under the laws of the State of Delaware as the successor to a California Corporation organized in 1968. The Company's principal executive offices are located at One Results Way, Cupertino, California 95014-5991 (telephone number: 408-255-1500).
The term "the Company" as used hereinafter means Measurex Corporation or Measurex Corporation and its subsidiaries, as the context requires.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
The response to this section of Item 1 is incorporated by reference to "Business Segments" under Notes to Consolidated Financial Statements in the Company's 1995 Annual Report to Shareholders.
NARRATIVE DESCRIPTION OF BUSINESS.
The Company is a leading worldwide supplier of computer-integrated measurement, control and information systems for continuous manufacturing processes. The Company's systems are primarily used to control the manufacturing processes in those industries in which the manufactured product is made in a flat sheet; e.g. paper, plastics, nonwovens, aluminum, steel and rubber.
The Company provides measurement and control systems and services that enhance the productivity and efficiency of its customers' processes and improve the quality of its customers' products. These integrated systems utilize sensors and scanners to measure the quality properties of the product. Software running in computers and workstations use these measurements to provide control of the process, computer graphic operator displays and management information. Actuators are regulated by the software to provide precision adjustments to the process.
The Company also provides management information systems which integrate the manufacturing process with such functions as order entry, inventory control, product tracking, production scheduling, shipping and invoicing.
The Company's systems use international industry communications and computing standards which allow connectivity between the Company's systems and other standards-based measurement and control products.
The following table shows the annual revenues and the percentages of annual revenues during the last three fiscal years attributable to the sale of computer-integrated measurement, control and information systems to the paper and industrial systems industries (plastics, nonwovens, aluminum, steel and rubber) and the services provided to customers in those industries.
PAPER SYSTEMS BUSINESS
In 1995, approximately 56% of the Company's revenues were generated from system sales to the paper industry. The Company's systems are used to control the production of practically all kinds of paper and paperboard products including: fine paper used for stationary and books; xerographic paper for copy machines; glossy stock for magazines; paperboard and linerboard for boxes; sack grades for paper bags; newsprint and tissue.
In the paper industry, the Company's MXOpen(R) product line includes:
. Integrated Control Systems and Sensors . Distributed Control Systems . Cross Direction (CD) Profile Control Systems and Actuators . Web Inspection Systems . Integrated Machine Monitoring Systems . Millwide Production and Information Management Systems
A key component of the Company's measurement and control systems is its proprietary sensor technology. The Company currently offers a wide variety of on-line sensors to its customers in the paper industry which measure many aspects of product quality including basis weight, moisture, caliper, ash content, coatweight, smoothness, gloss, formation, opacity, strength and color. These on-line sensors, generally non-contacting, probe the product with radiation from various parts of the electromagnetic spectrum including infrared, visible light, beta, x-ray and gamma radiation.
The Company's web-inspection systems use Charge Couple Device (CCD) camera technology to detect visual defects in paper and other web-produced material.
The Company is a leader in the complex technology of cross-direction (CD) profile control. The Company's Cross Direction Profile Control Systems and Actuators allow precise control of paper characteristics in small segments across the entire width of the sheet resulting in optimum quality levels, reduced material and energy use and lower scrappage rates.
The Company's products are sold individually as add-ons or upgrades to existing measurement and control systems (the Company or competitor systems) or as complex integrated systems designed for specific applications or processes. The Company's systems are primarily sold by the Company's worldwide sales organization. In addition, the Company has established certain alliances and OEM relationships to provide customers with turnkey paper automation projects. The systems are generally installed at the customer's site by the Company's worldwide service organization.
INDUSTRIAL SYSTEMS BUSINESS
In 1995, approximately 10% of the Company's revenues were generated from system sales to customers in the plastics, nonwovens, aluminum, rubber and other industries. The Company's systems are used to control the materials used in or the production of many products including:
. Plastics, films and coated products - candy wrap, magnetic media base, food and liquid packaging, vinyl products, labels and tapes. . Nonwoven products - diaper liners, wipes, surgical drapes, roofing, filters, clothing, floor mats and carpet backing. . Rubber products - tire fabrics, roofing, tank liners and belts. . Aluminum products - beverage and food can stock, foil and siding. . Other - chemical, fiberglass, plastic resin and pharmaceuticals.
The Company's MXOpen product offering to Industrial Systems' customers include:
. Measurement Control Systems (MCS) and Sensors . Distributed Control Systems . Profile Control Systems . Web Inspection Systems
In December 1994, the Company acquired the Webart Division of The Ohmart Corporation and its ConceptOne(R) measurement and control products. This acquisition added a low-priced PC based system to the Industrial Systems product line, opening a new market for smaller plastics and sheet applications.
In January 1996, the Company acquired Data Measurement Corporation (DMC) a manufacturer of measurement systems for the steel industry. The Company intends to expand DMC's gauging system into a full computer-integrated control and information system. Prior to the acquisition, the Company did not participate in the steel market.
Industrial Systems products are distributed through the Company's worldwide sales organization and other distribution channels such as OEMs, distributors and agents.
SERVICE BUSINESS
In 1995, service revenues represented approximately 34% of the Company's total revenue. The Company's worldwide sales and service organization supports customers in both the paper and industrial systems businesses. The Company has over 4,000 systems installed in 54 countries, primarily located in North America, South America, Europe and Asia. The Company's service offering includes both resident service contracts and on-demand service for spare parts, preventive and emergency maintenance. Value added services such as process optimization and software enhancements are growing parts of this business. Also, the Company maintains systems of its direct competitors as well as third party non-competitive products.
RESEARCH AND PRODUCT DEVELOPMENT
The Company's systems are the result of the integration of a number of complex technologies including electronics, physics, mechanical design and software. Central to the Company's strategic goals is a commitment to research and development. The Company strongly believes the continued investment in new product development is key to its long-term success.
During fiscal year 1995, 1994 and 1993, the Company spent approximately $19.4 million, $20.0 million and $21.1 million, respectively, on research and development. Those amounts represented 6%, 8% and 8%, respectively, of total revenues and 9%, 13% and 14%, respectively, of system revenue.
BACKLOG
System backlog at December 3, 1995, was $143 million, 55% higher than the backlog of $92 million at the end of fiscal 1994. Approximately 90% of the $143 million year-end 1995 backlog is scheduled to be shipped during fiscal 1996.
PATENTS
The Company follows a policy of filing appropriate patent applications on inventions it considers significant. As of December 3, 1995, the Company had 69 United States patents and 132 foreign patents in effect. Although important to the business, the Company believes that the invalidity or expiration of any single such patent would not have a material adverse effect on its operations.
SUPPLY OF MATERIALS AND PURCHASED COMPONENTS
The Company produces most of the application software, sensors, scanners, digital logic circuits and actuators used in its systems. Many components, such as integrated circuits, video monitors, printers, cameras, disks, and microcomputers are purchased from other manufacturers and integrated into the systems.
The Company currently purchases certain components from single sources of supply. In each instance, components performing similar functions are available from alternative sources, except for radioactive source material which is available from only two suppliers. Use of these alternative components might require a change in the design of certain portions of the system which could result in production delays, additional expenses and contract cancellations while changing vendors. The Company has contracts with certain vendors which entitle, but do not require, the Company to purchase specific quantities of components.
COMPETITION
The market for process measurement and control is highly competitive and is subject to technological change in both hardware and software development. The principal competitive factors in this market are product quality and reliability, product features, customer support, corporate reputation and relative price/performance. The Company's competitive strategy is to provide customers with greater economic results than available from competitors by focusing on quality and the unique performance characteristics of the customers' systems. However, any inability of the Company to match or exceed the price/performance or other features of the systems offered by its competitors could adversely affect future operating results.
The Company's principal competition is from distributed control systems suppliers and packaged system suppliers, as well as factory automation system suppliers, many of which have substantially greater resources than the Company. In the supervisory measurement and process control business area, competition includes Asea Brown Boveri Process Automation Inc. (ABB); Lippke, a wholly owned subsidiary of Honeywell; the Valmet Automation Group, a division of Valmet Oy; and Yokogawa-YEW in Japan. The distributed control system business area competition includes Honeywell, Fisher, Foxboro (a subsidiary of Siebe, Inc.), Siemens, and many other companies. In the web-inspection products area, the Company faces competition from ABB and other smaller companies. Competition for production management and process analysis and quality management is very fragmented.
EMPLOYEES
As of December 3, 1995, the Company had approximately 2,360 full-time employees. With the acquisition of DMC in January, 1996, the Company added approximately 340 full-time employees.
NUCLEAR REGULATORY LICENSES
In the United States, the Company and its customers are subject to licensing and regulation by the United States Nuclear Regulatory Commission (NRC) under the Atomic Energy Act of 1954 (the Act) with respect of those parts of its products and systems which utilize nuclear radiation. The NRC has transferred a portion of its licensing and regulatory functions to several state governments, including California, pursuant to Section 274 of the Act. The Company holds all such licenses necessary for its current operations. Licenses are renewed periodically as required.
The Company also holds all necessary foreign licenses regarding nuclear radiation for the applicable countries in which it operates.
United States customers possessing the Company's systems containing radioactive sources hold the radioactive material under a General or Specific License issued by their state or federal regulatory authority. Similarly, foreign customers hold licenses issued by their local authorities for radioactive material in the Company's systems.
ENVIRONMENT
The operations of the Company involve the use of substances regulated under various federal, state and international laws governing the environment. It is the Company's policy to apply strict standards for environmental protection to sites inside and outside the U.S., even if not subject to regulations imposed by local governments. Liability for environmental remediation is accrued when it is considered probable and costs can be reasonably estimated. Environmental expenditures are presently not material to the Company's operations or financial position.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
The Company engages in operations in many foreign countries. A large portion of the Company's foreign business is in Europe, Canada, Latin America and Asia.
Although there are risks attendant to foreign operations, such as potential nationalization of facilities, currency fluctuation and restrictions on movement of funds, the Company has taken action to mitigate such risks.
For information regarding geographic operations in 1995, 1994, and 1993, see "Business Segments" included in the Notes to Consolidated Financial Statements in the Company's 1995 Annual Report to Shareholders.
RISK FACTORS
The Company's future operations are subject to a number of risks and uncertainties including, but not limited to, the following:
Fluctuations in Quarterly Orders - The Company's quarterly orders have fluctuated in the past and may fluctuate significantly in the future due to a number of factors, including the timing of orders from its customers, changes in pricing by the Company or its competitors, discount levels, new product introductions by the Company or its competitors, foreign currency exchange rates, and changes in the economic and political environments of the countries and industries it serves.
Fluctuations in Financial Results - The Company's quarterly and annual financial results have fluctuated in the past and may fluctuate significantly in the future due to a number of factors, including the scheduling of factory shipments, changes in pricing and discount levels, utilization levels of the Company's manufacturing facilities and personnel, amount and growth in operating expenses, changes in applicable tax rates, changes in product mix of system revenue, amount of spares shipments, changes in interest rates, changes in foreign currency exchange rates and the ability of the Company to mitigate the impact of such changes with foreign currency forward contracts.
Cyclicality of the Paper Industry - A substantial portion of the Company's sales have historically come from the paper industry. While the Company has recently expanded its presence in the industrial systems component of its business through its acquisition of Data Measurement Corporation, the paper industry will continue to account for most of the Company's revenues. This industry has in the past, and will likely in the future, be subject to substantial cyclicality and economic downturns. This cyclicality may in turn materially impact the Company's order rate and results of operations.
Risks Associated with International Operations - A majority of the Company's revenues are typically generated from sales outside of the United States. The Company's international orders, revenues and profitability are subject to inherent risks including timing in obtaining import licenses and letters of credit, fluctuations in local economies, difficulties in staffing and managing foreign operations, changes in foreign currency exchange rates, changes in regulatory requirements, tariffs and other trade barriers, difficulties in repatriation of earnings, and burdens of complying with a wide variety of foreign laws.
Risks of Serving other Cyclical Industries - The Company's orders and operating results are impacted by the capital expenditure cycles in the plastics, rubber, non-wovens, aluminum and steel industries, all of which are subject to substantial cyclicality.
Ability to Integrate Acquisitions - A key element of the Company's strategy for growth is the acquisition of products that can be distributed through its worldwide sales and service organization. The success of this component of the Company's strategy is dependent upon the ability of the Company to identify acquisition candidates that meet its acquisition criteria, acquire the acquisition target at a fair price, integrate the acquired operations into the Company and implement its business plan after acquisition. There can be no assurance that the Company will be successful in achieving these goals in every instance.
ITEM 2.

ITEM 2. PROPERTIES
As of December 3, 1995, the Company owned the major facilities described below:
As of December 3, 1995, the Company also leased a facility in Waterford, Ireland totaling approximately 20,000 square feet and two facilities in Kuopio, Finland for manufacturing, engineering and sales support. The Company leases office space for sales and service operations throughout the United States and various countries.
With the acquisition of DMC in January 1996, the Company also acquired an additional 45,000 square feet leased facilities used by DMC for offices, research and manufacturing operations.
During 1995, the Company was productively utilizing the space in its facilities, while disposing of space determined to be under-utilized. The Company believes current facilities provide adequate production capacity to meet the Company's planned business activities.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or any of its subsidiaries are a party or of which any of their property is the subject, other than ordinary routine litigation incidental to the business. Management believes that the final outcome of such matters will not have a material adverse effect on the Company's consolidated financial position and results of operations.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
EXECUTIVE OFFICERS OF REGISTRANT
The following table and notes thereto identify and set forth information about the Company's eight executive officers as of January 31, 1996 (ages are as of December 3, 1995):
(1) Mr. Bossen, age 68, has been Chairman and Chief Executive Officer and Director since December 1993; President and Chief Executive Officer and Director from 1968 to December 1993.
(2) Mr. Gingerich, age 59, has been President and Chief Operating Officer and Director since December 1993; Executive Vice President, Worldwide Sales and Service from 1992 to December 1993; President, Americas and Pacific from 1991 to 1992; Executive Vice President from 1990 to 1991.
(3) Mr. Robert McAdams, Jr., age 56, has been Executive Vice President and Chief Financial Officer since April 1995; Senior Vice President and Chief Financial Officer from September 1994 to April 1995; Senior Vice President Operations and Information Services from 1992 to September 1994; Senior Vice President-Finance and Administration and Chief Financial Officer from 1985 to 1992.
(4) Mr. William J. Weyand, age 51, has been Executive Vice President, Worldwide Sales and Service since April 1995; Senior Vice President of Worldwide Sales and Service from December 1994 to April 1995; President, North and South America from February to December 1994; Senior Vice President, U.S. and Canada Sales and Service from 1993 to February 1994; Senior Vice President, U.S. Sales and Service from 1991 to 1993.
(5) Mr. Wienkoop, age 48, has been Executive Vice President, President Industrial Systems Division since September 1994; Executive Vice President, Engineering and Marketing from 1991 to September 1994; President, Measurex Automation Systems from 1985 to 1991.
(6) Mr. Lance M. Lissner, age 45, has been Vice President, Corporate Planning and Development since 1991; Vice President, Engineering and Marketing, Industry Groups from 1989 to 1991.
(7) Mr. John G. Preston, age 52, has been Vice President, General Manager, Integrated Control Systems Business Unit since September 1994; President, Measurex Europe from 1992 to September 1994; President, Devron Division from 1991 to 1992; President, Measurex Canada from 1990 to 1991.
(8) Mr. Charles Van Orden, age 41, has been Vice President, General Counsel and Secretary since April 1995; General Counsel and Secretary from 1988 to April 1995.
Officers are elected annually but may be removed at any time at the discretion of the Board of Directors. There are no family relationships among any of the above officers.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information under the heading "Market for the Registrant's Common Stock and Related Security Holder Matters," which appears on page 31 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K.
The Company paid quarterly dividends of $0.11 per share in 1995 and 1994. While the Company intends to pay regular quarterly dividends, the payment of any future dividends is within the discretion of the Board of Directors of the Company.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Financial Data," which appears on page 32 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information under the heading "Management's Discussion and Analysis" which appears on pages 18 to 19 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information under the heading "Financial Statements and Supplemental Financial Data," which appears on pages 20 to 31 of Registrant's 1995 Annual Report to Shareholders, is incorporated by reference in this Annual Report on Form 10-K.
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
Information concerning the directors of the Company appears in Registrant's definitive Proxy Statement for the annual meeting of shareholders to be held April 12, 1996, under the caption "Election of Directors" and is incorporated herein by reference. Information concerning the executive officers of the Company appears at the end of Part I, page 8 of this Annual Report on Form 10-K.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 12, 1996.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 12, 1996.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to Registrant's definitive Proxy Statement for its annual meeting of shareholders to be held April 12, 1996.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. The consolidated financial statements of Measurex Corporation included herein are set forth in the Index to Financial Statements and Schedules submitted as a separate section of this Report.
2. The Financial Statement Schedules are contained in the accompanying Index to Financial Statements and Schedules submitted as a separate section of this Report.
3. Exhibits
See Index to Exhibits, page 16.
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K dated September 16, 1995 in which the Company reported that it had entered into an agreement to acquire Data Measurement Corporation (DMC).
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.
MEASUREX CORPORATION (Registrant) Date: February 29, 1996 By /S/ DAVID A. BOSSEN --------------------------- David A. Bossen Chairman
Know all persons by these presents, that each person whose signature appears below constitutes and appoints David A. Bossen and Robert McAdams, Jr., jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
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.
MEASUREX CORPORATION INDEX TO FINANCIAL STATEMENTS AND SCHEDULES Fiscal Year 1995
------------------
With the exception of the aforementioned information, the 1995 Annual Report to Shareholders is not to be deemed filed as part of this report unless otherwise noted.
Other schedules have not been filed because the conditions requiring the filing do not exist or the required information is given in the financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders Measurex Corporation
Our report on the consolidated financial statements of Measurex Corporation and Subsidiaries as of December 3, 1995 and November 27, 1994 and for each of the three fiscal years in the period ended December 3, 1995, has been incorporated by reference in this Form 10-K from page 30 of Measurex Corporation's 1995 Annual Report to Shareholders. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 13 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein.
/S/ COOPERS & LYBRAND L.L.P. ----------------------------- COOPERS & LYBRAND L.L.P.
San Jose, California December 19, 1995
SCHEDULE VIII
MEASUREX CORPORATION VALUATION AND QUALIFYING ACCOUNTS (1) Fiscal years 1995, 1994 and 1993 (Amounts in thousands)
NOTES:
(1) See the Notes to Consolidated Financial Statements. (2) Deductions for returns of systems or parts of systems and for write-off of noncollectible amounts. (3) Deductions for write-offs of obsolete and scrapped parts and translation adjustments. (4) Represents the reclass to accrued liabilities of reserves relating to certain leases sold with recourse to a financial institution. (5) Represents the reclassification of reserves from current inventories to service parts. (6) Includes allowance on contracts receivable.
SCHEDULE X
MEASUREX CORPORATION SUPPLEMENTARY INCOME STATEMENT INFORMATION Fiscal Years 1995, 1994, and 1993 (Amounts in thousands)
1995 1994 1993 ------- ------- -------
Charged to costs and expenses: (1)
Amortization of intangible assets (2) $ 4,530 $ 5,218 $ 4,380 ======= ======== =======
NOTES:
(1) Items omitted are less than 1% of revenues. (2) Intangible assets include goodwill, patents and capitalized software.
MEASUREX CORPORATION INDEX TO EXHIBITS Fiscal Year 1995
Exhibits - --------
2.1 Copy of the Amended and Restated Agreement and Plan of Reorganization dated as of September 16, 1995 among Measurex, Data Measurement Corporation and Mx Acquisition Company (incorporated by reference from Exhibit 2.1 on Form 8-K reporting on event occurring on January 10, 1996).
3.1 Certificate of Incorporation of Registrant (incorporated by reference from Exhibit 3.1 on page 30 of Report on Form 10-K for the fiscal year ended November 29, 1987).
3.2 Bylaws of Registrant, restated and amended as of April 19, 1994 (incorporated by reference from Exhibit 3.2 on page 21 of Report on Form 10-K for the fiscal year ended November 27, 1994).
4.1 Copy of Registrant's Rights Agreement dated as of December 14, 1988, as amended by Amendment No. 1 thereto dated May 30, 1990, (incorporated by reference from Exhibit 4.1 on page 47 of Report on Form 10-K for the fiscal year ended December 2, 1990).
10.1 Copy of Registrant's Employee's Stock Option Plan (1993) (incorporated by reference from Form S-8 Registration Statement No. 33-65762 filed with the SEC on July 8, 1993).
10.2 Copy of Registrant's Management Incentive Plan.
10.3 Copy of Registrant's Employee Stock Purchase Plan, amended and restated effective December 14, 1993 (incorporated by reference from Exhibit 10.4 on page 21 of Report on Form 10-K for fiscal year ended November 27, 1994)
10.4 Copy of Registrant's Affiliation Agreement dated as of May 30, 1990, between Measurex Corporation and Harnischfeger Industries, Inc. (incorporated by reference from Exhibit 4.1 to Form 8-K filed with the SEC on June 12, 1990)
10.5 Copy of Registrant's Repurchase Agreement dated December 29, 1994 (which contains certain amendments to the Affiliation Agreement referred to in Exhibit 10.4) (incorporated by reference from Exhibit 10.6 on page 21 of Report of Form 10-K for fiscal year ended November 27, 1994).
10.6 Copy of Registrant's Joint Marketing, Sales and Development Agreement dated May 30, 1990 between Measurex Corporation and Beloit Corporation (incorporated by reference from Exhibit 10.1 to Form 8K filed with the SEC on June 12, 1990).
10.7 Copy of Registrant's Stock Option Agreement (Special Acceleration Grant) dated as of December 14, 1993 (incorporated by reference from Exhibit 10.10 on page 45 of Report on Form 10-K for the fiscal year ended November 25, 1993)
10.8 Copy of Stock Repurchase Agreement and Amendment to Joint Marketing Sales and Development Agreement dated June 22, 1995 among Measurex, Harnischfeger, HIHC and Beloit Corporation (incorporated by reference from Exhibit 2.1 on Form 8-K filed with the SEC on July 6, 1995)
10.9 Copy of Letter Agreement for a special severance benefit program for key executives dated May 15, 1995 (incorporated by reference from Exhibit 10.20 on Form 8-K filed with the SEC on October 10, 1995).
10.10 Copy of Credit Agreement dated as of February 10, 1995 among Measurex Corporation, Bank of America National Trust and Savings Association, as Agent, and the other financial institutions party hereto (incorporated by reference from Exhibit 10.16 on page 22 of Report on Form 10-K for fiscal year ended November 27, 1994).
10.11 Copy of First Amendment dated June 21, 1995 to Credit Agreement referred to on Exhibit 10.10 (incorporated by reference from Exhibit 10.18 on Form 10-Q for period ended June 4, 1995).
10.12 Copy of Second Amendment dated October 31, 1995 to Credit Agreement referred to on Exhibit 10.10.
11.0 Computation of Net Income per Share of Common Stock of the Registrant.
13.0 Registrant's Annual Report to Shareholders (In accordance with item 601(B)(13) of Regulation S-K, such Annual Report is not filed as part of this Form 10-K, except to the extent incorporated by reference).
21.0 Subsidiaries of Registrant.
23.0 Consent of Independent Accountants.
24.0 Power of Attorney (included on page 12).
27.0 Financial Data Schedule
Other exhibits have not been filed because conditions requiring filing do not exist.