### **EXHIBIT 13**

 

**1999 Minuteman Annual Report**

**"Total Solutions"**

 

| **Contents**                          |   |       |
|---------------------------------------|--------|------------|
| From the Chairman of the Board        |   | 2          |
| PowerBoss Profitable for First Time   |   | 4          |
| Front Runner Propels Industry         |   | 4–7   |
| Visionary Products Expand the Horizon |   | 8          |
| Total Solutions Minuteman's Full Line |   | 9–11  |
| Multi–Clean Dazzles              |   | 12         |
| Minuteman Parker                      |   | 12–13 |
| Financial Report                      |   | 14         |
| Locations and Corporate Information   |   | 25         |

 

**Mission Statement**

 

                ASteadfast Commitment to Our Customers.

 

                Thecore of Minuteman International is anchored by a single, straightforward visionto deliver exceptional floor cleaning equipment and chemicals combined with asingle–minded focus to anticipate and answer our customers' needs.Answering those needs is just the beginning of a performance–drivenphilosophy to help our distributors maximize profit and provide outstandingservice, products and training to each Minuteman customer. That philosophy iscombined with the ongoing development of new and more cost effective methods ofmanufacturing and product design to keep our customers on the leading edge offloor care technology into the next century.

 

                Minuteman'srecord sales are driven by Total Solutions approach to servicing customersincluding:

 

Ÿ              Oneof the industry's deepest, most varied lines of commercial and  industrial floor, carpet, lawn–careequipment and chemicals in the market

Ÿ                Long–heldstable customer relationships

Ÿ                Innovativecost controls

Ÿ               Targetedmarketing and aggressive promotions

Ÿ               Exceptionalcustomer service

Ÿ               State–of–the–arttechnology

Ÿ               Visionarymanagement

 

                Thisdynamic market position propels Minuteman into the new Millennium withconfidence and a vigilant determination to remain the front runner of theindustry.

 

                Multi–Clean'sUV–22 Dazzles the ISSA Show.

 

                "Peoplewanted to touch the floor" Mike Rau, Vice–President, Multi–Clean.

 

                Multi–Clean'srevolutionary Ultra Violet Single Floor Coat System for tile, wood and concretedazzled the ISSA Show for the second year in a row. As distributors clamor toestablish themselves as an exclusive distributor of the new UV–22, Multi–Cleanand Minuteman International continue to create new opportunities throughstunning and innovative new products.

 

                Successful Integration of Powerboss Yields Profit in First Year.Minuteman's successful integration of Powerboss showed profits in the firstyear after acquisition of the North Carolina company. Effective integration waspossible through operational restructuring as well as skillful blending withMinuteman's purchasing, production, sales and marketing programs.

 

**From the Chairman of the Board**

 

Dear Shareholders:

 

                Whatbetter news can I tell you than that Minuteman International had another recordyear, both for sales and earnings, in 1999. The principal source of the revenuegain was provided by the PowerBoss subsidiary. This maker of industrial floor–careequipment that we acquired in November of 1998 contributed 12 months of salesin 1999 versus only one month in the prior year. This division yielded a profitin its first year as a Minuteman operating unit. PowerBoss's rider industrialequipment has certainly added a new dimension to Minuteman's operations, but weshould not overlook the excellent performance of our North American dealers fortheir support of our Minuteman walk–behind commercial products throughout1999. For the year, net income was up 20.3% to the highest profit in our 19–yearhistory. It also was the first time our earnings per share have exceeded onedollar, reaching $1.12 per share. Sales rose 34.7%, putting us above $76million, a level that seemed so far away only a short time ago.

 

                Themore we assimilated PowerBoss, the more efficient operations became, so that bythe fourth quarter, our gross–profit margin expanded to 32.8% of salescompared with 30.9% for the final three months of 1998 and our net margin forthe 1999 quarter was 6.7% versus 4.2% for the like period a year ago. On thesubject of profitability, operating income was up 34.8 percent for the yearbut, as a percent of sales, held level at 8.9 percent. Selling expenses were lowerproportionately than last year owing to the higher volume and despite generousoutlays for personnel and promotional expenses. But administrative costs rosesharply (60.7 percent) due primarily to higher professional fees related to thesuccessful settlement of patent litigation as well as incremental expensesattributable to the operation of PowerBoss in 1999. Interest expense also washigher in 1999 from debt incurred in conjunction with the PowerBossacquisition.

 

                TheMinuteman brand of commercial floor cleaning and polishing machines enjoyed abanner year as domestic dealers exhibited their customary strong demand. Thiswas aided importantly by recent additions to the company's ever–expandingproduct line. Among the newest products, a 38–inch riding floor scrubberthat is the company's widest model ever and the Kleen Sweep 45, a compact ridersweeper designed for narrow spaces at a price affordable for small businesses,were particular standouts. The successful integration of PowerBoss affords thecompany an opportunity to cross–sell many Minuteman commercial productsinto PowerBoss' industrial marketplace, and vice–versa. Its additiongives Minuteman unchallenged product breadth and depth, from rider and walk–behindequipment to backpack and handheld devices. And unification with Minuteman'spurchasing, production, sales and marketing programs will leverage savings. Butit's not a one–way street. For example, production of Minuteman's 38–inchscrubber was moved to the PowerBoss plant because that facility was betterequipped to handle larger, rider–operated equipment. Multi–Cleanchemical sales increased an impressive 16 percent in 1999. Multi–Clean'sUltra Violet Single Floor Coat System dazzled the International Sanitary SupplyAssociation trade show for the second year in a row. Initial shipments justbegan in September of 1999.

 

                AndMinuteman Parker's century–old lawn care equipment division furtherextends our company's total solutions reputation and our position as the frontrunner in the sanitary cleaning industry. International sales rebounded from1998, when economic and currency turmoil in the Pacific Rim depressed overseasvolume. Minuteman European, entering its third year of operation from its basein the Netherlands, now provides European customers with timely delivery of CE–approvedmachines. Minuteman's marketing programs will also strengthen and invigoratethe PowerBoss line in the marketplace. The company's financial condition alsostrengthened by the end of 1999, Minuteman's net worth increased more that 8percent to $33.3 million, a book value of $9.32 per share, roughly equivalentto our share price. Working capital reached $30.3 million, up $1.9 million fromlast year, representing a current ratio of 4.7 to 1. Meeting arising needs is asign of good management but targeting actions that will accelerate thecompany's growth is aggressive management. This latter approach requires thatwe conserve and allocate our cash wisely. So let me discuss a change we aremaking in our dividend policy. Management has elected to reduce the amount ofthe dividend payment, to seven cents per share from 11 cents per sharepreviously, despite the higher profitability, in order to use those funds moreproductively for the growth of the company.

 

                Wehave concluded that a lower dividend should create greater shareholder valuefor investors. Specifically, we plan to spend some of those retained earningsfor debt reduction to realize savings on interest payments. The company's debtincreased substantially in late 1998 when we acquired PowerBoss. Consequently,interest expense in 1999 was $863,000 compared with only $196,000 for 1998.

 

                Otheruses of funds we foresee to stimulate earnings growth include, possibly,selected acquisitions, capital spending to achieve greater efficiency, thedevelopment of new products and expanding the company's market penetration,both here and abroad. The Company will make its new dividend payment of sevencents per share on May 15, 2000 to shareholders of record May 1, 2000. We hopeyou will appreciate our purpose in trying to increase the total return fromyour investment in Minuteman International. For 2000, we see another year ofprogress.

 

                Amongthe positive factors in our outlook are:

 

Ÿ               Continuinggrowth and still greater efficiency at PowerBoss as we cross–sell intocomplimentary markets and further integrate the acquired company,

Ÿ              Highersales for Minuteman products led by new product introductions and dynamicpromotions,

Ÿ               More–of–the–samesuccess for hard–charging Multi–Clean and

Ÿ               MinutemanEuropean capitalizing on an improving international economy.

 

Sincerely,

Jerome E. Rau,

Chairman of the Board and ChiefExecutive Officer

 

March 15, 2000

 

Gregory J. Rau Slated As NewMinuteman President

 

                Ina planned management succession, Gregory J. Rau assumed the offices ofPresident and Chief Operating Officer effective January 15, 2000. Jerome E.Rau, will remain as Chairman of the Board and continue as Chief ExecutiveOfficer. Greg held the position of Executive Vice President of Minuteman sinceAugust 1997. His 16 year career with Minuteman began in 1983 primarily in thesales arena and offered Greg a wide–ranging view of customers, industrymatters, the technology of the product line and the interpretation of keyfinancial and statistical statements.

 

                "Imagineany facility grocery store, school, hospital, office building and visualize anyfloor surface, indoor or outdoor. Minuteman has the floor care equipment andchemicals to do the job. We call it Total Solutions for all applications."Greg Rau, President and COO, Minuteman International Minuteman InternationalIntuitive, Customer–Focused Front Runner Propels Industry.

 

                TotalSolutions Total Applications Minuteman's Total Solutions approach yields 35%sales growth worldwide. Minuteman continues a trend to capture an increasinglygreater share of the marketplace with a solid 35% growth in sales worldwide.This solid, controlled growth is significant because it represents a"Total Solutions" approach to customer cleaning needs through thewell–planned development of a deep and broad product line unlike anyother in the Sanitary Cleaning industry. Total Solutions means that Minutemancustomers with any floor type, indoor or outdoor, can find floor care equipmentand chemicals perfectly suited to their individual cleaning needs. Intuitiveproducts combined with a knowledgeable sales and engineering staff that listenscarefully to customers and responds with a solution, will continue to bolsterMinuteman's position as the front runner poised to lead a competitive industryinto the next decade. Competitive Advantages Solidify Minuteman's Position as aMarket Leader Unchallenged product breadth and depth. Minuteman's unusualproduct breadth is marked by the greatest variety of commercial and industrialfloor, carpet and lawn care equipment for both indoor and outdoor floorsurfaces in the industry. From rider and walk behind equipment to backpack andhandheld devices, Minuteman continues to be an easy front runner when meetingcustomer cleaning needs. The depth of each product line is among the deepest inthe industry offering customers a wide variety of sizes, price options andfunction selection.

 

                PowerBossProfitable for the first time in company history. Minuteman's effective integrationof PowerBoss revealed profits in the first year after acquisition of the NorthCarolina company. PowerBoss rider–operated industrial floor/surfacemaintenance equipment differs from Minuteman's machines, which are traditionalwalk–behind commercial units. The effective integration of PowerBossoffers Minuteman greater visibility and expansion opportunities into newdistribution channels such as industrial markets.

 

                In1999, the new industrial floor care equipment allowed the company to cross–sellmany Minuteman products into the PowerBoss market and vice versa. In addition,successful integration was possible through operational restructuring as wellas unification with Minuteman's purchasing, production, sales and marketingprograms. For example, PowerBoss billing, parts and inventory control wastransferred to Minuteman's time–tested computer tracking system. Thismade tracking, ordering, shipping and purchasing analysis more efficient andtimely. Combined purchasing with Minuteman increased volume and thereforeoffered greater economies of scale. Quality control assurances were shifted toMinuteman's existing high quality control standards in all areas includingengineering, production and transportation.

 

                Inaddition to quality control enhancements, Minuteman was able to utilize thestrengths of both the Minuteman and the PowerBoss manufacturing facilities toprovide the most cost effective method of manufacturing specific pieces offloor cleaning equipment. For example, production of Minuteman's 3800 riderscrubber was moved to the PowerBoss plant because the facility was betterequipped to handle larger, rider–operated equipment. In addition, theacquired company was streamlined to procedurally comply with Minuteman's provenoperations system.

 

Everywhere you are, we'veprobably cleaned there. Visit a commercial or industrial facility. Imagine anyfloor or upholstery surface. Minuteman has probably been there. Follow oursimple chart to fully understand the depth and breadth of Minuteman's total cleaningsolutions for customers.

 

Total Cleaning Solutions

Example: Discount Store

 

| Floor Type      |   | Floor Care Equipment               |   | Chemical               |
|-----------------|--------|------------------------------------|--------|------------------------|
| Terrazzo        |   | 320 Automatic Scrubber             |   | Decade 90              |
| Tile            |   | Mirage Propane Burnisher           |   | Ultra Brite            |
|            |   |                               |   | Ultra Violet Coating   |
|            |   |                               |   |                   |
| Employee Lounge |   | MPV–Vacuum and                |   | Carpet Spotting Kit    |
| Carpeted        |   | Gotcha–Portable Extractor     |   | and Extraction Shampoo |
| Restroom Floor  |   | 170 Automatic Scrubber with        |   | Ful Trole              |
|            |   | Patented Off–Aisle Scrub Wand |   | Disinfectant/Cleaner   |
|            |   |                               |   |                   |
| Parking Lot     |   | Power Boss                         |   |                   |
|            |   |                               |   |                   |
|            |   | Armadillo Sweeper                  |   |                   |
|            |   |                               |   |                   |
| Sidewalks       |   | Parker Vac–35 Litter Vacuum   |   |                   |

 

                "Technicalknowledge, relationship building, a global focus and energy, will determinewhich competitors will dominate our markets. Minuteman is in a dominantposition today and I intend to see that position of superiority extend in theyears ahead." Greg Rau, President and COO, Minuteman InternationalSuperior, Creative People Getting it right for the customer, every time. Fromthe beginning, one of Minuteman's most important competitive advantages hasbeen superior people who are measured by their creativity, dedication,performance, vision, management finesse and commitment to getting it right,every time, for the customer. Each team member brings a quick reaction time, anintuitive understanding of the market place and is a motivated player inhelping customers decide on the best product for their individual floorcleaning needs. This dedicated group is the core of Minuteman's ability todeliver an aggressive, straightforward brand position to deliver high qualityproducts, maintain cost structures and design and retool innovative productswith cutting–edge engineering and technology. This customer–focusedattitude is what our loyal customers depend on every day.

 

                FrontRunner Vision Oracle ushers in a new information age.Minuteman has selectedOracle, one of the finest operational software programs for manufacturers, asits operational software. Oracle offers the ability to custom design programsspecifically suited to Minuteman International. Plans to have the new systemoperational in the 4th quarter of 2000 are well underway. Oracle will allow topmanagement to analyze and forecast more clearly as well as offer quicker accessto more comprehensive sales data, customer information, manufacturing andproduction output. The new system will enable the company and subsidiaries tocomfortably expand within the software for many years.

 

                CreativePromotions Distributor success and profit. Maintaining solid relationships withdistributors is a key element in the success of the company. Minuteman firmlybelieves that when distributors flourish, so will Minuteman. Outstandingmarketing savvy includes creative promotional efforts such as sales incentive,targeted end–user advertising campaigns, and direct sales opportunitiesfor distributors in conjunction with national advertising campaigns whichbolster both distributor and Minuteman profits. Minuteman's proven relationshipbuilding skills and support network for distributors is enhanced by training,consistent distribution of new product information and innovative, cost–effectiveproducts designed to help distributor's customers thrive.

 

                Minuteman's Popular Web Site www.minutemanintl.com "Hit's" onMinuteman's web site continue to increase, with more repeat, longer–stayingvisitors. To date the web site boasts thousand's of visits per day and offersshareholders and visitors complete information about Minuteman Floor CleaningEquipment including the exciting new PowerBoss floor cleaning equipment, Multi–Cleanchemicals, Minuteman Parker as well as new product releases, internationalnews, site locations, company history, financial reports and currentinformation and notes from across the floor cleaning industry. The site isdesigned to directly generate new business by increasing product knowledge andoffering immediate access to Minuteman through the site. The site is a quick,easy to access and convenient way for customers to match the right product tothe right cleaning application.

 

                WorldwideOpportunities Expand As the world's economies become increasingly tied to oneanother, Minuteman European, a fully operational company providing Europeancustomers with Minuteman's exceptional focus on growth strategies, customerservice, marketing and cost efficiencies, remains well positioned to takeadvantage of expanding opportunities for growth. As the group enters their 3rdyear of operation, opportunities for greater expansion into MinutemanEuropean's marketplace include enhancing a growing brand name presence throughdeliberate marketing and sales promotions, and reinforcing timely delivery toEuropean customers of CE–approved machines through the maintenance andsuccess of a Netherlands warehouse.

 

                200XPerformance, Maneuverability, Power Minuteman's newly designed 200X Scrubber ishighly maneuverable and designed to scrub up to 21,500 square feet per hourwith it's large 20 gallon tank capacity. In just one 20" wide pass, the200X Automatic Scrubber wet scrubs, deep cleans and dry vacuums with power andfinesse. This sleek scrubber is just one example of Minuteman's intuitivesolutions developed by a customer–focused front line.

 

                "Wefocused on what we know and do best. Our skills are sharply honed in the floor,carpet and lawn–care cleaning arena. We know what products will bestserve our customers, and, if we don't have it, we develop it for them. It'sthat simple." Jerry Rau, Chairman of the Board and CEO MinutemanInternational

New Products Enhance WorldwideLeadership Position

Visionary Products Expand theHorizon.

 

                3200Rider Scrubber High performance with a tighter scrub path. Rugged, maneuverableand powerful, the new 3200 rider scrubber is one of the smallest, most compactrider scrubbers on the market today. Designed to clean a tight 32" scrubpath while scrubbing and dry vacuuming in a single pass up to 44,000 squarefeet per hour, the new model combines the convenience of a rider with maximummaneuverability in tight locations to clean close to walls, into corners and upand down narrow aisles. The 3200 Rider Scrubber's 35 gallon molded polyethylenesolution/recovery tank provides easy tank filling/flushing and automatic vacuumshut off. A two inch drain hose allows for quick and easy emptying of therecovery tank. A curved, squeegee breaks away from the machine to preventdamage. In addition, the operator station provides maximum visibility and isequipped with a safety seat that will not allow the scrubber to move unless theoperator is seated behind a convenient control panel which constantly monitorsoperation. Minuteman's dependable 3200 Rider Scrubber digs down deep to cleaneven the tightest, most difficult–to–clean floor.

 

                200XAutomatic Floor Scrubber User–friendly power at the touch of a hand.Minuteman's newly designed 200X Automatic Scrubber wet scrubs, deep cleans anddry vacuums in one 20" wide pass for maximum efficiency and productivityin large, high traffic areas. The highly maneuverable, walk–behindscrubber is designed to scrub up to 21,500 square feet per hour and is easilyserviced thanks to stainless hinged, polyethylene 20 gallon solution/recoverytanks with a patented Maxi–Wall_ bladder. The brush deck features a quick–releasespring–loaded foot lever making pad or brush replacement quick and easy.A user–friendly control panel, individual forward and reverse bail leversand powerful heavy–duty battery packs with extended running time, makethe 200X Automatic Floor Scrubber the right choice for any high volume trafficarea.

 

                KleenSweep 45 New sweeper rides in comfort and sweeps with speed. The Kleen Sweep 45is a compact Rider Sweeper designed for sweeping narrow spaces and reducingmaintenance costs and cleaning time. Sweeping a big 84,000 square feet perhour, the Kleen Sweep 45 includes retractable side brooms, a floating self–levelingmain brush, hydrostatic drive, drum brakes, low turning radius~39 inches (1m),a large filter surface area, a convenient large 3.4 cu. ft. hopper whichreduces emptying and increases productivity and a fast, efficient operationalspeed. Perfect for small businesses with limited budgets, Kleen Sweep 45 offersthe efficiency of a larger sweeper at an affordable price.

 

                TotalSolutions Minuteman's Full Line of Customer Focused Dynamic Floor CareProducts. Total Solutions and Total Applications expand the Minuteman horizontoward even greater product depth, breadth and services to answer any cleaningcustomer's needs. With an eager global market and a full line of exceptionalmaintenance products for industrial, commercial and institutional facilities,Minuteman's unique, direct–control–over–design, production,product updates, manufacturing technologies, distribution and quality controlpositions the company to stand as the front runner in providing Total Solutionsin a customer–focused, competitive marketplace.

 

                CarpetCare Machines Dependable, reliable results guide users to Minuteman's power–packedcarpet care machines. Designed to be user–friendly as well as a powerfulchoice for carpet maintenance, Minuteman's carpet care equipment minimizesoperator fatigue and offers a myriad of machine and floor care equipment forevery application. From the daily dependability of the Multi–PurposeVacuum (MPV) upright, to the total care approach of the AmbassadorTM Seriesextractors, each of these dependable workhorses feature excellent operatorvisibility and reliable results, every time.

 

                3200Aggressive, High Performance From a Compact Rider Scrubber. Scrubbing up to44,000 square feet per hour in a tight 32" scrub path while scrubbing anddry vacuuming in a single pass, the new 3200 Rider Scrubber model combines theconvenience of a rider with the maximum maneuverability in tight locations. Thevisionary 3200 Rider Scrubber digs down deep to clean close to walls, intocorners and up and down narrow aisles. This unusual compact rider scrubberopens new markets for Minuteman and further bolsters Minuteman's unchallengedleadership position in the floor care industry.

 

                AutomaticScrubbers Minuteman offers one of the largest varieties of dynamic scrubbers onthe market.Minuteman's wide variety of scrubbers feature cleaning paths from17" to 38" and coverage from 18,000 to 44,000 sq. ft. per hour. Eachof Minuteman's automatic scrubbers is designed to fill a specific customer floorcare need. The 170 and 200 compact walk–behind scrubbers clean small tomid–sized floors with easy operation, increased maneuverability and highperformance. The 260, 320 and 380 Automatic Scrubbers maneuver at the touch ofa hand and offer simplified, user–friendly controls. All Minutemanautomatic scrubbers are ergonomically designed to allow for greater operatorcomfort and control. Recent additions to the automatic scrubber line, such asthe 200X and the 3200 Rider Scrubber, support Minuteman's dedication to focuson customer needs and provide a wide variety of solutions for every floorcleaning need.

 

                FloorMachines and Burnishers Unique, competitively priced to endure demandingconditions and expectations. Minuteman's 17" or 20" Front RunnerSeries floor machines combine high durability and operator safety with acompetitive pricing structure. Minuteman burnishers feature a non–fatiguedesign and offer a patented Passive Air Management System (PAMS_). PAMS_ keepsMinuteman's popular 1500, 2400, 2600 and 2700 ABS burnishers leading themarket, year after year. In addition to high productivity and increased laborsavings, Mirage_ propane burnishers offer added depth and greater efficienciesto the Minuteman product line. More powerful and dynamic engines combined withMinuteman's exceptional performance and engineering, deliver some of the mostpowerful propane burnishers on the market today.

 

                Indoor/OutdoorSweepers Sweepers add another dimension to Minuteman's Total Solution productline. High quality, efficient performers, Minuteman's Kleen Sweep_27 and KleenSweep_ 35 and the new Kleen Sweep_ 45 are examples of the strength and depth ofthe Minuteman product line. Kleen Sweep 27 is ideal for machine shops, stockrooms, parks, small yards, parking areas and loading ramps as well as indoorson large carpeted areas. Kleen Sweep 27 is a cost effective option cleaning upto 31,000 sq. ft. per hour. Kleen Sweep 35 covers an area of 55,440 sq. ft. perhour offering easy maintenance, exceptional performance, a dust filter systemand efficient ergonomic design. The Kleen Sweep 45 is a compact Rider Sweeperdesigned for sweeping narrow spaces and reducing maintenance costs and cleaningtime. Sweeping a big 84,000 square feet per hour, the Kleen Sweep 45 includesretractable side brooms, a floating self–leveling main brush, hydrostaticdrive, drum brakes, low turning radius– 39 inches (1m), a large filtersurface area, a convenient large 3.4 cu. ft. hopper which reduces emptying andincreases productivity and a fast, efficient operational speed. Kleen Sweep 45is another powerful example of Minuteman's commitment to outpace thecompetition and lead the way to providing Total Solutions for customers.

 

                CriticalFilter Vacuums Safe, efficient with absolute filtration. Critical FilterVacuums require both safety and efficiency. To guarantee efficiency, CriticalFilter Vacuums are designed to be easy to use, are available in a wide varietyof sizes and are created for specific hazardous waste applications. Forexample, the 55 Gallon Explosion–Proof Vacuum is designed for use whereflammable gases, vapors or finely pulverized dust may be present. The CRV_Clean Room Vacuum is specifically applicable to Class 1 through Class 100,000cleanrooms, pharmaceutical labs, gowning areas, air showers, biological labsand computer rooms. The Mercury Vacuum series is designed for the handling anddisposing of mercury–based residue. The vacuums are easy to use,available in a wide variety of sizes and are created for specific hazardouswaste applications.

 

                KleenSweep 45 Rides in Comfort, Sweeps with Speed and Efficiency. Kleen Sweep 45rides in comfort, sweeps with speed and offers the efficiency of a largersweeper at an affordable price. Designed for sweeping narrow spaces andreducing maintenance costs and cleaning time, the Kleen Sweep sweeps anenormous 84,000 square feet per hour. Perfect for small businesses with limitedbudgets, Kleen Sweep 45 represents Minuteman's customer–focused, ongoing,development of floor care products designed to provide Total Solutions for eachcustomer.

 

                "EvenI was surprised at the durability of the UV Floor Care System and how well itmaintains a long–lasting, high, glossy, deep finish."

 

Mike Rau, Vice–President,Multi–Clean

 

                Multi–CleanFirst, In History. First, In Innovation. Chemical Powerhouse Multi–CleanSales Grow 16%. New Products, Dynamic Sales Force, State–of–the–ArtResearch, Drive Sales Growth Multi–Clean's aggressive sales performancecontinues to build on delivering and developing some of the most effective andefficient chemical products for all floor types including resilient tile, hardfloors, carpet, concrete and wood. Multi–Clean's edge in the chemicalmanufacturing industry is evidenced by a 16% solid sales growth in 1999. Steadygrowth is supported by innovative new products such as the Ultra Violet FloorCare System, Poli–Mirro 450, and through strengthening residual sales ofrecently introduced products such as Multi–Fresh, Multi–Stat ESD,Bio–Power Plus and the Dilution Control System. Many of these innovativeproducts are examples of a growing target market segment~customers who re–orderreplacement chemicals for dispensing systems. Continued growth is also madepossible through Multi–Clean's long–held dedication to high qualitystate–of–the–art research and development, where talentedchemists and professional engineers are supported by a dynamic sales staff anda senior management team dedicated to delivering the very best floor careavailable.

 

                Forthe second year in a row Multi–Clean's Ultra Violet Floor Care Systemdazzled the audience at the ISSA show. Multi–Clean's revolutionary UltraViolet Single Floor Care System dazzled the ISSA Show for the second year in arow. After the initial unveiling at the 1998 ISSA Show, response and interestwas immediate from distributors seeking potential distributorships. Assignmentof exclusive distributorships is progressing well while enthusiasm for theproduct continues its unheralded excitement. Shipment of the first productbegan in September of 1999. Additionally, as distributors clamor to establishthemselves as an exclusive distributor, the innovative floor care systemgenerates cross–sell opportunities into new markets such as commercialcleaning contractors and national retail accounts.

 

                Firstin History The revolutionary, one–of–a–kind UV–22,Ultra Violet Curing Unit represents the first time in history this uniquetechnology has been introduced to the floor cleaning industry outside acontrolled factory environment. The unique Ultra Violet Chemical curesinstantly with the specially designed UV–22 machine so you can walk on itimmediately. This unique one coat, floor coating delivers a long–lastingwet–look that is resilient and durable with a finish that lasts on tile,wood and concrete.

 

                MinutemanParker The Professional Landscapers Choice For Quality andPerformance.Minuteman Parker adds depth to Minuteman's customer–focused,Total Solutions package.Minuteman Parker offers a wide variety of lawn, turfand industrial maintenance equipment. Located at Minuteman's Hampshirefacility, Parker products include high quality lawn sweepers, litter vacuums,dethatchers, wheeled blowers, chipper shredder vacuums and portable truckloaders. This exciting product line continues to bring diversity and strengthto Minuteman by selling its products through, but not limited to, thejanitorial and cleaning industries as well as lawn/garden and roofing/pavingdistribution channels. These additional distribution channels offer Minutemananother avenue through which to answer customer needs and support Minuteman'sTotal Solution promise to customers. Parker products have been the choice ofprofessional landscapers and discriminating consumers for over a century.Parker's distinguished reputation in the market is well known and continues toadd substantial value to the Minuteman brand.

 

                New!Poli–Mirro 450 Ideal for Gym Floors Poli–Mirro 450 is anexceptional oil modified polyurethane wood floor finish ideal for gym floors.Offering a high solid content, the new product offers superior gloss anddurability because a thicker wear layer is applied with each coat. Designed forgym floors and compliance with new Federal VOC Regulations, Poli–Mirro450 resists black marking and scuffing from athletic shoes and is easilyapplied.

 

Operating Officers

Jerome E. Rau

Chairman of the Board &

Chief Executive Officer

 

Gregory J. Rau

President & Chief

Operating Officer

 

Thomas J. Nolan

Chief Financial Officer,

Secretary & Treasurer

 

Michael A. Rau

Vice President

Multi–Clean Division

 

Dean W. Theobold

Vice President

Manufacturing

Corporate Information

 

General Counsel

Law Offices of Reynolds &Reynolds, Ltd.

Chicago, Illinois

 

Independent Auditors

Ernst & Young LLP

Chicago, Illinois

 

Transfer Agent

ChaseMellon Shareholder Services,L.L.C.

85 Challenger Road, OverpeckCentre

Ridgefield Park, New Jersey 07660

1–800–288–9541Shareholders Information

1–800–231–5469TDD (Telecommunications Device for the Deaf)

 

Stock Listing

Traded over–the–counteron The Nasdaq Stock Market under the symbol "MMAN"

 

 

 

Annual Meeting

April 18, 2000 at 10:00 a.m.

at LaSalle National Bank

135 South LaSalle Street

Forty–third Floor

Conference Room ABC

Chicago, Illinois 60603

 

Form 10–K

 

Minuteman International, Inc.will send a copy of its Form 10–K report for fiscal 1999 as filed withthe Securities and Exchange Commission upon written request to Thomas J. Nolan,Chief Financial Officer, at the corporate office.

 

Locations

Corporate Offices and

World Headquarters

Minuteman International, Inc.

111 South Rohlwing Road

Addison, Illinois 60101

(630) 627–6900

 

Manufacturing Facilities

 

Minuteman International, Inc.

111 South Rohlwing Road

Addison, Illinois 60101

(630) 627–6900

 

Minuteman International, Inc.

14N845 U.S. Route 20

Hampshire, Illinois 60140

(847) 683–5210

 

Minuteman PowerBoss, Inc.

175 Anderson Street

Aberdeen, North Carolina 28315

(910) 944–2105

 

Multi–Clean, Division ofMinuteman

International, Inc.

600 Cardigan Road

Shoreview, Minnesota 55126

(651) 481–1900

 

Sales Offices

 

United States

Minuteman International, Inc.

111 South Rohlwing Road

Addison, Illinois 60101

(630) 627–6900

 

Minuteman Parker

111 South Rohlwing Road

Addison, Illinois 60101

(630) 627–6900

 

Minuteman PowerBoss

1190 North Villa Avenue

Villa Park, Illinois 60181

(630) 530–0007

 

Minuteman PowerBoss

27223 North Line Road

Taylor, Michigan 48180

(734) 941–5662

Canada

 

Minuteman Canada, Inc.

2210 Drew Road

Mississauga, Ontario

Canada L5S 1B1

(905) 673–3222

FAX: (905) 673–5161

Europe

 

Minuteman European B.V.

Haver Straat 31

2153 GB Nieuw–Vennep

The Netherlands

(31) 252–623000

FAX: (31) 252–623001

 

Board of Directors

 

Jerome E. Rau

Chairman of the Board

& Chief Executive Officer

Minuteman International, Inc.

 

Gregory J. Rau

President

& Chief Operating Officer

Minuteman International, Inc.

 

Tyll Necker

Chief Executive Officer

Hako–Werke International

GmbH & Co.

 

Frederick W. Hohage

President

BSH Home Appliances

A Subsidiary of Robert Bosch

Corporation, Sales Group

 

James C. Schrader, Jr.

President

Precision Enterprises, Ltd.

 

Frank R. Reynolds

Attorney

Law Offices of Reynolds

& Reynolds, Ltd.

 

 

**MANAGEMENT'S DISCUSSION AND ANALYSIS**

**OF RESULTS OF OPERATIONS ANDFINANCIAL CONDITION**

 

**RESULTS OF OPERATIONS**

 

**Earnings**

 

                TheCompany achieved record net sales and net income during 1999. For the year netincome increased 20.3% to $4,007,000 or $1.12 per share compared with$3,332,000 or $.93 per share in 1998. Record net sales in 1999 increased 34.7%to $76,060,000 as compared to 1998. This increase was due primarily to theinclusion of twelve months of revenue related to the products of PowerBoss,acquired in November 1998, compared to only one month in 1998. This increasealso was attributed to strong domestic sales of commercial products in 1999 aswell as a rebound in some international markets, which were depressed in 1998.Gross profit during 1999 as a percent to net sales was 31.1% reflecting lowermargins on PowerBoss industrial products but offset in part by higher volumeand improved margins on commercial products. As a result, operating incomeimproved 34.8%, from $5,017,000 to $6,763,000, which was reduced by interestexpense of $863,000 (related principally to the debt from the PowerBossacquisition). Included in 1999 other income/expense is the non–recurringgain related to the successful settlement of patent litigation.

 

                For1998 net sales increased 5.9% or $3,139,000 in 1998 compared to 1997. TheCompany's commercial product line substantially all of which is domesticallymanufactured, increased $836,000 or 1.6% compared to 1997. This increase wasdue primarily to the favorable response to our product introductions, strongsales across most product lines and was fueled by strong domestic dealerdemand, as domestic sales increased 11% over the comparable period. Theseresults were hampered by a decline in international business due primarily tothe economic and currency turmoil experienced in the Pacific Rim. Gross profitduring 1998 increased as a percent to net sales to 32.0% from 30.8% in 1997.The positive effects of higher volume, combined with cost containment effortsand selective price increases made at the end of 1997 to compensate for vendorprice increases, accounted primarily for this increase but were partiallyoffset by the negative impact of product mix changes. Operating profitsincreased 18% due to these cost containment efforts in spite of increases inthe cost of new product introductions and marketing initiatives aimed atgaining market share. The benefits received in other income in 1998 due to thepre–tax gain of $428,000 recognized on the sale of our former Glendale,California warehouse facility during 1998, offset in part by interest expenseincurred relative to the net asset purchase of PowerBoss, accounted for theincrease in other income compared to 1997.

 

**Selling Expenses**

 

                Sellingexpenses, as a percent to net sales, decreased from 18.7% in 1998 to 17.0% in1999. The decrease resulted primarily from an increase in sales over 1998,which more than offset higher personnel and promotional expenses as well asincremental PowerBoss expenses in 1999.

 

                Sellingexpenses, as a percent to net sales, increased from 18.5% in 1997 to 18.7% in1998. The increase resulted primarily from higher promotional expenses aimed atgaining market share and increased personnel expenses.

 

**General and Administrative Expenses**

 

                For1999 these expenses increased 60.7% from 1998 due primarily to higherprofessional fees related to litigation and personnel expenses, as well asincremental PowerBoss expenses in 1999.

 

                For1998 these expenses increased 7.4% from 1997 due primarily to higher personnelexpenses.

**Other Income/Expense**

 

                In1999 and 1998 the Company incurred interest expense of $863,000 and $196,000respectively on debt resulting primarily from purchases of inventory andcapital expenditures as well as long–term debt resulting from thepurchase of the net assets of PowerBoss.

 

                In1999 other income, net decreased $84,000 compared to 1998 due primarily to thegain recognized on the sale of our former Glendale California warehouse facilityin 1998, offset in part by the successful settlement of patent infringementlitigation against an industry competitor.

 

                In1998 other income, net increased $293,000 over 1997 due primarily to theaforementioned gain recognized on the California warehouse sale.

 

**Income Taxes**

 

                Theeffective tax rate was 36.3%, 36.7% and 34.6% for 1999, 1998 and 1997,respectively. The decrease in the 1999 rate is caused principally by increasedbenefits received from our Foreign Sales Corporation, which includes the incrementaleffects of the PowerBoss export business during 1999. The increase in the 1998rate is caused principally by reduced benefits received from our Foreign SalesCorporation during 1998.

 

**Inflation**

 

                Inflationhas not had a significant impact on the Company's business during the pastthree years.

 

**FINANCIAL CONDITION**

 

**Liquidity and Capital Resources and Financial Position**

 

                TheCompany had working capital of $30.3 million and $28.4 million at December 31,1999 and 1998, respectively. This represented a current ratio of 4.7 and 5.6for those years respectively.

 

                Cash,cash equivalents and short–term investments represented 12.1% and 5.6% ofthis working capital at December 31, 1999 and 1998, respectively. This increasein 1999 was due primarily to improved collection of receivables during 1999.This increase in 1998 was due to receipts of cash relative to the newlyacquired receivables from PowerBoss.

 

                AtDecember 31, 1999 and 1998, the Company had shareholders' equity of $33.3million and $30.8 million, respectively, which when compared to totalliabilities represented an equity to liability ratio of 1.6 and 1.5,respectively.

 

                TheCompany has more than sufficient capital resources and is in a strong financialposition to meet business and liquidity needs as they arise. The Companyforesees no unusual future events that will materially change theaforementioned summarization.

 

**Intangible Assets**

 

                Intangibleassets represent 10.9% and 12.1% of total assets and 17.5% and 19.9% ofshareholders' equity December 31, 1999 and 1998, respectively. These assetswere primarily the result of the November, 1998 PowerBoss acquisition (see noteC to the consolidated financial statements). The Company does not believe therehas been any impairment in this asset at December 31, 1999 and 1998, inaccordance with Statements of Financial Accounting Standards No. 121"Accounting for the Impairment of Long–Lived Assets and for Long–LivedAssets to be Disposed of". If it became probable that the projected futureundiscounted cash flows of acquired assets were less than the carrying value ofintangible assets, the company would recognize an impairment loss in accordancewith the provisions of SFAS no. 121.

 

**Market Risk**

 

                TheCompany's earnings and cash flow are subject to fluctuations due to changes inforeign currency exchange rates. Currently these earnings and foreign currencytranslation adjustments have not been material to the overall financial resultsof the Company.

 

                TheCompany has also entered into an interest rate swap agreement to obtain a fixedinterest rate on variable rate debt to reduce certain exposures to interestrate fluctuations. In the event that a counterparty fails to meet the terms ofthe interest rate swap agreement, the Company's exposure is limited to theinterest rate differential. The Company manages the credit risk ofcounterparties by dealing only with institutions that the Company considersfinancially sound. The Company considers the risk of nonperformance to beremote.

 

**YEAR 2000READINESS DISCLOSURE**

 

                Inprior years, the Company discussed the nature and progress of its plans tobecome Year 2000 ready. In late 1999, the Company completed its remediation andtesting of systems. As a result of those planning and implementation efforts,the Company experienced no significant disruptions in mission criticalinformation technology and non–information technology systems andbelieves those systems successfully responded to the Year 2000 date change. Thetotal costs associated with the Company's Year 2000 remediation was notmaterial to the Company's financial position or results of operation and wasfunded through operating cash flows. The Company is not aware of any materialproblems resulting from Year 2000 issues, either with its products, its internalsystems, or the products and services of third parties. The Company willcontinue to monitor its mission critical computer applications and those of itssuppliers and vendors throughout the year 2000 to ensure that any latent year2000 matters that may arise are addressed promptly.

**CONSOLIDATED BALANCE SHEETS**

 
|                                                                                 |   | **December 31** |       |
|--------------------------------------------------------------------------------------|--------|-----------------|------------|
|                                                                                 |   | **1999**        |       | **1998** |   |
|                                                                                 |   |            |       |   |   |
| **ASSETS**                                                                           |   |            |       |   |   |
|                                                                                 |   |            |       |   |   |
| CURRENTS ASSETS                                                                      |   |            |       |   |   |
| Cash and cash equivalents                                                            |   | $               | 322,000    |   | $ | 1,590,000 |   |
| Short–term investments                                                          |   | 3,332,000       |       | 1,000 |   |
| Accounts receivable, less allowances of $469,000 in  1999 and $721,000 in 1998       |   | 14,935,000      |       | 14,725,000 |   |
| Due from affiliates                                                                  |   | 354,000         |       | 308,000 |   |
| Inventories                                                                          |   | 18,527,000      |       | 17,339,000 |   |
| Prepaid expenses                                                                     |   | 228,000         |       | 187,000 |   |
| Refundable income taxes                                                              |   | 267,000         |       | 111,000 |   |
| Deferred income taxes                                                                |   | 420,000         |       | 320,000 |   |
| TOTAL CURRENT ASSETS                                                                 |   | 38,385,000      |       | 34,581,000 |   |
| PROPERTY, PLANT AND EQUIPMENT                                                        |   |            |       |   |   |
| Land                                                                                 |   | 820,000         |       | 820,000 |   |
| Building and improvements                                                            |   | 5,983,000       |       | 5,983,000 |   |
| Machinery and equipment                                                              |   | 10,866,000      |       | 10,548,000 |   |
| Office furniture and equipment                                                       |   | 3,265,000       |       | 2,833,000 |   |
| Transportation equipment                                                             |   | 1,472,000       |       | 1,191,000 |   |
|                                                                                 |   | 22,406,000      |       | 21,375,000 |   |
| Accumulated depreciation                                                             |   | (12,993,000     | )          | (11,423,000 | ) |
|                                                                                 |   | 9,413,000       |       | 9,952,000 |   |
| INTANGIBLE ASSETS–Net of amortization of $442,000  in 1999 and $130,000 in 1998 |   | 5,825,000       |       | 6,137,000 |   |
|                                                                                 |   | $               | 53,623,000 |   | $ | 50,670,000 |   |
|                                                                                 |   |            |       |   |   |
| **LIABILITIES AND SHAREHOLDERS' EQUITY**                                             |   |            |       |   |   |
|                                                                                 |   |            |       |   |   |
| CURRENT LIABILITIES                                                                  |   |            |       |   |   |
| Current maturities of long term debt                                                 |   | $               | 1,500,000  |   | $ |   |   |
| Accounts payable                                                                     |   | 3,359,000       |       | 3,269,000 |   |
| Accrued expenses                                                                     |   | 3,235,000       |       | 2,952,000 |   |
| TOTAL CURRENT LIABILITIES                                                            |   | 8,094,000       |       | 6,221,000 |   |
| LONG–TERM DEBT, less current maturities                                         |   | 12,000,000      |       | 13,500,000 |   |
|                                                                                 |   |            |       |   |   |
| DEFERRED INCOME TAXES                                                                |   | 265,000         |       | 175,000 |   |
|                                                                                 |   |            |       |   |   |
| SHAREHOLDERS' EQUITY                                                                 |   |            |       |   |   |
| Common stock, no–par value                                                      |   |            |       |   |   |
| Authorized shares – 10,000,000                                                  |   |            |       |   |   |
| Issued and outstanding shares–3,568,385 in 1999  and 1998                       |   | 6,396,000       |       | 6,396,000 |   |
| Retained earnings                                                                    |   | 27,060,000      |       | 24,624,000 |   |
| Cumulative foreign currency translation adjustments                                  |   | (192,000        | )          | (246,000 | ) |
|                                                                                 |   | 33,264,000      |       | 30,774,000 |   |
|                                                                                 |   | $               | 53,623,000 |   | $ | 50,670,000 |   |

 

See notes toconsolidated financial statements.

**CONSOLIDATED STATEMENTS OF INCOME**

 
|                                               |   | **Year Ended  December 31** |       |
|----------------------------------------------------|--------|-----------------------------|------------|
|                                               |   | **1999**                    |       | **1998** |   | **1997** |   |
|                                               |   |                        |       |   |   |   |   |
| Net sales                                          |   | $                           | 76,060,000 |   | $ | 56,485,000 |   | $ | 53,346,000 |   |
| Cost of sales                                      |   | 52,412,000                  |       | 38,438,000 |   | 36,917,000 |   |
| Gross profit                                       |   | 23,648,000                  |       | 18,047,000 |   | 16,429,000 |   |
| Operating expenses                                 |   |                        |       |   |   |   |   |
| Selling                                            |   | 12,896,000                  |       | 10,548,000 |   | 9,869,000 |   |
| General and administrative                         |   | 3,989,000                   |       | 2,482,000 |   | 2,310,000 |   |
| Operating expenses                                 |   | 16,885,000                  |       | 13,030,000 |   | 12,179,000 |   |
| INCOME FROM OPERATIONS                             |   | 6,763,000                   |       | 5,017,000 |   | 4,250,000 |   |
| Other income (expense)                             |   |                        |       |   |   |   |   |
| Interest income                                    |   | 72,000                      |       | 32,000 |   | 53,000 |   |
| Interest expense                                   |   | (863,000                    | )          | (196,000 | ) | (57,000 | ) |
| Other – net                                   |   | 316,000                     |       | 400,000 |   | 107,000 |   |
| Other income (expense)                             |   | (475,000                    | )          | 236,000 |   | 103,000 |   |
| INCOME BEFORE INCOME TAXES                         |   | 6,288,000                   |       | 5,253,000 |   | 4,353,000 |   |
| Provision (credit) for income taxes                |   |                        |       |   |   |   |   |
| Current                                            |   | 2,291,000                   |       | 1,766,000 |   | 1,566,000 |   |
| Deferred                                           |   | (10,000                     | )          | 155,000 |   | (60,000 | ) |
| PROVISION FOR INCOME TAXES                         |   | 2,281,000                   |       | 1,921,000 |   | 1,506,000 |   |
| NET INCOME                                         |   | $                           | 4,007,000  |   | $ | 3,332,000 |   | $ | 2,847,000 |   |
| Net income per common share–basic and diluted |   | $                           | 1.12       |   | $ | .93 |   | $ | .80 |   |

 

See notes toconsolidated financial statements.

 

**CONSOLIDATED STATEMENTS OFSHAREHOLDERS' EQUITY**

 
|                         |   |             |   | **Years Ended  December 31, 1997, 1998 and 1999** |      |         |   |
|------------------------------|--------|------------------|--------|---------------------------------------------------|-----------|--------------|--------|
|                         |   |             |   |                                              |      |         |   | **Cumulative** |   |   |   |
|                         |   |             |   |                                              |      |         |   | **Foreign** |   |   |   |
|                         |   | **Common Stock** |   |                                              |      | **Currency** |   |   |   |
|                         |   | **Number of**    |   |                                              |      | **Retained** |   | **Translation** |   |   |   |
|                         |   | **Shares**       |   | **Amount**                                        |      | **Earnings** |   | **Adjustments** |   | **Total** |   |
|                         |   |             |   |                                              |      |         |   |   |   |   |   |
| BALANCE AT JANUARY 1, 1997   |   | 3,568,385        |   | $                                                 | 6,396,000 |         | $      | 21,585,000 |   | $ | (127,000 | ) | $ | 27,854,000 |   |
| Dividends (.44 per share)    |   |             |   |                                              |      | (1,570,000   | )      |   |   | (1,570,000 | ) |
| Net income                   |   |             |   |                                              |      | 2,847,000    |   |   |   | 2,847,000 |   |
| Translation adjustment       |   |             |   |                                              |      |         |   | (49,000 | ) | (49,000 | ) |
| Comprehensive income         |   |             |   |                                              |      |         |   |   |   | 2,798,000 |   |
|                         |   |             |   |                                              |      |         |   |   |   |   |   |
| BALANCE AT DECEMBER 31, 1997 |   | 3,568,385        |   | 6,396,000                                         |      | 22,862,000   |   | (176,000 | ) | 29,082,000 |   |
| Dividends (.44 per share)    |   |             |   |                                              |      | (1,570,000   | )      |   |   | (1,570,000 | ) |
| Net income                   |   |             |   |                                              |      | 3,332,000    |   |   |   | 3,332,000 |   |
| Translation adjustment       |   |             |   |                                              |      |         |   | (70,000 | ) | (70,000 | ) |
| Comprehensive income         |   |             |   |                                              |      |         |   |   |   | 3,262,000 |   |
| BALANCE AT DECEMBER 31, 1998 |   | 3,568,385        |   | 6,396,000                                         |      | 24,624,000   |   | (246,000 | ) | 30,774,000 |   |
| Dividends (.44 per share)    |   |             |   |                                              |      | (1,571,000   | )      |   |   | (1,571,000 | ) |
| Net income                   |   |             |   |                                              |      | 4,007,000    |   |   |   | 4,007,000 |   |
| Translation adjustment       |   |             |   |                                              |      |         |   | 54,000 |   | 54,000 |   |
| Comprehensive income         |   |             |   |                                              |      |         |   |   |   | 4,061,000 |   |
| BALANCE AT DECEMBER 31, 1999 |   | 3,568,385        |   | $                                                 | 6,396,000 |         | $      | 27,060,000 |   | $ | (192,000 | ) | $ | 33,264,000 |   |

 

See notes toconsolidated financial statements.

 

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

 
|                                                                               |   | **Year Ended  December 31** |      |
|------------------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                               |   | **1999**                    |      | **1998** |   | **1997** |   |
|                                                                               |   |                        |      |   |   |   |   |
| OPERATING ACTIVITIES                                                               |   |                        |      |   |   |   |   |
| Net income                                                                         |   | $                           | 4,007,000 |   | $ | 3,332,000 |   | $ | 2,847,000 |   |
| Adjustments to reconcile net income to net cash  provided by operating activities: |   |                        |      |   |   |   |   |
| Depreciation                                                                       |   | 1,636,000                   |      | 1,547,000 |   | 1,420,000 |   |
| Amortization                                                                       |   | 312,000                     |      | 39,000 |   | 15,000 |   |
| Deferred income taxes (credit)                                                     |   | (10,000                     | )         | 155,000 |   | (60,000 | ) |
| Other                                                                              |   | 54,000                      |      | (70,000 | ) | (49,000 | ) |
| Changes in operating assets and liabilities:                                       |   |                        |      |   |   |   |   |
| Accounts receivable and due from affiliates                                        |   | (127,000                    | )         | (2,691,000 | ) | (1,095,000 | ) |
| Inventories                                                                        |   | (1,511,000                  | )         | (1,056,000 | ) | (2,805,000 | ) |
| Prepaid expenses and refundable income taxes                                       |   | (209,000                    | )         | (142,000 | ) | 52,000 |   |
| Accounts payable, accrued expenses and income taxes                                |   | 579,000                     |      | 1,126,000 |   | 297,000 |   |
| NET CASH PROVIDED BY OPERATING ACTIVITIES                                          |   | 4,731,000                   |      | 2,240,000 |   | 622,000 |   |
| INVESTING ACTIVITIES                                                               |   |                        |      |   |   |   |   |
| Purchase of AAR PowerBoss                                                          |   |                        |      | (11,631,000 | ) |   |   |
| Purchases of property, plant and equipment, net                                    |   | (1,097,000                  | )         | (1,670,000 | ) | (1,946,000 | ) |
| Purchases of short–term investments                                           |   | (3,331,000                  | )         |   |   |   |   |
| Maturities of short–term investments                                          |   |                        |      | 157,000 |   | 1,983,000 |   |
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                |   | (4,428,000                  | )         | (13,144,000 | ) | 37,000 |   |
| FINANCING ACTIVITIES                                                               |   |                        |      |   |   |   |   |
| Proceeds from long–term debt                                                  |   |                        |      | 13,500,000 |   |   |   |
| Dividends paid                                                                     |   | (1,571,000                  | )         | (1,570,000 | ) | (1,570,000 | ) |
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                |   | (1,571,000                  | )         | 11,930,000 |   | (1,570,000 | ) |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   |   | (1,268,000                  | )         | 1,026,000 |   | (911,000 | ) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                     |   | 1,590,000                   |      | 564,000 |   | 1,475,000 |   |
| CASH AND CASH EQUIVALENTS AT END OF YEAR                                           |   | $                           | 322,000   |   | $ | 1,590,000 |   | $ | 564,000 |   |

 

See notes toconsolidated financial statements.

 

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

 

**NOTE A –BUSINESS INFORMATION**

 

                MinutemanInternational, Inc. (the "Company") operates primarily in onebusiness segment, which consists of the development, manufacture and marketingof commercial and industrial floor maintenance equipment and related products.The Company sells to a multitude of regional, national and internationalcustomers, primarily within the sanitary supply industry. No single customeraccounted for more than ten percent of net sales in 1999, 1998 or 1997.

 

                The Company sellsto affiliated (see Note H) and unaffiliated customers in foreign countries. For1999, 1998, and 1997, these sales aggregated $16,351,000, $10,642,000 and$12,062,000, respectively, and were principally to customers in Canada, thePacific Rim, the Middle East, Europe, and Latin America.

 

**NOTE B –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

**Principles ofConsolidation**

 

                The consolidatedfinancial statements include the accounts of the Company (an Illinoiscorporation) and its wholly owned subsidiaries, Multi–Clean, MinutemanPowerBoss, Inc., Minuteman Canada, Inc., Minuteman European B.V. and MinutemanInternational Foreign Sales Corporation. Significant intercompany accounts andtransactions have been eliminated in consolidation.

 

**RevenueRecognition**

 

                The Companyrecognizes sales upon the shipment of its products net of applicable provisionsfor discounts and allowances. The Company also provides for its estimate ofwarranty and bad debts at the time of sales.

 

**Use of Estimates**

 

                The preparation offinancial statements in conformity with accounting principles generallyaccepted in the United States requires management to make estimates andassumptions that affect the amounts reported in the financial statements andaccompanying notes. Actual results could differ from those estimates.

 

**Inventories**

 

                Inventories arestated at the lower of cost or market using the last in, first–out (LIFO)method for a majority (1999–54%, 1998–56%) of inventories and thefirst in, first out (FIFO) method for the remainder. Inventories at December31, 1999 and 1998 consist of the following:

 
|                      |   | **1999**   |       | **1998**   |   |
|---------------------------|--------|------------|------------|------------|--------|
|                      |   |       |       |       |   |
| Inventories at FIFO cost: |   |       |       |       |   |
| Finished goods            |   | $          | 7,760,000  |       | $      | 7,285,000 |   |
| Work in process           |   | 8,451,000  |       | 8,257,000  |   |
| Raw materials             |   | 4,403,000  |       | 3,898,000  |   |
|                      |   | 20,614,000 |       | 19,440,000 |   |
| Less LIFO reserve         |   | (2,087,000 | )          | (2,101,000 | )      |
| Total Inventories         |   | $          | 18,527,000 |       | $      | 17,339,000 |   |

 

 

**Property, Plantand Equipment**

 

                Property, plant andequipment are stated on the basis of cost. Depreciation is computed by both thestraight line and accelerated methods for financial reporting purposes and bythe accelerated method for tax purposes. Estimated useful lives for buildingsand improvements range from 15 to 40 years. All other property, plant andequipment lives range from 3 to 7 years.

 

**Intangible Assets**

 

                The Company hasclassified as intangible assets the cost in excess of the fair value of netassets of businesses acquired. Amortization is computed on a straight linebasis over twenty years.

 

                The Company doesnot believe there has been any impairment in this asset at December 31, 1999and 1998, in accordance with Statement of Financial Accounting Standards (SFAS)No. 121 "Accounting for the Impairment of Long–Lived Assets and forLong–Lived Assets to be Disposed of". If it became probable that theprojected future undiscounted cash flows of acquired assets were less than thecarrying value of intangible assets, the Company would recognize an impairmentloss in accordance with the provisions of SFAS No. 121.

 

**Income Taxes**

 

                Income taxes havebeen provided using the liability method. Under this method deferred tax assetsand liabilities are determined based on differences between financial reportingand tax bases of assets and liabilities, and are measured using the enacted taxrates and laws that will be in effect when the differences are expected toreverse.

 

**Net Income PerCommon Share**

 

                Net income percommon share is based on the weighted average number of common sharesoutstanding during each year (3,568,385 in 1999, 1998 and 1997). Basic andfully diluted earnings per share are the same amounts.

 

**Foreign CurrencyTranslation**

 

                The functionalcurrency of the Company's foreign subsidiaries is the local currency.Accordingly, the balance sheet accounts of the foreign subsidiaries have beentranslated into United States dollars using the current exchange rate at thebalance sheet date and income statement amounts have been translated using theaverage exchange rate for the year. Foreign currency translation adjustmentsresulting from the change in exchange rates have been classified as a separatecomponent of shareholders' equity.

 

**Cash Equivalents**

 

                The Companyconsiders all bank certificates of deposit and Eurodollar certificateinvestments with a maturity of three months or less when purchased to be cashequivalents.

 

**Short–TermInvestments**

 

                Short–terminvestments have been categorized as available for sale and are stated at cost,which approximates fair value. Investments, all of which are with domesticcommercial banks, include certificates of deposit and Eurodollar and treasurycertificates.

 

**Research andDevelopment Expenses**

 

                Research anddevelopment expense for 1999, 1998 and 1997, approximated $1,329,000,$1,118,000 and $1,102,000 respectively.

 

**New AccountingPronouncements**

 

                During 1998, the FinancialAccounting Standards Board issued Statement No. 133, "Accounting forDerivative Instruments and Hedging Activities" (the Statement), which wasamended by SFAS No. 137. Provisions of the Statement are required to be adoptedfor years beginning after June 15, 2000 and will require the Company torecognize all derivatives in the balance sheet at fair value. The Company willadopt the Statement effective January 1, 2001, and estimates that the adoptionof the Statement will not be material to its result of operations, financialposition or cash flows.

 

**NOTE C –ACQUISITION**

 

                On November 23,1998, the Company entered into an Asset Purchase Agreement with AAR PowerBoss,Inc., ("PowerBoss") for the acquisition of substantially all of thenet assets and assumption of certain liabilities of PowerBoss. PowerBossdesigns, manufactures, and repairs ride–on and walk–behind sweepersand scrubbers for floor and carpet care for use in industrial applications. Thecash purchase price, including related acquisition costs, was $11,494,000,after final purchase price adjustment. The acquisition was accounted for as apurchase. Accordingly, the assets and liabilities of the acquired business areincluded in the Consolidated Balance Sheet at December 31, 1998. The results ofPowerBoss's operations are included in the Consolidated Statements of Incomefrom the date of acquisition. The acquisition was financed with borrowed fundsfrom the long–term debt agreement entered into on November 18, 1998 (seeNote D). The aggregate consideration has been allocated to the assets ofPowerBoss based upon their respective fair market values. The excess of thepurchase price over the fair value of the net assets acquired (intangibleassets) in 1998 approximated $5,950,000 and is being amortized over 20 years.The unaudited pro forma combined historical results, as if PowerBoss had beenacquired at the beginning of the years 1998 and 1997 respectively, areestimated to be:

 
|                        |   | **1998**  |       | **1997**  |   |
|-----------------------------|--------|-----------|------------|-----------|--------|
|                        |   |      |       |      |   |
| Net sales                   |   | $         | 74,891,000 |      | $      | 76,105,000 |   |
| Net Income                  |   | 2,687,000 |       | 2,526,000 |   |
| Net Income per Common Share |   | $         | .75        |      | $      | .71 |   |

 

                These pro formaresults of operations have been prepared for comparative purposes only and donot purport to be indicative of the results of operations which actually would haveresulted had the acquisition occurred on the date indicated or which may resultin the future.

 

**NOTE D –DEBT**

 

**Short Term Debt**

 

                The Company enteredinto an unsecured Line of Credit arrangement for short–term debt with afinancial institution which expires in November, 2000. Under the terms of thisagreement the Company may borrow up to $5 million on terms mutually agreeableto the Company and the financial institution. There are no requirements forcompensating balances or restrictions of any kind involved in this arrangement.At December 31, 1999 and 1998 there were no borrowings outstanding.

 

**Long Term Debt**

 

                The Companyfinanced the PowerBoss acquisition (See Note C) by entering into a term loanagreement with a financial institution on November 18, 1998 for $13,500,000.This unsecured credit facility provides for an interest rate at LIBOR plus anapplicable margin based upon the ratio of debt outstanding to the Company'searnings before interest, taxes, depreciation and amortization and ranges from .70% to 1.15%. The margin rate on this debt at December 31, 1999 and December31, 1998 was .80% (see Note F). The effective interest rate on this debt atDecember 31, 1999 was 6.20%. The Company agreed to maintain certain minimumfinancial ratios. Maturities of long term debt are as follows:

 
|   |   |                    |   | **1999**   |       |
|--------|--------|-------------------------|--------|------------|------------|
|   |   |                    |   |       |       |
| Due    |   | 2000                    |   | $          | 1,500,000  |   |
|   |   | 2001                    |   | 1,500,000  |       |
|   |   | 2002                    |   | 1,500,000  |       |
|   |   | 2003                    |   | 1,500,000  |       |
|   |   | 2004 and thereafter     |   | 7,500,000  |       |
|   |   |                    |   | 13,500,000 |       |
|   |   | Less current maturities |   | 1,500,000  |       |
|   |   |                    |   | $          | 12,000,000 |   |

 

                Interest paid forshort–term and long–term debt obligations in 1999, 1998 and 1997was $847,000, $110,000 and $57,000, respectively.

 

**NOTE E –INCOME TAXES**

 

                Deferred incometaxes primarily relate to temporary differences in the recognition ofdepreciation expense and other accrued expenses for financial reporting andincome tax purposes. The temporary differences between the financial statementcarrying amounts and the tax bases of assets and liabilities that result insignificant amounts of deferred taxes in the consolidated balance sheets atDecember 31, 1999 and 1998 are as follows:

 
|                                                                |   | **Deferred Tax  Asset (Liabilities)** |          |
|---------------------------------------------------------------------|--------|---------------------------------------|---------------|
|                                                                |   | **December 31**                       |          |
|                                                                |   | **1999**                              |          | **1998** |   |
|                                                                |   |                                  |          |   |   |
| Accounts receivable allowance                                       |   | $                                     |  100,000 |   | $ |   108,000 |   |
| Property, plant & equipment tax depreciation in  excess of book |   | (230,000                              | )             | (175,000 | ) |
| Accrued expenses & other                                        |   | 285,000                               |          | 212,000 |   |
|                                                                |   | $                                     |  155,000 |   | $ |   145,000 |   |

 

 

                The effectiveincome tax rate on income taxes differed from the Federal statutory rate asfollows:

 
|                                           |   | **1999** |   | **1998** |   | **1997** |   |
|------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                                           |   |     |   |     |   |     |   |
| Federal statutory rate                         |   | 34.0     | %      | 34.0     | %      | 34.0     | %      |
| State income taxes, net of Federal tax benefit |   | 3.4      |   | 3.1      |   | 3.7      |   |
| Foreign Sales Corporation benefit              |   | (2.3     | )      | (1.5     | )      | (2.4     | )      |
| Research and Development Tax Credits           |   | (1.2     | )      | (.3      | )      | (.6      | )      |
| Other, net                                     |   | 2.4      |   | 1.4      |   | (.1      | )      |
|                                           |   | 36.3     | %      | 36.7     | %      | 34.6     | %      |

 

The components of the provision (benefit) for income taxes are:

 
|    |   | **1999** |      | **1998** |   | **1997**  |   |
|---------|--------|----------|-----------|----------|--------|-----------|--------|
|    |   |     |      |     |   |      |   |
| Federal |   | $        | 1,775,000 |     | $      | 1,693,000 |   | $ | 1,200,000 |   |
| State   |   | 450,000  |      | 328,000  |   | 285,000   |   |
| Foreign |   | 56,000   |      | (100,000 | )      | 21,000    |   |
|    |   | $        | 2,281,000 |     | $      | 1,921,000 |   | $ | 1,506,000 |   |

 

                The Company paidincome taxes of $2,421,000, $1,975,000 and $1,592,000 in 1999, 1998 and 1997,respectively.

 

**NOTE F –FINANCIAL INSTRUMENTS**

 

                Financialinstruments which potentially subject the Company to concentrations of creditrisk consist principally of cash equivalents and trade receivables. The Companyplaces its cash equivalents with high credit quality financial institutions,which are Federally insured up to prescribed limits. However, the amount ofcash equivalents at any one institution may exceed the Federally insuredprescribed limits. Concentrations of credit risks with regard to tradereceivables are limited due to the large number of customers comprising theCompany's customer base. The Company performs ongoing credit evaluations of itscustomers and maintains allowances for potential credit losses which, whenincurred, have been within the range of management expectations.

 

                In 1998, theCompany entered into an interest rate swap agreement to obtain a fixed interestrate on variable rate debt and reduce certain exposures to interest ratefluctuations. At December 31, 1999 and 1998, the Company had interest rateswaps with a notional amount of $13,500,000. The swaps will terminate on thesame basis as the long–term debt repayment schedule ending November, 2005(See Note D). The swaps result in fixed rate payments at an effective interestrate of 6.20%. Variable rate payments are based on LIBOR interest rate plus anapplicable margin (See Note D).

 

                Interest ratedifferentials paid or received under this agreement are recognized as anadjustment to interest expense. The Company does not hold or issue interestrate swap agreements for trading purposes.

 

                In the event that acounterparty fails to meet the terms of the interest rate swap agreement, theCompany's exposure is limited to the interest rate differential. The Companymanages the credit risk of counterparties by dealing only with institutionsthat the Company considers financially sound. The Company considers the risk ofnonperformance to be remote. The net carrying amounts and fair values of theCompany's financial instruments are approximately the same.

 

**NOTE G –LEASE COMMITMENTS**

 

                The Company and itssubsidiaries lease certain manufacturing, warehousing and other facilities andequipment. The leases generally provide for the lessee to pay taxes,maintenance, insurance and certain other operating costs of the leasedproperty. The leases on most of the properties contain renewal provisions. Thefollowing is a summary of future minimum payments under operating leases thathave initial or remaining noncancelable lease terms in excess of one year atDecember 31, 1999:

 
| 2000   |   | $       | 486,000 |   |
|--------|--------|---------|---------|--------|
| 2001   |   | 322,000 |    |
| 2002   |   | 124,000 |    |
| 2003   |   | 5,000   |    |
|   |   | $       | 937,000 |   |

 

                Rental expense foroperating leases amounted to $451,000, $219,000 and $128,000, in 1999, 1998 and1997, respectively.

 

**NOTE H –RELATED PARTY TRANSACTIONS**

 

                Hako–WerkeGmbH & Co. (a German corporation) owns 69.0% of the outstanding commonstock of the Company through a subsidiary.

 

                The Company soldapproximately $1,460,000, $1,403,000 and $1,968,000 of merchandise to HakoWerke and certain of its subsidiaries during 1999, 1998 and 1997, respectively.Amounts due from affiliates, which relate to these sales, are due within 90days from the date of sale.

 

**NOTE I –EMPLOYEE BENEFIT PLANS**

 

                The Companymaintains a participatory defined contribution plan for substantially allemployees under Section 401(a) of the Internal Revenue Code.

 

                In addition to adiscretionary contribution, the Company also matches employee contributionsbased upon a formula up to a specified maximum. Contributions to the plan andrelated expense were $403,000, $284,000 and $268,000 for the years ended 1999, 1998and 1997 respectively.

 

NOTE J - QUARTERLY RESULTS OF OPERATIONS 

(UNAUDITED)

The Company is restating the following summary ofquarterly results of operations for the years ended December 31, 1999 and 1998.The Company determined that it was necessary to restate these results based ona review of the timing of the recording of certain sales transactions on aquarterly basis, which were not consistent with the Company's sales recognitionpolicy. The annual amounts reported remain unaffected.

 
|                         |   |                                               |   | **Restated** |   |     |   | **Restated** |   |          |   | **Restated**  |   |         |   | **Restated** |   |
|------------------------------|--------|----------------------------------------------------|--------|--------------|--------|----------|--------|--------------|--------|---------------|--------|---------------|--------|--------------|--------|--------------|--------|
|                         |   | **March**                                          |   | **March**    |   | **June** |   | **June**     |   | **September** |   | **September** |   | **December** |   | **December** |   |
|                         |   | **31**                                             |   | **31**       |   | **30**   |   | **30**       |   | **30**        |   | **30**        |   | **31**       |   | **31**       |   |
|                         |   | **(Thousands of dollars, except per share  data)** |   |
| **1999**                     |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Net Sales                    |   | $                                                  | 19,491 |         | $      | 19,053   |   | $            | 20,007 |          | $      | 19,030        |   | $            | 21,110 |         | $      | 20,576 |   | $ | 17,074 |   | $ | 19,023 |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Gross Profit                 |   | 5,682                                              |   | 5,518        |   | 6,155    |   | 5,854        |   | 6,333         |   | 6,098         |   | 5,478        |   | 6,178        |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Net Income                   |   | 772                                                |   | 679          |   | 966      |   | 795          |   | 1,147         |   | 1,011         |   | 1,122        |   | 1,522        |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Net Income  per common share |   | $                                                  | 0.22   |         | $      | 0.19     |   | $            | 0.27   |          | $      | 0.22          |   | $            | 0.32   |         | $      | 0.29 |   | $ | 0.31 |   | $ | 0.42 |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| **1998**                     |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Net Sales                    |   | $                                                  | 15,341 |         | $      | 14,558   |   | $            | 14,716 |          | $      | 14,521        |   | $            | 14,189 |         | $      | 13,558 |   | $ | 13,134 |   | $ | 14,743 |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Gross Profit                 |   | 4,941                                              |   | 4,637        |   | 4,753    |   | 4,678        |   | 4,350         |   | 4,088         |   | 4,003        |   | 4,644        |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Net Income                   |   | 901                                                |   | 727          |   | 930      |   | 887          |   | 954           |   | 803           |   | 547          |   | 915          |   |
|                         |   |                                               |   |         |   |     |   |         |   |          |   |          |   |         |   |         |   |
| Net Income  per common share |   | $                                                  | 0.25   |         | $      | 0.20     |   | $            | 0.26   |          | $      | 0.25          |   | $            | 0.27   |         | $      | 0.23 |   | $ | 0.15 |   | $ | 0.25 |   |

 

** **

**MARKETS FOR THECOMPANY'S SECURITIES AND RELATED MATTERS**

 

                On March 1, 2000the last reported sales price of the common stock on the NASDAQ systems was$10.50. The approximate number of holders of common stock was 1100.

 

                Since 1988 theBoard of Directors has declared regular quarterly dividends and the fourth quarterdividend in 1999 represents the forty–fifth consecutive dividend paid toshareholders. Future dividend policy will be determined by the Board ofDirectors in light of prevailing financial needs and earnings of the Companyand other relevant factors.

 

                The common stock ofMinuteman International, Inc. is quoted on The Nasdaq Stock Market and itstrading symbol is "MMAN". The following tables set forth for 1999 and1998 the range of bid prices for the Company's common stock as reported in the NASDAQsystems for the period indicated:

 
|        |   |     |   |        |   |      |   |   |   | **Dividends** |   |
|-------------|--------|----------|--------|-------------|--------|-----------|--------|--------|--------|---------------|--------|
|        |   | **High** |   | **Low Per** |   | **Share** |   |
|        |   |     |   |        |   |      |   |   |   |          |   |
| **1999**    |   |     |   |        |   |      |   |   |   |          |   |
|        |   |     |   |        |   |      |   |   |   |          |   |
| 1st Quarter |   | 13       |   | 3/4         |   | 10        |   | 1/8    |   | $             | .11    |   |
| 2nd Quarter |   | 10       |   | 1/2         |   | 7         |   | 3/4    |   | $             | .11    |   |
| 3rd Quarter |   | 10       |   | 1/2         |   | 7         |   | 1/2    |   | $             | .11    |   |
| 4th Quarter |   | 10       |   | 1/4         |   | 7         |   | 1/2    |   | $             | .11    |   |
|        |   |     |   |        |   |      |   |   |   |          |   |
| **1998**    |   |     |   |        |   |      |   |   |   |          |   |
|        |   |     |   |        |   |      |   |   |   |          |   |
| 1st Quarter |   | 10       |   | 3/4         |   | 9         |   | 7/8    |   | $             | .11    |   |
| 2nd Quarter |   | 11       |   | 3/4         |   | 10        |   |   |   | $             | .11    |   |
| 3rd Quarter |   | 11       |   | 3/4         |   | 10        |   | 3/8    |   | $             | .11    |   |
| 4th Quarter |   | 12       |   | 3/4         |   | 9         |   | 5/8    |   | $             | .11    |   |
|             |        |          |        |             |        |           |        |        |        |               |        |  |  |  |

 

**SELECTEDCONSOLIDATED FINANCIAL DATA**

 

                See"Management's Discussion and Analysis of Results of Operations andFinancial Condition", and "Notes to Consolidated FinancialStatements"

 
|                                          |   | **Year Ended  December 31,**                         |   |
|-----------------------------------------------|--------|------------------------------------------------------|--------|
|                                          |   | **1999**                                             |   | **1998** |   | **1997** |   | **1996** |   | **1995** |   |
|                                          |   | **(In thousands,  except share and per share data)** |   |
|                                          |   |                                                 |   |   |   |   |   |   |   |   |   |
| INCOME STATEMENT DATA                         |   |                                                 |   |   |   |   |   |   |   |   |   |
| Net sales                                     |   | $                                                    | 76,060 |   | $ | 56,485 |   | $ | 53,346 |   | $ | 49,120 |   | $ | 46,300 |   |
| Cost of sales                                 |   | 52,412                                               |   | 38,438 |   | 36,917 |   | 33,932 |   | 31,957 |   |
| Gross profit                                  |   | 23,648                                               |   | 18,047 |   | 16,429 |   | 15,188 |   | 14,343 |   |
| Selling expenses                              |   | 12,896                                               |   | 10,548 |   | 9,869 |   | 8,548 |   | 8,431 |   |
| General and administrative expenses           |   | 3,989                                                |   | 2,482 |   | 2,310 |   | 2,207 |   | 1,920 |   |
| Income from operations                        |   | 6,763                                                |   | 5,017 |   | 4,250 |   | 4,433 |   | 3,992 |   |
| Interest income (expense), net                |   | (791                                                 | )      | (164 | ) | (4 | ) | 54 |   | 30 |   |
| Other, net                                    |   | 316                                                  |   | 400 |   | 107 |   | 486 |   | 82 |   |
| Income before income taxes                    |   | 6,288                                                |   | 5,253 |   | 4,353 |   | 4,973 |   | 4,104 |   |
| Income tax expense                            |   | 2,281                                                |   | 1,921 |   | 1,506 |   | 1,812 |   | 1,280 |   |
| Net income                                    |   | $                                                    | 4,007  |   | $ | 3,332 |   | $ | 2,847 |   | $ | 3,161 |   | $ | 2,824 |   |
|                                          |   |                                                 |   |   |   |   |   |   |   |   |   |
| PER SHARE DATA                                |   |                                                 |   |   |   |   |   |   |   |   |   |
| Cash dividends                                |   | $                                                    | .44    |   | $ | .44 |   | $ | .44 |   | $ | .40 |   | $ | .40 |   |
| Net income per common share                   |   | 1.12                                                 |   | .93 |   | .80 |   | .89 |   | .79 |   |
| Weighted average number of shares outstanding |   | 3,568,685                                            |   | 3,568,385 |   | 3,568,385 |   | 3,568,385 |   | 3,568,385 |   |
| BALANCE SHEET DATA                            |   |                                                 |   |   |   |   |   |   |   |   |   |
| Working capital                               |   | $                                                    | 30,291 |   | $ | 28,360 |   | $ | 19,901 |   | $ | 19,184 |   | $ | 17,142 |   |
| Total assets                                  |   | 53,623                                               |   | 50,670 |   | 32,493 |   | 30,968 |   | 29,500 |   |
| Long–term debt                           |   | 12,000                                               |   | 13,500 |   |   |   |   |   |   |   |
| Shareholders' equity                          |   | 33,264                                               |   | 30,774 |   | 29,082 |   | 27,854 |   | 26,125 |   |
|                                          |   |                                                 |   |   |   |   |   |   |   |   |   |

 

**REPORT OF INDEPENDENT AUDITORS**

 

**TO THESHAREHOLDERS OF MINUTEMAN INTERNATIONAL, INC.**

 

                We have audited theaccompanying consolidated balance sheets of Minuteman International, Inc. andsubsidiaries as of December 31, 1999 and 1998 and the related consolidatedstatements of income, shareholders' equity and cash flows for each of the threeyears in the period ended December 31, 1999. These financial statements are theresponsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audits.

 

                We conducted ouraudits in accordance with auditing standards generally accepted in the UnitedStates. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basisfor our opinion.

 

                In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the consolidated financial position of Minuteman International, Inc.and subsidiaries at December 31, 1999 and 1998, and the consolidated results oftheir operations and their cash flows for each of the three years in the periodended December 31, 1999, in conformity with accounting principles generallyaccepted in the United States.

 

 

/s/ Ernst & Young LLP

 

 

ERNST & YOUNG LLP

Chicago, Illinois

February 8, 2000

 

 

**REPORTOF MANAGEMENT**

 

                The management ofMinuteman International, Inc. is responsible for the integrity of theinformation presented in this Annual Report, including the Company's financialstatements. These statements have been prepared in conformity with accountingprinciples generally accepted in the United States and include, wherenecessary, informed estimates and judgments by management.

 

                The Companymaintains systems of accounting and internal controls designed to provideassurance that assets are properly accounted for, as well as to insure that thefinancial records are reliable for preparing financial statements. The systemsare augmented by qualified personnel and are reviewed on a periodic basis.

 

                The Companymaintains high standards when selecting, training, and developing personnel, toensure that management's objectives of maintaining strong, effective internalaccounting controls and unbiased, uniform reporting standards are attained. TheCompany believes its policies and procedures provide reasonable assurance thatoperations are conducted in conformity with law and with the Company'scommitment to a high standard of business conduct.

 

                Our independentauditors, Ernst & Young LLP, conduct annual audits of our financialstatements in accordance with auditing standards generally accepted in theUnited States which include the review of internal controls for the purpose ofestablishing their audit scope, and issue an opinion of the fairness of suchfinancial statements.

 

                The Board ofDirectors pursues its responsibility for the quality of the Company's financialreporting primarily through its Audit Committee, which is composed of threeoutside directors. The Audit Committee meets periodically with management andthe independent auditors to review the manner in which they are performingtheir responsibilities and to discuss auditing, internal accounting controls,and financial reporting matters. The independent auditors periodically meetalone with the Audit Committee and have full and free access to the AuditCommittee at any time.

 

 

/s/ Thomas J. Nolan

 

Thomas J. Nolan

Chief Financial Officer,

Secretary & Treasurer

 

 

/s/ Jerome E. Rau

 

Jerome E. Rau

Chairman of the Board and

Chief Executive Officer