<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NUMBER 1-5601
AMERICAN PRECISION INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 16-1284388
(State of incorporation) (I.R.S. Employer Identification No.)
2777 WALDEN AVENUE, BUFFALO, NEW YORK 14225
(Address of principal executive offices) (Zip Code)
</TABLE>
(716) 684-9700
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<S> <C>
COMMON STOCK, $.66-2/3 PAR VALUE NEW YORK STOCK EXCHANGE
(Title of each class) (Name of each exchange on which registered)
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- ------
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, at March 22, 1996 was approximately $74,703,000.
The number of shares of Registrant's Common Stock outstanding on March
22, 1996 was 7,154,051.
Exhibit Index can be found on page 38 of this document.
<PAGE> 2
AMERICAN PRECISION INDUSTRIES INC.
FORM 10-K ANNUAL REPORT
For the year ended December 29, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PART I
- ------ PAGE
ITEM 1. BUSINESS ----
Products and Marketing 3
Competition 6
Backlog 6
Suppliers 6
Patents and Licenses 7
Customers 7
Research and Development 7
Environmental Matters 7
Employees 8
Lines of Business and Industry Segment Information 8
Foreign Operations 8
ITEM 2. PROPERTIES 9-10
ITEM 3. LEGAL PROCEEDINGS 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 10
PART II
- -------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS 11
ITEM 6. SELECTED FINANCIAL DATA 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 13-15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS 16
ON ACCOUNTING AND FINANCIAL DISCLOSURE 36
PART III.
- ---------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 37
ITEM 11. EXECUTIVE COMPENSATION 37
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS 37
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 37
PART IV.
- --------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K 38
SIGNATURES 41-42
</TABLE>
2
<PAGE> 3
PART I
------
ITEM 1. BUSINESS
--------
a. PRODUCTS AND MARKETING
The registrant and its subsidiaries (the "Company" or "API")
conduct operations in three major industrial classifications,
namely, Heat Transfer, Motion Technologies, and Electronic
Components.
The Company continues to direct its efforts towards major sales
drives for current products in its served markets and target
markets. In addition, the Company continues to aggressively
seek profitable growth by enhancing and complementing its
existing technology base.
HEAT TRANSFER
-------------
The Heat Transfer Group, comprised of the Basco and Air
Technologies Divisions, designs, engineers, and manufactures a
broad range of heat transfer products which are used in a
variety of applications, including the cooling of oil, air, and
other gases; steam condensing; vapor recovery; and many other
processing requirements. The Group's products are sold for use
on various types of industrial machinery and for use in power,
chemical, petrochemical, and refining operations.
The Basco Division manufacturers a full line of standard and
custom shell and tube heat exchangers, plate fin intercoolers
and aftercoolers, and Centraflow steam surface condensers. The
Air Technologies Division produces a full line of aluminum
air-to-air and air-to-liquid heat exchangers for use on air
compressors, construction equipment, and industrial machines.
The Group generates its bookings and sales through a network of
sales representatives whose territories are geographically
defined. The majority of sales are made to original equipment
manufacturers, with the balance of sales made to end users,
usually for use in a plant or processing application.
During 1995, the Group upgraded its computer hardware and
software systems to support the upcoming growth objectives. In
addition to the capability to support additional sales volume,
significant benefits are expected in inventory management,
scheduling, and cost control.
Throughout the year the Basco Division reorganized departmental
responsibilities into a format that fits its future business
operating strategy and upgraded management positions in
Engineering, Manufacturing, and Marketing. This action, combined
with upgrades in machinery and equipment, has positioned this
Division to become an even larger force in the heat exchanger
industry. In addition, Basco has secured overseas
representation, and as a result obtained significant business in
Germany.
The Air Technologies Division experienced over 30% growth during
1995, and this, combined with healthy projections for 1996, has
created the need for a larger facility. We expect to complete a
new 80,000 square foot manufacturing facility in 1996. This
3
<PAGE> 4
move will approximately double the floor space currently in use
and will allow for both more efficient production of current
backlog, as well as the required space for expected future
growth. This new facility, coupled with planned heavy
investments in capital equipment will enable this Division to
pursue a leadership role in its industry. High quality,
flexibility, and strength of design, along with serviceability
to our customers at a competitive price, continues to drive the
Air Technologies Division to new heights.
The Group will continue to pursue new products and new markets
and strive for further productivity gains and processing
improvement to enhance value to its customers.
MOTION TECHNOLOGIES
-------------------
The Motion Technologies Group is comprised of the Controls,
Deltran, Harowe, and Rapidsyn Divisions. In addition, on
January 1, 1995, the Group assumed the management of the
day-to-day operations of Gettys Corporation, a manufacturer of
precision industrial motors located in Racine, Wisconsin.
During 1995, the number of facilities occupied by the Group was
reduced from six to four. The Rapidsyn Division was relocated
from Oceanside, California and merged into the Gettys facilities
in Wisconsin. The Controls and Deltran facilities were also
relocated into one larger, state-of-the-art facility in Amherst,
New York.
CONTROLS The Controls Division offers a complete line of drives,
controls, power-supplies, and applications support for motion
control systems, including factory automation, semi-conductor
equipment, printing, packaging, and winding equipment,
positioning tables, fluid metering, and electronics assembly
applications. During 1995, the Division continued to focus its
efforts on developing the Intelligent Drive family of products.
This product line provides the user with an integrated microstep
controller and drive unit with built-in network communications.
In 1996, plans are to continue development of the Intelligent
Drive family, including a new brushless servo unit that will be
directed to specific market opportunities in semi-conductor and
medical applications.
DELTRAN The Deltran Division manufactures high quality
electro-magnetic clutches and brakes used in sophisticated
rotary control applications. During 1995, the Division developed
a new line of spring-set brakes for servo motors. This highly
tooled product line will allow Deltran to become a leader within
this market, just as they are today in the office copier market.
The Division recently formed an alliance with Xerox Corporation,
being only the second company in the United States to do so,
which assures Deltran a long-term, profitable relationship as
the major supplier of clutches to Xerox world-wide. Significant
cost reductions are planned for 1996, such as the start-up of a
new manufacturing plant in St. Kitts, West Indies, and further
off-shore sourcing of key components. These efforts will
further enhance the Division's position within the highly
competitive markets in which it focuses.
HAROWE SERVO CONTROLS, INC. Harowe produces precision motors and
feedback devices for medical, factory automation, and aerospace
markets. The motors are fractional horsepower AC, DC brushless,
and stepper types. The feedback devices
4
<PAGE> 5
consist of tachometers, synchros, and resolvers which provide
velocity or position feedback. Harowe plans to develop and
introduce new feedback components in 1996. These will include
resolver-to-digital electronic packages and optical encoders.
Harowe will continue implementing cellular manufacturing that
was initiated in 1995. These efforts have already resulted in
shorter lead time and improved quality, productivity, and
on-time delivery.
RAPIDSYN The Rapidsyn Division offers a full line of step
motors, ranging from 2.3 inches to 4.2 inches in diameter. The
Division also manufactures AC synchronous motors, linear
actuators, and high performance brushless DC motors.
The Division also began an aggressive new product development
program that has resulted in a new high performance line of
hybrid step motors that meet or exceed the microstepping
accuracy and torque output of any products currently on the
market. Patents for the new motors have been applied for.
ELECTRONIC COMPONENTS
---------------------
The Electronic Components Group is comprised of the Delevan and
Surface Mounted Devices Divisions. These divisions design,
manufacture, and market an extensive line of quality inductors,
chokes, and coils to satisfy various electrical and electronic
filtering requirements. The Group concentrates on producing high
performance inductive devices to meet stringent government and
customer specifications relating to high product quality,
reliability, and dependability. The Delevan and SMD Divisions
are world-class suppliers to the telecommunication, aerospace,
avionics, lighting, computer, medical, and military markets.
Global competitive forces continue to push the market towards
improved product quality and lower product costs. This
competition from off-shore manufacturing is being neutralized
through major improvements in our manufacturing capabilities.
Productivity continues to increase due to the success of our
ISO-9001 certification, Total Quality Management practices,
recently introduced Statistical Process Control, and High
Performance teams. Aggressive automation and process
streamlining contributes to reducing our overall costs and cycle
time and to providing improved customer service.
The Group continues an assault on winning new markets and new
customers. The Group introduced both new product series and
expanded existing series to enhance our presence in the high
frequency and power markets. Two additional series are in the
final stages of development that will allow us to further
penetrate these growing markets. Custom designed products to
meet specific and unique customer requirements is an additional
area that the Group continues to grow. The net effort of our new
and custom products in 1995 resulted in increasing our business
base by 10% and is giving us the opportunity to service over 50
new customers.
One of the key initiatives identified in our Five Year Strategic
Business Plan was strengthening our customer base at both
Divisions. Today, our customer base is diverse, including
customers from the lighting, automotive, medical, and industrial
segments along with our traditional markets. This diversity has
both strengthened our backlog and reduced sales fluctuations
that commonly occur with a narrow customer
5
<PAGE> 6
base. To properly support this larger customer base, the Group
has developed a complete presence on the World Wide Web where
customers around the world can view our product offerings,
contact our field sales forces and distributors, request
additional information, and generally learn about our Company.
Likewise, each internal sales representative, has been
"computerized" with the latest sales management software to
quickly respond to customer needs.
The outlook in the coming years looks promising and full of
growth opportunities. Detailed plans, all focused on customer
satisfaction, are being implemented to develop new products,
enter new markets, and reduce our costs. Internal training, both
formal and on the job, continues to strengthen the capabilities
and skills of our workforce. This investment in training and our
new EVA-based incentive system are key factors that will enable
the Electronic Components Group to drive and accelerate our
commitment to excellence in meeting both customer requirements
and our strategic growth objectives.
To learn more about the Group, throughout the year, please visit
our homepage on the Internet...HTTP://WWW.DELEVAN.COM or E-mail
us at [email protected] or [email protected] and communicate
via the Internet directly with our sales or engineering team
members.
b. COMPETITION
-----------
In each of its segments the Company faces substantial
competition from a number of companies, some of which have
off-shore manufacturing facilities, and many of which are larger
and have greater resources. In the electronic components
market, several of our domestic competitors have become part of
a single organization through a series of acquisitions. The
inductor market continues to be faced with strong global
competition and trends towards product miniaturization and lower
costs. The Company relies primarily on the quality of its
products and service to meet competition. Although the Company
is not aware of definitive industry statistics by manufacturer
for the products it makes, in the opinion of management, the
Registrant is a significant competitive factor in the high
quality micro-miniature electronic coil, electro-magnetic
components, and compressor cooler markets.
c. BACKLOG
-------
The Company's backlog of unfilled orders believed to be firm at
December 29, 1995 was approximately $30,441,000. All backlog
orders are expected to be completed in the current fiscal year.
The following table shows the backlog of orders for products
associated with the three business segments:
<TABLE>
<CAPTION>
Heat Motion Electronic
Transfer Technologies Components Total
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
1995 $13,778,000 $14,229,000 $2,434,000 $30,441,000
1994 $ 9,201,000 $10,833,000 $2,413,000 $22,447,000
</TABLE>
6
<PAGE> 7
Backlogs have increased for the Heat Transfer and Motion
Technologies segments primarily due to a focused strategic
account sales program and the general business climate. While
the Electronic Components segment sales have increased, the
backlog has remained steady and is the result of reduced lead
times for delivery required by our customers.
d. SUPPLIERS
---------
The Company is not dependent upon any single supplier for any of
the raw materials used in manufacturing its products and has not
encountered significant difficulties in purchasing sufficient
quantities of raw materials on the open market.
e. PATENTS AND LICENSES
--------------------
The Company has patents covering the design and certain
manufacturing processes for some of its surface mounted
inductors which management believes may be material to the
Electronic Components segment over the next several years.
These patents have a remaining duration in excess of ten years.
Otherwise, no single patent or group of patents is material to
the operations of any industry segment or to the business as a
whole.
f. CUSTOMERS
---------
During 1995, no single customer accounted for more than 10% of
consolidated sales.
g. RESEARCH AND PRODUCT DEVELOPMENT
--------------------------------
The Company charges earnings directly for research and product
development expenses. Costs for Company-sponsored programs,
excluding capital expenditures, were approximately $1,111,000,
$888,000, and $602,000, in 1995, 1994, and 1993, respectively.
h. ENVIRONMENTAL MATTERS
---------------------
In 1990, the U.S. Environmental Protection Agency (EPA) named
the Company a potentially responsible party (PRP) with respect
to hazardous substances disposed of at the Envirotek II Site
(the Site) in Tonawanda, New York. The Company is a member of a
steering committee which was formed to facilitate discussions
with the EPA. The Company was named a de minimis participant
with respect to the first phase of the clean-up action and was
relieved of any potential liability for the first phase clean-up
with the payment of a minor fee. The EPA has since advised the
Company that its name had been removed from the PRP list. The
State of New York has also indicated to the Envirotek II PRP
Group its intention to pursue additional remedial measures at a
site which surrounds the Site. It is not possible at this time
to determine, whether and to what extent, the Company will incur
additional liability as a result of any future government or
private action.
7
<PAGE> 8
i. EMPLOYEES
---------
At December 29, 1995, 1,019 persons were employed by the Company.
j. LINES OF BUSINESS AND INDUSTRY SEGMENT INFORMATION
--------------------------------------------------
The Company's operations in 1995 were carried on through seven
divisions and two subsidiaries. Operations are classified into
three industry segments based upon the characteristics of
manufacturing processes and the nature of markets served. The
operating units which currently comprise the segments and their
principal products are as follows:
<TABLE>
<CAPTION>
Segment Principal Products
------- ------------------
<S> <C>
Heat Transfer:
-------------
Air Technologies Division Air-to-air aluminum heat exchangers
Basco Division Shell and tube heat exchangers
Motion Technologies:
-------------------
Controls Division Drives, power supplies, and controllers
Deltran Division Electro-magnetic clutches and brakes
Harowe Servo Controls Inc. Resolvers and DC motors
Harowe Servo Controls (St. Kitts) Ltd. Resolvers and DC motors
Rapidsyn Division Step motors
Electronic Components:
---------------------
Delevan Division Axial-leaded inductors
Surface Mounted Devices Division Surface mounted inductors
</TABLE>
Amounts of revenue from sales to unaffiliated customers,
operating profit or loss, and identifiable assets for the three
years ended December 29, 1995, are included in Note M of the
notes to consolidated financial statements on page(s) 34-35 of
this document.
k. FOREIGN OPERATIONS
------------------
Export sales, principally to Europe, Canada, and Asia, were
approximately 14% of consolidated sales for 1995. In 1994 and
1993, export sales were 17% of consolidated sales and were
principally to Europe and Canada. The foreign sales are not
believed to be subject to any risks other than those normally
associated with the conduct of business in friendly nations
having stable governments.
8
<PAGE> 9
ITEM 2. PROPERTIES
----------
The location of the Company's facilities and their approximate
size in terms of floor area are as follows:
<TABLE>
<CAPTION>
Floor Area
Location (Sq. Ft.)
------------------------------------ ----------
<S> <C>
HEAT TRANSFER
Buffalo 115,600
New York
(Walden Avenue)
Arcade 37,500
New York
(Sandusky Road)
MOTION TECHNOLOGIES
West Chester 34,500
Pennsylvania
(Westtown Road)
Amherst 43,652
New York
(Hazelwood Drive)
Racine 5,764
Wisconsin
(North Green Bay Road)
St. Kitts 6,500
West Indies
(Bourkes Road)
ELECTRONIC COMPONENTS
East Aurora 50,000
New York
(Quaker Road)
Arcade 23,500
New York
(North Street)
</TABLE>
9
<PAGE> 10
The Walden Avenue, Quaker Road, and North Street facilities are
owned by the Company.
The facilities leased by the Company are as follows:
<TABLE>
<CAPTION>
Approx.
Facility Location Annual Rental Leased Until
----------------- ------------- ------------
<S> <C> <C>
Bourkes Road $ 14,000 2003
Hazelwood Drive $115,000 2002
Westtown Road $152,000 2001
Sandusky Road $ 79,000 1997
North Green Bay Road $ 26,000 1996
</TABLE>
The Company believes all of its existing properties are well
maintained, are suitable for the operation of its business, and
are capable of handling production for the coming year.
ITEM 3. LEGAL PROCEEDINGS
-----------------
See Item 1(h).
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
There were no matters submitted to a vote of security holders
during the fourth quarter of 1995.
10
<PAGE> 11
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
-------------------------------------
AND RELATED SHAREHOLDER MATTERS
-------------------------------
COMMON STOCK PRICES
American Precision Industries common stock is listed on the New
York Stock Exchange and traded principally in that market. The
following table shows the Company's high and low prices on the
New York Stock Exchange, as reported in the Wall Street Journal.
<TABLE>
<CAPTION>
Quarter
1 2 3 4
-----------------------------------------
<S> <C> <C> <C> <C> <C>
1995 High $9.63 $11.13 $14.75 $13.88
Low $7.63 $ 8.50 $10.13 $10.75
1994 High $8.25 $ 7.63 $ 7.50 $ 8.00
Low $6.25 $ 6.88 $ 6.63 $ 7.00
</TABLE>
As of December 29, 1995, there were 1,076 shareholders of
record.
11
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
FIVE YEAR SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
OPERATIONS 1995 1994 1993 1992 1991
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $82,660,000 $65,265,000 $51,334,000 $51,295,000 $51,453,000
Interest and debt
expense $ 238,000 $ 220,000 $ 244,000 $ 293,000 $ 399,000
Depreciation and
amortization $ 2,594,000 $ 2,275,000 $ 1,712,000 $ 1,531,000 $ 1,382,000
Net earnings $ 4,731,000 $ 3,431,000 $ 2,050,000 $ 2,387,000 $ 3,635,000
Net earnings per
share $ .67 $ .49 $ .29 $ .34 $ .50
Cash dividends
declared per share $ .2575 $ .2475 $ .235 $ .215 $ .195
FINANCIAL
CONDITION
----------------------------------------------------------------------------------------------------
Current assets $31,615,000 $25,113,000 $21,347,000 $20,447,000 $19,964,000
Current liabilities $13,152,000 $10,916,000 $ 5,362,000 $ 4,896,000 $ 4,017,000
Working capital $18,463,000 $14,197,000 $15,985,000 $15,551,000 $15,947,000
Current ratio 2.4 2.3 4.0 4.2 5.0
Property, plant
and equipment, net $12,269,000 $10,202,000 $ 8,353,000 $ 8,200,000 $ 7,989,000
Total assets $57,791,000 $45,344,000 $38,081,000 $37,369,000 $36,863,000
Long-term
liabilities $10,292,000 $ 3,523,000 $ 3,507,000 $ 3,761,000 $ 4,778,000
Shareholders'
equity $34,347,000 $30,905,000 $29,212,000 $28,712,000 $28,068,000
Shareholders'
equity per share $ 4.82 $ 4.38 $ 4.14 $ 4.07 $ 3.94
Number of shares
outstanding at
year-end 7,128,000 7,064,000 7,058,000 7,055,000 7,117,000
</TABLE>
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL REVIEW - OPERATIONS
REVENUES Consolidated revenues increased 26.7% as compared to
the prior year. Sales within the Heat Transfer segment
increased 22.6% in 1995 and is attributable to increased sales
of traditional water cooled heat exchangers to existing
customers, as well as significant growth in the air cooled heat
exchanger product line. The Electronic Components segment sales
increased 8.7% due to a higher sales volume in a specific
axial-leaded product, offset by the completion of a major sales
order to one customer in 1994 which has not reoccurred in 1995.
The increase of 45.4% in sales of the Motion Technologies
segment is the result of the acquisition of Harowe Servo
Controls Inc. ("Harowe") in June 1994, as well as a slightly
higher sales volume of our previously existing motion control
products.
In 1994, consolidated revenues increased 27.1% as compared to
1993. Sales within the Heat Transfer segment increased 22.7% in
1994 reflecting continued demand for both air cooled and water
cooled heat exchangers, as well as sales to new customers and
new product offerings. Sales for the Electronic Components
segment increased 18.8% in 1994 reflecting a broad-based
increase in demand and a major order from one customer. The
increased sales in the Motion Technologies segment of 43.7%
reflect a strong market demand for motion control products. The
1994 results of the Motion Technologies segment were also
favorably impacted by sales of approximately $5.0 million from
Harowe, which was acquired by the Company June 30, 1994.
The Company's consolidated backlog of firm orders at December
29, 1995 was $30,441,000, up 35.6% from the prior year. This
reflects a 49.7% increase in the Heat Transfer segment, a minor
increase in the Electronic Components segment, and a 31.3%
increase in the Motion Technologies segment. A focused strategic
account sales program and the general business climate have all
contributed to these increases.
Investment income declined $112,000, or 30.4% in 1995 as
compared to 1994 and $107,000, or 22.5% in 1994 as compared to
1993. The decline for both periods reflects lower average
investment asset balances resulting from the sale of various
bonds to fund both current operations and the purchase of Harowe
in June 1994 combined with lower average interest rates.
13
<PAGE> 14
SELLING AND ADMINISTRATIVE EXPENSES Selling and administrative
expenses increased $3,219,000, or 20.7% in 1995 as compared to
1994 and $2,646,000 or 20.5% in 1994 as compared to 1993. The
majority of the increase in both periods relates to: 1)
increased commissions as a result of the increase in sales
revenue; 2) the inclusion of Harowe's selling and administrative
expenses for the six months in 1994 and for the full year in
1995; and 3) the provision for bonuses under the Company's
current incentive plans. In spite of these increases, selling
and administrative expenses continue to decline when expressed
as a percent of net sales, and this is consistent with
management's efforts to hold the growth of overhead costs below
the growth in sales.
RESEARCH AND PRODUCT DEVELOPMENT Research and development
expenses increased $223,000, or 25.1% in 1995 as compared to
1994 and $286,000, or 47.5% in 1994 as compared to 1993. The
increases for both periods reflects management's continued
commitment to the design of new products and improvement of
existing products.
INTEREST AND DEBT EXPENSE Interest and debt expense increased
$18,000 or 8.2% in 1995 as compared to 1994. The increase is due
to slightly higher interest rates offset by lower average
principal balances in 1995. While total debt increased in 1995
due to the industrial revenue bond financing of $6,660,000,
there was only a minor impact on interest and debt expense since
this financing was obtained on December 22, 1995. Another
contributing factor is the increased activity in short-term
borrowings in 1995 as compared to 1994.
The decrease in interest and debt expense for 1994 as compared
to 1993 is attributable to lower principal balances on the
industrial revenue bonds. Offsetting the effect of the lower
principal balances was a slight increase in interest rates from
1993.
INCOME TAXES Income taxes expressed as a percent of earnings
before taxes were 34.5%, 35.3%, and 34.9%, in 1995, 1994, and
1993, respectively. The lower rate in 1995 can be attributed to
the undistributed earnings of the Company's foreign subsidiary
for which no federal tax has been provided since it is the
intention of the Company to indefinitely reinvest those earnings
back into the operations of that entity.
The increased rate in 1994 is primarily the result of lower
tax-exempt investment income as compared to 1993.
NET EARNINGS Net earnings increased 37.9% in 1995 as compared
to 1994. This increase is primarily the result of the increased
level of net sales combined with lower operating costs, when
expressed as a percentage of revenues.
Net earnings increased 67.4% in 1994 as compared to 1993. A
substantial part of this increase can be attributed to the
increased net sales discussed previously, offset by higher
selling and administrative and research and product development
costs. The Company also recorded a fourth quarter charge of
$217,000, after tax, to provide for the closing of the Rapidsyn
Division plant in California and the movement of Rapidsyn's
motor production to the Gettys Corporation facility in Racine,
Wisconsin.
14
<PAGE> 15
Pursuant to a Management Contract, the Company assumed
responsibility for the day-to-day management of Gettys as of
January 1, 1995.
FINANCIAL POSITION The Company's liquidity is primarily
generated from operations. In addition, short-term lines of
credit totaling $7,398,000 were available at December 29, 1995.
Information on the Company's liquidity position for the past
three years is as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
1995 1994 1993
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net working capital $18,463,000 $14,197,000 $15,985,000
Current ratio 2.4 2.3 4.0
Cash flow from operations $ 3,786,000 $ 3,267,000 $ 3,935,000
Cash, cash equivalents, and
marketable securities $ 5,979,000 $ 3,841,000 $ 6,508,000
Capital expenditures $ 4,585,000 $ 1,857,000 $ 1,814,000
</TABLE>
The reduction in the current ratio for 1994 as compared to 1993
can be attributed to the combination of the lower marketable
securities balance in 1994 as a result of the purchase of
Harowe, the inclusion of Harowe's net current assets in API's
net working capital, and the increase in short-term borrowings
which were outstanding for only two business days.
The increase in cash flow from operations in 1995 as compared to
1994 is principally the result of increased sales and net
income.
The decline in cash flow from operations in 1994 as compared to
1993 reflects increases in accounts receivable and inventories
as a result of the increased sales and bookings in 1994.
Cash, cash equivalents, and marketable securities for 1995
includes $2,114,000 of restricted funds held in an escrow
account as part of the Management Agreement between the Company
and Gettys Corporation. These funds will be applied to the
purchase price of the net assets of Gettys Corporation at the
time the Company acquires those net assets pursuant to the
exercise of the put or call option provisions of the Management
Agreement.
The increase in capital expenditures in 1995 as compared to 1994
reflects the Company's investment in new machinery and equipment
and computer systems at both the Heat Transfer and Motion
Technologies Groups.
15
<PAGE> 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
American Precision Industries Inc.
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of earnings and
shareholders' equity and of cash flows present fairly, in all
material respects, the financial position of American Precision
Industries Inc. and its subsidiaries at December 29, 1995 and
December 30, 1994, and the results of their operations and their
cash flows for each of the three years in the period ended
December 29, 1995, in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
Buffalo, New York
February 12, 1996
16
<PAGE> 17
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
- ---------------------------------------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,486,000 $ 2,135,000
Accounts receivable less allowance for
doubtful accounts of $264,000 and $373,000 12,691,000 10,555,000
Marketable securities 3,493,000 1,706,000
Inventories 10,589,000 8,827,000
Prepaid expenses 967,000 862,000
Deferred income tax benefit 1,389,000 1,028,000
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 31,615,000 25,113,000
- ---------------------------------------------------------------------------------------------------
Investments 6,277,000 3,562,000
OTHER ASSETS
Cost in excess of net assets acquired, net of
accumulated amortization 2,153,000 2,245,000
Prepaid pension costs 2,140,000 2,005,000
Net cash value of life insurance 2,222,000 1,651,000
Other 1,115,000 566,000
- ---------------------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 7,630,000 6,467,000
- ---------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 211,000 211,000
Buildings and improvements 6,183,000 5,305,000
Machinery, equipment, and furniture 22,265,000 20,730,000
Construction in process 1,450,000 410,000
- ---------------------------------------------------------------------------------------------------
30,109,000 26,656,000
Less accumulated depreciation 17,840,000 16,454,000
- ---------------------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 12,269,000 10,202,000
- ---------------------------------------------------------------------------------------------------
$57,791,000 $45,344,000
</TABLE>
See notes to consolidated financial statements
17
<PAGE> 18
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Short-term borrowings $ 2,602,000 $ 2,000,000
Accounts payable 5,136,000 4,609,000
Accrued compensation and payroll taxes 3,566,000 2,523,000
Other accrued expenses 757,000 898,000
Dividends payable 463,000 441,000
Current portion of long-term obligations 628,000 366,000
Federal and state income taxes - 79,000
- -------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 13,152,000 10,916,000
- -------------------------------------------------------------------------------------------------
DEFERRED INCOME TAXES 1,251,000 875,000
OTHER NONCURRENT LIABILITIES 413,000 176,000
LONG-TERM OBLIGATIONS,
less current portion 8,628,000 2,472,000
SHAREHOLDERS' EQUITY
Common stock, par value
$.66 2/3 per share:
Authorized - 10,000,000 shares
Issued - 7,502,000 and
7,442,048 shares 5,001,000 4,961,000
Additional paid-in capital 9,532,000 9,098,000
Retained earnings 22,629,000 19,726,000
Net unrealized gain (loss) on
marketable securities 23,000 (18,000)
- -------------------------------------------------------------------------------------------------
37,185,000 33,767,000
Less cost of 374,262 and 378,262
treasury shares 2,838,000 2,862,000
- -------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 34,347,000 30,905,000
- -------------------------------------------------------------------------------------------------
$57,791,000 $45,344,000
</TABLE>
See notes to consolidated financial statements
18
<PAGE> 19
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $82,403,000 $64,896,000 $50,858,000
INVESTMENT INCOME 257,000 369,000 476,000
- -------------------------------------------------------------------------------------------------------------
REVENUES 82,660,000 65,265,000 51,334,000
COSTS AND EXPENSES
Cost of products sold 55,289,000 43,270,000 34,404,000
Selling and administrative 18,801,000 15,582,000 12,936,000
Research and product development 1,111,000 888,000 602,000
Interest and debt expense 238,000 220,000 244,000
- -------------------------------------------------------------------------------------------------------------
75,439,000 59,960,000 48,186,000
- -------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 7,221,000 5,305,000 3,148,000
FEDERAL AND STATE INCOME TAXES 2,490,000 1,874,000 1,098,000
- -------------------------------------------------------------------------------------------------------------
NET EARNINGS $ 4,731,000 $ 3,431,000 $ 2,050,000
- -------------------------------------------------------------------------------------------------------------
NET EARNINGS PER SHARE $ .67 $ .49 $ .29
- -------------------------------------------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING 7,090,000 7,062,000 7,057,000
</TABLE>
See notes to consolidated financial statements
19
<PAGE> 20
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Net
Unrealized
Gain
Common Stock Additional (Loss) on Treasury Stock
----------------------- Paid-in Retained Marketable ----------------------
Shares Amount Capital Earnings Securities Shares Amount
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
JANUARY 1, 1993 7,433,211 $4,955,000 $9,065,000 $17,651,000 $(97,000) 378,262 $2,862,000
Net earnings - 1993 - - - 2,050,000 - - -
Stock options
exercised, net 2,892 3,000 8,000 - - - -
Cash dividends
declared,
$.235 per share - - - (1,658,000) - - -
Net unrealized gain on
marketable equity
securities - - - - 97,000 - -
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 31, 1993 7,436,103 4,958,000 9,073,000 18,043,000 - 378,262 2,862,000
Net earnings - 1994 - - - 3,431,000 - - -
Stock options
exercised, net 5,945 3,000 25,000 - - - -
Cash dividends
declared,
$.2475 per share - - - (1,748,000) - - -
Net unrealized (loss)
on marketable
securities - - - - (18,000) - -
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 30, 1994 7,442,048 4,961,000 9,098,000 19,726,000 (18,000) 378,262 2,862,000
Net earnings - 1995 - - - 4,731,000 - - -
Stock options
exercised, net 59,952 40,000 422,000 - - - -
Treasury shares issued
as bonus - - 12,000 - - (4,000) (24,000)
Cash dividends
declared,
$.2575 per share - - - (1,828,000) - - -
Net unrealized gain
on marketable equity
securities - - - - 41,000 - -
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 29, 1995 7,502,000 $5,001,000 $9,532,000 $22,629,000 $ 23,000 374,262 $2,838,000
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements
20
<PAGE> 21
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,731,000 $3,431,000 $2,050,000
Adjustments to reconcile net income to
cash and cash equivalents provided by
operating activities:
Depreciation and amortization 2,594,000 2,275,000 1,712,000
Gain (Loss) on sale of investments/fixed assets 42,000 - (37,000)
Increase in supplemental benefit program 125,000 176,000 148,000
Recognition of pension income under SFAS 87 (136,000) (260,000) (181,000)
Stock compensation program 202,000 - -
Change in various allowance accounts (95,000) 91,000 107,000
Treasury stock issued as bonus 36,000 - -
(Increase) Decrease In:
Accounts receivable (2,028,000) (2,168,000) 738,000
Inventories (1,785,000) (1,267,000) (679,000)
Prepaid expenses (75,000) (199,000) (103,000)
Prepaid federal and state income taxes - 68,000 188,000
Deferred income taxes (386,000) (267,000) (105,000)
Prepaid pension cost - (24,000) -
Net cash value of life insurance (571,000) (548,000) (434,000)
Other assets, net (475,000) (140,000) (105,000)
Increase (Decrease) in:
Accounts payable 373,000 953,000 462,000
Accrued expenses 902,000 1,062,000 52,000
Federal and state Income taxes (79,000) (93,000) -
Deferred Income taxes 376,000 31,000 122,000
Other noncurrent liabilities 35,000 176,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,786,000 3,287,000 3,936,000
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Purchases of investments and marketable securities (6,233,000) (2,546,000) (5,850,000)
Additions to property, plant and equipment (4,585,000) (1,857,000) (1,814,000)
Proceeds from investments and markable securities 1,797,000 7,225,000 4,900,000
Investments in Harowe Servo Controls, Inc. - (5,195,000) -
Proceeds from sale of fixed assets 36,000 7,000 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
NET CASH USED BY INVESTING ACTIVITIES (8,985,000) (2,366,000) (2,763,000)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Exercise of stock options 462,000 28,000 11,000
Payment of long-term obligations, including current maturities (366,000) (519,000) (606,000)
Dividends paid (1,806,000) (1,730,000) (1,624,000)
Increase in long-term debt 6,660,000 - -
Increase in short-term borrowings 602,000 2,000,000 -
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 5,550,000 (221,000) (2,219,000)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 351,000 680,000 (1,624,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,135,000 1,456,000 2,502,000
- ------------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $2,486,000 $2,136,000 $1,455,000
</TABLE>
See notes to consolidated financial statements
21
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 29, 1995, December 30, 1994, and December 31,
1993.
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) NATURE OF OPERATIONS American Precision Industries Inc. (the
"Company") is a diversified manufacturing company whose principal
lines of business include the production and sale of heat transfer
products, motion control devices, and electronic components. Sales
of these products are primarily to customers in industrialized
nations both domestic and foreign.
(2) CONSOLIDATION The accounts of all subsidiaries are included in the
consolidated financial statements. The fiscal years consisted of
52 weeks. The Consolidated Balance Sheet, Statement of Earnings,
and Statement of Cash Flows include the results of Harowe Servo
Controls, Inc. since June 30, 1994, the date of acquisition.
(3) INVENTORIES Inventories are valued at the lower of cost or market,
net of progress payments. At December 29, 1995 and December 30,
1994 inventories comprising approximately 50% and 52%,
respectively, of total inventories were valued using the last-in,
first-out (LIFO) method. Other inventories are priced using the
first-in, first-out (FIFO) method.
(4) PROPERTY, PLANT AND EQUIPMENT These assets are stated at cost and
are depreciated over their estimated useful lives; building and
improvements - 10 to 45 years; machinery, equipment, and furniture
- 2 to 15 years.
Expenditures for maintenance and repairs are charged to expense;
renewals and betterments are capitalized and depreciated.
Properties are removed from the accounts when they are disposed of,
and the related cost and accumulated depreciation are eliminated
from the accounts. Associated gains and losses, if any, are
included in consolidated net earnings.
(5) GOODWILL The excess of the purchase cost over the fair value of
net assets acquired in an acquisition (goodwill) is separately
disclosed, net of accumulated amortization, and is being amortized
over 25 years on a straight-line basis. Amortization expense
amounted to $102,000 in 1995 and $44,000 in 1994. Accumulated
amortization of goodwill at December 29, 1995 was $146,000.
(6) INCOME TAXES The Company provides for deferred income taxes under
the asset and liability approach. This method requires the
recognition of deferred tax liabilities and assets for the expected
future tax consequences of temporary differences between the
carrying amounts and tax basis of assets and liabilities. No
provision has been made for United States income taxes applicable
to undistributed earnings of a foreign subsidiary as it is the
intention of the Company to indefinitely reinvest those earnings in
the operations of that entity.
22
<PAGE> 23
(7) EMPLOYEE BENEFIT PLANS Benefits under the Company's salaried
defined benefit and supplemental benefit plans are based upon years
of service and average compensation during an individual's last
years of employment for the defined benefit plan and final pay for
the supplemental benefit plan.
Benefits under the salaried defined benefit plan are funded
annually based upon the maximum contribution deductible for federal
income tax purposes. The supplemental benefit program is funded
through company-owned life insurance contracts on the lives of the
participants, but the benefit obligation to certain participants
will be offset by the participant's interest in a split-dollar
insurance contract.
Benefits under the hourly defined benefit plan of Harowe are based
upon years of service, not to exceed 35, times a fixed rate
specified in the union contract. Benefits under this plan are
funded annually based upon funding recommendations of the plan
actuaries.
All union employees are covered under defined contribution plans.
The Company's contribution to these plans are set forth under the
provisions of the specific union contracts.
(8) STOCK OPTIONS Proceeds from the sale of common stock issued under
employee stock option plans are credited to capital accounts.
There are no charges to income with respect to the plans; however,
compensation expense is recorded with respect to the increase in
value of stock appreciation rights.
(9) EARNINGS PER SHARE Earnings per share are based on the weighted
average number of shares outstanding during each year.
(10) ADVERTISING The Company expenses the production costs of
advertising in the year in which the advertising takes place. Total
advertising expense in 1995, 1994, and 1993 was $873,000, $664,000,
and $514,000, respectively.
(11) ESTIMATES The preparation of financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
23
<PAGE> 24
B. BUSINESS ACQUISITION AND STRATEGIC ALLIANCE
(1) BUSINESS ACQUISITION On June 30, 1994, the Company acquired 100% of
the stock of Harowe Servo Controls, Inc. ("HSC"), a Delaware
corporation and Harowe Servo Controls (St. Kitts) Limited ("HSC
Limited"), a corporation organized under the laws of the Island of
St. Christopher and Nevis, from Hawker Siddeley Holdings Inc., a
Delaware corporation, at a cost of approximately $5,200,000. HSC and
HSC Limited are engaged in the business of designing, manufacturing,
and marketing precision motors, feedback devices, and related
products for motion control applications.
The acquisition has been accounted for by the purchase method of
accounting, and accordingly, the purchase price has been allocated to
the assets acquired and the liabilities assumed based on the
estimated fair values at the date of acquisition. The resulting
goodwill is being amortized on a straight-line basis over 25 years.
The following table presents unaudited pro forma results of
operations as if the acquisition had occurred on January 1, 1994 and
1993, respectively, after giving effect to certain adjustments,
including amortization of goodwill, loss of interest income on
tax-exempt municipal bonds sold to fund the purchase cost, adjusted
depreciation on fair value of assets acquired, and the related income
tax effects. The pro forma results have been prepared for
comparative purposes only and do not purport to be indicative of what
would have occurred had the acquisition been made at the beginning of
1993 or of results which may occur in the future. Furthermore, no
effect has been given in the pro forma information for operating and
synergistic benefits that are expected to be realized through the
combination of the entities because precise estimates of such
benefits cannot be quantified.
<TABLE>
<CAPTION>
Thousands of Dollars, Except
per Share Data (unaudited) 1994 1993
------------------------------------- --------- ---------
<S> <C> <C>
Revenues $ 69,631 $ 61,195
Earnings Before Income Taxes $ 5,641 $ 3,681
Net Earnings $ 3,517 $ 2,335
Net Earnings Per Share $ 0.50 $ .33
</TABLE>
(2) STRATEGIC ALLIANCE On December 23, 1994, the Company entered into a
strategic alliance with AEG Daimler-Benz Industrie of Frankfurt,
Germany, which provided that on January 1, 1995, the Company would
assume responsibility for the day-to-day management of Gettys
Corporation, a manufacturer of high performance servo-motors and
controls in Racine, Wisconsin. As part of the Management Agreement
between the Company and Gettys Corporation, cash in the amount of
$333,000 and marketable
24
<PAGE> 25
securities in the amount of $1,781,000 are held in an escrow account
to be applied to the purchase price of the net assets of Gettys
Corporation at the time the Company acquires those net assets
pursuant to the exercise of the put or call option provisions of the
Management Agreement. In conjunction with this strategic alliance,
the Company moved the production of the industrial stepper motor
line of the Rapidsyn Division into the Gettys facility during the
first half of 1995. In anticipation of this move, the Company
recorded a fourth quarter reserve in 1994 of $350,000 ($217,000 net
of tax) relating to the estimated cost of the relocation of the
production facility. This reserve consisted primarily of nonemployee
related costs. Final relocation costs incurred in 1995 approximated
$350,000.
C. CASH EQUIVALENTS, MARKETABLE SECURITIES, AND INVESTMENTS
(1) Cash equivalents consist of money market funds, commercial paper, and
certificates of deposit with original maturities of three months or
less. Marketable securities, consisting of municipal securities, are
carried at market. Included in marketable securities is $1,781,000
of municipal bonds which is restricted as to use under the provisions
of the Gettys Management Agreement. Investments primarily consist of
marketable municipal bonds, which are carried at market. Included in
Investments is $6,233,000 of funds obtained under industrial revenue
bond financing. Use of these funds is restricted and can only be
applied to the purchase of capital assets for the related expansion
program.
For the purpose of determining gross realized gains and losses, the
cost of securities sold is based upon specific identification.
During 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities. This Statement requires that debt and equity
securities not classified as either held-to-maturity or trading be
classified as "available for sale" and reported at market value, with
unrealized gains and losses reported as a separate component of
shareholders' equity.
(2) Additional information pertaining to the Consolidated Statement of
Cash Flows is as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 225,000 $ 184,000 $182,000
Income taxes net of tax refunds $2,513,000 $2,145,000 $890,000
</TABLE>
25
<PAGE> 26
D. INVENTORIES
The major classes of inventories are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------
1995 1994
---------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 995,000 $ 802,000
Work in process 2,538,000 3,319,000
Raw materials 7,056,000 4,706,000
---------------------------------------------------------------------
$10,589,000 $8,827,000
</TABLE>
Had the cost of all inventories at December 29, 1995 and December 30, 1994
been determined by the FIFO method, the amounts thereof would have been
greater by $1,187,000 and $1,043,000, respectively.
E. OTHER NONCURRENT LIABILITIES
In 1995, other noncurrent liabilities consist of the noncurrent portion of
bonus obligations under the Company's incentive plans, deferred
compensation associated with the stock appreciation rights granted to the
Chief Executive Officer on June 16, 1992, and options granted to certain
members of the Board of Directors of the Company in lieu of certain
directors' fees.
In 1994, other noncurrent liabilities consisted of the noncurrent portion
of bonuses under the Company's incentive plans.
F. SHORT AND LONG-TERM OBLIGATIONS
(1) SHORT-TERM OBLIGATIONS As of December 29, 1995 and December 30,
1994, the Company had $2,602,000 and $2,000,000, respectively
outstanding on its line of credit. These amounts were outstanding for
four and two business days, respectively. The Company had available
unsecured, short-term lines of credit totalling $7,398,000 and
$8,000,000 at the prime rate on December 29, 1995 and December 30,
1994, respectively. During 1994, the Company borrowed $4,000,000 on
its unsecured short-term line of credit to fund the purchase of
Harowe Servo Controls, Inc. which was acquired on June 30, 1994. This
borrowing was repaid within six business days after the closing
through the sale of certain municipal bonds.
26
<PAGE> 27
(2) LONG-TERM OBLIGATIONS CONSIST OF THE FOLLOWING:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Industrial revenue bonds $8,112,000 $1,649,000
Supplemental benefit program 1,144,000 1,189,000
- ------------------------------------------------------------------------------
9,256,000 2,838,000
Less current obligations 628,000 366,000
- ------------------------------------------------------------------------------
Long-term obligations $8,628,000 $2,472,000
</TABLE>
During the fourth quarter of 1995, the Company obtained adjustable rate
industrial revenue bond ("IRB") capital lease financing of $6,660,000 for
asset purchases associated with its Air Technologies expansion program. The
interest rate on these bonds, which approximates 60% of the prime rate, is
adjustable every seven days in order for the Remarketing Agent to sell the
bonds at par value. The bonds are subject to a mandatory sinking fund
repayment schedule through 2015. Unexpended revenue bond proceeds of
$6,233,000 were invested and held by a trustee at the end of 1995 and are
included in Investments in the accompanying consolidated balance sheet.
Such amount is restricted and can only be applied to the purchase of
capital assets for the related expansion program, and such assets will be
pledged as collateral for the bonds.
Previously obtained adjustable rate IRB capital lease financing is
collateralized by assets with a depreciated value of $1,501,000 at December
29, 1995. The bonds are subject to a mandatory sinking fund repayment
schedule through 2008 and had an average interest rate of 4.1% in 1995.
During 1994, the Company also repaid other IRB financing obtained in prior
years.
All of the IRB's are subject to various restrictive covenants, with respect
to which the Company is in compliance.
Under the supplemental benefit program, the Company provides retirement or
death benefits to directors and certain officers meeting specified service
requirements. Directors are entitled to an annual benefit of $10,000 per
year for ten years. Generally, participating officers are provided an
annual benefit equal to 20% of their current salary payable over fifteen
years. In the case of several executives, these benefits will be partially
or totally funded through split-dollar life insurance contracts. The
estimated future benefits to be paid directly by the Company under this
program are accrued over the participants' service lives by estimating the
present value of such future benefits assuming a 9% rate of interest. The
Company has also invested in company-owned life insurance contracts on the
lives of the participants, the cash surrender values of which are recorded
in Other Assets. It is actuarially assumed that over the term of this
program all costs will be offset by benefits provided from the underlying
contracts.
Over the next five years, the Company will make long-term obligation
payments of approximately $628,000 in 1996, $724,000 in 1997, $742,000 in
1998,
27
<PAGE> 28
$768,000 in 1999, and $778,000 in 2000.
G. OPERATING LEASES
The Company leases certain office and manufacturing facilities and
automotive and other equipment through operating leases. Certain of these
provide for the payment of taxes, insurance and maintenance costs and most
contain renewal options. Net future minimum lease commitments do not have
a material impact on the consolidated financial statements. Total rental
expense for 1995, 1994, and 1993, was $587,000, $568,000, and $436,000,
respectively.
H. EMPLOYEE BENEFITS
Retirement Plans - In addition to the aforementioned supplemental benefit
program, the Company has a defined benefit retirement plan covering all
nonunion employees ("Salaried Plan") and makes contributions to
union-sponsored plans. Harowe has a defined benefit retirement plan
covering all hourly employees in its West Chester, Pennsylvania location
("HSC Hourly Plan"). The total expense for such plans, net of the
recognition of net periodic pension income was $227,000, $44,000, and
$230,000, in 1995, 1994, and 1993, respectively.
28
<PAGE> 29
The following summarizes the funded status of the Company's and Harowe's
defined benefit retirement plans:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
1995 1994
-----------------------------------------------------------------------------------------------------
HSC HSC
HOURLY SALARIED HOURLY SALARIED
PLAN PLAN PLAN PLAN
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations
Vested Benefits $ 712,000 $4,649,000 $ 614,000 $4,182,000
Nonvested benefits 17,000 74,000 20,000 49,000
-----------------------------------------------------------------------------------------------------
Accumulated benefit obligations 729,000 4,723,000 634,000 4,231,000
-----------------------------------------------------------------------------------------------------
Projected benefit obligations 729,000 5,646,000 634,000 5,048,000
Plan assets at fair value 393,000 9,336,000 303,000 8,452,000
-----------------------------------------------------------------------------------------------------
Assets in excess of (less than)
projected benefit obligation (336,000) 3,690,000 (331,000) 3,404,000
Unrecognized prior service cost - 13,000 - 51,000
Less:
Accumulated unrecognized net 20,000 - - -
loss
Unrecognized net gain at
transition being recognized
over 15 years - 614,000 - 737,000
Unrecognized net gain arising
since transition - 973,000 - 737,000
-----------------------------------------------------------------------------------------------------
(Accrued) prepaid pension cost $(316,000) $2,116,000 $(331,000) $1,981,000
</TABLE>
Net periodic pension income (cost) associated with the salaried plan and
the HSC Hourly Plan for 1995 and 1994 included the following components:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
1995 1994
-------------------------------------------------------------------------------------------------
HSC HSC
HOURLY SALARIED HOURLY SALARIED
PLAN PLAN PLAN PLAN
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Service costs - benefits earned
during the period $(19,000) $(347,000) $(10,000) $(274,000)
Interest on projected benefit
obligations (51,000) (392,000) (23,000) (352,000)
Actual return on assets 24,000 754,000 11,000 246,000
Amortization of transition
assets and deferrals - 121,000 660,000
-------------------------------------------------------------------------------------------------
Net periodic pension income (cost) $(46,000) $136,000 $(22,000) $ 280,000
</TABLE>
29
<PAGE> 30
An assumed discount rate of 7.75%, a rate increase in future compensation
of 4.0%, and an expected long-term rate of return of 9.0% have been used in
determining the actuarial present value of projected benefit obligations of
the Salaried Plan for 1995 and 1994. The HSC Hourly Plan includes an
assumed discount rate and expected long-term rate of return of 7.5% for
1995 and 1994.
I. SHAREHOLDERS' EQUITY
(1) PREFERRED STOCK - None of the Company's authorized 20,000 shares of
preferred stock (par value $50 a share) have been issued.
(2) STOCK OPTIONS - The Company has granted options to employees under
four employee stock option plans and pursuant to the 1992 employment of the
Company's Chief Executive Officer. Changes in outstanding options are as
follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Granted and Option Price
Outstanding Per Share ($)
---------------------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1993 Balance 774,014 5.11 - 10.90
1994
Granted 157,500 6.875 - 7.75
Exercised (7,059) 5.11
Expired or Cancelled (41,277) 6.625 - 10.90
---------------------------------------------------------------------------------------------
December 30, 1994 Balance 883,178 6.625 - 10.90
1995
Granted 214,350 7.75 - 13.00
Exercised (79,430) 6.625 - 10.90
Expired or Cancelled (14,085) 6.75 - 9.00
---------------------------------------------------------------------------------------------
December 29, 1995 Balance 1,004,013 6.625 - 13.00
</TABLE>
Options outstanding at December 29, 1995 were granted at the fair market
value on the date of grant and expire at various dates from April, 1996 to
December, 2005. In 1995, 125,920 options became exercisable, and, in 1994,
109,255 options became exercisable. At December 29, 1995, 470,970 of the
outstanding options were exercisable and 519,150 shares of common stock
were available for future grants under the 1993 and 1995 stock option
plans. All options become exercisable over a five year period at the rate
of 20% each year.
30
<PAGE> 31
On June 16, 1992, the Company's new Chief Executive Officer was granted
options to acquire 200,000 shares of the Company's common stock, along with
50,000 stock appreciation rights ("SARs") which must be exercised in tandem
with the exercise of the options at the rate of one SAR for each four stock
options exercised. The options and SARs have a term of ten years, are
exercisable at $7.75 per share or right, the fair market value at date of
grant, and become exercisable over a five year period at the rate of 20%
per year. Data relating to the CEO options are included in the table
above. In 1995, the Company recorded compensation expenses in the amount of
$148,000 in connection with the increase in value of these stock
appreciation rights.
Beginning on July 1,1995, the Company has granted stock options to each of
five directors of the Company on the first day of each calendar quarter
under the 1995 Directors Stock Option Plan. Under this plan, a director may
elect to receive options in lieu of his cash annual retainer and meeting
fees. The option exercise price is 30% of the fair market value of a share
on the date of grant, and the cash fees foregone by the director are
equivalent to 70% of the fair market value. Options become exercisable six
months after date of grant and expire ten years from date of grant. Options
outstanding on December 29, 1995 totaled 4,989 shares. None of the options
were exercisable on that date and 45,011 shares were available for future
grants of options under the plan.
J. INVESTMENT INCOME
Investment income consists of the following:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gain on sale of investments $ - $ 2,000 $ 79,000
Interest and dividend income 257,000 367,000 397,000
-------------------------------------------------------------------------------------------------------
$257,000 $369,000 $476,000
</TABLE>
31
<PAGE> 32
K. INCOME TAXES
The provision for income taxes includes the following:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $2,114,000 $1,830,000 $936,000
Deferred 4,000 (187,000) 14,000
State:
Current 368,000 280,000 145,000
Deferred 4,000 (49,000) 3,000
- -----------------------------------------------------------------------------------------------------
$2,490,000 $1,874,000 $1,098,000
</TABLE>
Deferred tax liabilities (assets) at December 29, 1995 and December 30, 1994 are
comprised of the following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accelerated depreciation $ 662,000 $ 619,000
Pension 844,000 792,000
Other 311,000 25,000
- -------------------------------------------------------------------------------------------------------
Gross deferred tax liabilities 1,817,000 1,436,000
- -------------------------------------------------------------------------------------------------------
Deferred compensation (623,000) (577,000)
Various reserves (634,000) (501,000)
Other (698,000) (511,000)
- -------------------------------------------------------------------------------------------------------
Gross deferred tax assets (1,955,000) (1,589,000)
- -------------------------------------------------------------------------------------------------------
Deferred tax assets valuation allowance - -
- -------------------------------------------------------------------------------------------------------
$ (138,000) $ (153,000)
</TABLE>
32
<PAGE> 33
The provision for income tax differs from the federal statutory rate of
34% due to the following:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 34.0% 34.0% 34.0%
State income taxes, less federal effect 3.3 2.9 2.9
Nontaxable investment income (0.9) (1.7) (3.6)
Effect of undistributed earnings
of foreign subsidiary (2.2) - -
Other 0.3 0.1 1.6
- ----------------------------------------------------------------------------------------------
Effective tax rate 34.5% 35.3% 34.9%
</TABLE>
The Company has not recorded deferred income taxes applicable to
undistributed earnings of a foreign subsidiary that are indefinitely
reinvested in foreign operations. Undistributed earnings amounted to
approximately $525,000 at December 29, 1995. If the earnings of such
foreign subsidiary were not reinvested, a deferred tax liability of
approximately $217,000 would have been required.
L. LITIGATION
In 1990, the U.S. Environmental Protection Agency (EPA) named the Company a
potentially responsible party (PRP) with respect to hazardous substances
disposed of at the Envirotek II Site (the Site) in Tonawanda, New York. The
Company is a member of a steering committee which was formed to facilitate
discussions with the EPA. The Company was named a de minimis participant
with respect to the first phase of the clean-up action and was relieved of
any potential liability for the first phase clean-up with the payment of a
minor fee. The EPA has since advised the Company that its name had been
removed from the PRP list. The State of New York has also indicated to the
Envirotek II PRP Group its intention to pursue additional remedial measures
at a site which surrounds the Site. It is not possible at this time to
determine whether, and to what extent, the Company will incur additional
liability as a result of any future government or private action.
33
<PAGE> 34
M. BUSINESS SEGMENT DATA
The Company conducts operations in three major industrial classifications:
Heat Transfer, Motion Technologies, and Electronic Components. The
operations of the Heat Transfer segment include the production and sale of
water and air-cooled heat transfer equipment to industrial customers.
Operations of the Motion Technologies segment comprises production and sale
of electro-magnetic clutches and brakes, high performance motors, step
motors, controllers, and resolvers. Operations of the Electronic
Components segment involve production and sale of inductors and coils.
Total revenues by segment consist entirely of sales to unaffiliated
customers. Operating profit is total revenue less operating expenses.
Operating profit does not include the following items: general corporate
income and expense, investment income, interest expense, other income and
expense, or income taxes. Identifiable assets by segment consist of those
assets that are, or will be, used in the segmental operations. Corporate
assets are principally cash, cash equivalents, marketable securities,
investments, and other assets.
Export sales, principally to Europe, Canada, and Asia, were approximately
14% of consolidated sales for 1995. In 1994 and 1993, export sales were
17% of consolidated sales and were principally to Europe and Canada.
34
<PAGE> 35
Information about the Company's operations in different industries, stated in
thousands of dollars, are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Heat Transfer $40,819 $33,276 $27,119
Motion Technologies 28,599 19,674 13,687
Electronic Components 12,985 11,946 10,052
General Corporate 257 369 476
- ------------------------------------------------------------------------------------------------
Consolidated $82,660 $65,265 $51,334
- ------------------------------------------------------------------------------------------------
OPERATING PROFIT
Heat Transfer $ 5,542 $ 5,331 $ 4,182
Motion Technologies 2,466 614 246
Electronic Components 2,058 1,790 863
- ------------------------------------------------------------------------------------------------
Combined 10,066 7,735 5,291
General Corporate expense, net (2,845) (2,430) (2,143)
- ------------------------------------------------------------------------------------------------
Earnings before income taxes $ 7,221 $ 5,305 $ 3,148
- ------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Heat Transfer $23,673 $14,607 $11,342
Motion Technologies 15,179 12,370 5,489
Electronic Components 6,821 6,071 5,881
General Corporate 12,118 12,296 15,369
- ------------------------------------------------------------------------------------------------
Total assets $57,791 $45,344 $38,081
- ------------------------------------------------------------------------------------------------
DEPRECIATION
Heat Transfer $ 877 $ 735 $ 616
Motion Technologies 964 637 376
Electronic Components 558 598 515
General Corporate 61 62 133
- ------------------------------------------------------------------------------------------------
Total Depreciation $ 2,460 $ 2,032 $ 1,640
- ------------------------------------------------------------------------------------------------
NET CAPITAL EXPENDITURES
Heat Transfer $ 1,789 $ 1,358 $ 907
Motion Technologies 2,218 188 491
Electronic Components 449 259 107
General Corporate 33 10 126
- ------------------------------------------------------------------------------------------------
Total net capital expenditures $ 4,489 $ 1,815 $ 1,631
- ------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 36
N. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Fiscal
First Second Third Fourth Year
- -----------------------------------------------------------------------------------------------------
(Thousands except per share information)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Revenues $19,289 $20,360 $20,850 $22,161 $82,660
Gross profit 6,254 6,410 7,264 7,186 27,114
Net earnings 1,042 1,122 1,200 1,367 4,731
Net earnings per share 0.15 0.16 0.17 0.19 0.67
Cash dividends
declared per share 0.0625 0.0650 0.0650 0.0650 0.2575
- -----------------------------------------------------------------------------------------------------
1994
Revenues $14,294 $15,438 $18,145 $17,388 $65,265
Gross profit 4,751 5,150 6,029 5,696 21,626
Net earnings 680 841 934 976 3,431
Net earnings per share 0.10 0.12 0.13 0.14 0.49
Cash dividends
declared per share 0.0600 0.0625 0.0625 0.0625 0.2475
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
There were no changes in accountants or disagreements with Price
Waterhouse on accounting or financial disclosure.
36
<PAGE> 37
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The information required by this item concerning the directors
and executive officers of the Company, appearing on pages 2
through 7 and page 11 of the Company's definitive Proxy
Statement, which has been filed with the Commission pursuant to
Regulation 14A, is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The information required by this item concerning executive
compensation appearing on pages 12 through 17 of the company's
definitive Proxy Statement, which has been filed with the
Commission pursuant to Regulation 14A, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
a) & b) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information required by this item, appearing on pages 8 and
9 of the Company's definitive Proxy Statement which has been
filed with the Commission pursuant to Regulation 14A, is
incorporated herein by reference.
c) CHANGES IN CONTROL
------------------
The Company knows of no contractual arrangements which may, at a
subsequent date, result in a change in control of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
a) TRANSACTIONS WITH MANAGEMENT AND OTHERS
---------------------------------------
None.
b) BUSINESS RELATIONSHIPS
----------------------
None.
c) INDEBTEDNESS OF MANAGEMENT
--------------------------
None.
d) TRANSACTIONS WITH PROMOTERS
---------------------------
None.
37
<PAGE> 38
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE IN
a) 1. FINANCIAL STATEMENTS FORM 10-K
-------------------- ---------
<S> <C>
Report of Independent Accountants 16
Consolidated Balance Sheet 17-18
Consolidated Statement of Earnings 19
Consolidated Statement of Shareholders' Equity 20
Consolidated Statement of Cash Flows 21
Notes to Consolidated Financial Statements 22-36
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
-----------------------------
All schedules are omitted because they are inapplicable,
immaterial, or not required under the instructions, or the
information is included in the financial statements or notes
thereto.
b) REPORTS ON FORM 8-K
-------------------
There were no reports on Form 8-K for the three months ended
December 29, 1995.
c) EXHIBITS
--------
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C> <C>
2-A Management Agreement dated December
23, 1994 among American Precision
Industries Inc., Gettys Corporation,
and Gettys Property Corporation,
including List of Exhibits, List of
Schedules, and Exhibit D - Asset
Purchase Agreement
3-A Restated Certificate of Incorporation,
as amended on April 26, 1991 e.
3-B Restated By-Laws, as amended on
June 16, 1992 g.
</TABLE>
38
<PAGE> 39
<TABLE>
<CAPTION>
c. Exhibits (continued)
Exhibit No.
-----------
<S> <C> <C> <C> <C>
10-A Form of Agreement relating to the
Directors Supplemental Death Benefit
and Fee Continuation Plan, as amended
March 11, 1991 b.
10-B Form of Agreement relating to the
Executive Supplemental Death Benefit
and Retirement Plan, as amended on
March 11, 1991 b.
10-C Form of Indemnification Agreement with
directors dated February 25, 1991 c.
10-D Form of Indemnification Agreement with
officers dated February 25, 1991 b.
10-E Long-Term Incentive Stock Option Plan c.
10-F 1989 Stock Option Plan d.
10-G Amendment to the American Precision
Industries Inc. 1989 Stock Option Plan j.
10-H Executive Employment Agreement dated
April 14, 1992 between Kurt Wiedenhaupt
and American Precision Industries Inc. f.
10-I Stock Option and Tandem Stock Appreciation
Rights Agreement dated June 16, 1992
between Kurt Wiedenhaupt and American
Precision Industries Inc. f.
10-J Agreement dated April 24, 1992 between
Robert J. Fierle and American Precision
Industries Inc. f.
10-K Life Insurance Split-Dollar Agreement
dated August 26, 1992 between Kurt
Wiedenhaupt and American Precision
Industries Inc. h.
10-L Executive Supplemental Retirement Plan
dated July 1, 1992 between Kurt
Wiedenhaupt and American Precision
Industries Inc. h.
</TABLE>
39
<PAGE> 40
<TABLE>
<CAPTION>
c. Exhibits (continued)
Exhibit No.
-----------
<S> <C> <C>
10-M 1993 Employees Stock Option Plan i.
10-N Amendment to the American Precision Industries
Inc. 1993 Employees Stock Option Plan J.
10-O 1995 Directors Stock Option Plan J.
10-P 1995 Employees Stock Option Plan J.
21 List of Subsidiaries *
23 Consent of independent Page 43 of
accountants Form 10-K
27 Financial Data Schedule *
<FN>
* Documents filed herewith.
</TABLE>
<TABLE>
<S> <C>
a. Incorporated by reference to Exhibits A and B in the definitive Proxy Statement dated March 22, 1991.
b. Incorporated by reference to Exhibits 10A-D in the Annual Report on Form 10-K for the fiscal year ended
December 28, 1990
c. Incorporated by reference to Exhibit 4.4 in the Registration Statement on Form S-8 (#2-85320), filed
July 22, 1983.
d. Incorporated by reference to Exhibit 4(a) in the Registration Statement on Form S-8 (#33-31315)
filed September 28, 1989.
e. Incorporated by reference to Exhibits 3-B and 3-D in the Annual Report on Form 10-K for the fiscal year
ended January 3, 1992.
f. Incorporated by reference to Exhibits 10(i) - (iii) in the Quarterly Report on Form 10-Q for the fiscal
quarter ended July 3, 1992.
g. Incorporated by reference to Exhibits B(i) - (ii) in the Quarterly Report on Form 10-Q for the fiscal
quarter ended October 1, 1993.
h. Incorporated by reference to Exhibits 10(i) - (ii) in the Quarterly Report on Form 10-Q for the fiscal
quarter ended April 2, 1993.
i. Incorporated by reference to Exhibit A in the definitive Proxy Statement dated March 22, 1993.
j. Incorporated by reference to Exhibits A-C in the definitive Proxy Statement dated March 24, 1995.
</TABLE>
40
<PAGE> 41
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN PRECISION INDUSTRIES INC.
March 27, 1996 By: /s/ Kurt Wiedenhaupt
-------------------------------------------
Kurt Wiedenhaupt
President and Director
March 27, 1996 By: /s/ John M. Murray
-------------------------------------------
John M. Murray
Vice President-Finance
and Treasurer
March 27, 1996 By: /s/ Thomas M. Huebsch
-------------------------------------------
Thomas M. Huebsch
Corporate Controller
41
<PAGE> 42
SIGNATURES
----------
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<S> <C>
/s/ Robert J. Fierle February 27, 1996
- ------------------------------------------ ------------------
Robert J. Fierle Chairman of the Board Date
/s/ John M. Albertine February 27, 1996
- ------------------------------------------ -----------------
John M. Albertine Director Date
/s/ Bernard J. Kennedy February 27, 1996
- ------------------------------------------ -----------------
Bernard J. Kennedy Director Date
/s/ Douglas J. MacMaster February 27, 1996
- ------------------------------------------ -----------------
Douglas J. MacMaster Director Date
/s/ Klaus K. Oertel February 27, 1996
- ------------------------------------------- -----------------
Klaus K. Oertel Director Date
/s/ William P. Panny February 27, 1996
- ------------------------------------------ -----------------
William P. Panny Director Date
/s/ Victor Rice February 27, 1996
- ------------------------------------------ -----------------
Victor Rice Director Date
/s/ Jerre L. Stead February 27, 1996
- ------------------------------------------ -----------------
Jerre L. Stead Director Date
/s/ Kurt Wiedenhaupt February 27, 1996
- ------------------------------------------ -----------------
Kurt Wiedenhaupt Director Date
</TABLE>
42
<PAGE> 43
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 2-85320, 33-31315, 33-61734, and 33-71839) of
American Precision Industries Inc. of our report dated February 12, 1996
appearing on page 16 of this Form 10-K.
PRICE WATERHOUSE LLP
Buffalo, New York
March 27, 1996
43
<PAGE> 44
EXHIBIT INDEX
-------------
21 List of Subsidiaries
23 Page 43 of
Form 10-K
27 FDS
<PAGE> 1
EXHIBIT 21
----------
LIST OF SUBSIDIARIES
--------------------
American Precision Industries (U.K.) Ltd.
100 New Bridge Street, London England EC4V6JA
API-AF Corporation
2777 Walden Avenue, Buffalo, New York 14225
API Development Corporation
2777 Walden Avenue, Buffalo, New York 14225
API-FS Corporation
5 Kronprindsens Gade, St. Thomas, U.S. Virgin Islands 00801-8080
API of Canada Inc.
698 Wilson Avenue, Kitchener, Ontario, Canada N2C 1H9
Harowe Servo Controls, Inc.
110 Westown Road, West Chester, Pennsylvania 19382
Harowe Servo Controls (St. Kitts) Ltd.
Bourkes Road, Sandy Point, Bassetere, West Indies
Nitta-Apitron Co., Ltd. (50% owned)
55-1 2chome, Honmachi, Higashi-ku, Osaka 541, Japan
45
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> DEC-29-1995
<CASH> 2,486,000
<SECURITIES> 3,493,000
<RECEIVABLES> 12,691,000
<ALLOWANCES> 264,000
<INVENTORY> 10,589,000
<CURRENT-ASSETS> 31,615,000
<PP&E> 30,109,000
<DEPRECIATION> 17,840,000
<TOTAL-ASSETS> 57,791,000
<CURRENT-LIABILITIES> 13,152,000
<BONDS> 8,628,000
0
0
<COMMON> 5,001,000
<OTHER-SE> 29,346,000
<TOTAL-LIABILITY-AND-EQUITY> 57,791,000
<SALES> 82,403,000
<TOTAL-REVENUES> 82,660,000
<CGS> 55,289,000
<TOTAL-COSTS> 75,439,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 238,000
<INCOME-PRETAX> 7,221,000
<INCOME-TAX> 2,490,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,731,000
<EPS-PRIMARY> .67
<EPS-DILUTED> 0
</TABLE>
