FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1999
Commission File No. 1-5562
KOLLMORGEN CORPORATION
(Exact name of registrant as specified in its charter)
New York 04-2151861
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1601 Trapelo Road, Waltham, Massachusetts 02451
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 890-5655
_________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report.)
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 _____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 17, 1999
Common Stock, $2.50 par value 10,187,126 shares
<PAGE>2
KOLLMORGEN CORPORATION AND SUBSIDIARIES
INDEX
Page No.
PART I - Financial Information
Unaudited Consolidated Statements of 3
Operations for the Three Months Ended
March 31, 1999 and 1998
Unaudited Consolidated Balance Sheets 4
as of March 31, 1999 and
December 31, 1998
Unaudited Consolidated Statements of Cash Flows 5
for the Three Months Ended March 31, 1999
and 1998
Notes to unaudited Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
PART II - Other Information 11
<PAGE>3
<TABLE>
PART I - FINANCIAL INFORMATION
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
<CAPTION>
March 31, March 31,
1999 1998
--------- ---------
<S> <C> <C>
Net Sales $ 59,471 $ 56,793
Cost of Sales 41,878 39,666
--------- ---------
Gross profit 17,593 17,127
--------- ---------
Selling and marketing expense 6,135 5,619
General and administrative expense 6,452 5,122
Research and development expense 3,053 3,181
Impairment of goodwill and assets held for sale - 2,733
Tender offer costs - 1,273
--------- ---------
Income (loss) from operations 1,953 (801)
Other income (expense):
Interest expense (901) (834)
Interest income 74 377
Intellectual property license, net of expenses - 21,217
Other, net 1,178 (8,336)
--------- ---------
Income before income taxes and minority interest 2,304 11,623
Provision for income taxes (805) (6,072)
--------- ---------
Income before minority interest 1,499 5,551
Minority interest 135 9
--------- ---------
Net income $ 1,634 $ 5,560
========= =========
Earnings per common share:
Basic $ 0.16 $ 0.55
Diluted $ 0.16 $ 0.52
Number of shares used in calculating earnings per common share:
Basic 10,155,809 10,038,399
Diluted 10,448,249 11,598,545
<FN>
See accompanying notes to unaudited consolidated financial statements.
</FN>
</TABLE>
<PAGE>4
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)
(Unaudited)
<CAPTION>
ASSETS
March 31, December 31,
1999 1998
--------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,304 $ 13,086
Accounts receivable (net of reserve of
$594 in 1999 and $581 in 1998) 43,504 48,927
Recoverable amounts on long-term contracts 4,496 2,597
Inventories 27,861 27,838
Prepaid expenses and other current assets 2,790 1,885
--------- ---------
Total current assets 85,955 94,333
Property, plant and equipment, net 31,290 30,809
Goodwill, patents and other intangible assets,net 19,299 20,420
Deferred income taxes 9,389 9,448
Other assets 13,766 13,623
--------- ---------
Total assets $159,699 $ 168,633
========= =========
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,675 $ 14,336
Income taxes payable 4,945 6,733
Accrued liabilities 23,555 28,110
Line of credit 6,907 9,270
Current portion of long-term debt 2,365 2,419
--------- ---------
Total current liabilities 51,447 60,868
Long-term debt 35,439 36,120
Other liabilities 15,064 14,943
Minority interest 37 175
Shareholders' equity:
Common stock 26,940 26,932
Additional paid-in capital 13,216 12,882
Retained earnings 24,203 22,772
Accumulated other comprehensive income (1,287) (270)
Less: common stock in treasury, at cost (5,360) (5,789)
--------- ---------
Total shareholders' equity 57,712 56,527
--------- ---------
Total liabilities and shareholders' equity $ 159,699 $ 168,633
========= =========
<FN>
See accompanying notes to unaudited consolidated financial statements.
</FN>
</TABLE>
<PAGE>5
<TABLE>
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<CAPTION>
For the Three
Months Ended March 31,
--------------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,634 $ 5,560
Adjustments to reconcile income to
net cash provided by (used in) operating activities:
Depreciation 1,530 1,274
Amortization 430 417
Impaired asset charge - 2,733
Deferred income taxes - (3,572)
Minority interest and other non-cash expenses (255) 231
Changes in operating assets and liabilities:
Accounts receivable 2,329 (1,708)
Recoverable amounts on long-term contracts (1,899) (1,936)
Inventories (802) (1,087)
Prepaid expenses (929) (379)
Accounts payable and accrued liabilities (5,948) 12,401
Other deferred expenses (154) 1,258
--------- ---------
Net cash provided by (used in) operating activities (4,064) 15,192
--------- ---------
Cash flows from investing activities:
Capital expenditures (1,880) (1,924)
Other (44) 111
--------- ---------
Net cash used in investing activities (1,924) (1,813)
--------- ---------
Cash flows from financing activities:
Borrowings (repayments) under credit lines, net 112 284
Proceeds from common stock issued from treasury 738 42
Borrowings (repayments) of long-term debt (325) 358
Dividends paid (203) (201)
--------- ---------
Net cash provided by financing activities 322 483
--------- ---------
Effect of exchange rate changes on cash (116) (144)
--------- ---------
Net decrease in cash and cash equivalents (5,782) (13,718)
Cash and cash equivalents at beginning of period 13,086 14,854
--------- ---------
Cash and cash equivalents at end of period $ 7,304 $28,572
========= =========
<FN>
See accompanying notes to unaudited consolidated financial statements.
</FN>
</TABLE>
<PAGE>6
KOLLMORGEN CORPORATION AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(In thousands, except per share amounts)
1. The accompanying unaudited consolidated financial statements include the
accounts of Kollmorgen Corporation and its subsidiaries (the "Company").
2. In the opinion of management, the unaudited consolidated financial
statements included herein contain all adjustments, consisting only of
normal recurring adjustments necessary to present fairly the Company's
financial condition at March 31, 1999, the results of operations for
the three-month period ended March 31, 1999 and 1998, and the cash
flows for the three-month periods ended March 31, 1999 and 1998. The
balance sheet at December 31, 1998 was derived from the audited
financial statements as of December 31, 1998. The results of
operations for interim periods are not necessarily indicative of the
results to be expected for the full year. See Management's Discussion
and Analysis of Financial Condition and Results of Operations for
additional information. These interim financial statements should be
read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.
3. Inventories consist of the following:
<TABLE>
March 31, December 31,
1999 1998
--------- -----------
<S> <C> <C>
Raw materials $ 13,776 $ 12,187
Work in process 8,394 8,073
Finished goods 5,691 7,578
-------- ---------
$ 27,861 $ 27,838
======== =========
4. The Company's comprehensive earnings were as follows:
For the
Three Months Ended
March 31,
----------------
1999 1998
------- -------
Net income $ 1,634 $ 5,560
Foreign currency translation
adjustment (net of tax provision of
$450 and $277 in 1999 and 1998, respectively) (837) (615)
------- -------
Comprehensive income $ 797 $ 4,945
======= =======
</TABLE>
5. The following table includes certain financial information relating to
each of the Company's segments in the first quarter of 1999 and 1998:
<TABLE>
Industrial Aerospace
and and Corporate,
Commercial Defense Interest Special
Group Group And Other Items Total
<S> <C> <C> <C> <C> <C>
1999
Sales $33,557 $25,914 $ - $ - $59,471
Profit (loss) before tax 1,498 2,804 (1,998) - 2,304
1998
Sales 31,374 25,419 - - 56,793
Profit (loss) before tax 1,574 2,378 (1,115) 8,786 11,623
</TABLE>
<PAGE>7
6. In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities" which
must be adopted for fiscal years beginning after June 15, 1999. The new
standard establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. The Company expects to adopt SFAS
133 by January 1, 2000. Had the Company implemented SFAS 133 for the
current reporting period there would have been no material effect on the
financial statements.
7. Basic EPS excludes the dilutive effect of common stock equivalent
securities and is computed by dividing net income by the
weighted-average number of common shares outstanding for the period.
Diluted EPS reflects the potential dilution that could occur if
securities or other instruments to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock
that then shared in the earnings of the entity. A reconciliation between
basic and diluted EPS is as follows:
For the
Three Months Ended
March 31,
---------------
1999 1998
------- -------
Net income - basic $ 1,634 $ 5,560
Effect of dilutive securities:
Convertible debentures - 476
------- -------
Net income - diluted $ 1,634 $ 6,036
Shares used in net income
per share - basic 10,156 10,038
Effect of dilutive securities:
Stock options 292 605
Convertible debentures - 956
------- -------
Shares used in net income
per share - diluted 10,448 11,599
Net income per share-basic $0.16 $0.55
Net income per share-diluted $0.16 $0.52
During the first quarter of 1999, options to purchase 545,000 shares of
common stock with exercise prices ranging from $17.31 to $20.94 and with
expiration dates ranging up to May 26, 2008 were outstanding, but were
not included in the computation of diluted EPS because the options'
exercise prices were greater than the average market price of the common
shares. Additionally, 904,000 common equivalent shares of the
convertible subordinated debentures were not included in the diluted EPS
calculation as a result of their antidilutive effect.
During the first quarter of 1998, there were no options to purchase
common stock that had an exercise price greater than the average market
price of the common shares. Therefore, no options were excluded from the
computation of diluted EPS.
8. Effective May 1, 1999 the Company purchased the assets of New England
Affiliated Technologies (NEAT), a leader in the application of
high-performance motion control for advanced positioning systems, from
Instrument Industries, Inc. NEAT has a 25-year history in the design
and production of single-axis stages, x-y tables, integrated
workstations, and air-bearing slides for industry applications where
precise motion is critical. These products can be found in
applications such as digital image setters, semiconductor inspection
tools, and DNA analyzing equipment serving the graphic arts,
biotechnology and instrumentation, disk drive, and semiconductor
manufacturing markets. The company has approximately 100 employees at
its manufacturing facility in Lawrence, MA. and recorded sales of
approximately $13 million in 1998.
<PAGE>8
Management's Discussion and Analysis of Financial Condition
and Results of Operations
For the three months ended March 31, 1999, the Company had sales of
$59.5 million and net income of $1.6 million, equal to $0.16 per common share
(diluted). These results compare with sales for the three months ended March 31,
1998 of $56.8 million and net income of $5.6 million equal to $0.52 per common
share (diluted). Excluding the impact of the Special Items in 1998 discussed
below, the Company's net income for the three months ended March 31 would have
been $1.6 million equal to $0.16 per share (diluted) for 1999 and $2.0 million
equal to $0.19 per share (diluted) for 1998.
During the first quarter of 1998, the Company announced the first major
license agreement for its pioneering electronic motion control patents in the
amount of $27.2 million, which, after legal and other expenses, resulted in
income of $21.2 million. In connection with its patent enforcement program, the
Company has engaged counsel to continue enforcement of the Company's patent
estate, and accordingly, has recorded a charge of $6.8 million to cover legal
expenses and other related costs. The Company recorded a pre-tax charge of $2.7
million, primarily relating to the write-down of goodwill from its 1994
acquisition of the assets of Sperry Marine. Also in the first quarter of 1998,
the Company incurred $1.3 million of expenses in conjunction with the tender
offer for Pacific Scientific Company. Finally, the Company elected to change the
vesting method for post-retirement medical insurance benefits, resulting in a
charge of $1.6 million. The total of these items had a positive impact in 1998
of $8.8 million to the reported income before income taxes of the Company and
$3.6 million to the net income of the Company.
Collectively, the items above from the first quarter of 1998 will be
referred to as the "Special Items" to provide for comparative discussion of the
Company's results on a consistent basis.
RESULTS OF OPERATIONS
The following table reflects the results of operations for the Company's
two operating segments excluding the impact of the Special Items. This
comparison provides a consistent basis by which to view the results of the
Company's two operating segments (in millions):
For the
Three Months Ended
March 31,
----------------
1999 1998
------- -------
Industrial and Commercial Group:
Bookings $ 37.3 $ 37.0
Sales 33.6 31.4
Profit before tax 1.5 1.6
Aerospace and Defense Group:
Bookings $ 42.4 $ 28.1
Sales 25.9 25.4
Profit before tax 2.8 2.4
1999 versus 1998
Profit before tax for the three months ending March 31, 1999 decreased
to $2.3 million from $11.6 million in the same period of the prior year.
Excluding the Special Items in 1998 discussed above, profit before tax would
have been $2.3 million and $2.8 million for the three months ending March 31,
1999 and 1998, respectively.
<PAGE>9
The Company's sales increased $2.7 million or 5% for the three months
ended March 31, 1999 as compared to the same period a year ago. The Industrial
and Commercial Group's revenue increased to $33.6 million for the three months
ended March 31, 1999 from $31.4 million or 7% as compared to the three months
ended March 31, 1998. The increase reflects the acquisition of Magnedyne in July
1998 and increased sales of the Company's engineering consulting business. These
increases offset declines in the Industrial and Commercial Group's motion
control businesses due to the continued slowdown in the semiconductor equipment
and electronics sectors and the impact of the Asian economy on the group's high
volume business. Sales to the Aerospace and Defense Group's markets of $25.9
million for the three months ended March 31, 1999 represented an increase of 2%
over the $25.4 million of sales in same period of the prior year.
The Company's overall gross margin as a percent of sales remained
relatively constant at approximately 30% for the three months ended March 31,
1999 and 1998. The Industrial and Commercial Group had a decline in gross margin
as a percent of sales to 28% for the first quarter of 1999 from 30% in 1998. The
decline in margin was due to additional overhead costs primarily relating to the
Magnedyne acquisition without corresponding revenue increases by the group's
motion control business. The Aerospace and Defense Group had an increase in
gross margin as a percent of sales from 30% for the first quarter of 1998 to 31%
in 1999.
Sales and marketing expenses increased to $6.1 million in the first
quarter of 1999 as compared to $5.6 million for the same period in 1998, but
remained consistent at 10% of sales for both periods.
General and administrative expenses were $6.5 million or 11% of sales in
the first quarter of 1999 as compared to $5.1 million or 9% of sales for the
same period in 1998. This increase reflects insurance settlements and credits in
the first quarter of 1998, the effect of the inclusion of Magnedyne, and volume
increases at the Company's engineering consulting business.
Research and development expenses were $3.1 million or 5% of sales for
the first quarter of 1999 as compared with $3.2 million or 6% of sales for the
same period in the prior year.
Interest and Taxes
Interest expense was $0.9 million and $0.8 million for the three month
periods ending March 31, 1999 and 1998, respectively.
The Company recorded a provision for taxes of 35% in the first quarter
of 1999. The tax rate for the three months ended March 31, 1998 was 52%. That
rate reflected the impact of the patent licensing income, recorded in the first
quarter of 1998, taxable in the U.S. and subject to Japan withholding tax.
Excluding this Special Item, the Company's effective tax rate was 31% in 1998.
The Company's effective tax rates in both 1999 and 1998, excluding Special
Items, are less than the statutory U.S. tax rate as some of the Company's
foreign subsidiaries operate in countries where the statutory rate is less than
the U.S.
rate, or the Company is operating under a tax holiday agreement.
Bookings increased $14.6 million or 23% during the first three months of
1999 as compared to the same period in the prior year. The increase is due to
the improved bookings in the Aerospace and Defense Group, which included a $22
million submarine periscope order.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated cash position decreased by $5.8 million
during the quarter of 1999. Cash used for operations was $4.1 million, $1.9
million was used for investing activities, and financing activities provided
$0.3 million.
The Company used $8.1 million to fund working capital requirements. This
was principally due to scheduled payments for taxes and compensation, and a
settlement concerning a business disposed in 1996.
The Company's financing activities provided $0.3 million of cash during
the first quarter of 1999. Common dividends paid were $0.2 million or $0.02 per
common share for the three months ended March 31, 1999.
The Company believes that it can generate sufficient cash from
operations and its current line of credit to finance its cash requirements for
capital expenditures, sinking fund payments, potential acquisitions, and working
capital needs for the next twelve months.
<PAGE>10
Year 2000 Issue
The year 2000 issue is the result of computer programs having been written
using two digits, rather than four, to define the applicable year. Any of the
Company's computers, computer programs, manufacturing and administration
equipment or products that have date-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. If any of the Company's
systems or equipment that have date-sensitive software use only two digits,
system failures or miscalculations may result causing disruptions of operations,
including, among other things, a temporary inability to process transactions or
send and receive electronic data with third parties or engage in similar normal
business activities.
During 1998, the Company formed an ongoing internal review team to address
the year 2000 issue that encompasses operating and administrative areas of the
Company. A team of global professionals has been engaged in a process to work
with Company personnel to identify and resolve significant year 2000 issues in a
timely manner. In addition, executive management regularly monitors the status
of the Company's year 2000 remediation plans. The process includes an assessment
of issues and development of remediation plans, where necessary, as they relate
to internally used software, computer hardware and use of computer applications
in the Company's manufacturing processes and products. In addition, the Company
is engaged in assessing the year 2000 issue with significant suppliers.
The assessment process has been completed at the Company's U.S. operations.
With respect to the Company's international operations, the assessment process
has been completed for computer software and hardware information technology
systems used internally by the Company. The assessment process at several
international operations for internally used manufacturing and administrative
equipment is expected to be completed in April 1999. In addition, the Company is
finalizing its assessment of significant suppliers at all major locations to
determine the extent to which the Company is vulnerable to third parties'
failure to remediate their own year 2000 issues. Finally, related to products
sold by the Company, the Company believes it has no exposure to contingencies
related to year 2000 issues.
During the past three years, as part of business modernization programs
intended to reduce cycle time and improve profitability, the Company has
purchased Enterprise Resource Planning ("ERP") Systems for some of its
operations in the U.S. and other international locations, which the software
vendors have indicated are year 2000 compliant. The Company is in the
implementation phase for these systems and other ancillary financial systems
with many sites expected to achieve full implementation before September 30,
1999. Some sites are not expected to implement new ERP systems before the end of
1999 and accordingly, the Company has begun making the current systems year 2000
compliant. The cost of making those adaptations are not expected to be material
and will be expensed in the period incurred. It is expected that the Company
will be in full compliance with its internal systems before the year 2000. If,
due to unforeseen circumstances, the implementation is not completed on a timely
basis, the year 2000 could have a material impact on the operations of the
Company.
The Euro
On January 1, 1999, eleven of fifteen member countries of the European
Union established fixed conversion rates between their existing currencies
("legacy currencies") and one common currency, the euro. The euro now trades on
currency exchanges and may be used in business transactions. The conversion to
the euro eliminates currency exchange rate risk among the eleven member
countries. Beginning in January 2002, new euro-denominated bills and coins will
be issued. The Company's business units significantly affected by the euro
conversion have established plans to address the issues raised by the euro
currency conversion, and expect to be substantially complete with these plans by
the year 2000. These issues include, among others, the need to adapt computer
and financial systems, business processes and equipment, and the need to
accommodate euro-denominated transactions and the impact of one common currency
on product pricing, taxation and governmental and legal regulations. The Company
does not expect the system and equipment conversion costs to be material to its
financial condition, results of operations or cash flows. Due to numerous
uncertainties, the Company cannot reasonably estimate the effects currency will
have on pricing and the resulting impact, if any, on its financial condition
results of operations or cash flows.
<PAGE>11
Forward Looking Information
Certain statements in this report are "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. All forward
looking statements involve risks and uncertainties. In particular, any statement
contained herein, in press releases, written statements or other documents filed
with the Securities and Exchange Commission, or in the Company's communications
and discussions with investors and analysts in the normal course of business
through meetings, phone calls and conference calls, regarding the consummation
and benefits of future acquisitions, as well as expectations with respect to
future sales, operating efficiencies and product expansion, are subject to known
and unknown risks, uncertainties and contingencies, many of which are beyond the
control of the Company. These factors may cause actual results, performance or
achievements to differ materially from anticipated results, performances or
achievements. Factors that might affect such forward looking statements include,
but are not limited to, overall economic and business conditions; the demand for
the Company's goods and services; the timing of and market acceptance of new
products; competitive factors in the industries and geographic markets in which
the Company competes; changes in tax requirements (including tax rate changes,
new tax laws and revised tax law interpretations); interest rate fluctuations
and other capital market conditions, including foreign currency rate
fluctuations; economic and political conditions in international markets; the
ability to achieve anticipated synergies and other cost savings in connection
with acquisitions; the timing, impact and other uncertainties of future
acquisitions; and the Company's ability and its customers' and suppliers'
ability to replace, modify or upgrade computer programs in order to adequately
address the year 2000 issue. Any forward looking statements should be considered
in light of these factors.
PART II - OTHER INFORMATION
Item 5. Other Information
Effective May 1, 1999, the Company acquired substantially all of
the assets and assumed certain liabilities of New England Affiliated
Technologies, Inc. located in Lawrence Massachusetts. The Company announced this
acquisition in a press release dated April 26, 1999
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Listed below are the exhibits filed with this report.
27 Financial Data Schedules.
99 Press release dated April 26, 1999 reporting on the
acquisition of New England Affiliated Technologies, Inc.
(b) Reports on Form 8-K - none
<PAGE>12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
KOLLMORGEN CORPORATION
By: /s/ Robert J. Cobuzzi
Robert J. Cobuzzi, Senior Vice
President, Treasurer and
Chief Financial Officer
Date: May 17, 1999
<PAGE>13
Kollmorgen will Acquire New England Affiliated Technologies;
Adds Capability for Complete Positioning Systems
WALTHAM, Mass. (April 26, 1999) -- Kollmorgen Corporation (NYSE: KOL) announced
today that it has agreed to purchase New England Affiliated Technologies, a
leader in the application of high-performance motion control for advanced
positioning systems. Based in Lawrence, Mass., NEAT has a 25-year history in
the design and production of single-axis stages, x-y tables, integrated
workstations, and air-bearing slides for industry applications where precise
motion is critical.
"This is a perfect fit for Kollmorgen," said Gideon Argov, Kollmorgen's
chairman and chief executive. "NEAT serves the next rung up the value ladder.
They have the application experience and skills to combine our motors, drives,
and servo systems with tables, slides, and workstations into precise
positioning systems perfectly suited to the customer's need, especially in the
field of linear motion control."
NEAT builds a range of products that integrate motion control components into a
more complete system for precisely positioning a part or a product. The
company's products can be found in applications as varied as digital
imagesetters, semiconductor inspection tools, and DNA analyzing equipment. NEAT
enjoys a reputation as a leader in application-specific positioning systems for
such fields as graphic arts, biotechnology and instrumentation, disk drives,
and semiconductor manufacturing. In addition, NEAT has a well-established
reputation in the development of linear positioning systems, one of the fastest
growing segments of motion control.
The company has approximately 100 employees at its manufacturing facility in
Lawrence, Mass., and recorded sales of approximately $13 million in 1998.
"NEAT adds significant new opportunities for Kollmorgen," Argov said,
"particularly in the area of linear motion. We will, of course, incorporate
Kollmorgen motors into the NEAT equipment, but we will also introduce the NEAT
team to our OEM and industrial customers with the goal of transforming
Kollmorgen from a supplier of motors and drives into a supplier of entire
linear positioning systems."
"We're very pleased by this acquisition," said Argov. "It's a good example of
our ongoing strategy to grow our business around our core expertise,
high-performance electronic motion control." Kollmorgen is a leading producer
of high-performance electronic motion control components and systems. Additional
information can be found on the World Wide Web at http://www.kollmorgen.com.
Cautionary Statement
The anticipated benefits associated with this acquisition are forward-looking
as defined in the federal securities laws. Expected performance may not be
achieved due to a variety of factors including, but not limited to, competition
and continued demand for its products, and other risks detailed in Kollmorgen's
filings with the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, under the
heading "Forward-looking Information." Management believes, nonetheless, that
the acquisition of NEAT offers the best strategy commensurate with Kollmorgen's
financial objectives.
Contact: Dorothy Amaral, Kollmorgen Corp. (781) 890-5655
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FOR CURRENT FISCAL YEAR ENDED MARCH 31, 1999
</LEGEND>
<CIK>0000056583
<NAME>KOLLMORGNE CORPORATION
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 7,304
<SECURITIES> 0
<RECEIVABLES> 43,504
<ALLOWANCES> 594
<INVENTORY> 27,861
<CURRENT-ASSETS> 85,955
<PP&E> 113,611
<DEPRECIATION> 82,321
<TOTAL-ASSETS> 159,699
<CURRENT-LIABILITIES> 51,477
<BONDS> 31,050
0
0
<COMMON> 26,940
<OTHER-SE> 30,772
<TOTAL-LIABILITY-AND-EQUITY> 159,699
<SALES> 52,842
<TOTAL-REVENUES> 59,471
<CGS> 40,132
<TOTAL-COSTS> 41,878
<OTHER-EXPENSES> 15,640
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 901
<INCOME-PRETAX> 2,439
<INCOME-TAX> 805
<INCOME-CONTINUING> 1,634
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,634
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
<FN>
(1) EPS - Primary represents Earnings per share - Basic per SFAS 128
EPS - Diluted represents Earnings per share - Diluted per SFAS 128
</FN>
</TABLE>
