<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-----------------------
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- -----
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------------------------------
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 1-168
AMETEK, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-4923320
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Station Square, Paoli, Pennsylvania 19301
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code 610-647-2121
----------------
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 number of shares of the issuer's common stock outstanding as of the
latest practicable date was:
Common Stock, $.01 Par Value, outstanding at April 30, 1996 was 32,690,303
shares.
<PAGE>
PART I. FINANCIAL INFORMATION
-----------------------------
Item 1. Financial Statements
- -----------------------------
AMETEK, INC.
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CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(Unaudited)
(Dollars in thousands except per-share amounts)
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------------------
1996 1995
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<S> <C> <C>
Net sales $ 227,633 $ 211,527
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Expenses:
Cost of sales (excluding depreciation) 177,213 162,847
Selling, general & administrative 19,914 20,193
Depreciation 7,032 6,981
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Total expenses 204,159 190,021
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Operating income 23,474 21,506
Other income (expenses):
Interest expense (4,837) (5,032)
Other, net 544 540
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Income from continuing operations
before income taxes 19,181 17,014
Provision for income taxes 6,965 6,865
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Income from continuing operations 12,216 10,149
Income from discontinued operations, net of taxes - 513
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Net income $ 12,216 $ 10,662
============= =============
Earnings per share:
Income from continuing operations $ 0.37 $ 0.30
Income from discontinued operations - 0.01
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Net income $ 0.37 $ 0.31
============= =============
Cash dividends paid per share $ 0.06 $ 0.06
============= =============
Average common shares outstanding 32,783,106 34,244,298
============= =============
</TABLE>
See accompanying notes.
2
<PAGE>
AMETEK, INC.
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CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $3,285 $7,011
Marketable securities 6,867 5,694
Receivables, less allowance for possible losses 143,334 118,782
Inventories 101,898 101,515
Deferred income taxes 12,579 11,825
Other current assets 6,075 4,518
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Total current assets 274,038 249,345
------------ -------------
Property, plant and equipment 415,948 408,050
Less accumulated depreciation (238,548) (231,212)
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177,400 176,838
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Intangibles, investments and other assets 98,178 100,562
------------ -------------
Total assets $549,616 $526,745
============ =============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<TABLE>
<S> <C> <C>
Current liabilities:
Short-term borrowings and current
portion of long-term debt $68,496 $56,374
Accounts payable 73,356 76,569
Accruals 84,984 77,733
------------ -------------
Total current liabilities 226,836 210,676
Long-term debt 150,409 150,430
Deferred income taxes 32,390 31,927
Other long-term liabilities 45,918 46,653
Stockholders' equity 94,063 87,059
------------ -------------
Total liabilities and stockholders' equity $549,616 $526,745
============ =============
</TABLE>
See accompanying notes.
3
<PAGE>
AMETEK, INC.
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1996 1995 (a)
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<S> <C> <C>
Cash provided by (used for):
Operating activities:
Net income $12,216 $10,662
Deduct discontinued operations:
Net income from discontinued operations - (513)
------------ -------------
Income from continuing operations 12,216 10,149
Adjustments to reconcile income from continuing
operations to net cash used for continuing operations:
Depreciation and amortization 9,065 8,876
Deferred income taxes (559) 305
Net change in operating working capital (21,255) (20,161)
Other (1,423) 590
------------ -------------
Cash used for continuing operations (1,956) (241)
Cash provided by discontinued operations - 484
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Total operating activities (1,956) 243
------------ -------------
Investing activities:
Additions to property, plant and equipment (6,391) (4,976)
Purchase of businesses and investments - (33,458)
Other (1,149) 988
------------ -------------
Total investing activities (7,540) (37,446)
------------ -------------
Financing activities:
Net change in short-term borrowings 12,025 50,700
Repurchases of common stock (5,284) (13,863)
Cash dividends paid (1,976) (2,035)
Other 1,005 580
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Total financing activities 5,770 35,382
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Decrease in cash and cash equivalents (3,726) (1,821)
Cash and cash equivalents:
As of January 1 7,011 7,245
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As of March 31 $3,285 $5,424
============ =============
</TABLE>
_______________________________________________
(a) Restated for discontinued operations.
See accompanying notes.
4
<PAGE>
AMETEK, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
March 31, 1996
--------------
(Unaudited)
Note 1 - Financial Statement Presentation
- ------ --------------------------------
The accompanying consolidated financial statements are unaudited, but the
Company believes that all adjustments (which consist of normal recurring
accruals) necessary for fair presentation of the consolidated financial position
of the Company at March 31, 1996 and the consolidated results of its operations
and cash flows for the three-month periods ended March 31, 1996 and 1995 have
been included. Quarterly results of operations are not necessarily indicative
of results for the full year. Quarterly financial statements should be read in
conjunction with the financial statements and related notes in the Company's
1995 Annual Report.
Note 2 - Earnings Per Share
- ------ ------------------
Earnings per share is based on the average number of common shares
outstanding each period. No material dilution of earnings per share would
result for the first quarter of 1996 or 1995 if it were assumed that all
outstanding stock options were exercised.
Note 3 - Inventories
- ------ -----------
The estimated components of inventory stated at lower of LIFO cost or
market are:
<TABLE>
<CAPTION>
In thousands
-----------------------------
March 31, December 31,
1996 1995
--------- ----------
(Unaudited)
<S> <C> <C>
Finished goods and parts $ 30,666 $ 31,628
Work in process 24,321 23,491
Raw materials and purchased parts 46,911 46,396
------ -------
$ 101,898 $ 101,515
======= =======
</TABLE>
5
<PAGE>
AMETEK, INC.
------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- ------- -----------------------------------------------------------------------
of Operations
- -------------
RESULTS OF OPERATIONS
- ---------------------
The following table sets forth sales and operating income by business
segment:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Net sales (Dollars in thousands)
---------
Electro-mechanical $ 98,137 $ 97,490
Precision Instruments 79,615 71,461
Industrial Materials 49,881 42,576
-------- --------
Total Consolidated $227,633 $211,527
======== ========
Operating income
----------------
Electro-mechanical $ 11,980 $ 12,745
Precision Instruments 8,736 7,716
Industrial Materials 9,392 7,764
------ ------
Total Segments 30,108 28,225
Corporate and other (6,634) (6,719)
-------- --------
Total Consolidated $ 23,474 $ 21,506
======== ========
</TABLE>
Operations for the first quarter of 1996 compared to the first quarter of 1995
- ------------------------------------------------------------------------------
Sales for the first quarter of 1996 were $227.6 million, compared to sales of
$211.5 million for the first quarter of 1995, an increase of $16.1 million or
7.6%. The sales improvement came almost equally from the Company's Precision
Instruments and Industrial Materials Groups. The Precision Instruments
Group's sales increased $8.2 million or 11.4% to $79.6 million from last
year's first-quarter, due to the Dixson heavy vehicle instrumentation
acquisition in late March 1995, and higher sales of aerospace products. The
Industrial Materials Group's sales increased $7.3 million or 17.2%, to $49.9
million, compared to first quarter 1995 sales of $42.6 million, due to
increased sales of water filtration and specialty metal products.
The Electro-mechanical Group's first quarter 1996 sales of $98.1 million were
not significantly changed from the same period of 1995.
Operating income for the first quarter of 1996 increased $2.0 million or 9.2%
to $23.5 million, primarily the result of the Company's higher sales volume
and improved operating efficiencies in the Precision Instruments and
Industrial Materials Groups.
6
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AMETEK, INC.
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RESULTS OF OPERATIONS (CONT'D)
- ---------------------
The effective income tax rate was 36.3% for the first quarter of 1996
compared with 40.3% for the first quarter of 1995. The reduced 1996 tax rate
reflects the overall effect of lower Italian pretax earnings in the current
first quarter. The 1995 tax rate included the current and deferred tax effect
of a one percent increase in the Italian statutory income tax rate.
Income from continuing operations and net income for the first quarter of
1996 was $12.2 million, or $.37 per share, compared to income from continuing
operations of $10.2 million or $.30 per share in the first quarter of 1995,
an income improvement of $2.0 million or 20.4%. First quarter 1995 income
from operations discontinued in May 1995 was $.5 million, or $.01 per share,
resulting in net income for that quarter of $10.7 million or $.31 per share.
The weighted average shares outstanding during the first quarter of 1996 was
32.8 million, compared to 34.2 million shares for the same quarter of 1995, a
reduction of 1.4 million shares or 4%. The reduced number of shares reflects
the Company's ongoing share repurchase program, which began in late March,
1994.
Electro-mechanical Group sales totaled $98.1 million in the current
------------------------
first quarter, essentially unchanged from the $97.5 million in the first
quarter of 1995. Domestic vacuum motor product sales increases were
substantially offset by lower foreign sales caused by weak market
conditions in Europe.
Operating profit of this group decreased $.8 million or 6% to $12.0
million in this year's first quarter. Operating profit margins decreased
to 12.2% in the current quarter from 13.1% in the first quarter of 1995,
primarily due to softness in the European floorcare market, which is
adversely affecting the Company's Italian motor operations. These
conditions are being moderated by programs to reduce costs, improve
margins from operating efficiencies, and to explore new market
opportunities. Operating margins of domestic divisions increased due to
improved production efficiencies. Market expansion and cost reduction
programs for this Group have been initiated in Mexico, China and in the
Czech Republic. Recently, the Group leased facilities in Reynosa, Mexico
and in China to manufacture motors to reduce costs and enter new
markets. In the Czech Republic, a new motor manufacturing operation is
being pursued, subject to certain due diligence reviews, with objectives
similiar to the planned manufacturing operation in China. Sales growth
and profit enhancement opportunities continue to be explored by the
Group as the Company continues the global expansion of its electric
motor businesses. The expansion programs are not expected to have a
significant impact on Group results for 1996.
7
<PAGE>
AMETEK, INC.
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RESULTS OF OPERATIONS (CONT'D)
- ---------------------
In the Precision Instruments Group, sales of $79.6 million in this
---------------------------
year's first quarter were up $8.2 million or 11.4% from the same quarter
last year. The acquisition of the heavy vehicle instruments business of
Dixson, Inc., which occurred at the end of the first quarter of 1995,
contributed to the increase in sales, along with higher sales of
aerospace instruments. The sales increase was reduced by an industry-
wide decline in demand for heavy trucks.
Group operating profit for the current quarter increased $1.0 million or
13.2% to $8.7 million from $7.7 million in the same period last year.
The Group benefited significantly from the lower cost structure now in
place as a result of the restructuring activities begun in 1993. In
addition, the aerospace business experienced a favorable change in
product mix in the current quarter. The increased profits from the
aerospace business were partially offset by lower profits due to the
weakness in the market for heavy truck instrumentation.
The Industrial Materials Group's first-quarter 1996 sales increased $7.3
----------------------------
million or 17.2% to $49.9 million, compared to $42.6 million in sales
for the first quarter of 1995. The increased sales were largely due to
higher shipments of specialty metals and water filtration products,
including sales by a French water filtration business acquired in the
fourth quarter of 1995. Group operating profit for the current quarter
increased $1.6 million, or 21.0%, to $9.4 million, due to the increase
in sales volume, and improved operating efficiencies.
FINANCIAL CONDITION
- -------------------
Liquidity and Capital Resources
-------------------------------
Working capital at March 31, 1996 amounted to $47.2 million, an increase
of $8.5 million from December 31, 1995, due primarily to an increase in
receivables, offset somewhat by higher short-term borrowings. The
increase in receivables was attributable to the higher level of sales
during the period. Higher short-term borrowings were primarily used to
fund investing and financing requirements. The ratio of current assets
to current liabilities at March 31, 1996 was 1.21 to 1, compared to 1.18
to 1 at December 31, 1995.
Cash used for operating activities in the first quarter of 1996 totaled
$2.0 million, and reflects requirements to support the increase in
receivables, partially offset by positive cash flow from net income and
slightly higher accounts payable and accruals.
Cash used for investing activities in the first quarter of 1996 totaled
$7.5 million, primarily for additions to property, plant and equipment.
This compares to cash used of $37.4 million in the same period last
year. Expenditures in the first quarter of 1995 included $33.5 million
for the purchase of a business and an investment in a joint venture.
8
<PAGE>
AMETEK, INC.
------------
FINANCIAL CONDITION (CONT'D)
- -------------------
Financing activities in the first quarter of 1996 provided cash totaling
$5.8 million, compared to cash provided of $35.4 million in the first
quarter of 1995. In the 1996 quarter the Company received net proceeds
from short-term borrowings totaling $12.0 million, which were used to
repurchase 316,000 shares of the Company's common stock at a total cost
of $5.3 million, finance dividend payments totaling $2.0 million, fund
additions to property, plant and equipment, and support operating cash
flow requirements. Financing activities in the first quarter of 1995
included net short-term borrowings of $50.7 million, which were used to
fund the cash outlay for the purchase of the business and investment
mentioned earlier, repurchase $13.9 million of the Company's common
stock (796,000 shares), and make dividend payments of $2.0 million.
The stock repurchases mentioned above are being made under a previously
announced plan to enhance shareholder value. Since beginning the stock
repurchase program in March 1994, a total of 12.1 million shares have
been acquired as of May 8, 1996, at a total cost of $169.2 million,
under a $175 million authorization.
As a result of all cash flow activities, cash and cash equivalents and
short-term marketable securities decreased $2.6 million since December
31, 1995, to $10.2 million at March 31, 1996. The Company believes it
has sufficient cash-generating capabilities and available credit
facilities to enable it to meet its needs in the foreseeable future.
9
<PAGE>
AMETEK, INC.
------------
PART II. OTHER INFORMATION
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on April 23, 1996.
The following matters were voted on at the Annual Meeting:
1) Election of Directors. The following persons were elected as
----------------------
directors:
<TABLE>
<CAPTION>
Number of Shares
--------------------------------------
Voted against
Name Voted for or withheld
------------------------------- ------------------ ----------------
<S> <C> <C>
Walter E. Blankley 27,630,165 4,975,653
Lewis G. Cole 27,423,081 5,182,737
Helmut N. Friedlaender 27,643,347 4,962,471
Sheldon S. Gordon 27,653,103 4,952,715
Charles D. Klein 27,631,543 4,974,275
James R. Malone 27,651,303 4,954,515
David P. Steinmann 27,651,466 4,954,352
Elizabeth R. Varet 27,649,176 4,956,642
</TABLE>
2) Appointment of Independent Auditors. The stockholders approved
-----------------------------------
the appointment of Ernst & Young LLP as independent auditors for
the Company for the year 1996. There were 27,786,947 shares voted
for approval; 55,695 shares voted against; 116,523 abstentions,
and 4,646,653 shares not voting.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
a) Exhibits:
Exhibit
Number Description
------ -----------
27 Financial Data Schedule *
* Schedule submitted in electronic format only.
b) Reports on Form 8-K: During the quarter ended March 31, 1996, the
Company did not file any reports on Form 8-K.
10
<PAGE>
AMETEK, INC.
------------
SIGNATURES
Pursuant to the requirements 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.
AMETEK, INC.
---------------------------------------------
(Registrant)
By /s/ Robert R. Mandos, Jr.
-------------------------------------------
Robert R. Mandos, Jr.
Comptroller
(Principal Accounting Officer)
May 10, 1996
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet of AMETEK, Inc. at March 31, 1996, and the
Consolidated Statement of Income of AMETEK, Inc. for the three months ended
March 31, 1996, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3,285
<SECURITIES> 6,867
<RECEIVABLES> 149,610
<ALLOWANCES> 6,276
<INVENTORY> 101,898
<CURRENT-ASSETS> 274,038
<PP&E> 415,948
<DEPRECIATION> 238,548
<TOTAL-ASSETS> 549,616
<CURRENT-LIABILITIES> 226,836
<BONDS> 150,409
0
0
<COMMON> 346
<OTHER-SE> 93,717
<TOTAL-LIABILITY-AND-EQUITY> 549,616
<SALES> 227,633
<TOTAL-REVENUES> 227,633
<CGS> 177,213
<TOTAL-COSTS> 177,213
<OTHER-EXPENSES> 7,032
<LOSS-PROVISION> 482
<INTEREST-EXPENSE> 4,837
<INCOME-PRETAX> 19,181
<INCOME-TAX> 6,965
<INCOME-CONTINUING> 12,216
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,216
<EPS-PRIMARY> .37
<EPS-DILUTED> 0
</TABLE>
