<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, 1997
------------------------------------------------
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
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(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, 1997 was 32,763,450
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,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Net sales $221,176 $227,633
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Expenses:
Cost of sales (excluding depreciation) 169,456 177,213
Selling, general & administrative 19,651 19,914
Depreciation 7,022 7,032
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Total expenses 196,129 204,159
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Operating income 25,047 23,474
Other income (expenses):
Interest expense (4,511) (4,837)
Other, net 1,105 544
------------ ------------
Income before income taxes 21,641 19,181
Provision for income taxes 7,975 6,965
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Net income $13,666 $12,216
============ ============
Earnings per share $0.42 $0.37
============ ============
Cash dividends paid per share $0.06 $0.06
============ ============
Average common shares outstanding 32,739,097 32,783,106
============ ============
</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,
1997 1996
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(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $2,841 $3,051
Marketable securities 7,702 6,441
Receivables, less allowance for possible losses 140,178 126,212
Inventories 93,257 94,413
Deferred income taxes 11,023 11,086
Other current assets 7,142 5,769
----------- ------------
Total current assets 262,143 246,972
----------- ------------
Property, plant and equipment 447,213 448,597
Less accumulated depreciation (259,073) (256,241)
----------- ------------
188,140 192,356
----------- ------------
Intangibles, investments and other assets 94,878 98,587
----------- ------------
Total assets $545,161 $537,915
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Short-term borrowings and current
portion of long-term debt $41,629 $31,898
Accounts payable 74,761 77,994
Accruals 71,068 76,079
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Total current liabilities 187,458 185,971
Long-term debt 150,270 150,333
Deferred income taxes 34,055 35,099
Other long-term liabilities 36,965 37,014
Stockholders' equity 136,413 129,498
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Total liabilities and stockholders' equity $545,161 $537,915
=========== ============
</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,
-----------------------------
1997 1996
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<S> <C> <C>
Cash provided by (used for):
Operating activities:
Net income $13,666 $12,216
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 8,954 9,065
Deferred income taxes 166 (559)
Net change in operating working capital (23,942) (21,255)
Other (145) (1,423)
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Total operating activities (1,301) (1,956)
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Investing activities:
Additions to property, plant and equipment (7,320) (6,391)
Increase in marketable securities (1,256) (1,149)
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Total investing activities (8,576) (7,540)
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Financing activities:
Net change in short-term borrowings 10,910 12,025
Repurchases of common stock - (5,284)
Cash dividends paid (1,966) (1,976)
Proceeds from stock options 723 1,005
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Total financing activities 9,667 5,770
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Decrease in cash and cash equivalents (210) (3,726)
Cash and cash equivalents:
As of January 1 3,051 7,011
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As of March 31 $2,841 $3,285
============= =============
</TABLE>
See accompanying notes.
4
<PAGE>
AMETEK, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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March 31, 1997
--------------
(Unaudited)
Note 1 - Financial Statement Presentation
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The accompanying consolidated financial statements are unaudited. The
Company believes that all adjustments (which consist of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
position of the Company at March 31, 1997 and the consolidated results of its
operations and cash flows for the three-month periods ended March 31, 1997 and
1996 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 1996 Annual Report on Form 10-K as filed with the Securities and
Exchange Commission.
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 1997 or 1996 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,
1997 1996
--------- ------------
(Unaudited)
<S> <C> <C>
Finished goods and parts $27,397 $28,565
Work in process 21,358 18,829
Raw materials and purchased parts 44,502 47,019
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$93,257 $94,413
======= =======
</TABLE>
Note 4 - New Accounting Standards
- ------ ------------------------
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) No. 96-1, Environmental Remediation
Liabilities. The SOP provides authoritative guidance on the recognition,
measurement, display, and disclosure of environmental remediation liabilities.
The Company adopted this SOP as required for its fiscal year beginning January
1, 1997. Adoption of the SOP had no effect on the Company's results of
operations, financial position, or cash flows.
5
<PAGE>
AMETEK, INC.
------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
March 31, 1997
--------------
(Unaudited)
Note 4 - New Accounting Standards (con't.)
- ------ ---------------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share, which is required to be adopted December
31, 1997. At that time, the Company will be required to change the method
currently used in computing earnings per share and to restate all prior periods.
Under the new requirements for calculating basic earnings per share, the
dilutive effect of stock options will be excluded. The impact of this change
will not affect the calculation of basic earnings per share, and the impact of
Statement No. 128 on the calculation of fully diluted earnings per share is not
expected to be material.
Note 5 - Subsequent Event
- ------ ----------------
On April 17, 1997, the Company announced it had signed a definitive
agreement to acquire the Test & Measurement Products businesses of Technitrol,
Inc., for $34 million in cash. Closing of the acquisition of the two
subsidiaries (John Chatillon & Sons, Inc., and Lloyd Instruments, Ltd.), which
is expected by the end of June 1997, is subject to regulatory approval and
certain other requirements. These businesses had annual sales of approximately
$30 million, and they manufacture a comprehensive line of measurement and
testing devices, including gauges, electronic instruments and test stands, and
analytical software and support services. Upon consummation, this acquisition
will be accounted for by the purchase method and the results of their operations
will be included in the Company's consolidated results from the closing date.
6
<PAGE>
AMETEK, INC.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
- ------- -----------------------------------------------------------------------
of Operations
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Results of Operations
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The following table sets forth sales and operating income by business segment:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1997 1996
---- ----
Net sales (Dollars in thousands)
---------
<S> <C> <C>
Electromechanical $ 94,017 $ 98,137
Precision Instruments 81,695 79,615
Industrial Materials 45,464 49,881
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Total Consolidated $221,176 $227,633
======== ========
Operating income
----------------
Electromechanical $ 11,923 $ 11,980
Precision Instruments 10,800 8,736
Industrial Materials 7,518 9,392
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Total Segments 30,241 30,108
Corporate and other (5,194) (6,634)
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Total Consolidated $ 25,047 $ 23,474
======== ========
</TABLE>
Operations for the first quarter of 1997 compared to the first quarter of
-------------------------------------------------------------------------
1996
----
Sales for the first quarter of 1997 were $221.2 million, a decrease of $6.5
million or 2.8% compared with the first quarter of 1996. The decrease was
due to lower sales of specialty metals, where a depressed clad metal market
resulted in a decline when measured against strong results in the prior
year's first quarter. In addition, sales of electric motors were lower,
primarily due to softness in domestic floor care markets. These reductions
were partly offset by a sales increase of precision instruments, mostly due
to higher sales of aerospace instruments.
Segment operating income for the first quarter of 1997 was $30.2 million,
and was essentially unchanged from the first quarter of 1996. Segment
operating income as a percentage of sales increased to 13.7% of sales in
the current first quarter from 13.2% of sales in the first quarter of 1996,
these operating improvements were primarily from the Company's aerospace
operations, and better performance by the Company's Italian motor
operations. Corporate and other expenses decreased by $1.4 million to $5.2
million in the current first quarter, due to lower overall administrative
expenses. These improvements resulted in total operating income of $25.0
million in the first quarter of 1997, an increase of $1.6 million or 6.7%
from the same quarter of 1996.
7
<PAGE>
AMETEK, INC.
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Results of Operations (cont'd)
- ---------------------
Interest and other expenses, net were $3.4 million in the first quarter of
1997, a decrease of $.9 million or 20.7% from the same quarter of 1996,
primarily due to higher investment income from the Company's captive
insurance subsidiary.
As a result of the above items, net income for the first quarter of 1997
was $13.7 million, or $.42 per share, compared with $12.2 million or $.37
per share in the first quarter of 1996, an income increase of $1.5 million
or 11.9%.
Electromechanical Group sales totaled $94.0 million in the first
-----------------------
quarter of 1997, a decrease of $4.1 million or 4.2% from the same
quarter of 1996. Domestic sales of floor care products primarily
accounted for the decrease, due to certain Original Equipment
Manufacturer (OEM) customers' inventory adjustments, and a shift in
market share relative to their competitors. Partly offsetting the
overall sales decrease was higher European sales by the Group's
Italian motor operations, despite the negative effects from the
strengthening U.S. dollar against the Italian lire. The higher
European sales reflected both sales to new customers and new
initiatives with existing customers. Higher U.S. exports, primarily to
the growing Asian floor care market, also helped to offset the overall
sales decrease.
Operating profit of this Group was $11.9 million for the first quarter
of 1997, essentially unchanged from the same quarter of 1996 despite
the lower Group sales. Profit margins increased to 12.7% of sales in
the current first quarter from 12.2% of sales a year ago. Improved
operating efficiencies and lower material costs in the Italian motor
operations benefited the Group. Also, strong domestic margins remained
essentially unchanged from a year ago.
New market penetration and market expansion strategies for the
Electromechanical Group are continuing, as initial manufacturing
operations began in Shanghai, Peoples' Republic of China in March
1997, and production activities are expanding in the Group's new
Reynosa, Mexico plant. In addition, a previously announced motor
production plant in the Czech Republic is scheduled to begin
production in mid-1997. The Group continues to absorb start-up costs
associated with these new plants, however, these costs are expected to
decline in the latter part of 1997.
In the Precision Instruments Group, sales were $81.7 million in this
---------------------------
year's first quarter, up $2.1 million or 2.6% from the same quarter of
1996. Continued sales growth of aerospace instruments was the primary
factor in the sales increase, due to the introduction of new products
and to higher demand for existing products, as well as a favorable
change in product mix. Also contributing to the sales increase was
higher sales of heavy-vehicle instruments. These increases were offset
somewhat by lower domestic and international sales of process
instruments.
8
<PAGE>
AMETEK, INC.
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Results of Operations (cont'd)
- ---------------------
Group operating profit for the current first quarter increased
significantly by $2.1 million or 23.6% to $10.8 million, partly
resulting from the sales increase noted previously. In addition,
profit margins of the Group increased to 13.2% in the current first
quarter from 11.0% in the first quarter of 1996. The Group's aerospace
operations reported significant improvements in operating profit,
driven by the favorable impacts of the higher sales volume, an
improved product mix, and related operating efficiencies.
The Industrial Materials Group's first-quarter 1997 sales decreased
----------------------------
$4.4 million or 8.9% to $45.5 million, mostly due to lower sales by
the Group's specialty metals business compared with an unusually
strong 1996 first quarter. Lower international sales of clad metal
products, and a weak metal strip market caused the reductions. First
quarter 1997 sales by the Group's water filtration businesses were
essentially unchanged from the same quarter of 1996. The previously
announced divestiture of the water filtration business is proceeding,
including the receipt of one of the necessary regulatory approvals,
and is expected to be completed by the end of July, 1997.
Group operating profit was $7.5 million in the first quarter of 1997,
a reduction of $1.9 million or 20% from the first quarter of 1996,
primarily resulting from the sales decrease. Profit margins in the
first quarter of 1997 decreased to 16.5% from 18.8% a year ago, due to
the sales decline and associated changes in product mix.
Financial Condition
- -------------------
Liquidity and Capital Resources
-------------------------------
Working capital at March 31, 1997 amounted to $74.7 million, an
increase of $13.7 million from December 31, 1996. This was primarily
due to an increase in receivables, which is proportionate to the
higher sales levels in the first quarter of 1997 relative to the
last quarter of 1996. The ratio of current assets to current
liabilities at March 31, 1997 was 1.40 to 1, compared to 1.33 to 1 at
December 31, 1996.
Cash used for operating activities in the first quarter of 1997
totaled $1.3 million, compared with cash used of $2.0 million for the
same quarter of 1996. Both periods reflect the use of cash to support
working capital requirements.
Cash used for investing activities totaled $8.6 million in the first
quarter of 1997, compared with cash used of $7.5 million in the same
quarter of 1996, primarily for additions to property, plant and
equipment.
9
<PAGE>
AMETEK, INC.
------------
Financial Condition (cont'd)
- -------------------
Financing activities in the first quarter of 1997 provided cash
totaling $9.7 million, compared to cash provided of $5.8 million in
the same quarter of 1996. In the 1997 first quarter the Company
borrowed $10.9 million, compared with $12.0 million in the 1996 first
quarter. In the 1996 quarter, the Company also repurchased 316,000
shares of the Company's common stock at a total cost of $5.3 million.
As a result of all cash flow activities, cash and cash equivalents and
short-term marketable securities increased $1.1 million since December
31, 1996, to $10.5 million at March 31, 1997. The Company believes it
has sufficient cash-generating capabilities and available credit
facilities to enable it to meet its needs in the foreseeable future.
Risk Factors
- ------------
Information contained in this discussion, other than historical
information, are considered "forward-looking statements" and may be
subject to change based on various important factors and
uncertainties. Some, but not all, of the factors and uncertainties
that may cause actual results to differ significantly from those
expected in any forward-looking statement are disclosed in the
Company's 1996 Form 10-K as filed with the Securities and Exchange
Commission.
10
<PAGE>
AMETEK, INC.
------------
PART II. OTHER INFORMATION
---------------------------
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: For the quarter ended March 31, 1997, the Company
filed a Current Report on Form 8-K dated February 6, 1997, under Item 5,
Other Events, to report the announcement of an agreement to merge the
Company's water filtration business into Culligan Water Technologies,
Inc.
11
<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 14, 1997
12
<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, 1997, AND THE
CONSOLIDATED STATEMENT OF INCOME OF AMETEK, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1997, 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,841
<SECURITIES> 7,702
<RECEIVABLES> 145,770
<ALLOWANCES> 5,592
<INVENTORY> 93,257
<CURRENT-ASSETS> 262,143
<PP&E> 447,213
<DEPRECIATION> 259,073
<TOTAL-ASSETS> 545,161
<CURRENT-LIABILITIES> 187,458
<BONDS> 150,270
0
0
<COMMON> 342
<OTHER-SE> 136,071
<TOTAL-LIABILITY-AND-EQUITY> 545,161
<SALES> 221,176
<TOTAL-REVENUES> 221,176
<CGS> 169,456
<TOTAL-COSTS> 169,456
<OTHER-EXPENSES> 7,022
<LOSS-PROVISION> 322
<INTEREST-EXPENSE> 4,511
<INCOME-PRETAX> 21,641
<INCOME-TAX> 7,975
<INCOME-CONTINUING> 13,666
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,666
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0
</TABLE>
