<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended
September 30, 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: 0-4791
PAUL MUELLER COMPANY
- ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Missouri
- ----------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
44-0520907
- ----------------------------------------------------------------------
(I.R.S. Employer Identification No.)
1600 W. Phelps Street, P.O. Box 828, Springfield, Missouri 65801-0828
- ----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (417) 831-3000
- ----------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all re-
ports 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 the issuer's Common Stock
as of November 8, 1996: 1,168,021
<PAGE> 2
PART I - FINANCIAL INFORMATION
The condensed financial statements included herein have been prepared
by the Company without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in the financial statements,
prepared in accordance with generally accepted accounting principles,
have been condensed or omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that
these condensed financial statements be read in connection with the
financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K. This report reflects all adjust-
ments of a normal recurring nature which are, in the opinion of
management, necessary for a fair statement of the results for the
interim period.
2
<PAGE> 3
PAUL MUELLER COMPANY AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Sept. 30 Dec. 31
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments, at cost $ 3,324 $ 2,491
Available-for-sale investments, at market 15,873 12,063
Accounts and notes receivable, less reserve
of $716 at September 30, 1996, and $532
at December 31, 1995, for doubtful accounts 13,233 13,034
Inventories (Note 2) -
Raw materials and components $ 4,035 $ 6,891
Work-in-process 2,071 2,066
Finished goods 2,017 2,241
-------- --------
$ 8,123 $ 11,198
Prepayments 650 617
-------- --------
Total Current Assets $ 41,203 $ 39,403
Other Assets 3,705 3,845
Property, Plant & Equipment, at cost $ 46,594 $ 45,313
Less - Accumulated depreciation 35,373 33,882
-------- --------
$ 11,221 $ 11,431
-------- --------
$ 56,129 $ 54,679
======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current maturities of long-term debt $ 3,000 $ 3,000
Accounts payable 2,826 1,961
Accrued expenses 6,420 4,796
Advance billings 4,400 6,139
-------- --------
Total Current Liabilities $ 16,646 $ 15,896
Other Long-Term Liabilities (Note 4) 1,028 1,218
Contingencies (Note 5)
Shareholders' Investment:
Common Stock, par value $1 per share --
Authorized 20,000,000 shares --
Issued 1,342,325 shares $ 1,342 $ 1,342
Preferred Stock, par value $1 per share --
Authorized 1,000,000 shares --
No shares issued - -
Paid-in surplus 4,307 4,307
Retained earnings 35,360 34,470
-------- --------
$ 41,009 $ 40,119
Less - Treasury stock, 174,304 shares at
September 30, 1996, and December 31, 1995,
at cost 2,554 2,554
-------- --------
$ 38,455 $ 37,565
-------- --------
$ 56,129 $ 54,679
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE> 4
PAUL MUELLER COMPANY AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $ 21,187 $ 21,186 $ 61,403 $ 59,166
Cost of Sales 15,761 16,882 46,885 45,041
-------- -------- -------- --------
Gross Profit $ 5,426 $ 4,304 $ 14,518 $ 14,125
Selling, General and
Administrative Expenses 3,919 3,978 11,417 12,156
-------- -------- -------- --------
Operating Income $ 1,507 $ 326 $ 3,101 $ 1,969
Other Income (Expense):
Interest income $ 195 $ 135 $ 523 $ 430
Interest expense (Note 4) (30) (31) (87) (96)
Other, net 69 140 335 410
-------- -------- -------- --------
$ 234 $ 244 $ 771 $ 744
-------- -------- -------- --------
Income from Operations before
Provision for Income Taxes $ 1,741 $ 570 $ 3,872 $ 2,713
Provision for Income Taxes 570 151 1,230 801
-------- -------- -------- --------
Net Income $ 1,171 $ 419 $ 2,642 $ 1,912
======== ======== ======== ========
Earnings per
Common Share (Note 3) $ 1.00 $ 0.36 $ 2.26 $ 1.64
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
PAUL MUELLER COMPANY AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
--------------------
1996 1995
-------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 2,642 $ 1,912
Adjustments to reconcile net income to net
cash provided by operating activities:
Bad debt expense 211 37
Depreciation and amortization 1,896 1,852
(Gain) on sales of fixed assets (2) (5)
Changes in assets and liabilities -
(Increase) decrease in interest receivable (60) 139
(Increase) decrease in accounts
and notes receivable (410) 542
Decrease (increase) in inventory 3,075 (6,730)
(Increase) in prepayments (33) (203)
Decrease in other assets 23 149
Increase in accounts payable 865 1,216
(Increase) decrease in accrued expenses 1,624 (176)
(Decrease) increase in advance billings (1,739) 2,399
(Decrease) in other liabilities (190) (166)
-------- --------
Net Cash Provided by Operations $ 7,902 $ 966
Cash Flows Provided (Requirements) from
Investing Activities:
Proceeds from maturities of investments $ 15,590 $ 18,135
Purchases of investments (19,340) (15,575)
Proceeds from sale of equipment 2 8
Additions to property, plant and equipment (1,569) (1,491)
-------- --------
Net Cash (Required) Provided from
Investing Activities $ (5,317) $ 1,077
Cash Flows (Requirements) from
Financing Activities:
Dividends paid $ (1,752) $ (1,752)
-------- --------
Net Cash (Required) by
Financing Activities $ (1,752) $ (1,752)
-------- --------
Net Increase in Cash $ 833 $ 291
Cash at Beginning of Period 2,491 1,874
-------- --------
Cash at End of Period $ 3,324 $ 2,165
======== ========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 89 $ 90
Income taxes 756 1,260
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
PAUL MUELLER COMPANY AND SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(Unaudited)
1. The condensed financial statements include the accounts of Paul
Mueller Company (Company) and its wholly owned subsidiary, Mueller
International Sales Corporation. A summary of the significant
accounting policies is included in Note 1 to the consolidated
financial statements included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
2. Inventory is recorded at the lower of cost, last-in, first-out
(LIFO), or market.
Because the inventory determination under the LIFO method can only
be made at the end of each fiscal year based on the inventory
levels and costs at that time, interim LIFO determinations,
including those at September 30, 1996, must necessarily be based on
management's estimate of expected year-end inventory levels and
costs. Since estimates of future inventory levels and prices are
subject to many factors beyond the control of management, interim
financial results are subject to final year-end LIFO inventory
amounts. Accordingly, inventory components reported for the period
ending September 30, 1996, are estimates based on management's
knowledge of the Company's production cycle, the costs associated
with this cycle and the sales and purchasing volume of the Company.
3. The net income per share of Common Stock has been computed on the
basis of weighted average shares outstanding: 1,168,021 for
periods ended September 30, 1996, and September 30, 1995.
4. In 1987, the Company purchased an additional manufacturing facility
in Osceola, Iowa, by assuming a $3,000,000 Floating Rate Weekly
Demand Industrial Development Bond issue due December 1, 1996. The
assets acquired included land, a building, equipment and inventory.
The weighted average interest rate on a year-to-date basis as of
September 30, 1996, and September 30, 1995, was 3.6% and 4.0%,
respectively.
5. The Company currently employs about 900 people, of which approxi-
mately 400 are represented by the Sheet Metal Workers Union. The
International Union called a strike beginning July 25, 1995, and
approximately 30 employees are currently participating.
The Company is self-insured for healthcare, workers' compensation,
general liability and products liability claims, subject to speci-
fic retention levels.
6
<PAGE> 7
PAUL MUELLER COMPANY AND SUBSIDIARY
MANAGEMENT'S ANALYSIS OF OPERATING RESULTS
AND FINANCIAL CONDITION
OPERATING RESULTS
The following is Management's discussion and analysis of the signi-
ficant factors that have affected the Companies' earnings during the
periods included in the accompanying Consolidated Condensed Statements
of Income.
Net sales for the third quarter ended September 30, 1996, were
$21,187,000 versus $21,186,000 for the third quarter of 1995.
Although the level of sales was comparable between years, there was
a change in the mix, whereby Dairy Farm Equipment sales increased
by $906,000, and sales of Processing Equipment declined by $905,000.
The higher level of Dairy Farm Equipment sales was primarily achieved
in the domestic market and was related to escalating milk prices,
which reached an all-time high during the third quarter of 1996,
with some moderation in feed costs. Sales of Processing Equipment
declined primarily as a result of lower shipments of Temp-Plate
Heat Transfer Surface and Pure Water Equipment, as order entry was
affected by soft market conditions.
The gross profit rate for the third quarter of 1996 was 25.6% versus
20.3% for the third quarter of 1995. The improvement was related to
a higher overall gross margin, improved manufacturing burden absorp-
tion and a lower LIFO provision. The overall margin was affected
favorably, as Processing Equipment margins increased due to improved
shop efficiency and better quality orders. Manufacturing burden
absorption improved during the third quarter principally due to an
increase in plant labor efficiency. The LIFO provision was lower in
the third quarter of 1996 compared to the third quarter of 1995 due
to lower stainless steel prices and inventory levels.
Selling, general and administrative expenses were comparable for the
third quarter of 1996 compared to the third quarter of 1995.
Interest income was higher in the third quarter of 1996, as the level
of investable funds was greater than during the third quarter of 1995
in spite of the fact that interest rates were lower. Other income
was lower for the third quarter of 1996 as the results from the
trucking operation and royalty income declined from the third quarter
of 1995.
The effective tax rate for the three months ended September 30, 1996
and 1995, varied from the statutory rate (34%) primarily as a result
of tax-exempt interest and the lower effective tax rate for the
Foreign Sales Corporation (FSC).
For the nine months ended September 30, 1996, shipments were
$61,403,000 versus $59,166,000 for the first nine months of 1995.
The increase in shipments was solely related to Processing Equipment,
as Dairy Farm Equipment sales declined by $771,000. The increase in
Processing Equipment sales related to increased shipments of Food and
Pharmaceutical Processing Equipment, Pure Water Equipment and Plate
Heat Exchangers. The improvement in sales of Processing Equipment
was directly related to the higher backlog at December 31, 1995, as
compared to December 31, 1994. The effects of the strike were signi-
ficant during the fourth quarter of 1995 when capacity was reduced
and the backlog expanded. The decline in Dairy Farm Equipment sales
was primarily attributable to lower export sales. Export sales of
Dairy Farm Equipment continue to be adversely affected by the eco-
nomic problems in Mexico and Argentina.
7
<PAGE> 8
The gross profit rate for the first nine months of 1996 was 23.6%
versus 23.9% for the first nine months of 1995. The 1996 year-to-
date performance was adversely affected during the first six months
when over 140 people were participating in the strike. The lower
gross profit rate for 1996 was also due to lower overall gross mar-
gins, as sales of Food and Pharmaceutical Equipment (the product line
most affected by the strike) were proportionally higher during 1996
compared to 1995, and historically Food and Pharmaceutical Equipment
has had lower margins. Although manufacturing burden was higher for
the first nine months of 1996 compared to 1995, the increase was more
than offset by a reduced provision for LIFO in 1996, as stainless
steel prices have decreased and inventory levels are lower.
Selling, general and administrative expenses were lower by $739,000
for the first nine months of 1996 versus the first nine months of
1995. The reduction was due to lower expenditures for manufacturers'
representative's commissions, advertising, trade shows, marketing
support, and the receipt of a $312,000 group life insurance premium
refund (of which $234,000 was credited to general and administrative
expense).
The increase in interest income for the first nine months of 1996
compared to the first nine months of 1995 is attributable to a higher
level of investable funds, even though interest rates were lower.
The decrease in other income in 1996 as compared to 1995 was due to a
decline in the results from the trucking operation, royalty income,
and miscellaneous income.
The effective tax rate for the nine months ended September 30, 1996
and 1995, varied from the statutory rate (34%) primarily as a result
of tax-exempt interest and the lower effective tax rate for the FSC.
As previously reported, the labor contract with the Sheet Metal
Workers Union (which covers a portion of the employees at the Spring-
field, Missouri, plant) expired on June 11, 1994. Negotiations with
union representatives continued until an impasse was reached, and the
Company implemented specific provisions of its final offer effective
September 19, 1994. In November 1994, the Regional Director of the
National Labor Relations Board (NLRB) also concluded that a lawful
impasse had been reached in negotiations prior to the Company's imple-
mentation of its offer.
However, on December 22, 1994, the Regional Director of the NLRB
issued an unfair labor practice complaint against the Company for
refusing to supply information to union representatives about the
personal health insurance claims of individual employees and their
dependents and reversed his previous decision regarding the implemen-
tation of changes in wages and benefits. A hearing on these and
other unfair labor practice issues was held during August 1996 by an
administrative law judge of the NLRB, and a decision is expected in
early 1997. However, a final determination of all the charges may
take up to two years, but management believes, based on an evaluation
by counsel, that there is no significant financial exposure to the
Company.
The Company currently employs about 900 people, of which approximately
400 at the Springfield, Missouri, facility are represented by the
Sheet Metal Workers Union. The International Union called a strike
beginning on July 25, 1995, and currently there are approximately 30
employees participating. No action has been taken by the Union to
prevent nonstriking employees from working.
The Company has implemented the provisions of its revised and final
offer effective April 1, 1996, which remains open for the Union's
acceptance, and no further negotiations are scheduled.
The Company has facilities located in Springfield, Missouri, and
Osceola, Iowa. There are approximately 800 employees assigned to the
Springfield facility, and there are an additional 100 employees at the
Osceola facility (none of which are represented by a labor union).
8
<PAGE> 9
Looking to the balance of 1996, there are factors that could affect
the results of operations. If there is an expanded employee parti-
cipation for an extended period of time in the strike mentioned
above, this could have an adverse effect on the level of production
and the Company's ability to secure orders. With respect to the
sales outlook for domestic Dairy Farm Equipment, milk prices paid to
farmers are expected to decline over the coming months, which could
have an adverse effect on order entry and shipments. The economic
problems in Mexico and Argentina continue to have an adverse effect
on the level of export activities in those markets.
The backlog of sales at September 30, 1996, was $19,500,000 compared
to $27,200,000 at September 30, 1995. The September 30, 1996, back-
log represents orders that will be completed and shipped over the
next twelve months.
FINANCIAL CONDITION
The consolidated financial condition and the liquidity of the Company
at September 30, 1996, have not changed significantly since December
31, 1995. There are no significant commitments for capital expendi-
tures at September 30, 1996.
9
<PAGE> 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Sequentially
Exhibit Numbered
Number Exhibit Page
------ ------------------------------------- --------
(10) Amendment Number Four to the Paul
Mueller Company Contract Employees
Retirement Plan (amended and restated
as of January 1, 1992), executed
July 26, 1996........................ 11
(27) Financial Data Schedule.............. 16
b. Reports on Form 8-K -- There were no reports on Form 8-K
filed for the three months ended September 30, 1996.
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.
PAUL MUELLER COMPANY
DATE: November 8, 1996 /S/ DONALD E. GOLIK
---------------- ------------------------------------------
Donald E. Golik, Senior Vice President and
Chief Financial Officer
10
AMENDMENT NUMBER FOUR
TO THE
PAUL MUELLER COMPANY
CONTRACT EMPLOYEES RETIREMENT PLAN
WHEREAS, Paul Mueller Company (the "Company") adopted the Paul
Mueller Company Contract Employees Retirement Plan (the "Plan") effec-
tive July 1, 1965; and
WHEREAS, the Company amended and restated the Plan effective
January 1, 1992; and
WHEREAS, the Company retained the right to amend the Plan pursuant
to Section 9.01 hereof;
NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended as
follows:
1. The definition of "Actuarial Equivalent" in Section 1.02 is
amended to read as follows:
ACTUARIAL EQUIVALENT means equality in the value of the
aggregate amounts expected to be received under different
forms of payment based on the rates determined below. The
amount of each payment under an optional form shall be
determined by multiplying the amount payable on the Normal
Form by the ratio of (a) the applicable rate for the Normal
Form, to (b) the applicable rate for the optional form at the
time benefits are determined. The benefit from a single sum
on an optional form shall be the Actuarial Equivalent of the
benefit payable on the Normal Form based on the applicable
rates. These applicable rates will be determined using the
rates of interest and mortality (male table) used (as of the
first day of the calendar quarter preceding the calendar
quarter in which occurs the Annuity Starting Date) by the
Pension Benefit Guaranty Corporation for a trusteed single-
employer plan to value a benefit upon termination of an
insufficient trusteed single-employer plan. In the event the
basis for determining Actuarial Equivalent is changed,
Actuarial Equivalent of the Participant's Accrued Benefit on
and after the date of the change shall be determined as the
greater of (a) the Actuarial Equivalent of the Accrued Benefit
as of the date of the change computed on the old basis, or (b)
the Actuarial Equivalent of the total Accrued Benefit computed
on the new basis.
2. The definition of "Present Value" in Section 1.02 is amended
to read as follows:
PRESENT VALUE means the current value of a benefit payable
on a specified form and on a specified date. The method of
determining Present Value is based upon assumed rates of
mortality and the rates of interest used by the Pension
Benefit Guaranty Corporation for a trusteed single-employer
plan to value a benefit upon termination of an insufficient
trusteed single-employer plan. Such rates shall be determined
without regard to sex and shall be those rates on the first
day of the calendar quarter preceding the calendar quarter in
which occurs the Annuity Starting Date. In the event the
basis for determining Present Value is changed, the Present
Value of the Participant's Accrued Benefit on and after the
date of the change shall be determined as the greater of
(a) the Present Value of the Accrued Benefit as of the date of
the change computed on the old basis, or (b) the Present Value
of the total Accrued Benefit computed on the new basis.
3. A new Section 3.04 is added as follows:
SECTION 3.04--LIQUIDITY SHORTFALL LIMITATIONS.
If the Plan has a liquidity shortfall within the meaning
of Section 412(m) of the Internal Revenue Code, the Plan shall
not pay benefits in excess of the amounts payable as a monthly
Accrued Benefit, plus any applicable Social Security supple-
ments, to a Participant or Beneficiary the payment of whose
benefits commences during the period of the liquidity short-
fall. Additional restrictions shall apply to a period of a
liquidity shortfall to the extent required by section
401(a)(32) of the Internal Revenue Code and Section 206(d)
of ERISA.
4. Section 4.01 is amended to read as follows:
SECTION 4.01--ACCRUED BENEFIT.
An Active Participant's monthly Accrued Benefit as of any
date will be calculated according to subsections (a), (b) and
(c) below:
(a) If a Participant was an Active Participant on April
1, 1996, or first became an Active Participant after
that date, his monthly Accrued Benefit as of any date
will be an amount equal to $25.00 multiplied by his
Accrual Service (not to exceed 35 years) on such
date.
(b) If a Participant was not an Active Participant on
April 1, 1996, and did not first become an Active
Participant after that date, but was an Active Par-
ticipant on September 19, 1994, or first became an
Active Participant after that date, his monthly
Accrued Benefit as of any date will be determined
as follows:
(1) An amount equal to:
(i) Before January 1, 1996, $21.00; and
(ii) On and after January 1, 1996, $25.00.
(2) Multiplied by his Accrual Service for the appli-
cable period(s) specified in (1) above; pro-
vided, however, that:
(i) Regardless of when the service was ren-
dered, no more than 35 years of Accrual
Service shall be counted; and
(ii) In the event that the 35 year limitation
applies to a Participant's Accrual Ser-
vice, his Accrued Benefit shall be calcu-
lated by counting last years first.
(c) If a Participant was not an Active Participant on
September 19, 1994, and did not first become an
Active Participant after that date, his monthly
Accrued Benefit as of any date will be determined as
follows:
(1) An amount equal to:
(i) Before January 1, 1981, $12.00;
(ii) On and after January 1, 1981, and before
January 1, 1984, $14.00;
(iii) On and after January 1, 1984, and before
January 1, 1994, $20.00;
(iv) On and after January 1, 1994, and before
January 1, 1996, $21.00; and
(v) On and after January 1, 1996, $25.00.
(2) Multiplied by his Accrual Service for the appli-
cable period(s) specified in (1) above; pro-
vided, however, that:
(i) Regardless of when the service was ren-
dered, no more than 35 years of Accrual
Service shall be counted;
(ii) For service prior to January 1, 1994, no
more than 30 years of Accrual Service
shall be counted; and
(iii) For service prior to January 1, 1985, no
more than 25 years of Accrual Service
shall be counted.
In the event that the 25, 30 or 35 year limita-
tion applies to a Participant's Accrual Service,
his Accrued Benefit shall be calculated by
counting last years first.
5. Section 4.03 is amended by deleting the existing Section in
its entirety and substituting the following new Section in its place:
SECTION 4.03--BENEFIT LIMITATION.
In no event shall the monthly retirement benefit payable
under the Plan exceed the limitations applicable to the Plan
under Section 415 of the Internal Revenue Code and the regu-
lations promulgated thereunder. If the monthly retirement
benefit payable under any provision of the Plan would exceed
such limitations, then notwithstanding any other provision of
the Plan, such monthly retirement benefit shall be reduced to
the extent necessary to ensure that such limitations are not
exceeded. If a Member's monthly retirement benefit payable
under this Plan, in combination with the annual additions
credited to him under any defined contribution plan maintained
by the Employer, would exceed such limitations, then the
monthly retirement benefit payable under this Plan shall be
reduced to the extent necessary to ensure that such limi-
tations are not exceeded. For purposes of this Section,
"Employer" means Paul Mueller Company and all employers
required, pursuant to Section 415 of the Internal Revenue
Code, to be aggregated therewith under the rules of Sections
414(b) or (c) of the Code.
6. The first sentence of Section 6.03(b) is deleted in its en-
tirety and the following is substituted in its place:
(b) The optional forms of retirement benefit shall be the
following: single life annuities with a certain period
of three years; survivorship life annuities with survi-
vorship percentages of 50 or 100; and a single lump sum,
as provided in Section 6.03(i).
7. A new Section 6.03(i) is added as follows:
(i) Cash Option.
Where the lump sum Actuarial Equivalent of a Partici-
pant's vested Accrued Benefit is not greater than
$10,000, he may elect with the consent of his spouse to
receive an immediate lump sum cash settlement in lieu of
the monthly payments of his vested Accrued Benefit which
he would otherwise be entitled to receive. The Parti-
cipant may elect this cash settlement to be paid at any
time after termination of employment but not later than
his Normal or Late Retirement Date. This Cash Option may
also be elected by a Participant who has not terminated
employment but Accrued Pension must be distributed pur-
suant to the required distribution provisions of Section
6.03.
The Cash Option will be invoked without the Participant's
consent if the lump sum Actuarial Equivalent of the Par-
ticipant's vested Accrued Benefit is less than $1,750, as
described in the SMALL AMOUNTS SECTION of ARTICLE 9.
The changes made by numbered paragraphs 1, 2, 6 and 7 shall be
effective for Annuity Starting Dates on or after April 1, 1996. The
changes made by numbered paragraphs 3 and 5 shall be effective for
Plan Years beginning on or after January 1, 1995. The changes made by
numbered paragraph 4 shall be effective as provided therein.
IN WITNESS WHEREOF, PAUL MUELLER COMPANY has caused this instru-
ment to be duly executed this 26th day of July, 1996.
PAUL MUELLER COMPANY
/S/ DONALD E. GOLIK
_____________________________
Donald E. Golik
Senior Vice President and CFO
Attest:
/S/ RONALD W. GIELOW
____________________________
Ronald W. Gielow
Assistant Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,324
<SECURITIES> 15,873
<RECEIVABLES> 13,949
<ALLOWANCES> 716
<INVENTORY> 8,123
<CURRENT-ASSETS> 41,203
<PP&E> 46,594
<DEPRECIATION> 35,373
<TOTAL-ASSETS> 56,129
<CURRENT-LIABILITIES> 16,646
<BONDS> 161
<COMMON> 1,342
0
0
<OTHER-SE> 39,667
<TOTAL-LIABILITY-AND-EQUITY> 56,129
<SALES> 61,403
<TOTAL-REVENUES> 61,403
<CGS> 46,885
<TOTAL-COSTS> 46,885
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 211
<INTEREST-EXPENSE> 87
<INCOME-PRETAX> 3,872
<INCOME-TAX> 1,230
<INCOME-CONTINUING> 2,642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,642
<EPS-PRIMARY> 2.26
<EPS-DILUTED> 2.26
</TABLE>
