<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
Commission file Number 1-5356
PENN ENGINERRING & MANUFACTURING CORP.
(Exact name of registrant as specified in its charter.)
Delaware 23-0951065
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 1000, Danboro, Pennsylvania 18916
(Address of principal executive offices (Zip Code)
Registrant's telephone number, including area code:
(215) 766-8853
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 practical
date: 1,675,082 shares of Class A common stock, $.01 par value, and
6,935,821 shares of common stock, $.01 par value, outstanding on
November 13, 1998.
<PAGE> 2
<TABLE>
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
PENN ENGINEERING & MANUFACTURING CORP.
CONDENSED CONSOLIDATED BALANCE SSHEETS
<CAPTION>
ASSETS
(Unaudited)
September 30, 1998 December 31, 1997
------------------ -----------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $11,649,780 $6,826,152
Short-term investments 16,083,326 10,844,382
Accounts receivable-trade 29,422,052 27,994,379
Allowance for doubtful accounts (550,000) (550,000)
Inventories 31,363,243 26,678,203
Prepaid expenses 2,456,049 2,130,357
---------- ----------
Total current assets 90,424,450 73,923,473
---------- ----------
PROPERTY
Property, plant & equipment 124,243,365 119,289,752
Less accumulated depreciation 50,675,960 45,392,774
----------- -----------
Property - net 73,567,405 73,896,978
----------- -----------
OTHER ASSETS 3,240,000 3,172,000
----------- -----------
TOTAL $167,231,855 $150,992,451
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $5,188,184 $5,825,920
Dividends payable 947,141 0
Accrued expenses:
Pension & profit sharing 3,128,520 2,522,230
Income taxes 3,091,127 806,392
Payroll & commissions 5,229,403 2,961,321
Other 1,542,929 1,396,289
---------- ----------
Total current liabilities 19,127,304 13,512,152
---------- ----------
ACCRUED PENSION COST 5,451,879 4,330,429
---------- ----------
DEFERRED INCOME TAXES 4,254,743 4,231,374
---------- ----------
STOCKHOLDERS' EQUITY
Class A common stock 17,720 17,720
Common stock 71,955 71,870
Additional paid-in capital 36,072,971 35,877,797
Retained earnings 105,868,929 96,687,693
Accumulated other comprehensive
income (647,491) (1,418,429)
Treasury stock (2,986,155) (2,318,155)
----------- -----------
Total stockholders' equity 138,397,929 128,918,496
----------- -----------
TOTAL $167,231,855 $150,992,451
=========== ===========
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE> 3
<TABLE>
PENN ENGINEERING & MANUFACTURING CORP.
STATEMENTS OF CONDENSED CONSOLIDATED INCOME AND RETAINED EARNINGS
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------------- -------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
NET SALES $43,356,965 $42,531,365 $135,076,501 $123,521,017
COST OF PRODUCTS SOLD 30,065,928 29,414,064 93,253,549 85,657,943
---------- ---------- ----------- -----------
GROSS PROFIT 13,291,037 13,117,301 41,822,952 37,863,074
---------- ---------- ----------- -----------
OTHER EXPENSES:
Selling expenses 4,279,751 4,385,072 13,918,791 13,061,248
General & administrative expenses 3,715,924 3,305,729 10,342,110 9,460,964
---------- ---------- ----------- -----------
7,995,675 7,690,081 24,260,901 22,522,212
---------- ---------- ----------- -----------
OPERATING PROFIT 5,295,362 5,426,500 17,562,051 15,340,862
OTHER INCOME - NET 580,933 557,472 1,091,806 1,027,933
---------- ---------- ----------- -----------
INCOME BEFORE INCOME TAXES 5,876,295 5,983,972 18,653,857 16,368,795
PROVISION FOR INCOME TAXES 1,995,000 2,156,000 6,625,000 6,006,000
---------- ---------- ----------- -----------
NET INCOME 3,881,295 3,827,972 12,028,857 10,362,795
RETAINED EARNINGS - BEGINNING 102,934,834 90,620,125 96,687,693 85,822,011
CASH DIVIDEND (947,200) (948,610) (2,847,621) (2,685,319)
----------- ---------- ---------- ----------
RETAINED EARNINGS - ENDING $105,868,929 $93,499,487 $105,868,929 $93,499,487
=========== ========== =========== ==========
INCOME PER SHARE-BASIC AND DILUTED $0.45 $0.44 $1.39 $1.19
=========== ========== =========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 8,627,599 8,685,190 8,634,755 8,705,183
CASH DIVIDEND PER SHARE $0.11 $0.10 $0.22 $0.20
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE> 4
<TABLE>
PENN ENGINEERING & MANUFACTURING CORP.
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
<CAPTION>
NINE MONTHS ENDED
-------------------------------------
September 30, 1998 September 30, 1997
(Unaudited) (Unaudited)
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $12,028,857 $10,362,795
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 5,904,695 4,708,515
Gain on disposal of property (47,284) (6,171)
Loss (gain) on disposal of investments 4,070 (7,662)
Changes in assets and liabilities:
(Increase) decrease in receivables (1,168,449) 3,137,098
Increase in refundable income taxes 0 (46,526)
(Increase) decrease in inventories (4,412,156) 811,061
(Increase) decrease in prepaid expenses (313,264) 204,059
Decrease in deferred income taxes-current 0 29,039
Increase in other assets (68,000) (40,000)
(Decrease) increase in accounts payable (669,471) 655,024
Increase in accrued expenses 5,310,008 1,762,701
Increase (decrease) in accrued pension
cost 1,121,450 (462,428)
Increase in deferred income taxes -
noncurrent 23,369 909,326
--------- ---------
Net cash provided by operating
activities 17,713,825 22,016,831
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (5,712,259) (16,161,540)
Additoins to held-to-maturity
investments (18,361,608) (23,589,128)
Proceeds from disposal of available-
for-sale investments 101,368 447,865
Proceeds from disposal of held-to-
maturity investments 13,062,771 22,277,321
Proceeds from disposal of property 221,328 164,097
---------- ----------
Net cash used in investing activities(10,688,400) (16,861,385)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (1,900,480) (1,736,710)
Issuance of common stock 195,259 167,115
Acquisition of treasury stock (668,000) (1,366,198)
--------- ---------
Net cash used in financing activities (2,373,221) (2,935,793)
--------- ---------
Effect of exchange rate changes on cash 171,424 (285,171)
--------- ---------
Net increase in cash and cash equivalents 4,823,628 1,934,482
Cash and cash equivalents at
beginning of year 6,826,152 4,208,339
--------- ---------
Cash and cash equivalents at end of
period $11,649,780 $6,142,821
========== =========
SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the year for:
Income taxes $4,265,817 $5,086,490
Interest 0 1,380
See Notes to Condensed Consolidated Financial Statements
</TABLE>
<PAGE> 5
PENN ENGINEERING & MANUFACTURING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1998
Note 1. Condensed Consolidated Financial Statements (Unaudited)
- ---------------------------------------------------------------
The accompanying interim financial statements should be read in conjunction
with the annual financial statements and notes thereto included in the
Company's Annual Report for the year ended December 31, 1997. The information
contained in this report is unaudited and subject to year-end audit and
adjustment. In the opinion of management, all adjustments (which include only
normal recurring adjustments) have been made which are necessary for a fair
presentation of the Company's consolidated financial position at September 30,
1998 and 1997 and the consolidated statements of income and cash flows for the
nine-month periods then ended. The results of operations for the nine months
ended September 30, 1998 are not necessarily indicative of the results of
operations to be expected for the year ending December 31, 1998.
Note 2. Inventories
- -------------------
Substantially all of the Company's domestic fastener inventories are priced
on the lower of last-in, first-out (LIFO) cost or market method. The remainder
of the inventories are priced on the first-in, first-out (FIFO) method, at the
lower of cost or market.
Inventories are as follows:
(Unaudited)
September 30, 1998 December 31, 1997
------------------ -----------------
Raw material $4,844,908 $4,347,554
Tooling 3,500,957 3,391,208
Work-in-process 10,464,630 8,073,292
Finished goods 12,552,748 10,866,149
---------- ----------
TOTAL $31,363,243 $26,678,203
========== ==========
If the FIFO method of inventory valuation had been used by the Company for
all inventories, inventories would have been $9,004,119 and $8,704,119 higher
than reported at September 30, 1998 and December 31, 1997, respectively, and
net income would have been $194,000 and $454,000 higher than reported for the
nine months ended September 30, 1998 and 1997, respectively. Included in other
assets is long-term tooling inventory totaling $3,240,000 and $3,172,000 at
September 30, 1998 and December 31, 1997, respectively.
Note 3. Comprehensive Income
- ----------------------------
As of January 1, 1998 the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income". Statement No. 130
establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this Statement had no impact on
the Company's net income or stockholders' equity. Statement No. 130 requires
unrealized gains or losses on the Company's available-for-sale securities and
foreign currency translation adjustments, which prior to adoption were
reported separately in stockholders' equity, to be included in comprehensive
income. Prior year financial statements have been reclassified to conform to
the requirements of Statement No. 130.
During the nine months ended September 30, 1998 and 1997, total
comprehensive income amounted to $12,799,796 and $8,908,330 respectively.
<PAGE> 6
PENN ENGINEERING & MANUFACTURING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
September 30, 1998
Note 4. Accounting Changes
- --------------------------
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities", which
is required to be adopted in years beginning after June 15, 1999. The
Statement will require the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on the nature of
the hedge, changes in fair value of the derivative will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet determined what the effect of Statement No. 133 will
be on the earnings and financial position of the Company.
Note 5. Reclassifications
- -------------------------
Certain reclassifications have been made to prior year amounts and balances
to conform with the 1998 presentation.
Note 6. Use of Estimates
- ------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PENN ENGINEERING & MANUFACTURING CORP.
September 30, 1998
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Quarter Ended September 30, 1998 vs. Quarter Ended September 30, 1997
- ---------------------------------------------------------------------
Consolidated net sales for the quarter ended September 30, 1998 were $43.4
million, versus $42.5 million for the quarter ended September 30, 1997, a 2.1%
increase. Net sales to customers outside the United States for the quarter
ended September 30, 1998 were $14.7 million, versus $11.4 million for the
quarter ended September 30, 1997, a 28.9% increase. Net sales for the fastener
operation for the quarter ended September 30, 1998 were $36.0 million, versus
$34.4 million for the quarter ended September 30, 1997, a 4.6% increase. Motor
net sales were $7.4 million for the quarter ended September 30, 1998, versus
$8.1 million for the quarter ended September 30, 1997, an 8.6% decrease.
The number of fastener units sold to independent customers increased
approximately 5.4% in the third quarter of 1998 compared to the third quarter
of 1997. The number of fastener units sold within North America decreased
approximately 4.0% in the third quarter of 1998 compared to the third quarter
of 1997, and represented approximately 66.5% of total fasteners sold in the
third quarter of 1998. This decrease can be attributed to a softening in
demand from personal computer manufacturers who have extended the release
dates for proposed new product offerings by about two to three quarters and
have shifted some manufacturing overseas. The number of fastener units sold
into Europe increased approximately 22.4% in the third quarter of 1998
compared to the third quarter of 1997 and represented approximately 25.0% of
total fasteners sold in the third quarter of 1998. The increase in the
European market is a direct result of the continued strong European economy.
The number of fastener units sold into the Asia-Pacific region increased
approximately 62.7% in the third quarter of 1998 compared to the third quarter
of 1997. The larger sheet metal fabricators in this area are running at full
capacity to take advantage of the currency devaluation in this region which
has allowed the major computer manufacturers to lower the selling price for
products shipped back to the United States for sale. The number of motors sold
decreased 13.5% in the third quarter of 1998 compared to the third quarter of
1997. All markets served by Pittman have shown a decrease from the strong
demand in the third quarter of 1997.
The average selling price for fasteners shipped in the third quarter of 1998
decreased approximately 4.3% from $63.48 per thousand fasteners sold in the
third quarter of 1997 to $60.76 per thousand fasteners sold in the third
quarter of 1998. This decrease is mainly due to a change in product mix
especially with the large amount of lower margin automotive product being
exported. The average selling price of Pittman motors increased approximately
5.2% from the third quarter of 1997 to the third quarter of 1998.
Consolidated gross profit for the third quarter of 1998 was $13.3 million,
versus $13.1 million for the third quarter of 1997, a 1.5% increase. Fastener
gross profit increased 4.5% in the third quarter of 1998 compared to the third
quarter of 1997 while motor gross profit decreased 15.1% from the third
quarter of 1997 to the third quarter of 1998.
Consolidated selling, general, and administrative expenses ("SG&A") for the
third quarter of 1998 were $8.0 million, versus $7.7 million for the third
quarter of 1997, a 3.9% increase. This increase was mainly caused by
increased advertising expenses, technology related expenses, and research and
development expenses.
Consolidated net income for the third quarter of 1998 was $3.9 million,
versus $3.8 million for the third quarter of 1997. The effective tax rate
decreased from 36.0% in the third quarter of 1997 to 33.9% in the third
quarter of 1998 due to tax saving strategies implemented during the prior
year.
<PAGE> 8
PENN ENGINEERING & MANUFACTURING CORP.
September 30, 1998
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Nine Months Ended September 30, 1998 vs. Nine Months Ended September 30, 1997
- -----------------------------------------------------------------------------
Consolidated net sales for the nine months ended September 30, 1998 were
$135.1 million, versus $123.5 million for the nine months ended September 30,
1997, a 9.4% increase. Net sales to customers outside the United States for
the nine months ended September 30, 1998 were $40.5 million, versus $33.5
million for the nine months ended September 30, 1997, a 20.9% increase. Net
sales for the fastener operation for the nine months ended September 30, 1998
were $110.4 million, versus $100.6 million for the nine months ended September
30, 1997, a 9.7% increase. Motor sales were $24.6 million for the nine months
ended September 30, 1998, versus $22.9 million for the nine months ended
September 30, 1997, a 7.4% increase.
The number of fastener units sold to independent customers increased
approximately 13.2% in the first nine months of 1998 compared to the first
nine months of 1997. The number of fastener units shipped within North America
increased approximately 9.6% in the first nine months of 1998 compared to the
first nine months of 1997, and represented approximately 69.1% of total
fasteners shipped in the first nine months of 1998. Distributor shipments to
end customers were strong in the first half of 1998, however shipments have
weakened in the third quarter as major computer manufacturers shift more of
their production off-shore. The number of fastener units sold into Europe
increased approximately 24.8% in the first nine months of 1998 compared to the
first nine months of 1997 and represented approximately 25.2% of total
fasteners sold in the first nine months of 1998. This increase is mainly due
to the strong European economy especially in the automotive sector. The number
of fastener units sold into the Asia-Pacific region increased approximately
11.8% in the first nine months of 1998 compared to the first nine months of
1997 as a result of the strong third quarter. The number of motors sold
increased 5.8% in the first nine months of 1998 compared to the first nine
months of 1997 as demand from the semiconductor equipment manufacturing market
and the data storage and retrieval market which strengthened during the latter
half of 1997 continued into the first half of 1998.
The average selling price of fasteners shipped in the first nine months of
1998 decreased approximately 3.3% from $64.16 per thousand fasteners sold in
the first nine months of 1997 to $62.07 per thousand fasteners sold in the
first nine months of 1998. This decrease is mainly due to a change in product
mix toward lower margin fasteners as inventory levels at distributors are
once again replenished. The average selling price of Pittman motors increased
from $40.98 per motor in the first nine months of 1997 to $41.65 per motor in
the first nine months of 1998.
Consolidated gross profit for the first nine months of 1998 was $41.8
million, versus $37.9 million for the first nine months of 1997, a 10.3%
increase. Fastener gross profit increased 18.4% in the first nine months of
1998 compared to the first nine months of 1997 as a result of increased sales
and productivity improvements. Motor gross profit increased 3.3% in the first
nine months of 1998 compared to the first nine months of 1997.
Consolidated SG&A for the first nine months of 1998 were $24.3 million,
versus $22.5 million for the first nine months of 1997, an 8.0% increase.
Major areas showing increases were advertising expenses, technology related
expenses, and employee recruiting expenses. As a percent of sales, however,
SG&A decreased from 18.2% in the first nine months of 1997 to 17.9% in the
first nine months of 1998.
Consolidated net income for the first nine months of 1998 was $12.0 million,
versus $10.4 million for the first nine months of 1997. Other income increased
mainly due to higher investment income as a result of the increassed amount
of short-term investments.
<PAGE> 9
PENN ENGINEERING & MANUFACTURING CORP.
September 30, 1998
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operations totaled $17.7 million for the nine months
ended September 30, 1998. These funds are being temporarily invested in
anticipation of increased capital spending and working capital needs. Short-
term investments increased 48.3% from $10.8 million at December 31, 1997 to
$16.1 million at September 30, 1998. Accordingly, the Company anticipates that
its existing capital resources and cash flow generated from future operations
will enable it to maintain its current level of operations and its planned
growth for the foreseeable future.
Year 2000 Issues
- ----------------
Many companies are currently in the process of determining what corrective
measures, if any, need to be taken in order to ensure that their computer
systems will not be disrupted by the Year 2000 ("Y2K") problem. The Y2K
problem relates to many of the computer systems in use today that have codes
programmed to read dates as two digits. If the fields containing the two
digits are not corrected, these programs will not function properly and could
result in the creation of erroneous information or computer failures.
The Company expects to have all critical systems Y2K compliant by the close
of 1998. The scope of the Company's effort includes (1) information technology
("IT") such as software and hardware; (2) non-IT systems or embedded
technology such as microcontrollers contained in various manufacturing and lab
equipment, environmental and safety systems, and facilities and utilities; and
(3) readiness of key third parties, including suppliers and customers. In
connection with its Y2K program, the Company's mainframe computer system has
been updated so that it can be reasonably assumed that system functions
relating to operations, accounting, processing, order entry, inventory,
production, shipping, and billing are Y2K compliant. Other areas have been
identified, including a few overseas systems, where a Y2K compliance program
has been implemented, which the Company expects will be completed during 1998.
The Company retained the services of an independent company to review and
catalogue it IT and non-IT systems to determine the remaining tasks of
complying with Y2K. Their efforts identified 357 items of which 311 were
classified as unknown while 46 were found to be non-compliant. It is expected
that all items will be cleared by December 31, 1998, except for internal
E-mail and internal scheduler software. The latter is expected to be compliant
by March, 1999. The cost of completing compliance will be $200,000 to $300,000
except for E-mail and scheduler. The latter will cost approximately $200,000.
The Company estimates that it has spent approximately $190,000 for the nine
months ended September 30, 1998 on its Y2K projects.
The Company also seeks to address the Y2K activities of its suppliers,
service providers, distributors, and other business relationships. The Company
is and will continue to be in contact with key suppliers and customers to
determine if they are Y2K compliant, and if not when they will be. This
information will be used to determine the extent of any interruption that
could occur in the Company's operations. If third parties do not convert their
systems in a timely manner and in a way that is compatible with the Company's
systems, the Y2K issue could have a material adverse affect on the Company's
operations. The Company believes that its communications with its suppliers
and customers will minimize these risks.
Forward-Looking Statements
- --------------------------
Forward-looking statements are made throughout this Mnagement's Discussion
and Analysis. The Company's results may differ from those in the forward-
looking statements. Forward-looking statements are based on management's
current views and assumptions, and involve risks and uncertainties that
significantly affect expected results. For example, operating results may be
affected by external factors such as: changes in laws and regulations, changes
in accounting standards, fluctuations in the cost and availability of the
supply chain resources, failure of third parties with which the Company has
material business relationships to be Y2K compliant, and foreign economic
conditions, including currency rate fluctuations.
<PAGE> 10
Item 3. Quantitative and Qualitative Disclosure About Market Risk
- -----------------------------------------------------------------
Not Applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
Reference is made to Part 1, Item 3 of the Company's Form 10-K Annual Report
for the year ended December 31, 1997.
Item 2. Changes in Securities
- -----------------------------
Not Applicable.
Item 3. Default upon Senior Securities
- --------------------------------------
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Not Applicable.
Item 5. Other Information
- -------------------------
a). Stockhholder Proposals
Any stockholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the Company's proxy statement for its 1999 Annual
Meeting of Stockholders must deliver such proposal in writing to the Company's
Secretary at the Company's principal executive offices at P.O. Box 1000,
Danboro, Pennsylvania 18916, no later than December 1, 1998.
Pursuant to new amendments to Rule 14a-4(c) of the Securities Exchange
Act of 1934, as amended, if a stockholder who intends to present a proposal at
the 1999 Annual Meeting of Stockholders does not notify the Company of such
proposal on or prior to February 15, 1999, then management proxies will be
allowed to use their discretionary authority to vote on the proposal when the
proposal is raised at the 1999 Annual Meeting of Stockholders, even though
there is no discussion of the proposal in the 1999 proxy statement.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
a). Exhibits
Exhibit No. Description
----------- -----------
3.1 Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3.1 of the Company's Form 10-Q
Quarterly Report for the period ended June 30, 1996.)
3.2 By-laws, as amended (Incorporated by reference to Exhibit
3(ii) of the Company's Form 10-K Annual Report for the
fiscal year ended December 31, 1994.)
27 Financial Statemet Data Schedule
b). Reports on Form 8-K
None.
<PAGE> 11
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PENN ENGINEERING & MANUFACTURING CORP.
Dated: November 13, 1998 By: /s/ Kenneth A. Swanstrom
-----------------------------
Kenneth A. Swanstrom
Chairman/CEO
Dated: November 13, 1998 By: /s/ Mark W. Simon
-----------------------------
Mark W. Simon
Vice-President - Finance
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Sep-30-1998
<CASH> 11,649,780
<SECURITIES> 16,083,326
<RECEIVABLES> 29,422,052
<ALLOWANCES> 550,000
<INVENTORY> 31,363,243
<CURRENT-ASSETS> 90,424,450
<PP&E> 124,243,365
<DEPRECIATION> 50,675,960
<TOTAL-ASSETS> 167,231,855
<CURRENT-LIABILITIES> 19,127,304
<BONDS> 0
<COMMON> 89,675
0
0
<OTHER-SE> 138,308,254
<TOTAL-LIABILITY-AND-EQUITY> 167,231,855
<SALES> 135,076,501
<TOTAL-REVENUES> 136,168,307
<CGS> 93,253,549
<TOTAL-COSTS> 117,514,450
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 18,653,857
<INCOME-TAX> 6,625,000
<INCOME-CONTINUING> 12,028,857
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,028,857
<EPS-PRIMARY> 1.39
<EPS-DILUTED> 1.39
</TABLE>
