<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
- ---
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 1-5356
PENN ENGINEERING & 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)
(215) 766-8853
- ---------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
documents and 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 last practicable
date: 1,707,082 shares of Class A common stock, $.01 par value and
6,935,821 shares of common stock, $.01 par value, outstanding on
August 12, 1998.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
PENN ENGINEERING & MANUFACTURING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
(Unaudited)
June 30, 1998 December 31, 1997
CURRENT ASSETS -------------- ------------------
Cash and cash equivalents $8,926,089 $6,826,152
Short-term investments 15,428,137 10,844,382
Accounts receivable-trade 30,076,293 27,994,379
Allowance for doubtful accounts (550,000) (550,000)
Inventories (Note 2) 29,871,999 26,678,203
Prepaid expenses 1,987,454 2,130,357
---------- ----------
Total current assets 85,739,972 73,923,473
---------- ----------
PROPERTY
Property, plant & equipment 122,423,953 119,289,752
Less accumulated depreciation 48,716,312 45,392,774
---------- ----------
Property - net 73,707,641 73,896,978
---------- ----------
OTHER ASSETS 3,291,000 3,172,000
---------- ----------
TOTAL $162,738,613 $150,992,451
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable-trade $6,521,791 $5,825,920
Dividends payable 950,632
Accrued expenses:
Pension & profit sharing 2,529,551 2,522,230
Income taxes 1,741,439 806,392
Payroll & commissions 4,502,633 2,961,321
Other 1,413,792 1,396,289
---------- ----------
Total current liabilities 17,659,838 13,512,152
---------- ----------
ACCRUED PENSION COST 5,209,362 4,330,429
---------- ----------
DEFERRED INCOME TAXES 4,001,425 4,231,374
---------- ----------
STOCKHOLDERS' EQUITY (See Note 3)
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 102,934,834 96,687,693
Accumulated other comprehensive
income (911,337) (1,418,429)
Treasury stock (2,318,155) (2,318,155)
----------- -----------
Total stockholders' equity 135,867,988 128,918,496
----------- -----------
TOTAL $162,738,613 $150,992,451
============ ============
See Notes to Condensed Consolidated Financial Statements
<PAGE> 3
PENN ENGINEERING & MANUFACTURING CORP.
STATEMENTS OF CONDENSED CONSOLIDATED INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------- ------------------------------
(Unaudited) (Unaudited)
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $44,994,628 $41,973,879 $91,719,535 $80,989,652
COST OF PRODUCTS SOLD 31,056,284 29,007,288 63,187,620 56,243,879
----------- ----------- ----------- -----------
GROSS PROFIT 13,938,344 12,966,591 28,531,915 24,745,773
----------- ----------- ----------- -----------
OTHER EXPENSES:
Selling expenses 4,835,435 4,469,978 9,639,041 8,676,176
General & administrative expenses 3,237,248 3,059,798 6,626,186 6,155,235
----------- ----------- ----------- -----------
8,072,683 7,529,776 16,265,227 14,831,411
----------- ----------- ----------- -----------
OPERATING PROFIT 5,865,661 5,436,815 12,266,688 9,914,362
OTHER INCOME - NET 231,160 297,404 510,874 470,461
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 6,096,821 5,734,219 12,777,562 10,384,823
PROVISION FOR INCOME TAXES 2,215,000 2,174,000 4,630,000 3,850,000
----------- ----------- ----------- -----------
NET INCOME 3,881,821 3,560,219 8,147,562 6,534,823
RETAINED EARNINGS - BEGINNING 100,003,704 87,928,782 96,687,693 85,822,011
CASH DIVIDEND (950,691) (868,876) (1,900,421) (1,736,709)
----------- ----------- ----------- -----------
RETAINED EARNINGS - ENDING $102,934,834 $90,620,125 $102,934,834 $90,620,125
=========== =========== =========== ===========
NET INCOME PER SHARE-BASIC & DILUTED $0.45 $0.41 $0.94 $0.75
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING 8,642,643 8,688,764 8,638,344 8,683,574
CASH DIVIDEND PER SHARE $0.11 $0.10 $0.22 $0.20
=========== =========== =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE> 4
PENN ENGINEERING & MANUFACTURING CORP.
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
SIX MONTHS ENDED
-----------------------------
(Unaudited)
June 30, 1998 June 30, 1997
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $8,147,562 $6,534,823
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,934,438 3,016,237
(Gain)loss on disposal of property (27,034) 55,200
(Gain) on disposal of investments 0 (1,250)
Changes in assets and liabilities:
(Increase)decrease in receivables (1,967,762) 1,715,705
(Increase) in refundable income taxes 0 (418,406)
(Increase)decrease in inventories (3,082,111) 43,578
(Increase)decrease in prepaid expenses, etc. 146,526 (142,807)
Decrease in deferred income taxes-current 0 57,517
(Increase) in other assets (119,000) (60,000)
Increase in accounts payable 682,015 931,703
Increase in accrued expenses 2,500,424 2,306,003
Increase in accrued pension cost 878,933 0
Increase(decrease) in deferred income
taxes- noncurrent (229,949) 578,808
---------- ----------
Net cash provided by operating activities 10,864,042 14,617,111
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions (3,855,963) (12,097,964)
Additions to held-to-maturity investments (12,545,004) (17,361,669)
Proceeds from disposal of held-to-maturity
investments 8,004,809 17,126,797
Proceeds from disposal of property 155,371 47
---------- ----------
Net cash used in investing activities (8,240,787) (12,332,789)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (949,730) (867,834)
Issuance of common stock 195,259 167,115
Acquisition of treasury stock 0 (484)
---------- ----------
Net cash used in financing activities (754,471) (701,203)
---------- ----------
Effect of exchange rate changes on cash 231,153 70,937
----------- ---------
Net increase in cash and cash equivalents 2,099,937 1,654,056
Cash and cash equivalents at
beginning of year 6,826,152 4,208,339
----------- ---------
Cash and cash equivalents at end of year $8,926,089 $5,862,395
=========== ==========
SUPPLEMENTAL CASH FLOW DATA:
Cash paid during the year for:
Income taxes $3,876,863 $3,436,990
Interest 0 1,380
See Notes to Condensed Consolidated Financial Statements
<PAGE> 5
PENN ENGINEERING & MANUFACTURING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 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
June 30, 1998 and 1997 and the consolidated statements of income and cash
flows for the six-month periods then ended. The results of operations for the
six months ended June 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)
June 30, 1998 December 31, 1997
-------------- -----------------
Raw material $5,007,558 $4,347,554
Tooling 3,560,216 3,391,208
Work-in-process 10,491,682 8,073,292
Finished goods 10,812,543 10,866,149
---------- ---------
TOTAL $29,871,999 $26,678,203
========== ==========
If the FIFO method of inventory valuation had been used by the Company for
all inventories, inventories would have been $8,904,119 and $8,704,119 higher
than reported at June 30, 1998 and December 31, 1997, respectively, and net
income would have been $128,000 and $140,000 higher than reported for the
six months ended June 30, 1998 and 1997, respectively. Included in other
assets is long-term tooling inventory totaling $3,291,000 and $3,172,000 at
June 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 six months ended June 30, 1998 and 1997, total comprehensive
income amounted to $8,654,655 and $6,271,122, respectively.
<PAGE> 6
PENN ENGINEERING & MANUFACTURING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 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 derivatives 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.
June 30, 1998
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Quarter Ended June 30, 1998 vs. Quarter Ended June 30, 1997
- -----------------------------------------------------------
Consolidated net sales for the quarter ended June 30, 1998 were $45.0
million, versus $42.0 million for the quarter ended June 30, 1997, a 7.1%
increase. Net sales to customers outside the United States for the quarter
ended June 30, 1998 were $12.8 million, versus $11.2 million for the quarter
ended June 30, 1997, a 14.3% increase. Net sales for the fastener operation
for the quarter ended June 30, 1998 were $36.6 million, versus $34.1 million
for the quarter ended June 30, 1997, a 7.3% increase. Motor sales were $8.4
million for the quarter ended June 30, 1998, versus $7.8 million recorded for
the quarter ended June 30, 1997, a 7.7% increase.
The number of fastener units sold to independent customers increased
approximately 8.2% in the second quarter of 1998 compared to the second
quarter of 1997. The number of fastener units sold within North America
increased approximately 6.7% in the second quarter of 1998 compared to the
second quarter of 1997, and represented approximately 69.9% of total fasteners
sold in the second quarter of 1998. The number of fastener units sold into
Europe increased approximately 19.4% in the second quarter of 1998 compared
to the second quarter of 1997 and represented approximately 25.5% of total
fasteners sold in the second quarter of 1998. The increase in the European
market is a direct result of the strong European economy. The number of
fastener units sold into the Asia-Pacific region decreased approximately
17.4% in the second quarter of 1998 compared to the second quarter of 1997,
mainly as a result of the continued economic uncertainty in the region. The
number of motors sold increased 9.3% in the second quarter of 1998 compared
to the second quarter of 1997.
The average selling price for fasteners shipped in the second quarter of
1998 decreased approximately 1.5% from $63.79 per thousand fasteners sold in
the second quarter of 1997 to $62.86 per thousand fasteners sold in the second
quarter of 1998. This decrease is mainly due to a change in product mix due to
a return to more normal distributor ordering patterns. The average selling
price of Pittman motors decreased approximately 2.3% from the second quarter
of 1997 to the second quarter of 1998 due to a shift towards lower priced
brush motors from the higher priced brushless motors.
Consolidated gross profit for the second quarter of 1998 was $13.9 million,
versus $13.0 million for the second quarter of 1997, an 6.9% increase.
Fastener gross profit increased 8.8% in the second quarter of 1998 compared to
the second quarter of 1997 while motor gross profit remained about the same.
Consolidated selling, general, and administrative expenses ("SG&A") for
the second quarter of 1998 were $8.1 million, versus $7.5 million for the
second quarter of 1997, a 8.0% increase. This increase was mainly caused by
increased advertising expenses as well as increased technology related
expenses. SG&A , as a percent of sales, remained the same (17.9%) for both the
second quarter 1998 and the second quarter 1997.
Consolidated net income for the second quarter of 1998 was $3.9 million,
versus $3.6 million for the second quarter of 1997. Other income was
negatively impacted in the second quarter of 1998 by realized currency losses
in the Asia-Pacific region.
<PAGE> 8
PENN ENGINEERING & MANUFACTURING CORP.
June 30, 1998
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Six Months Ended June 30, 1998 vs.Six Months Ended June 30, 1997
- ----------------------------------------------------------------
Consolidated net sales for the six months ended June 30, 1998 were $91.7
million, versus $81.0 million for the six months ended June 30, 1997, a 13.2%
increase. Net sales to customers outside the United States for the six months
ended June 30, 1998 were $25.9 million, versus $22.0 million for the six
months ended June 30, 1997, a 17.7% increase. Net sales for the fastener
operation for the six months ended June 30, 1998 were $74.5 million, versus
$66.2 million for the six months ended June 30, 1997, a 12.5% increase. Motor
sales were $17.2 million for the six months ended June 30, 1998, versus
$14.8 million for the six months ended June 30, 1997, a 16.2% increase.
The number of fastener units sold to independent customers increased
approximately 17.3% in the first six months of 1998 compared to the first six
months of 1997. The number of fastener units sold within North America
increased approximately 17.0% in the first six months of 1998 compared to the
first six months of 1997, and represented approximately 70.4% of total
fasteners shipped in the first six months of 1998. Distributor shipments to
end customers continued strong in the first half of 1998, especially in the
personal computer market. Shipments in the first half of 1997 were still
affected by unusually high distributor inventory levels that have since
stabilized. The number of fastener units sold into Europe increased
approximately 26.0% in the first six months of 1998 compared to the first six
months of 1997 and represented approximately 25.3% of total fasteners sold in
the first six 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 decreased approximately 13.7% from
the first six months of 1997 compared to the first six months of 1998 as the
economic turmoil continues in this region. The number of motors sold increased
17.5% in the first six months of 1998 compared to the first six 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 1998.
The average selling price of fasteners shipped in the first six months of
1998 decreased approximately 2.7% from $64.51 per thousand fasteners sold in
the first six months of 1997 to $62.76 per thousand fasteners sold in the
first six 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 decreased
slightly from $42.59 per motor in the first six months of 1997 to $42.27 per
motor in the first six months of 1998.
Consolidated gross profit for the first six months of 1998 was $28.5
million, versus $24.7 million for the first six months of 1997, a 15.4%
increase. Fastener gross profit increased 15.6% in the first six months of
1998 compared to the first six months of 1997 as a result of increased sales
and productivity improvements. Motor gross profit increased 13.7% in the first
six months of 1998 compared to the first six months of 1997.
Consolidated selling, general, and administrative expenses ("SG&A") for
the first six months of 1998 were $16.3 million, versus $14.8 million for the
first six months of 1997, a 10.1% increase. This increase was mainly caused by
increased commission expense due to continued strong end customer demand. As
a percent of sales, however, SG&A decreased from 18.3% in the first six months
of 1997 to 17.7% in the first six months of 1998.
Consolidated net income for the first six months of 1998 was $8.1 million,
versus $6.5 million for the first six months of 1997. Other income increased
mainly due to higher investment income as a result of the increased amount of
short-term investments.
<PAGE> 9
PENN ENGINEERING & MANUFACTURING CORP.
June 30, 1998
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operations totaled $10.9 million for the six months
ended June 30, 1998. These funds are being temporarily invested in
anticipation of increased capital spending and working capital needs during
the remaining half of 1998. Short-term investments increased 42.3% from $10.8
million at December 31, 1997 to $15.4 million at June 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 beginning
January 1, 2000 and could result in the creation of erroneous information or
computer failures.
The Company is well underway towards having 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 it can be reasonably
assumed will be completed during 1998. The Company retained the services of an
independent company to review and catalogue its IT and non-IT systems to
determine the remaining task of complying with Y2K. Their efforts identified
357 items of which 311 items 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 also seeks to address the Y2K activities of its suppliers,
service providers, distributors, and other business relationships. The Company
is and will 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 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, the Y2K issue could have a
material adverse effect 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 Management's
Discussion and Analysis. The Company's results may differ materially 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, 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. Defaults Upon Senior Securities
- ---------------------------------------
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
The Company held its 1998 Annual Meeting of Stockholders (the "Annual
Meeting") on May 1, 1998. The matters voted upon at the Annual Meeting and
the respective voting results were as follows:
1. The election of two Class A Directors of the Company to hold office
until the Annual Meeting of Stockholders to be held in 2001 and until their
successors are duly elected.
Name of Nominee For Withheld
- --------------- --- --------
Maurice D. Oaks 1,595,489 1,008
Charles R. Smith 1,595,489 1,008
The Directors whose term of office continued after the meeting were:
Class B Directors:
- ------------------
Kenneth A. Swanstrom
Lewis W. Hull
Mark W. Simon
Class C Directors:
- ------------------
Willard S. Boothby
Thomas M. Hyndman
Daryl L. Swanstrom
2. The election of Ernst & Young LLP as auditors for the Company for
its 1998 fiscal year.
For Against Abstain
--- ------- -------
1,594,543 60 1,894
<PAGE> 11
Item 5. Other Information
- -------------------------
a). Stockholder Proposals
Any stockholer 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.
b.) New President and Chief Operating Officer
Martin Bidart, 61, has been elected President and Chief Operating
Officer, and a Director of the Company. Formerly Vice-President, Manufacturing
of the Company's fastener operation, Mr. Bidart will now be responsible for
all aspects of the fastener and motor operations.
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 Bylaws, as amended. (Incorporated by reference to Exhibit
3(ii) of the Company's Form 10-K Annual Report for the
year ended December 31, 1994.)
27 Financial Statement Data Schedule. (Filed herewith.)
(b) Reports on Form 8-K
None
<PAGE> 12
SIGNATURE
Pursuant to the requirements 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: August 12, 1998 By: /s/ Kenneth A. Swanstrom
----------------------------
Kenneth A. Swanstrom
Chairman/ CEO
Dated: August 12, 1998 By: /s/ Mark W. Simon
----------------------------
Mark W. Simon
Vice-President - Finance
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,926,089
<SECURITIES> 15,428,137
<RECEIVABLES> 30,076,293
<ALLOWANCES> 550,000
<INVENTORY> 29,871,999
<CURRENT-ASSETS> 85,739,972
<PP&E> 122,423,953
<DEPRECIATION> 48,716,312
<TOTAL-ASSETS> 162,738,613
<CURRENT-LIABILITIES> 17,659,838
<BONDS> 0
<COMMON> 89,675
0
0
<OTHER-SE> 135,778,313
<TOTAL-LIABILITY-AND-EQUITY> 162,738,613
<SALES> 91,719,535
<TOTAL-REVENUES> 92,230,409
<CGS> 63,187,620
<TOTAL-COSTS> 79,452,847
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 12,777,562
<INCOME-TAX> 4,630,000
<INCOME-CONTINUING> 8,147,562
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,147,562
<EPS-PRIMARY> 0.94
<EPS-DILUTED> 0.94
</TABLE>
