<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934 For the fiscal Period Ended
March 31, 1997
or
[ ] Transition Report to Section 13 or 15(d) of the
Securities Act of
1934 For the Transition Period From ________ to ________
Commission file number: 33-56256
PCC Flow Technologies, Inc.
- ------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-3115884
- ------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
301 Camp Craft Road, Suite 100, Austin, Tx 78746
- ------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
512-314-8500
- ------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- ------------------------------------------------------------
(Former name, former address and former year, if changed
since last report)
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 and 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.
[ X ] Yes [ ] No
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13
or 15(d) of the Securities and Exchange act of 1934
subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest
practicable date.
Common Stock, par value $.01, 1,000 shares authorized, 100
shares issued and outstanding as of May 1, 1997
THIS FORM 10-Q IS BEING FILED WITH THE REDUCED DISCLOSURE
FORMAT PURSUANT TO COMPLIANCE BY THE REGISTRANT WITH
CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b)
OF FORM 10-Q.
</PAGE>
<PAGE>
PCC FLOW TECHNOLOGIES, INC.
INDEX
Page No.
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 2
Condensed Consolidated Statements of Income -
Three months ended March 31, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows -
Three months ended March 31, 1997 and 1996. 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. Other Information
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures
</PAGE>
<PAGE>
Part I. Financial Information
PCC FLOW TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets (Unaudited-see note)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- ----------
- -
(In thousands)
<S> <C> <C>
Assets
Current assets:
Cash $ 1,020 $ 3,960
Accounts receivable 47,015 38,934
Less allowance for doubtful accounts(1,428) (1,331)
Accounts receivable (net) 45,587 37,603
Inventories, at cost:
Raw materials 17,615 18,025
Work-in-process 7,614 6,296
Finished goods 44,367 41,620
Total inventories 69,596 65,941
Deferred taxes - current 10,979 9,637
Other current assets 573 391
Total current assets 127,755 117,532
Property, plant and equipment 33,503 32,235
Less accumulated depreciation (2,828) (1,936)
Net property, plant and equipment 30,675 30,299
Goodwill net of $3,825 amortization
(1996-$2,373) 231,095 235,050
Deferred taxes - long term 7,341 12,195
Other assets 1,271 1,317
-------- --------
Total assets $398,137 $396,393
======== ========
</TABLE>
[FN]
Note: The balance sheet at December 31, 1996 has been derived
from the audited financial statements at that date but does not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
The accompanying notes are an integral part of these financial
statements.
2
</PAGE>
<PAGE>
PCC FLOW TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets (Unaudited-see note)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------- ------------
(In thousands, except per share data)
<S> <C> <C>
Liabilities
Current liabilities:
Accounts payable $ 17,703 $ 14,958
Accrued liabilities 28,522 32,105
Accrued taxes payable 12,016 11,745
Current portion of long term debt 274 274
--------- ---------
Total current liabilities 58,515 59,082
Payable to affiliate 15,922 6,369
Long term debt 100,163 100,163
Deferred taxes - long term --- 8,615
Other liabilities 15,339 14,848
Minority interest --- 1,647
Redeemable preferred stock
Preferred stock, Class A, $.01 par
value, 450 shares authorized, 113
shares issued and outstanding;
liquidation preference of $113 in
1996; redeemed July 31, 1996 --- ---
Preferred stock Class B, $.01 par value,
7,000 shares authorized, issued and
outstanding in 1996; liquidation
preference of $7,000; redeemed July 31,
1996 --- ---
Common stockholders' equity:
Common stock, par value $.01, 1,000 shares
authorized, 100 shares issued and
outstanding --- ---
Contributed capital from parent 201,663 201,663
Accumulated translation adjustment (159) 4
Retained earnings 6,694 4,002
--------- ---------
Total common stockholders' equity 208,198 205,669
Total liabilities and stockholders' --------- ---------
equity $ 398,137 $ 396,393
========= =========
</TABLE>
[FN]
Note: The balance sheet at December 31, 1996 has been derived
from the audited financial statements at that date but does
not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements.
The accompanying notes are an integral part of these financial
statements.
3
</PAGE>
<PAGE>
PCC FLOW TECHNOLOGIES, INC.
Condensed Consolidated Statements of Income (Unaudited-see note)
<TABLE>
<CAPTION>
Successor Predecessor
Three months Three months
ended ended
March 31, 1997 March 31,1996
-------------- -------------
(In Thousands, except per share data)
<S> <C> <C>
Product sales, net $ 63,841 $ 56,805
Cost of sales 44,618 38,001
---------- ----------
Gross profit 19,223 18,804
Operating expenses:
Sales and marketing 8,575 7,273
General and administrative 3,436 4,022
---------- ----------
Total operating expense 12,011 11,295
---------- ----------
Income from operations 7,212 7,509
Interest expense (1,517) (4,664)
Other expense --- (333)
Income before income taxes and ---------- ----------
minority interest 5,695 2,512
Income tax expense (3,003) (955)
---------- ----------
Income before minority interest 2,692 1,557
Minority interest --- 40
---------- ----------
Net income $ 2,692 $ 1,517
========== ==========
Net income attributable to
common shares $ 2,692 $ 1,513
========== ==========
Net income per common share $26,920.00 $ 5.96
========== ==========
Shares used in calculation of
net income per common share 100 253,938
========== ==========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial
statements.
4
</PAGE>
<PAGE>
PCC FLOW TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited - see note)
<TABLE>
<CAPTION>
Successor Predecessor
Three months Three months
ended ended
March 31, 1997 March 31, 1996
-------------- --------------
(In thousands)
<S> <C> <C>
Operating activities:
Net income $ 2,692 $ 1,517
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,346 2,180
Minority interest (1,647) 40
Deferred taxes 709 ---
Changes in operating assets and
liabilities:
Accounts receivable (7,015) 32
Inventories (1,280) (4,243)
Other current assets 249 481
Accounts payable 2,701 3,037
Income taxes payable (301) 583
Accrued compensation (1,635) (1,479)
Accrued interest 1,529 3,306
Other accrued liabilities (3,469) (2,872)
Cash (used by) provided by operating --------- ----------
activities (5,121) 2,486
Investing activities:
Acquisition, net of cash acquired,
OIC Valve (6,379) ---
Acquisition, net of cash acquired,
Barber --- (9,764)
Purchase of minority interest,
Water Specialties (4,000) ---
Purchase of property and equipment (1,356) (663)
Proceeds from sale of equipment --- 136
Advances from parent 13,605 ---
Other investing activities 474 379
Cash provided by (used in) investing --------- ---------
activities 2,344 (9,816)
Financing activities:
Borrowings - bank line of credit --- 7,725
Repayments of notes payable --- (284)
Payment of preferred stock dividends --- (4)
--------- ---------
Cash provided by financing activities --- 7,437
Effect of foreign exchange rate changes on
cash (163) 155
Net (decrease) increase in cash $ (2,940) $ 262
--------- ---------
Cash, beginning of period $ 3,960 $ 736
Cash, end of period $ 1,020 $ 998
========= =========
</TABLE>
[FN]
The accompanying notes are an integral part of these financial
statements.
5
</PAGE>
<PAGE>
PCC FLOW TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying condensed consolidated financial
statements of PCC Flow Technologies, Inc. (the "Company")
are unaudited, but are prepared in accordance with generally
accepted accounting principles for interim financial
information and include all adjustments (consisting only of
normal recurring entries) which, in the opinion of
management, are necessary for a fair presentation of
financial position, results of operations and cash flows.
PCC Flow Technologies, Inc. (the "Successor"), formally
known as NEWFLO Corporation (the "Predecessor") was acquired
on July 31, 1996, by Precision Castparts Corp. ("PCC").
These unaudited condensed consolidated financial statements
should be read in conjunction with the audited consolidated
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K as of and for the year
ended December 31, 1996. The accompanying condensed
consolidated financial statements consist of the three month
period ended March 31, 1996 (Predecessor) and the three
month period ended March 31, 1997 (Successor). As a result
of the acquisition of the Company by PCC, the condensed
consolidated financial statements have been presented in a
manner to reflect the change of ownership and the effect of
the purchase price adjustments that resulted from the
recognition of fair values in conjunction with the Company's
acquisition by PCC. Certain reclassifications have been
made in the prior periods to conform to presentations for
the current period. Such reclassifications have had no
impact on the previously reported financial position or
results of operations.
2. Acquisitions
On March 28, 1997, the Company acquired 100% of the
capital stock of OIC Valve, Inc. ("OIC") for a cash payment
of approximately $6.4 million, net of related acquisition
costs. The acquisition has been recorded pursuant to the
purchase method of accounting. Accordingly, the purchase
price plus direct costs of the acquisition have been
allocated to the assets acquired and liabilities assumed
based on their estimated fair market values.
On December 23, 1996, the Company acquired 100% of the
capital stock of Crown Pump, Inc. ("Crown") for a cash
payment of approximately $6.1 million and related
acquisition costs of approximately $0.1 million. The
acquisition has been recorded pursuant to the purchase
method of accounting. Accordingly, the purchase price plus
direct costs of the acquisition have been allocated to the
assets acquired and liabilities assumed based on their
estimated fair market values.
On July 31,1996, Precision Castparts Corp. ("PCC")
acquired 100% of the capital stock of NEWFLO Corporation and
renamed the acquired Company "PCC Flow Technologies, Inc."
The acquisition has been recorded pursuant to the purchase
method of accounting. Accordingly, the purchase price plus
direct costs of the acquisition have been allocated to the
assets acquired and liabilities assumed based on their
estimated fair market values.
6
</PAGE>
<PAGE>
PCC Flow Technologies, Inc.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion should be read in conjunction
with the consolidated audited financial statements and
footnotes thereto included in the Company's annual Form 10-K
filed with the Securities Exchange Commission for the fiscal
year ended December 31, 1996, and the condensed consolidated
financial statements which are included elsewhere in this
quarterly report. PCC Flow Technologies, Inc. (the
"Successor"), previously known as NEWFLO Corporation (the
"Predecessor"), was acquired on July 31, 1996 by Precision
Castparts Corp. ("PCC"), a world wide manufacturer of
complex metal structural investment castings and the leading
manufacturer of airfoils castings used in jet aircraft
engines. The following discussion of operations are for the
results of the three month period ended March 31, 1997
(Successor) and the three month period ended March 31, 1996
(Predecessor).
PCC Flow Technologies, Inc., (the "Company"), designs,
manufactures, markets and services a broad range of
specialty and general purpose valves, pumps, meters and
related products for a variety of industrial, commercial,
utilities and municipal customers. The Company sells its
products worldwide through direct sales, distributors and
manufacturers' representatives primarily to chemical,
petrochemical, construction contractors, municipalities and
other industrial companies. The accompanying condensed
consolidated financial statements include the accounts the
Company and its wholly owned and majority owned subsidiaries.
RESULT OF OPERATIONS
Three months ended March 31, 1997, compared with three
months ended March 31, 1996.
Net sales increased for the three month period ended
March 31, 1997 to $63.8 million, up $7.0 million, or 12.3%
from sales of $56.8 million for the three months ended March
31, 1996. This increase of $7.0 million was primarily the
result of favorable weather conditions for drilling in
Canada which resulted in a sales increase in valve products
plus the effects of the acquisition of Crown Pump at the end
of December 1996.
Gross profit of $19.2 million for the quarter ended
March 31, 1997 represents an increase of $0.4 million from
the $18.8 million for the same period for 1996. Gross
profit as a percentage of sales decreased from 33.1% in the
first quarter of 1996 to 30.1% for the same period in 1997.
The favorable impact of the higher sales was largely offset
by the impact of stronger marketplace competition, lower
margin product mix and additional amortization of
intangibles related to purchase accounting for the
acquisition of the Company by PCC.
Income from operations of $7.2 million , or 11.3% of
sales for the quarter, represented a decrease of $0.3
million from $7.5 million, or 13.2% of sales for the same
period in 1996. Higher marketing and sales costs resulting
from the increased competitiveness in many of the Company's
markets led to a reduction in profits this quarter as
compared with a year ago.
7
</PAGE>
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Interest expense on long term debt decreased to $1.5
million during the quarter ended March 31, 1997, from $4.7
million for the same period in 1996. Approximately, $32.7
million of senior debt was retired July 31, 1996 with the
acquisition of the Company by PCC. In conjunction with the
acquisition, the Company's debt was restated to fair market
value and a liability was established to reflect the
difference between the stated interest rate on the
outstanding subordinated notes and a market rate. As a
result, the effective interest rate for the Company was
lower for the quarter ended, March 31, 1997.
Net income before tax and minority interest of $5.7
million for the quarter ended March 31, 1997 was an
improvement from the $2.5 million for the comparable period
in 1996. Excluding the $0.2 million contribution by Crown
Pump, the increase of $3.0 million was primarily the result
of the decrease in interest expense.
CHANGES IN FINANCIAL POSITION AND LIQUIDITY
Total assets of $398.1 million at March 31, 1997
represented a $1.7 million increase from the $396.4 million
balance at December 31, 1996. Acquisitions accounted for
the majority of the increase.
Cash from earnings for the three months ended March 31,
1997, of $4.1 million was less than cash requirements which
consisted of $10.4 million for acquisitions, $9.2 million of
increased working capital net of acquisitions and $1.4
million of capital expenditures. The cash shortfall was
funded from $13.6 million of net advances from parent and
$2.9 million of available cash. At March 31, 1997, cash and
cash equivalents were $1.0 million.
Prior to July 31, 1996, the Company financed its
activities principally through cash provided by operations
and borrowings under a Senior Credit Agreement with a
financial institution. On July 31, 1996, the Senior Credit
Agreement was retired as part of the acquisition of the
Company by PCC.
The Company expects cash provided by operations and
financing provided by PCC sufficient to meet its current
obligations and future operating requirements. The Company
continues to evaluate potential acquisitions and believes
acquisition opportunities can be funded from cash and
financing from PCC.
8
</PAGE>
<PAGE>
PCC Flow Technologies, Inc.
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Item 6.(a) Exhibits
Exhibit 10.65 Form of Employment and Non-Interference
Agreement dated May 2,1994, between PCC Flow
Technologies and John D. Lilla, as amended March
18, 1997, previously filed with the Commission
on March 30, 1996 as Exhibit 10.48.
Exhibit 27 Financial Data Schedule
Item 6.(b) Reports on Form 8-K:
None
9
</PAGE>
<PAGE>
PCC Flow Technologies, Inc.
Signature
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized
PCC Flow Technologies, Inc.
(Registrant)
Date: May 15, 1997
By: /s/ William D.Larsson
------------------------
William D. Larsson
Vice President and Chief
Financial Officer (Principal
Financial and Accounting Officer)
</PAGE>
<PAGE>
AMENDMENT NO. 2 TO EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
This Amendment, dated as of March 18, 1997, by and
between John D. Lilla ("Executive") and PCC Flow
Technologies, Inc., a Delaware corporation (the "Company");
W I T N E S S E T H:
WHEREAS, NEWFLO Corporation was acquired on July 31,
1996 by Precision Castparts Corp. (PCC) and, as of that
date, PCC assumed all liabilities and obligations with
respect to Executive's Employment and Non-interference
Agreement and adopted resolutions to change the legal name
of NEWFLO Corporation to PCC Flow Technologies, Inc.;
WHEREAS, PCC has notified Executive that it intends to
close the Company's business offices located at 301 Camp
Craft Road, Suite 100, Austin, Texas 78746, and to establish
a new business office in the Houston, Texas, or surrounding
area;
WHEREAS, the Company wishes to obtain the future
services of the Executive for the Company, and wishes for
the Executive to relocate to the Houston, Texas, or
surrounding area;
WHEREAS, the Company and Executive wish to amend the
Executive's Employment and Non-Interference Agreement, which
upon Relocation of the Executive (as defined in Section 9),
will become effective as Amendment No. 2 to the Executive's
Employment and Non-Interference Agreement originally dated
May 2, 1994;
WHEREAS, the Executive is willing, upon the terms and
conditions herein set forth, to continue to provide services
under the Agreement and Amendments No. 1 and 2 to the
Agreement;
NOW, THEREFORE, in consideration of the mutual promises
and covenants contained in the Agreement, the Company and
the Executive, intending to be legally bound, hereby agree
to amend Sections 3(a), 5, 9, 10, 17, and 18 of the
Agreement to read as follows:
Section 3(a) is amended in its entirety to read as
follows:
3. Term of Employment; Termination
(a) The "Term of Employment", as amended under this
Amendment No. 2, shall commence on the date of Executive's
Relocation and shall continue for a term of thirty six
months; provided, that, (i) such term will be continued for
the twelve month period following such thirty six month
period, and for each twelve month period thereafter, unless,
at least 60 days prior to the scheduled expiration date,
either the Executive or the Company notifies the other of
its decision not to continue such term, and (ii) should the
Executive's employment by the Company be earlier terminated
pursuant to Section 3(b), the Term of Employment shall end
on the date of such earlier termination.
Section 5 is amended in its entirety to read as
follows:
5. Reimbursement of Expenses
During the Term of Employment, the Company shall
reimburse Executive for documented travel, entertainment and
other expenses reasonably incurred by Executive in
connection with the performance of his duties hereunder and
in accordance with the rules, customs and usages of the
Company from time to time in effect. The Company also shall
reimburse the Executive for his Relocation from Austin,
Texas to the Houston, Texas, or surrounding area, based on
the PCC Flow Technologies, Inc. Relocation Guidelines, a
copy of which is attached to this Amendment No. 2, labeled
as Exhibit 1.
Section 9 is amended by only adding and changing the
follows definitions:
9. Definitions
"Companies" means PCC Flow Technologies, Inc. and its
successors or any of its direct or indirect subsidiaries.
"Company" has been changed from NEWFLO Corporation to
PCC Flow Technologies, Inc., and is defined in the
introduction to this Amendment No. 2.
"Relocation" means the transfer of Executive,
Executive's family and household goods to Houston, Texas, or
the surrounding area, concluded by Executive's purchase of a
residence in that area.
Section 10. Notice is amended in its entirety to read
as follows:
10. Notice
Any notice, request, demand or other communication
required or permitted to be given under this Agreement shall
be given in writing and if delivered personally, or sent by
certified or registered mail, return receipt requested, as
follows (or to such other addresses or address as shall be
set forth in a notice give in the same manner):
If to Executive: John D. Lilla
9909 Jasmine Creek Drive
Austin, Texas 78726
(new address to be provided upon
Relocation to Houston, Texas area)
If to Company: PCC Flow Technologies, Inc.
800 Koomey Rd.
Brookshire, Texas 77423
Attn: President
With a copy to: Ms. Ruth A. Beyer
Stoel Rives LLP
900 SW Fifth Avenue,
Suite 2300
Portland, Oregon 97204-1268
Any notices by personal delivery shall be deemed to be given
on the date personally delivered, and notices by facsimile
shall be effective when sent and confirmed by the sending by
facsimile machine.
Section 17. Litigation is amended in its entirety to
read as follows:
17. Litigation
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE
USED TO APPLY ANY LAW OTHER THAN THAT OF TEXAS, AND NO
DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED
BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING
OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW,
REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION,
BE INTERPOSED IN ANY ACTION HEREON. SUBJECT TO SECTION 18,
EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR
PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT MAY
BE COMMENCED IN THE STATE COURTS, OR IN THE UNITED STATES
DISTRICT COURTS IN HOUSTON, TEXAS. EXECUTIVE AND THE
COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL
BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON
FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS
SECTION 17 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT
OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
JURISDICTION.
Section 18. Arbitration is amended in its entirety to
read as follows:
18. Arbitration
EXCEPT AS SPECIFICALLY PROVIDED FOR IN THIS SECTION 18,
THE EXECUTIVE AND THE COMPANY AGREE THAT ANY DISPUTE BETWEEN
OR AMONG THE PARTIES TO THIS AGREEMENT RELATING TO OR IN
RESPECT OF THIS AGREEMENT, ITS NEGOTIATION, EXECUTION,
PERFORMANCE, SUBJECT MATTER, OR ANY COURSE OF CONDUCT OR
DEALING OR ACTIONS UNDER OR IN RESPECT OF THIS AGREEMENT,
SHALL BE SUBMITTED TO, AND RESOLVED EXCLUSIVELY PURSUANT TO
ARBITRATION IN ACCORDANCE WITH THE EMPLOYMENT DISPUTE
RESOLUTION RULES OF THE AMERICAN ARBITRATION ASSOCIATION.
SUCH ARBITRATION SHALL TAKE PLACE IN HOUSTON, TEXAS AND
SHALL BE SUBJECT TO THE SUBSTANTIVE LAW OF THE STATE OF
TEXAS. DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE
FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. UPON THE
CONCLUSION OF ARBITRATION, EXECUTIVE OR THE COMPANY MAY
APPLY TO ANY COURT OF THE TYPE DESCRIBED IN SECTION 17 TO
ENFORCE THE DECISION PURSUANT TO SUCH ARBITRATION. THE
COMPANY SHALL HAVE NO OBLIGATION TO ARBITRATE DISPUTES
ARISING UNDER SECTIONS 7 AND 8 HEREOF, AND MAY ENFORCE ANY
OF ITS RIGHTS AND REMEDIES WITH RESPECT THERETO IN ANY COURT
OF COMPETENT JURISDICTION.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
EXECUTIVE:
/s/ John D. Lilla
John D. Lilla
PCC Flow Technologies, Inc.
By: /s/ David W. Norris
Its: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from
the Condensed Consolidated Statement of Financial Position
at 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> 1,020
<SECURITIES> 0
<RECEIVABLES> 47,015
<ALLOWANCES> 1,428
<INVENTORY> 69,596
<CURRENT-ASSETS> 127,755
<PP&E> 33,503
<DEPRECIATION> 2,828
<TOTAL-ASSETS> 398,137
<CURRENT-LIABILITIES> 58,515
<BONDS> 100,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 398,137
<SALES> 63,841
<TOTAL-REVENUES> 63,841
<CGS> 44,618
<TOTAL-COSTS> 44,618
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,517
<INCOME-PRETAX> 5,695
<INCOME-TAX> 3,003
<INCOME-CONTINUING> 2,692
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,692
<EPS-PRIMARY> 27
<EPS-DILUTED> 27
