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 quarter ended June 30, 1997
Commission file number 1-4416
SPS TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its Charter)
PENNSYLVANIA 23-1116110
(State of incorporation) (I.R.S. Employer
101 Greenwood Avenue, Suite 470 Identification No.)
Jenkintown, Pennsylvania 19046
(Address of principal executive offices) (Zip Code)
(215) 517-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
The number of shares of Registrant's Common Stock outstanding
on August 6, 1997 was 6,067,184.
<PAGE>1
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
PART 1
FINANCIAL INFORMATION
Item 1. Index to Financial Statements
Condensed Statements of Consolidated Operations -
Three and Six Months Ended June 30, 1997 and 1996
(Unaudited)
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996
(Unaudited)
Condensed Statements of Consolidated Cash Flows -
Six Months Ended June 30, 1997 and 1996
(Unaudited)
Notes to Condensed Consolidated Financial Statements
<PAGE>2
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited-Thousands of dollars except share data)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Net sales $ 153,108 $ 121,302 $ 291,083 $ 235,277
Cost of goods sold 119,691 96,352 228,336 187,502
---------- ---------- ---------- ----------
Gross profit 33,417 24,950 62,747 47,775
Selling, general and
administrative expense 17,709 14,490 34,261 28,555
---------- ---------- ---------- ----------
Operating earnings 15,708 10,460 28,486 19,220
---------- ---------- ---------- ----------
Other income (expense):
Interest income 98 45 438 105
Interest expense (2,350) (1,650) (4,626) (3,240)
Equity in earnings
of affiliates 60 252 145 354
Minority interest (86) (108) (86) (108)
Other, net (590) (389) (797) (521)
---------- ---------- ---------- ----------
(2,868) (1,850) (4,926) (3,410)
---------- ---------- ---------- ----------
Earnings before income taxes 12,840 8,610 23,560 15,810
Provision for income taxes 4,450 2,590 8,050 4,750
---------- ---------- ---------- ----------
Net earnings $ 8,390 $ 6,020 $ 15,510 $ 11,060
========== ========== ========== ==========
Earnings per common share
and common share equivalent $ 1.32 $ .95 $ 2.44 $ 1.76
========== ========== ========== ==========
Weighted average number of
common shares used to compute
earnings per share 6,364,974 6,329,366 6,357,814 6,273,856
See accompanying notes to condensed consolidated financial statements.
<PAGE>3
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited-Thousands of dollars)
June 30, December 31,
1997 1996
---------- -----------
Assets
Current assets
Cash and cash equivalents $ 12,197 $ 33,310
Accounts and notes receivable,
less allowance for doubtful
receivables of $1,921 (1996-$1,668) 95,578 73,542
Inventories 101,535 99,778
Deferred income taxes 18,011 20,567
Prepaid expenses 3,328 2,979
Net assets held for sale 500 1,600
---------- ----------
Total current assets 231,149 231,776
Investments in affiliates 4,463 4,760
Property, plant and equipment, net of
accumulated depreciation of $131,124
(1996-$127,446) 162,099 148,616
Other assets 59,026 42,848
---------- ----------
Total assets $ 456,737 $ 428,000
========== ==========
See accompanying notes to condensed consolidated financial statements.
<PAGE>4
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited-Thousands of dollars, except share data)
June 30, December 31,
1997 1996
--------- ------------
Liabilities and shareholders' equity
Current liabilities
Notes payable and current portion of
long-term debt $ 17,375 $ 16,454
Accounts payable 40,059 34,952
Accrued expenses 55,042 50,132
Income taxes payable 4,968 3,919
---------- ----------
Total current liabilities 117,444 105,457
---------- ----------
Deferred income taxes 15,610 14,505
Long-term debt 99,236 98,838
Retirement obligations 25,725 25,607
Minority interest 6,053 5,997
Shareholders' equity
Preferred stock, par value $1 per share,
authorized 400,000 shares, issued none
Common stock, par value $1 per share,
authorized 30,000,000 shares,
issued 6,710,687 shares (6,646,250
shares in 1996) 6,711 6,646
Additional paid-in capital 85,025 82,561
Retained earnings 116,401 100,891
Minimum pension liability (2,257) (2,257)
Common stock in treasury, at cost,
652,681 shares (645,381 shares in 1996) (8,392) (7,920)
Cumulative translation adjustments (4,819) (2,325)
---------- ----------
Total shareholders' equity 192,669 177,596
---------- ----------
Total liabilities and
shareholders' equity $ 456,737 $ 428,000
========== ==========
See accompanying notes to condensed consolidated financial statements.
<PAGE>5
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited-Thousands of dollars)
Six Months Ended
June 30,
------------------------
1997 1996
Net cash provided by operating activities $ 24,477 $ 14,017
---------- ----------
Cash flows provided by (used in) investing
activities
Additions to property, plant and equipment (19,480) (9,421)
Proceeds from sale of property, plant
and equipment 1,360 371
Acquisitions of businesses, net of cash
acquired (28,349) (18,800)
---------- ----------
Net cash used in investing activities (46,469) (27,850)
---------- ----------
Cash flows provided by (used in) financing
activities
Proceeds from borrowings 10,663 122,681
Reduction of borrowings (10,615) (94,744)
Proceeds from exercise of stock options 1,365 1,808
Treasury stock purchases (333)
---------- ----------
Net cash provided by financing activities 1,080 29,745
---------- ----------
Effect of exchange rate changes on cash (201) 50
---------- ----------
Net increase (decrease) in cash and cash
equivalents (21,113) 15,962
Cash and cash equivalents at
beginning of period 33,310 8,093
---------- ----------
Cash and cash equivalents at
end of period $ 12,197 $ 24,055
========== ==========
Significant noncash financing activities:
Debt assumed with businesses acquired $ 1,578
Acquisition of treasury shares for
stock options exercised $ 139 $ 3,133
See accompanying notes to condensed consolidated financial statements.
<PAGE>6
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited-Thousands of dollars except share data)
1. Financial Statements
In the opinion of the Company's management, the
accompanying unaudited, condensed consolidated financial
statements contain all adjustments necessary to present fairly
the financial position as of June 30, 1997, the results of
operations for the three and six-month periods ended June 30,
1997 and 1996, and cash flows for the six-month periods ended
June 30, 1997 and 1996. The December 31, 1996 condensed
balance sheet data was derived from audited financial
statements, but does not include all disclosures required by
generally accepted accounting principles. The accompanying
financial statements contain only normal recurring
adjustments. All financial information has been prepared in
conformity with the accounting principles reflected in the
financial statements included in the 1996 Annual Report filed
on Form 10-K applied on a consistent basis.
2. Business Acquisitions
All acquisitions have been accounted for under the
purchase method. The results of operations of the acquired
businesses are included in the consolidated financial
statements from the dates of acquisition.
In January 1997, the Company acquired all of the
outstanding shares of Postkey, Ltd. (Postkey), a manufacturer
of cylindrical thread roll dies, located in Nuneaton, England,
for $1,200. The excess of purchase price over the fair values
of the net assets acquired was approximately $860 and has been
recorded as goodwill, which is being amortized on a straight-
line basis over 30 years.
On February 24, 1997, the Company acquired all of the
outstanding shares of Greer Stop Nut, Inc. (Greer), a
manufacturer of nylon insert nuts, located in Nashville,
Tennessee for $10,000. The excess of the purchase price over
the fair values of the net assets acquired was approximately
$5,000 and has been recorded as goodwill, which is being
amortized on a straight-line basis over 40 years.
On March 7, 1997, the Company acquired the assets of RJF
International Corporation's (RJF) Bonded Magnet Business, a
manufacturer of flexible ferrite bonded magnets, located in
Cincinnati and Marietta, Ohio for $9,200. The excess of the
purchase price over the fair values of the net assets acquired
was approximately $4,800 and has been recorded as goodwill,
which is being amortized on a straight-line basis over 30
years.
<PAGE>7
On April 1, 1997, the Company paid $1,000 to increase its
ownership in Unbrako Products Pte., Ltd. (UPL) from 50 percent
to 100 percent. UPL, located in Singapore, is a distributor
of the Company's Unbrako products to the Southeast Asian
market.
On May 5, 1997, the Company acquired all of the outstand-
ing shares of Lake Erie Design Co., Inc. (LED), a manufacturer
of high precision ceramic cores for the investment casting
industry, located in Cleveland, Ohio for $8,100. The excess
of the purchase price over the fair values of the net assets
acquired was approximately $6,500 and has been recorded as
goodwill, which is being amortized on a straight-line basis
over 30 years.
In the first quarter of 1996, the Company formed a joint
venture in China by acquiring a 55 percent interest in
Shanghai SPS Biao Wu Fasteners Co. Ltd. (SSBW). The Company
contributed cash and equipment of $3,288 and manufacturing
technology.
In 1996, the Company completed two acquisitions of magnet
materials manufacturers. On June 14, 1996, the Company
acquired all of the outstanding shares of Flexmag Industries,
Inc. (Flexmag) located in Marietta, Ohio, and the assets of a
related magnets business located in Seneca, South Carolina,
for $21,274. On July 3, 1996, the Company acquired all of the
outstanding shares of Swift Levick Magnets Ltd. (Swift
Levick), located in Derbyshire, England for $18,491. The
excess of the purchase price over the fair value of the net
assets acquired for both acquisitions was approximately
$12,900 and has been recorded as goodwill, which is being
amortized on a straight-line basis over 30 years.
On October 8, 1996, the Company acquired 85 percent of
the capital stock of Mecair Aerospace Industries, Inc.
(Mecair), a manufacturer of aerospace fasteners, located in
Pointe Claire (Montreal), Quebec, Canada for $8,300. The
excess of the purchase price over the fair value of the net
assets acquired was approximately $3,500 and has been recorded
as goodwill, which is being amortized on a straight-line basis
over 40 years.
The following unaudited pro forma consolidated results of
operations are presented as if the Greer, RJF, Flexmag, Swift
Levick, Mecair and LED acquisitions had been made at the
beginning of the periods presented. The effects of the other
acquisitions (Postkey, SSBW and UPL) are not material and,
accordingly, have been excluded from the pro forma
presentation.
<PAGE>8
Six Months Ended
June 30,
-------------------
1997 1996
-------- --------
Net sales $296,962 $272,914
Net earnings 15,847 12,030
Earnings per common share
and common share equivalent 2.49 1.92
The pro forma consolidated results of operations include
adjustments to give effect to amortization of goodwill,
interest expense on acquisition debt and certain other
adjustments, together with related income tax effects. The
unaudited pro forma information is not necessarily indicative
of the results of operations that would have occurred had the
purchase been made at the beginning of this period or the
future results of the combined operations.
3. Inventories
June 30, December 31,
1997 1996
-------- ------------
Finished goods $46,500 $50,726
Work-in-process 29,243 25,363
Raw materials
and supplies 19,298 17,010
Tools 6,494 6,679
-------- --------
$101,535 $99,778
======== ========
The June 30, 1997 inventory balances include $5,100 of
inventory from businesses acquired in 1997.
4. Environmental Contingency
The Company has been identified as a potentially
responsible party by various federal and state authorities for
clean up or removal of waste from various disposal sites. At
June 30, 1997, the accrued liability for environmental
remediation represents management's best estimate of the costs
related to environmental remediation which are considered
probable and can be reasonably estimated. The Company has not
included any insurance recovery in the accrued environmental
liability. The measurement of the liability is evaluated
quarterly based on currently available information. As the
scope of the Company's environmental liability becomes more
clearly defined, it is possible that additional reserves may
be necessary. Accordingly, it is possible that the Company's
results of operations in future quarterly or annual periods
could be materially affected. Management does not anticipate
that its consolidated financial condition will be materially
affected by environmental remediation costs in excess of
amounts accrued.
<PAGE>9
5. Earnings Per Share
Earnings per share is computed by dividing net earnings
by the weighted average number of common shares outstanding.
When dilutive, stock options are included as common share
equivalents using the treasury stock method.
6. Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share." This Statement
establishes new standards for computing and presenting
earnings per share (EPS) and applies to entities with publicly
held common stock or potential common stock. This Statement
is effective for financial statements issued for periods
ending after December 15, 1997 (earlier application is not
permitted). This Statement requires restatement of all prior-
period EPS data presented. The Company has evaluated the
provisions of SFAS No. 128 and does not anticipate adoption to
have a material effect on its computation of EPS.
7. Subsequent Events
On July 29, 1997, the Company's Board of Directors
approved a two-for-one split of its common stock, effective
August 20, 1997, to be distributed to shareholders on August
29, 1997. After giving effect to the split, earnings per
share would have been reported as follows:
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1997 1996 1997 1996
-------- -------- -------- --------
$ .66 $ .48 $1.22 $ .88
======== ======== ======== ========
In addition, the Company's authorized common stock
changed from 30,000,000 shares with a par value of $1 per
share and 6,710,687 issued shares to 60,000,000 shares with a
par value of $ .50 per share and 13,421,374 issued shares.
Common Stock in treasury changed from 652,681 shares to
1,305,362 shares.
On August 7, 1997, the Company entered into a merger
agreement to acquire the outstanding stock of Magnetic
Technologies Corporation (MTC) for approximately $14,400.
Completion of the transaction is subject to a number of
conditions including approval of a majority of MTC's
stockholders. In connection with the transaction, five
stockholders of MTC representing 26% of the outstanding shares
have entered into agreements with the Company to vote their
shares in favor of the merger. MTC located in Rochester, New
York and Rochester, England, designs and manufactures
<PAGE>10
magnetic, electronic and mechanical subassemblies of copiers
and printers for the electronic office equipment industry. If
this transaction is completed, the acquisition will be
accounted for under the purchase method. The results of
operations of MTC will be included in the consolidated
financial statements from the date the acquisition is
completed.
<PAGE>11
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition
- -------------------------------------------------------------------
and Results of Operations
- -------------------------
Introduction
- ------------
The Company's operating results are a major improvement over
the corresponding periods in the prior year. The improvement in
operating results was due primarily to increased sales of aerospace
fasteners and the inclusion of businesses acquired in the last
twelve months. In the first six months of 1997, the Company
completed five acquisitions which strengthened its existing
businesses.
Sales and Operating Earnings by Segment
- ---------------------------------------
(Unaudited-Thousands of dollars)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1997 1996 1997 1996
-------- -------- -------- ---------
Net sales:
Fasteners $102,999 $ 85,400 $195,981 $164,155
Materials 50,109 35,902 95,102 71,122
-------- -------- -------- --------
$153,108 $121,302 $291,083 $235,277
======== ======== ======== ========
Operating earnings:
Fasteners $ 10,912 $ 7,520 $ 20,193 $ 13,536
Materials 7,346 5,052 13,153 9,666
Unallocated
corporate costs (2,550) (2,112) (4,860) (3,982)
======== ======== ======== ========
$ 15,708 $ 10,460 $ 28,486 $ 19,220
======== ======== ======== ========
Net Sales
- ---------
Net sales increased $31.8 million, or 26.2 percent, in the
second quarter of 1997 and $55.8 million, or 23.7 percent, for the
six month period ended June 30, 1997 compared to the same periods
in 1996.
Fastener segment sales increased $17.6 million, or 20.6
percent, in the second quarter of 1997 and $31.8 million, or 19.4
percent, for the six month period. The Company's aerospace
fastener sales were up 34.3 percent to $54.3 million in the second
quarter and 31.2 percent to $103.5 million for the six month
period. Based on commercial aircraft production projections by the
major aircraft manufacturers, the Company expects this trend of
improving demand for aerospace fasteners to continue throughout
1997 and into 1998. The Company has invested and plans to continue
to invest in infrastructure to increase capacity and support this
projected expansion.
<PAGE>12
The Company's industrial and Unbrako fastener sales increased
$3.1 million, or 7.1 percent, in the second quarter and $6.2
million, or 7.6 percent, for the six month period. These increases
are due primarily to increased sales of Unbrako fasteners in North
America and sales by Greer Stop Nut, Inc., a business acquired on
February 24, 1997. Partially offsetting these increases was a
decline in sales of Unbrako fasteners in Europe ($1.4 million in
the second quarter and $3.0 million for the six month period).
Sales of automotive fasteners in North America and Europe remained
level with the corresponding periods in the prior year.
Material businesses acquired in the last twelve months
(Flexmag Industries, Inc., Swift Levick Magnets, Ltd., RJF
International Corporation's Bonded Magnet Business and Lake Erie
Design Co., Inc.) increased material segment sales by $12.7 million
in the second quarter of 1997 and $21.7 million for the six month
period. Sales of superalloys increased $2.6 million, or 15.2
percent, in the second quarter and $4.0 million, or 11.6 percent,
for the six month period. This increase is driven by increased
demand from the aerospace, land-based turbine and medical markets.
New furnaces currently being installed are intended to increase
superalloy vacuum melt production capacity to further participate
in the expanding aerospace and land-based turbine markets.
Excluding magnetic material sales from acquired businesses, sales
of magnetic materials decreased $1.1 million in the second quarter
and $1.7 million for the six month period. Magnetic sales to the
personal computer and telecommunications markets remained strong
but sales to other served markets trailed last year's levels.
Operating Earnings
- ------------------
Operating earnings of the fasteners segment improved signif-
icantly from $13.5 million, or 8.2 percent of sales, for the six
months ended June 30, 1996, to $20.2 million, or 10.3 percent of
sales, for the six months ended June 30, 1997. The improvement in
earnings is attributed to increased sales of aerospace fasteners
and cost reductions attributed to the Company's investment in new
equipment and employee training programs. The operating earnings
from Mecair Aerospace Industries, Inc. and Greer Stop Nut, Inc.,
two companies recently acquired, also contributed to this increase.
Partially reducing these increases were operating losses incurred
by the Company's manufacturing facilities in Coventry, England and
Shanghai, China. Manufacturing inefficiencies caused the losses in
Coventry while the relocation to a new facility contributed to the
losses in Shanghai. The Company is addressing the manufacturing
disciplines at these locations in order to return these facilities
to profitability.
In the materials segment, operating earnings increased by $2.3
million in the second quarter and $3.5 million for the six month
period. The improvement in operating earnings is attributed to a
higher volume and better product mix of superalloy sales, a
decrease in the cost of certain raw materials and operating
earnings from the recently acquired material businesses noted
above.
<PAGE>13
Other Income and Expense
- ------------------------
Due to higher levels of interest bearing cash, interest income
increased from $105 thousand in the first six months of 1996 to
$438 thousand in the first six months of 1997. Due to higher
levels of debt, interest expense increased from $3.2 million in the
first six months of 1996 to $4.6 million in the first six months of
1997. The "other, net" expense item of $797 thousand includes
losses on the disposal of machinery and equipment that was replaced
with more modern equipment.
Orders and Backlog
- ------------------
Incoming orders for the second quarter of 1997 were $161.1
million compared to $126.1 million in 1996, a 27.8 percent
increase. Incoming orders for the six months ended June 30, 1997
were $324.5 million compared to $254.0 million for the same period
in 1996, a 27.8 percent increase. The increase in orders is
attributed to an increase in orders received by the Aerospace
Products Division ($15.7 million for the quarter and $31.8 million
for the six month period), orders for superalloys ($5.8 million for
the six month period) and orders received by the recently acquired
materials businesses ($12.0 million for the second quarter and
$21.0 million for the six month period). Partially offsetting
these increases were a decrease in orders received for automotive
fasteners sold in North America ($2.2 million for the six month
period). Backlog at June 30, 1997 was $221.8 million, compared to
$154.5 million on the same date a year ago and $181.0 million at
December 31, 1996.
Acquisitions
- ------------
As discussed in Note 2 to the financial statements, the
Company acquired five businesses in the first six months of 1997.
In January 1997, the Company acquired all of the outstanding shares
of Postkey Ltd. (Postkey) located in Nuneaton, England for $1.2
million. Postkey is a supplier of tooling and tool services to the
United Kingdom fastener market with 1996 sales of approximately
$900 thousand. This acquisition increases the company's market
penetration into the United Kingdom tool market and expands the
Company's cylindrical thread roll die technical know-how. On
February 24, 1997, the Company acquired all of the outstanding
shares of Greer Stop Nut, Inc. (Greer), a manufacturer of nylon
insert prevailing torque (locking) nuts, located in Nashville,
Tennessee for $10 million. In 1996, Greer had sales of
approximately $13.1 million. The acquisition of Greer adds a
complementary branded product line to the Company's Unbrako
business. On March 7, 1997, the Company acquired the assets of RJF
International Corporation's (RJF) Bonded Magnet Business, a
manufacturer of flexible ferrite bonded magnets, located in
Cincinnati and Marietta, Ohio for $9.2 million. In 1996, RJF's
Bonded Magnet Business had sales of approximately $9.2 million.
These assets are being relocated to the Company's current magnetic
manufacturing facility in Marietta, Ohio. On April 1, 1997, the
<PAGE>14
Company paid $1.0 million to increase its ownership interest in
Unbrako Products Pte., Ltd. (UPL) from 50 percent to 100 percent.
UPL, located in Singapore, is a distributor of the Company's
Unbrako products to the southeast Asian market with 1996 sales of
approximately $3.2 million. On May 5, 1997, the Company acquired
all of the outstanding shares of Lake Erie Design Co., Inc. (LED)
located in Cleveland, Ohio for $8.1 million. LED is a manufacturer
of high precision ceramic cores for the investment casting industry
with 1996 sales of approximately $5.6 million. LED's ceramic cores
are used in the manufacturing of parts for aerospace and industrial
gas turbines, medical prosthesis and other precision cast
applications. Over 60 percent of their sales are for aerospace
applications. The acquisition of LED expands the scope of products
offered by SPS' subsidiary, Cannon-Muskegon Corporation, to the
investment casting industry.
Liquidity and Capital Resources
- -------------------------------
Management considers liquidity to be the ability to generate
adequate amounts of cash to meet its needs and capital resources to
be the resources from which such cash can be obtained, principally
from operating and external sources. The Company believes that
capital resources available to it will be sufficient to meet the
needs of its business, both on a short-term and long-term basis.
Cash flow provided or used by operating activities, investing
activities and financing activities is summarized in the condensed
statements of consolidated cash flows. Net cash provided by
operating activities increased by $10.5 million compared to the
first six months of 1996 primarily due to the $4.5 million
improvement in net earnings and the $2.6 million decrease in the
use of cash to increase working capital.
The increase in cash used in investing activities is
attributed to the 1997 payments for the acquisitions of Greer ($10
million), RJF's bonded magnet business ($9.2 million) and LED ($7.8
million) compared to the 1996 payment for Flexmag Industries, Inc.
($20 million). Additionally, the Company spent $19.5 million for
capital expenditures in the first six months of 1997 and has
budgeted $35 million for the full year of 1997, as reported on Form
10-K for the year ended December 31, 1996.
Net assets held for sale included in the December 31, 1996
consolidated balance sheet includes the land and building located
in Puerto Rico, related to the former site of an Unbrako
manufacturing operation closed in 1992, and a small parcel of land
located in Newtown, Pennsylvania. In January 1997, the Company
sold the land and building in Puerto Rico for $1.1 million and
these proceeds are included in the consolidated cash flow from
investing activities.
<PAGE>15
The Company's total debt to equity ratio was 61 percent at
June 30, 1997, compared to 65 percent at December 31, 1996. Total
debt was $116.6 million at June 30, 1997 and $115.3 million at
December 31, 1996. As of June 30, 1997, under the terms of the
existing credit agreements, the Company is permitted to incur an
additional $33 million in debt.
Forward-Looking Statements
- --------------------------
Certain statements in management's discussion and analysis of
financial condition and results of operations contain "forward-
looking" information that involve risk and uncertainty. Actual
future results may differ materially depending on a variety of
factors, such as: the effects of competition on products and
pricing, customer satisfaction and qualification issues, labor
disputes, worldwide political stability and economic growth and
changes in fiscal policies, laws and regulations on a national and
international basis.
<PAGE>16
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
---------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 4. Submission of Matters to Vote of Security Holders
- ---------------------------------------------------------
(a) The Annual Meeting of Shareholders was held on April 29, 1997.
(b) The name of each director elected at the Annual Meeting as the
Company's two Class II directors, each to hold office until
the 2000 Annual Meeting of Shareholders, is as follows:
Raymond P. Sharpe
James F. O'Connor
The name of each other director whose term of office continued
after the meeting is as follows:
Richard W. Kelso
Howard T. Hallowell III
Charles W. Grigg
Harry J. Wilkinson
Eric M. Ruttenberg
(c) 1. The results of the election of directors with respect to
each nominee for office was as follows:
For Withheld
---------- ----------
Raymond P. Sharpe 4,448,027 4,555
James F. O'Connor 4,446,222 6,360
Item 5. Other Information
- --------------------------
On July 29, 1997, the Company's Board of Directors
approved a two-for-one stock split, effective August 20, 1997.
When the stock split becomes effective, each existing common stock
certificate will thereafter represent a number of shares equal to
two times the number of shares specified on its face, and may be
exchanged for a new share certificate reflecting the stock split.
In addition, the Company's authorized common stock changed from
30,000,000 shares with a par value of $1.00 per share and 6,710,687
issued shares to 60,000,000 shares with a par value of $ .50 per
share and 13,421,374 issued shares. Common Stock in treasury
changed from 652,681 shares to 1,305,362 shares.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
11 - Computation of Earnings Per Share Statement.
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1997.
<PAGE>17
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
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.
SPS TECHNOLOGIES, INC.
----------------------
(Registrant)
Date: August 11, 1997 /s/William M. Shockley
--------------- ------------------------
William M. Shockley
Vice President, Chief
Financial Officer and
Controller
Mr. Shockley is signing on behalf of the registrant and as the
Chief Financial Officer of the registrant.
<PAGE>18
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit 11 - Computation of Earnings Per Share Statemen
<PAGE>19
Exhibit 11
----------
SPS TECHNOLOGIES, INC. AND SUBSIDIARIES
Computation of Earnings Per Share Statement
(Thousands of dollars, except share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
Net earnings $ 8,390 $ 6,020 $ 15,510 $ 11,060
======== ======== ======== ========
Weighted average
number of common
shares outstanding
during the period 6,039,616 5,953,673 6,028,592 5,932,744
Weighted average
number of maximum
shares subject to
exercise under
outstanding stock
options at end
of period 653,170 662,262 630,978 667,511
--------- --------- --------- ---------
6,692,786 6,615,935 6,659,570 6,600,255
Less treasury shares
assumed purchased
with proceeds from
assumed exercise
of outstanding
options (a) 327,812 286,569 301,756 326,399
--------- --------- --------- ---------
Weighted average
number of common
and common
equivalent shares
outstanding after
assumed exercise
of options 6,364,974 6,329,366 6,357,814 6,273,856
========= ========= ========= =========
Earnings per share
based on above
assumptions (b) $ 1.32 $ .95 $ 2.44 $ 1.76
========= ========= ========= =========
Earnings per share
as reported $ 1.32 $ .95 $ 2.44 $ 1.76
========= ========= ========= =========
<PAGE>20
(a) All options are exercisable under a nonqualified plan. The proceeds
from assumed exercise of options aggregated $23,192,691 and
$20,901,241 in the three and six month periods ended June 30, 1997
respectively; the proceeds from assumed exercises aggregated
$20,203,111 and $20,288,214 in the three and six month periods ended
June 30, 1996, respectively. The proceeds and number of treasury
shares assumed purchased were determined on the most likely exercise
assumption.
(b) Primary and fully diluted earnings per share are the same for each
period presented.
<PAGE>21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,197
<SECURITIES> 0
<RECEIVABLES> 97,499
<ALLOWANCES> 1,921
<INVENTORY> 101,535
<CURRENT-ASSETS> 231,149
<PP&E> 293,223
<DEPRECIATION> 131,124
<TOTAL-ASSETS> 456,737
<CURRENT-LIABILITIES> 117,444
<BONDS> 99,236
0
0
<COMMON> 6,711
<OTHER-SE> 185,958
<TOTAL-LIABILITY-AND-EQUITY> 456,737
<SALES> 291,083
<TOTAL-REVENUES> 291,083
<CGS> 228,336
<TOTAL-COSTS> 228,336
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,626
<INCOME-PRETAX> 23,560
<INCOME-TAX> 8,050
<INCOME-CONTINUING> 15,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,510
<EPS-PRIMARY> 2.44
<EPS-DILUTED> 2.44
</TABLE>
