Jason Sandefur

Following months of industry speculation, PennEngineering & Manufacturing Corp. signed an agreement in January 2005 to be purchased for about $330 million in cash by PEM Holding Co., an affiliate of private equity firm Tinicum Capital Partners II.
Under the arrangement, stockholders will receive $18.25 per share for the Danboro, PA-based fastener manufacturer. The transaction is expected to close in the first half of 2005.
CEO Kenneth Swanstrom could see a windfall from the sale. According to Securities and Exchange Commission filings, Swanstrom owns 24% of the company”s outstanding class A common stock. Based on the current agreement, Swanstrom could make more than $80 million from the deal.
The news follows positive results from PennEngineering in 2004. For the second straight year, both sales and profit rose more than 20%. Overall sales in 2004 gained 26.3% to $240.8 million, while net income more than tripled to $18.5 million.
Fastener Technology sales rose 33% to $127.8 million, while operating profit nearly tripled to $32 million. The fastener segment continued to benefit from the improved economy, especially in the gaming, security and medical markets. In addition, a 2% price increase went into effect on January 1, 2004, as well as an additional 2% surcharge in May 2004 on selected products to cover additional raw material cost increases. During the year the average selling price for fasteners increased 4.7%.
Distribution sales in 2004 improved 20% to $62.4 million, while operating income soared 78% to $3.1 million.
PennEngineering has found production success in its fastener division by converting operations to an innovative mini-factory approach that promotes teamwork among employees.
In 2002 the company established an Arconix Group distribution facility in Shanghai. This facility joins established Arconix operations in the U.S., the UK, Singapore and Mexico.
Fasteners and Pemserter presses are in the Pem Fastening Systems unit, rivet nut fasteners are in Atlas Engineering, distribution and logistics are in Arconix Group, and DC motors are in Pittman.
Founded in 1942 by K.A. Swanstrom, PennEngineering produces self-clinching fasteners, fastener installation equipment, miniature DC electric motors and other metal products. Brand names include PEM self-clinching fasteners, SI inserts for plastics and Pemserter automatic fastener installation equipment.
PennEngineering has locations in North Carolina, Ohio, Pennsylvania, California, Mexico, Ireland, England, Italy and Asia.
The Swanstrom family owns about 53% of the class A common stock.

Headquarters: 5190 Old Easton Rd., P.O. Box 1000, Danboro, PA 18916-1000. Tel: 215 766-3675 or 800 237-4736 Fax 215 766-7366
Web: penn-eng.com
NYSE Symbol: PNN (nonvoting) and PNN.A (voting)
CEO: Kenneth Swanstrom, 65
Investor Relations: CFO Mark Simon
Key fastener executive: Francis Wilson, president of Fastening Technologies; Alan Kay, president of Arconix Group
Founded: 1942
Employees: 1,361
Percentage of revenue from fastener-related products: 79%
\ �2005 FastenerNews.com