Pacific Scientific to Buy Firm for Cash

Pacific Scientific Co. said Monday that it will acquire a Massachusetts subsidiary of Allied-Signal Inc. for approximately $17 million in cash. The Anaheim company also credited an earlier acquisition for the 18% increase in net earnings and sharply increased sales reported Monday for the first quarter of its fiscal 1987.

The latest in Pacific Scientific’s three-year acquisition campaign, the purchase of Sigma Instruments Inc., will virtually exhaust the company’s once-substantial cash holdings, said Richard Plat, senior vice president for finance.

Pacific Scientific had $36 million in cash at the end of 1986 but will use up the last of that money when the Sigma purchase is completed. Plat said the sale is expected to become final in about 30 days. The Sigma purchase will be the firm’s sixth since 1984.

Sigma, whose electric motors and controls last year generated about $30 million in sales, will “integrate nicely with our other operations,” Plat said. Pacific Scientific’s Motor & Control division manufactures a line of electric motors.

Plat said Pacific Scientific does not plan to relocate Sigma’s operations to Orange County. Sigma, he said, has about 500 employees in Massachusetts and Puerto Rico.

Separately, Pacific Scientific said net earnings for the quarter ended March 27 increased to $1.3 million from $1.1 million a year earlier. Revenues during the three months climbed 48% to $32.9 million from $22.2 million.

However, the improvements resulted not from Pacific Scientific’s core businesses but from a recent acquisition. HTL Instruments Inc., acquired in December for about $27 million in cash, added $275,000 to Pacific Scientific’s first-quarter net earnings and $11 million to revenues, Plat said. HTL is a Monrovia-based defense electronics firm.

Without HTL, Pacific Scientific would have had a 9% decrease in quarterly net earnings and a 1% drop in revenues. Plat blamed the decrease on continued weak demand for one of Pacific Scientific’s main products--mechanical shock arresters used in nuclear power plants.

The shock arresters, used to stabilize pipes in nuclear power plants, once were Pacific Scientific’s most profitable product, but slumping demand forced the company to hit the acquisition trail in a bid to diversify.

Plat said that Pacific Scientific is not using up its sizable cash reserve in order to reduce its attractiveness as a takeover target. And the company, he said, has not had any “serious discussions” with potential suitors.

However, analysts have said that Pacific Scientific’s strong balance sheet and ample working capital, including cash and marketable assets, make it a logical target for a leveraged buyout. One analyst last year called the company a “sitting duck.”