-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pxw+xQfHTUIrw5+ayulnPD5b7QXuSzhDwDh/w5QpcRBMRYL0dUAeZwvO26OqUFdw yAhgFzAusLaYkqdqVzhpew== 0000950124-97-000731.txt : 19970222 0000950124-97-000731.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950124-97-000731 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961229 FILED AS OF DATE: 19970212 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: LABARGE INC CENTRAL INDEX KEY: 0000057139 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 730574586 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05761 FILM NUMBER: 97528024 BUSINESS ADDRESS: STREET 1: 1300 NATIONAL HIGHWAY CITY: THOMASVILLE STATE: NC ZIP: 27360 BUSINESS PHONE: 9104764777 MAIL ADDRESS: STREET 1: PO BOX 14499 CITY: ST LOUIS STATE: MO ZIP: 63178-4499 FORMER COMPANY: FORMER CONFORMED NAME: DORSETT ELECTRONICS INC DATE OF NAME CHANGE: 19690406 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended December 29, 1996 Commission file number: 1-5761 - -------------------------------------------------------------------------------- LaBarge, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 73-0574586 - ------------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 14499, St. Louis, Missouri 63178 - -------------------------------------------------------------------------------- (Address) (Zip Code) (314) 997-0800 - -------------------------------------------------------------------------------- (Registrant's telephone number, including Area Code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal 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 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 December 29, 1996. 15,621,495 common stock. 2 LABARGE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (dollars in thousands except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 29, December 31, DECEMBER 29, December 31, 1996 1995 1996 1995 - --------------------------------------------------------------------------------------------- NET SALES $24,102 $14,910 $46,026 $28,271 - --------------------------------------------------------------------------------------------- COSTS AND EXPENSES: Cost of sales 19,086 12,483 36,254 23,806 Selling and administrative expenses 3,069 1,798 5,928 3,471 - --------------------------------------------------------------------------------------------- 22,155 14,281 42,182 27,277 - --------------------------------------------------------------------------------------------- EARNINGS FROM OPERATIONS 1,947 629 3,844 994 - --------------------------------------------------------------------------------------------- Interest expense 300 327 588 646 Equity in loss of joint venture (6) - (139) - Other income, net 12 139 32 185 - --------------------------------------------------------------------------------------------- EARNINGS BEFORE INCOME TAXES 1,653 441 3,149 533 INCOME TAX EXPENSE 106 27 202 33 - --------------------------------------------------------------------------------------------- NET EARNINGS $1,547 $414 $2,947 $500 ============================================================================================= NET EARNINGS PER COMMON SHARE $.10 $.03 $.19 $.03 ============================================================================================= AVERAGE COMMON SHARES OUTSTANDING 15,622 15,296 15,613 15,271 =============================================================================================
See accompanying notes to consolidated financial statements. -2- 3 LABARGE, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (dollars in thousands except per share data)
DECEMBER 29, June 30, 1996 1996 - --------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,550 $ 935 Accounts and notes receivable, net 12,324 13,455 Inventories 19,727 17,577 Prepaid expenses 282 286 Deferred tax assets, net 1,013 1,013 - --------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 35,896 33,266 - --------------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT, NET 3,326 3,194 DEFERRED TAX ASSETS, NET 2,237 2,237 INVESTMENT IN JOINT VENTURE 18 157 OTHER ASSETS, NET 2,736 2,696 - --------------------------------------------------------------------------------------- $44,213 $41,550 ======================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings $ 2,650 $ 400 Current maturities of long-term debt 619 633 Trade accounts payable 4,920 7,614 Accrued liabilities 5,032 4,729 - --------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 13,221 13,376 - --------------------------------------------------------------------------------------- Long-term debt 10,265 10,419 - --------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY: Common stock, $.01 par value. Authorized 20,000,000 shares; issued 15,621,495 shares at December 29, 1996 and 15,601,891 shares at June 30, 1996 156 156 Additional paid-in capital 13,553 13,527 Retained earnings 7,020 4,073 Less stock in treasury; 396 shares at December 29, 1996 and 187 shares at June 30, 1996 (2) (1) - --------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 20,727 17,755 - --------------------------------------------------------------------------------------- $44,213 $41,550 =======================================================================================
See accompanying notes to consolidated financial statements. -3- 4 LABARGE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (dollars in thousands)
SIX MONTHS ENDED DECEMBER 29, December 31, 1996 1995 - --------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $2,947 $ 500 Adjustments to reconcile net cash provided (used) by operating activities: Undistributed loss in equity of joint venture 139 - Depreciation and amortization 484 443 Other - (8) Changes in assets and liabilities: Accounts and notes receivable, net 1,131 (332) Inventories (2,150) (1,070) Prepaid expenses 4 9 Trade accounts payable (2,694) 813 Accrued liabilities 303 (161) Current liabilities of discontinued operations, net - (275) - --------------------------------------------------------------------------------------------------------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 164 (81) - --------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (526) (540) Additions to other assets (129) (156) - --------------------------------------------------------------------------------------------------------- NET CASH USED BY INVESTING ACTIVITIES (655) (696) - --------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of long-term debt (169) (769) Exercise of stock warrants and options 26 10 Purchase of common stock to treasury (1) 9 Net change in short-term borrowings 2,250 1,600 - --------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 2,106 850 - --------------------------------------------------------------------------------------------------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 1,615 73 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 935 143 - --------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,550 $ 216 =========================================================================================================
See accompanying notes to consolidated financial statements. -4- 5 LABARGE, INC. FORM 10-Q NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. CONSOLIDATED FINANCIAL STATEMENTS - BASIS OF PREPARATION The consolidated balance sheets at December 29, 1996 and June 30, 1996, the related consolidated statements of operations for the three and six months ended December 29, 1996 and December 31, 1995 and the consolidated statements of cash flows for the six months ended December 29, 1996 and December 31, 1995 have been prepared by LaBarge, Inc. (the "Company") without audit. In the opinion of management, adjustments of a normal and recurring nature, necessary to present fairly the financial position and the results of operations and cash flows for the aforementioned periods, have been made. Certain information and footnote disclosures normally included in consolidated financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996. 2. ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable consist of the following: (dollars in thousands) DECEMBER 29, June 30, 1996 1996 - -------------------------------------------------------------------------------- Billed shipments, net of progress payments $ 11,772 $ 12,860 Less allowance for doubtful accounts 160 187 - -------------------------------------------------------------------------------- Trade receivables - net 11,612 12,673 Current portion of notes receivable 600 600 Other current receivables 112 182 - -------------------------------------------------------------------------------- $ 12,324 $ 13,455 ================================================================================ Progress payments are payments from customers in accordance with contractual terms for contract costs incurred to date. Such payments are credited to the customer at the time of shipment. Notes receivable include a note from a former officer of the Company totaling $600,000. Other current receivables represent amounts due from employees for travel advances and other miscellaneous sources. -5- 6 3. INVENTORIES ----------- Inventories consist of the following: (dollars in thousands) DECEMBER 29, June 30, 1996 1996 - -------------------------------------------------------------------------------- Raw materials $ 13,502 $ 14,042 Work in process 6,225 4,779 - -------------------------------------------------------------------------------- 19,727 18,821 Less progress payments - 1,244 - -------------------------------------------------------------------------------- $ 19,727 $ 17,577 ================================================================================ In accordance with contractual agreements, the government has a security interest in inventories related to contracts for which progress payments have been received. 4. SHORT AND LONG-TERM OBLIGATIONS ------------------------------- Short-term borrowings, long-term debt and the current maturities of long-term debt consist of the following: (dollars in thousands) DECEMBER 29, June 30, 1996 1996 - -------------------------------------------------------------------------------- SHORT-TERM BORROWINGS: Revolving credit agreement: Balance at period-end $ 2,650 $ 400 Interest rate at period-end 8.00% 8.25% Average amount of short-term borrowings outstanding during period $ 2,232 $ 5,823 Average interest rate for period 7.66% 10.07% Maximum short-term borrowings at any month-end $ 3,060 $ 9,800 ================================================================================ Total short-term borrowings $ 2,650 $ 400 ================================================================================ -6- 7 4. SHORT AND LONG-TERM OBLIGATIONS (continued) ------------------------------- DECEMBER 29, June 30, 1996 1996 - -------------------------------------------------------------------------------- LONG-TERM DEBT: Senior lender: Revolving credit agreement $ 4,500 $ 4,500 Term loan 12% Subordinated Notes 2,850 3,000 Industrial revenue bond due 3,386 3,386 semiannually through 2001, interest at 5% 122 134 Other 26 32 - -------------------------------------------------------------------------------- 10,884 11,052 Less current maturities 619 633 - -------------------------------------------------------------------------------- Total long-term debt, less current maturities $10,265 $10,419 ================================================================================ The average interest rate was computed by dividing the sum of daily interest costs by the sum of the daily borrowings for the respective periods. 5. EARNINGS PER COMMON SHARE ------------------------- Earnings per common share is based on the weighted average number of shares outstanding during the period, i.e., quarter or year to date. Also outstanding are the following common stock options: 155,000 shares currently exercisable at $.66 to $1.44 and 181,775 shares with exercise prices ranging from $1.31 to $7.24 which are not exercisable at this time. The earliest exercise date of the non-exercisable options is February 8, 1997. Due to the insignificant percentage of options outstanding to the total number of common shares outstanding, the options are not considered dilutive common stock equivalents for the purposes of the earnings per share calculation. During the six months ended December 29, 1996, options to purchase 20,000 shares were exercised at a price of $1.31 per share. 6. INCOME TAXES ------------ The tax benefits from the Company's net operating loss carryforwards, which will more likely than not be realized, have been recorded as an asset. As of December 29, 1996, the net value of this benefit was $3.25 million and is reported as $1.01 million in current assets and $2.23 million in other assets. The net operating loss carryforwards as of June 30, 1996, for Federal Income Tax purposes, were $16.6 million, which are available to offset future Federal taxable income through 2003. The Company also has investment tax credit carryforwards for Federal income tax purposes of approximately $200,000 which are available to reduce future Federal income taxes through 2001. In addition, the Company has alternative minimum tax credit carryforwards of approximately $300,000 which are available to reduce future regular Federal income taxes over an indefinite period. -7- 8 7. CASH FLOWS Total cash payments for interest for the three and six months ended December 29, 1996 were $290,000 and $476,000 compared to $308,000 and $635,000 for the three and six months ended December 31, 1995. -8- 9 LABARGE, INC. FORM 10-Q MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION AND FINANCIAL CONDITION Statements contained in this Report which are not historical facts are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. For a summary of important factors which could cause the Company's actual results to differ materially from those projected in, or inferred by, the forward looking statements, see the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1996, which is on file with the Securities and Exchange Commission and available to stockholders from the Company. LaBarge, Inc. engineers, manufactures, tests and sells sophisticated electronic systems and devices and complex interconnect assemblies. Primary markets for the Company's products include telecommunications, geophysical, medical, aerospace and defense. The Company employs approximately 770 people. On May 7, 1996, the Company, through its wholly-owned subsidiary LaBarge Wireless Inc., entered into a fifty-fifty joint venture with Clayco Construction Company of St. Louis, Missouri. The new company, LaBarge Clayco Wireless L.L.C., provides engineering, project management, construction, equipment installation and testing services for the rapidly growing wireless telecommunications industry. LaBarge Clayco Wireless complements LaBarge's efforts in the design, production and sale of equipment for this segment of the telecommunications market. LaBarge, Inc. accounts for its fifty percent investment in LaBarge Clayco Wireless L.L.C. under the equity method of accounting. On May 15, 1996, the Company, through its wholly-owned subsidiary LaBarge/STC, Inc., purchased the assets for approximately $2.7 million and assumed $400,000 of liabilities of SOREP Technology Corporation in Houston, Texas. LaBarge/STC, Inc. is engaged in the manufacture of custom hybrid circuits and high-temperature electronic assemblies used in oil and gas exploration, drilling and production. The acquisition furthers the Company's efforts to expand its geophysical business. The results of this subsidiary are included in the consolidated results of the Company for the three and six months ended December 29, 1996. The Company's backlog of firm, unshipped orders at December 29, 1996 was approximately $58.8 million compared to $64.0 million at December 31, 1995. The backlog at December 29, 1996 consisted of approximately $39.8 million for various defense products, and approximately $19.0 million for commercial products. Approximately $8.8 million of the total backlog is not scheduled to ship within the next break5break512 months pursuant to the shipment schedules contained in those contracts. For the six months ended December 29, 1996, approximately 45% of the Company's sales -9- 10 were defense related while 55% were commercial. Commercial markets included telecommunications (21%), geophysical (21%), aerospace (7%) and other (6%). Significant customers for the six months were: Lockheed Martin, which accounted for 24% of sales; Schlumberger, which accounted for 15% of sales; Northern Telecom, which accounted for 17% of sales. The Company has designed and developed the Laser Lancet(TM), a small medical laser, for Venisect, Inc. under a technology licensing agreement from Venisect. Venisect is currently attempting to secure U.S. Food and Drug Administration (FDA) clearance to market the device for the purpose of perforating the skin to collect capillary blood for clinical testing. On December 30, 1996, Venisect provided the FDA with the additional information the FDA requested to complete its review of Venisect's request for clearance to market the Laser Lancet(TM). While there can be no assurance, both LaBarge and Venisect remain confident that clearance will be received. Upon FDA clearance the Company will manufacture the Laser Lancet(TM) for distribution by Venisect. -10- 11 LABARGE, INC. FORM 10-Q MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS SIX MONTHS ENDED DECEMBER 29, 1996 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 1995 Net sales for the six months ended December 29, 1996 were $46.0 million compared to $28.3 million for the six months ended December 31, 1995, an increase of approximately $17.7 million or 63%. The increase is mainly attributable to growth in sales to the telecommunications and geophysical markets including sales by LaBarge/STC, Inc. Gross profit for the six months ended December 29, 1996 was $9.77 million, 21.2% of sales, compared to $4.47 million, 15.8% of sales, for the six months ended December 31, 1995. The increase in gross margin is attributable to higher sales volume relative to fixed costs and a more profitable product mix. Selling and administrative expenses for the six months ended December 29, 1996 were $5.93 million, 12.9% of sales, compared to $3.47 million, 12.3% of sales, for the six months ended December 31, 1995. The increased expenses are due to added personnel and outside professional services to support the sales growth and the acquisition of SOREP Technology Corporation in May 1996. Earnings from operations were $3.84 million, 8.4% of sales, for the six months ended December 29, 1996, compared to $994,000, 3.5% of sales, for the six months ended December 31, 1995. Interest expense for the six months ended December 29, 1996 was $588,000, compared to $646,000 for the six months ended December 31, 1995. Equity in loss of joint venture of $139,000 represents the Company's share of the loss incurred by LaBarge Clayco Wireless L.L.C. for the six months. The Company has significant tax loss carryforwards which offset most of its income tax liability. Income tax expense for the six months ended December 29, 1996 and December 31, 1995, respectively, was $202,000 and $33,000. Net earnings for the six months ended December 29, 1996 were $2.95 million, up 489% compared to $500,000 for the six months ended December 31, 1995. Earnings per common share were $.19 for the six months ended December 29, 1996 and $.03 for the six months ended December 31, 1995. -11- 12 RESULTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 29, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 1995 Net sales for the three months ended December 29, 1996 were $24.1 million compared to $14.9 million for the three months ended December 31, 1995. This is a 62% increase and is largely attributable to higher shipments in the telecommunications and geophysical markets. Gross profit for the three months ended December 29, 1996 was $5.02 million, 20.8% of sales, compared to $2.43 million, 16.3% of sales, for the three months ended December 31, 1995. The higher volume of sales in relation to fixed costs and an improved mix of product shipments are the primary reasons for the higher margins. Selling and administrative expenses were $3.07 million, 12.7% of sales, for the three months ended December 29, 1996, compared to $1.8 million, 12.1% of sales, for the three months ended December 31, 1995. Selling and administrative expenses have increased due to additional personnel to support growth and the acquisition of SOREP. Earnings from operations for the three months ended December 29, 1996 were $1.95 million, 8.1% of sales, compared to $629,000, 4.2% of sales, for the three months ended December 31, 1995. Interest expense for the three months ended December 29, 1996 was $300,000 compared to $327,000 for the three months ended December 31, 1995. The Company continues to have significant tax loss carryforwards which, in accordance with SFAS 109, results in $3.25 million of deferred tax assets, net of the related valuation allowance as of June 30, 1996. Income tax expense for the three months ended December 29, 1996 and December 31, 1995 was $106,000 and $27,000, respectively. Net earnings for the three months ended December 29, 1996 were $1.55 million, compared to $414,000 for the three months ended December 31, 1995. Earnings per common share were $.10 for the three months ended December 29, 1996, compared to $.03 for the three months ended December 31, 1995. FINANCIAL CONDITION & LIQUIDITY On June 25, 1996, the Company entered into a new lending agreement providing for a $3.0 million term loan and a $17.0 million revolving credit facility based on a borrowing base formula tied to accounts receivable and inventory. Both loans are secured by the assets of the Company and mature in July 1999. The term loan requires quarterly payments of principal of $150,000. This loan agreement provides sufficient working capital to support planned internal growth. -12- 13 For the six months ended December 29, 1996, the Company generated cash from its operations totaling $164,000. Cash was generated through net earnings and reduced accounts receivable. Cash was used to reduce accounts payable and increase inventories. During the six months ended December 29, 1996, the Company increased borrowings by $2.1 million. -13- 14 PART II Not Applicable -14- 15 SIGNATURE 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. LABARGE, INC. ---------------------- (Registrant) Date February 12, 1997 -------------------- /s/William J. Maender -------------------------- William J. Maender Vice President - Finance, Treasurer and Secretary -15- EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS JUN-29-1997 DEC-29-1996 2,550 0 12,324 160 19,727 35,896 3,326 (9,598) 44,213 13,221 0 0 0 156 20,571 44,213 46,026 46,026 36,254 42,182 107 0 588 3,149 202 2,947 0 0 0 2,947 .19 .19
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