-----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, WkbFDKgr3vZ2ejwVZwehJePc+KB7c/7Hm5mD5Zu9hgS66V652sSVAottsj8/mFUt cHWvHOkI/bla8T1T2xKxPw== 0000009342-97-000018.txt : 19970813 0000009342-97-000018.hdr.sgml : 19970813 ACCESSION NUMBER: 0000009342-97-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970812 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALDOR ELECTRIC CO CENTRAL INDEX KEY: 0000009342 STANDARD INDUSTRIAL CLASSIFICATION: MOTORS & GENERATORS [3621] IRS NUMBER: 430168840 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07284 FILM NUMBER: 97657006 BUSINESS ADDRESS: STREET 1: 5711 R S BOREHAM JR ST STREET 2: P O BOX 2400 CITY: FORT SMITH STATE: AR ZIP: 72902-2400 BUSINESS PHONE: 5016464711 10-Q 1 BALDOR'S 2ND QTR 1997 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ---------------------- FORM 10-Q ----------------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 28, 1997. ------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ------------------. Commission File Number 1-7284 ------ BALDOR ELECTRIC COMPANY ------------------------------------------------------ (Exact name of registrant as specified in its charter) Missouri 43-0168840 -------------------------------- ----------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5711 R.S. Boreham, Jr Street, Fort Smith, Arkansas 72908 ----------------------------------------------------------- (Address of principal executive offices) (Zip Code) (501) 646-4711 ---------------------------------------------------- (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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- At June 28, 1997, there were 26,867,158 shares of the registrant's common stock outstanding. PART I. FINANCIAL INFORMATION Item 1. Financial Statements ---------------------------------- BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 28 JUNE 29 JUNE 28 JUNE 29 1997 1996 1997 1996 ------------------- -------------------- (In thousands, except share data) Net sales $141,929 $129,906 $271,842 $251,459 Other income (net) 408 718 983 1,453 --------- --------- -------- -------- 142,337 130,624 272,825 252,912 Cost and expenses: Cost of goods sold 99,088 91,481 189,925 177,223 Selling and administrative 23,745 21,861 45,447 42,453 Profit sharing 2,261 1,839 4,347 3,634 Interest 567 855 1,155 1,475 --------- --------- -------- -------- 125,661 116,036 240,874 224,785 --------- ---------- -------- -------- Earnings before income taxes 16,676 14,588 31,951 28,127 Income taxes 6,418 5,617 12,301 10,829 --------- --------- -------- ------- Net earnings $ 10,258 $ 8,971 $ 19,650 $ 17,298 ========= ========= ======== ======== Net earnings per common share $0.37 $0.33 $0.71 $.063 ===== ===== ===== ===== Dividends paid per common share $0.12 $0.10 $0.23 $0.19 ===== ===== ===== ===== Weighted average common shares outstanding 27,875,000 27,023,000 27,550,000 27,424,000 =========== ========== ========== ========== See the notes to the unaudited condensed consolidated financial statements. -2- BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) JUNE 28 DECEMBER 28 1997 1996 ------------- ------------- ASSETS (In thousands) CURRENT ASSETS: Cash and cash equivalents $ 5,746 $ 7,950 Marketable securities 15,918 17,892 Receivables, less allowances of $3,525,000 and $3,200,000, respectively 90,097 80,183 Inventories: Finished products 69,414 66,528 Work-in-process 12,897 13,483 Raw materials 35,844 39,162 --------- --------- 118,155 119,173 LIFO valuation adjustment (deduction) (26,595) (26,786) --------- --------- 91,560 92,387 Other current and deferred tax assets 14,533 19,745 --------- -------- TOTAL CURRENT ASSETS 217,854 218,157 OTHER ASSETS 32,331 11,965 PROPERTY, PLANT AND EQUIPMENT 210,064 202,470 Allowances for depreciation and amortization (deduction) (115,335) (107,106) --------- -------- 94,729 95,364 --------- -------- $344,914 $325,486 ========= ======== The Condensed Consolidated Balance Sheet at December 28, 1996, has been derived from the audited Consolidated Balance Sheet at that date. Also, see the notes to the unaudited condensed consolidated financial statements. -3- BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) JUNE 28 DECEMBER 28 1997 1996 ----------- ----------- LIABILITIES AND SHAREHOLDERS' EQUITY (In thousands) CURRENT LIABILITIES: Accounts payable $ 21,564 $ 20,314 Employee compensation 5,218 5,932 Profit sharing 4,347 7,645 Anticipated warranty costs 5,200 4,500 Accrued insurance obligations 14,801 14,286 Other accrued expenses 20,496 16,626 Income taxes 3,247 766 Current maturities of long-term obligations 1,125 1,113 ------- ------- TOTAL CURRENT LIABILITIES 75,998 71,182 LONG-TERM OBLIGATIONS 36,471 45,027 DEFERRED INCOME TAXES 3,989 8,952 SHAREHOLDERS' EQUITY: Common stock 2,874 2,862 Additional capital 41,936 37,112 Retained earnings 220,605 207,064 Cumulative translation adjustments (259) 346 Treasury stock, at cost (36,700) (47,059) --------- --------- TOTAL SHAREHOLDERS' EQUITY 228,456 200,325 --------- --------- $ 344,914 $ 325,486 ========= ========= The Condensed Consolidated Balance Sheet at December 28, 1996, has been derived from the audited Consolidated Balance Sheet at that date. Also, see the notes to the unaudited condensed consolidated financial statements. -4- BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED June 28 June 29 1997 1996 --------- --------- (In thousands) Operating activities: Net earnings $19,650 $17,298 Depreciation and amortization 9,295 8,429 Deferred income taxes (2,110) (3,844) Changes in operating assets and liabilities: Receivables (8,651) (6,156) Inventories 1,801 (5,396) Other current assets 2,397 3,319 Accounts payable 536 933 Accrued expenses and other liabilities 2,039 (805) Income taxes 2,108 (1,558) Other (net) (1,908) (1,937) ------- -------- Net cash provided by operating activities 25,157 10,283 Investing activities: Additions to property, plant and equipment (7,907) (7,899) Sales of available-for-sale securities 9,486 27,085 Purchases of available-for-sale securities (7,512) (15,696) Optimised Control Ltd. (7,597) ------- ------- Net cash provided by (used in) investing activities (13,530) 3,490 Financing activities: Additional long-term borrowings 38,000 Reduction of long-term obligations (8,544) (13,022) Unexpended debt proceeds (184) 522 Dividends paid (6,109) (4,936) Stock option plans 1,006 2,005 Common stock repurchased (40,925) -------- -------- Net cash used in financing activities (13,831) (18,356) -------- -------- Net decrease in cash and cash equivalents (2,204) (4,583) Beginning cash and cash equivalents 7,950 6,322 ------- ------- Ending cash and cash equivaelnts $ 5,746 $ 1,739 ======= ======= See notes to unaudited condensed consolidated financial statements. -5- BALDOR ELECTRIC COMPANY AND AFFILIATES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 28, 1997 BASIS OF PRESENTATION: The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements, and therefore should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 28, 1996. In the opinion of management, all adjustments (consisting only of normal recurring items) considered necessary for a fair presentation have been included. The results of operations for the six months ended June 28, 1997, may not be indicative of the results that may be expected for the fiscal year ending January 3, 1998. ACCOUNTING PRONOUNCEMENTS: In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for computing primary earnings per share, the dilutive effect of stock options will be excluded. The impact of Statement No. 128 on the calculation of primary earnings per share and fully diluted earnings per share for these quarters is not expected to be material. In June 1997, the FASB issued Statement No. 130, Reporting Comprehensive Income. The Statement establishes standards for the reporting and display of comprehensive income and its components in a full set of general purpose financial statements. The Statement is effective for the Company in 1998. The Company does not anticipate that adoption of this Statement will have a material impact on the current presentation of its financial statements. In June 1997, the FASB issued Statement No. 131, Disclosures about Segments of an Enterprise and Related Information. The Statement changes the way public companies report segment information in annual financial statements and also requires those companies to report selected segment information in interim financial reports to shareholders. The proposal superseded FASB Statement No. 14 on segments. The Statement is effective for the Company in 1998. The Company is currently evaluating the impact that the Statement will have on its reporting. RECLASSIFICATION: The Company has reclassified the presentation of certain prior year information to be consistent with the presentation in the current year. -6- ACQUISITION: On April 5, 1997, Baldor Electric Company acquired Optimised Control Ltd. ("Optimised") with a combination of cash and Baldor Common Stock. The acquisition of Optimised has been accounted for using the purchase method of accounting and beginning April 5, 1997, the results of Optimised's operations are included in the accompanying statement of income. The results of Optimised's operations in the periods presented prior to April 5, 1997, were not material to the Company. -7- PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition ------ ----------------------------------------------------------- and Results of Operations ------------------------- RESULTS OF OPERATIONS For the 22nd consecutive quarter, sales and earnings set records for both the quarter and the year-to-date periods. Sales for the second quarter of 1997 were $141,929,000, up 9.3% over sales of $129,906,000 for the second quarter of 1996. Year-to-date 1997 sales of $271,842,000 were up 8.1% over year-to-date 1996 sales of $251,459,000. International sales (exports and sales by foreign affiliates), which comprise 13.4% of total year-to-date sales, were about flat for the second quarter and for year-to- date over the same periods in 1996. Sales growth was broad-based with growth across many product lines, industries, and geographic regions. Sales growth in North America was strong, up approximately 12%; however, European sales performance was not up to expectations. The corrective actions taken are expected to yield better European sales results in the second half of 1997. Both distributor and OEM sales increased for the quarter and year-to-date. Stronger increases in OEM sales during 1997 have resulted in a shift between OEM and distributor sales to approximately 52% and 48% of total sales, respectively. Year-to-date sales of motor products were up approximately 10% over year-to-date 1996, but year-to-date drives sales were down approximately 4% over the same period of 1996. Pricing remained firm in the first half of 1997 compared to 1996 levels. No price increases have been announced since October 1995. Second quarter 1997 net earnings of $10,258,000 were up 14.3% over second quarter 1996 and year-to-date 1997 net earnings of $19,650,000 were up 13.6% over the first six months of 1996. Earnings per common share were $0.37 for the second quarter of 1997 and $0.71 for the first six months of 1997, up 12.1% and 12.7% respectively over 1996 amounts. Earnings per common share increased less than net earnings due largely to the shares issued to purchase Optimised Control Ltd. The second quarter 1997 gross margin as a percent of sales was 30.2% and the year-to-date 1997 gross margin was 30.1% compared to 29.6% for the second quarter of 1996 and 29.5% year-to-date 1996. For the quarter and the year, margins have benefitted from steady material costs and the effects of productivity and other cost improvements. Second quarter 1997 selling and administrative expenses at 16.7% of sales remained at the same level as first quarter 1997 and second quarter 1996. This continues to be the best leverage for selling and administrative expenses since 1984. -8- LIQUIDITY AND CAPITAL RESOURCES Through the first six months of 1997, the Company's financial position remained solid. Cash and marketable securities were at $21.7 million compared to $25.8 million at year-end 1996. Working capital decreased to $141.9 million at June 28, 1997, from $146.9 million at December 28, 1996, due in part to the cash used to purchase Optimised Control Ltd. in the second quarter. The current ratio at June 28, 1997, remained strong at 2.9 compared to 3.1 at December 28, 1996 and the debt-to- capitalization ratio (shareholders' equity and long-term borrowings) was 13.8%. - 9- PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders -------- ------------------------------------------------------ On May 3, 1997, the Company held its Annual Meeting of Shareholders at which two proposals were voted on. Proposal I was the election of three Directors to the Company's Board of Directors for terms expiring in 2000. Proposal II was a proposal to amend the Baldor Electric Company 1994 Incentive Stock Plan as contained in the Company's Proxy Statement dated March 27, 1997. The following is a list of the Board's slate of nominees (who were the only nominees) each of whom were elected, and the results of shareholder voting on proposal II: Votes Votes Votes Broker Proposal FOR AGAINST WITHHELD NON-VOTES -------- --------- ---------- --------- --------- Proposal I O. A. Baumann 21,209,521 N/A 373,606 N/A John A. McFarland 21,213,299 N/A 369,828 N/A Robert L. Proost 21,218,534 N/A 364,593 N/A Proposal II 20,849,134 503,943 230,050 N/A Messers Jefferson W. Asher, Jr., Fred C. Ballman, R.S. Boreham, Jr., Robert J. Messey, R.L. Qualls and Willis J. Wheat, are the remaining board members, each of whom is expected to serve out his respective term. Item 6. Exhibits and Reports on Form 8-K ------- ---------------------------------------- a. Exhibits - See the Exhibit Index b. The registrant filed a Form 8-K on April 18, 1997, to report the exemption from registration under the Securities Act of 1933 on which the registrant relied when it issued Baldor Common Stock to the former shareholders of Optimised Control Ltd.in connection with the registrant's Acquisition of Optimised Control Ltd. S I G N A T U R E S ------------------------- 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. BALDOR ELECTRIC COMPANY (Registrant) August 12, 1997 By: /s/ Lloyd G. Davis --------------- ------------------- (Date) Lloyd G. Davis - Chief Financial Officer and Executive Vice-President - Finance (on behalf of the Registrant and as principal financial officer) -10- EXHIBIT INDEX These Exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K. Exhibits Number --------- 2 Omitted - Inapplicable 3(i) Omitted - Inapplicable 3(ii) Omitted - Inapplicable 4 Omitted - Inapplicable 10(iii)(A) Omitted - Inapplicable 11 Computation of Earnings Per Common Share - filed herewith 15 Omitted - Inapplicable 18 Omitted - Inapplicable 19 Omitted - Inapplicable 22 Omitted - Inapplicable 23 Omitted - Inapplicable 24 Omitted - Inapplicable 27 Financial Data Schedules - filed herewith 99 Omitted - Inapplicable -11- EX-11 2 EXHIBIT 11 - EPS - BALDOR'S 2ND QTR 1997 FORM 10-Q EXHIBIT 11 BALDOR ELECTRIC COMPANY AND AFFILIATES COMPUTATION OF EARNINGS PER COMMON SHARE THREE MONTHS SIX MONTHS ENDED ENDED ---------------- ----------------- June 28 June 29 June 28 June 29 1997 1996 1997 1996 (In thousands, except per share data) Primary Weighted average shares outstanding 26,811 26,044 26,530 26,470 Dilutive stock options based on the treasury stock method using the average market price 1,064 979 1,020 954 ------- ------- ------ ------ Total 27,875 27,023 27,550 27,424 ======= ====== ====== ====== Net Earnings $10,258 $ 8,971 $19,650 $17,298 ======= ======= ======= ======= Per Share Earnings $ 0.37 $ 0.33 $ 0.71 $ 0.63 ======= ======= ======= ======= Fully Diluted Weighted average shares outstanding 26,811 26,044 26,530 26,470 Dilutive stock options based on the treasury stock method using the year-end market price, if higher than average market price 1,155 1,034 1,155 1,034 ------ ------ ------ ------ Total 27,966 27,078 27,685 27,504 ====== ====== ====== ====== Net Earnings $10,258 $ 8,971 $19,650 $17,298 ======= ======= ======= ======= Per Share Earnings $ 0.37 $ 0.33 $ 0.71 $ 0.63 ======= ======= ======= ======= EX-27 3 EXHIBIT 27 - FDS - BALDOR'S 2ND QTR 1997 FORM 10-Q
5 0000009342 BALDOR ELECTRIC COMPANY 1000 6-MOS JAN-3-1998 JUN-28-1997 5746 15918 93622 3525 91560 217854 210064 115335 344914 75998 36471 0 0 2874 225582 344914 271842 272825 189925 239719 0 88 1155 31951 12301 19650 0 0 0 19650 .71 .71
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