-----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, KTbKIiuMu+8GGmZfmY54kgHTbMFwurG+Lu92XLiuhmGLy12RdS6tnol6quD4obgl jHuFVAgM9ORlmn2rLb8Qmg== 0000009342-97-000020.txt : 19971024 0000009342-97-000020.hdr.sgml : 19971024 ACCESSION NUMBER: 0000009342-97-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971023 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: SEC FILE NUMBER: 001-07284 FILM NUMBER: 97699486 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 3RD 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 September 27, 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 September 27, 1997, there were 26,949,747 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 NINE MONTHS ENDED SEPTEMBER 27 SEPTEMBER 28 SEPTEMBER 27 SEPTEMBER 28 1997 1996 1997 1996 -------------------------- -------------------------- (In thousands, except share data) Net sales $142,494 $125,111 $414,336 $376,570 Other income (net) 401 578 1,384 2,032 --------- --------- --------- --------- 142,895 125,689 415,720 378,602 Cost and expenses: Cost of goods sold 99,511 87,800 289,436 265,024 Selling and administrative 23,928 20,993 69,375 63,446 Profit sharing 2,219 2,062 6,566 5,697 Interest 504 633 1,659 2,107 --------- --------- --------- --------- 126,162 111,488 367,036 336,274 --------- --------- --------- --------- Earnings before income taxes 16,733 14,201 48,684 42,328 Income taxes 6,442 5,467 18,742 16,296 --------- --------- --------- --------- Net earnings $ 10,291 $ 8,734 $ 29,942 $ 26,032 ========= ========= ========= ========= Net earnings per common share $0.37 $0.32 $1.08 $0.95 ===== ===== ===== ===== Dividends paid per common share $0.12 $0.10 $0.35 $0.29 ===== ===== ===== ===== Weighted average common shares outstanding 28,078,000 27,048,000 27,718,000 27,282,000 ========== ========== ========== ========== See the notes to the unaudited condensed consolidated financial statements. - 2 - BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER 27 DECEMBER 28 1997 1996 -------------- -------------- ASSETS (In thousands ) CURRENT ASSETS: Cash and cash equivalents $ 10,139 $ 7,950 Marketable securities 14,310 17,892 Receivables, less allowances of $3,525,000 and $3,200,000, respectively 94,142 80,183 Inventories: Finished products 65,763 66,528 Work-in-process 12,979 13,483 Raw materials 37,117 39,162 --------- --------- 115,859 119,173 LIFO valuation adjustment (deduction) (26,395) (26,786) --------- --------- 89,464 92,387 Other current and deferred tax assets 12,358 19,745 --------- --------- TOTAL CURRENT ASSETS 220,413 218,157 OTHER ASSETS 33,527 11,965 PROPERTY, PLANT AND EQUIPMENT 218,549 202,470 Allowances for depreciation and amortization (deduction) (119,441) (107,106) ---------- --------- 99,108 95,364 ---------- --------- $353,048 $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 state- ments. - 3 - BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) SEPTEMBER 27 DECEMBER 28 1997 1996 -------------- -------------- LIABILITIES AND SHAREHOLDERS' EQUITY (In thousands) CURRENT LIABILITIES: Accounts payable $ 24,593 $ 20,314 Employee compensation 7,329 5,932 Profit sharing 6,566 7,645 Anticipated warranty costs 5,200 4,500 Accrued insurance obligations 15,472 14,286 Other accrued expenses 20,632 16,626 Income taxes 766 Current maturities of long-term obligations 1,130 1,113 --------- --------- TOTAL CURRENT LIABILITIES 80,922 71,182 LONG-TERM OBLIGATIONS 31,304 45,027 DEFERRED INCOME TAXES 4,852 8,952 SHAREHOLDERS' EQUITY: Common stock 2,884 2,862 Additional capital 43,334 37,112 Retained earnings 227,499 207,064 Cumulative translation adjustments (537) 346 Treasury stock, at cost (37,210) (47,059) --------- --------- TOTAL SHAREHOLDERS' EQUITY 235,970 200,325 --------- --------- $353,048 $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) NINE MONTHS ENDED September 27 September 28 1997 1996 -------------- -------------- (In thousands) Operating activities: Net earnings $29,942 $26,032 Depreciation and amortization 14,282 12,872 Deferred income taxes 844 (3,973) Changes in operating assets and liabilities: Receivables (12,696) (5,512) Inventories 3,896 (6,407) Other current assets 2,483 1,528 Accounts payable 3,564 1,967 Accrued expenses and other liabilities 7,176 6,617 Income taxes (1,139) (3,597) Other (net) (3,774) (1,232) --------- --------- Net cash provided by operating activities 44,578 28,295 Investing activities: Additions to property, plant and equipment (16,960) (13,560) Sales of available-for-sale securities 15,051 38,200 Purchases of available-for-sale securities (11,469) (26,865) Optimised Control Ltd (7,597) --------- --------- Net cash used in investing activities (20,975) (2,225) Financing activities: Additional long-term borrowings 38,000 Reduction of long-term obligations (13,706) (15,952) Unexpended debt proceeds (269) 440 Dividends paid (9,343) (7,554) Stock option plans 1,904 2,580 Common stock repurchased (41,488) --------- --------- Net cash used in financing activities (21,414) (23,974) --------- --------- Net increase in cash and cash equivalents 2,189 2,096 Beginning cash and cash equivalents 7,950 6,322 --------- --------- Ending cash and cash equivalents $ 10,139 $ 8,418 ========== ========== See notes to unaudited condensed consolidated financial statements. - 5 - BALDOR ELECTRIC COMPANY AND AFFILIATES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 27, 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 nine months ended September 27, 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 the Company is required to adopt 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 calculating "basic earnings per share" (which will replace the term "primary earnings per share"), the dilutive effect of stock options will be excluded. The difference between basic earnings per share and previously reported primary earnings per share is expected to be immaterial for each quarter presented. 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. - 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 23rd consecutive quarter, sales and earnings set records for both the quarter and the first nine months of 1997. Sales for the third quarter of 1997 were $142,494,000, up 13.9% over sales of $125,111,000 for the third quarter of 1996. Year-to-date 1997 sales of $414,336,000 were up 10.0% over year-to-date 1996 sales of $376,570,000. International sales (exports and sales by foreign affiliates), which comprise 13.8% of total year-to-date sales, were up 19.2% for the third quarter and up 6.9% 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. Third quarter 1997 sales growth in North America was strong, up approximately 14% over third quarter 1996 levels. European sales performance improved in the third quarter 1997 with double digit increases compared to third quarter 1996. Both distributor and OEM sales increased for the quarter and year-to-date. Stronger increases in distributor sales during the third quarter resulted in a shift between OEM and distributor sales to approximately 51% and 49% of total sales, respectively. Third quarter sales of motor products were up approximately 11% over the same period last year. For the same period, sales of controls and servo products (which now include the products of Optimised) were up approximately 27% from third quarter 1996. Year-to-date sales of motor products were up approximately 11% over year-to-date 1996, and year-to-date drives sales were up approximately 7% over the same period of 1996. Pricing softened slightly in third quarter 1997 compared to third quarter 1996. A price increase goes into effect this October for EPAct- related products only. Third quarter 1997 net earnings of $10,291,000 were up 17.8% over third quarter 1996 and year-to-date 1997 net earnings of $29,942,000 were up 15.0% over the first nine months of 1996. Earnings per common share were $0.37 for the third quarter of 1997 and $1.08 for the first nine months of 1997, up 15.6% and 13.7% respectively over 1996 amounts. Earnings per common share increased less than net earnings due largely to the shares issued to purchase Optimised Control Ltd. Third quarter 1997 pre-tax margins were 11.7% compared to 11.3% for third quarter 1996 and year-to-date pre-tax margins were 11.7% compared to 11.2% for the same period of 1996. The third 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 29.8% for the third quarter of 1996 and 29.6% year-to-date 1996. For the quarter and the year, margins have benefitted from stable material costs and the effects of productivity and other cost improvements. Third quarter 1997 selling and administrative expenses at 16.8% of sales remained about flat with the first and second quarter 1997 and with third quarter 1996. - 8 - LIQUIDITY AND CAPITAL RESOURCES The Company's financial position remained solid through the first nine months of 1997. Cash and marketable securities were at $24.4 million compared to $25.8 million at year-end 1996. Working capital decreased to $139.5 million at September 27, 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 September 27, 1997, remained strong at 2.8 compared to 3.1 at December 28, 1996 and the debt-to-capitalization ratio (shareholders' equity and long- term borrowings) was 11.5%. - 9 - PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ------- -------------------------------- a. Exhibits - See the Exhibit Index b. The registrant did not file any reports on Form 8-K during the most recently completed fiscal quarter. 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 under- signed thereunto duly authorized. BALDOR ELECTRIC COMPANY (Registrant) October 23, 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 3RD QTR 1997 FORM 10-Q EXHIBIT 11 BALDOR ELECTRIC COMPANY AND AFFILIATES COMPUTATION OF EARNINGS PER COMMON SHARE THREE MONTHS NINE MONTHS ENDED ENDED -------------------------- -------------------------- September 27 September 28 September 27 September 28 1997 1996 1997 1996 ------------ ------------ ------------ ------------ (In thousands, except per share data) Primary Weighted average shares outstanding 26,907 26,151 26,656 26,364 Dilutive stock options based on the treasury stock method using the average market price 1,171 897 1,062 918 ------- ------- ------- ------- Total 28,078 27,048 27,718 27,282 ======= ======= ======= ======= Net Earnings $ 10,291 $ 8,734 $ 29,942 $ 26,032 ======= ======= ======= ======= Per Share Earnings $ 0.37 $ 0.32 $ 1.08 $ 0.95 ======= ======= ======= ======= Fully Diluted Weighted average shares outstanding 26,907 26,151 26,656 26,364 Dilutive stock options based on the treasury stock method using the period-end market price, if higher than average market price 1,155 848 1,155 848 ------- ------- ------- ------- Total 28,062 26,999 27,811 27,212 ======= ======= ======= ======= Net Earnings $ 10,291 $ 8,734 $ 29,942 $ 26,032 ======= ======= ======= ======= Per Share Earnings $ 0.37 $ 0.32 $ 1.08 0.95 ======= ======= ======= ======= EX-27 3 EXHIBIT 27 - FDS - BALDOR'S 3RD QTR 1997 FORM 10-Q
5 0000009342 BALDOR ELECTRIC COMPANY 1000 3-MOS JAN-3-1998 SEP-27-1997 10139 14310 97667 3525 89464 220413 218549 119441 353048 80922 31304 0 0 2884 233086 353048 142494 142895 99511 125658 0 146 504 16733 6442 10291 0 0 0 10291 .37 .37
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