-----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, EOutIWOU1uNHV6fuzmY1aj9HE3gMSnK+JIbtueudnR4egZIL/B/PJ4aPucacaIXj lsNRtCbKlS8OsVCi+oG1qA== /in/edgar/work/20000815/0001068800-00-000326/0001068800-00-000326.txt : 20000922 0001068800-00-000326.hdr.sgml : 20000921 ACCESSION NUMBER: 0001068800-00-000326 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000701 FILED AS OF DATE: 20000815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALDOR ELECTRIC CO CENTRAL INDEX KEY: 0000009342 STANDARD INDUSTRIAL CLASSIFICATION: [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: 702634 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 0001.txt BALDOR ELECTRIC COMPANY FORM 10-Q UNITED STATES 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 July 1, 2000 ------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 July 1, 2000, there were 33,815,218 shares of the registrant's common stock outstanding. 1 Index Baldor Electric Company and Affiliates Part 1. Financial Information Item 1. Financial Statements (Unaudited) Condensed consolidated statements of earnings-Six months ended July 1, 2000 and July 3, 1999 Condensed consolidated balance sheets-July 1, 2000 and January 1, 2000 Condensed consolidated statements of cash flow-Six months ended July 1, 2000 and July 3, 1999 Notes to condensed consolidated financial statements-July 1, 2000 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures about Market Risk Part 2. Other Information Item 2. Recent Sales of Unregistered Securities Item 6. Exhibits and Reports on Form 8-K 2 PART 1. FINANCIAL INFORMATION Item 1. Financial Statements - ---------------------------- BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED -------------------------- -------------------------- JULY 1 JULY 3 JULY 1 JULY 3 (In thousands, except share data) 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net sales $ 160,970 $ 152,130 $ 317,044 $ 294,263 Other income (net) 563 350 890 874 ----------- ----------- ----------- ----------- 161,533 152,480 317,934 295,137 Cost and expenses: Cost of goods sold 110,853 105,794 217,913 204,288 Selling and administrative 27,054 25,584 53,244 49,435 Profit sharing 2,722 2,492 5,246 4,813 Interest 847 826 1,924 1,509 ----------- ----------- ----------- ----------- 141,476 134,696 278,327 260,045 ----------- ----------- ----------- ----------- Earnings before income taxes 20,057 17,784 39,607 35,092 Income taxes 7,522 6,754 14,852 13,331 ----------- ----------- ----------- ----------- NET EARNINGS $ 12,535 $ 11,030 $ 24,755 $ 21,761 =========== =========== =========== =========== Net earnings per share-diluted $0.36 $0.30 $0.71 $0.59 =========== =========== =========== =========== Net earnings per share-basic $0.37 $0.30 $0.72 $0.60 =========== =========== =========== =========== Weighted average shares outstanding-diluted 34,507,770 36,952,028 34,784,879 37,042,383 =========== =========== =========== =========== Weighted average shares outstanding-basic 33,926,099 36,170,533 34,247,695 36,271,880 =========== =========== =========== =========== Dividends paid per common share $0.12 $0.11 $0.24 $0.22 =========== =========== =========== =========== See notes to unaudited condensed consolidated financial statements.
3 BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED BALANCE SHEETS
JULY 1 JANUARY 1 2000 2000 -------- --------- ASSETS (in thousands) CURRENT ASSETS Cash and cash equivalents $ 1,751 $ 12,103 Marketable securities 15,192 30,805 Receivables, less allowance of $4,350 111,138 98,470 Inventories: Finished products 82,493 75,351 Work in process 10,686 9,728 Raw materials 44,570 47,677 -------- -------- 137,749 132,756 LIFO valuation adjustment (deduction) (26,299) (26,571) -------- -------- 111,450 106,185 Other current and deferred tax assets 21,146 24,767 -------- -------- TOTAL CURRENT ASSETS 260,677 272,330 OTHER ASSETS 26,770 26,809 NET PROPERTY, PLANT AND EQUIPMENT 124,250 124,802 -------- -------- $411,697 $423,941 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 23,957 $ 26,774 Employee compensation 5,618 6,021 Profit sharing 5,216 9,417 Anticipated warranty costs 5,925 5,925 Accrued insurance obligations 14,344 15,675 Other accrued expenses 16,808 18,205 Income Taxes 9,038 5,752 Current portion of long-term obligations 640 605 -------- -------- TOTAL CURRENT LIABILITIES 81,546 88,374 LONG-TERM OBLIGATIONS 65,665 56,305 DEFERRED INCOME TAXES 13,601 13,153 SHAREHOLDERS' EQUITY Common stock 3,884 3,872 Additional capital 36,334 34,971 Retained earnings 308,095 291,741 Accumulated other comprehensive income (3,606) (2,676) Treasury stock , at cost (93,822) (61,799) -------- -------- TOTAL SHAREHOLDERS' EQUITY 250,885 266,109 -------- -------- $411,697 $423,941 ======== ======== See notes to unaudited condensed consolidated financial statements.
4 BALDOR ELECTRIC COMPANY AND AFFILIATES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED ----------------------- JULY 1 JULY 3 2000 1999 -------- -------- (In thousands) OPERATING ACTIVITIES: Net earnings $ 24,755 $ 21,761 Depreciation and amortization 10,071 10,387 Deferred income taxes 495 1,787 Changes in operating assets and liabilities: Receivables (12,668) (11,512) Inventories (5,264) 2,578 Other current assets 3,573 5,652 Accounts payable (2,837) 4,070 Accrued expenses and other liabilities (7,310) (9,802) Income taxes 3,286 751 Other, net (3,024) (5,732) -------- -------- Net cash provided from operating activities 11,077 19,940 INVESTING ACTIVITIES: Additions to property, plant and equipment (7,640) (5,393) Sales of available-for-sale securities 19,625 8,106 Purchases of available-for-sale securities (4,012) (12,786) Acquisitions 0 0 -------- -------- Net cash used in investing activities 7,973 (10,073) FINANCING ACTIVITIES: Additional long-term borrowings 9,395 0 Reduction of long-term obligations 0 (562) Unexpended debt proceeds (5) (124) Dividends paid (8,144) (7,958) Common stock repurchases (31,852) (13,035) Stock option plans 1,204 875 -------- -------- Net cash used in financing activities (29,402) (20,804) -------- -------- NET DECREASE IN CASH & CASH EQUIVALENTS (10,352) (10,937) BEGINNING CASH AND CASH EQUIVALENTS 12,103 24,793 -------- -------- ENDING CASH AND CASH EQUIVALENTS $ 1,751 $ 13,856 ======== ======== See notes to unaudited condensed consolidated financial statements.
5 Baldor Electric Company and Affiliates Notes to Unaudited Condensed Consolidated Financial Statements July 1, 2000 NOTE A SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION: The unaudited condensed 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 January 1, 2000. 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 July 1, 2000, may not be indicative of the results that may be expected for the fiscal year ending December 30, 2000. COMPREHENSIVE INCOME: Total comprehensive income was approximately $12.2 and $11.1 million for the second quarter of 2000 and 1999 and was approximately $24.0 million and $21.5 million for the six months ended July 1, 2000 and July 3, 1999. Cumulative translation adjustments are the only significant items included in other comprehensive income. SEGMENT REPORTING: The Company has only one reportable segment; therefore, the consolidated financial statements reflect segment information. FINANCIAL DERIVATIVES: In June 1999, the Financial Accounting Standards Board issued SFAS No. 137 to defer the effective date of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133 now becomes effective for Baldor in the second quarter of 2001. The Statement will require companies to recognize all derivatives on the balance sheet at fair value. The Company's use of derivatives is minimal, and management continues to study the effects of adopting the standard and currently believes the adoption will not have a material effect. 6 NOTE B EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (EPS):
Three Months Ended ------------------ (In thousands, except per share data) July 1, 2000 July 3, 1999 ------------ ------------ Numerator Reconciliation: Net earnings $12,535 $11,030 ======= ======= Denominator Reconciliation: The denominator for basic EPS: Weighted average shares 33,926 36,171 Effect of dilutive securities: Stock options 582 781 --- --- The denominator for diluted EPS-adjusted weighted average shares 34,508 36,952 ====== ====== Basic earnings per share $0.37 $0.30 ===== ===== Diluted earnings per share $0.36 $0.30 ===== ===== Six Months Ended ---------------- (In thousands, except per share data) July 1, 2000 July 3, 1999 ------------ ------------ Numerator Reconciliation: Net earnings $24,755 $21,761 ======= ======= Denominator Reconciliation: The denominator for basic EPS: Weighted average shares 34,248 36,272 Effect of dilutive securities: Stock options 537 770 --- --- The denominator for diluted EPS-adjusted weighted average shares 34,785 37,042 ====== ====== Basic earnings per share $0.72 $0.60 ===== ===== Diluted earnings per share $0.71 $0.59 ===== =====
7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Second quarter 2000 sales were the highest quarterly sales ever for the Company, increasing 5.8% over second quarter 1999 and 3.1% over first quarter 2000. Gross margin improved to 31.1% in second quarter 2000 compared to 30.5% for second quarter 1999. For the first six months gross margin improved to 31.3% compared to 30.6% for the same period in 1999. Operating margin for the second quarter increased to 14.3% from 13.6% for the same period in 1999. Operating margin for the first six months improved to 14.5% compared to 13.8% in 1999. The second quarter effective tax rate of 37.5% was down slightly from 38% in 1999. Net earnings of $12,535,000 for the second quarter increased 13.6% compared to the same quarter of 1999. Earnings of $24,755,000 for the first six months of 2000 were a 13.8% improvement over the same period in 1999. Earnings per share of $0.36 increased 20% in the second quarter compared to the same quarter of 1999 in part due to the stock repurchase plan authorized by the Board. EPS of $.71 for the first six months of 2000 advanced 20% from $.59 for the same period in 1999. Pretax earnings for second quarter 2000 grew 12.8% to $20,057,000 compared to $17,784,000 for second quarter 1999. Pretax earnings of $24,755,000 for the first six months of 2000 improved 12.9% from the same period in 1999. LIQUIDITY AND CAPITAL RESOURCES Baldor's financial position remains solid. The current ratio was 3.2 and the debt-to-capitalization ratio increased to 20.7% for second quarter versus 17.6% for second quarter 1999. Return on average equity was 18.1% compared to 16.4% for second quarter 1999. During the second quarter Baldor repurchased 252,000 shares under the stock repurchase program. To date 3.97 million of the authorized 6.0 million shares have been repurchased since the stock repurchase program began in September 1998. YEAR 2000 The Company's comprehensive Year 2000 initiative was implemented timely and successfully with no significant problems. We did not experience any disruptions from our suppliers or financial institutions nor has any Baldor product been affected by the 2000 date. We are ready with our new Company-wide information system to improve visibility and reaction time to customer orders, reduce lead times, support international operations, improve productivity and better manage inventory for the new millennium. This Form 10-Q may contain statements that may constitute "forward- looking statements". Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Prospective investors are cautioned that actual results and experience may differ materially from the forward-looking statements as a result of many factors, possibly including changes in economic conditions, competition, fluctuations in raw materials, and other unanticipated events and conditions. These statements are only as of the date of this Form 10-Q. 8 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in market risk or market risk factors since the 1999 Annual Report to Shareholders. PART II. OTHER INFORMATION ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES During the second quarter of 2000, certain District Managers exercised non-qualified stock options previously granted to them under the Baldor Electric Company 1990 Stock Option Plan for District Managers (the DM Plan). The exercise price paid by the District Manager equaled the fair market value on the date of grant. The total amount of shares granted under the DM Plan is less than 1% of the outstanding shares of Baldor common stock. None of the transactions were registered under the Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption from registration afforded by Section 4(2) of the Act. The Company deems this exemption to be appropriate given that there are a limited number of participants in the DM Plan and all parties are knowledgeable about the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its annual meeting on April 29, 2000, at which shareholders voted on one proposal. Proposal I was the election of three Directors to the Company's Board of Directors for terms expiring in 2003. 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 I: Votes Votes Votes Proposal For Against Withheld -------- --- ------- -------- Proposal I Merlin J. Augustine, Jr. 27,328,719 N/A 608,083 John A. McFarland 26,419,619 N/A 1,517,183 Robert L. Proost 27,453,529 N/A 483,273 The remaining board members are listed below and each is expected to serve out his respective term: Jefferson W. Asher, Jr. R. S. Boreham, Jr. Robert L. Proost Fred C. Ballman Robert J. Messey R. L. Qualls 9 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibit Number Description -------------- ----------- 27 Financial Data Schedules-filed herewith in electronic filing of Form 10-Q. 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 undersigned thereunto duly authorized. BALDOR ELECTRIC COMPANY (Registrant) Date: August 14, 2000 By: /s/ Ronald E. Tucker --------------------- Ronald E. Tucker - Chief Financial Officer (on behalf of the Registrant and as Chief Financial Officer) 10 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-30-2000 JAN-01-2000 JUL-01-2000 1,751 15,192 115,488 4,350 111,450 260,677 288,062 163,812 411,697 81,546 65,665 3,884 0 0 247,001 411,697 317,044 317,934 217,913 217,913 58,490 0 1,924 39,607 14,852 24,755 0 0 0 24,755 0.72 0.71
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