<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1998 Commission File Number: 0-7916
------------- ------
HARMON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Missouri 44-0657800
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 Jefferson Court, Blue Springs, Missouri 64015
- -------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
816-229-3345
------------
(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 (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
--- ---
Number of shares of Registrant's common stock outstanding as of June 30, 1998:
10,542,206
- ----------
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The Consolidated Statements of Earnings, Consolidated Balance Sheets,
Consolidated Statements of Cash Flows and Consolidated Statements of
Stockholders' Equity are unaudited, but reflect, in the opinion of management,
all adjustments necessary, all of which are considered normal and recurring, to
present fairly the financial position of the Company at June 30, 1998 and
December 31, 1997 as well as the results of its operations for the interim
periods ended June 30, 1998 and June 30, 1997. The Consolidated Balance Sheet as
of December 31, 1997 is derived from the audited Consolidated Balance Sheet as
of that date.
2
<PAGE>
HARMON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR PERIODS ENDED JUNE 30, 1998 AND 1997
AMOUNTS IN THOUSANDS (EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------------- -------------------------------
1998 1997 1998 1997
------------- ------------- --------------- ---------
<S> <C> <C> <C> <C>
Net sales $ 73,705 $ 47,621 $ 134,263 $ 83,609
Cost of sales 55,324 33,607 101,338 59,803
Research and development expenditures 2,376 1,809 4,483 3,411
-------- -------- --------- --------
Gross profit 16,005 12,205 28,442 20,395
Selling, general and
administrative expenses 8,426 6,687 15,967 12,535
Amortization of cost in
excess of fair value of
net assets acquired 217 166 434 326
Equity in net loss of affiliate -- 330 -- 330
Miscellaneous (income) expense-net (27) (49) (18) (72)
-------- -------- --------- --------
Operating income 7,389 5,071 12,059 7,276
Interest expense (352) (428) (656) (551)
Investment income 75 176 111 313
-------- -------- --------- --------
Earnings before income taxes 7,112 4,819 11,514 7,038
Income tax expense 2,510 1,832 4,100 2,604
-------- -------- --------- --------
Net earnings $ 4,602 $ 2,987 $ 7,414 $ 4,434
-------- -------- --------- --------
-------- -------- --------- --------
Net earnings per common share:
Basic $ 0.44 $ 0.29 $ 0.71 $ 0.43
Diluted $ 0.43 $ 0.29 $ 0.70 $ 0.43
Shares used for computation:
Basic 10,524 10,301 10,503 10,277
Diluted 10,685 10,335 10,647 10,320
</TABLE>
3
<PAGE>
HARMON INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
IN THOUSANDS OF DOLLARS
<TABLE>
<CAPTION>
JUNE 30,
1998 DECEMBER 31,
(UNAUDITED) 1997
-------------------- -------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $4,247 $6,748
Trade receivables, less allowance for doubtful accounts
of $313 in 1998 and $318 in 1997 44,894 45,001
Costs and estimated earnings in excess of billings on
uncompleted contracts 6,284 2,850
Inventories:
Work in process 5,761 6,171
Raw materials and supplies 35,091 32,894
-------------------- -------------------
40,852 39,065
Deferred tax asset 2,215 2,215
Prepaid expenses and other current assets 1,341 473
-------------------- -------------------
Total current assets 99,833 96,352
-------------------- -------------------
Property, plant and equipment, at cost:
Land 465 465
Buildings 11,992 11,363
Machinery and equipment 18,032 16,319
Office furniture and equipment 22,111 20,671
Transportation equipment 1,459 1,393
Leasehold improvements 3,512 3,120
-------------------- -------------------
57,571 53,331
Less accumulated depreciation and amortization 32,339 29,302
-------------------- -------------------
Net property, plant and equipment 25,232 24,029
Deferred tax asset 414 414
Cost in excess of fair value of net assets acquired,
net of accumulated amortization of
$3,614 in 1998 and $3,180 in 1997 9,490 8,766
Deferred compensation asset 6,776 5,807
Other assets 1,230 401
-------------------- -------------------
$142,975 $135,769
-------------------- -------------------
-------------------- -------------------
JUNE 30,
1998 DECEMBER 31,
(UNAUDITED) 1997
-------------------- ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current debt installments $595 $1,162
Accounts payable 17,833 21,554
Accrued payroll, bonus and employee benefit plan
contributions 9,875 11,893
Billings in excess of costs and estimated earnings
on uncompleted contracts 8,513 5,677
Federal and state income taxes payable 2,444 566
Other accrued liabilities 4,971 5,177
-------------------- ------------------
Total current liabilities 44,231 46,029
-------------------- ------------------
Deferred compensation liability 5,279 4,522
Long-term debt 15,337 15,456
-------------------- ------------------
Total liabilities 64,847 66,007
Stockholders' equity
Common stock of $.25 par value; authorized
50,000,000 shares, issued 10,542,206 in 1998
and 10,437,369 in 1997 2,635 2,609
Additional paid-in capital 25,986 24,514
Foreign currency translation 138 104
Unearned compensation (224) (224)
Retained earnings 49,593 42,759
-------------------- ------------------
Total stockholders' equity 78,128 69,762
-------------------- ------------------
$142,975 $135,769
-------------------- ------------------
-------------------- ------------------
</TABLE>
4
<PAGE>
HARMON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
IN THOUSANDS OF DOLLARS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1998 1997
---------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 7,414 $ 4,434
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 3,642 2,643
Equity in net loss of affiliate -- 330
(Gain) loss on sale of property, plant and equipment 8 (11)
Changes in assets and liabilities:
Trade receivables 714 11,514
Inventories (1,786) (6,382)
Estimated costs, earnings and billings on contracts (598) (3,171)
Prepaid expenses (865) 1,653
Accounts payable (3,721) (5,817)
Accrued payroll and benefits (2,018) (4,316)
Current income taxes 1,877 (3)
Other accrued liabilities (206) (726)
Deferred compensation liability 757 161
-------- --------
Total adjustments (2,196) (4,125)
-------- --------
Net cash provided by operating activities 5,218 309
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,409) (4,482)
Proceeds from sale of property, plant and equipment 4 15
Deferred compensation contributions (969) (394)
Acquisition of business -- (167)
Other investing activities (837) 14
-------- --------
Net cash used in investing activities (6,211) (5,014)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 333 416
Proceeds from issuance of long-term debt -- 15,000
Borrowings under line of credit agreements 43,906 12,905
Repayments under line of credit agreements (43,906) (15,250)
Principal payments of long-term debt (1,297) (550)
Cash dividends paid (580) (515)
-------- --------
Net cash (used in) provided by financing activities (1,544) 12,006
-------- --------
-------- --------
Foreign currency translation adjustment 36 (49)
-------- --------
Net increase (decrease) in cash and cash equivalents (2,501) 7,252
-------- --------
Cash and cash equivalents at beginning of period 6,748 --
-------- --------
Cash and cash equivalents at end of period $ 4,247 $ 7,252
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 716 $ 118
Income taxes $ 4,335 $ 2,650
Acquisition of business financed by issuance of common stock $ 1,158 --
</TABLE>
5
<PAGE>
HARMON INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
IN THOUSANDS OF DOLLARS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Additional Foreign Total
Common Paid-in Currency Unearned Retained Stockholders' Comprehensive
Stock Capital Translation Compensation Earnings Equity Income
----------------------------------------------------------------------------------- ---------
Balance at December 31, 1996 $2,561 $22,340 $203 -- $32,835 $57,939
-----------------------------------------------------------------------------------
Net earnings 1,447 1,447 $1,447
Common stock issued:
Stock options and other 12 159 171
Foreign currency translation (107) (107) (107)
---------
Comprehensive income $1,340
----------------------------------------------------------------------------------- =========
Balance at March 31, 1997 2,573 22,499 96 -- 34,282 59,450
-----------------------------------------------------------------------------------
Net earnings 2,987 2,987 $2,987
Cash dividends paid (515) (515)
Common stock issued:
Stock options and other 5 239 244
Foreign currency translation 58 58 58
---------
Comprehensive income $3,045
----------------------------------------------------------------------------------- =========
Balance at June 30, 1997 2,578 22,738 154 -- 36,754 62,224
-----------------------------------------------------------------------------------
Net earnings 2,639 2,639 $2,639
Common stock issued:
Deferred compensation 5 267 (163) 109
Stock options and other 1 31 32
Foreign currency translation (122) (122) (122)
---------
Comprehensive income $2,517
----------------------------------------------------------------------------------- =========
Balance at September 30, 1997 2,584 23,036 32 (163) 39,393 64,882
-----------------------------------------------------------------------------------
Net earnings 3,888 3,888 $3,888
Cash dividends paid (522) (522)
Common stock issued:
Acquisition of businesses 23 1,337 1,360
Deferred compensation 1 88 (61) 28
Stock options and other 1 53 54
Foreign currency translation 72 72 72
---------
Comprehensive income $3,960
----------------------------------------------------------------------------------- =========
Balance at December 31, 1997 2,609 24,514 104 (224) 42,759 69,762
-----------------------------------------------------------------------------------
Net earnings 2,812 2,812 $2,812
Common stock issued:
Acquisition of businesses 20 1,138 1,158
Stock options and other 1 36 37
Foreign currency translation 149 149 149
---------
Comprehensive income $2,961
----------------------------------------------------------------------------------- =========
Balance at March 31, 1998 $2,630 $25,688 $253 ($224) $45,571 $73,918
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Net earnings 4,602 4,602 $4,602
Cash dividends paid (580) (580)
Common stock issued:
Deferred compensation 7 7
Stock options and other 5 291 296
Foreign currency translation (115) (115) (115)
---------
Comprehensive income $4,487
----------------------------------------------------------------------------------- =========
Balance at June 30, 1998 $2,635 $25,986 $138 ($224) $49,593 $78,128
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS: THREE MONTHS ENDED JUNE 30, 1998
Net sales for the quarter were $73.7 million, an increase of $26.1 million, or
54.8%, from the second quarter of 1997. The increase in net sales is the result
of continued strong demand for the Company's goods and services and substantial
shipments on two large projects; one in the freight market and one in the
transit market.
Gross profit for the quarter increased by 31.1% to $16.0 million in 1998 from
$12.2 million in 1997. This increase in gross profit is the result of the sales
increase previously discussed. Gross profit margin for the quarter decreased to
21.7% from 25.6% in the prior year quarter. The decline in gross profit margin
is primarily the result of an increase in the sales mix toward services, systems
and pass-through sales. Research and development expenditures (R&D) for the
quarter increased to $2.4 million from $1.8 million in the same quarter one year
ago. As a result of the increase in net sales, R&D as a percent of net sales
decreased from 3.8% in the second quarter of 1997 to 3.2% in the second quarter
of 1998.
Selling, general and administrative expenses (SG&A) were $8.4 million during the
quarter in 1998 compared with $6.7 million during the prior year quarter. Much
of the increase in SG&A was represented by labor and benefit expenses resulting
from an increase in full-time employees from the second quarter of 1997 to the
second quarter of 1998 of approximately 13%. SG&A as a percent of net sales
decreased from 14.0% during the 1997 quarter to 11.4% during the 1998 quarter.
Amortization expense increased to $217 thousand from $166 thousand in the same
quarter one year ago. This increase is attributable to the increase in goodwill
resulting from acquisitions during the twelve months ended June 30, 1998.
Net interest expense (interest expense less investment income) for the quarter
increased to $277 thousand from $252 thousand for the prior year quarter as a
result of higher borrowings in support of increased working capital.
The effective tax rate for the quarter decreased to 35.3% in 1998 from 38.0% in
1997. This decrease is due to a reduced effective income tax rate in Missouri
resulting from the receipt of tax refunds arising under recent legislation and
increased tax benefits from the Company's foreign sales corporation as a result
of a larger percentage of foreign sales in the 1998 period compared with the
1997 period.
Net income increased 54.1% to $4.6 million from $3.0 million in the prior year
quarter. Diluted earnings per common share increased 48.3% to $0.43 from $0.29.
7
<PAGE>
Orders for the Company's products and services during the quarter ended June 30,
1998 increased to $62.8 million from $57.5 million during the 1997 quarter. The
Company's order backlog was $77.0 million at June 30, 1998, compared with $74.5
million at December 31, 1997 and $78.4 million one year ago.
RESULTS OF OPERATIONS: SIX MONTHS ENDED JUNE 30, 1998
Net sales for the six months ended June 30, 1998 were $134.3 million, an
increase of $50.7 million, or 60.6%, from the same period in 1997. As discussed
above, this increase is the result of continued strong demand for the Company's
goods and services and substantial shipments on two large projects.
Gross profit for the six month period increased by 39.5% to $28.4 million in
1998 from $20.4 million in 1997. This increase in gross profit is the result of
the sales increase previously discussed. Gross profit margin for the period
decreased to 21.2% from 24.4% in the prior year period. As discussed above, this
decline in gross profit margin is primarily the result of an increase in the
sales mix toward services, systems and pass-through sales. R&D for the period
increased to $4.5 million from $3.4 million in the same period one year ago. As
a result of the increase in net sales, R&D as a percent of net sales decreased
from 4.1% in the six months ended June 30, 1997 to 3.3% in the same period of
1998.
SG&A increased to $16.0 million during the 1998 period from $12.5 million during
the prior year period. Much of the increase in SG&A was represented by labor and
benefit expenses resulting from an increase in full-time employees from the
first half of 1997 to the first half of 1998. SG&A as a percent of net sales
decreased from 15.0% during the 1997 period to 11.9% during the 1998 period.
Amortization expense increased to $434 thousand from $326 thousand in the same
period one year ago. This increase is attributable to the increase in goodwill
resulting from acquisitions during the twelve months ended June 30, 1998.
As a result of higher borrowings to support increased working capital, interest
expense for the first six months of 1998 increased to $656 thousand from $551
thousand for the prior year period. Investment income decreased from $313
thousand during the 1997 period to $111 thousand during the 1998 period. This
decrease is the result of lower cash balances available for investment during
the 1998 period compared to the 1997 period during which a $15 million private
placement of debt was completed. A substantial portion of the proceeds of the
private placement were invested during the first half of 1997 prior to being
utilized to finance working capital and capital expenditures later in the year.
The effective tax rate for the six months ended June 30, 1998 decreased to 35.6%
from 37.0% for the comparable period of 1997. As discussed above, this decrease
is due to a reduced effective income tax rate in Missouri resulting from the
receipt of tax refunds arising under recent legislation and increased tax
benefits from the Company's foreign sales corporation as a result of a larger
percentage of foreign sales in the 1998 period compared with the 1997 period.
8
<PAGE>
Net income increased 67.2% to $7.4 million from $4.4 million in the prior year
period. Diluted earnings per common share increased 62.8% to $0.70 from $0.43.
FINANCIAL CONDITION AT JUNE 30, 1998
At June 30, 1998, the Company had $34.4 million in liquidity. This consisted of
$4.2 million in cash and cash equivalents plus $30.2 million available under
bank lines of credit. The current ratio at June 30, 1998 was 2.26 to 1 compared
to 2.09 to 1 at December 31, 1997 and 2.60 to 1 at June 30, 1997. The increase
in the current ratio from December 31, 1997 to June 30, 1998 is the result of
decreases in accounts payable and accrued payroll and benefits from year-end
levels. Cash provided by operating activities for the six months ended June 30,
1998 was $5.2 million compared to $0.3 million for the same period one year ago.
The principal reasons for this increase were increased earnings during the 1998
period, smaller inventory growth during the 1998 period and smaller reductions
in accounts payable and accrued payroll and benefits during the 1998 period
compared with 1997.
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income. The adjustment to
stockholders' equity as a result of the cumulative foreign currency translation
adjustment is included in comprehensive income as presented in the Consolidated
Statements of Stockholders' Equity.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit
Number Exhibit Page(s)
------- ------------------------------------------------------- -------
3 (i) Restated Articles of Incorporation of the Company dated 11-13
May 19, 1998
3 (ii) Amendment to the Bylaws of the Company, effective May 14
12, 1998
11 Computation of per share earnings 15
27 Financial Data Schedule 16
</TABLE>
(b) Reports on Form 8-K:
There were no reports on Form 8-K for the quarter ended June 30, 1998.
9
<PAGE>
SIGNATURES
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.
HARMON INDUSTRIES, INC.
Date: August 4, 1998 /s/Bjorn E. Olsson
------------------
Bjorn E. Olsson,
President and Chief Executive Officer
Date: August 4, 1998 /s/Charles M. Foudree
---------------------
Charles M. Foudree,
Executive Vice President-Finance
Date: August 4, 1998 /s/Stephen L. Schmitz
---------------------
Stephen L. Schmitz,
Vice President-Controller
10
<PAGE>
Exhibit 3(i)
RESTATED ARTICLES OF INCORPORATION
OF
HARMON INDUSTRIES, INC.
The undersigned, for the purpose of adopting Restated Articles of
Incorporation under The General Business and Corporation Law of Missouri,
Chapter 351 RSMO, hereby adopt the following Restated Articles of
Incorporation as the Articles of Incorporation of Harmon Industries, Inc., a
Missouri corporation (the "Corporation"), and hereby certify that said
Restated Articles of Incorporation correctly set forth without change the
corresponding provisions of the Articles of Incorporation as heretofore
amended, and that the Restated Articles of Incorporation supersede the
original Articles of Incorporation and all amendments thereto.
ARTICLE I
The name of this Corporation is Harmon Industries, Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Missouri is 2600 Grand Avenue, Kansas City, Missouri 64108, and the name of
its registered agent at that address is James O. Selzer.
ARTICLE III
The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is fifty million (50,000,000)
shares, all of which will be common stock having a par value of Twenty-Five
Cents ($.25) per share.
No holder of common stock of the Corporation shall be entitled as of
right to subscribe for, purchase, or receive any part of any new or
additional issue of stock of any class, whether now or hereafter authorized
or of any bonds, debentures, or other securities convertible into stock of
any class, and all such additional shares of stock, bonds, debentures, or
other securities convertible into stock may be issued and disposed of by the
Board of Directors to such person or persons and on such terms and for such
consideration (so far as may be permitted by law) as the Board of Directors
in its absolute discretion, may deem advisable.
ARTICLE IV
The number of shares of common stock to be issued before the Corporation
shall commence business is Five (5), and the consideration to be paid
therefor and the capital with which the Corporation shall commence business
is Five Hundred ($500.00) Dollars, all of said Five (5) shares having first
been duly subscribed by the incorporators and paid up in cash at the rate of
One Hundred ($100.00) Dollars per share, which said sum is in the hands of
the subscribers and incorporators.
11
<PAGE>
ARTICLE V
The names and places of residence of the initial shareholders and the
number of shares of stock subscribed by each are as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE NO. OF SHARES
<S> <C> <C>
Robert C. Harmon Route #1, Grain Valley, MO 3
Robert E. Harmon Route #1, Grain Valley, MO 1
Mildred I. Harmon Route #1, Grain Valley, MO 1
</TABLE>
ARTICLE VI
The number of Directors to constitute the current Board of Directors of
the Corporation is ten. Hereafter, the number of Directors of the Corporation
shall be fixed by, or in the manner provided in, its Bylaws; provided, that
the Board of Directors shall be no less than seven nor more than twelve. Any
changes in the number of Directors shall be reported to the Secretary of
State of the State of Missouri within 30 calendar days of such change.
ARTICLE VII
The duration and number of years the Corporation is to continue shall be
perpetual.
ARTICLE VIII
The Corporation is formed for the following purposes:
1. To design, manufacture, repair, buy, sell, job, distribute and
otherwise acquire or dispose of, and to deal in any and all kinds of
electronic, electrical or atomic equipment, supplies, parts,
appliances, apparatus, or merchandise incident thereto.
2. To engage in any lawful act or activity for which corporations may
be organized under The General and Business Corporation Law of
Missouri.
ARTICLE IX
The Board of Directors may repeal or amend the Bylaws of this Corporation
and may adopt new or additional Bylaws.
12
<PAGE>
The foregoing Restated Articles of Incorporation were adopted by the Board
of Directors of the Corporation on May 12, 1998.
IN WITNESS WHEREOF, the undersigned Charles M. Foudree, Executive Vice
President-Finance of the Corporation, has executed this instrument and James O.
Selzer, Assistant Secretary of the Corporation, has affixed its corporate seal
hereto and attested said seal on the 19th day of May, 1998.
HARMON INDUSTRIES, INC.
By: /s/ Charles M. Foudree
-----------------------------------
Charles M. Foudree
Executive Vice President -
Finance
By: /s/ James O. Selzer
-----------------------------------
James O. Selzer
Assistant Secretary
13
<PAGE>
Exhibit 3 (ii)
WHEREAS, the provisions of Section 2, Article III of the Bylaws of the
Company currently provide for a Board of Directors consisting of nine
directors, plus a variable Board as determined by the Board from time to
time; and
RESOLVED, that the Board of Directors wishes to increase the size of the
Board of Directors through amendment of the Bylaws of the Corporation to a
Board consisting of ten members;
FURTHER RESOLVED, that, effective May 12, 1998, the provisions of Section
2, Article III of the Bylaws are hereby deleted in their entirety and
replaced by the following:
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS: The provisions of Article VI
of the Corporation's Articles of Incorporation provide for an
indefinite number of directors, not less than seven (7) nor more
than twelve (12), and require the exact number of directors to be set
forth in the Bylaws. It is specified that the Corporation shall have
ten (10) directors. Such number may be increased or decreased from
time to time within the above-mentioned limits by amendment of these
Bylaws. Each director shall hold office for the term for which he is
elected or until his successor shall have been duly elected and
qualified.
14
<PAGE>
Exhibit 11
Harmon Industries, Inc.
Form 10-Q
Computation of Per Share Earnings
(in thousands, except earnings per share)
<TABLE>
<CAPTION>
Three Months ended June 30,
----------------------
1998 1997
---- ----
<S> <C> <C>
Basic:
Net earnings $ 4,602 $ 2,987
------- -------
------- -------
Weighted average shares outstanding 10,534 10,301
Shares representing unearned compensation (10) 0
------- -------
Total 10,524 10,301
------- -------
------- -------
Basic earnings per share $ 0.44 $ 0.29
------- -------
------- -------
Diluted:
Net earnings $ 4,602 $ 2,987
------- -------
------- -------
Weighted average shares outstanding 10,534 10,301
Shares representing unearned compensation (10) 0
Equivalent shares under option plans 161 34
------- -------
Total 10,685 10,335
------- -------
------- -------
Diluted earnings per share $ 0.43 $ 0.29
------- -------
------- -------
</TABLE>
<TABLE>
<CAPTION>
Six Months ended June 30,
----------------------
1998 1997
---- ----
<S> <C> <C>
Basic:
Net earnings $ 7,414 $ 4,434
------- -------
------- -------
Weighted average shares outstanding 10,514 10,277
Shares representing unearned compensation (11) 0
------- -------
Total 10,503 10,277
------- -------
------- -------
Basic earnings per share $ 0.71 $ 0.43
------- -------
------- -------
Diluted:
Net earnings $ 7,414 $ 4,434
------- -------
------- -------
Weighted average shares outstanding 10,514 10,277
Shares representing unearned compensation (11) 0
Equivalent shares under option plans 144 43
------- -------
Total 10,647 10,320
------- -------
------- -------
Diluted earnings per share $ 0.70 $ 0.43
------- -------
------- -------
</TABLE>
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HARMON INDUSTRIES, INC. AT JUNE 30, 1998
AND FOR THE SIX MONTH PERIOD THEN ENDED.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 4,247
<SECURITIES> 0
<RECEIVABLES> 45,207
<ALLOWANCES> (313)
<INVENTORY> 40,852
<CURRENT-ASSETS> 99,833
<PP&E> 57,571
<DEPRECIATION> (32,339)
<TOTAL-ASSETS> 142,975
<CURRENT-LIABILITIES> 44,231
<BONDS> 15,932
0
0
<COMMON> 2,635
<OTHER-SE> 75,493
<TOTAL-LIABILITY-AND-EQUITY> 142,975
<SALES> 134,263
<TOTAL-REVENUES> 134,263
<CGS> 105,821
<TOTAL-COSTS> 105,821
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 656
<INCOME-PRETAX> 11,514
<INCOME-TAX> 4,100
<INCOME-CONTINUING> 7,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,414
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.70
</TABLE>
