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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 January 1, 1995 Commission file number: 1-5761
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LaBarge, Inc.
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(Exact name of registrant as specified in its charter)
DELAWARE 73-0574586
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 14499, St. Louis, Missouri 63178
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(Address) (Zip Code)
(314) 231-5960
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(Registrant's telephone number, including Area Code)
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(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 the close of the period covered by this report. 15,227,316
shares.
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LABARGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 1, January 2, JANUARY 1, January 2,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
NET SALES $ 16,206 $ 18,038 $ 33,317 $ 37,646
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COSTS AND EXPENSES:
Cost of sales 13,323 14,955 27,663 31,159
Selling and administrative expenses 2,055 2,010 4,123 4,215
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15,378 16,965 31,786 35,374
EARNINGS FROM OPERATIONS 828 1,073 1,531 2,272
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Interest expense 511 521 1,058 1,112
Other income, net 177 37 210 71
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EARNINGS FROM OPERATIONS BEFORE
INCOME TAXES 494 589 683 1,231
Income tax expense 29 35 41 74
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NET EARNINGS $ 465 $ 554 $ 642 $ 1,157
===================================================================================================================================
NET EARNINGS PER COMMON SHARE $.03 $.04 $.04 $.08
===================================================================================================================================
AVERAGE COMMON SHARES OUTSTANDING 15,227 15,112 15,218 15,107
===================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
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LABARGE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
JANUARY 1, July 3,
1995 1994
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 261 $ 140
Accounts and notes receivable, net 10,488 14,291
Inventories 14,716 21,446
Prepaid expenses 164 249
Deferred tax assets, net 614 614
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TOTAL CURRENT ASSETS 26,243 36,740
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PROPERTY, PLANT AND EQUIPMENT, NET 2,629 3,346
DEFERRED TAX ASSETS, NET 2,258 2,258
OTHER ASSETS, NET 2,165 2,133
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$ 33,295 $ 44,477
===================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $ 700 $ 2,800
Current maturities of long-term debt 1,768 1,857
Trade accounts payable 6,014 9,836
Other accrued liabilities 2,799 2,748
Current liabilities from discontinued operations 252 125
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TOTAL CURRENT LIABILITIES 11,533 17,366
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LONG-TERM OBLIGATIONS:
Liabilities from discontinued operations -- 232
Long-term debt 9,091 14,911
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9,091 15,143
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STOCKHOLDERS' EQUITY:
Common stock, $.01 par value. Authorized 20,000,000 shares;
issued 15,227,316 shares at January 1, 1995
and 15,166,877 shares at July 3, 1994 152 152
Additional paid-in capital 12,554 12,493
Retained earnings (deficit) (35) (677)
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TOTAL STOCKHOLDERS' EQUITY 12,671 11,968
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$ 33,295 $ 44,477
===================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
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LABARGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 1, January 2,
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 642 $ 1,157
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization 544 520
Accretion of discount on long-term assets from business divestitures (16) (18)
Accretion of discount on note from discontinued operations 20 24
Gain on sale of Flippin facility (154) --
Changes in assets and liabilities:
Accounts and notes receivable, net 1,179 2,006
Inventories (1,623) 2,427
Prepaid expenses 40 (177)
Trade accounts payable (1,166) (1,170)
Accrued liabilities (207) (419)
Liabilities of discontinued operations (125) (75)
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (866) 4,275
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (297) 76
Additions to other assets of continuing operations (126) (241)
Sale of operating facility in Flippin 9,359 --
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NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 8,936 (165)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (5,909) (1,939)
Exercise of stock warrants and options 60 47
Net change in short-term borrowings (2,100) (2,500)
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NET CASH USED BY FINANCING ACTIVITIES (7,949) (4,392)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 121 (282)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 140 304
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 261 $ 22
===================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
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LABARGE, INC.
FORM 10-Q
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS - BASIS OF PREPARATION
The consolidated balance sheets at January 1, 1995 and July 3, 1994, the
related consolidated statements of operations for the three and six months
ended January 1, 1995 and January 2, 1994 and the statements of cash flows for
the six months ended January 1, 1995 and January 2, 1994, have been prepared by
LaBarge, Inc. (the "Company") without audit. In the opinion of management,
adjustments, including those regarding the sale of the Company's facility in
Flippin, Arkansas, all 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 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 consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K.
2. ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable consist of the following:
(dollars in thousands)
<TABLE>
<CAPTION>
JANUARY 1, July 3,
1995 1994
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<S> <C> <C>
Billed shipments, net of progress payments $ 7,511 $ 10,640
Unbilled costs and accrued profits,
net of progress payments 1,058 3,241
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Trade receivables - gross 8,569 13,881
Less: Allowance for doubtful accounts (171) (140)
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Trade receivables - net 8,398 13,741
Current portion of notes receivable 488 463
Escrow and cash advance
receivable, net 1,522 --
Other current receivables 80 87
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$ 10,488 $ 14,291
===================================================================================================================================
</TABLE>
Unbilled amounts represent revenues recognized on contracts, less applicable
progress payments received, for which billings have not been presented to the
customers at the balance sheet dates. Unbilled amounts are usually billed
within the month following the closing date as units are delivered to the
customer.
Progress payments are payments from customers in accordance with contractual
terms for
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<PAGE> 6
contract costs incurred to date. Such payments are credited to the customer at
the time of shipment.
The escrow and cash advance receivable, net represents funds on deposit in
escrow and funds distributed by the Company for payroll and vendor payments on
behalf of the buyer, related to the sale of the Flippin facility and the
related business. These funds will be released upon final valuation of the net
assets sold and satisfactory completion of certain representations and
warranties regarding the sale. Cash advances are reimbursed on a regular
basis.
Other current receivables represent amounts due from employees for travel
advances and other miscellaneous sources.
3. INVENTORIES
Inventories consist of the following:
(dollars in thousands)
<TABLE>
<CAPTION>
JANUARY 1, July 3,
1995 1994
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<S> <C> <C>
Raw materials $ 9,239 $ 15,003
Work in process 6,616 7,605
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15,855 22,608
Less progress payments (1,139) (1,162)
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$ 14,716 $ 21,446
===================================================================================================================================
</TABLE>
In accordance with contractual agreements, the government has a security
interest in inventories related to contracts for which progress payments have
been received.
In the normal course of the contract manufacturing business, situations develop
which require revisions to contract specifications and, as a result,
renegotiation of pricing to allow recovery of additional costs incurred or to
be incurred. Consistent with past practices, included in inventories at
January 1, 1995 and July 3, 1994 are deferred costs subject to renegotiation
totaling approximately $612,000 and $755,000, respectively. In management's
opinion, these costs have been incurred due to customer changes in contract
requirements and terms, and the resultant increase in costs and/or delays in
contract performance, and will be recovered.
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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)
<TABLE>
<CAPTION>
JANUARY 1, July 3,
1995 1994
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<S> <C> <C>
SHORT-TERM BORROWINGS:
Revolving credit agreement:
Balance at period-end $ 700 $ 2,800
Interest rate at period-end 10.00% 8.75%
Average amount of short-term borrowings
outstanding during period (rounded to
nearest thousand) $ 3,245 $ 2,397
Average interest rate for period 9.34% 7.82%
Maximum short-term borrowings
at any month-end $ 5,000 $ 3,200
===================================================================================================================================
Total short-term borrowings $ 700 $ 2,800
===================================================================================================================================
JANUARY 1, July 3,
1995 1994
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LONG-TERM DEBT:
Sanwa Business Credit Corporation:
Revolving credit agreement $ 2,500 $ 7,500
Term loan 1,255 1,705
Chemical Bank term loan 1,607 2,035
15% Subordinated Notes 5,000 5,000
Industrial revenue bond due
semiannually through 1997,
interest at 8% 270 270
Other 227 258
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10,859 16,768
Less current maturities 1,768 1,857
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Total long-term debt $ 9,091 $ 14,911
===================================================================================================================================
</TABLE>
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.
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5. OTHER INCOME AND EXPENSE, NET
The components of other income and expense, net are as follows:
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 1, January 2, JANUARY 1, January 2,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Interest income $ 29 $ 34 $ 58 $ 68
Gain on disposal of assets 154 -- 154 --
Other, net (6) 3 (2) 3
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$ 177 $ 37 $ 210 $ 71
===================================================================================================================================
</TABLE>
On December 2, 1994, the Company completed the sale of its operating business
in Flippin, Arkansas, to Avnet, Inc. In the transaction, Avnet purchased
substantially all of the assets of the Flippin operation and the related
business for approximately $10,455,000 cash and assumed liabilities of
approximately $2,900,000. This sale resulted in a gain of $154,000, which is
included in other income.
6. EARNINGS PER COMMON SHARE
Earnings per common share is based on the weighted average number of shares
outstanding during the quarter. There are 1,357,025 common stock warrants
exercisable at $3.00 per share outstanding at January 1, 1995. Also
outstanding are 97,000 common stock options exercisable at $.66 to $.726,
165,000 common stock options which are not exercisable until August, 1995 at
$1.125 to $1.2375 per share and 75,000 common stock options which are not
exercisable until August, 1996 at $1.3125 to $1.4438 per share. The warrants
and options are not considered dilutive common stock equivalents for the
purposes of the earnings per share calculation.
7. INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 - Accounting for Income Taxes (SFAS 109). 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 January 1,
1995, the net value of this benefit is $2,872,000 and is reported as $614,000
in current assets and $2,258,000 in other assets.
The net operating loss carryforwards as of July 3, 1994, for Federal Income Tax
purposes, were $20,794,000, which are available to offset future Federal
taxable income through 2003. These carryforwards are the result of losses
generated by discontinued operations prior to 1987. A valuation allowance is
provided to reduce the deferred tax assets to a level which, more likely than
not, will be realized. The net deferred assets reflects management's estimate
of the amount which will be realized from future profitability which can be
predicted with reasonable certainty.
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<PAGE> 9
8. CASH FLOWS
Total cash payments for interest for the three and six months ended January 1,
1995 were $567,000 and $1,117,000 compared to $552,000 and $1,136,000 for the
three and six months ended January 2, 1994.
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<PAGE> 10
LABARGE, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATION AND
FINANCIAL CONDITION
LaBarge, Inc. engineers, manufactures, tests and sells sophisticated electronic
systems and devices and complex interconnect assemblies under contract with its
customers. Markets for the Company's products are the defense electronics,
medical equipment, aerospace, energy production, telecommunications, computer
and various other commercial/industrial markets. The Company employs
approximately 650 people.
On December 2, 1994, the Company completed the sale of the on-going business of
its operation in Flippin, Arkansas to Avnet, Inc. In the transaction, Avnet
purchased substantially all of the assets of the Flippin operation and the
related business for approximately $10,455,000 cash and assumed liabilities of
approximately $2,900,000. The proceeds from the sale are being used to reduce
debt. The Company intends to continue to operate its facilities in Huntsville
and Berryville, Arkansas; Tulsa, Oklahoma and Joplin, Missouri. The Company
will continue, through its remaining operations, to focus on the design and
manufacture of high-tech electronic systems, devices and interconnect systems
with special emphasis on higher value-added and proprietary products.
The Flippin facility manufactured cable assemblies for a variety of markets
including computer products and medical equipment. Revenues for the fiscal
year ended July 3, 1994 were approximately $19 million (26% of the Company
total). For the six months ended January 1, 1995, the Company recorded
revenues from Flippin (through the date of divestiture) of $7.3 million (22% of
the Company total).
Of the approximate $10.5 million sale price, $9.4 million was received in cash
at the time of sale, with the remainder held in escrow subject to adjustment
based upon the closing-date balance sheet of the Flippin operation. A portion
thereof ($500,000) is to be held in escrow subject to any claims by Avnet for
breaches of representations and warranties until the first anniversary of the
sale.
The sale was part of a Company plan to strengthen its balance sheet. The
Company believes the stronger balance sheet will allow it much greater
flexibility to invest in growth opportunities at its other facilities.
A proforma consolidated statement of operations for the twelve months ended
July 3, 1994 and the six months ended January 1, 1995 follows and shows the
effect of the sale of Flippin as if it had occurred at the beginning of each
period noted.
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<PAGE> 11
LABARGE, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JULY 3, 1994
AND THE SIX MONTHS ENDED JANUARY 1, 1995
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JULY 3, 1994 SIX MONTHS ENDED JANUARY 1, 1995
Reported Adjustments PROFORMA Reported Adjustments PROFORMA
-------- ----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ 73,143 $ 19,008 $ 54,135 $ 33,317 $ 7,339 $ 25,978
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COST OF SALES 60,798 16,710 44,088 27,662 6,534 21,128
SELLING & ADMIN. EXPENSES 8,263 1,354 6,909 4,123 665 3,458
- - - ---------------------------------------------------------------------------------------------------------------------------------
EARNINGS FROM OPERATIONS 4,082 944 3,138 1,531 140 1,391
INTEREST EXPENSE 2,117 817 1,300 1,058 489 569
OTHER INCOME, NET 138 2 136 210 154 56
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EARNINGS BEFORE INCOME TAXES 2,103 129 1,974 683 195 878
INCOME TAX EXPENSE (BENEFIT) (253) (8) (261) 41 11 52
- - - ---------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS 2,356 121 2,235 642 184 826
===================================================================================================================================
EARNINGS PER COMMON SHARE $0.16 -- $0.15 $0.04 -- $0.05
===================================================================================================================================
AVERAGE COMMON SHARES 15,135 -- 15,135 15,218 -- 15,218
===================================================================================================================================
</TABLE>
The above reflects adjustments to eliminate the sales and profit generated by
the Flippin facility for the twelve- and six-month periods indicated as well
as adjustment of interest expense to reflect the cash received from the sale of
Flippin used to reduce debt.
Historically, due to the lead times required in the production of the Company's
defense and aerospace products, its backlog of firm, unshipped orders has
always been considered extremely important. However, with the reduction in the
Company's dependence on defense work this has changed. The importance of
backlog as an indicator of future performance has declined due to the Company's
increase in the proportion of sales received from new subcontract and
commercial work, both of which have much shorter lead times and demand quick
turnaround on product deliveries. The backlog at January 1, 1995 was
approximately $47,065,000 compared to $50,966,000 at January 2, 1994, which
excludes Flippin's backlog at that date. The backlog at January 1, 1995 for
the products described below consisted of: approximately $34,294,000 of orders
for various defense products, the majority of which contain cancellation and
termination provisions, and $12,771,000 of orders for commercial products.
Approximately $7,852,000 of the total backlog is not scheduled to ship within
the next 12 months pursuant to the shipment schedules contained in those
contracts.
Substantially all of the Company's contracts with the United States Government
and subcontracts with prime contractors of the United States Government are
firm fixed-price contracts. Under firm fixed-price contracts, work is
performed and paid for at a fixed
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<PAGE> 12
amount without adjustment for the actual costs experienced
in connection with the contracts. Therefore, unless the customer actually or
constructively alters or impedes the work performed, all risk of loss due to
cost overruns is borne by the Company.
The Company continues to pursue defense-related business. During the first
quarter, the Company received additional orders on the AEGIS program totaling
$8.4 million. AEGIS is the most advanced shipboard anti-aircraft and
anti-missile system in the world. All work on this contract will be performed
in Huntsville, Arkansas.
Sales to Martin Marietta represented approximately 30% of total Company sales
for the three and six months ended January 1, 1995.
The Company also serves the energy production, medical equipment, commercial
aerospace, telecommunications and other commercial/industrial markets. The
Company has aggressively expanded its commercial business over the past several
years and intends to continue to do so. For the first half, non-defense
business represented approximately 50% of total Company sales (36% restated to
remove sales from Flippin). The Company manufactures products as diverse as an
audio tape player used by the vision impaired and data collection equipment
used in oil and gas production. As in the defense market, all production is
completed on a contract basis.
Clinical trials of the blood laser perforator, developed under a contract with
Venisect, Inc., began on October 26, 1994, pursuant to an approval received
from the U.S. Food and Drug Administration (the "FDA"). Results of Phase I of
the trials were positive and a report was filed with the FDA requesting
permission to begin Phase II. Conditional approval has been received. It is
anticipated that Phase II will be complete by March/April. It is not known at
this time when the product could enter production or what future sales might
be.
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<PAGE> 13
In order to facilitate an understanding of the sale of Flippin and the related
business, the following schedule shows a proforma statement of operations
excluding Flippin for the periods indicated.
LABARGE, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
YEAR END QTR. END QTR. END SIX MOS.
JULY 3, 1994 OCT. 2, 1994 JAN. 1, 1995 JAN. 1, 1995
PROFORMA PROFORMA PROFORMA PROFORMA
- - - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 54,135 $ 12,438 $ 13,540 $ 25,978
- - - ---------------------------------------------------------------------------------------------------------------------------------
COST OF SALES 44,088 10,081 11,048 21,128
SELLING & ADMIN. EXPENSES 6,909 1,643 1,815 3,458
- - - ---------------------------------------------------------------------------------------------------------------------------------
EARNINGS FROM OPERATIONS 3,138 714 677 1,391
INTEREST EXPENSE 1,300 309 260 569
OTHER INCOME, NET 136 33 22 56
- - - ---------------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 1,974 438 439 878
INCOME TAX EXPENSE (BENEFIT) (261) 17 34 52
- - - ---------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS 2,235 421 405 826
===================================================================================================================================
EARNINGS PER COMMON SHARE $0.15 $0.03 $0.03 $0.05
===================================================================================================================================
AVERAGE COMMON SHARES 15,135 15,209 15,227 15,218
===================================================================================================================================
</TABLE>
Management expects third quarter sales to increase from the second quarter
level as reflected in the above table, but decrease somewhat from the actual
reported second quarter level which includes Flippin sales for October and
November. Earnings are expected to increase compared to both the proforma and
actual reported second quarter.
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<PAGE> 14
LABARGE, INC.
FORM 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
SIX MONTHS ENDED JANUARY 1, 1995
COMPARED TO SIX MONTHS ENDED JANUARY 2, 1994
In December, the Company sold its Flippin, Arkansas operation and its related
business for approximately $10,455,000. Sales, related costs and profits
though November, 1994 are included in operating results and may distort the
comparative data presented.
Net sales for the six months ended January 1, 1995 were $33,317,000 compared to
$37,646,000 for the six months ended January 2, 1994. Approximately $1,800,000
of the decline is due to the sale of Flippin, while the remainder is caused by
lower defense-related sales.
Gross profit for the six months ended January 1, 1995 was $5,654,000, 17.0% of
sales, compared to $6,487,000, 17.2% of sales, for the six months ended January
2, 1994. The majority of the decline is due to the lower volume, including the
sale of Flippin.
Selling and administrative expenses for the six months ended January 1, 1995
were $4,123,000, 12.4% of sales, compared to $4,215,000, 11.2% of sales, for
the six months ended January 2, 1994. Costs are slightly down from prior year
and continue to show the effects of cost containment efforts.
Earnings from operations were $1,531,000, 4.6% of sales, for the six months
ended January 1, 1995, compared to $2,272,000, 6.0% of sales, for the six
months ended January 2, 1994.
Interest expense for the six months ended January 1, 1995 was $1,058,000,
compared to $1,112,000 for the six months ended January 2, 1994. Lower debt
levels continue to cause lower interest costs; however, increasing interest
rates have largely offset the effect of lower debt levels.
Other income was $210,000 and $71,000 for the six months ended January 1, 1995
and January 2, 1994, respectively. Included in the other income for the period
ended January 1, 1995, is $154,000 in gain from the sale of the Flippin
facility. The remainder of this income represents accretion of a discount on a
note receivable.
The Company has significant net operating loss carryforwards which offset most
of its income tax liability. Income tax expense for the six months ended
January 1, 1995 and January 2, 1994, respectively, was $41,000 and $74,000.
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<PAGE> 15
Net earnings for the six months ended January 1, 1995 were $642,000, compared
to $1,157,000 for the six months ended January 2, 1994.
Earnings per common share were $.04 for the six months ended January 1, 1995
and $.08 for the six months ended January 2, 1994.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JANUARY 1, 1995
COMPARED TO THREE MONTHS ENDED JANUARY 2, 1994
Net sales for the three months ended January 1, 1995 were $16,206,000 compared
to $18,038,000 for the three months ended January 2, 1994. This decrease in
volume is primarily attributable to the sale of the Flippin facility and the
related business.
Gross profit for the three months ended January 1, 1995 was $2,883,000, 17.8%
of sales, compared to $3,083,000, 17.1% of sales, for the three months ended
January 2, 1994. Lower volume in relation to fixed costs and the sale of
Flippin have contributed to the lower gross profit. Margins are up due to
improved product costs for those products shipped.
Selling and administrative expenses were $2,055,000, 12.7% of sales, for the
three months ended January 1, 1995, compared to $2,010,000, 11.1% of sales, for
the three months ended January 2, 1994. The expenses have remained relatively
constant year to year, but due to lower volume and the high content of fixed
costs included in selling and administrative expenses, the percentage to sales
has increased.
Earnings from operations for the three months ended January 1, 1995 were
$828,000, 5.1% of sales, compared to $1,073,000, 6.0% of sales, for the three
months ended January 2, 1994.
Interest expense for the three months ended January 1, 1995 was $511,000,
compared to $521,000 for the three months ended January 2, 1994. Lower debt
levels continue to keep interest costs down, in spite of increasing interest
rates. With the sale of the Flippin operation and the resulting decrease in
debt, interest expense should be considerably lower in future periods.
Other income was $177,000 and $37,000 for the three months ended January 1,
1995 and January 2, 1994, respectively. Included in the January 1, 1995
results is a gain of $154,000 on the sale of the Flippin facility. The balance
is due to the accretion of a discount on a note receivable.
The Company has significant net operating loss carryforwards which offset most
of its income tax liability. Income tax expense for the three months ended
January 1, 1995 and January 2, 1994 was $29,000 and $35,000, respectively.
Net earnings for the three months ended January 1, 1995 were $465,000, down 16%
compared to $554,000 for the three months ended January 2, 1994.
-15-
<PAGE> 16
Earnings per common share were $.03 for the three months ended January 1, 1995
compared to $.04 for the three months ended January 2, 1994.
FINANCIAL CONDITION & LIQUIDITY
On December 2, 1994, the Company completed the sale of its operations in
Flippin, Arkansas to Avnet, Inc. In the transaction, Avnet purchased the net
assets of the Flippin operation and the related business for $10,455,000 and
assumed liabilities of $2,900,000. The proceeds of the sale are being used to
reduce debt. As of January 1, 1995, $9,363,000 of the purchase price has been
received and used to reduce debt. Subsequent to January 1, 1995, the Company
received an additional $450,000.
At January 1, 1995, the Company had borrowings as follows: a term loan with an
initial balance of $3,280,000 payable over four years at an interest rate of
prime plus 1.5% and a revolving credit facility of up to $14,500,000 which
expires July 1, 1996, at prime plus 1.5% interest, both through Sanwa Business
Credit. As of January 1, 1995, $1,255,000 was outstanding on the term loan and
$3,200,000 was outstanding on the revolver. In addition, the Company has
$5,000,000 of 15% Subordinated Notes due May 15, 1997, $1,607,000 in notes due
Chemical Bank at prime plus .5%, plus other debt totaling $497,000. Equity at
January 1, 1995 was $12,671,000 or $.83 per common share.
Primary sources of the cash generated were: the sale of the Flippin operations
and the related business--$9,359,000, net income of $642,000 adjusted for
non-cash depreciation and amortization of $544,000, and reduction of accounts
receivable of $1,179,000. Cash was used to increase inventories by $1,623,000,
and reduce accounts payable and accrued liabilities by $1,373,000.
During the six months ended January 1, 1995, the Company reduced borrowings
$7,949,000.
-16-
<PAGE> 17
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 2/10/95
----------------
/S/ WILLIAM J. MAENDER
----------------------
William J. Maender
Vice President - Finance,
Treasurer and Secretary
-17-
<PAGE> 18
PART II
Item 5. Other Information
On December 2, 1994, the Company filed a special report on Form
8-K the sale of its operation in Flippin, Arkansas. Attached
hereto and incorporated herein as Exhibit 99(a) are proforma
Statement of Operations for the twelve months ended July 3, 1994
and six months ended January 1, 1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- - - ------ -----------
<S> <C>
2(a) Asset Purchase Agreement between Avnet,
Inc. and LaBarge, Inc. dated December 2, 1994,
previously filed as Exhibit 2(a) to the Company's
current report on Form 8-K, as filed with the
Commission on December 2, 1994 and incorporated
herein by reference.
27 Financial Data Schedule
99(a) Proforma statement of operations for the
twelve months ended July 3, 1994 and the six months
ended January 1, 1995.
</TABLE>
(b) Reports on Form 8-K
On December 2, 1994, the Company filed a special report on Form 8-K to
report under, Item 2, the sale of its operation in Flippin, Arkansas.
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-02-1995
<PERIOD-END> JAN-01-1995
<CASH> 261
<SECURITIES> 0
<RECEIVABLES> 8,569
<ALLOWANCES> (171)
<INVENTORY> 14,716
<CURRENT-ASSETS> 26,243
<PP&E> 10,749
<DEPRECIATION> (8,120)
<TOTAL-ASSETS> 33,295
<CURRENT-LIABILITIES> 11,533
<BONDS> 0
<COMMON> 152
0
0
<OTHER-SE> 12,519
<TOTAL-LIABILITY-AND-EQUITY> 33,295
<SALES> 33,317
<TOTAL-REVENUES> 33,317
<CGS> 27,663
<TOTAL-COSTS> 31,786
<OTHER-EXPENSES> 210
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,058
<INCOME-PRETAX> 683
<INCOME-TAX> 41
<INCOME-CONTINUING> 642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 642
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
<PAGE> 1
Exhibit 99(a)
A proforma statement of operations for the twelve months ended July 3, 1994 and
the six months ended January 1, 1995 follows and shows the effect of the sale
of Flippin as if it had occurred at the beginning of each period noted.
LABARGE, INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JULY 3, 1994
AND THE SIX MONTHS ENDED JANUARY 1, 1995
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JULY 3, 1994 SIX MONTHS ENDED JANUARY 1, 1995
Reported Adjustments PROFORMA Reported Adjustments PROFORMA
-------- ----------- -------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ 73,143 $ 19,008 $ 54,135 $ 33,317 $ 7,339 $ 25,978
- - - ----------------------------------------------------------------------------------------------------------------------------------
COST OF SALES 60,798 16,710 44,088 27,662 6,534 21,128
SELLING & ADMIN. EXPENSES 8,263 1,354 6,909 4,123 665 3,458
- - - ----------------------------------------------------------------------------------------------------------------------------------
EARNINGS FROM OPERATIONS 4,082 944 3,138 1,531 140 1,391
INTEREST EXPENSE 2,117 817 1,300 1,058 489 569
OTHER INCOME, NET 138 2 136 210 154 56
- - - ----------------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES 2,103 129 1,974 683 195 878
INCOME TAX EXPENSE (BENEFIT) (253) (8) (261) 41 11 52
- - - ----------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS 2,356 121 2,235 642 184 826
==================================================================================================================================
EARNINGS PER COMMON SHARE $0.16 -- $0.15 $0.04 -- $0.05
==================================================================================================================================
AVERAGE COMMON SHARES 15,135 -- 15,135 15,218 -- 15,218
==================================================================================================================================
</TABLE>
The above reflects adjustments to eliminate the sales and profit generated by
the Flippin facility for the twelve- and six- month periods indicated as well
as adjustment of interest expense to reflect the cash received from the sale of
Flippin used to reduce debt.
