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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 quarter ended June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file Number 0-8287
LINDBERG CORPORATION
DELAWARE 36-1391480
------------------------------ -------------------------------
State of Incorporation IRS Employer Identification No.
6133 North River Road, Suite 700
Rosemont, Illinois 60018
(708) 823-2021
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
The number of shares of the Registrant's Common Stock outstanding as of August
11, 1995 was: 4,727,391.
<PAGE> -2-
LINDBERG CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
Part I Financial Information: Page No.
--------
Item 1. Consolidated Statements of Earnings - Three Months
and Six Months Ended June 30, 1995 and 1994............... 3
Consolidated Balance Sheets - As of June 30, 1995 and
December 31, 1994 ........................................ 4
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1995 and 1994.............................. 5
Notes to the Consolidated Financial Statements ............. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 7
Part II Other Information:
Item 4. Submission of Matters to a Vote of Security Holders......... 9
Item 6. Exhibits and Reports on Form 8-K ........................... 9
Signatures ................................................ 10
Exhibit Index ............................................. 11
Exhibit 11 - Computation of Net Earnings per Common 13
Share
Exhibit 27 - Financial Data Schedule
<PAGE> -3-
LINDBERG CORPORATION AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Net Sales $31,376,407 $26,501,567 $64,956,460 $45,328,314
Cost of Sales 24,818,290 20,600,609 51,423,507 34,693,209
----------- ----------- ----------- -----------
Gross Profit 6,558,117 , 5,900,958 13,532,953 10,635,105
Selling and Adminis-
trative Expenses 3,631,563 3,409,704 7,684,149 6,431,523
----------- ----------- ----------- -----------
Earnings From
Operations 2,926,554 2,491,254 5,848,804 4,203,582
Interest Expense - Net 435,177 213,575 863,970 283,294
----------- ----------- ----------- -----------
Earnings Before
Income Taxes 2,491,377 2,277,679 4,984,834 3,920,288
Provision for
Income Taxes 1,009,419 955,274 2,031,648 1,606,138
----------- ----------- ----------- -----------
Net Earnings $ 1,481,958 $ 1,322,405 $ 2,953,186 $ 2,314,150
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Per Common and
Common Equivalent
Share Amounts:
Net Earnings $ .31 $ .28 $ .62 $ .49
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted Average
Common and Common
Equivalent Shares
Outstanding 4,764,456 4,760,109 4,760,792 4,742,952
----------- ----------- ----------- -----------
Cash Dividends
Declared and Paid $ .06 $ .05 $ .12 $ .10
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<PAGE> -4-
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 56,178 $ 111,060
Accounts Receivable - Net 18,504,042 16,751,894
Inventories:
Raw Material 1,280,032 1,678,239
Work in Process and Finished Goods 3,005,701 2,653,028
Prepaid and Refundable Income Taxes 1,770,215 2,027,147
Prepaid Expenses and Other Current Assets 4,034,764 2,665,358
----------- -----------
Total Current Assets 28,650,932 25,886,726
PROPERTY AND EQUIPMENT:
Cost 94,349,061 90,326,887
Accumulated Depreciation (53,956,021) (51,469,024)
----------- -----------
Net Property and Equipment 40,393,040 38,857,863
OTHER ASSETS 5,559,707 5,776,979
----------- -----------
TOTAL ASSETS $74,603,679 $70,521,568
----------- -----------
----------- -----------
CURRENT LIABILITIES:
Current Maturities on Debt $ 1,500,318 $ 1,501,478
Accounts Payable 7,116,409 8,281,648
Accrued Expenses 6,925,816 7,496,115
----------- -----------
Total Current Liabilities 15,542,543 17,279,241
DEFERRED INCOME TAXES 6,611,387 6,491,387
LONG-TERM DEBT (less Current Maturities) 20,351,430 16,699,942
OTHER NON-CURRENT LIABILITIES 5,012,422 5,382,482
SHAREHOLDERS' EQUITY:
Common Shares, $2.50 par value: 14,183,493 14,183,493
Authorized 12,000,000 shares in 1995 and 1994.
Issued 5,673,397 Shares in 1995 and 1994
Additional Paid-In Capital 1,514,262 1,531,600
Earnings Retained in the Business 16,948,534 14,561,840
Shares held in Treasury (947,881 in
1995 and 956,381 in 1994), at Cost (5,357,632) (5,405,657)
Underfunded Pension Liability Adjustment (202,760) (202,760)
----------- -----------
Total Shareholders' Equity 27,085,897 24,668,516
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $74,603,679 $70,521,568
----------- -----------
----------- -----------
</TABLE>
<PAGE> -5-
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
INCREASE (DECREASE) IN CASH June 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings $ 2,953,186 $ 2,314,150
Adjustments to Reconcile Net Earnings
to Net Cash Provided by (Used in)
Operating Activities:
Depreciation 2,618,721 2,022,411
Increase in Deferred Taxes 120,000 90,000
Change in Assets and Liabilities (4,850,354) (1,995,597)
----------- -----------
Total Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating Activities (2,111,633) 116,814
----------- -----------
Net Cash Provided by Operating Activities 841,553 2,430,964
Cash Flows from Investing Activities:
Capital Expenditures (4,181,431) (1,872,584)
Proceeds from Note Receivable for
Sale of International Affiliate --- 484,000
Proceeds from Notes Receivable for
Sales of Heat Treat Facilities 200,000 1,304,350
Payment for Purchase of Impact Industries, Inc.,
Net of Cash Acquired --- (5,497,106)
----------- -----------
Net Cash Used in Investing Activities (3,981,431) (5,581,340)
Cash Flows from Financing Activities:
Net Borrowings Under Revolving Credit Agreement 4,400,000 10,050,000
Principal Payments on Long-Term Debt (700,000) ---
Repayment of Long-Term Debt of Impact
Industries, Inc. --- (6,411,633)
Principal Payments of Capital Lease Obligations (48,512) (15,218)
Dividends Paid (566,492) (470,709)
----------- -----------
Net Cash Provided by Financing Activities 3,084,996 3,152,440
Net Increase (Decrease) in Cash (54,882) 2,064
Cash at Beginning of Period 111,060 210,660
----------- -----------
Cash at End of Period $ 56,178 $ 212,724
----------- -----------
----------- -----------
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 870,977 $ 224,675
Income Taxes Paid - Net of Refunds 1,680,149 1,123,410
</TABLE>
<PAGE> -6-
LINDBERG CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
NOTE 1 The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Company's latest annual report on Form 10-K.
Statements for the three month and six month periods ended June 30,
1995 and June 30, 1994 reflect, in the opinion of the Company, all
adjustments (consisting only of normal recurring accruals) necessary
to present fairly the results of these periods. Results for interim
periods are not necessarily indicative of results for a full year.
<PAGE> -7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION:
For the six months ended June 30, 1995, the Company's borrowings increased $3.7
million to $21.9 million from $18.2 million. Correspondingly, the Company's debt
-to-capitalization ratio increased to 45% from the year-end level of 42%. The
additional borrowings were required to fund an increase in working capital and
to fund expenditures on capital projects. Working capital increased primarily
due to the growth in accounts receivable which resulted from the Company's
increased sales volume.
Capital expenditures through June were $4.2 million. Of the amount spent thus
far, approximately 17% related to growth of the Company's Strategic Partnership
2000 program. The Company expects to invest about $7 million overall on capital
projects in 1995.
In December 1994, the Company experienced a fire at its Solon, Ohio heat
treating facility. Throughout 1995, the Company made expenditures to repair or
replace plant and equipment damaged by the fire. As of June 30, 1995, these
cash outlays totaled $700,000 after netting the effect of an advance received by
the Company against final settlement of an insurance claim made as a result of
the damage. The Company expects to expend additional funds in the third quarter
to complete the restoration of the facility, and anticipates receiving the final
settlement for the claim by year-end 1995.
On July 26, 1995, the Board of Directors declared a cash dividend of $.06 on
each of the Company's common shares, payable on September 1, 1995, to
shareholders of record at the close of business on August 10, 1995. This was
the same amount as was paid in the previous quarter.
OF RESULTS OF OPERATIONS:
Quarter Ended June 30, 1995 and 1994
Sales for the second quarter of 1995 increased $4.9 million, or 18%, to $31.4
million from $26.5 million in the second quarter of 1994. Excluding sales for
Impact Industries, Inc. ("Impact") which was acquired on April 29, 1994, from
the second quarter of 1995 and 1994, sales for the Company increased 11% over
last year's second quarter . Second quarter sales, while improved over the
second quarter of 1994, reflected softening in some of the Company's markets
served, particularly with certain automotive and consumer products customers.
The Company's second quarter earnings from operations increased $435,000 to $2.9
million from $2.5 million in 1994, as operating margins were essentially
maintained as sales increased.
Interest expense for the second quarter increased $222,000 to $435,000 from
$213,000. The increase resulted from having additional borrowings related to the
purchase of Impact for three months during 1995 versus two months in 1994, and
an increase in the effective date of borrowings.
<PAGE> -8-
As a result of the above, second quarter net income increased $160,000, or 12%,
to $1.5 million from $1.3 million in the second quarter of 1994. Earnings per
share for the quarter increased $.03 to $.31 from $.28 in 1994.
Six Months Ended June 30, 1995 and 1994
For the six months ended June 30, 1995, sales were up $19.7 million, or 43%, to
$65.0 million from $45.3 million in 1994. Excluding Impact from each year in the
comparison, sales increased 18% from the prior year. For 1995, the softening in
orders mentioned above was reflected in second quarter sales falling 7% below
the strong revenue level experienced during the first quarter of 1995.
Through June, earnings from operations increased $1.6 million to $5.8 million
from $4.2 million last year. This gain resulted mainly from the aforementioned
sales increase, as the Company's operating profit margin fell slightly from 1994
primarily due to reduced productivity in the first quarter as the Company's
operations maintained service levels during that period of high order demand.
The six month interest expense increased $580,000 to $860,000 from $280,000 in
1994. This increase was the result of having additional borrowings related to
the purchase of Impact outstanding for six months in 1995 versus four months in
1994 and also a higher effective interest rate in 1995.
As a result of the above, first half earnings rose $640,000, or 28%, to $3.0
million in 1995 from $2.3 million the year before. Earnings per share were $.62
versus $.49 in 1994, an increase of 27%.
Outlook:
Impact, as a result of new contracts, expects significant sales volume growth
from one of its existing customers to commence in the third quarter of 1995.
This customer is expected to add several million dollars annually to Impact's
revenues over the next three years. Based on the short term outlook, however,
the new business with this customer will be offset to some degree by softness in
sales with some other customers as well as selected other business no longer
retained by Impact.
<PAGE> -9-
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders was held on April 26, 1995.
Matters submitted to, and approved by, the shareholders included
amendments to the 1991 Stock Option Plan for Key Employees and
amendments to the 1991 Stock Option Plan for Directors, which are
included in the Registrant's definitive Proxy Statement dated March 24,
1995. The shareholders voted 2,789,393 shares in favor of, 571,928
shares against and withheld 162,700 shares in the vote on the
amendments to the Stock Option Plan for Key Employees. The
shareholders voted 3,314,462 in favor of, 393,324 shares against and
withheld 163,075 shares in the vote on the amendments to the Stock
Option Plan for Directors.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits Required by Item 601 of Regulation S-K - Exhibits
required by Item 601 of Regulation S-K are listed in the
Exhibit Index which is attached hereto at page 11 and
which is incorporated herein by reference.
(b) Reports on Form 8-K There were no reports on Form
8-K filed for the three months
ended June 30, 1995.
<PAGE> -10-
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.
LINDBERG CORPORATION
Principal Financial and Accounting By Stephen S. Penley
Officer: -------------------------
Stephen S. Penley
Senior Vice President
and Chief Financial Officer,
Secretary and Treasurer
Dated: August 11, 1995
<PAGE> -11-
LINDBERG CORPORATION
Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 1995
Exhibit Index
Page Number (1)
Number and Description of Exhibit (or reference)
--------------------------------- ---------------
2. Plan of acquisition, reorganization,
arrangement, liquidation or succession
2.1 Stock Purchase Agreement Dated
April 19, 1994 among Rexcorp
International Ltd., Marle Management Ltd.,
D.F. Haslam Management Ltd., and Gary E.
Miller and Lindberg Corporation (2)
3. Articles of Incorporation and By-Laws
3.1 Certificate of Incorporation (composite) (3)
3.2 1979 Amendment to Certificate of Incorporation (4)
3.3 1987 Amendment to Certificate of Incorporation (5)
3.4 By-Laws (as amended) (6)
4. Instruments defining the rights of security
holders, including indentures
4.1 Amended and Restated Credit Agreement (7)
Dated as of April 28, 1994
10. Material Contracts
10.1 Description of Bonus Program (8)
10.2 Consulting Agreement Between the
Registrant and G.H. Bodeen dated
October 25, 1990 (9)
10.3 1991 Stock Option Plan for Key Employees (10)
10.4 1991 Stock Option Plan for Directors (11)
11. Statement re computation of net earnings
per common share Attached
27. Financial Data Schedule Attached
<PAGE> -12-
(1) Shown only in manually signed original.
(2) Incorporated by reference to Exhibit 2.1 of the Registrant's Report on
Form 8-K dated May 13, 1994, Commission file no. 0-8287.
(3) Incorporated by reference to Exhibit 3.1 of the Registrant's Report on
Form 10-K for the year ended December 31, 1980, Commission file no.
0-8287.
(4) Incorporated by reference to Exhibit 3.2 of the Registrant's Report on
Form 10-Q for the quarter ended March 31, 1995, Commission file no.
0-8287.
(5) Incorporated by reference to page 6 of the Registrant's 1987 proxy
statement filed with the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1986, Commission file no. 0-8287.
(6) Incorporated by reference to Exhibit 3.3 of the Registrant's Report on
Form 10-K for the year ended December 31, 1994, Commission file no.
0-8287.
(7) Incorporated by reference to Exhibit 4.2 of the Registrant's Report on
Form 8-K dated May 13, 1994, Commission file no. 0-8287.
(8) Incorporated by reference to page 5 of the Registrant's 1991 proxy
statement filed with the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1990, Commission file no. 0-8287.
(9) Incorporated by reference to Exhibit 10.5 of the Registrant's Report on
Form 10-K for the year ended December 31, 1990, Commission file no.
0-8287.
(10) Incorporated by reference to Appendix A of the Registrant's 1995 proxy
statement filed with the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994, Commission file no. 0-8287.
(11) Incorporated by reference to Appendix B of the Registrant's 1995 proxy
statement filed with the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1994, Commission file no. 0-8287.
<PAGE> -13-
Exhibit 11
COMPUTATION OF NET EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
EARNINGS
Net Earnings $1,481,958 $1,322,405 $2,953,186 $2,314,150
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
SHARES
Weighted Average Number
of Common Shares Outstanding 4,724,296 4,708,819 4,721,756 4,706,656
Common Share Equivalents 40,160 51,290 39,036 36,296
---------- ---------- ---------- ----------
Weighted Average Common
Shares Outstanding and
Equivalents 4,764,456 4,760,109 4,760,792 4,742,952
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
PRIMARY EARNINGS PER
COMMON SHARE
Net Earnings $ .31 $ .28 $ .62 $ .49
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 56,178
<SECURITIES> 0
<RECEIVABLES> 18,504,042
<ALLOWANCES> 0
<INVENTORY> 4,285,733
<CURRENT-ASSETS> 28,650,932
<PP&E> 94,349,061
<DEPRECIATION> 53,956,021
<TOTAL-ASSETS> 74,603,679
<CURRENT-LIABILITIES> 15,542,543
<BONDS> 0
<COMMON> 14,183,493
0
0
<OTHER-SE> 12,902,404
<TOTAL-LIABILITY-AND-EQUITY> 74,603,679
<SALES> 64,956,460
<TOTAL-REVENUES> 64,956,460
<CGS> 51,423,507
<TOTAL-COSTS> 51,423,507
<OTHER-EXPENSES> 7,684,149
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 863,970
<INCOME-PRETAX> 4,984,834
<INCOME-TAX> 2,031,648
<INCOME-CONTINUING> 2,953,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,953,186
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
