<PAGE> 1
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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, 1996
[ ] 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
(847) 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 9, 1996 was: 4,759,391.
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LINDBERG CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Part I Financial Information: Page No.
--------
<S> <C> <C>
Item 1. Consolidated Statements of Earnings - Three Months
and Six Months Ended June 30, 1996 and 1995............. 3
Consolidated Balance Sheets - As of June 30, 1996 and
December 31, 1995 ...................................... 4
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1996 and 1995............................ 5
Notes to the Consolidated Financial Statements ........... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 8
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K ......................... 10
Signatures ............................................... 11
Exhibit Index ............................................ 12
</TABLE>
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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,
------------------------ ------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $30,338,754 $31,376,407 $59,841,011 $64,956,460
Cost of Sales 23,727,756 24,740,953 47,123,211 51,343,170
----------- ----------- ------------ -----------
Gross Profit 6,610,998 6,635,454 12,717,800 13,613,290
Selling and
Administrative Expenses 3,737,659 3,708,900 7,355,259 7,764,486
----------- ----------- ---------- -----------
Earnings From
Operations 2,873,339 2,926,554 5,362,541 5,848,804
Interest Expense - Net 397,321 435,177 799,632 863,970
----------- ----------- ----------- -----------
Earnings Before
Income Taxes 2,476,018 2,491,377 4,562,909 4,984,834
Provision for
Income Taxes 1,002,790 1,009,419 1,847,853 2,031,648
----------- ----------- ----------- -----------
Net Earnings $ 1,473,228 $ 1,481,958 $ 2,715,056 $ 2,953,186
=========== =========== =========== ===========
Per Common and
Common Equivalent
Share Amounts:
Net Earnings $ .30 $ .31 $ .56 $ .62
=========== =========== =========== ===========
Weighted Average
Common Shares
Outstanding and
Equivalents 4,880,968 4,764,456 4,854,880 4,760,792
=========== =========== =========== ===========
Cash Dividends
Declared and Paid $ .07 $ .06 $ .14 $ .12
=========== =========== =========== ===========
</TABLE>
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LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
----------- -----------
<S> <C>
CURRENT ASSETS:
Cash $ 132,055 $ 200,171
Receivables - Net 17,743,704 17,099,688
Inventories
Raw Material 1,718,693 1,997,594
Work in Process 2,441,418 2,352,526
Finished Goods 663,812 587,867
Prepaid and Refundable Income Taxes 1,539,087 1,060,546
Prepaid Expenses and Other Current Assets 3,548,593 3,083,505
----------- -----------
Total Current Assets 27,787,362 26,381,897
PROPERTY AND EQUIPMENT:
Cost 102,252,474 96,894,481
Accumulated Depreciation (58,904,644) (56,153,951)
----------- -----------
Net Property and Equipment 43,347,830 40,740,530
OTHER NON-CURRENT ASSETS 6,459,217 5,999,448
----------- -----------
TOTAL ASSETS $77,594,409 $73,121,875
=========== ===========
CURRENT LIABILITIES:
Current Maturities on Long-Term Debt $ 59,391 $ 83,286
Note Payable 970,000 --
Accounts Payable 7,131,133 6,726,972
Accrued Expenses 6,403,234 6,380,210
----------- -----------
Total Current Liabilities 14,563,758 13,190,468
DEFERRED INCOME TAXES 6,234,508 6,114,508
LONG-TERM DEBT (less Current Maturities) 20,686,546 19,018,285
OTHER NON-CURRENT LIABILITIES 4,753,088 5,616,179
STOCKHOLDERS' EQUITY:
Common Shares, $2.50 par value: 14,183,493 14,183,493
Authorized 12,000,000 shares in 1996 and
1995. Issued 5,673,397 Shares in 1996
and 1995
Additional Paid-In Capital 1,496,095 1,512,106
Retained Earnings 21,066,539 19,015,302
Treasury Shares (921,431 in
1996 and 946,006 in 1995), at Cost (5,208,190) (5,347,038)
Underfunded Pension Liability Adjustment (181,428) (181,428)
----------- -----------
Total Stockholders' Equity 31,356,509 29,182,435
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $77,594,409 $73,121,875
=========== ===========
</TABLE>
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LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
INCREASE (DECREASE) IN CASH June 30,
-------------------------
1996 1995
----------- -----------
<S> <C>
Cash Flows from Operating Activities:
Net Earnings $ 2,715,056 $ 2,953,186
Adjustments to Reconcile Net Earnings
to Net Cash Provided by (Used in)
Operating Activities:
Depreciation 2,760,184 2,618,721
Increase in Deferred Taxes 120,000 120,000
Change in Assets and Liabilities (1,706,264) (4,850,354)
---------- -------------
Total Adjustments to Reconcile Net Earnings
to Net Cash Provided by (Used in)
Operating Activities 1,173,920 (2,111,633)
---------- -------------
Net Cash Provided by Operating Activities 3,888,976 841,553
Cash Flows from Investing Activities:
Capital Expenditures (3,537,639) (4,181,431)
Proceeds from Notes Receivable for
Sales of Certain Heat Treating Facilities -- 200,000
Payment for Purchase of Vac-Hyd (2,370,000) --
---------- -----------
Net Cash Used in Investing Activities (5,907,639) (3,981,431)
Cash Flows from Financing Activities:
Net Borrowings Under Revolving Credit Agreement 1,700,000 4,400,000
Note Payable 970,000 --
Payments on Bank Term Loan -- (700,000)
Payments of Capital Lease Obligations (55,634) (48,512)
Dividends Paid (663,819) (566,492)
---------- -----------
Net Cash Provided by Financing Activities 1,950,547 3,084,996
Net Decrease in Cash (68,116) (54,882)
Cash at Beginning of Period 200,171 111,060
----------- -----------
Cash at End of Period 132,055 $ 56,178
=========== ===========
Supplemental Disclosures of
Cash Flow Information:
Interest Paid 802,967 $ 870,977
Income Taxes Paid - Net of Refunds 2,202,319 1,680,149
</TABLE>
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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,
1996 and June 30, 1995 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.
NOTE 2 On May 31, 1996, the Company acquired the assets of Vac-Hyd, a
division of Interturbine Corporation, for $2.37 million in cash and a
note payable. Vac-Hyd is a heat treating facility located in the
Los Angeles area. The results of operations since May 31, 1996 are
included in the three month and six month totals of the registrant.
The acquisition was accounted for as a purchase. The purchase price
has been allocated to Vac-Hyd's net assets based upon preliminary
results of asset valuations and liability adjustments. Actual
adjustments may differ based on the results of further evaluations of
the fair value of the acquired assets and liabilities. Any
differences between preliminary and actual adjustments are not
expected to have a material impact on the consolidated financial
statements.
The preliminary allocation of the purchase price is as follows:
<TABLE>
<CAPTION>
(in $000's)
<S> <C>
Property and Equipment $1,830
Accounts Receivable 570
Goodwill 310
Prepaid Expenses 50
Other Liabilities (390)
------
$2,370
======
</TABLE>
Goodwill is being amortized over a period of 30 years.
<PAGE> 7
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NOTE 3 No material changes have occurred with respect to the Company's
contingent liabilities outlined in the Company's 1995 10-K through the
date of this report.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:
As of June 30, 1996, the Company's total debt was $21.7 million as compared to
$19.7 million at the end of the prior quarter and $19.1 million at December 31,
1995. The change in debt level during the second quarter of 1996 relates
primarily to the $2.4 million needed to fund the acquisition of Vac-Hyd
(discussed further in footnote 2 to the financial statements included herein).
Excluding the effect of that acquisition, debt was reduced modestly from the
March 31, 1996 level.
Spending for capital projects for the first six months of 1996 totalled $3.5
million. Management's current expectation for capital expenditures for the
full year is approximately $7.5 million, which would represent an increase of
13% from $6.7 million spent on capital expenditures in 1995. The 1996
estimate excludes the investment of funds for the acquisition of Vac-Hyd.
On April 26, 1996, the Board of Directors declared a cash dividend of $.07 on
each share of the Company's common stock, payable June 1, 1996 to stockholders
of record at the close of business on May 10, 1996. Cash dividends of $332,000
were paid, bringing the total cash outlays for dividends in the six months
ended June 30, 1996 to $664,000. This represents an increase of 17% as compared
to $566,000 for the first six months of 1995.
At present, the Company believes that its borrowing capacity and funds
generated through operations will be sufficient to meet currently foreseen
capital investment, working capital and other funding needs, both for the
balance of 1996 and in the longer-term.
OF RESULTS OF OPERATIONS:
Quarter Ended June 30, 1996 and 1995
Sales for the second quarter of 1996 were $30.3 million, a decrease of 3% from
$31.4 million for the same three month period of 1995. In comparison to last
year, a 4% sales gain within the Company's Heat Treating Service business
segment was offset by reduced revenues from Precision Products segment
operations.
In general, customer markets remained steady during the second quarter of this
year. However, a falloff in sales with certain automotive and heavy equipment
customers in the period adversely affected Precision Products segment results
in comparison to the second quarter of 1995.
For the second quarter of 1996, the Company's operating margin of 9.5%
increased 0.2% from 9.3% for the same period of 1995. This resulted primarily
from an increase in the proportion of overall Company sales related to the
higher margin Heat Treating Services operations - to 60% of revenue in the
three month 1996 period from 56% a year ago. Thus, despite revenues falling by
$1.0 million for the quarter, earnings from operations were reduced by only
$53,000 as a result of the higher overall operating margin.
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Interest expense for the second quarter of 1996 of $397,000 was 9% below the
$435,000 incurred in the same prior year period. This was largely a result of
lower interest rates and debt levels experienced this year.
As a result of the above, net earnings of $1,473,000 this year were essentially
level with $1,482,000 for the second quarter of 1995.
Six Months Ended June 30, 1996 and 1995
For the six months ended June 30, 1996, sales of $59.8 million were $5.1
million, or 8%, below the $65.0 million reported in the first half of 1995. Of
the $5.1 million decrease, $4.1 million was attributable to the first quarter
1996 comparison to a very robust first quarter of 1995. At $33.6 million in
sales, the first quarter last year was the highest in the Company's history.
The decline during the six month period reflected lower overall sales for the
Precision Products business segment, which offset a slight 3% increase in heat
treating related revenues. The reduction in sales from Precision Products
operations resulted, generally, from lower levels of sales to automotive and
heavy equipment customers in 1996 and the selective shedding of certain low
margin businesses which existed in the first half of 1995.
Through June 30, 1996, earnings from operations totalled $5.4 million, down 8%
from $5.8 million for the same period of 1995. Operating profit margins
remained unchanged at 9% despite the lower sales level. The Company's business
units operated more productively during 1996 as compared to during the 1995
period wherein high levels of customer demand caused some operational
inefficiencies at certain facilities.
Interest expense for the first six months of 1996 was $800,000, down 7% from
$864,000 in the year earlier period. This resulted from a combination of lower
debt levels than in 1995 as well as a reduction in interest rates on the
Company's borrowings.
Net earnings for the first half of 1996 were $2.7 million, 8% below the $3.0
million reported in the same period of 1995, as a result of the lower level of
sales.
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PART II. OTHER INFORMATION
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 12 and which is
incorporated herein by reference.
(b) Reports on Form 8-K - There were no reports on Form 8-K
filed in the three months ended June
30, 1996.
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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
Dated: August 9, 1996
<PAGE> 12
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LINDBERG CORPORATION
Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 1996
Exhibit Index
<TABLE>
<CAPTION>
Page Number (1)
Number and Description of Exhibit (or reference)
- --------------------------------- --------------
<S> <C>
1. Not Applicable
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 (7)
4.1 Amended and Restated Credit Agreement
Dated as of April 28, 1994 (8)
4.2 First Amendment to Amended and Restated Credit
Agreement dated as of November 2, 1995 (9)
4.3 Second Amendment to Amended and Restated Credit
Agreement dated as of January 31, 1996 (10)
4.4 Note Agreement dated as of October 15, 1995 (11)
5-9 Not Applicable
10. Material Contracts
10.1 Description of Bonus Program (12)
10.2 Consulting Agreement Between the
Registrant and G.H. Bodeen dated
October 25, 1990 (13)
10.3 1991 Stock Option Plan for Key Employees (14)
10.4 1991 Stock Option Plan for Directors (15)
11. Statement recomputation of per share earnings Attached
12-26 Not Applicable
27. Financial Data Schedule Attached
28. Not Applicable
</TABLE>
<PAGE> 13
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(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 Annual
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 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 3.4 of the Registrant's Report on
Form 10-Q for the quarter ended September 30, 1995, Commission file
no. 0-8287.
(7) Other instruments defining the rights of the holders of long-term debt
of the Registrant are omitted pursuant to Regulation S-K Item 601
(b)(4)(v). The Registrant agrees to furnish copies of such agreements
to the Securities and Exchange Commission upon request.
(8) 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.
(9) Incorporated by reference to Exhibit 4.2 of the Registrant's Report on
Form 10-Q for the quarter ended September 30, 1995, Commission file
no. 0-8287.
(10) Incorporated by reference to Exhibit 4.3 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995, Commission
file no. 0-8287.
(11) Incorporated by reference to Exhibit 4.3 of the Registrant's Report on
Form 10-Q for the quarter ended September 30, 1995, Commission file
no. 0-8287.
(12) Incorporated by reference to page 6 of the Registrant's Proxy
Statement filed with the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995, Commission file no. 0-8287.
(13) Incorporated by reference to Exhibit 10.5 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1990, Commission
file no. 0-8287.
(14) Incorporated by reference to Appendix A of the Registrant's 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.
(15) Incorporated by reference to Appendix B of the Registrant's 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> 1
Exhibit 11
COMPUTATION OF NET EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C>
EARNINGS
Net Earnings $ 1,473,228 $ 1,481,958 $ 2,715,056 $ 2,953,186
=========== =========== =========== ===========
SHARES
Weighted Average Number
of Common Shares Outstanding 4,750,237 4,724,296 4,742,775 4,721,756
Common Share Equivalents 130,731 40,160 112,105 39,036
----------- ----------- ----------- -----------
Weighted Average Common
Shares Outstanding and
Equivalents 4,880,968 4,764,456 4,854,880 4,760,792
=========== =========== =========== ===========
PRIMARY EARNINGS PER
COMMON SHARE
Net Earnings $ .30 $ .31 $ .56 $ .62
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from financial
statements for the period ended 6/30/96 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 132,055
<SECURITIES> 0
<RECEIVABLES> 17,743,704
<ALLOWANCES> 367,000
<INVENTORY> 4,823,923
<CURRENT-ASSETS> 27,787,362
<PP&E> 102,252,474
<DEPRECIATION> 58,904,644
<TOTAL-ASSETS> 77,594,409
<CURRENT-LIABILITIES> 14,563,758
<BONDS> 0
0
0
<COMMON> 14,183,493
<OTHER-SE> 1,496,095
<TOTAL-LIABILITY-AND-EQUITY> 77,594,409
<SALES> 59,841,011
<TOTAL-REVENUES> 59,841,011
<CGS> 47,123,211
<TOTAL-COSTS> 47,123,211
<OTHER-EXPENSES> 7,355,259
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 799,632
<INCOME-PRETAX> 4,562,909
<INCOME-TAX> 1,847,853
<INCOME-CONTINUING> 2,715,056
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,715,056
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
