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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, 1997
[ ] 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 8, 1997 was: 4,808,966.
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LINDBERG CORPORATION AND SUBSIDIARY
TABLE OF CONTENTS
Part I Financial Information: Page No.
--------
Item 1. Consolidated Statements of Earnings - Three Months
and Six Months Ended June 30, 1997 and 1996............. 3
Consolidated Balance Sheets - As of June 30, 1997 and
December 31, 1996....................................... 4
Consolidated Statements of Cash Flows - Six Months
Ended June 30, 1997 and 1996............................ 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 ...... 10
Item 6. Exhibits and Reports on Form 8-K ......................... 10
Signatures ............................................... 11
Exhibit Index ............................................ 12
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LINDBERG CORPORATION AND SUBSIDIARY
PART I FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $29,939,486 $30,338,754 $59,545,814 $59,841,011
Cost of Sales (23,413,713) (23,942,932) (47,234,994) (47,513,570)
----------- ----------- ----------- -----------
Gross Profit 6,525,773 6,395,822 12,310,820 12,327,441
Selling and
Administrative Expenses (3,687,058) (3,737,659) (7,496,283) (7,355,259)
Equity in Earnings of
Partnership 574,815 215,176 830,746 390,359
----------- ----------- ----------- -----------
Operating Earnings 3,413,530 2,873,339 5,645,283 5,362,541
Interest Expense - Net (378,268) (397,321) (752,990) (799,632)
----------- ----------- ----------- -----------
Earnings Before
Income Taxes 3,035,262 2,476,018 4,892,293 4,562,909
Provision for
Income Taxes (1,229,123) (1,002,790) (1,981,272) (1,847,853)
----------- ----------- ----------- -----------
Net Earnings $ 1,806,139 $ 1,473,228 $ 2,911,021 $ 2,715,056
=========== =========== =========== ===========
Per Common and
Common Equivalent
Share Amounts:
Net Earnings $ .37 $ .30 $ .60 $ .56
=========== =========== =========== ===========
Weighted Average
Common Shares
Outstanding and
Equivalents 4,889,819 4,880,968 4,882,710 4,854,880
=========== =========== =========== ===========
Cash Dividends
Declared and Paid $ .08 $ .07 $ .16 $ .14
=========== =========== =========== ===========
</TABLE>
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LINDBERG CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(Unaudited)
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 235,644 $ 51,992
Accounts Receivable - Net 15,394,737 15,419,945
Inventories
Raw Material 1,063,950 726,870
Work in Process 2,201,718 1,753,574
Finished Goods 552,274 541,064
Prepaid and Refundable Income Taxes 1,691,078 1,687,534
Note Receivable -- 1,102,600
Prepaid Expenses and Other Current Assets 4,012,320 4,745,419
----------- -----------
Total Current Assets 25,151,721 26,028,998
PROPERTY AND EQUIPMENT:
Cost 105,469,666 104,100,559
Accumulated Depreciation (59,943,919) (59,137,724)
----------- -----------
Net Property and Equipment 45,525,747 44,962,835
Goodwill 2,919,582 2,973,212
Investment in Partnership 1,910,378 1,607,632
Other Non-Current Assets 2,531,032 2,521,855
----------- -----------
TOTAL ASSETS $78,038,460 $78,094,532
=========== ===========
CURRENT LIABILITIES:
Current Maturities on Long-Term Debt $ 51,428 $ 53,565
Note Payable -- 901,437
Accounts Payable 4,989,971 5,553,376
Accrued Expenses 5,762,514 6,104,228
----------- -----------
Total Current Liabilities 10,803,913 12,612,606
NON-CURRENT LIABILITIES:
Deferred Income Taxes 6,967,504 6,847,504
Long-term Debt (less Current Maturities) 20,026,773 20,759,150
Accrued Pension 3,071,511 3,148,114
Other Non-Current Liabilities 1,800,566 1,680,256
----------- -----------
Total Non-Current Liabilities 31,866,354 32,435,024
STOCKHOLDERS' EQUITY:
Common Shares, $2.50 par value: 14,183,493 14,183,493
Authorized 12,000,000 shares in 1997 and
1996. Issued 5,673,397 shares in 1997
and 1996
Additional Paid-In Capital 1,512,120 1,493,406
Retained Earnings 24,796,527 22,652,574
Treasury Shares (866,181 in 1997
and 894,256 in 1996), at Cost (4,896,027) (5,054,651)
Underfunded Pension Liability Adjustment (227,920) (227,920)
----------- -----------
Total Stockholders' Equity 35,368,193 33,046,902
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $78,038,460 $78,094,532
=========== ===========
</TABLE>
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LINDBERG CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
INCREASE (DECREASE) IN CASH June 30,
--------------------------
1997 1996
----------- ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings $ 2,911,021 $ 2,715,056
Adjustments to Reconcile Net Earnings
to Net Cash Provided by (Used in)
Operating Activities:
Depreciation 2,837,036 2,760,184
Increase in Deferred Taxes 120,000 120,000
Change in Assets and Liabilities (306,484) (1,706,264)
----------- -----------
Total Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating Activities 2,650,552 1,173,920
----------- -----------
Net Cash Provided by Operating Activities 5,561,573 3,888,976
Cash Flows from Investing Activities:
Capital Expenditures (4,077,501) (3,537,639)
Proceeds from Notes Receivable for
Sale of Wire Belt Operation 1,102,600 --
Payment for Purchase of Vac-Hyd -- (2,370,000)
----------- -----------
Net Cash Used in Investing Activities (2,974,901) (5,907,639)
Cash Flows from Financing Activities:
Net Borrowings Under Revolving Credit Agreement (700,000) 1,700,000
Note Payable for Purchase of Vac-Hyd (901,437) 970,000
Payments of Capital Lease Obligations (34,514) (55,634)
Dividends Paid (767,069) (663,819)
----------- -----------
Net Cash Provided by (Used in)
Financing Activities (2,403,020) 1,950,547
Net Increase (Decrease) in Cash 183,652 (68,116)
Cash at Beginning of Period 51,992 200,171
----------- -----------
Cash at End of Period $ 235,644 $ 132,055
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Interest Paid $ 836,762 $ 802,967
Income Taxes Paid - Net of Refunds 1,864,816 2,202,319
</TABLE>
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LINDBERG CORPORATION AND SUBSIDIARY
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,
1997 and June 30, 1996 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 No material changes have occurred with respect to the Company's
contingent liabilities outlined in the Company's 1996 10-K through
the date of this report.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:
At June 30, 1997, the Company's total debt was $20.1 million, $1.9 million
below the $22.0 that was outstanding as of the quarter ended March 31, 1997.
In concert with the reduced debt level, the ratio of total debt to
capitalization was lowered to 36% at the close of the second quarter of this
year from 39% at the end of the prior quarter. Borrowing levels decreased in
the second quarter from cash generated through operations and the receipt of
$1.1 million due as final payment from the sale of a wire-belting product line
in 1996.
Capital expenditures for the first six months of 1997 were $4.1 million, 15%
above the $3.5 million recorded for the same period in 1996. The spending in
1997 was chiefly for projects related to sales expansion opportunities within
the Heat Treating business segment, including furnaces for existing facilities
as well as equipment for new Strategic Partnership 2000 programs. The Company
currently estimates that capital investments for the full year 1997 will total
about $9.0 million, excluding amounts required to fund any acquisitions that
may develop during the year.
On April 25, 1997, the Board of Directors declared a cash dividend of $.08 on
each share of the Company's common stock, payable on June 1, 1997. The total
cash dividends paid on the latter date were $385,000, bringing to $767,000 the
total cash outlay for dividends to shareholders in the first six months of
1997. The six month figure for this year was 16% above the $664,000 paid out
for the same period in 1996, due primarily to an increase in the quarterly
dividend rate in October 1996 to $.08 per share from $.07 per share.
The Company believes that its borrowing capacity and funds generated through
operations will be sufficient to meet currently foreseen capital investment and
working capital needs in support of existing businesses for the balance of 1997
and in the longer term.
OF RESULTS OF OPERATIONS:
Quarter ended June 30, 1997 and 1996
Sales for the quarter ended June 30, 1997 were $29.9 million, down $400,000, or
1%, from $30.3 million in the same period in 1996. While total sales declined
slightly, results within the Company's two business segments varied. Revenues
for the Heat Treating segment increased by 12% for the quarter in comparison to
the second quarter of 1996, but that increase was more than offset by reduced
sales from the Precision Products segment. For the second quarter of 1997,
Heat Treating revenues were 68% of total revenues as compared to 60% in the
same quarter of last year.
Sales increased within the Heat Treating segment as a majority of the Company's
divisions, particularly those serving aerospace markets, continued to
experience strong demand from customers as had been the case during the first
three months of 1997. Revenues declined in the Precision Products segment due
chiefly to weakness at the Company's Impact Industries division, which resulted
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from a softening in orders from certain customers and the loss of parts
produced in 1996 which were not replaced due to model changeover issues.
The Company's overall gross profit percentage rose to 21.8% in the second
quarter of 1997 as compared to 21.1% in the same 1996 period. This resulted
mainly from the increase in higher margin heat treating sales as a percentage
of total Company sales.
Operating earnings, overall, improved to $3.4 million in the second quarter of
1997 from $2.9 million in the same period of 1996. By segment, operating
earnings improvement within the Heat Treating segment was offset to a degree by
lower earnings from Precision Products operations, which recorded an overall
operating loss of $141,000 for the second quarter of this year. Contributing
to operating earnings within the Heat Treating segment in the second quarter of
1997 was the increase in equity earnings from a heat treating partnership to
$575,000 this year versus $215,000 in the second quarter of 1996. The Company
maintains a 50% partnership interest in this heat treating operation which
services aerospace and other customers.
Overall, reflecting the above issues, net earnings in the second quarter of
1997 of $1.8 million, or $.37 per share, increased from $1.5 million, or $.30
per share in the same three month period of 1996.
Six Months Ended June 30, 1997 and 1996
Sales for the first six months of 1997 were $59.5 million, essentially level
with the $59.8 million reported for the same period last year. While overall
sales were largely unchanged, a sales increase within the Heat Treating
business segment was offset by reduced sales from Precision Products
operations. The latter segment reported lower sales thus far in 1997 in
comparison to the same period of the prior year as a result primarily of
reduced revenues at the Company's Impact Industries division. To a lesser
degree, the sale of a wire-belting product line in December 1996 also
contributed to the year-over-year sales decline within the Precision Products
segment.
The gross profit percentage for the 1997 six month period was 21%, unchanged
from the same period in 1996, as increased heat treating margins on higher
sales were offset by a reduced gross profit percentage overall from Precision
Products operations, which experienced a 16% sales decline in comparison to the
prior year excluding the effect of the sale of a wire-belting product line in
December 1996.
For the first six months of 1997, the Company recorded $831,000 in equity
earnings from its 50% interest in a heat treating partnership, more than double
the $390,000 reported last year. This operation has seen steady growth in its
revenues, in part due to its heat treating and forming of products for the
aerospace industry which has been a strong growth market over the last several
months.
For the first six months of 1997, net earnings of $2.9 million, or $.60 per
share, was ahead of the $2.7 million, or $.56 per share, reported for the same
period in 1996 primarily reflecting the above issues.
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Subsequent Event
On July 31, 1997, the Company acquired all of the outstanding common stock of
TiCorm, Inc. for $3.8 million, which included cash and notes payable. TiCorm
is a heat treating and forming facility located in the Los Angeles area, with
annual sales in its latest fiscal year of approximately $4.0 million.
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PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
(b) At the annual meeting of stockholders of the Company held
on April 25, 1997, the board's two nominees for Class III
directors were re-elected, receiving the following votes:
Votes for Authority Withheld
--------------- ------------------
J. W. Puth 4,321,219 219,712
L. G. Thompson 4,321,519 219,412
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, 1997.
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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 /s/ Stephen S. Penley
Officer: ---------------------------
Stephen S. Penley
Senior Vice President
and Chief Financial Officer
Dated: August 8, 1997
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LINDBERG CORPORATION
Quarterly Report on Form 10-Q
for the Quarter Ended June 30, 1997
Exhibit Index
Number and Description of Exhibit
11. Statement recomputation of per share earnings Attached
27. Financial Data Schedule Attached
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Exhibit 11
COMPUTATION OF NET EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
EARNINGS
Net Earnings $1,806,139 $1,473,228 $2,911,021 $2,715,056
========== ========== ========== ==========
SHARES
Weighted Average Number
of Common Shares Outstanding 4,806,737 4,750,237 4,797,847 4,742,775
Common Share Equivalents 83,082 130,731 84,863 112,105
---------- ---------- ---------- ----------
Weighted Average Common
Shares Outstanding and
Equivalents 4,889,819 4,880,968 4,882,710 4,854,880
========== ========== ========== ==========
PRIMARY EARNINGS PER
COMMON SHARE
Net Earnings $ .37 $ .30 $ .60 $ .56
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 235,644
<SECURITIES> 0
<RECEIVABLES> 15,394,737
<ALLOWANCES> 425,000
<INVENTORY> 3,817,942
<CURRENT-ASSETS> 25,151,721
<PP&E> 105,469,666
<DEPRECIATION> 59,943,919
<TOTAL-ASSETS> 78,038,460
<CURRENT-LIABILITIES> 10,803,913
<BONDS> 0
0
0
<COMMON> 14,183,493
<OTHER-SE> 1,512,120
<TOTAL-LIABILITY-AND-EQUITY> 78,038,460
<SALES> 59,545,814
<TOTAL-REVENUES> 59,545,814
<CGS> 47,234,994
<TOTAL-COSTS> 47,234,994
<OTHER-EXPENSES> 6,665,537
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 752,990
<INCOME-PRETAX> 4,892,293
<INCOME-TAX> 1,981,272
<INCOME-CONTINUING> 2,911,021
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,911,021
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
</TABLE>
