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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 September 30, 1998
[ ] 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
November 10, 1998 was: 5,875,781.
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LINDBERG CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
Part I Financial Information: Page No.
--------
<S> <C>
Item 1. Consolidated Statements of Earnings - Three Months
and Nine Months Ended September 30, 1998 and 1997 ...... 3
Consolidated Balance Sheets - As of September 30, 1998
and December 31, 1997 .................................. 4
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1998 and 1997 ...................... 5
Notes to the Consolidated Financial Statements ......... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 9
Part II Other Information:
Item 1. Legal Proceedings ..................................... 13
Item 6. Exhibits and Reports on Form 8-K ....................... 13
Signatures ............................................. 14
Exhibit Index .......................................... 15
</TABLE>
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PART I FINANCIAL INFORMATION
<TABLE>
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Sales $31,365,152 $20,954,520 $95,270,799 $62,350,578
Cost of Sales (21,680,600) (15,573,533) (65,628,244) (45,720,831)
----------- ----------- ----------- -----------
Gross Profit 9,684,552 5,380,987 29,642,555 16,629,747
Selling and Administrative
Expenses (5,215,129) (3,009,785) (15,016,364) (9,077,671)
Equity in Earnings of
Partnership -- 605,582 -- 1,436,328
----------- ----------- ----------- -----------
Operating Earnings 4,469,423 2,976,784 14,626,191 8,988,404
Interest Expense - Net (510,388) (387,069) (2,056,067) (1,132,185)
----------- ----------- ----------- -----------
Earnings from Continuing
Operations Before
Income Taxes 3,959,035 2,589,715 12,570,124 7,856,219
Provision for Income Taxes (1,603,398) (1,043,587) (5,091,655) (3,176,415)
Earnings from Continuing ----------- ----------- ----------- -----------
Operations 2,355,637 1,546,128 7,478,469 4,679,804
Loss from Discontinued
Operations, Net of
Income Taxes -- (197,845) -- (420,500)
----------- ----------- ----------- -----------
Net Earnings $ 2,355,637 $ 1,348,283 $ 7,478,469 $ 4,259,304
=========== =========== =========== ===========
Basic Earnings Per Share:
Earnings from Continuing
Operations $ .43 $ .32 $ 1.47 $ .97
Loss from Discontinued
Operations -- (.04) -- (.08)
----------- ----------- ----------- -----------
Net Earnings $ .43 $ .28 $ 1.47 $ .89
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 5,512,901 4,809,490 5,072,119 4,801,771
=========== =========== =========== ===========
Diluted Earnings Per Share:
Earnings from Continuing
Operations $ .41 $ .31 $ 1.41 $ .96
Loss from Discontinued
Operations -- (.04) -- (.09)
----------- ----------- ----------- -----------
Net Earnings $ .41 $ .27 $ 1.41 $ .87
=========== =========== =========== ===========
Weighted Average Shares
Outstanding and Equivalents 5,720,087 4,940,781 5,300,075 4,898,043
=========== =========== =========== ===========
Cash Dividends Declared
and Paid $ .08 $ .08 $ .24 $ .24
=========== =========== =========== ===========
</TABLE>
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<TABLE>
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1998 1997
(UNAUDITED)
------------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 199,458 $ 283,270
Receivables - Net 20,529,704 14,875,005
Prepaid and Refundable Income Taxes 1,098,865 1,380,768
Prepaid Expenses 1,128,259 632,846
Net Assets of Discontinued Operations 2,356,576 17,475,866
Other Current Assets 1,279,582 1,616,774
------------- -------------
Total Current Assets 26,592,444 36,264,529
PROPERTY AND EQUIPMENT:
Cost 119,260,975 91,602,405
Less-Accumulated Depreciation (59,501,077) (52,505,822)
------------- -------------
Net Property and Equipment 59,759,898 39,096,583
Goodwill 19,414,831 11,537,742
Other Non-Current Assets 5,312,142 2,664,577
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TOTAL ASSETS $ 111,079,315 $ 89,563,431
============= =============
CURRENT LIABILITIES:
Current Maturities on Long-Term Debt $ 120,373 $ 83,328
Notes Payable 2,000,000 10,220,000
Accounts Payable 3,399,799 3,540,279
Accrued Expenses 9,469,391 6,273,794
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Total Current Liabilities 14,989,563 20,117,401
NON-CURRENT LIABILITIES:
Deferred Income Taxes 6,329,001 6,149,001
Long-Term Debt (Less Current Maturities) 29,699,594 25,862,512
Accrued Pension 3,222,930 3,342,458
Other Non-Current Liabilities 2,586,310 2,000,641
------------- -------------
Total Non-Current Liabilities 41,837,835 37,354,612
STOCKHOLDERS' EQUITY:
Preferred Shares, (Par value $0.01)
Authorized 1,000,000 shares since April
24, 1998. No shares issued. -- --
Common Shares, (Par value $0.01 since April
24, 1998 and $2.50 prior thereto)
Authorized 25,000,000 shares since April
24, 1998 and 12,000,000 prior thereto.
Issued 6,673,397 shares in 1998 and
5,673,397 in 1997. 66,734 14,183,493
Additional Paid-In Capital 31,313,928 1,526,192
Retained Earnings 27,611,138 21,377,489
Treasury Shares (797,616 in 1998
and 845,016 in 1997), at Cost (4,585,348) (4,841,221)
Underfunded Pension Liability Adjustment (154,535) (154,535)
------------- -------------
Total Stockholders' Equity 54,251,917 32,091,418
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 111,079,315 $ 89,563,431
============= =============
</TABLE>
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<TABLE>
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
INCREASE (DECREASE) IN CASH September 30,
-----------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings $ 7,478,469 $ 4,259,304
Adjustments to Reconcile Net Earnings to
Net Cash Provided by Operating Activities:
Depreciation 4,511,566 2,944,683
Goodwill Amortization 438,811 21,169
Increase in Deferred Taxes 180,000 180,000
Change in Assets and Liabilities 2,181,318 369,979
------------- -------------
Total Adjustments to Reconcile Net
Earnings to Net Cash Provided by
Operating Activities 7,311,695 3,515,831
------------- -------------
Net Cash Provided by Operating Activities 14,790,164 7,775,135
Cash Flows from Investing Activities:
Capital Expenditures (7,679,284) (5,633,566)
Cash Received from Sale of Precision Products
Operations 6,582,717 1,102,600
Investment in Acquisitions, Net
of Cash Received (24,112,588) (3,800,000)
------------- -------------
Net Cash Used in Investing Activities (25,209,155) (8,330,966)
Cash Flows from Financing Activities:
Net Borrowings Under Revolving
Credit Agreement 3,800,000 800,000
Issuance of Common Stock 16,000,000 --
Note Payable for Purchase of Vac-Hyd -- (901,437)
Notes Payable for Purchase of Ticorm (1,900,000) 1,900,000
Notes Payable for Purchase of Alumatherm (6,320,000) --
Dividends Paid (1,244,821) (1,151,786)
------------- -------------
Net Cash Provided by Financing Activities 10,335,179 646,777
Net Increase (Decrease) in Cash (83,812) 90,946
Cash at Beginning of Period 283,270 36,228
------------- -------------
Cash at End of Period $ 199,458 $ 127,174
============= =============
Supplemental Disclosures of Cash
Flow Information:
Interest Paid $ 2,302,378 $ 1,021,143
Income Taxes Paid - Net of Refunds 4,726,578 2,599,094
</TABLE>
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LINDBERG CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
NOTE 1 Condensed Financial Statements
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 consolidated
financial statements for the three years ended December 31,
1997, and the notes thereto included in the Company's latest
annual report on Form 10-K.
Statements for the three month and nine month periods ended
September 30, 1998 and September 30, 1997 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 Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standard no. 130, "Reporting
Comprehensive Income" ("SFAS 130"). For the three month and
nine month periods ended September 30, 1998 and September 30,
1997, there was no difference between net earnings as reported
and comprehensive income as per SFAS 130.
NOTE 3 Acquisitions
On January 16, 1998, the Company acquired all of the
outstanding shares of both Industrial Steel Treating Co.
("Industrial") and Fabriform Metal Brazing, Inc.
("Fabriform"), related heat treating companies in the Los
Angeles area, for $10.6 million. The purchase was effective
as of January 1, 1998. On April 16, 1998, the Company
acquired all of the outstanding shares of Houston Heat
Treating Company ("HHT") for $10.7 million. On September 30,
1998, the Company acquired all of the outstanding shares of
Merrell Enterprises, Inc. (D.B.A. Mann Aircraft Forming)
of Gardena, California, for $2.8 million plus debt assumed.
The acquisitions were funded with additional borrowings
under the Company's revolving credit agreement
("Credit Agreement").
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All of the acquisitions were accounted for using the purchase
method; accordingly, the results of operations have been
included in the consolidated totals of the Company since the
effective dates of their respective acquisitions. The cost of
the acquisitions has been allocated to the assets and
liabilities based on their estimated fair market value.
Goodwill is amortized using the straight line method over 30
years.
The preliminary allocation of the purchase prices is as
follows: (in thousands)
<TABLE>
Industrial/
Fabriform HHT
---------- ----------
<S> <C> <C>
Property and Equipment ....... $ 5,753 $ 9,261
Accounts Receivable .......... 1,947 954
Other Assets ................. 69 15
Goodwill ..................... 4,633 999
Accounts Payable ............. (157) (11)
Other Liabilities ............ (1,632) (518)
---------- ----------
$ 10,613 $ 10,700
</TABLE>
The following table presents pro forma information for the
three month and nine month periods ended September 30, 1998
and September 30, 1997 of the combined entities of Lindberg
Corporation, Industrial and Fabriform, HHT, and Alumatherm
Heat Treating Company ("Alumatherm"). The Company purchased
the remaining 50% interest in Alumatherm from its partner on
October 1, 1997.
The unaudited pro forma information assumes the acquisitions
had taken place at the beginning of the periods presented (in
thousands, except per share data).
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales $31,365 $28,833 $97,253 $85,046
Earnings from
Continuing
Operations 2,356 2,042 7,702 6,247
Net Earnings 2,356 1,844 7,702 5,826
Per Diluted Share:
Earnings from
Continuing
Operations .41 .41 1.45 1.28
Net Earnings .41 .37 1.45 1.19
</TABLE>
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Adjustments to the statements of earnings include additional
depreciation and interest charges, goodwill amortization,
adjustments of certain other expenses and income tax effects.
The pro forma information is provided for illustrative
purposes only and is not necessarily reflective of the future
results of the Company or results of operations that would
have actually occurred had the transactions been in effect for
the periods presented.
NOTE 4 Debt
On February 10, 1998, the Credit Agreement was amended to
increase the Company's revolving credit facility by $10
million to $45 million and to adjust certain loan covenants.
Additionally, the amendment extended the maturity date of the
Credit Agreement to April 2000.
NOTE 5 Material Changes
The Company is the subject of a pending investigation by the
government and a qui tam (whistle-blower) lawsuit regarding
alleged violations of the Federal False Claims Act. The
Company learned of the lawsuit in late May 1998. Although the
activities that are the subject of the investigation and
lawsuit appear to relate to only one plant, no assurance can
be given that the investigation or lawsuit will not materially
adversely affect the Company. Also, the Company assumed a
liability for environmental remediation, which has been
estimated to be $1.2 million, in its acquisition of
Industrial. Otherwise, no material changes have occurred with
respect to the Company's contingent liabilities outlined in
the consolidated financial statements and the notes thereto
through the date of this report.
NOTE 6 Discontinued Operations
On April 22, 1998, the Company sold certain assets of its
Impact Industries, Inc. subsidiary, which was a part of the
discontinued Precision Products segment, for cash and a note.
On June 11, 1998, the Company sold the assets of Harris
Metals, another Precision Products facility, for cash and a
note. The Company is continuing to pursue the sale of the
remaining Precision Products operations and expects to
complete the divestiture of the segment by the end of the
first quarter of 1999. The Company believes that the net
assets of discontinued operations of $2.4 million as of
September 30, 1998 will be realizable upon final
disposition.
NOTE 7 Public Stock Offering
On August 3, 1998, the Company sold 1,000,000 shares of its
common stock to the underwriters of a public offering at a
price of $16.00 per share, which was net of an underwriting
discount.
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"Safe Harbor" Statement: Statements contained herein that are not based
on historical facts are forward-looking statements subject to
uncertainties and risks including, but not limited to, economic
conditions, industry concentration, risks associated with
acquisition strategy, approved vendor status, environmental
regulations, product and other liabilities, risks associated with
government programs, competition and other uncertainties and risks
described in registration statements, reports and other documents
filed by the Company from time to time with the Securities and
Exchange Commission under the Securities Act of 1933 and
Securities Exchange Act of 1934. Specific reference is made to
the factors described under "Risk Factors" in the Registration
Statement on Form S-2 (Registration No. 333-57313) filed by the
Company in connection with the public offering of 1,000,000 shares
of its common stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION:
At September 30, 1998, the Company's total debt was $31.8 million,
a decrease of $4.4 million from $36.2 million outstanding as of
December 31, 1997. The Company's total debt to capitalization
ratio was 37% at the close of the third quarter in 1998 versus 53%
at the end of last year. At $31.8 million, total debt decreased
29% from $44.5 million at the close of the quarter ended June 30, 1998.
The reduction in total debt during the third quarter of the year
resulted largely from a public offering of common stock completed
during the period. On August 3, 1998, the Company sold 1,000,000
new shares of its common stock at a public offering price of
$17.00 per share (net of an underwriting discount of $1.00 per
share). Proceeds received of $16,000,000, less offering expenses,
were used to repay debt under the Company's revolving credit
agreement.
On September 30, 1998, the Company acquired Mann Aircraft
Forming for $2.8 million of cash. The funds used to complete
this transaction were borrowed under the Company's revolving
credit facility on that date.
The Company's revolving credit agreement maintained with two banks
provides for a total borrowing facility of $45 million. At
September 30, 1998, the Company had $23.4 million of available
capacity under this revolving credit agreement.
Capital expenditures for the first nine months of 1998 were $7.7
million, an increase from the $5.6 million recorded in the same
period of 1997. The spending in 1998 related primarily to the
acquisition of additional furnaces/equipment for expansion at
certain heat treating locations and for equipment used in the
Company's Strategic Partnership 2000 program. The figure does not
include funds utilized for acquisitions.
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On July 29, 1998, the Board of Directors declared a cash dividend
of $.08 on each share of the Company's common stock. This
dividend was paid on September 1, 1998, totaling $470,000. This
compared to a dividend payout of $.08 per share of common stock,
or $385,000, in the third quarter of 1997.
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 1998 and in the longer
term.
OF RESULTS OF OPERATIONS:
Quarter ended September 30, 1998 and 1997
Net sales for the quarter ended September 30, 1998 were $31.4
million, up $10.4 million, or 50%, from $21.0 million for the
corresponding period in 1997. Approximately 92% of the year-to-
year increase in net sales resulted from acquisitions in the
latter half of 1997 and in 1998. Excluding those acquisitions,
the Company's remaining operations reported increased net sales of
4% overall. These results are for the Company's continuing heat
treating operations, and do not reflect revenues from the
Precision Products business segment, which has been reported as
discontinued operations.
Gross profit for the third quarter of 1998 was $9.7 million, up
$4.3 million, or 80%, from $5.4 million for the third quarter of
1997. The Company's gross margin in the third quarter of 1998 was
30.9% compared to 25.7% in the same period of 1997. The improved
margin resulted as sales growth exceeded the increase in expenses
due to the fixed nature of certain of the Company's operating
costs, and also from the effect of certain acquisitions since the
third quarter of 1997 which have provided above average margins.
Selling and administrative expenses for the third quarter of 1998
were $5.2 million, an increase of 73% in comparison to $3.0
million in the third quarter of 1997. The increase resulted in
large part from expenses associated with acquired companies.
Subsequent to the Company's acquisition of its partner's 50%
interest in the Alumatherm partnership on October 1, 1997, the
Company stopped recording equity in earnings of the partnership
and, therefore, did not report any such earnings during the third
quarter of 1998. During the same period of 1997, the Company
reported equity in earnings of $606,000 from the Alumatherm
partnership.
Interest expense in the third quarter of 1998 was $510,000,
compared to $387,000 in the third quarter of 1997. The increase
resulted from the higher level of borrowing associated with the
Company's acquisitions during the latter three months of 1997 and
in 1998. Interest expense in the third quarter of 1998 fell 34%
from $770,000 in the second quarter of 1998 due to the sale of
common stock and subsequent paydown of debt in August 1998.
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Reflecting the above, net earnings from continuing operations in
the third quarter of 1998 were $2.4 million, up $810,000, or 52%,
from $1.5 million for the corresponding period of 1997. Net
earnings from continuing operations for the third quarter of 1998
were $.41 per diluted share, up $.10, or 32%, from $.31 per
diluted share in the third quarter of 1997.
As required by Accounting Principles Board Opinion No. 30, results
of discontinued operations for the third quarter of 1998 were
included in the reserve for loss on discontinued operations
provided for previously. Discontinued operations reported a net
loss of $198,000 in the third quarter of 1997.
Nine months ended September 30, 1998 and 1997
Net sales for the nine months ended September 30, 1998 were $95.3
million, up $32.9 million, or 53%, from $62.4 million for the
corresponding period in 1997. Approximately 86% of the year-to-
year increase in net sales resulted from acquisitions in the
latter half of 1997 and in 1998. Excluding those acquisitions,
the Company's remaining operations reported increased net sales
of 7% overall.
Gross profit for the first nine months of 1998 was $29.6 million,
up $13.0 million, or 78%, from $16.6 million for the first nine
months of 1997. The Company's gross margin in the first nine
months of 1998 was 31.1% compared to 26.7% in the same period of
1997. The improved margin resulted as sales growth exceeded the
increase in expenses due to the fixed nature of certain of the
Company's operating costs, and also from the effect of recent
acquisitions.
Selling and administrative expenses for the first nine months of
1998 were $15.0 million, compared to $9.1 million in the first
nine months of 1997. The increase resulted in large part from
expenses associated with acquired companies.
During the first nine months of 1998, the Company did not record
equity in earnings from the Alumatherm partnership. For the same
nine-month period of 1997 the Company reported equity in earnings
of $1.4 million from the partnership.
Interest expense in the first nine months of 1998 was $2.1
million, compared to $1.1 million in the corresponding period of
1997. The increase resulted from a higher level of borrowing
associated with the Company's acquisitions during the latter six
months of 1997 and in 1998, offset to a degree by the sale of
common stock and related paydown of debt in the third quarter of
1998.
Reflecting the above, net earnings from continuing operations in
the first nine months of 1998 were $7.5 million, up $2.8 million,
or 60%, from $4.7 million for the corresponding period of 1997.
Net earnings from continuing operations for the first nine months
of 1998 were $1.41 per diluted share, up $.45, or 47%, from $.96
per diluted share in the first nine months of 1997.
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Discontinued operations reported a net loss of $421,000, or $.09
per diluted share, in the first nine months of 1997.
POSSIBLE EFFECTS OF YEAR 2000:
The Company maintains computer systems at each operating facility
and at its corporate office and, additionally, utilizes embedded
technology such as microcontrollers. Certain of these
systems/technologies are provided by third party vendors, which
are responsible for upgrades and maintenance. Company staff
personnel maintain others.
The Company is in the process of cataloging all areas to determine
exposure to the Year 2000 issue. With respect to items supplied
by third party vendors, the Company is monitoring progress related
to stated solutions to the Year 2000 issue and is in the process
of verifying compliance. Systems that are identified as non-
compliant will be upgraded or replaced. The Company is in the
process of acquiring new software, which will replace and enhance
the functionality of current proprietary systems used at its
operating plants for order entry, billing, plant routing, shipping
and process management. This new software will also be Year 2000
compliant, and installation is expected to be completed during
1999. This project was not accelerated due to the Year 2000
issue.
Company personnel, working in some cases with third party
suppliers, are attempting to confirm that all computer systems and
embedded technology will be fully Year 2000 compliant in advance
of December 31, 1999, including verification of compliance. Based
on present information, the Company believes that its internal
systems and those supplied by third parties are or will be Year
2000 compliant without material additional expense, and that past
costs related to the Year 2000 issue have also not been material.
However, there can be no assurance that the Company's operations
will not be adversely affected by this issue, particularly as it
relates to compliance by the Company's many customers and
suppliers, of which the Company has not presently confirmed Year
2000 readiness status. The Company does not currently have a Year
2000 contingency plan, nor has it been able to reasonably determine
the potential worst case effects from the Year 2000 issue, but
expects to develop such a plan as soon as is practicable.
<PAGE> 13
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is a defendant in a qui tam (whistle-blower) lawsuit
filed by a former employee of the Company under seal on or about
July 25, 1996 in the U.S. District Court for the Central District
of California, seeking to recover damages and civil penalties
arising from allegedly false statements and claims made by the
Company in violation of the federal False Claims Act (the "FCA")
and for damages resulting from the plaintiff's allegedly wrongful
discharge and retaliatory acts by the Company. The complaint
alleges that the Company defrauded the government by submitting
invoices and other documentation falsely representing that
certain metal parts had been treated at one Company facility by
equipment that met certain industry and government standards.
Private parties may bring actions under the FCA on behalf of the
government and share in any recovery, and may recover attorneys'
fees. The FCA provides for civil penalties of up to $10,000 for
each false claim, plus trebling of damages sustained by the
government. A qui tam complaint must be filed under seal
(without service on the defendant) and may remain under seal
while the government conducts its own investigation and
determines whether to join the action. The government notified
the Company of the complaint in late May 1998, stating that the
court partially unsealed the complaint, which the government gave
to the Company, to facilitate discussions between the parties.
The government told the Company that it has not yet determined
whether to join the action, and that it was also independently
investigating the hardness testing certification of certain items
treated at the same Company facility. The Company has responded
to a civil investigative demand from the government and is
cooperating with the government in its investigation. Although
the activities that are the subject of the investigation and the
lawsuit appear to be limited to one plant, the Company cannot
predict whether the government will join the action nor whether
the action or the government's investigation will have a material
adverse effect on the Company.
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 15 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 September 30, 1998.
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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 __________________________
Officer: Stephen S. Penley
Senior Vice President
and Chief Financial Officer
Dated: November 10, 1998
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LINDBERG CORPORATION
Quarterly Report on Form 10-Q
for the Quarter Ended September 30, 1998
Exhibit Index
<TABLE>
Number and Description of Exhibit
- - ---------------------------------
<S> <C>
11. Statement re computation of per share earnings Attached
27. Financial Data Schedule Attached
</TABLE>
Exhibit 11
<TABLE>
COMPUTATION OF NET EARNINGS PER COMMON SHARE
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
EARNINGS
- - --------
<S> <C> <C> <C> <C>
Earnings from
Continuing Operations $2,355,637 $1,546,128 $7,478,469 $4,679,804
Loss from
Discontinued Operations -- (197,845) -- (420,500)
---------- ---------- ---------- ----------
Net Earnings $2,355,637 $1,348,283 $7,478,469 $4,259,304
========== ========== ========== ==========
SHARES
- - ------
Weighted Average Number
of Common Shares
Outstanding (See Note) 5,512,901 4,809,490 5,072,119 4,801,771
Additional Shares
Assuming Conversion
of Stock Options 207,186 131,291 227,956 96,272
--------- --------- --------- ---------
Weighted Average Common
Shares Outstanding
and Equivalents 5,720,087 4,940,781 5,300,075 4,898,043
========= ========= ========= =========
Basic Earnings Per Share:
Earnings from
Continuing Operations $ .43 $ .32 $ 1.47 $ .97
Loss from
Discontinued Operations -- (.04) -- (.08)
--------- --------- --------- ---------
Net Earnings $ .43 $ .28 $ 1.47 $ .89
========= ========= ========= =========
Diluted Earnings Per Share:
Earnings from
Continuing Operations $ .41 $ .31 $ 1.41 $ .96
Loss from
Discontinued Operations -- (.04) -- (.09)
--------- --------- --------- ---------
Net Earnings $ .41 $ .27 $ 1.41 $ .87
========= ========= ========= =========
</TABLE>
Note: All activity during the year has been adjusted for the number of days
in the year that the shares were outstanding.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 199,458
<SECURITIES> 0
<RECEIVABLES> 20,529,704
<ALLOWANCES> 823,818
<INVENTORY> 0
<CURRENT-ASSETS> 26,592,444
<PP&E> 119,260,975
<DEPRECIATION> 59,501,077
<TOTAL-ASSETS> 111,079,315
<CURRENT-LIABILITIES> 14,989,563
<BONDS> 0
0
0
<COMMON> 66,734
<OTHER-SE> 31,313,928
<TOTAL-LIABILITY-AND-EQUITY> 111,079,315
<SALES> 31,365,152
<TOTAL-REVENUES> 31,365,152
<CGS> 21,680,600
<TOTAL-COSTS> 21,680,600
<OTHER-EXPENSES> 5,215,129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 510,388
<INCOME-PRETAX> 3,959,035
<INCOME-TAX> 1,603,398
<INCOME-CONTINUING> 2,355,637
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,355,637
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.41
</TABLE>
