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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, 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
August 10, 1998 was: 5,870,806.
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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 Six Months Ended June 30, 1998 and 1997 ......... 3
Consolidated Balance Sheets - As of June 30, 1998
and December 31, 1997 ............................... 4
Consolidated Statements of Cash Flows - Six Months
Ended June 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 4. Submission of Matters to a Vote of Security Holders . 13
Item 5. Other Information ................................... 14
Item 6. Exhibits and Reports on Form 8-K .................... 14
Signatures .......................................... 15
Exhibit Index ....................................... 16
</TABLE>
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<TABLE>
LINDBERG CORPORATION AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $33,033,451 $20,750,247 $63,905,647 $41,396,057
Cost of Sales (22,675,210) (14,973,903) (43,947,644) (30,147,298)
----------- ----------- ----------- -----------
Gross Profit 10,358,241 5,776,344 19,958,003 11,248,759
Selling and Administrative
Expenses (5,077,403) (2,913,579) (9,801,235) (6,067,885)
Equity in Earnings of
Partnership -- 574,815 -- 830,746
----------- ----------- ----------- -----------
Operating Earnings 5,280,838 3,437,580 10,156,768 6,011,620
Interest Expense - Net (770,153) (374,507) (1,545,679) (745,116)
----------- ----------- ----------- -----------
Earnings from Continuing
Operations Before
Income Taxes 4,510,685 3,063,073 8,611,089 5,266,504
Provision for Income Taxes (1,827,770) (1,240,386) (3,488,257) (2,132,827)
----------- ----------- ----------- -----------
Earnings from Continuing
Operations 2,682,915 1,822,687 5,122,832 3,133,677
Loss from Discontinued
Operations, Net of
Income Taxes -- (16,548) -- (222,656)
----------- ----------- ----------- -----------
Net Earnings $ 2,682,915 $ 1,806,139 $ 5,122,832 $ 2,911,021
=========== =========== =========== ===========
Basic Earnings Per Share:
Earnings from Continuing
Operations $ .55 $ .38 $ 1.06 $ .65
Loss from Discontinued
Operations -- -- -- (.04)
----------- ----------- ----------- -----------
Net Earnings $ .55 $ .38 $ 1.06 $ .61
=========== =========== =========== ===========
Weighted Average Shares
Outstanding 4,860,132 4,806,737 4,848,075 4,797,847
=========== =========== =========== ===========
Diluted Earnings Per Share:
Earnings from Continuing
Operations $ .52 $ .37 $ 1.01 $ .64
Loss from Discontinued
Operations -- -- -- (.04)
----------- ----------- ----------- -----------
Net Earnings $ .52 $ .37 $ 1.01 $ .60
=========== =========== =========== ===========
Weighted Average Shares
Outstanding and Equivalents 5,127,158 4,882,200 5,088,460 4,874,883
=========== =========== =========== ===========
Cash Dividends Declared
and Paid $ .08 $ .08 $ .16 $ .16
=========== =========== =========== ===========
</TABLE>
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<TABLE>
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1998 1997
(UNAUDITED)
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 61,675 $ 283,270
Receivables - Net 20,547,146 14,875,005
Prepaid and Refundable Income Taxes 1,328,728 1,380,768
Prepaid Expenses 1,042,524 632,846
Net Assets of Discontinued Operations 2,538,344 17,475,866
Other Current Assets 683,749 1,616,774
------------ ------------
Total Current Assets 26,202,166 36,264,529
PROPERTY AND EQUIPMENT:
Cost 111,422,326 91,602,405
Less-Accumulated Depreciation (58,250,766) (52,505,822)
------------ ------------
Net Property and Equipment 53,171,560 39,096,583
Goodwill 22,603,954 11,537,742
Other Non-Current Assets 5,172,497 2,664,577
------------ ------------
TOTAL ASSETS $107,150,177 $ 89,563,431
============ ============
CURRENT LIABILITIES:
Current Maturities on Long-Term Debt $ 83,328 $ 83,328
Notes Payable 8,440,000 10,220,000
Accounts Payable 4,856,149 3,540,279
Accrued Expenses 8,493,792 6,273,794
------------ ------------
Total Current Liabilities 21,873,269 20,117,401
NON-CURRENT LIABILITIES:
Deferred Income Taxes 6,269,001 6,149,001
Long-Term Debt (Less Current Maturities) 36,013,904 25,862,512
Accrued Pension 3,265,401 3,342,458
Other Non-Current Liabilities 3,034,940 2,000,641
------------ ------------
Total Non-Current Liabilities 48,583,246 37,354,612
STOCKHOLDERS' EQUITY:
Preferred Shares, (Par value $.01)
Authorized 1,000,000 shares since April
24, 1998. No shares issued. -- --
Common Shares, (Par value $.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 5,673,397 shares in 1998 and 1997. 56,734 14,183,493
Additional Paid-In Capital 15,671,730 1,526,192
Retained Earnings 25,725,164 21,377,489
Treasury Shares (802,966 in 1998
and 845,016 in 1997), at Cost (4,605,431) (4,841,221)
Underfunded Pension Liability Adjustment (154,535) (154,535)
------------ ------------
Total Stockholders' Equity 36,693,662 32,091,418
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $107,150,177 $ 89,563,431
============ ============
</TABLE>
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<TABLE>
LINDBERG CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
INCREASE (DECREASE) IN CASH June 30,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings $ 5,122,832 $ 2,911,021
Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating Activities:
Depreciation 2,853,233 1,914,068
Goodwill Amortization 323,746 5,000
Increase in Deferred Taxes 120,000 120,000
Change in Assets and Liabilities 3,232,498 (526,247)
------------ ------------
Total Adjustments to Reconcile Net
Earnings to Net Cash Provided by
Operating Activities 6,529,477 1,512,821
------------ ------------
Net Cash Provided by Operating Activities 11,652,309 4,423,842
Cash Flows from Investing Activities:
Capital Expenditures (5,266,551) (3,042,371)
Cash Received from Sale of Precision
Products Segments 7,110,000 1,102,600
Investment in Acquisitions, Net
of Cash Received (21,313,588) --
------------ ------------
Net Cash Used in Investing Activities (19,470,139) (1,939,771)
Cash Flows from Financing Activities:
Net Borrowings (Payments) Under Revolving
Credit Agreement 10,200,000 (700,000)
Note Payable for Purchase of Vac-Hyd -- (901,437)
Notes Payable for Purchase of Ticorm (1,900,000) --
Notes Payable for Purchase of Alumatherm 71,392 --
Dividends Paid (775,157) (767,069)
------------ ------------
Net Cash Provided by (Used in)
Financing Activities 7,596,235 (2,368,506)
Net Increase (Decrease) in Cash (221,595) 115,565
Cash at Beginning of Period 283,270 36,228
------------ ------------
Cash at End of Period $ 61,675 $ 151,793
============ ============
Supplemental Disclosures of Cash
Flow Information:
Interest Paid $ 1,524,024 $ 828,888
Income Taxes Paid - Net of Refunds 3,426,831 1,864,816
</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 six month periods ended
June 30, 1998 and June 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
six month periods ended June 30, 1998 and June 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. The acquisitions
were funded with additional borrowings under the Company's
revolving credit agreement ("Credit Agreement").
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.
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The preliminary allocation of the purchase prices is as
follows: (in thousands)
<TABLE>
Industrial/
Fabriform HHT
---------- ----------
<S> <C> <C>
Property and Equipment ....... $ 5,175 $ 4,000
Accounts Receivable .......... 1,987 972
Other Assets ................. -- 29
Goodwill ..................... 5,208 6,182
Accounts Payable ............. (157) --
Other Liabilities ............ (1,600) (483)
---------- ----------
$ 10,613 $ 10,700
</TABLE>
The following table presents pro forma information for the
three month and six month periods ended June 30, 1998 and June
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 Six Months Ended
June 30, June 30,
------------------ ------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales $33,286 $28,745 $65,888 $56,212
Earnings from
Continuing
Operations 2,738 2,515 5,389 4,308
Net Earnings 2,738 2,499 5,389 4,085
Per Diluted Share:
Earnings from
Continuing
Operations .53 .51 1.06 .88
Net Earnings .53 .51 1.06 .84
</TABLE>
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.
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NOTE 4 Debt
On February 10, 1998, the Credit Agreement was amended to
increase the 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 was estimated
to be $1.2 million as of June 30, 1998, 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
for the three years ended December 31, 1997 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 operating in 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 divestiture of the segment by year-end 1998, as
originally scheduled.
NOTE 7 Subsequent Event
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 (net of underwriting discounts).
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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 June 30, 1998, the Company's total debt was $44.5 million, an
increase of $8.4 million from $36.2 million outstanding as of
December 31, 1997. The Company's total debt to capitalization
ratio was 55% at the close of the second quarter in 1998 versus
53% at the end of last year. At $44.5 million, total debt was
unchanged from March 31, 1998.
During the second quarter of 1998, funds used for the acquisition
of all of the common shares of Houston Heat Treating Company
("HHT") on April 16, 1998 were essentially offset by cash received
related to the sale of two of the Company's discontinued Precision
Products businesses during the quarter - Impact Industries and Harris
Metals.
On April 22, 1998, the Company sold the operating assets of Impact
Industries. The Company received $4.6 million and a note
receivable of $2.0 million from the buyer on the closing date of
the transaction. Additionally, the Company retained and collected
approximately $4 million of trade accounts receivable, and the
buyer assumed the liability for trade accounts payable and certain
accrued expenses. On June 11, 1998, the Company sold the
operating assets of its Harris Metals operation. Cash of $2.5
million and a note receivable of $500,000 were received on the
closing date - subject to a final purchase price adjustment, which
remains to be determined.
Effective February 10, 1998, the Company's revolving credit
agreement with two banks was amended to increase the total
borrowing facility from $35 million to $45 million and to adjust
certain loan covenants. At June 30, 1998, the Company had $17
million of available capacity under its amended revolving credit
agreement.
Capital expenditures for the first six months of 1998 were $5.3
million, an increase from the $3.0 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 divisions and for equipment under the
Company's Strategic Partnership 2000 program.
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On April 24, 1998, the Board of Directors declared a cash dividend
of $.08 on each share of the Company's common stock, payable on
June 1, 1998. The total cash dividends paid on the latter date
were $389,000. This compared to a dividend payout of $.08 per
share of common stock, or $385,000, in the second quarter of 1997.
The Company believes that its borrowing capacity and funds
generated through operations, as augmented through the sale of new
shares of common stock on August 3, 1998 as outlined below in
"Subsequent Event", 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 June 30, 1998 and 1997
Net sales for the quarter ended June 30, 1998 were $33.0 million,
up $12.3 million, or 59%, from $20.8 million for the corresponding
period in 1997. Approximately 85% of the year-to-year increase in
net sales resulted from acquisitions in the latter half of 1997
and in 1998. Excluding acquisitions, the Company's remaining
operations reported increased net sales of 9% 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 second quarter of 1998 was $10.4 million, up
$4.6 million, or 79%, from $5.8 million for the second quarter of
1997. The Company's gross margin in the second quarter of 1998
was 31.4% compared to 27.8% 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 recent
acquisitions, which have provided above average margins.
Selling and administrative expenses for the second quarter of 1998
were $5.1 million, compared to $2.9 million in the second quarter
of 1997. The increase resulted largely 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 second
quarter of 1998. During the same period of 1997, the Company
reported equity in earnings of $575,000 from the Alumatherm
partnership.
Interest expense in the second quarter of 1998 was $770,000,
compared to $375,000 in the second quarter of 1997. The increase
resulted from the higher level of borrowing associated with the
Company's acquisitions during the latter six months of 1997 and in
1998.
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Reflecting the above, net earnings from continuing operations in
the second quarter of 1998 were $2.7 million, up $860,000, or 47%,
from $1.8 million for the corresponding period of 1997. Net
earnings from continuing operations for the second quarter of 1998
were $.52 per diluted share, up $.15, or 41%, from $.37 per diluted
share in the second quarter of 1997.
As required by Accounting Principles Board Opinion No. 30, results
of discontinued operations for the second quarter of 1998 were
included in the reserve for loss on discontinued operations provided
for previously. Discontinued operations reported a net loss of
$17,000 in the second quarter of 1997.
Six months ended June 30, 1998 and 1997
Net sales for the six months ended June 30, 1998 were $63.9
million, up $22.5 million, or 54%, from $41.4 million for the
corresponding period in 1997. Approximately 84% of the year-to-
year increase in net sales resulted from acquisitions in the
latter half of 1997 and in 1998. Excluding acquisitions, the
Company's remaining operations reported increased net sales of 9%
overall.
Gross profit for the first six months of 1998 was $20.0 million,
up $8.7 million, or 77%, from $11.2 million for the first six
months of 1997. The Company's gross margin in the first six
months of 1998 was 31.2% compared to 27.2% 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 half of 1998
were $9.8 million, compared to $6.1 million in the first six
months of 1997. The increase resulted largely from expenses
associated with acquired companies.
During the first six months of 1998, the Company did not record
equity in earnings from the Alumatherm partnership. For the same
six-month period of 1997 the Company reported equity in earnings
of $831,000 from the partnership.
Interest expense in the first six months of 1998 was $1.5 million,
compared to $745,000 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.
Reflecting the above, net earnings from continuing operations in
the first six months of 1998 were $5.1 million, up $2.0 million,
or 63%, from $3.1 million for the corresponding period of 1997.
Net earnings from continuing operations for the first six months
Of 1998 were $1.01 per diluted share, up $.37, or 58%, from $.64
per diluted share in the first six months of 1997.
Discontinued operations reported a net loss of $223,000, or $.04
per diluted share, in the first six months of 1997.
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SUBSEQUENT EVENT:
On August 3, 1998, the Company sold 1,000,000 new shares of its
common stock to the underwriters of a public offering at a price
of $16.00 per share (net of underwriting discounts). Proceeds
received of $16,000,000 were used to repay debt under the Company's
revolving credit agreement.
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 and
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 issues. Concurrently, with respect to
items supplied by third party vendors, the Company is monitoring
progress related to stated solutions to the Year 2000 issue and
will be verifying compliance as soon as practicable. Systems that
are identified as non-compliant will be upgraded or replaced.
The Company is also in the process of acquiring new software,
which will replace and enhance the functionality of the Company's
current proprietary system used at most operating plants for
order entry, billing, plant routing, shipping and process
management. This new software will be Year 2000 compliant, and
installation is expected to be completed during 1999.
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. 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 to the Company. 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.
<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 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of stockholders was held on April 24, 1998.
(b) The board's two nominees for Class I directors were re-elected,
receiving the following votes:
<TABLE>
Votes for Authority Withheld
--------- ------------------
<S> <C> <C>
R. F. Decker 3,972,963 390,675
R. A. Jean 3,976,813 386,825
</TABLE>
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(c) Other matters submitted to, and approved by, the
stockholders included amending the Company's Certificate of
Incorporation to change the par value of the Common Stock to
$.01 per share, to increase the number of authorized shares
of Common Stock to 25,000,000 and to create a new class of
1,000,000 authorized shares of preferred stock, issuable in
series, as set forth in the Company's definitive Proxy
Statement dated March 30, 1998. The stockholders voted for
the amendments to the Company's Certificate of Incorporation
as follows:
<TABLE>
Broker
Votes for Votes against Abstentions non-votes
--------- ------------- ----------- ---------
<S> <C> <C> <C>
2,730,565 722,517 39,413 871,143
</TABLE>
ITEM 5. Other Information
Under amended Rule 14a-4(c) of the Securities and Exchange
Commission's proxy rules, if a stockholder who intends to present
a proposal at the 1999 annual meeting of stockholders (other than
through the Rule 14a-8 procedures) does not notify the Company of
the proposal on or before February 12, 1999, management proxies
may use their discretionary voting authority to vote on the
proposal when the proposal is brought before the annual meeting,
without the Company advising in its 1999 Proxy Statement on the
nature of the proposal or how it intends to exercise its discretion.
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 16 and which is
incorporated herein by reference.
(b) Reports on Form 8-K - The following Form 8-K was filed during
the three months ended June 30, 1998:
The acquisition, on April 16, 1998, of Houston Heat Treating
Company was reported under Item 2 of Form 8-K. The acquired
company, located in Texas, is engaged in the heat treating
business, and specializes in processing for the oilfield
equipment market.
<PAGE> 15
-15-
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: August 12, 1998
<PAGE> 16
-16-
LINDBERG CORPORATION
Quarterly Report on Form 10-Q
for the Quarter Ended June 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 Six Months Ended
June 30, June 30,
-------------------- --------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
EARNINGS
- --------
Earnings from
Continuing Operations $2,682,915 $1,822,687 $5,122,832 $3,133,677
Loss from
Discontinued Operations -- (16,548) -- (222,656)
---------- ---------- ---------- ----------
Net Earnings $2,682,915 $1,806,139 $5,122,832 $2,911,021
========== ========== ========== ==========
SHARES
- ------
Weighted Average Number of
Common Shares Outstanding 4,860,132 4,806,737 4,848,075 4,797,847
(See Note)
Additional Shares Assuming
Conversion of Stock Options 267,026 75,463 240,385 77,036
---------- ---------- ---------- ----------
Weighted Average Common
Shares Outstanding
and Equivalents 5,127,158 4,882,200 5,088,460 4,874,883
========== ========== ========== ==========
Basic Earnings Per Share:
Earnings from
Continuing Operations $ .55 $ .38 $ 1.06 $ .65
Loss from
Discontinued Operations -- -- -- (.04)
---------- ---------- ---------- ----------
Net Earnings $ .55 $ .38 $ 1.06 $ .61
========== ========== ========== ==========
Diluted Earnings Per Share:
Earnings from
Continuing Operations $ .52 $ .37 $ 1.01 $ .64
Loss from
Discontinued Operations -- -- -- (.04)
---------- ---------- ---------- ----------
Net Earnings $ .52 $ .37 $ 1.01 $ .60
========== ========== ========== ==========
Note: All activity during the year has been adjusted for the number of
days in the year that the shares were outstanding.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 61,675
<SECURITIES> 0
<RECEIVABLES> 20,547,146
<ALLOWANCES> 552,263
<INVENTORY> 0
<CURRENT-ASSETS> 26,202,166
<PP&E> 111,422,326
<DEPRECIATION> 58,250,766
<TOTAL-ASSETS> 107,150,177
<CURRENT-LIABILITIES> 21,873,269
<BONDS> 0
0
0
<COMMON> 56,734
<OTHER-SE> 15,671,730
<TOTAL-LIABILITY-AND-EQUITY> 107,150,177
<SALES> 33,033,451
<TOTAL-REVENUES> 33,033,451
<CGS> 22,675,210
<TOTAL-COSTS> 22,675,210
<OTHER-EXPENSES> 5,077,403
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 770,153
<INCOME-PRETAX> 4,510,685
<INCOME-TAX> 1,827,770
<INCOME-CONTINUING> 2,682,915
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,682,915
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.52
</TABLE>
