SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________
FORM 10-Q
Quarterly Report Pursuant to section 13 or 15(d) of
the Securities and Exchange Act of 1934
____________________
For the Quarter ended Commission File Number
March 31, 1994 0-14903
Baldwin Piano & Organ Company
(Exact name of registrant as specified in its charter)
Delaware 31-1091812
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
422 Wards Corner Road
Loveland, Ohio 45140-8390
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (513) 576-4500
Indicate by check mark whether the registrant (1) has filed
all documents and 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 Common Stock outstanding of
Baldwin Piano & Organ Company ("Company"), as of May 1, 1994 is
3,415,196.
<PAGE>
BALDWIN PIANO & ORGAN COMPANY
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1994 and December 31, 1993 .................
Condensed Consolidated Statements of Earnings
for the three months ended
March 31, 1994 and 1993 ..............................
Condensed Consolidated Statements of Cash Flows
for the three months ended
March 31, 1994 and 1993 ..............................
Notes to Condensed Consolidated Financial
Statements, March 31, 1994 ...........................
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .................................
Item 2. Changes in Securities .............................
Item 3. Defaults upon Senior Securities ...................
Item 4. Submission of Matters to a Vote
of Security Holders ............................
Item 5. Other Information .................................
Item 6. Exhibits and Reports on Form 8-K ..................
<PAGE>
<TABLE>
BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 1994 and December 31, 1993
<CAPTION>
ASSETS March 31, December 31,
1994 1993
----------- ------------
<S> <C> <C>
Current assets:
Cash ................................. $ 590,258 $ 1,203,199
Receivables, net ..................... 11,079,483 10,162,811
Inventories .......................... 49,782,749 45,077,365
Other current assets ................. 5,873,753 6,461,892
----------- -----------
Total current assets ........... 67,326,243 62,905,267
----------- -----------
Installment receivables,
less current portion ................. 7,490,000 6,920,000
Property, plant and equipment, net ...... 13,610,371 13,664,099
Deferred income taxes ................... 443,681 813,681
Other assets ............................ 5,553,704 5,625,368
----------- -----------
Total assets ................... $94,423,999 $89,928,415
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .... $16,274,917 $11,299,100
Other current liabilities ............ 14,111,425 15,665,179
----------- -----------
Total current liabilities ...... 30,386,342 26,964,279
----------- -----------
Long-term debt, less current portion .... 5,000,000 4,384,464
Other liabilities ....................... 8,523,602 8,687,949
----------- -----------
Total liabilities .............. 43,909,944 40,036,692
----------- -----------
Stockholders' equity:
Common stock ......................... 41,770 41,639
Additional paid-in capital ........... 12,206,232 12,068,613
Retained earnings .................... 44,677,485 43,972,787
----------- -----------
56,925,487 56,083,039
Less cost of treasury shares ......... (6,411,432) (6,191,316)
----------- -----------
Total stockholders' equity ..... 50,514,055 49,891,723
__________ ___________
Total liabilities and
stockholders' equity ........... $94,423,999 $89,928,415
=========== ===========
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended
March 31, 1994 and 1993
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Net sales ................................. $25,571,900 $28,073,134
Cost of goods sold ........................ 19,336,936 21,239,939
----------- -----------
Gross profit ........................ 6,234,964 6,833,195
Income on the sale of
installment receivables ................ 1,388,528 1,411,556
Interest income on installment receivables. 122,459 114,754
Other operating income, net ............... 776,444 874,222
----------- -----------
8,522,395 9,233,727
Operating expenses:
Selling, general and administrative .... 6,620,901 6,287,511
Provision for doubtful accounts ........ 335,306 472,239
----------- -----------
Operating profit .................... 1,566,188 2,473,977
Interest expense .......................... 397,490 520,860
----------- -----------
Earnings before income taxes and
cumulative effects of changes
in accounting principles .......... 1,168,698 1,953,117
Income taxes .............................. 464,000 736,000
----------- -----------
Earnings before cumulative effects of
changes in accounting principles .. 704,698 1,217,117
Cumulative effect of changes in
accounting for postretirement and
postemployment benefits ................ -- (1,604,000)
----------- -----------
Net earnings ........................ $ 704,698 $ (386,883)
=========== ===========
Earnings per share:
Before cumulative effects of
changes in accounting principles $ .21 $ .36
Cumulative effect of changes in
accounting for postretirement and
postemployment benefits -- (.47)
----- -----
Net earnings per share $ .21 $(.11)
===== =====
Average number of common shares outstanding 3,415,463 3,399,144
========= =========
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
March 31, 1994 and 1993
<CAPTION>
INCREASE (DECREASE) IN CASH 1994 1993
- --------------------------- ----------- -----------
<S> <C> <C>
Net cash used in operating activities ...... $(5,050,799) $(1,589,907)
Net cash used in investing activities ...... (542,786) (230,750)
Cash flows from financing activities:
Installment contract
receivables written ................. (10,608,176) (10,992,329)
Installment receivables liquidated ..... 1,375,364 1,284,445
Proceeds from sale of
installment receivables ............. 8,704,469 9,566,421
Borrowing under long-term debt 5,591,353 1,687,269
Other .................................. (82,366) --
----------- -----------
Net cash provided by
financing activities ........... 4,980,644 1,545,806
----------- -----------
Net decrease in cash ...................... (612,941) (274,851)
Cash at beginning of quarter .............. 1,203,199 1,037,372
----------- -----------
Cash at end of quarter .................... $ 590,258 $ 762,521
=========== ===========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
------------------------
Cash paid during the quarter for:
Interest ............................... $ 409,416 $ 481,876
=========== ===========
Income taxes ........................... $ 254,790 $ 1,739,210
=========== ===========
<FN>
See accompanying Notes to Condensed Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1994
(1) BASIS OF REPORTING FOR CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited condensed consolidated financial statements included
herein have been prepared by the Company 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
omitted pursuant to such rules and regulations, although the Company
believes that the disclosures are adequate to make the information presented
not misleading. These financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
Annual Report and Form 10-K for the year ended December 31, 1993.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary to fairly state the results of operations for the
three month periods ended March 31, 1994 and 1993. Results of operations
for interim periods are not necessarily indicative of results to be expected
for an entire year.
(2) INVENTORIES
Inventories consist of the following:
<CAPTION>
March 31, December 31,
1994 1993
----------- -----------
<S> <C> <C>
FIFO cost:
Raw material ......................... $11,160,805 $ 9,930,923
Work-in-process ...................... 6,478,573 7,081,883
Finished goods ....................... 40,658,621 36,149,809
----------- -----------
58,297,999 53,162,615
Excess of FIFO cost
over LIFO inventory value ............ (8,515,250) (8,085,250)
----------- -----------
Net inventories ................ $49,782,749 $45,077,365
=========== ===========
</TABLE>
<PAGE>
BALDWIN PIANO & ORGAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(3) POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The Company is contractually obligated to make health care benefits
available to a certain group of retired employees. Also, the Company
sponsors several postemployment plans for various groups of employees.
These plans' provisions include severance benefits in which the employees'
rights either vest or accumulate for each additional year of service
performed. The Company funds these postretirement and postemployment
benefits primarily on a pay-as-you-go basis.
In the fourth quarter of 1993, the Company adopted the provisions of
Statements of Financial Accounting Standards No. 106 (FAS 106), "Employers'
Accounting for Postretirement Benefits other than Pensions;" and No. 112
(FAS 112), Employers' Accounting for Postemployment Benefits." The Company
elected to recognize the combined benefit obligations of $2,673,000
retroactive to January 1, 1993 as accounting changes. On an after-tax
basis, this charge was $1,604,000 or $.47 per share. Previously reported
first quarter results in 1993 have been restated to reflect the adoption of
FAS 106 and 112 as of January 1, 1993. The adoption of these standards had
no impact on consolidated cash flows. Prior to 1993, the cost of post-
retirement and postemployment benefits were recognized when incurred and
were not material.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1994 COMPARED TO 1993
Three Months ended March 31, 1994
Compared to Three Months ended March 31, 1993
Net sales for the three months ended March 31, 1994 decreased
$2,501,000 or 9% over the comparable period in 1993. The components of this
decrease in sales are as follows:
Piano $(3,524,000)
Organ 42,000
Music product and
furniture contracting 1,046,000
Electronic contracting 7,000
Clock (72,000)
-----------
$(2,501,000)
===========
The decrease in piano sales is attributable to a 26% decrease in the
number of units sold, partially offset by an 11% increase in the average
unit selling price. In late 1993, Baldwin's piano sales to many of its
wholesale dealers increased significantly because of dealer incentive
programs and in anticipation of higher consumer demand. However, the severe
weather in parts of the United States during the first quarter of 1994 did
not allow the dealers to sell this merchandise and therefore adversely
impacted Baldwin's ability to sell replacement pianos to them. The increase
in the average unit selling price is largely due to higher sales of more
expensive grand pianos and increased selling prices for vertical pianos.
The increase in organ sales is primarily related to higher sales of church
organs partially offset by the continued decline in sales of home organs.
The Company's sales of non-portable organs for home use has declined
steadily during the last decade, reflecting a general decline in this
market. Music product and furniture contracting sales increased due to
higher sales of piano cases to another piano manufacturer for use outside
the United States as well as increased furniture sales to principally two
customers. Electronic contracting sales remained relatively constant. The
decrease in clock sales results from lower units sales of grandfather
clocks.
The Company values a substantial portion of its inventory on the last-
in, first-out (LIFO) method. The first quarter 1994 gross profit is
$430,000 less than the amount that would have been presented had the first-
in, first-out (FIFO) method been used.
Income on the sale of installment receivables for the first quarter of
1994 decreased $23,000 over the comparable period in 1993. This decrease is
primarily the result of higher interest costs as a result of an interest
rate modification agreement on $20,000,000. See "Liquidity and Capital
Resources."
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
Other operating income for the first quarter of 1994 decreased $98,000
from the first quarter of 1993. This decline is primarily due to lower
display fees on the Company's inventory consigned to its dealers.
Selling, general and administrative expenses for the first quarter of
1994 increased $333,000 over the comparable period in 1993. This increase
is primarily related to a new "factory direct" sales concept started during
the first quarter of 1994 and currency exchange losses.
The provision for doubtful accounts for the first quarter of 1994
declined $137,000 from the same period in 1993 due to continued reductions
in losses experienced.
Interest expense for the first quarter of 1994 decreased $123,000 from
the comparable period in 1993, primarily due to reduced average borrowing.
Borrowing was reduced primarily as a result of net earnings since March
1993.
In the fourth quarter of 1993, the Company adopted the provisions of
Statements of Financial Accounting Standards No. 106 (FAS 106), "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and No. 112 (FAS
112), "Employers' Accounting for Postemployment Benefits." The Company
elected to recognize the combined benefit obligations of $2,673,000
retroactive to January 1, 1993 as accounting changes. On an after-tax
basis, this charge amounted to $1,604,000 or $.47 per share. Previously
reported first quarter results in 1993 have been restated to reflect the
adoption of FAS 106 and 112 as of January 1, 1993. The adoption of these
standards had no impact on consolidated cash flows. Prior to 1993, the cost
of postretirement and postemployment benefits were recognized when incurred
and were not material.
Effective January 1, 1993, the Company implemented the provisions of
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting
for Income Taxes." The adoption of FAS 109 had no effect on the financial
condition or results of operations of the Company. In the opinion of the
management, no valuation allowance related to deferred tax assets was
required at December 31, 1993. Based on the Company's historical and
current pre-tax earnings, management believes it is more likely than not
that the Company will realize the benefit of recorded deferred tax assets.
There can be no assurance, however, that the Company will generate any
earnings or any specific level of continuing earnings.
INFLATION, OPERATIONS AND INTEREST RATES
The impact of inflation on manufacturing and operating costs can affect
the Company's results. However, the Company has generally been able to
offset the effects of inflation by price increases and operating efficien-
cies.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
The operations of the Company and its predecessors are subject to
federal, state and local laws regulating the discharge of materials into the
environment. Although on several occasions the Company has been the subject
of inquiries from government agencies and/or persons who may be held
responsible for environmental liabilities relating to the sites in question,
the Company has been made a party to actual proceedings on only one occasion
to date. The Company's actual liability in such matter was not significant.
The Company does not anticipate that any environmental matters currently
known to the Company will result in additional proceedings against the
Company or in any material liability.
The Company and its subsidiaries' operating results are sensitive to
changes in interest rates primarily because of fixed interest rates on
installment receivables and floating interest rates on a substantial portion
of indebtedness. Additionally, the buyer of the installment receivables is
entitled to earn interest on the outstanding principal balance of the
contracts based upon a floating interest rate provision.
The Company can partially offset the effect of interest rate changes by
adjusting display fees on its consigned inventory and interest rates on its
new installment receivable contracts. The Company has an interest rate
modification agreement which ensures, through October 1994, that with
respect to $25,000,000, the Company will receive interest income to the
extent the one-month commercial paper rate reported on the Federal Reserve
statistical release H15(519), converted to a money market yield, exceeds
12%.
In 1993, the annual rate of interest under the revolving line of credit
(Revolver) was the prime lending rate plus 1/2%. Effective February 15,
1994, the annual rate of interest is 150 basis points plus the greater of
the LIBOR on three month deposits or the rate on 60 day high grade
commercial paper.
LIQUIDITY AND CAPITAL RESOURCES
The Company and its wholly-owned finance subsidiary (Finance) require
significant working capital to support their operations. Working capital
requirements fluctuate throughout the year.
The Company ships musical instruments and clocks to its Baldwin dealer
network on a consignment basis. Management believes the consignment program
creates a competitive advantage for its dealers. Dealers are able to
display a larger and more comprehensive product line than they may otherwise
be able to without the Company's financial support. Also the consignment
program is advantageous to the Company for income tax purposes, and
management believes the consignment method minimizes losses from dealers.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
Because the Company finances inventory on consignment to Baldwin
dealers, the Company's borrowing is higher than comparable companies not
operating on the consignment basis. Management believes the advantages of
the consignment program are greater than the risks associated with the
higher leverage.
In February 1994, the Company reduced the Revolver from $60,000,000 to
$40,000,000 and extended the initial due date from December 31, 1994 to
February 15, 1999. The Revolver is renewable for three consecutive one-year
periods beyond February 15, 1999. Amounts outstanding under the Revolver
are due one year after demand. However, the lender retains absolute
discretion regarding further advances, even if no event of default then
exists.
Under the Revolver, the lender will make available a line of credit
based upon certain percentages of the value of the Company's inventories and
trade accounts receivable. At March 31, 1994, the Company had approximately
$24,325,000 of additional borrowing available under the $40,000,000
Revolver.
The Company's debt agreements contain covenants that restrict, among
other things, the payment of dividends, the repurchase of the Company's
common stock and the Company's ability to incur new indebtedness and to
enter new businesses. Such agreements permit the payment of dividends or
repurchase of the Company's common stock equal to the lesser of (i) 50% of
the Company's cumulative net earnings since January 1, 1986 or (ii) the
amount of unused borrowing available under the Company's Revolver, reduced
by the unpaid portion of the term loan. Accordingly, at March 31, 1994,
approximately $19,325,000 is available for the payment of dividends or the
repurchase of the Company's common stock. The Company's debt agreements
contain provisions by which a default under one agreement constitutes a
default under the other agreements. The Company has been in compliance with
these covenants.
In February 1994, Finance amended its agreements with an independent
entity to sell substantially all of its installment receivable contracts up
to a maximum outstanding principal amount of $72,000,000. Certain
installment receivables are not eligible for sale and are retained by
Finance. Finance continues to service all installment receivables sold.
At the time of each installment receivable sale, Finance receives cash
equal to the unpaid principal balance of the contracts, less a holdback of
10% of the principal balance of the contracts sold.
The buyer of the installment receivables earns interest on the
outstanding principal balance of the contracts based upon a floating
interest rate provision. Over the life of the contracts, the difference
between the actual yield on the installment contracts sold, using the
interest method, and the amount retained by the buyer, is remitted to
Finance as a service fee. Finance's performance under this agreement is
guaranteed by a third party lender for which Finance pays a fee of 1% of the
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
outstanding balance. In February 1994, Finance entered into a five year
interest rate modification agreement on $20,000,000 whereby, Finance will
receive interest income to the extent the floating rate retained by the
buyer exceeds 6% or will pay interest expense to the extent the floating
rate is less than 6%.
Proceeds from sale of installment receivables amounted to $8,704,000
for the first quarter of 1994 compared to $9,566,000 for the same period of
1993. The decrease in the first quarter of 1994 compared to the same period
of 1993 is largely the result of reduced sales volume during the first
quarter of 1994.
Under the sale agreements, Finance is required to repurchase accounts
that become more than 120 days past due or accounts that are deemed
uncollectable. The repurchase price is equal to the remaining unpaid
principal balance of the contract on the date repurchased, less the related
10% holdback. Finance remains contingently liable on approximately
$56,835,000 of installment receivables. Management believes an adequate
allowance has been provided for any uncollectable receivables.
Certain Wurlitzer dealers finance their inventory with floor plan loans
from an independent bank. Dealers can borrow money from the bank based upon
the value of the inventory purchased from Wurlitzer, with the keyboard
instruments pledged as collateral. The dealers are required to pay the bank
monthly interest payments and pay principal balance after inventory is sold
or held longer than twelve months. The bank may request Wurlitzer to
repurchase notes due from delinquent dealers. If Wurlitzer does not
repurchase such notes, the bank can terminate the floor plan agreement with
the dealers and require Wurlitzer to repurchase up to $2,200,000 of the
outstanding dealer notes. The Company believes the financial statements
contain adequate provisions for any loss that may be incurred as a result of
the repurchase.
Baldwin's Stock Repurchase Plan permits the Company to purchase an
amount of the Company's common stock not to exceed the lesser of 1,033,000
shares or $12,416,000 in dollar value. From the date the plan was adopted
in November 1987 through May 3, 1994, the Company has repurchased 701,300
shares of its common stock at an aggregate purchase price of $5,655,000
under the plan.
Capital expenditures amounted to $543,000 in the first quarter of 1994
and $231,000 in the comparable period of 1993. At March 31, 1994, the
Company had no significant outstanding capital commitments.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation arising in its normal course of
business. The Company does not believe that any existing claim or suit will
have a material adverse effect on the business or financial condition of the
Company.
ITEM 2. CHANGES IN SECURITIES
No changes have been made to the instruments defining the right of the
holders of the Company's common stock or to the rights of such stockholders.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company is not in default nor has it defaulted on any indebtedness.
The Company is not obligated to pay any dividends or other payment to any of
its stockholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters have been submitted to a vote of security holders during the
first quarter of 1994.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Certificate of Incorporation of the Company, as
amended.*
3.2 By-Laws of the Company.*
20.1 1994 First Quarter Report to Stockholders of the
Company.
*Incorporated by reference from the Company's Form S-1 Registration
Statement No. 33-7251 as declared effective by the Commission on October 8,
1986.
Index to Exhibits appears on sequentially numbered page 15.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the first
quarter of 1994.
<PAGE>
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.
BALDWIN PIANO & ORGAN COMPANY
DATE: May 9, 1994 BY: R. S. HARRISON
--------------------- -----------------------------------
R. S. Harrison, President
and Chief Executive Officer
DATE: May 9, 1994 BY: CHARLES R. JUENGLING
--------------------- ------------------------------------
Charles R. Juengling, Vice President
(Chief Financial Officer and
Chief Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Exhibit
- -------------- -------
3.1 Certificate of Incorporation
of the Company, as amended. *
3.2 By-Laws of the Company. *
20.1 1994 First Quarter Report to
Stockholders of the Company.
*Incorporated by reference from the Company's Form S-1 Registration
Statement No. 33-7251 as declared effective by the Commission on October 8,
1986.
<PAGE>
BALDWIN
BALDWIN PIANO & ORGAN COMPANY
FIRST QUARTER REPORT - 1994
<PAGE>
To Our Stockholders
May 2, 1994
Net sales for the three months ended March 31, 1994, decreased 9% to
$25,572,000 from $28,073,000 in the corresponding three month period in
1993. Piano sales declined $3,500,000, partially offset by an increase in
wood product contracting sales. In late 1993, Baldwin's piano sales to
many of its wholesale dealers increased significantly because of dealer
incentive programs and in anticipation of higher consumer demand.
However, the severe weather in parts of the United States during the first
quarter of 1994 did not allow the dealers to sell this merchandise and
therefore adversely impacted Baldwin's ability to sell replacement pianos
to them.
As of January 1, 1993, the Company adopted the provisions of Statements
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" and No. 112, "Employers'
Accounting for Postemployment Benefits," resulting in a decrease in net
earnings of $1,604,000 and a decrease in net earnings per share of $.47
for the three months ended March 31, 1993.
Baldwin's net earnings before cumulative effects of changes in accounting
principles decreased 42% to $705,000 for the three months ended March
31, 1994 from $1,217,000 for the three months ended March 31, 1993. Net
earnings per share before cumulative effects of changes in accounting
principles decreased to $.21 from $.36 for the first quarter of 1993. The
decrease in Baldwin's first quarter 1994 net earnings and net earnings per
share was primarily a result of reduced piano sales.
R.S. HARRISON, Chief Executive Officer and President
<PAGE>
<TABLE>
Consolidated Summary of Earnings (Unaudited)
(in thousands, except earnings per share)
<CAPTION>
Three Months Ended Twelve Months Ended
March 31, March 31,
1994 1993 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $25,572 $28,073 $118,156 $111,709
Cost of goods sold 19,337 21,240 88,068 81,722
- -----------------------------------------------------------------------------
Gross profit 6,235 6,833 30,088 29,987
Income on the sale of
installment receivables 1,389 1,412 5,723 5,378
Interest income on
installment receivables 122 115 450 343
Other operating income 776 874 3,434 3,611
Selling, general and
administrative expenses (6,956) (6,760) (28,086) (27,203)
Interest expense (397) (521) (2,108) (2,492)
- -----------------------------------------------------------------------------
Earnings before income
taxes and cumulative
effects of changes in
accounting principles 1,169 1,953 9,501 9,624
Income taxes 464 736 3,848 3,841
- -----------------------------------------------------------------------------
Earnings before
cumulative effects
of changes in
accounting principles 705 1,217 5,653 5,783
Cumulative effects of changes
in accounting for
postretirement and
postemployment benefits -- (1,604) -- (1,604)
- -----------------------------------------------------------------------------
Net earnings (loss) $ 705 $ (387) $ 5,653 $ 4,179
=============================================================================
<PAGE>
Earnings (loss) per share:
Before cumulative effects
of changes in accounting
principles $ .21 $ .36 $ 1.66 $ 1.70
Cumulative effects of
changes in accounting for
postretirement and
postemployment benefits -- (.47) -- (.47)
- -----------------------------------------------------------------------------
Net earnings (loss) per share $ .21 $ (.11) $ 1.66 $ 1.23
=============================================================================
Average number of shares
outstanding(000) 3,415 3,399 3,413 3,399
=============================================================================
</TABLE>
<PAGE>
<TABLE>
Consolidated Summary Balance Sheets (Unaudited)
(in thousands)
<CAPTION>
March 31,
1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C>
Assets
Trade receivables, net $ 6,449 $ 5,563
Installment receivables, net 4,630 4,291
Inventories 49,783 49,237
Other current assets 6,464 7,907
- -----------------------------------------------------------------------------
Total current assets 67,326 66,998
Installment receivables,
less current portion 7,490 6,931
Property, plant and equipment, net 13,610 13,555
Other assets 5,998 6,153
- -----------------------------------------------------------------------------
Total assets $ 94,424 $ 93,637
=============================================================================
Liabilities and Stockholders' Equity
Current portion of long-term debt $ 16,275 $ 20,526
Other current liabilities 14,111 15,106
- -----------------------------------------------------------------------------
Total current liabilities 30,386 35,632
Long-term debt, less current portion 5,000 4,891
Other liabilities 8,524 8,338
Stockholders' equity 50,514 44,776
- -----------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 94,424 $ 93,637
=============================================================================
</TABLE>
<PAGE>
Businesses
Manufacturing
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Pianos and electronic keyboards
Actions, cabinets, pinblocks, bridges, cables, keys, etc. for piano
and organ industry
Printed circuit boards and electro-mechanical assemblies
for manufacturers outside music industry
Grandfather Clocks
Retailing
- ---------
Company owned outlets in Atlanta, Chicago, Cincinnati, Indianapolis,
Lexington and Louisville
Independent keyboard dealers (1,100)
Financing
- ---------
Consumer installment financing and dealer consignment
Home Office
- -----------
422 Wards Corner Road, Loveland, OH 45140, (513)576-4500
Manufacturing Locations
- -----------------------
Conway, Fayetteville and Trumann, Arkansas
Greenwood, Mississippi
Juarez, Mexico
Registrar and Transfer Agent
- ----------------------------
The Provident Bank, One East Fourth Street
Cincinnati, OH 45202
Baldwin Piano & Organ Company common stock is traded on
The Nasdaq National Market; Symbol: BPAO
<PHOTO>
Baldwin Designer Series Piano
<PAGE>
