<PAGE>
<PAGE>
Securities and Exchange Commission
Washington, D.C. 20549
-----------------------------------------------------
Form 10-Q
Quarterly Report Pursuant To Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
<TABLE>
<S> <C>
For the Quarter Ended Commission File Number
December 31, 1998 0-15045
</TABLE>
BHA Group Holdings, Inc.
---------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
Delaware 43-1416730
- ----------------------------------- --------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
</TABLE>
<TABLE>
<S> <C>
8800 East 63rd Street, Kansas City, Missouri 64133
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (816) 356-8400
------------------
</TABLE>
Indicate by checkmark 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 twelve 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.
<TABLE>
<S> <C>
Yes X No
------ ------
</TABLE>
As of January 31, 1999, the number of shares outstanding of the Registrant's
Common Stock was 7,098,040.
<PAGE>
<PAGE>
Part I. Financial Information
BHA Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share data) December 31, September 30,
Assets 1998 1998
------ ------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,208 $ 193
Accounts receivable, less allowance for doubtful
receivables of $1,126 and $1,139, respectively 26,608 31,338
Inventories (note 4) 27,540 27,363
Prepaid expenses 2,501 1,828
Deferred income taxes 1,850 1,850
--------- ---------
Total current assets 59,707 62,572
--------- ---------
Property, plant and equipment, at cost:
Land and improvements 1,344 1,344
Buildings and improvements 24,379 24,241
Machinery and equipment 37,309 35,947
Office furniture, fixtures and equipment 4,127 4,149
--------- ---------
67,159 65,681
Less accumulated depreciation and amortization 30,223 29,125
--------- ---------
Net property, plant and equipment 36,936 36,556
--------- ---------
Other assets (note 5) 10,451 8,446
========= =========
$ 107,094 $ 107,574
========= =========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Current installments of long-term debt $ 4,110 $ 3,988
Current lease obligations (note 5) 400 --
Accounts payable 5,029 8,896
Accrued compensation and employee benefit costs 1,545 3,695
Accrued expenses and other current liabilities 3,096 3,411
Income tax payable 886 359
--------- ---------
Total current liabilities 15,066 20,349
--------- ---------
Long-term deferred income taxes 2,107 2,116
Long-term debt, excluding current installments 20,008 23,029
Long-term lease obligations, excluding current
installments (note 5) 7,600 --
Other liabilities 130 127
Shareholders' equity:
Common stock $0.01 par value.
Authorized 20,000,000 shares; issued
8,686,723 and 8,666,353, respectively 87 87
Additional paid-in capital 61,317 61,310
Retained earnings 24,084 22,983
Accumulated - other comprehensive income (487) (293)
Unearned compensation (82) (108)
Less cost of 1,580,245 shares and 1,527,856 of
common stock in treasury (22,736) (22,026)
--------- ---------
Total shareholders' equity 62,183 61,953
========= =========
$ 107,094 $ 107,574
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-1-
<PAGE>
<PAGE>
BHA Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
For the Three Months Ended December 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except per share data) 1998 1997
---- ----
<S> <C> <C>
Net sales $35,228 $30,022
Cost of sales 24,539 20,312
------- -------
Gross margin 10,689 9,710
------- -------
Operating expenses
Selling and advertising expense 4,685 3,918
General and administrative expense 3,595 3,486
------- -------
Total operating expenses 8,280 7,404
------- -------
Operating income 2,409 2,306
------- -------
Interest expense, net 443 246
------- -------
Earnings before income taxes 1,966 2,060
------- -------
Income taxes 650 670
======= =======
Net earnings $ 1,316 $ 1,390
======= =======
Basic earnings per common share* $ .18 $ .19
Diluted earnings per common share* .18 .18
Basic weighted average number of common shares 7,142 7,158
outstanding*
Diluted weighted average number of common shares 7,364 7,680
outstanding*
</TABLE>
* Earnings per share and weighted average shares have been adjusted to reflect
the 1998 stock dividend of 10%.
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
<PAGE>
BHA Group Holdings, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
for the Three Months Ended December 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
(In thousands) 1998 1997
---- ----
<S> <C> <C>
Net earnings: $1,316 $1,390
Other comprehensive income - foreign currency
translation adjustments (194) (369)
------ ------
------ ------
Comprehensive income 1,122 1,021
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
<PAGE>
BHA Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Shareholders' Equity
for the Three Months Ended December 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
(In thousands, except share and per share data) 1998 1997
---- ----
<S> <C> <C>
Common stock:
Balance at beginning period $ 87 $ 78
Issuance of 20,370 and 20,871 shares of common
stock in 1998 and 1997, respectively -- 1
-------- --------
Balance at end of period 87 79
-------- --------
Additional paid-in capital:
Balance at beginning of period 61,310 47,607
Excess over par value of common stock issued 7 277
-------- --------
Balance at end of period 61,317 47,884
-------- --------
Retained earnings:
Balance at beginning of period 22,983 27,773
Net earnings for the period 1,316 1,390
Cash dividends of $.03 per share paid on common
stock during 1998 and 1997 (215) (195)
-------- --------
Balance at end of period 24,084 28,968
-------- --------
Accumulated - other comprehensive income:
Balance at beginning of period (293) (148)
Equity adjustment from foreign currency translation (194) (369)
-------- --------
Balance at end of period (487) (517)
-------- --------
Unearned compensation:
Balance at beginning of period (108) (211)
Compensation expense 26 26
-------- --------
Balance at end of period (82) (185)
-------- --------
Treasury stock:
Balance at beginning of period (22,026) (18,181)
Acquisition of 57,500 and 7,000 shares of common
stock, at cost, during 1998 and 1997, respectively (772) (130)
Issuance of 5,111 and 1,454 treasury shares pursuant
to stock option exercises, net, during 1998 and 1997 62 17
-------- --------
Balance at end of period (22,736) (18,294)
-------- --------
Total shareholders' equity $ 62,183 $ 57,935
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
<PAGE>
BHA Group Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended December 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
(In thousands) 1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings: $ 1,316 $1,390
Adjustment to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 1,377 1,300
Deferred Income Tax (9) --
Changes in assets and liabilities:
Accounts receivable 4,730 (1,306)
Inventories (177) 135
Prepaid expenses (673) (697)
Accounts payable (3,867) (3,651)
Accrued expenses and other liabilities (2,465) (2,682)
Income taxes payable 527 764
-------- ------
Net cash provided by (used in) operating 759 (4,747)
activities -------- ------
Cash flows from investing activities:
Acquisition of property, plant and equipment (1,547) (2,503)
Net assets of businesses acquired, excluding cash -- (1,104)
Change in other assets (2,186) --
-------- ------
Net cash used in investing activities (3,733) (3,607)
-------- ------
Cash flows from financing activities:
Payment of cash dividend on common stock (215) (195)
Purchase of treasury stock (772) (130)
Proceeds from issuance of common stock 139 81
Net stock options exercised (70) (17)
Proceeds from borrowings under bank term notes 2,997 --
Proceeds from lease obligations 8,000 --
Net proceeds (repayments) from borrowings under
revolving bank lines of credit (5,455) 7,410
Repayments of long-term debt and other long-term (441) (81)
liabilities
-------- ------
Net cash provided by financing activities 4,183 7,068
-------- ------
Effect of exchange rate changes (194) (369)
-------- ------
Net increase in cash and cash equivalents 1,015 (1,655)
Cash and cash equivalents at beginning of period 193 2,590
-------- ------
Cash and cash equivalents at end of period $ 1,208 $ 935
======== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE>
<PAGE>
BHA Group Holdings, Inc. and Subsidiaries
Notes To Condensed Consolidated Financial Statements
(1) Basis of Presentation
These condensed consolidated financial statements reflect all adjustments
(consisting of normal recurring adjustments) which, in the opinion of
management, are necessary to present fairly the financial position, results of
operations and cash flows for the periods presented in conformity with generally
accepted accounting principles applied on a consistent basis.
These statements should be read in conjunction with the Notes to Consolidated
Financial Statements contained in BHA Group Holdings, Inc.'s Annual Report to
Shareholders for the fiscal year ended September 30, 1998, and with Management's
Discussion and Analysis of Results of Operations and Financial Condition
appearing within this quarterly report.
(2) Earnings Per Common Share
Basic earnings per share is computed by dividing net earnings available to
common shareholders by the weighted average number of common shares outstanding
for the period. Diluted earnings per share is computed based upon the weighted
average number of common shares and dilutive common equivalent shares
outstanding. Stock options, which are common stock equivalents, have a dilutive
effect on earnings per share in all periods presented and are therefore included
in the computation of diluted earnings per share. A reconciliation of the
numerators and the denominators of the basic and diluted per-share computations
is as follows:
(In thousands, except per share data)
For the three months ended
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
Net Earnings Shares Per-Share Net Earnings Shares Per-Share
(Numerator) (Denom.) Amt. (Numerator) (Denom.) Amt.
----------- -------- ---- ----------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share:
Earnings available to
common shareholders $ 1,316 7,142 $ 0.18 $ 1,390 7,158 $ 0.19
Effect of dilutive
securities--stock options -- 222 -- 522
Diluted earnings per share:
Earnings available to common
shareholders and assumed
conversion $ 1,316 7,364 $ 0.18 $ 1,390 7,680 $ 0.18
======= ===== ====== ======= ===== ======
</TABLE>
A 10% stock dividend was distributed in June 1998 and June 1997. All per share
and weighted average number of common shares and common share equivalents
outstanding data in the consolidated financial statements and related notes have
been restated to reflect the stock dividends for all periods presented.
-6-
<PAGE>
<PAGE>
(3) Comprehensive Income
The Company retroactively adopted Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income" as of October 1, 1998. This statement
establishes rules for the reporting of comprehensive income and its components.
The adoption of Statement No. 130 had no impact on total shareholders' equity.
(4) Inventories
BHA Group Holdings, Inc. values its inventory at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
Components of inventories at December 31, 1998 and September 30, 1998 were as
follows (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1998 1998
---- ----
<S> <C> <C>
Raw materials $18,492 $ 17,036
Work-in-process 1,290 1,174
Finished goods 7,758 9,153
------- ---------
Total $27,540 $ 27,363
======= =========
</TABLE>
(5) Lease Obligations
On December 22, 1998, BHA Technologies, Inc., a wholly-owned subsidiary of BHA
Group Holdings, Inc., entered into a sales-leaseback transaction with the City
of Lee's Summit, Missouri. In connection with this lease, the city issued
tax-exempt Industrial Development Revenue Bonds ("Bonds") totaling $8 million
and placed the proceeds in a trust to fund capital expenditures at the Lee's
Summit manufacturing facility. The Company is obligated, through its lease, for
the repayment of these bonds over the next 20 years. The interest rate on the
tax-exempt Bonds is variable based on a weekly published index that is
approximately 67% of LIBOR. As of December 31, 1998, BHA Technologies, Inc. has
$2.2 million in restricted cash held in the trust for exclusive use for
additional qualified capital expenditures in Lee's Summit, Missouri. This
restricted cash is included in Other Assets. A portion of the proceeds from the
transaction was used to repay the Company's long-term debt.
(6) Notes Payable to Banks
In October 1998, the Company's foreign subsidiary located in Germany entered
into an unsecured credit agreement with a German bank. The credit agreement
includes a DEM 5,000,000 (approximately $2,997,000) term loan with a fixed
interest rate of 4.75%. The term loan matures in December 2003. The credit
agreement also includes a revolving bank line of credit of DEM 2,500,000
(approximately $1,498,000) to be used for working capital purposes. This
revolving line of credit bears interest at a variable rate based on the German
prime rate. This revolving line of credit expires in December 2001. As of
December 31, 1998, DEM 1,750,000 (approximately $1,049,000) was outstanding
under this line of credit at an interest rate of 4.85%.
-7-
<PAGE>
<PAGE>
The Company has domestic unsecured bank lines of credit amounting to $28,000,000
for working capital purposes and other corporate matters. These lines bear
interest at variable rates based on LIBOR. These lines expire in the following
fiscal years: 1999 - $5,000,000; 2000 - $9,000,000; 2001 - $4,000,000; 2002 -
$10,000,000. The facilities include revolving credit agreements of $19,000,000,
in which the Company pays a 0.25% commitment fee on the unused portion. At
December 31, 1998, $12,845,000 was outstanding under all domestic bank lines of
credit at a weighted average interest rate of 6.33%. At September 30, 1998,
$19,300,000 was outstanding under the Company's domestic bank lines of credit.
-8-
<PAGE>
<PAGE>
BHA Group Holdings, Inc. and Subsidiaries
Management's Discussion and Analysis
Results of Operations and Financial Condition
Net Sales
BHA Group Holdings, Inc. (the "Company") develops, manufactures and sells
innovative filtration products and services to domestic and international
customers. Domestic sales for the purpose of this "Management's Discussion and
Analysis" are those to customers in the U.S. and Canada. Consolidated net sales
for the three months ended December 31, 1998 ("first quarter") increased 17% to
$35.2 million from $30.0 million for the same period in fiscal 1998. The
improvement in sales is due primarily to strong domestic sales in both the
Company's electrostatic precipitator ("ESP") and fabric filter businesses.
Domestic ESP replacement parts and service sales increased 56% over the prior
year due to an increase in electric utility business. Domestic Fabric filter
replacement parts sales increased 13% due to continued market penetration of the
Company's fine filtration and traditional products. International sales
increased 8% over the prior year. The improvement was due primarily to strong
sales in Europe which rose 22% over the prior year. Export sales from the U.S.
during the first quarter of fiscal 1999 showed a slight decline due to lower
exports to Latin America and consistent exports to Asia.
Gross Margin
Consolidated gross margin as a percentage of sales was 30.3% for the first
quarter of fiscal 1999 down from 32.3% for the same period a year ago. The
consolidated gross margin in the first quarter 1999 was comparable to the fourth
quarter of fiscal 1998. The decline in gross margin as a percentage of sales for
the period was largely attributable to BHA Technologies, Inc.'s efforts outside
of air pollution control.
Operating Expense
Operating expense as a percentage of sales was 23.5% and 24.7% for the first
quarter of fiscal years 1999 and 1998, respectively. Selling and advertising
expense as a percentage of sales during the first quarter was comparable to the
same period in the prior year. General and administrative expense as a
percentage of sales decreased slightly during the first quarter to 10.2% as
compared to 11.61% in the prior year. The decrease is reflective of a modest
increase in general and administrative costs while sales rose 17%.
Net Interest Expense
Net interest expense for the first quarter of fiscal 1999 and 1998 was $443,000
and $246,000. Net interest expense was comparable to the fourth quarter of
fiscal 1998. The increase was attributable to higher average outstanding
borrowings in the current period as compared to the prior year. The increase in
borrowings is attributable to capital expenditures relating to BHA Technologies,
Inc. and an increase in working capital and treasury share repurchases.
Income Taxes
The effective income tax rates were 33.1% and 32.5% for the first quarter of
fiscal 1999 and 1998, respectively.
-9-
<PAGE>
<PAGE>
Net Earnings
Net earnings for the first quarter of fiscal 1999 and 1998 were $1,316,000 and
$1,390,000, respectively. The decrease in net earnings despite the increase in
profits in the Company's core air pollution control businesses was attributable
to losses in BHA Technologies, Inc.
Liquidity and Capital Resources
Net working capital increased from $42.2 million at September 30, 1998 to $44.6
million at December 31, 1998. The current ratio at December 31, 1998 and
September 30, 1998 was 4.0 and 3.1, respectively. The Company's cash increased
from $193,000 to $1.2 million. Cash provided by operating activities for the
three months ended December 31, 1998 was $759,000 and cash used in operating
activities for the three months ended December 31, 1997 was $4.7 million. The
improvement was attributable to the reduction of accounts receivable.
Investing activities resulted in a net use of cash of $3.7 million and $3.6
million for the three months ended December 31, 1998 and 1997, respectively. The
current year activity consisted of capital expenditures and the investment of
the proceeds from the sales-leaseback transaction.
During the three months ended December 31, 1998 and 1997, net cash provided by
financing activities was $4.2 million and $7.1 million, respectively. The
Company's financing activities during fiscal 1999 consisted of borrowings under
the newly established credit facility in Europe and proceeds from the
sales-leaseback transaction. Borrowings this quarter were used to fund the
Company's capital expenditures, treasury share repurchases, cash dividend
requirements and repayment of revolving bank lines of credit.
During the three month period ended December 31, 1998, the Company established
several new credit facilities which are described more fully in footnotes 5 and
6. Specifically, BHA Technologies, Inc. entered into a sales-leaseback
transaction for the purpose of issuing Industrial Development Revenue Bonds to
fund the capital expenditures. The Company's foreign subsidiary located in
Germany entered into a credit agreement with a German bank. This credit
agreement includes a term loan and a revolving bank line of credit. The purpose
of the credit agreement is to provide working capital to the Company's
businesses in Europe. In addition to the above two facilities, the company had
unused domestic bank lines of credit aggregating $15.2 million at December 31,
1998. The Company believes that cash flows from operations and available credit
lines will be sufficient to meet its capital needs for the foreseeable future.
Year 2000
The Company has established a task force to address and assess Year 2000
compliance for the Company's computer system and software applications,
facilities throughout the world, the products that include date-sensitive
microprocessors, and suppliers providing both goods and services.
The State of Readiness of the Company
During the past several years, the Company has replaced its significant computer
software applications through normal system upgrades. These computer systems
include personal computers, mainframe systems, and worldwide network
applications. All of the new systems are, according to the software vendors,
Year 2000 compliant to support the proper processing of date-sensitive
transactions. Internal testing of these computer systems software applications
is expected to be complete by March 31, 1999.
-10-
<PAGE>
<PAGE>
The task force is currently preparing an inventory list of all machinery, office
equipment, and building equipment that utilize microprocessors at the Company's
facilities around the world to determine Year 2000 compliance. An evaluation of
this inventory list by the task force will be used to prioritize the need to
test and correct any Year 2000 compliance issues. The Company plans to identify
all Year 2000 compliance issues which could have a material impact on the
business by March 1999. The plans also call for the completion of final system
testing and any required remediation by September 1999.
The Company has a number of products that have date-sensitive microprocessors.
The Company has identified those products that have Year 2000 compliance issues
and proactively notified the customers, via certified letter, to whom these
products have been sold. Additional testing of the Year 2000 compliance of the
Company's products is being performed. As additional products with potential
Year 2000 issues are identified, the Company will communicate, via certified
letter, directly with those customers to provide them with additional
information. The communication with customers is expected to continue through
March 1999.
The task force is currently preparing a list of significant suppliers of goods
and services whose Year 2000 compliance could potentially impact the Company's
business. The Company is in the process of proactively addressing Year 2000
compliance with these suppliers, via certified letter, to obtain information
regarding the state of readiness for Year 2000 compliance. The task force is
currently evaluating the response from these requests for information to
determine the impact on the Company's business and develop necessary contingency
plans. The Company expects to complete this evaluation by March 1999.
The Costs of Year 2000 Compliance
The costs incurred to upgrade the Company's computer systems and software
applications were normal, planned system upgrades. In 1996, the Company made the
decision to consolidate its business into one entity for operating purposes.
This consolidation process included an upgrade to the Company's mainframe legacy
systems. The Company believes that all Year 2000 issues were addressed and
corrected at this time. The Company completed its personal computer rollout
during 1998. The rollout was part of an overall strategy to standardize on a
single platform using a current level of technology. Based on representations
received from vendors, the Company believes that all new equipment and software
purchased is Year 2000 compliant.
The costs associated with the Year 2000 compliance of the Company's equipment
are not expected to be material based on the preliminary review of the inventory
listing by the task force. Any equipment that is not Year 2000 compliant will be
replaced.
The costs associated with any potential non-compliance of the Company's products
for Year 2000 are mitigated by the terms and conditions under which these
products were sold. The Company's terms and conditions do not include any
representations or warranties regarding Year 2000 compliance and exclude any
liability for incidental or consequential damages including those which could
arise out of a Year 2000 issue. The Company does not anticipate that the costs
associated with Year 2000 issues relating to its products will be material.
-11
<PAGE>
<PAGE>
The costs associated with the Year 2000 compliance of the Company's suppliers of
goods and services are not expected to be material. The Company will continue to
evaluate each supplier's state of readiness to determine if alternative plans
need to be developed prior to January 1, 2000. These plans could include
procuring additional quantities of inventory from certain vendors during the
fourth quarter of calendar 1999.
The Company does not separately track the internal costs incurred relating to
Year 2000 compliance since these costs are principally payroll and related costs
for the task force and Management Information Systems department.
The Risks of Year 2000 Non-compliance to the Company
The task force believes that the most significant risk that relates to Year 2000
compliance may be the state of readiness of the Company's significant suppliers
of goods and services. Although the Company has taken a proactive approach to
communicate with these suppliers, the Company's relationship with these
suppliers cannot impact or ensure Year 2000 compliance in these suppliers'
ability to continue to provide the necessary goods and services to the Company.
As stated above, the Company has not completed the evaluation and testing of all
of its business systems, products and vendor relationships. The task force does
not believe that there are other significant risks related to Year 2000 that
would have a material negative impact on the Company. The costs and timetables
in which the Company plans to complete the Year 2000 readiness activities are
based on management's best estimates, which were derived using numerous
assumptions of future events including the continued availability of certain
resources, third party readiness plans and other factors. The Company can make
no guarantee that these estimates will be achieved, and actual results could
differ from such plans.
The Year 2000 Contingency Plans of the Company
The task force will make an assessment of the Year 2000 compliance of the
Company's significant suppliers of goods and services by March 1999. The Company
will then determine if additional quantities of inventory or services need to be
provided prior to January 1, 2000 to allow the Company to maintain its own
production schedule. The Company will also evaluate whether alternative
suppliers should be found. The Company will continue to evaluate alternatives
for other contingency plans for mission critical issues involving utility and
telephone service based on proactive communication with these service providers.
New Accounting Pronouncements
Statement of Financial Accounting Standard No. 131, "Disclosures about Segments
of an Enterprise and Related Information," is effective for the Company's fiscal
year 1999. This standard will expand and modify current segment disclosures.
-12
<PAGE>
<PAGE>
Forward Looking Information
This report contains forward-looking statements that reflect the Company's
current views with respect to future events and financial performance. The
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or those
anticipated. The words "should," "believe," "anticipate," "expect," and other
expressions that indicate future events and trends identify forward-looking
statements. Actual future results and trends may differ materially from
historical results or those anticipated depending on a variety of factors,
including, but not limited to, competition, the performance of newly established
domestic and international operations, demand and price for the Company's
products and services, and other factors. You should consult the section
entitled "Factors Affecting Earnings and Stock Price" in the Company's annual
report of Form 10-K.
Quantitative and Qualitative Disclosures about Market Risk
Forward Exchange Contracts
BHA periodically enters into forward exchange contracts in order to fix the
currency exchange rate related to intercompany transactions with its foreign
subsidiaries. Changes in the value of these instruments due to currency
movements offset the foreign exchange gains and losses of the corresponding
intercompany transactions. At December 31, 1998 and 1997, the aggregate amount
of such forward exchange contracts was approximately $2,500,000 and $1,450,000,
respectively. The fair value of the outstanding forward exchange contracts
approximates the aggregate amount outstanding at December 31, 1998.
-13-
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Part II. Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit 11: Computation of earnings per common share
(b) Exhibit 27: Financial Data Schedule
Reports on Form 8-K:
(c) During the quarter ended December 31, 1998, there were no reports on
Form 8-K filed by the Company.
</TABLE>
-14-
<PAGE>
<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.
BHA GROUP HOLDINGS, INC.
(Registrant)
February 16, 1999 By: /s/ James C. Shay
- ------------------------------ -----------------------------------------
Date (Signature)
James C. Shay
Secretary, Treasurer, Principal Financial
and Accounting Officer
By: /s/ James E. Lund
-----------------------------------------
(Signature)
James E. Lund
President and
Chief Executive Officer
-15-
<PAGE>
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
</TABLE>
<PAGE>
<PAGE>
Exhibit 11
BHA Group Holdings, Inc.
Computation of Earnings Per Common Share
<TABLE>
<CAPTION>
(In thousands, except per share data)
For the three months ended
December 31, 1998 December 31, 1997
Net Earnings Shares Per-Share Net Earnings Shares Per-Share
(Numerator) (Denom.) Amt. (Numerator) (Denom.) Amt.
----------- -------- ---- ----------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share:
Earnings available to
common shareholders $ 1,316 7,142 $ 0.18 $ 1,390 7,158 $ 0.19
Effect of dilutive
securities--stock options -- 222 -- 522
Diluted earnings per share:
Earnings available to common
shareholders and assumed
conversion $ 1,316 7,364 $ 0.18 $ 1,390 7,680 $ 0.18
======= ===== ====== ======= ===== ======
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from unaudited condensed consolidated
financial statements for the three months ended
December 31, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1998
<CASH> 1,208
<SECURITIES> 0
<RECEIVABLES> 27,734
<ALLOWANCES> 1,126
<INVENTORY> 27,540
<CURRENT-ASSETS> 59,707
<PP&E> 67,159
<DEPRECIATION> 30,223
<TOTAL-ASSETS> 107,094
<CURRENT-LIABILITIES> 15,066
<BONDS> 20,008
<COMMON> 87
0
0
<OTHER-SE> 62,096
<TOTAL-LIABILITY-AND-EQUITY> 107,094
<SALES> 30,667
<TOTAL-REVENUES> 35,228
<CGS> 21,242
<TOTAL-COSTS> 24,539
<OTHER-EXPENSES> 8,280
<LOSS-PROVISION> 3
<INTEREST-EXPENSE> 443
<INCOME-PRETAX> 1,966
<INCOME-TAX> 650
<INCOME-CONTINUING> 1,316
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,316
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
