SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended July 2, 1994
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period ___________________________________
Commission File Number 1-7284
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BALDOR ELECTRIC COMPANY
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(Exact name of registrant as specified in its charter)
Missouri 43-0168840
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(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
5711 R.S. Boreham, Jr Street, Fort Smith, Arkansas 72902
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(Address of principal executive offices) (Zip Code)
(501) 646-4711
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(Registrant's Telephone Number, including Area Code)
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 and (2) has been subject to such filing requirements for
the past 90 days.
Yes__X__ No _____
At July 2, 1994, there were 18,179,404 shares of the registrant's common stock
outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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BALDOR ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 2 JULY 3 JULY 2 JULY 3
1994 1993 1994 1993
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(In thousands, except share data)
Net sales $104,812 $ 90,673 $202,288 $177,219
Other income (net) 501 455 685 612
-------- -------- -------- --------
$105,313 $ 91,128 $202,973 $177,831
Cost and expenses:
Cost of goods sold 74,667 64,766 144,237 126,680
Selling and
administrative 18,022 16,497 35,341 32,456
Profit sharing 1,415 1,162 2,646 2,207
Interest 386 274 618 530
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94,490 82,699 182,842 161,873
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Earnings before income
taxes 10,823 8,429 20,131 15,958
Income taxes 4,221 3,284 7,851 6,220
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Net earnings $ 6,602 $ 5,145 $ 12,280 $ 9,738
======== ======== ======== ========
Net earnings per common
share $0.35 $0.27 $0.65 $0.52
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Dividends paid per common
share $0.10 $0.08 $0.20 $0.16
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Weighted average common
shares outstanding 18,999,497 18,640,048 18,974,984 18,591,030
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See notes to unaudited condensed consolidated financial statements.
BALDOR ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JULY 2 JANUARY 1
1994 1994
ASSETS ------ ---------
(In thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 2,661 $ 7,310
Marketable securities 23,872 22,914
Accounts receivable, less allowances
of $2,100,000 and $1,800,000,
respectively 71,422 59,566
Inventories:
Finished products 49,245 44,544
Work in process 10,505 9,351
Raw materials 24,148 24,448
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83,898 78,343
LIFO valuation adjustment (deduction) (25,348) (24,724)
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58,550 53,619
Deferred income taxes 2,575 2,219
Other current assets 4,189 6,374
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TOTAL CURRENT ASSETS 163,269 152,002
OTHER ASSETS 16,696 13,552
PROPERTY, PLANT AND EQUIPMENT 154,505 146,220
Allowances for depreciation and amortization
(deduction) (79,480) (73,824)
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75,025 72,396
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$254,990 $237,950
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,015 $ 12,690
Accrued employee compensation
and other liabilities 26,756 28,100
Income taxes 2,316 2,121
Current maturities of long-term
obligations 920 490
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TOTAL CURRENT LIABILITIES 47,007 43,401
LONG-TERM OBLIGATIONS 26,432 22,474
DEFERRED INCOME TAXES 10,051 11,536
SHAREHOLDERS' EQUITY:
Common stock 1,818 1,797
Additional capital 19,557 17,848
Retained earnings 150,380 141,729
Cumulative translation adjustments (255) (835)
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TOTAL SHAREHOLDERS' EQUITY 171,500 160,539
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$254,990 $237,950
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See notes to unaudited condensed consolidated financial statements.
BALDOR ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED
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JULY 2 JULY 3
1994 1993
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(In thousands)
Operating activities:
Net earnings $12,280 $ 9,738
Depreciation and amortization 6,496 6,009
Deferred income taxes (1,840) (1,351)
Changes in operating assets and liabilities:
Accounts receivable (12,156) (8,371)
Inventories (4,931) (2,512)
Other current assets 2,185 2,396
Accounts payable 4,325 5,147
Accrued expenses and other liabilities (1,344) 706
Income taxes 195 1,161
Other (net) 2,518 (881)
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Net cash provided by operating activities 7,728 12,042
Investing activities:
Additions to property, plant and equipment (9,005) (7,082)
Sales of marketable securities available-
for-sale 14,045
Purchase of marketable securities available-
for-sale (15,003) (3,601)
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Net cash used in investing activities ( 9,963) (10,683)
Financing activities:
Additional long-term borrowings 6,000
Reduction of long-term obligations (1,612) (787)
Unexpended debt proceeds (4,903) 666
Dividends paid (3,629) (2,894)
Stock option plans 1,730 369
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Net cash used in financing activities (2,414) (2,646)
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Net decrease in cash and cash eqivalents (4,649) (1,287)
Beginning cash and cash equivalents 7,310 5,921
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Ending cash and cash equivalents $ 2,661 $ 4,634
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See notes to unaudited condensed consolidated financial statements.
BALDOR ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 2, 1994
BASIS OF PRESENTATION: The unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements, and therefore should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended January 1,
1994. In the opinion of management, all adjustments (consisting only of normal
recurring items) considered necessary for a fair presentation have been
included. The results of operations for the six months ended July 2, 1994, may
not be indicative of the results that may be expected for the fiscal year
ending December 31, 1994.
INCOME TAXES: Deferred income taxes are provided on temporary differences
between net earnings reported for financial and tax purposes. During the first
quarter of 1993, the Company adopted Statement of Financial Accounting
Standards No. 109 - "Accounting for Income Taxes". Adoption of this standard
did not have a material impact on the Company's financial statements.
MARKETABLE SECURITIES: In May 1993, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 115 - "Accounting for
Certain Investments in Debt and Equity Securities" which the Company adopted
in the first quarter of 1994. Adoption of this standard did not have a
material impact on the Company's financial statements. Management determines
the appropriate classification of debt securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Currently, all of
the Company's marketable securities are classified as available-for-sale. The
cost approximates the fair market value and unrealized gains and losses, net
of tax, are immaterial. Interest on securities classified as available-for-
sale is included in other income.
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
- - ------- ---------------------------------------------------------------
Results of Operations
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RESULTS OF OPERATIONS
Sales and earnings were a record for the second quarter and for the first six
months of 1994. The second quarter of 1994 also brought Baldor's first $100
million sales quarter. Second quarter sales of $104,812,000 were up 15.6% over
second quarter 1993 sales of $90,673,000. Year-to-date 1994 sales of
$202,288,000 were up 14.1% over year-to-date 1993 sales of $177,219,000.
International sales (exports and sales by foreign affiliates), which comprise
12.9% of total year-to-date sales, were also strong, up 21.6% in the second
quarter and up 16.1% year-to-date over the same periods in 1993.
Second quarter 1994 earnings of $6,602,000 were up 28.3% over second quarter
1993 and year-to-date 1994 earnings of $12,280,000 were up 26.1% over the first
six months of 1993. Pre-tax margins were 10.3% for the second quarter and
10.0% for the first six months of 1994. This is the first time that pre-tax
margins have been at or above 10.0% since 1985. Both distributor and OEM
business was strong with some of the core OEM markets such as pumps, blowers,
fans, and machine tools doing especially well. A price increase of slightly
over 2% also contributed to the strong second quarter.
The Company's gross margin for the second quarter of 1994 was 28.8% compared
to 28.6% for the first quarter of 1994 and 28.5% for the second quarter of
1993. Material costs are up slightly over 1% from year-end with increases in
steel, aluminum, and grey iron castings. Manufacturing costs continue to show
good improvement due to investments in lamination and winding equipment,
improvements in manufacturing technology, increases in productivity, and the
results of increased training and education.
Second quarter 1994 selling and administrative expense of 17.2% of net sales
is the lowest since the first quarter of 1985. Selling and administration
expense in the second quarter continued an improving trend, down from 17.8% of
net sales in the first quarter of 1994 and 18.2% of net sales in the second
quarter of 1993.
LIQUIDITY AND CAPITAL RESOURCES
Through the first six months of 1994, the Company's financial position remains
strong with cash and marketable securities over $26.5 million. Although second
quarter 1994 sales were up 15.6%, total inventories ended the second quarter
of 1994 at $58.6 million, up $6.4 million from the second quarter of 1993.
Working capital increased to $116.3 million at July 2, 1994, from $108.6
million at January 1, 1994. The ratio of long-term borrowing to total
capitalization (shareholders' equity and long-term borrowings) was 13.4% at
July 2, 1994, compared to 12.3% at January 1, 1994. The July 2, 1994 ratio
includes the $6,000,000 in Industrial Development Bonds, issued in the second
quarter, to finance the new plant in Ozark, Arkansas. The current ratio at
July 2, 1994 remained at 3.5 times which was the same as the current ratio at
January 1, 1994.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
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On May 7, 1994, the Company held its Annual Meeting of Shareholders at which
three proposals were voted on. Proposal I was the election of three Directors
to the Company's nine-person Board of Directors for terms expiring in 1997.
Proposal II was a proposal to amend the Restated Articles of Incorporation, as
Amended, of the Company to increase the authorized shares of Common Stock, par
value $0.10 per share, from 25,000,000 to 50,000,000 shares. Proposal III was
a proposal to adopt the Baldor Electric Company 1994 Incentive Stock Plan as
contained in the Company's Proxy Statement dated April 4, 1994. The following
is a list of the Board's slate of nominees (who were the only nominees) each
of whom were elected, and the results of shareholder voting on each of the
proposals:
Votes Votes Votes Broker
Proposal FOR AGAINST WITHHELD NON-VOTES
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Proposal I
O. A. Bauman 15,026,097 N/A 730,700 N/A
Robert L. Proost 15,044,821 N/A 711,976 N/A
George A. Schock 15,015,364 N/A 741,433 N/A
Proposal II 15,031,915 616,828 108,054 N/A
Proposal III 12,534,209 2,119,616 228,199 874,773
Item 6. Exhibits and Reports on Form 8-K
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a. Exhibits - See the Exhibit Index.
b. The registrant did not file any reports on Form 8-K during the most
recently completed fiscal quarter.
S I G N A T U R E S
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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.
BALDOR ELECTRIC COMPANY
(Registrant)
August 16, 1994 By: /s/Lloyd G. Davis
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(Date) Lloyd G. Davis - Chief Financial
Officer and Vice-President -
Finance (on behalf of the
Registrant and as principal
financial officer)
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
Exhibits
Number
- - -------- ---------------------------------------------------------
2 Omitted - Inapplicable
4 Omitted - Inapplicable
10 Omitted - Inapplicable
11 Computation of Earnings Per Common Share - filed herewith
12 Omitted - Inapplicable
15 Omitted - Inapplicable
18 Omitted - Inapplicable
19 Omitted - Inapplicable
22 Omitted - Inapplicable
23 Omitted - Inapplicable
24 Omitted - Inapplicable
27 Not required
EXHIBIT 11
BALDOR ELECTRIC COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS SIX MONTHS
ENDED ENDED
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July 2 July 3 July 2 July 3
1994 1993 1994 1993
(In thousands, except per share data)
Primary
Weighted average shares outstanding 18,160 17,815 18,116 17,807
Dilutive stock options based on the
treasury stock method using the
average market price 839 825 859 784
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Total 18,999 18,640 18,975 18,591
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Net Earnings $ 6,602 $ 5,145 $ 12,280 $ 9,738
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Per Share Earnings $0.35 $0.27 $0.65 $0.52
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Fully Diluted
Weighted average shares outstanding 18,160 17,815 18,116 17,807
Dilutive stock options based on the
treasury stock method using the
year-end market price, if higher
than average market price 838 913 838 913
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Total 18,998 18,728 18,954 18,720
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Net Earnings $ 6,602 $ 5,145 $ 12,280 $ 9,738
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Per Share Earnings $0.35 $0.27 $0.65 $0.52
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