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 October 1, 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 of (I.R.S. Employer
incorporation or organization) Identification No.)
5711 R.S. Boreham, Jr Street, Fort Smith, Arkansas 72901
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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 October 1, 1994, there were 18,226,997 shares of the registrant's
common stock outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
October 1, October 2, October 1, October 2,
1994 1993 1994 1993
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(In thousands, except share data)
Net sales $105,432 $ 90,703 $307,720 $267,923
Other income (net) 453 340 1,138 1,025
-------- -------- -------- --------
105,885 91,043 308,858 268,948
Cost and expenses:
Cost of goods sold 74,787 65,111 219,024 191,855
Selling and
administrative 18,098 16,064 53,440 48,530
Profit sharing 1,488 1,147 4,134 3,355
Interest 335 272 952 801
-------- -------- -------- --------
94,708 82,594 277,550 244,541
-------- -------- -------- --------
Earnings before income
taxes 11,177 8,449 31,308 24,407
Income taxes 4,359 3,595 12,210 9,815
-------- -------- -------- --------
Net earnings $ 6,818 $ 4,854 $ 19,098 $ 14,592
======== ======== ======== ========
Net earnings per common
share $0.36 $0.26 $1.01 $0.78
===== ===== ===== =====
Dividends paid per common
share $0.10 $0.083 $0.30 $0.246
===== ====== ===== ======
Weighted average common
shares outstanding 19,026,138 18,761,947 18,978,939 18,645,305
========== ========== ========== ==========
See notes to unaudited condensed consolidated financial statements.
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
October 1, JANUARY 1,
1994 1994
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ASSETS (In thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 3,146 $ 7,310
Marketable securities 34,259 22,914
Accounts receivable, less allowances
of $2,225,000 and $1,800,000,
respectively 72,998 59,566
Inventories:
Finished products 45,410 44,544
Work in process 11,255 9,351
Raw materials 26,494 24,448
------- -------
83,159 78,343
LIFO valuation adjustment (deduction) (25,770) (24,724)
-------- --------
57,389 53,619
Deferred tax assets 2,733 2,219
Other current assets 3,905 6,374
-------- --------
TOTAL CURRENT ASSETS 174,430 152,002
OTHER ASSETS 17,815 13,552
PROPERTY, PLANT AND EQUIPMENT 156,143 146,220
Allowances for depreciation and amortization
(deduction) (81,279) (73,824)
-------- --------
74,864 72,396
-------- --------
$267,109 $237,950
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,535 $ 12,690
Accrued employee compensation
and other liabilities 31,930 28,100
Income taxes 3,834 2,121
Current maturities of long-term
obligations 920 490
-------- --------
TOTAL CURRENT LIABILITIES 54,219 43,401
LONG-TERM OBLIGATIONS 26,412 22,474
DEFERRED INCOME TAXES 9,150 11,536
SHAREHOLDERS' EQUITY:
Common stock 1,823 1,797
Additional capital 19,955 17,848
Retained earnings 155,375 141,729
Cumulative translation adjustments 175 (835)
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TOTAL SHAREHOLDERS' EQUITY 177,328 160,539
-------- --------
$267,109 $237,950
======== ========
See notes to unaudited condensed consolidated financial statements.
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
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October 1, October 2,
1994 1993
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(In thousands)
Operating activities:
Net earnings $19,098 $14,592
Depreciation and amortization 9,720 9,055
Deferred income taxes (2,900) (1,136)
Changes in operating assets and liabilities:
Accounts receivable (13,857) (11,126)
Inventories (3,770) (910)
Other current assets 2,469 1,226
Accounts payable 4,845 3,511
Accrued expenses and other liabilities 3,830 4,362
Income taxes 1,713 1,571
Other (net) 2,035 (1,396)
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Net cash provided by operating activities 23,183 19,749
Investing activities:
Additions to property, plant and equipment (12,010) (9,989)
Sales of marketable securities available-
for sale 17,984
Purchase of marketable securities available- (29,329) (5,919)
for-sale
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Net cash used in investing activities (23,355) (15,908)
Financing activities:
Additional long-term borrowings 6,000
Reduction of long-term obligations (1,632) (813)
Unexpended debt proceeds (5,041) 589
Dividends paid (5,452) (4,388)
Stock option plans 2,133 729
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Net cash used in financing activities (3,992) (3,883)
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Net decrease in cash and cash eqivalents (4,164) (42)
Beginning cash and cash equivalents 7,310 5,921
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Ending cash and cash equivalents $ 3,146 $ 5,879
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See notes to unaudited condensed consolidated financial statements.
BALDOR ELECTRIC COMPANY AND AFFILIATE
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
October 1, 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 nine months ended
October 1, 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
re-evaluates 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
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Results of Operations
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RESULTS OF OPERATIONS
For the eleventh straight quarter, sales and earnings set records for both
the quarter and the year-to-date amounts. Sales for the first nine months of
1994 were $307,720,000, up 14.9% over sales of $267,923,000 for the first
nine months of 1993. Third quarter 1994 sales of $105,432,000 were up 16.2%
over the third quarter 1993 sales of $90,703,000. International sales
(exports and sales by foreign affiliates), which comprise 12.9% of total
year-to-date sales, also increased for the third quarter, up 11.4% over the
third quarter of 1993. International sales for the first nine months of 1994
were up 14.4% over the same period last year.
Sales growth remained broad-based across both geographic regions and
industries. Pricing continued to hold at approximately 2.5% above year-end
1993 levels. Sales of drives (motors+controls) remained strong. Year-to-date,
drives sales have increased at about twice the rate of motor sales.
Third quarter 1994 net earnings of $6,818,000 were up 40.5% over third
quarter 1993 net earnings of $4,854,000. Net earnings for the nine-month
period were $19,098,000 for 1994 compared to $14,592,000 for 1993, a 30.9%
increase. The pre-tax margins for 1994 exceeded 10.0% for both the quarter
and the year-to-date. Pre-tax margins have not been at 10.0% or above since
1985. For both the quarter and the year-to-date, margins have benefitted
from higher sales volumes, slightly higher selling prices, and the effects of
productivity and cost improvements.
The third quarter 1994 gross margin was 29.1% compared to 28.2% for the third
quarter of 1993. Material costs were up slightly over 1% from year-end with
increases in steel, aluminum, and grey iron castings. Manufacturing cost
reductions continued 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.
Third quarter 1994 selling and administrative expenses as a percent of sales
were 17.2%, below the 1993 third quarter of 17.7%. Year-to-date selling and
administrative expenses were 17.4% of sales compared to 18.1% of sales for
1993. The decrease was primarily in administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
Through the first nine months of 1994, the Company's financial position
remained strong with cash and marketable securities over $37.4 million.
Working capital increased to $120.2 million at October 1, 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 13.0% at
October 1, 1994, compared to 12.3% at January 1, 1994. The October 1, 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 October 1, 1994 was 3.2 to 1.0 compared to 3.5 to 1.0 at January 1,
1994.
At their meeting on November 7, 1994, the Board of Directors declared a
quarterly cash dividend of $0.12 per share payable on January 3, 1995 to
shareholders of record on December 9, 1994.
PART II. OTHER INFORMATION
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)
November 15, 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 Financial Data Schedules - filed herewith
EXHIBIT 11
BALDOR ELECTRIC COMPANY AND AFFILIATES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS NINE MONTHS
ENDED ENDED
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Oct 1, Oct 2, Oct 1, Oct 2,
1994 1993 1994 1993
(In thousands, except per share data)
Primary
Weighted average shares outstanding 18,216 17,904 18,149 17,840
Dilutive stock options based on the
treasury stock method using the
average market price 810 858 830 805
------- ------- ------- ------
Total 19,026 18,762 18,979 18,645
======= ======= ======= ======
Net Earnings $ 6,818 $ 4,854 $ 19,098 $ 14,592
======== ======== ======== ========
Per Share Earnings $ 0.36 $ 0.26 $ 1.01 $ 0.78
======== ======== ======== ========
Fully Diluted
Weighted average shares outstanding 18,216 17,904 18,149 17,840
Dilutive stock options based on the
treasury stock method using the
year-end market price, if higher
than average market price 838 882 838 881
-------- -------- -------- --------
Total 19,054 18,786 18,987 18,721
======== ======== ======== ========
Net Earnings $ 6,818 $ 4,854 $ 19,098 $ 14,592
======== ======== ======== ========
Per Share Earnings $ 0.36 $ 0.26 $ 1.01 $ 0.78
======== ======== ======== ========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
These unaudited numbers should be reviewed in conjunction with the Company's
Annual Report for the year ended January 1, 1994.
</LEGEND>
<CIK> 0000009342
<NAME> BALDOR ELECTRIC COMPANY
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JUL-03-1994
<PERIOD-END> OCT-01-1994
<CASH> 3,146
<SECURITIES> 34,259
<RECEIVABLES> 75,223
<ALLOWANCES> 2,225
<INVENTORY> 57,389
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<PP&E> 156,143
<DEPRECIATION> 81,279
<TOTAL-ASSETS> 267,109
<CURRENT-LIABILITIES> 54,219
<BONDS> 26,412
<COMMON> 1,823
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<OTHER-SE> 175,505
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