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 September 30, 1995
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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 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 September 30, 1995, there were 27,708,446 shares of the registrant's
common stock outstanding.
<PAGE>
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
SEPT 30 OCT 1 SEPT 30 OCT 1
1995 1994 1995 1994
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(In thousands, except share data)
Net sales $120,044 $105,432 $356,468 $307,720
Other income (net) 745 453 1,851 1,138
--------- -------- -------- --------
$120,789 $105,885 $358,319 $308,858
Cost and expenses:
Cost of goods sold 84,854 74,787 252,022 219,024
Selling and
administrative 20,261 18,098 60,290 53,440
Profit sharing 1,808 1,488 5,384 4,134
Interest 321 335 960 952
-------- -------- -------- --------
107,244 94,708 318,656 277,550
-------- -------- -------- --------
Earnings before income
taxes 13,545 11,177 39,663 31,308
Income taxes 5,269 4,359 15,455 12,210
-------- -------- -------- --------
Net earnings $ 8,276 $ 6,818 $ 24,208 $ 19,098
======== ======== ======== ========
Net earnings per common
share $0.29 $0.24 $0.84 $0.67
===== ===== ===== =====
Dividends paid per common
share $0.09 $0.07 $0.25 $0.20
===== ===== ===== =====
Weighted average common
shares outstanding 29,019,459 28,539,209 28,820,949 28,468,409
========== ========== ========== ==========
See notes to unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30 DECEMBER 31
1995 1994
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ASSETS (In thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 1,931 $ 8,848
Marketable securities 34,839 25,996
Accounts receivable, less allowances
of $2,800,000 and $2,250,000,
respectively 80,131 71,003
Inventories:
Finished products 56,787 48,516
Work-in-process 11,008 11,933
Raw materials 35,296 29,408
-------- --------
103,091 89,857
LIFO valuation adjustment (deduction) (27,544) (25,759)
-------- --------
75,547 64,098
Deferred tax assets 6,841 4,801
Other current assets 5,758 6,426
-------- --------
TOTAL CURRENT ASSETS 205,047 181,172
OTHER ASSETS 13,272 20,481
PROPERTY, PLANT AND EQUIPMENT 177,807 163,039
Allowances for depreciation and
amortization (deduction) (90,901) (81,537)
-------- --------
86,906 81,502
-------- --------
$305,225 $283,155
======== ========
See notes to unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30 DECEMBER 31
1995 1994
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(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 21,319 $ 18,802
Employee compensation 6,182 5,776
Profit sharing 5,384 5,789
Anticipated warranty costs 4,100 3,700
Accrued insurance obligations 11,424 9,156
Other accrued expenses 13,201 15,697
Income taxes 4,947 2,777
Current maturities of long-term
obligations 972 925
-------- --------
TOTAL CURRENT LIABILITIES 67,529 62,622
LONG-TERM OBLIGATIONS 25,377 26,303
DEFERRED INCOME TAXES 8,814 9,968
SHAREHOLDERS' EQUITY:
Common stock 2,771 1,831
Additional capital 22,273 21,958
Retained earnings 177,623 160,024
Cumulative translation adjustments 838 449
-------- --------
TOTAL SHAREHOLDERS' EQUITY 203,505 184,262
-------- --------
$305,225 $283,155
======== ========
See notes to unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
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SEPT 30 OCT 1
1995 1994
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(In thousands)
Operating activities:
Net earnings $24,208 $19,098
Depreciation and amortization 11,153 9,720
Deferred income taxes (3,384) (2,900)
Changes in operating assets and liabilities:
Accounts receivable (9,678) (13,857)
Inventories (11,449) (3,770)
Other current assets 668 2,469
Accounts payable 2,517 4,845
Accrued expenses and other liabilities 173 3,830
Income taxes 2,170 1,713
Other (net) 2,432 2,035
------- --------
Net cash provided by operating activities 18,810 23,183
Investing activities:
Additions to property, plant and equipment (16,105) (12,010)
Sales of marketable securities available-
for-sale 36,639 17,984
Purchase of marketable securities available-
for-sale (44,996) (29,329)
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Net cash used in investing activities (24,462) (23,355)
Financing activities:
Additional long-term borrowings 6,000
Reduction of long-term obligations (879) (1,632)
Unexpended debt proceeds 5,264 (5,041)
Dividends paid (6,905) (5,452)
Stock option plans 1,255 2,133
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Net cash used in financing activities (1,265) (3,992)
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Net decrease in cash and cash equivalents (6,917) (4,164)
Beginning cash and cash equivalents 8,848 7,310
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Ending cash and cash equivalents $ 1,931 $ 3,146
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See notes to unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
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
December 31, 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
September 30, 1995, may not be indicative of the results that may be expected
for the fiscal year ending December 30, 1995.
MARKETABLE SECURITIES: The Company adopted Statement of Financial Accounting
Standards No. 115 - "Accounting for Certain Investments in Debt and Equity
Securities" in the first quarter of 1994. Adoption of this standard did not
have a material impact on the Company's financial statements. Marketable
securities are available for sale to support current operations or to take
advantage of other investment opportunities. These securities are stated at
estimated fair value with unrealized gains and losses, net of tax, included
as an adjustment to shareholders' equity. Interest on securities classified
as available-for-sale is included in other income.
<PAGE>
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
For the fifteenth consecutive quarter, sales and earnings set records for
both the quarter and the year-to-date amounts. Third quarter sales of
$120,044,000 were up 13.9% over third quarter 1994 sales of $105,432,000.
Year-to-date 1995 sales of $356,468,000 were up 15.8% over year-to-date 1994
sales of $307,720,000. International sales (exports and sales by foreign
affiliates), which comprise 13.2% of total year-to-date sales, were also
strong, up 21.2% in the third quarter and up 19.0% year-to-date over the same
periods in 1994.
Sales growth continued broad-based with increases across numerous product
lines, industries, and geographic regions. Both distributor and OEM business
remained solid with distributor sales being somewhat stronger than OEM sales
in the third quarter. During the third quarter, the distributor/OEM split
returned to about 50/50. Sales of drives (motors + controls) remained strong
with year-to-date sales of these products increasing at over four times the
rate of motor sales. A 3.3% price increase was announced in the third quarter
with an effective date of October 2, 1995. The previous price increase of 4.5%
was effective in December of 1994.
Third quarter 1995 earnings of $8,276,000 were up 21.4% over third quarter
1994 and year-to-date 1995 earnings of $24,208,000 were up 26.8% over the
first nine months of 1994. The Company's gross margin for the third quarter
of 1995 was 29.3% compared to 29.3% for the first and second quarter of 1995
and 29.1% for the third quarter of 1994. Year-to-date 1995 gross margin was
29.3% compared to 28.8% for the same period of 1994. Pre-tax margins were
11.3% for the third quarter and 11.1% for the first nine months of 1995. For
both the quarter and year-to-date, margins have benefitted from higher sales
volumes and the effects of productivity and cost improvements.
Third quarter 1995 selling and administrative expenses at 16.9% of net sales
were flat with second quarter and down from 17.2% of net sales in the third
quarter of 1994.
LIQUIDITY AND CAPITAL RESOURCES
Through the first nine months of 1995, the Company's financial position
remains strong with cash and marketable securities over $36.8 million.
Working capital increased to $137.5 million at September 30, 1995, from
$118.6 million at December 31, 1994. The ratio of long-term borrowing to
total capitalization (shareholders' equity and long-term borrowings)
decreased to 11.1% at September 30, 1995, from 12.5% at December 31, 1994.
The current ratio at September 30, 1995 remains strong at 3.0 times.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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a. Exhibits - See 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 13, 1995 By: /s/ Lloyd G. Davis
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Lloyd G. Davis - Chief Financial
Officer and Vice-President -
Finance (on behalf of the
Registrant and as principal
financial officer)
<PAGE>
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
Exhibits
Number
- -------- --------------------------------------------------------
2 Omitted - Inapplicable
3 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
----------------- ----------------
Sept 30 Oct 1 Sept 30 Oct 1
1995 1994 1995 1994
(In thousands, except per share data)
Primary
Weighted average shares outstanding 27,678 27,324 27,587 27,224
Dilutive stock options based on the
treasury stock method using the
average market price 1,341 1,215 1,234 1,244
------- ------ ------- ------
Total 29,019 28,539 28,821 28,468
======== ======= ======= =======
Net Earnings $ 8,276 $ 6,818 $24,208 $19,098
======== ======= ======= =======
Per Share Earnings $ 0.29 $ 0.24 $ 0.84 $ 0.67
======== ======== ======= =======
Fully Diluted
Weighted average shares outstanding 27,678 27,324 27,587 27,224
Dilutive stock options based on the
treasury stock method using the
year-end market price, if higher
than average market price 1,426 1,257 1,426 1,257
-------- ------- ------- -------
Total 29,104 28,581 29,013 28,481
======== ======= ======= =======
Net Earnings $ 8,276 $ 6,818 $24,208 $19,098
======== ======= ======= =======
Per Share Earnings $ 0.28 $ 0.24 $ 0.83 $ 0.67
======== ======== ======= =======
Note: Share and per share data reflect the third quarter three-for-two stock
split.
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