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 1, 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 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 July 1, 1995, there were 18,415,511 shares of the registrant's common
stock outstanding.
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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 SIX MONTHS ENDED
JULY 1 JULY 2 JULY 1 JULY 2
1995 1994 1995 1994
------------------- ---------------------
(In thousands, except share data)
Net sales $121,839 $104,812 $236,424 $202,288
Other income (net) 578 501 1,106 685
--------- -------- -------- --------
$122,417 $105,313 $237,530 $202,973
Cost and expenses:
Cost of goods sold 86,141 74,667 167,168 144,237
Selling and
administrative 20,585 18,022 40,029 35,341
Profit sharing 1,822 1,415 3,576 2,646
Interest 321 386 639 618
-------- -------- -------- --------
108,869 94,490 211,412 182,842
-------- -------- -------- --------
Earnings before income
taxes 13,548 10,823 26,118 20,131
Income taxes 5,287 4,221 10,186 7,851
-------- -------- -------- --------
Net earnings $ 8,261 $ 6,602 $ 15,932 $ 12,280
======== ======== ======== ========
Net earnings per common
share $0.43 $0.35 $0.83 $0.65
===== ===== ===== =====
Dividends paid per common
share $0.12 $0.10 $0.24 $0.20
===== ===== ===== =====
Weighted average common
shares outstanding 19,206,742 18,999,497 19,159,668 18,974,984
========== ========== ========== ==========
See notes to unaudited condensed consolidated financial statements.
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BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JULY 1 DECEMBER 31
1995 1994
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ASSETS (In thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 9,974 $ 8,848
Marketable securities 17,348 25,996
Accounts receivable, less allowances
of $2,500,000 and $2,250,000,
respectively 78,343 71,003
Inventories:
Finished products 59,246 48,516
Work-in-process 10,921 11,933
Raw materials 32,841 29,408
-------- --------
103,008 89,857
LIFO valuation adjustment (deduction) (27,046) (25,759)
-------- --------
75,962 64,098
Deferred tax assets 5,683 4,801
Other current assets 4,288 6,426
-------- --------
TOTAL CURRENT ASSETS 191,598 181,172
OTHER ASSETS 13,466 20,481
PROPERTY, PLANT AND EQUIPMENT 173,289 163,039
Allowances for depreciation and
amortization (deduction) (87,750) (81,537)
-------- --------
85,539 81,502
-------- --------
$290,603 $283,155
======== ========
See notes to unaudited condensed consolidated financial statements.
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BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JULY 1 DECEMBER 31
1995 1994
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(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 18,268 $ 18,802
Employee compensation 4,959 5,776
Profit sharing 3,576 5,789
Anticipated warranty costs 4,100 3,700
Accrued insurance obligations 10,958 9,156
Other accrued expenses 12,927 15,697
Income taxes 2,908 2,777
Current maturities of long-term
obligations 973 925
-------- --------
TOTAL CURRENT LIABILITIES 58,669 62,622
LONG-TERM OBLIGATIONS 25,420 26,303
DEFERRED INCOME TAXES 9,111 9,968
SHAREHOLDERS' EQUITY:
Common stock 1,842 1,831
Additional capital 22,800 21,958
Retained earnings 171,815 160,024
Cumulative translation adjustments 946 449
-------- --------
TOTAL SHAREHOLDERS' EQUITY 197,403 184,262
-------- --------
$290,603 $283,155
======== ========
See notes to unaudited condensed consolidated financial statements.
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BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED
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JULY 1 JULY 2
1995 1994
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(In thousands)
Operating activities:
Net earnings $15,932 $12,280
Depreciation and amortization 7,086 6,496
Deferred income taxes (1,912) (1,840)
Changes in operating assets and liabilities:
Accounts receivable (7,590) (12,156)
Inventories (11,864) (4,931)
Other current assets 2,138 2,185
Accounts payable (534) 4,325
Accrued expenses and other liabilities (3,598) (1,344)
Income taxes 131 195
Other (net) 2,080 2,518
------- --------
Net cash provided by operating activities 1,869 7,728
Investing activities:
Additions to property, plant and equipment (10,816) (9,005)
Sales of marketable securities available-
for-sale 30,307 14,045
Purchase of marketable securities available-
for-sale (21,214) (15,003)
------- -------
Net cash used in investing activities (1,723) ( 9,963)
Financing activities:
Additional long-term borrowings 6,000
Reduction of long-term obligations (835) (1,612)
Unexpended debt proceeds 5,373 (4,903)
Dividends paid (4,411) (3,629)
Stock option plans 853 1,730
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Net cash provided by (used in) financing
activities 980 (2,414)
------- -------
Net increase (decrease) in cash and
cash eqivalents 1,126 (4,649)
Beginning cash and cash equivalents 8,848 7,310
------- -------
Ending cash and cash equivalents $ 9,974 $ 2,661
======= =======
See notes to unaudited condensed consolidated financial statements.
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BALDOR ELECTRIC COMPANY AND AFFILIATES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 1, 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 six months ended July
1, 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
in retained earnings. Interest on securities classified as available-for-
sale is included in other income.
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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 fourteenth consecutive quarter, sales and earnings set records for both
the quarter and the year-to-date periods. Second quarter sales of $121,839,000
were up 16.2% over second quarter 1994 sales of $104,812,000. Year-to-date
1995 sales of $236,424,000 were up 16.9% over year-to-date 1994 sales of
$202,288,000. International sales (exports and sales by foreign affiliates),
which comprise 13.2% of total year-to-date sales, were also strong, up 17.4%
in the second quarter and up 19.1% year-to-date over the same periods in
1994.
Sales growth was broad-based with good growth across numerous product lines,
industries, and geographic regions. Both distributor and OEM business was
strong with some of the core OEM markets such as Food Processing, Blowers and
Fans, and Pumps doing especially well. Sales of drives (motors + controls)
also remained strong with year-to-date sales of these products increasing at
about four times the rate of motor sales.
Second quarter 1995 earnings of $8,261,000 were up 25.1% over second quarter
1994 and year-to-date 1995 earnings of $15,932,000 were up 29.7% over the
first six months of 1994. The Company's gross margin for the second quarter
of 1995 was 29.3% compared to 29.3% for the first quarter of 1995 and 28.8%
for the second quarter of 1994. Pre-tax margins were 11.1% for the second
quarter and 11.0% for the first six 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.
Second quarter 1995 selling and administrative expense at 16.9% of net sales
is the lowest since the second quarter of 1984 and continued an improving
trend, down from 17.0% of net sales in the first quarter of 1995 and 17.2% of
net sales in the second quarter of 1994.
LIQUIDITY AND CAPITAL RESOURCES
Through the first six months of 1995, the Company's financial position
remains strong with cash and marketable securities over $27.3 million.
Working capital increased to $132.9 million at July 1, 1995, from $118.6
million at December 31, 1994. The ratio of long-term borrowing to total
capitalization (shareholders' equity and long-term borrowings) was 11.4% at
July 1, 1995, compared to 12.5% at December 31, 1994. The current ratio at
July 1, 1995 remains strong at 3.3 times.
At their meeting on August 7, 1995, the Board of Directors declared a three-
for-two stock split effected in the form of a 50% stock dividend to be
distributed September 6, 1995 to shareholders of record on August 18, 1995.
The Board also declared a quarterly cash dividend of $.09 per share on the
increased number of shares payable September 29, 1995 to shareholders of record
on September 18, 1995. Lastly, the Board of Directors approved a stock
repurchase program which authorizes the company to purchase up to one million
shares through December 31, 1996.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
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On May 6, 1995, the Company held its Annual Meeting of Shareholders at which
the only item voted on was the election of three Directors to the Company's
nine person Board of Directors. The following is a list of the Board's slate
of nominees (who were the only nominees) each of whom was elected, and the
results of shareholder voting:
Votes for the Votes Broker
Nominee Election of Nominee Withheld Nonvotes
--------------------- ------------------- -------- --------
O. A. Baumann 15,026,097 730,700 N/A
Robert L. Proost 15,044,821 711,976 N/A
George A. Schock 15,015,364 741,433 N/A
Messers Roland S. Boreham, Jr.; R. L. Qualls; Jefferson W. Asher, Jr.; Fred
C. Ballman; Robert J. Messey; and Willis J. Wheat are the remaining board
members, each of whom is expected to serve out his respective term.
Item 6. Exhibits and Reports on Form 8-K
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a. See Exhibit Index attached hereto.
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 14, 1995 By: /s/Lloyd G. Davis
--------------------- -------------------
Lloyd G. Davis - Chief Financial
Officer and Vice-President -
Finance (on behalf of the
Registrant and as principal
financial officer)
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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 SIX MONTHS
ENDED ENDED
------------------ -----------------
July 1 July 2 July 1 July 2
1995 1994 1995 1994
(In thousands, except per share data)
Primary
Weighted average shares outstanding 18,389 18,160 18,362 18,116
Dilutive stock options based on the
treasury stock method using the
average market price 818 839 798 859
------ ------ ------ ------
Total 19,207 18,999 19,160 18,975
====== ====== ====== ======
Net Earnings $ 8,261 $ 6,602 $ 15,932 $ 12,280
======== ======== ======== ========
Per Share Earnings $ 0.43 $ 0.35 $ 0.83 $ 0.65
======== ======== ======== ========
Fully Diluted
Weighted average shares
outstanding 18,389 18,160 18,362 18,116
Dilutive stock options based on the
treasury stock method using the
year-end market price, if higher
than average market price 807 838 807 838
------ ------ ------ ------
Total 19,196 18,998 19,169 18,954
======= ====== ====== ======
Net Earnings $ 8,261 $ 6,602 $ 15,932 $ 12,280
======== ======== ======== ========
Per Share Earnings $ 0.43 $ 0.35 $ 0.83 $ 0.65
======== ======== ======== ========
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