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 March 30, 1996
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period
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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
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At March 30, 1996, there were 26,018,021 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
March 30, April 1,
1996 1995
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(In thousands, except share data)
Net sales $121,553 $114,585
Other income (net) 735 528
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$122,288 $115,113
Cost and expenses:
Cost of goods sold 85,742 81,027
Selling and administrative 20,592 19,444
Profit sharing 1,795 1,754
Interest 620 318
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108,749 102,543
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Earnings before income taxes 13,539 12,570
Income taxes 5,212 4,899
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Net earnings $ 8,327 $ 7,671
======== ========
Net earnings per common share $0.30 $0.26
===== =====
Dividends paid per common share $0.09 $0.08
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Weighted average common
shares outstanding 27,869,647 28,689,293
========== ==========
See notes to unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 30, DECEMBER 30,
1996 1995
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ASSETS (In thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 17,262 $ 6,322
Marketable securities 22,292 28,487
Receivables, less allowances of
$2,900,000 and $2,800,000,
respectively 81,132 77,768
Inventories:
Finished products 65,930 61,681
Work-in-process 12,929 11,978
Raw materials 36,950 36,972
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115,809 110,631
LIFO valuation adjustment (deduction) (27,048) (26,942)
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88,761 83,689
Other current and deferred tax assets 12,368 15,829
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TOTAL CURRENT ASSETS 221,815 212,095
OTHER ASSETS 12,671 12,296
PROPERTY, PLANT AND EQUIPMENT 184,944 182,214
Allowances for depreciation and
amortization (deduction) (96,886) (93,143)
-------- --------
88,058 89,071
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$322,544 $313,462
======== ========
See notes to unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 30, DECEMBER 30,
1996 1995
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LIABILITIES AND SHAREHOLDERS' EQUITY (In thousands)
CURRENT LIABILITIES:
Accounts payable $ 22,572 $ 18,996
Employee compensation 7,194 5,110
Profit sharing 1,795 7,168
Anticipated warranty costs 4,200 4,100
Accrued insurance obligations 13,218 12,627
Other accrued expenses 13,539 16,080
Income taxes 5,055 1,967
Current maturities of long-term
obligations 977 978
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TOTAL CURRENT LIABILITIES 68,550 67,026
LONG-TERM OBLIGATIONS 63,227 25,255
DEFERRED INCOME TAXES 9,694 9,804
SHAREHOLDERS' EQUITY:
Common stock 2,830 2,817
Additional capital 33,324 32,476
Retained earnings 188,353 182,354
Cumulative translation adjustments 910 1,246
Treasury stock, at cost (44,344) (7,516)
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TOTAL SHAREHOLDERS' EQUITY 181,073 211,377
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$322,544 $313,462
======== ========
See notes to unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
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March 30, April 1,
1996 1995
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(In thousands)
Operating activities:
Net earnings $ 8,327 $ 7,671
Depreciation and amortization 4,043 3,388
Deferred income taxes (698) (751)
Changes in operating assets and liabilities:
Receivables (3,464) (2,601)
Inventories (5,072) (9,269)
Other current assets 4,048 1,986
Accounts payable 3,576 1,714
Accrued expenses and other liabilities (5,139) (3,003)
Income taxes 3,088 4,520
Other (net) (517) 1,825
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Net cash provided by operating activities 8,192 5,480
Investing activities:
Additions to property, plant and equipment (3,030) (4,574)
Sales of available-for-sale securities 19,000 6,921
Purchases of available-for-sale securities (12,805) (18,217)
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Net cash provided by (used in) investing
activities 3,165 (15,870)
Financing activities:
Additional long-term borrowings 38,000
Reduction of long-term obligations (29) (18)
Unexpended debt proceeds (93) 4,711
Dividends paid (2,328) (2,202)
Stock option plans 601 297
Common stock repurchased (40,110)
Contributions to benefit plans 3,542
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Net cash provided by (used in) financing
activities (417) 2,788
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Net increase (decrease) in cash and cash
equivalents 10,940 (7,602)
Beginning cash and cash equivalents 6,322 8,848
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Ending cash and cash equivalents $17,262 $ 1,246
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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
March 30, 1996
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 30, 1995. 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 three months ended
March 30, 1996, may not be indicative of the results that may be expected for
the fiscal year ending December 28, 1996.
RECLASSIFICATION: The Company has reclassified the presentation of certain
prior year information to be consistent with the presentation in the current
year.<PAGE>
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 seventeenth consecutive quarter, sales and earnings set records.
Sales for the first quarter of 1996 were $121,553,000, up 6.1% over sales of
$114,585,000 for the first quarter of 1995. International sales (exports and
sales by foreign affiliates), which comprise 13.7% of total first quarter
sales, were up 16.9% over the same period last year.
Sales growth was broad-based with solid growth across many product lines,
industries, and geographic regions. Both distributor and OEM sales increased
for the quarter. For the first quarter of 1996 sales of drives (motors +
controls) increased at over three times the overall rate of sales. Pricing
for first quarter 1996 increased over first quarter 1995 levels by over 3%.
First quarter 1996 net earnings of $8,327,000 were up 8.6% over first quarter
1995 net earnings of $7,671,000. For the quarter, margins have benefitted
from flattening material costs and the effects of productivity and other cost
improvements.
The first quarter 1996 gross margin was 29.5% compared to 29.3% for the first
quarter of 1995. Increases in raw material costs since the first quarter of
1995 have been offset by increases in selling prices since the first quarter
of 1995.
First quarter 1996 selling and administrative expenses of 16.9% remained flat
with the second, third and fourth quarters of 1995 and were down from 17.0%
in the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Through the first three months of 1996, the Company's financial position
remained strong with cash and marketable securities at $39.6 million.
Working capital increased to $153.3 million at March 30, 1996, from $145.1
million at December 30, 1995. The ratio of long-term borrowing to total
capitalization (shareholders' equity and long-term borrowings) was 25.9% at
March 30, 1996, compared to 10.7% at December 30, 1995. This increase was
due to the mid-term debt used to fund the repurchase of 2,000,000 common
shares from the estate of Mr. G. A. Schock. The current ratio at March 30,
1996 was 3.2 compared to 3.2 at December 30, 1995.
At its meeting on May 4, 1996, the Board of Directors declared an 11%
increase in the regular quarterly cash dividend to $0.10 per share payable on
June 28, 1996 to shareholders of record on June 7, 1996.
<PAGE>
Item 2. Changes in Securities
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At its February 5, 1996 meeting, the Board of Directors updated the
Shareholder Rights Plan as discussed under Item 6(b).
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 filed a Form 8-K on March 22, 1996 which disclosed
the changes, as outlined below, to the Company's Rights Agreement
dated May 6, 1988.
At a meeting held on February 5, 1996, the Board of Directors of
Baldor Electric Company approved Amendment No. 1 to the Rights
Agreement dated May 6, 1988 between the Company and Wachovia
Bank of North Carolina, N.A. as Rights Agent. The Amendment
changed certain provisions of the Rights Agreement such that (i)
the expiration date was changed from May 25, 1998 to May 25, 2008;
(ii) the Purchase Price was changed from $75.00 to $120.00; and
(iii) the Company no longer needed to reserve any Common Stock for
issuance pursuant to the Rights Agreement until the Rights become
exercisable. All of these changes were to be effective as of
February 5, 1996. The foregoing description of the Amendment does
not purport to be complete and is qualified in its entirety by
reference to the Amendment.
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)
May 13, 1996 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)
<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(i) Omitted - Inapplicable
3(ii) 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
99 Omitted - Inapplicable
EXHIBIT 11
BALDOR ELECTRIC COMPANY AND AFFILIATES
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED
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March 30, April 1,
1996 1995
(In thousands, except per share data)
Primary
Weighted average shares outstanding 26,897 27,502
Dilutive stock options based on the
treasury stock method using the
average market price 973 1,187
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Total 27,870 28,689
========= =========
Net Earnings $ 8,327 $ 7,671
========= =========
Per Share Earnings $ 0.30 $ 0.26
========= =========
Fully Diluted
Weighted average shares outstanding 26,897 27,502
Dilutive stock options based on the
treasury stock method using the
year-end market price, if higher
than average market price 949 1,199
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Total 27,846 28,701
========= =========
Net Earnings $ 8,327 $ 7,671
========= =========
Per Share Earnings $ 0.30 $ 0.26
========= =========
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