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 28, 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 from to
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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 72908
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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 September 28, 1996, there were 26,171,480 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 28 SEPT 30 SEPT 28 SEPT 30
1996 1995 1996 1995
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(In thousands, except share data)
Net sales $125,111 $120,044 $376,570 $356,468
Other income (net) 579 745 2,032 1,851
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125,690 120,789 378,602 358,319
Cost and expenses:
Cost of goods sold 87,800 84,854 265,023 252,022
Selling and
administrative 20,993 20,261 63,446 60,290
Profit sharing 2,063 1,808 5,697 5,384
Interest 633 321 2,108 960
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111,489 107,244 336,274 318,656
-------- -------- -------- --------
Earnings before income
taxes 14,201 13,545 42,328 39,663
Income taxes 5,467 5,269 16,296 15,455
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Net earnings $ 8,734 $ 8,276 $ 26,032 $ 24,208
======== ======== ======== ========
Net earnings per common
share $0.32 $0.29 $0.95 $0.84
===== ===== ===== =====
Dividends paid per common
share $0.10 $0.09 $0.29 $0.25
===== ===== ===== =====
Weighted average common
shares outstanding 27,047,655 29,019,459 27,281,774 28,820,949
========== ========== ========== ==========
See the notes to the unaudited condensed consolidated financial statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 28 DECEMBER 30
1996 1995
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ASSETS (In thousands)
CURRENT ASSETS:
Cash and cash equivalents $ 8,418 $ 6,322
Marketable securities 17,152 28,487
Receivables, less allowances of
$3,200 and $2,800, respectively 82,880 77,768
Inventories:
Finished products 64,612 61,681
Work-in-process 13,570 11,978
Raw materials 37,959 36,972
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116,141 110,631
LIFO valuation adjustment (deduction) (26,045) (26,942)
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90,096 83,689
Other current and deferred tax assets 19,580 15,829
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TOTAL CURRENT ASSETS 218,126 212,095
OTHER ASSETS 12,536 12,296
PROPERTY, PLANT AND EQUIPMENT 193,719 182,214
Allowances for depreciation and
amortization (deduction) (103,591) (93,143)
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90,128 89,071
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$ 320,790 $ 313,462
========= =========
The Condensed Consolidated Balance Sheet at December 30,1995, has been
derived from the audited Consolidated Balance Sheet at that date.
Also, see the notes to the unaudited condensed consolidated financial
statements.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 28 DECEMBER 30
1996 1995
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LIABILITIES AND SHAREHOLDERS' EQUITY (In thousands)
CURRENT LIABILITIES:
Accounts payable $ 20,963 $ 18,996
Employee compensation 5,887 5,110
Profit sharing 5,697 7,168
Anticipated warranty costs 4,500 4,100
Accrued insurance obligations 14,541 12,627
Other accrued expenses 17,359 16,080
Income taxes 1,967
Current maturities of long-term
obligations 1,027 978
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TOTAL CURRENT LIABILITIES 69,974 67,026
LONG-TERM OBLIGATIONS 47,254 25,255
DEFERRED INCOME TAXES 9,480 9,804
SHAREHOLDERS' EQUITY:
Common stock 2,856 2,817
Additional capital 36,197 32,476
Retained earnings 200,832 182,354
Cumulative translation adjustments 662 1,246
Treasury stock, at cost (46,465) (7,516)
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TOTAL SHAREHOLDERS' EQUITY 194,082 211,377
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$320,790 $313,462
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The Condensed Consolidated Balance Sheet at December 30, 1995, has been
derived from the audited Consolidated Balance Sheet at that date.
Also, see the notes to the 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 28 SEPT 30
1996 1995
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(In thousands)
Operating activities:
Net earnings $26,032 $24,208
Depreciation and amortization 12,872 11,153
Deferred income taxes (3,973) (3,384)
Changes in operating assets and liabilities:
Receivables (5,512) (9,678)
Inventories (6,407) (11,449)
Other current assets 1,528 668
Accounts payable 1,967 2,517
Accrued expenses and other liabilities 6,618 173
Income taxes (3,597) 2,170
Other (net) (1,233) 2,432
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Net cash provided by operating activities 28,295 18,810
Investing activities:
Additions to property, plant and equipment (13,560) (16,105)
Sales of available-for-sale securities 38,200 36,639
Purchases of available-for-sale securities (26,865) (44,996)
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Net cash provided by (used in) investing
activities (2,225) (24,462)
Financing activities:
Additional long-term borrowings 38,000
Reduction of long-term obligations (15,952) (879)
Unexpended debt proceeds 440 5,264
Dividends paid (7,554) (6,905)
Stock option plans 2,580 1,255
Common stock repurchased (41,488)
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Net cash provided by (used in) financing
activities (23,974) (1,265)
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Net increase (decrease) in cash and cash
equivalents 2,096 (6,917)
Beginning cash and cash equivalents 6,322 8,848
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Ending cash and cash equivalents $ 8,418 $ 1,931
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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 28, 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 nine months ended
September 28, 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 nineteenth consecutive quarter, sales and earnings set records for
both the quarter and the year-to-date periods. Sales for the third quarter
of 1996 were $125,111,000, up 4.2% over sales of $120,044,000 for the third
quarter of 1995. Year-to-date 1996 sales of $376,570,000 were up 5.6% over
year-to-date 1995 sales of $356,468,000. International sales (exports and
sales by foreign affiliates), which comprise 14.2% of total year-to-date
sales, were up 7.1% in the third quarter and up 13.6% year-to-date over the
same periods in 1995.
Sales growth was broad-based with growth across several product lines,
industries, and geographic regions. Both distributor and OEM sales increased
for the quarter and year-to-date. There continued to be a good balance
between distributor and OEM sales for the first nine months. Year-to-date
1996 sales of drives (motors + controls) increased at over two and one-half
times the overall rate of sales. Year-to-date 1996 pricing increased over
year-to-date 1995 levels by approximately 3%.
Third quarter 1996 net earnings of $8,734,000 were up 5.5% over third quarter
1995 and year-to-date 1996 net earnings of $26,032,000 were up 7.5% over the
first nine months of 1995. Earnings per common share were $0.32 for the third
quarter of 1996 and $0.95 for the first nine months of 1996, up 10.3% and
13.1% respectively over 1995 amounts. Earnings per common share increased
more than net earnings due to the share buy-back program in place during
1996. Through the first nine months of 1996, 2,183,000 common shares have
been repurchased including the 2,000,000 common shares repurchased from the
Estate of Mr. G.A. Schock in February.
The third quarter 1996 gross margin was 29.8% and the year-to-date 1996 gross
margin was 29.6% compared to 29.3% for both the third quarter of 1995 and
year-to-date 1995. For the quarter and the year, margins have benefitted
from the effects of productivity and other cost improvements.
Third quarter 1996 selling and administrative expenses at 16.8% were flat
with second quarter 1996 and down slightly from the 16.9% level where they
had remained for several previous quarters. Through the first nine months of
1996 total profit sharing is at a record level.
LIQUIDITY AND CAPITAL RESOURCES
Through the first nine months of 1996, the Company's financial position
remained solid. Cash and marketable securities were at $25.6 million
compared to $34.8 million at year-end 1995, even considering the stock
repurchase so far this year and after paying down approximately $16.0 million
of debt. Working capital increased to $148.2 million at September 28, 1996,
from $145.1 million at December 30, 1995. The current ratio at September 28,
1996, remained strong at 3.1 compared to 3.2 at December 30, 1995 and the
debt-to-capitalization ratio (shareholders' equity and long-term borrowings)
was 19.6%.
<PAGE>
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 12, 1996 By: /s/ Lloyd G. Davis
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(Date) Lloyd G. Davis - Chief Financial
Officer and Executive 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
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2 Omitted - Inapplicable
3(i) Omitted - Inapplicable
3(ii) Omitted - Inapplicable
4 Omitted - Inapplicable
10(iii)(A) The Baldor Electric Company's 1996 Stock Option Plan for
Non-employee Directors originally filed as Exhibit "A" to
Registrant's Proxy Statement filed on March 28, 1996, is
incorporated herein by reference.
11 Computation of Earnings Per Common Share - filed herewith
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 NINE MONTHS
ENDED ENDED
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Sept 28 Sept 30 Sept 28 Sept 30
1996 1995 1996 1995
(In thousands, except per share data)
Primary
Weighted average shares outstanding 26,151 27,678 26,364 27,587
Dilutive stock options based on the
treasury stock method using the
average market price 897 1,341 918 1,234
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Total 27,048 29,019 27,282 28,821
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Net Earnings $ 8,734 $ 8,276 $ 26,032 $24,208
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Per Share Earnings $ 0.32 $ 0.29 $ 0.95 $ 0.84
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Fully Diluted
Weighted average shares outstanding 26,151 27,678 26,364 27,587
Dilutive stock options based on the
treasury stock method using the
year-end market price, if higher
than average market price 897 1,426 918 1,426
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Total 27,048 29,104 27,282 29,013
======== ======= ======== =======
Net Earnings $ 8,734 $ 8,276 $ 26,032 $24,208
======== ======= ======== =======
Per Share Earnings $ 0.32 $ 0.28 $ 0.95 $ 0.83
======== ======= ======== =======
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