UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACTOF 1934
For the fiscal year ended: Commission File Number:
January 3, 1998 1-7284
--------------- ------
BALDOR ELECTRIC COMPANY
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Missouri 43-0168840
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5711 R. S. Boreham, Jr St,
Fort Smith, Arkansas 72908 (501) 646-4711
- ----------------------------------------- ---------------
(Address of principal executive offices) (Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of Each Class which registered
------------------- ----------------
Common Stock, $0.10 Par Value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates of the
registrant based on the closing price on February 27, 1998, was $689,146,181.
At February 27, 1998, there were 36,111,501 shares of the registrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended January
3, 1998 (the "Annual Report to Shareholders for 1997"), are incorporated by
reference into Part II.
Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held May 2, 1998 (the "1998 Proxy Statement"), are incorporated by reference
into Parts I and III.
<PAGE>
PART I
Item 1. Business
- --------------------------
Baldor Electric Company ( "Baldor" or the "Company") was incorporated in
Missouri in 1920. The Company operates in one industry segment which includes
the design, manufacture, and sale of electric motors and drives. In addition to
electric motors and drives, products include speed reducers, industrial
grinders, buffers, polishing lathes, stampings, castings, and repair parts.
Baldor has made several small acquisitions; however, the majority of its growth
has come internally through broadening its markets and product lines.
Products
Sales of industrial electric motors represented approximately 76% of the
Company's business in 1997, 76% in 1996 and 78% in 1995. The AC motor product
line presently ranges in size from 1/50 through 800 horsepower. The DC motor
product line presently ranges from 1/50 through 700 horsepower.
The Company also sells industrial control products, which include servo
products, DC controls, position controls, and inverter and vector drives. The
Company's line of adjustable speed controls ranges from 1/50 to 600 horsepower.
With these products, the Company provides its customers the ability to purchase
a "Drive" which Baldor defines as an industrial motor and an electronic control,
from one manufacturer. Sales of drives were approximately 23% of total 1997
sales, 22% of total 1996 sales, and 20% of total 1995 sales.
Baldor's motors and drives are designed, manufactured, and marketed for general
purpose uses ("stock products") and for individual customer requirements and
specifications ("custom products"). Stock product sales represented
approximately 62% of the Company's total sales in 1997, 63% in 1996, and 62% in
1995. Most stock product sales are to customers who place their orders for
immediate shipment from current inventory. Custom products generally are shipped
within four weeks from the date of order. Because of these and other factors,
the Company does not believe that its backlog represents an accurate indication
of future shipments.
Sales and Marketing
The products of the Company are marketed throughout the United States and in
more than 55 foreign countries. The company's field sales organization consists
of more than 50 groups of independent manufacturer's representatives, including
28 in the United States. The remainder of the Company's representatives are
located in various parts of the world, including Canada, Europe, Latin America,
Australia, and the Far East.
Custom products and stock products are sold to original equipment manufacturers
("OEMs") . Stock products are also sold to independent distributors for resale,
often as replacement components in industrial machinery which is being
modernized or upgraded for improved performance.
The Company conducts business with a large number of customers and does not
believe that the loss of any single customer would have a material effect on its
total business.
<PAGE>
Competition
The Company faces substantial competition in the sales of its products in all
markets served. Some of the Company's competitors are larger in size or are
divisions of large diversified companies and have substantially greater
financial resources. The Company competes by providing its customers better
value through product quality and efficiency and better services, including
availability, shorter lead-times, on-time delivery, product literature, and
training.
The Company is not aware of any industry-wide statistics from which it can
precisely determine its relative position in the industrial electric motor
industry. In the United States, certain industry statistics are available from
the U.S. Department of Commerce and the National Electric Manufacturers
Association. However, these sources do not include all competitors or all sizes
of motors. The Company believes that it is a significant factor in the markets
it serves and that its share of the market has increased over the past several
years.
Manufacturing
The Company manufactures many of the components used in its products including
laminations, motor hardware, and aluminum die castings. Manufacturing many of
its own components permits the Company to better manage cost, quality, and
availability. In addition to the manufacture of components, the Company's motor
manufacturing operations include machining, welding, winding, assembling, and
finishing operations.
The raw materials necessary for the Company's manufacturing operations are
available from several sources. These materials include steel, copper wire, gray
iron castings, aluminum, and insulating materials, many of which are purchased
from more than one supplier; the Company believes that alternative sources are
available for such materials.
Research and Engineering
The Company's design and development of electric motors and drives includes both
the development of products which extend the product lines and the modification
of existing products to meet new application requirements. Additional
development work is done to improve production methods. Costs associated with
research, new product development, and product and cost improvements are treated
as expenses when incurred and amounted to $22,900,000 in 1997, $19,900,000 in
1996, and $17,200,000 in 1995.
Environment
Compliance with laws relating to the discharge of materials into the environment
or otherwise relating to the protection of the environment has not had a
material effect on capital expenditures, earnings, or the financial position of
the Company and is not expected to have such an effect.
Employees
As of January 3, 1998, the Company had 3,843 employees.
Executive Officers of the Registrant
Information regarding executive officers is contained in Part III, Item 10, and
incorporated herein by reference.
<PAGE>
International Operations
For each of the three fiscal years in the period ended January 3, 1998, export
and international sales revenues have increased and represented 15.1% of
consolidated sales in 1997, 14.5% in 1996, and 14.0% in 1995. See also Note H on
page 24 of the Annual Report to Shareholders for 1997.
The Company's products are distributed in more than 55 foreign countries,
principally in Canada, Europe, Australia, the Far East, and Latin America. The
Company's international operations include the Baldor ASR group of companies
which was acquired in 1983. Baldor ASR has sales offices in Switzerland,
Germany, Italy, and the United Kingdom. Baldor ASR also has development and
manufacturing operations in Germany. In April 1997, the Company acquired the
UK-based Optimised Control Ltd. Baldor Optimised Control has sales offices,
development and manufacturing facilities located in the U.K. The Company also
owns majority interests in Baldor Electric (Far East) Pte. Ltd., located in
Singapore, and Australian Baldor Pty. Limited which has locations in Sydney and
Melbourne. The Company wholly owns Baldor de Mexico, S.A. de C.V., located in
Mexico City.
The company believes that it is in a position to act on global opportunities as
they become available. The Company also believes that there are additional risks
attendant to international operations including currency fluctuations and
possible restrictions on the movement of funds. However, these risks have not
had a significant adverse effect on the Company's business.
<PAGE>
Item 2. Properties
- ---------------------------
The Company believes that its facilities, including equipment and machinery, are
in good condition, suitable for current operations, adequately maintained and
insured, and capable of sufficient additional production levels. The following
table sets forth certain information with respect to the Company's properties.
AREA
LOCATION PRIMARY USE (SQ.FT.)
- -------- ----------- ----------
Fort Smith, AR AC motor production 298,150
Distribution and service center 208,000
Administration and engineering offices 70,950
Aluminum die casting 76,400
St. Louis County, MO Metal stamping and engineering toolroom 133,850
DC and miscellaneous motor production 55,600
Columbus, MS AC motor production 191,000
Westville, OK AC and DC motor production 207,900
Fort Mill, SC DC motor, AC motor 108,000
and tachometer production
Clarksville, AR Subfractional motor, gear motor, 167,000
and worm-gear speed reducer production
Ozark, AR AC motor production 84,050
Five other Metal stamping and motor, drives,
domestic locations and servomotor production 141,900
Ten foreign Sales and distribution centers
locations and servodrive production 84,200
----------
1,827,000
Certain properties listed above (486,400 sq. ft. in the aggregate) are leased,
principally pursuant to Industrial Revenue Bond agreements, and where material,
are accounted for as capitalized lease obligations. Certain lease agreements
contain purchase options at varying prices and/or renewal options at reduced
rentals for extended additional periods.
Item 3. Legal Proceedings
- --------------------------------------
The Company is party to a number of legal proceedings incidental to its
business, none of which is deemed to be material to its operations or business.
Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------------------------------------
Not applicable.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and
Related Shareholder Matters
- -------------------------------------------------------
Information under the captions "Dividends paid", "Common stock price range", and
"Shareholders" on page 29 of the Annual Report to Shareholders for 1997 is
incorporated herein by reference.
Item 6. Selected Financial Data
- --------------------------------
Information under the caption "Eleven-Year Summary of Financial Data" only for
years 1993 through 1997 for net sales, net earnings, net earnings per share,
dividends per share, long-term obligations, and total assets on page 14 of the
Annual Report to Shareholders for 1997 is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- --------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 16 and 17 of the Annual Report to Shareholders for 1997 is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
- -----------------------------------------------------
The consolidated financial statements of the Company on pages 18 through 26, the
"Report of Ernst & Young LLP, Independent Auditors," on page 26, and the
"Summary of Quarterly Results of Operations (Unaudited)" on page 19 of the
Annual Report to Shareholders for 1997 are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
- ----------------------------------------------------------
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- --------------------------------------------------------------
The current executive officers of the Company, each of whom is elected for a
term of one year or until his successor is elected and qualified, are:
Served as
Officer
Name Age Position Since
- ---- --- -------- -----
R. S. Boreham, Jr. 73 Chairman of the Board 1961
R. L. Qualls 64 Vice Chairman 1986
John A. McFarland 46 President 1990
Robert D. Butler 55 Executive Vice President - 1996
Operations
Ronald E. Tucker 40 Controller 1997
Charles H. Cramer 53 Vice President - Personnel 1984
Lloyd G. Davis 50 Chief Financial Officer, 1992
Executive Vice President-Finance,
Secretary, and Treasurer
Gene J. Hagedorn 50 Vice President - Materials 1994
James R. Kimzey 59 Executive Vice President - 1984
Research and Engineering
Randy L. Colip 38 Vice President - Sales 1997
Jerry D. Peerbolte 41 Vice President - Marketing 1990
Randal G. Waltman 48 Vice President - Engineering 1997
Each of the executive officers, except Robert D. Butler, has served as an
officer or in a management capacity with the Company for the last five years.
Mr. Butler, who joined the Company in 1996, previously operated Manufacturing
Services International which provided manufacturing consulting services to small
and medium sized U.S. based companies for more than the previous five years.
There are no family relationships among the directors or executive officers. The
information under the caption "Election of Directors" of the 1998 Proxy
Statement is incorporated herein by reference.
<PAGE>
Item 11. Executive Compensation
- -------------------------------------------------
Information contained in the 1998 Proxy Statement under the caption "Information
About the Board of Directors and Committees of the Board -- Director
Compensation" and information under the caption "Executive Compensation", except
for the information contained in the sub-captions "Report of the Executive and
Stock Option Committees" and "Performance Graph" is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- ---------------------------------------------------------------------------
The security ownership by officers and directors included under the caption
"Security Ownership of Certain Beneficial Owners and Management" of the 1998
Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
None
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------------------------------------------------------------------------------
(a) (1) and (2) - The response to this portion of Item 14 is submitted as a
separate section of this Report at page 13 hereof.
(3) Listing of Exhibits
Exhibit 3(i) - The Restated Articles of Incorporation of Baldor
Electric Company, effective March 14, 1995, filed as Exhibit 3(i) to
Form 10-K for the year ended December 31, 1994.
Exhibit 3(ii) - Bylaws of Baldor Electric Company (as amended) dated
February 6, 1995, filed as Exhibit 3(ii) to Form 10-K for the year
ended December 31, 1994.
Exhibit 4(i)(a) - Rights Agreement dated May 6, 1988, between Baldor
Electric Company and Wachovia Bank of North Carolina, N.A. (formerly
Wachovia Bank & Trust Company, N.A.), as Rights Agent originally filed
as Exhibit 1 to Registrant's Form 8-K Current Report, dated May 13,
1988, and refiled as Exhibit 4(i) to Form 10- K for the year ended
December 31, 1994.
Exhibit 4(i)(b) - Amendment Number 1 to the Shareholders' Rights
Agreement dated February 5, 1996 filed as Exhibit 2 to Registrant's
Form 8-A/A dated March 21, 1996.
Exhibit 4(iii) - The Registrant agrees to furnish to the Securities
and Exchange Commission upon request pursuant to Item 601(b)(4)(iii)
of Regulation S-K copies of instruments defining the rights of the
holders of long-term debt of the Registrant and its consolidated
affiliates.
Exhibit (10) - Exhibits 10(iii)(A)(1) through 10(iii)(A)(6) were
previously submitted as exhibits and are incorporated herein by
reference:
* 10(iii)(A)(1) 1982 Incentive Stock Option Plan (originally filed
as Exhibit 10.8 to Form 10-K for year ended December 31,
1981, refiled as Exhibit 10.1 to For 10-K for the year ended
December 28, 1991).
* 10(iii)(A)(2) Officers Compensation Plan (originally filed as
Exhibit 10.6 to Form 10-K for year ended December 31, 1988,
and refiled as Exhibit 10(iii)(A)(2) to Form 10-K for the year
ended December 31, 1994).
* 10(iii)(A)(3) 1987 Incentive Stock Plan (originally filed as
Appendix A to Registrant's Proxy Statement dated April 3, 1987,
and refiled as Exhibit 10(iii)(A)(3) to Form 10-K for the year
ended December 31, 1994.
* 10(iii)(A)(4) 1989 Stock Option Plan for Non-Employee Directors
(filed as Exhibit 10 to Form 10-Q for quarter ended
September 29, 1990).
<PAGE>
* 10(iii)(A)(5)(a) 1994 Incentive Stock Option Plan (filed as
Exhibit A to Registrant's Proxy Statement dated April 4, 1994).
* 10(iii)(A)(5)(b) Amendment #1 to the 1994 Incentive Stock Option
Plan filed as Exhibit 10(iii)(A)(5)(b) to Form 10-K for the year
ended December 28, 1996.
* 10(iii)(A)(6) 1996 Stock Option Plan for Non-Employee Directors
(filed as Exhibit A to Registrant's Proxy Statement dated
March 28, 1996).
For a listing of all management contracts and compensatory plans or arrangements
required to be filed as exhibits to this Form 10-K, see the exhibits listed
above under Exhibit 10.
Exhibit (11) - Incorporated by reference in Note J of the Annual Report
to Shareholders for 1997 filed as Exhibit (13).
Exhibit (13) - Portions of the Annual Report to Shareholders for 1997.
The Annual Report is being filed as an exhibit solely for the purpose
of incorporating certain provisions thereof by reference. Portions of
the Annual Report not specifically incorporated are not deemed "filed"
for the purposes of the Securities Exchange Act of 1934, as amended.
Exhibit (21) - Affiliates of the Registrant filed herewith.
Exhibit (23) - Consent of Independent Auditors filed herewith.
Exhibit (24) - Powers of Attorney. Included on signature
pages 11 and 12.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of the
period covered by this Report.
(c) Exhibits
See Exhibit Index at page 16 of this Report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate
section of this Report at page 14
hereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By /s/ R. S. Boreham, Jr.
----------------------------------------
Chairman
(Principal Executive Officer)
Date: March 27, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints R. S. Boreham, Jr., R. L. Qualls, and John A.
McFarland, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Report and any and all
amendments to this Report, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ R. S. Boreham, Jr. Chairman and Director )
- ------------------------------ (Principal Executive Officer) )
R. S. Boreham, Jr. )
)
/s/ R. L. Qualls Vice Chairman and Director )
- ------------------------------ )
R. L. Qualls )
)
)
/s/ John A. McFarland President and Director )
- ------------------------------ )
John A. McFarland )
)
)
/s/ Lloyd G. Davis Chief Financial Officer, )
- ------------------------------ Executive Vice President - )
Lloyd G. Davis Finance, Secretary, and )
Treasurer (Principal Financial )
and Accounting Officer) )
)
/s/ Jefferson W. Asher, Jr. Director ) March 27, 1998
- ------------------------------ )
Jefferson W. Asher, Jr. )
)
/s/ Fred C. Ballman Director )
- ------------------------------ )
Fred C. Ballman) )
)
/s/ O. A. Baumann Director )
- ------------------------------ )
O. A. Baumann )
)
)
/s/ Robert J. Messey Director )
- ------------------------------ )
Robert J. Messey )
)
)
/s/ Robert L. Proost Director )
- ------------------------------ )
Robert L. Proost )
)
/s/ Willis J. Wheat Director )
- ------------------------------ )
Willis J. Wheat )
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2), (c) and (d)
LIST OF FINANCIAL STATEMENTS
FINANCIAL STATEMENT SCHEDULE
CERTAIN EXHIBITS
YEAR ENDED JANUARY 3, 1998
BALDOR ELECTRIC COMPANY
FORT SMITH, ARKANSAS
<PAGE>
FORM 10-K, ITEM 14(a)(1) and (2)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
BALDOR ELECTRIC COMPANY AND AFFILIATES
The following consolidated financial statements of Baldor Electric Company and
Affiliates, included in the Annual Report to Shareholders for 1997, are
incorporated by reference in Item 8:
* Consolidated Balance Sheets
- January 3, 1998 and December 28, 1996
* Consolidated Statements of Earnings
- for the three years in the period ended January 3, 1998
* Consolidated Statements of Cash Flows
- for the three years in the period ended January 3, 1998
* Consolidated Statements of Shareholders' Equity
- for the three years in the period ended January 3, 1998
* Notes to Consolidated Financial Statements
The following consolidated financial statement schedule of Baldor Electric
Company and Affiliates is included in Item 14(d):
* Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Additions
---------------------------
Charged to Charged to
Balance at Costs Other Balance
Beginning and Accounts Deductions at End of
Description of Period Expenses Describe Describe Period
- ----------- --------- -------- -------- -------- ------
(In thousands)
Deducted from current assets:
Allowance for doubtful accounts
1997 $3,200 $ 509 $ 184(A) $3,525
1996 2,800 695 295(A) 3,200
1995 2,250 886 336(A) 2,800
Included in current liabilities:
Anticipated warranty costs
1997 $4,500 $ 700(B) $5,200
1996 4,100 400(B) 4,500
1995 3,700 400(B) 4,100
(A) Net uncollectible accounts written off during year.
(B) Additions to reserve for anticipated warranty costs, net of expenses
incurred.
<PAGE>
BALDOR ELECTRIC COMPANY AND AFFILIATES
INDEX OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------------- ---------------------
11 Computation of Earnings Per Common Share-
Incorporated by reference in Note J of the Annual
Report to Shareholders for 1997 in Exhibit (13)
13 Portions of the Annual Report to Shareholders for
1997- filed herewith
21 Affiliates of the Registrant - filed herewith
23 Consent of Independent Auditors - filed herewith
24 Powers of Attorney - Included on signature
pages 11 and 12
27 Financial Data Schedules - filed herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By /s/ R. S. Boreham, Jr.
-------------------------------------
R. S. Boreham, Jr.
Chairman and Principal Executive Officer
Date: March 27, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints R. S. Boreham, Jr., R. L. Qualls, and John A.
McFarland, and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this Report and any and all
amendments to this Report, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Summary
Baldor extended its growth trend for the sixth consecutive year by posting
record sales and earnings for 1997. An 11% increase in sales was leveraged into
a 14.8% increase in net earnings. 1997 saw the successful introduction of our
new Standard-E line of motors. In addition to conforming to the new Energy
Policy Act (EPAct) efficiency requirements, this line offers improved overall
value to our customers. This improved value includes longer service life,
reduced energy cost, quieter running and less vibration achieved by using more
and better materials and improved manufacturing methods.
During 1997, Baldor continued to focus on product innovations, service,
inventory availability and shortened lead times. We believe an emphasis on
taking better care of our customer (rather than emulating our competitors) will
translate into a competitive advantage and continue to add shareholder value.
Net Sales
Baldor reached a record sales level of $557.9 million in 1997, an 11% increase
over 1996 sales of $502.9 million. Sales in 1995 were $473.1 million. Sales to
distributor customers in 1997 increased 8.8%, while sales to OEM customers in
1997 increased 13.7%, continuing a good balance between OEM and distributors. In
1996, sales to distributors increased 8.7% over 1995 levels and OEM sales
increased 5.9% over 1995 levels. Baldor serves many industries and geographic
regions be selling to a broad base of distributors and OEMs both domestically
and in more than 55 countries around the world. No single customer accounted for
more than 4% of sales in any year covered by this report.
During 1997, we saw strong growth in motor products for blowers, fans,
conveyers, HVAC, pumps, construction machinery and crane and hoist equipment.
Sales of Super-E premium-efficient motors continued their history of more than
doubling the overall growth rate. In addition, sales increases for our drives,
DC motors, hostile environment and pump motors continued to be strong. Sales of
products introduced in the previous five years accounted for 30% of 1997 and
1996 sales. The strong sales growth in 1997 was generated without a price
increase with the exception of the increase on EPAct-related products effective
after October 24, 1997.
The overall modest sales increase in 1996 included good growth in farm products,
most of our drives and our Super-E premium-efficient motors. Volume increase
accounted for approximately 75% of the 1996 sales growth.
Net Earnings
Net earnings of $40.4 million in 1997 exceeded 1996 net earnings of $35.2
million by 15%. Net earnings in 1995 were $32.3 million. In spite of an overall
softening in selling prices, net earnings during 1997 improved to a record level
primarily due to volume increases and slightly lower material costs.
The gross margin percentage improved to 30.2% in 1997 from 29.7% in 1996 and
29.3% in 1995. Manufacturing costs continued to improve in 1997 compared to 1996
and 1995. Selling and administrative costs as a percent of sales remained level
at 16.8% in 1997 compared to 16.8% in 1996 and 16.9% in 1995. Baldor continues
to increase its sales volumes without a corresponding increase in selling and
administrative support costs. Pre-tax margins improved to 11.8% in 1997 from
11.4% in 1996 and 11.2% in 1995. Our tax rate remained 38.5% in 1997 compared to
38.5% in 1996 and 39.0% in 1995.
<PAGE>
International Operations
Sales from international operations (foreign affiliates and exports) were $84.2
million in 1997 up from $72.8 million in 1996, and $66.0 million in 1995. This
marks our sixth consecutive year of double digit sales growth in our
international operations. Our export sales to many countries, especially to
Canada, continued strong in 1997. We saw very strong sales increases in Mexico
and increased sales in Europe due in part to our acquisition of the UK-based
Optimised Control Ltd. in April 1997. Sales in Australia and the Far East were
weaker in 1997 due to the overall weakening of these economies and the
strengthening of the U.S. dollar during the year. Foreign pre-tax earnings were
down in 1997 compared to 1996 and 1995 due to lower earnings in Europe and the
Far East.
Environmental Remediation
Management believes, based on their internal reviews and other factors, that the
future costs relating to environmental remediation and compliance will not have
a material effect on the capital expenditures, earnings, or competitive position
of the Company.
Year 2000
We are in the process of implementing a new, fully-integrated, company-wide
information system that will improve visibility and reaction time to customer
orders, reduce lead times, support international operations, improve
productivity and better manage our inventory. In addition, the new system is
year 2000 certified. Portions of the project are completed and the rest are
scheduled to be completed by early 1999. Hardware and networks are already year
2000 compliant.
Financial Position
Summary
In 1997, Baldor continued to improve its strong financial position. Baldor
continued to invest in its future by expanding research and development for new
and existing products, by continuing capital investments for capacity,
productivity and cost improvements, and by making additional investments in both
its employees and customers through education and training.
Based on the Company's strong financial position, in 1997 the Board of Directors
approved a four-for-three stock split and two cash dividend increases. Our
financial strength is an important competitive advantage which provides a strong
base to better serve our customers and finance future growth opportunities.
Investments
Baldor continues to believe that the investment in our employees through
emphasis on training and education is a key to our continuing success. This
investment was recognized when we were honored to be included in Fortune
magazine's list of "100 Best Companies to Work For In America."
Investments in property, plant and equipment for 1997 were $26.9 million
compared to $23.2 million in 1996, and $23.1 million in 1995. Our 1997 property,
plant and equipment investments were made for increased capacity, and quality
and productivity improvements.
<PAGE>
In 1997, Baldor also increased its investments in research and development to
$22.9 million compared to $19.9 million in 1996 and $17.2 million in 1995.
Baldor's commitment to research and development continues to help it maintain a
leadership position in the marketplace and to satisfy its customers' needs. We
also continue to make investments in our existing products for greater
performance, energy efficiency improvements, and manufacturability. In 1996 and
1997, new products developed in the last five years as a result of these
investments accounted for 30% of the Company's total sales.
Current Liquidity
Cash flow from operations improved to $58.1 million in 1997 from $42.6 million
in 1996 and $24.2 million in 1995. In 1997, we increased inventory and
receivables $10.5 million, compared to $11.5 million in 1996 and $26.9 million
in 1995. Working Capital was $141.3 million at the end of 1997 compared to
$146.9 million in 1996, and $145.1 million in 1995. The current ratio was 2.8 in
1997 compared to 3.1 in 1996 and 3.2 at the end of 1995. This decrease was due
to the increased volume of business and the repayment of mid-term borrowings
used for the repurchase of stock in 1996. Baldor also has available lines of
credit of $30 million to support operations. There was no borrowing under these
lines at the end of 1997 or 1996.
Long-Term Debt and Shareholder's Equity
Long-term obligations decreased to 10.3% of total capitalization at the end of
1997 compared to 18.4% in 1996 and 10.7% in 1995. The 1997 weighted average
interest rate on long-term debt was 6.0%. Shareholders' equity continued to
increase and reached a record level of $243.4 million at the end of 1997
compared to $200.3 million in 1996 and $211.4 million at the end of 1995. Return
on average shareholders' equity increased to 18.2% in 1997 compared to 17.1% in
1996 and 16.3% in 1995.
<PAGE>
Dividend Policy
In 1997, the Board of Directors approved two cash dividend increases. A 9%
increase was approved in the second quarter and an 11% increase was approved in
the fourth quarter. The cash dividend was also increased 21% in 1996 and 12.5%
in 1995. There have been ten dividend increases since the first quarter of 1992.
These increases were in line with Baldor's policy of making increases
periodically, as earnings and financial strength warrant, and reinvesting a
major portion of earnings to finance growth opportunities. The objective is for
shareholders to obtain dividend increases over time while also participating in
the growth of the Company.
<PAGE>
CONSOLIDATED BALANCE SHEETS
BALDOR ELECTRIC COMPANY AND AFFILIATES
JANUARY 3 DECEMBER 28
1998 1996
---- ----
ASSETS (In thousands)
CURRENT ASSETS:
Cash and cash equivalents ................. $ 9,575 $ 7,950
Marketable securities ..................... 11,900 17,892
Receivables, less allowances
of $3,525 and $3,200, respectively ...... 88,740 80,183
Inventories:
Finished products ...................... 71,616 66,528
Work-in-process ........................ 10,675 13,483
Raw materials .......................... 41,793 39,162
------ ------
124,084 119,173
LIFO valuation adjustment (deduction) (27,543) (26,786)
------- -------
96,541 92,387
Other current and deferred tax assets ... 12,684 19,745
------ ------
TOTAL CURRENT ASSETS ......... 219,440 218,157
OTHER ASSETS ................................... 32,352 11,965
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements ..................... 4,533 3,869
Buildings and improvements ................ 33,227 32,059
Machinery and equipment ................... 190,009 166,542
Allowances for depreciation and
amortization (deduction) ................ (123,672) (107,106)
-------- --------
NET PROPERTY, PLANT AND
EQUIPMENT .................. 104,097 95,364
------- ------
$ 355,889 $ 325,486
========= ==========
See notes to consolidated financial statements .
<PAGE>
CONSOLIDATED BALANCE SHEETS
BALDOR ELECTRIC COMPANY AND AFFILIATES
JANUARY 3 DECEMBER 28
1998 1996
---- ----
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands, except share data)
CURRENT LIABILITIES:
Accounts payable ............................ $ 19,935 $ 20,314
Employee compensation ....................... 5,684 5,932
Profit sharing .............................. 8,858 7,645
Anticipated warranty costs .................. 5,200 4,500
Accrued insurance obligations ............... 13,836 14,286
Other accrued expenses ...................... 22,003 16,626
Income taxes ................................ 1,586 766
Current maturities of long-term obligations . 1,070 1,113
--------- ---------
TOTAL CURRENT LIABILITIES ...... 78,172 71,182
LONG-TERM OBLIGATIONS ............................ 27,929 45,027
DEFERRED INCOME TAXES ............................ 6,354 8,952
SHAREHOLDERS' EQUITY:
Preferred stock, $0.10 par value
Authorized shares: 5,000,000
Issued and outstanding shares: None
Common stock, $0.10 par value
Authorized shares: 50,000,000
Issued shares:
1997- 37,951,901; 1996-37,351,160 ......... 3,795 2,862
Additional capital .......................... 44,606 37,112
Retained earnings ........................... 233,637 207,064
Cumulative translation adjustments .......... (617) 346
Treasury stock at cost
(1,923,142 shares in 1997 and
2,417,247 shares in 1996) ........... (37,987) (47,059)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY ..... 243,434 200,325
--------- ---------
$ 355,889 $ 325,486
========= =========
See notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
BALDOR ELECTRIC COMPANY AND AFFILIATES
YEARS ENDED
----------------------------------------
JANUARY 3 DECEMBER 28 DECEMBER 30
1998 1996 1995
---- ---- ----
(In thousands, except share data)
Net sales ......................... $ 557,940 $ 502,875 $ 473,103
Other income, net ................. 1,843 2,497 2,596
----- ----- -----
559,783 505,372 475,699
Costs and expenses:
Cost of goods sold ............. 389,711 353,345 334,306
Selling and administrative ..... 93,455 84,522 80,019
Profit sharing ................. 8,858 7,645 7,168
Interest ....................... 2,124 2,668 1,260
----- ----- -----
494,148 448,180 422,753
Earnings Before Income Taxes ...... 65,635 57,192 52,946
Income taxes ...................... 25,270 22,019 20,641
------ ------ ------
NET EARNINGS .............. $ 40,365 $ 35,173 $ 32,305
=========== =========== ===========
NET EARNINGS PER SHARE-DILUTED .... $ 1.09 $ 0.97 $ 0.84
=========== =========== ===========
NET EARNINGS PER SHARE-BASIC ...... $ 1.13 $ 1.00 $ 0.88
=========== =========== ===========
Weighted average shares
outstanding - diluted .......... 37,062,624 36,290,312 38,521,714
========== ========== ==========
Weighted average shares
outstanding - basic ............. 35,691,572 35,091,161 36,862,329
========== ========== ==========
See notes to consolidated financial statements
<PAGE>
SUMMARY OF QUARTERLY RESULTS OF OPERATIONS (Unaudited)
BALDOR ELECTRIC COMPANY AND AFFILIATES
QUARTER
-----------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
----- ------ ----- ------ -----
(In thousands,
except per share data):
1997:
Net sales ............. $129,914 $141,929 $142,494 $143,605 $557,940
Gross profit .......... 39,077 42,841 42,983 43,328 168,229
Net earnings ......... 9,392 10,258 10,291 10,424 40,365
Net earnings per
share-Diluted ....... 0.26 0.28 0.27 0.28 1.09
Net earnings per
share-Basic ......... 0.27 0.29 0.29 0.29 1.13
1996:
Net sales ............. $121,553 $129,906 $125,111 $126,305 $502,875
Gross profit .......... 35,811 38,425 37,310 37,984 149,530
Net earnings .......... 8,327 8,971 8,733 9,142 35,173
Net earnings per
share-Diluted ........ 0.22 0.25 0.25 0.25 0.97
Net earnings per
share-Basic ......... 0.23 0.26 0.25 0.26 1.00
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
BALDOR ELECTRIC COMPANY AND AFFILIATES
YEARS ENDED
------------------------------------
JANUARY 3 DECEMBER 28 DECEMBER 30
1998 1996 1995
---- ---- ----
In thousands)
Operating activities:
Net earnings ........................... $ 40,365 $ 35,173 $ 32,305
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization ....... 19,337 17,277 15,583
Deferred income taxes ............... 5,316 (1,943) (1,979)
Changes in operating assets
and liabilities:
Receivables ......................... (7,295) (2,815) (7,315)
Inventories ......................... (3,181) (8,698) (19,591)
Other current assets ................ (813) (2,826) (3,020)
Accounts payable .................... (1,093) 1,318 194
Accrued expenses .................... 7,558 7,149 4,967
Income taxes ........................ 447 (1,201) (810)
Other, net .......................... (2,498) 873 3,851
------ --- -----
Net cash from operating activities .... 58,143 42,561 24,185
Investing activities:
Additions to property, plant
and equipment ......................... (26,857) (23,183) (23,112)
Marketable securities purchased ......... (14,847) (33,315) (50,881)
Marketable securities sold .............. 20,839 43,910 48,987
Acquisition of Optimised Control Ltd. ... (7,597)
------ ------- --------
Net cash used in investing activities .... (28,462) (12,588) (25,006)
Financing activities:
Additional long-term borrowings ........ 38,000
Reduction of long-term obligations ..... (17,141) (18,093) (995)
Unexpended debt proceeds ............... (367) 353 5,641
Dividends paid ......................... (12,958) (10,498) (9,416)
Stock option plans ..................... 2,410 3,902 3,065
Common stock repurchased ............... (42,009)
------- ------- -------
Net cash used in financing activities .... (28,056) (28,345) (1,705)
------- ------- ------
Net increase (decrease) in cash and
cash equivalents ....................... 1,625 1,628 (2,526)
Beginning cash and cash equivalents ...... 7,950 6,322 8,848
----- ----- -----
Ending cash and cash equivalents ......... $ 9,575 $ 7,950 $ 6,322
======== ======== ========
See notes to consolidated financial statements
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
BALDOR ELECTRIC COMPANY AND AFFILIATES
<CAPTION>
Cumulative Treasury
Common Stock Additional Retained Translation Stock
Shares Amount Capital Earnings Adjustments (at cost) Total
------ ------ ------- -------- ----------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
(In thousands, except per share amounts)
BALANCE AT DECEMBER 31, 1994 ........... 18,310 $ 1,847 $ 25,871 $ 160,024 $ 449 $ (3,929) $ 184,262
Stock option plans (net of shares
exchanged) ........................... 332 47 6,605 (3,587) 3,065
Translation adjustments ................ 797 797
Net earnings ........................... 32,305 32,305
Securities valuation adjustment,
net of deferred taxes of $233 ........ 364 364
Three-for-two common stock
split effected in the form of
a 50% stock dividend ................. 9,228 923 (923)
Cash dividends at $0.26
per common share ..................... (9,416) (9,416)
------ ------ ------ ------ ----- ------ -------
BALANCE AT DECEMBER 30, 1995 ........... 27,870 2,817 32,476 182,354 1,246 (7,516) 211,377
Stock option plans (net of shares
exchanged) ........................... 380 45 5,290 (1,433) 3,902
Translation adjustments ................ (900) (900)
Net earnings ........................... 35,173 35,173
Securities valuation adjustment,
net of deferred taxes of $11 ......... 35 35
Cash dividends at $0.30
per common share .................... (10,498) (10,498)
Common stock repurchased ............... (2,210) (42,009) (42,009)
Contributions to benefit plans ......... 160 (654) 3,899 3,245
--- ---- ----- ------- ------- ------- --------
BALANCE AT DECEMBER 28, 1996 ........... 26,200 2,862 37,112 207,064 346 (47,059) 200,325
Stock option plans (net of shares
exchanged) ........................... 263 33 4,365 (1,988) 2,410
Translation adjustments ................ (963) (963)
Net earnings ........................... 40,365 40,365
Four-for-three common stock
split effected in the form of
a 33% stock dividend ................. 8,999 900 (900)
Cash dividends at $0.36
per common share ..................... (12,958) (12,958)
Contributions to benefit plans ......... 115 647 2,242 2,889
Acquisitions ........................... 452 2,482 8,818 11,300
Miscellaneous adjustments .............. 66 66
------ -------- ------- ------- -------- ------- -------
BALANCE AT JANUARY 3, 1998 ............. 36,029 $ 3,795 $44,606 $233,637 $ (617) $ (37,987) $ 243,434
====== ========= ======= ======== ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BALDOR ELECTRIC COMPANY AND AFFILIATES
January 3, 1998
NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Line of Business: The Company operates primarily in one industry segment which
includes the design, manufacture and sale of electric motors and drives.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the statements and
accompanying notes. Actual results may differ from those estimates.
Consolidation: The consolidated financial statements include the accounts of the
Company and all its affiliates. Intercompany accounts and transactions have been
eliminated in consolidation.
Fiscal Year: The Company's fiscal year ends on the Saturday nearest to December
31 which results in a 52- or 53- week year. Fiscal year 1997 contained 53 weeks
and fiscal years 1996 and 1995 each contained 52 weeks.
Cash Equivalents: Cash equivalents consist of highly liquid investments having
original maturities of three months or less and are valued at cost which
approximates market.
Marketable Securities: All marketable securities are classified as
available-for-sale and are available to support current operations or to take
advantage of other investment opportunities. Those securities are stated at
estimated fair value based upon market quotes. Unrealized gains and losses, net
of tax, are computed on the basis of specific identification and are included in
Retained Earnings. Realized gains, realized losses, and declines in value,
judged to be other-than-temporary, are included in Other Income. The cost of
securities sold is based on the specific identification method and interest
earned is included in Other Income.
Inventories: The Company values inventories at the lower of cost or market, cost
being determined principally by the last-in, first-out method (LIFO), except for
$13,882,000 in 1997 and $14,166,000 in 1996 at foreign locations, valued by the
first-in, first-out method (FIFO).
Property, Plant and Equipment: Property, plant and equipment, including assets
under capital leases, are stated at cost. Depreciation and amortization are
computed principally using the straight-line method over the estimated useful
lives of the assets and the remaining term of capital leases, respectively.
Long-Lived Assets: Impaired losses are recognized on long-lived assets when
information indicates the carrying amount of these assets, intangibles and any
goodwill related to long-lived assets will not be recovered through future
operations or sale.
Benefit Plans: The Company has a profit sharing plan covering most employees
with over two years service. Baldor contributes 12% of earnings before income
taxes of participating companies to the Plan.
<PAGE>
Income Taxes: Income taxes are provided based on the liability method of
accounting. Deferred income taxes are provided for the expected future tax
consequences of temporary differences between the basis of assets and
liabilities reported for financial and tax purposes.
Net Earnings Per Common Share: The Company has historically reported diluted net
earnings per common share. Diluted net earnings per common share is computed by
dividing net earnings by the weighted average number of shares of common stock
and common stock equivalents (dilutive stock options) outstanding during the
year. Basic net earnings per common share is computed by dividing net earnings
by the weighted average number of shares of common stock outstanding during the
year. Basic net earnings per share gives no consideration to common stock
equivalents.
Stock-Based Compensation: In fiscal year 1996, the Company adopted Statement of
Financial Accounting Standards No.123 (SFAS No. 123), Accounting for Stock-Based
Compensation, which establishes financial accounting and reporting standards for
stock-based employee compensation plans. SFAS No. 123 requires that the fair
value of employee stock-based compensation plans be recorded as a component of
compensation expense as of the grant date or, in lieu of expense recognition
under SFAS No. 123, companies may follow current guidance under Accounting
Principals Board Opinion No. 25 (APB 25), Accounting for Stock Issued to
Employees. Companies electing to remain with APB 25 accounting guidance must
provide pro forma disclosures of net income and earnings per share as if the
fair value based method defined in SFAS No. 123 had not been applied. The
Company has elected to continue accounting for its stock-based compensation
under the provisions of APB 25. As such, SFAS No. 123 did not have an effect on
the Company's reported financial results for 1997.
Research and Engineering: Costs associated with research, new product
development and product cost improvements are treated as expenses when incurred
and amounted to approximately $22,900,000 in 1997, $19,900,000 in 1996, and
$17,200,000 in 1995.
Reclassification: The Company has reclassified the presentation of certain prior
year information to be consistent with the presentation in the current year.
Comprehensive Income: In June 1997, the Financial Accounting Standards Board
Issued Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income. This statement becomes effective for fiscal year 1998 and
requires companies to classify components of other comprehensive income by their
nature in a financial statement and disclose the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the balance sheet. The Company's comprehensive
income items are not material. Therefore, the Company does not believe adopting
this statement will have a material effect.
Segment Reporting: In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131, Disclosures About Segments
of an Enterprise and Related Information. The statement requires public
companies to report financial and descriptive information about their reportable
operating segments. Currently, the Company has only one reportable segment;
therefore, management expects the adoption of this statement in 1998 to have no
material effect.
<PAGE>
NOTE B -- LONG-TERM OBLIGATIONS
Long-term obligations consist of the following:
1997 1996
---- ----
(In thousands)
Industrial Development Bonds:
due through 1997 at 6.0% fixed rate
(paid in 1997) .......................... $ $ 113
due through 2004 at 5.29% fixed rate ...... 4,515 5,030
due through 2004 at 3.95% variable rate ... 2,300 2,300
due through 2004 at 6.0% fixed rate ....... 24 57
due through 2009 at 7.75% fixed rate ...... 2,860 3,000
due through 2009 at 7.875% fixed rate ..... 6,860 7,200
due through 2010 at 3.95% variable rate ... 3,440 3,440
Notes payable to banks:
due March 1, 1999 at 6.175% variable rate 9,000 25,000
------- -------
28,999 46,140
Less current maturities ................... 1,070 1,113
------- -------
$27,929 $45,027
======= =======
At January 3, 1998, Industrial Development Bond proceeds of $6,757,000 are
included in Other Assets. Certain long-term obligations are collateralized by
property, plant and equipment with a net book value of $10,209,000 at January 3,
1998.
Maturities of long-term obligations during each of the five fiscal years ending
2002 are: 1998--$1,070,000; 1999--$10,145,000; 2000--$1,215,000;
2001--$1,290,000; and 2002--$2,470,000. Industrial Development Bonds include
capital lease obligations of $2,883,000 at January 3, 1998. Aggregate future
minimum capital lease payments at January 3, 1998, are $4,641,000 including
interest of 1,758,000.
Certain long-term obligations require, among other things, that the Company
maintain certain financial ratios and restrict cumulative cash dividends and
other distributions. Retained earnings of $21,180,000 at January 3, 1998, were
unrestricted. At January 3, 1998, the Company had outstanding letters of credit
totaling $6,709,000.
Interest paid was $3,577,000 in 1997, $2,988,000 in 1996 and, $1,730,000 in
1995.
The Company had lines of credit aggregating $30,000,000 available at January 3,
1998. These arrangements do not have termination dates but are reviewed
annually. Interest on these lines of credit is at rates mutually agreed upon at
the time of borrowing. There were no outstanding borrowings under these lines at
January 3, 1998.
<PAGE>
NOTE C -- MARKETABLE SECURITIES
Baldor currently invests in only high-quality, short-term investments which it
classifies as available-for-sale. There were no significant differences between
amortized cost and estimated fair value at January 3, 1998, or December 28,
1996. Because investments are predominantly short-term and are generally allowed
to mature, realized gains and losses for both years have been minimal.
The following table presents the estimated fair value
breakdown of investments by category:
January 3 December 28
1998 1996
---- ----
(In thousands)
Municipal debt securities ....... $ 3,858 $12,843
U.S. corporate debt securities .. 5,213 2,925
U.S. Treasury & agency securities 5,500 7,331
Other debt securities ........... 563 5,039
------- -------
15,134 28,138
Less cash equivalents ........... 3,234 10,246
------- -------
$11,900 $17,892
======= =======
The estimated fair value of marketable debt and equity securities at January 3,
1998, was $2,167,000 due in one year or less, $4,911,000 due in one to three
years, and $4,849,000 due after three years. Because of the short-term nature of
the investments, expected maturities and contractual maturities are normally the
same.
NOTE D -- INCOME TAXES
The Company made income tax payments of $24,101,000 in 1997, $22,718,000 in
1996, and $21,643,000 in 1995. Income tax expense consists of the following:
1997 1996 1995
------- ------ ------
(in thousands)
Current: Federal ..... $ 22,879 $ 19,887 $ 19,125
State ....... 2,949 2,591 2,614
Foreign ..... 573 637 776
Deferred ................ (1,131) (1,096) (1,874)
------ ------ ------
$ 25,270 $ 22,019 $ 20,641
======== ======== ========
Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. The sources of these differences
relate primarily to depreciation, certain liabilities, and bad debt expense.
The following table reconciles the difference between the Company's effective
income tax rate and the federal corporate statutory rate:
1997 1996 1995
------- ------ -------
Statutory federal income tax rate ....... 35.0% 35.0% 35.0%
State taxes, net of federal benefit ..... 2.9 3.0 3.3
Other ................................... 0.6 0.5 0.7
--- --- ---
Effective income tax rate ............... 38.5% 38.5% 39.0%
==== ==== ====
<PAGE>
NOTE E -- FINANCIAL DERIVATIVES
Hedging of Foreign Exchange Risks
As a result of having various foreign operations, the Company engages in a
limited amount of hedging to minimize the effects of fluctuating foreign
currencies on its intercompany pricing. The Company's investment in foreign
currency options is included in Other Current Assets at cost, net of realized
gains deferred, and is amortized to Other Income over the period in which
intercompany sales of foreign affiliates occur, generally within the following
twelve months.
At January 3, 1998, and December 28, 1996, the Company had no investments in
foreign currency derivatives.
Hedging of Copper and Aluminum Requirements
The Company purchases significant amounts of copper and aluminum, key
ingredients in its motor production, under short-term firm price contracts which
are renegotiated annually. In order to hedge itself from exposure to price
fluctuations on these two metals, the Company utilizes options and swaps for
quantities of metal estimated to be used in our product in the future. Any cost
is carried in Other Current Assets, net of realized gains deferred, and is
amortized to Cost of Goods Sold over the period that the metal is used.
The net unamortized costs with respect to the Company's metal hedging programs
were not material at January 3, 1998, and December 28, 1996.
NOTE F -- SHAREHOLDERS' EQUITY
On November 13, 1997, the Company's Board of Directors authorized a
four-for-three stock split effected in the form of a 33% stock dividend payable
December 15, 1997, to shareholders of record on December 1, 1997. This resulted
in the issuance of 8,999,078 additional shares of common stock. All per share
and weighted average share amounts have been restated to reflect this stock
split.
The Company maintains a shareholder rights plan intended to encourage a
potential acquirer to negotiate directly with the Board of Directors. The
purpose of the plan is to ensure the best possible treatment for all
shareholders. Under the terms of the plan, one Common Stock Purchase Right (a
Right) is associated with each outstanding share of common stock. If an
acquiring person acquires 20% or more of the Baldor common stock then
outstanding, the Rights become exercisable and would cause substantial dilution.
Effectively, each such Right would entitle its holder (excluding the 20% owner)
to purchase shares of Baldor common stock for half of the then current market
price, subject to certain restrictions under the plan. Until a Right is
exercised, the holder of the Right is not entitled to any of the benefits of
being a shareholder of the Company. The Rights, which expire in May 2008, may be
redeemed by the Company at any time prior to someone acquiring 20% or more of
Baldor's outstanding common stock and in certain events thereafter.
NOTE G -- COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
The Company leases certain computers, buildings, and other equipment under
operating lease agreements. Related rental expense was $5,500,000 in 1997,
$4,800,000 in 1996, and $4,300,000 in 1995. Future minimum payments for
operating leases having noncancelable lease terms in excess of one year are:
1998--$2,843,000; 1999--$2,652,000; 2000--$1,958,000; 2001--$764,000,
2002--$640,000; and decline substantially thereafter.
<PAGE>
Legal Proceedings
The Company is subject to a number of legal actions arising in the ordinary
course of business. In management's opinion, the ultimate resolution of these
actions will not materially affect the Company's financial position or results
of operations.
NOTE H -- FOREIGN OPERATIONS
The Company's foreign operations include both export sales and the results of
its foreign affiliates in Europe, Australia, Singapore and Mexico. Consolidated
sales, earnings before income taxes, and identifiable assets consist of the
following:
1997 1996 1995
---- ---- ----
(In thousands)
Net Sales:
United States Companies
Domestic customers ............ $473,702 $430,014 $407,078
Export customers .............. 38,762 30,831 25,068
------ ------ ------
512,464 460,845 432,146
Foreign Affiliates ............... 45,476 42,030 40,957
------ ------ ------
$557,940 $502,875 $473,103
======== ======== ========
Earnings Before Income Taxes:
United States Companies .......... $ 64,710 $ 55,160 $ 51,723
Foreign Affiliates .............. 925 2,032 1,223
--- ----- -----
$ 65,635 $ 57,192 $ 52,946
======== ======== ========
Assets:
United States Companies .......... $322,245 $297,496 $285,381
Foreign Affiliates ............... 33,644 27,990 28,081
------ ------ ------
$355,889 $325,486 $313,462
======== ======== ========
Assets and liabilities of foreign affiliates are translated into U.S. dollars at
year-end exchange rates. Income statement items are generally translated at
average exchange rates prevailing during the period. Translation adjustments are
recorded in the Cumulative Translation Adjustment account in Shareholders'
Equity.
<PAGE>
NOTE I -- STOCK PLANS
The Company accounts for stock option grants in accordance with APB Opinion No.
25, Accounting for Stock Issued to Employees, and related interpretations.
Incentive stock options to purchase shares at prices not less than the market
value at the date of grant and non-qualified stock options to purchase shares of
restricted stock equal to and less than the stock's market value at the date of
grant have been granted. The grants made from each plan expire 10 years from
date of grant except for grants made from the 1990 Plan which expire six years
from date of grant. A summary of the Company's current stock option plans is
below:
PLAN
PLAN ADMINISTRATOR RECIPIENTS
- ---- ------------- ----------
Compensatory Plans (see note 1)
1987 (see note 3 Stock Option Committee Employees
1989 (see note 3) Executive Committee Non-employee directors
1994 Stock Option Committee Employees
1996 Executive Committee Non-employee directors
Non-compensatory Plans (see note 2)
1981 (see note 3) Board of Directors Employees
1990 Stock Option Committee District Managers
Note 1: Under the 1987 Plan and the 1994 Plan, incentive stock options vest
and become fully exercisable at the end of six months or three years of
continued employment for officers and non-officers, respectively.
Grants can include incentive stock options, non-qualified stock
options, restricted shares, formula price shares, and stock
appreciation rights. Restrictions on non-qualified stock options
normally lapse after a period of five years or earlier under certain
circumstances. Related compensation expense for the non-qualified stock
options is amortized over the restriction period.
Under the 1996 Plan, each non-employee director is granted an annual
grant consisting of a non-qualified stock option to purchase 2,160
shares at prices equal to the market value at the date of grant and a
non-qualified stock option to purchase 3,240 shares at prices equal to
50% of the market value at the date of grant. These options become
exercisable in five equal installments beginning on the grant's first
anniversary. Related compensation expense on the options granted at 50%
of market is amortized over the restriction period.
Note 2: Under the 1990 Plan, only non-qualified options can be granted and
options vest and become 50% exercisable at the end of one year and 100%
exercisable at the end of two years. There are no charges to income in
connection with the non-compensatory stock option plans.
<PAGE>
Note 3: This plan has expired except for unexercised options outstanding.
The alternative fair value accounting provided for under Statement of Financial
Accounting Standards No. 123 (SFAS No. 123), Accounting for Stock-Based
Compensation, requires the use of option valuation models. The Company uses the
Black-Scholes option valuation model which was developed for use in estimating
the fair value of traded options. Traded options have no vesting restrictions
and are fully transferable. The Black-Scholes model also requires the input of
highly subjective assumptions including the expected stock price volatility and
the estimated life of the option. The Company's employee stock options have
characteristics significantly different from those of traded options and changes
in the subjective input assumptions can materially affect the fair value
estimate. Therefore, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.
The pro forma information regarding net income and earnings per share required
by SFAS No. 123 has been determined as if the Company had accounted for its
employee stock options under the fair value method of SFAS No. 123. The fair
value for these options was estimated as of the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions for 1997 and 1996, respectively:
1997 1996
---- ----
Volatility factors of the expected market
price of the Company's common stock ...... 22.4% 19.2%
Risk-free interest rates ...................... 6.4% 7.9%
Dividends yields .............................. 1.7% 1.8%
Weighted-average expected option life ......... 7.0 years 7.1 years
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting periods. The initial impact on
pro forma net income and net income per share may not be representative of the
compensation expense in future years when the effect of the amortization of
multiple awards would be reflected in the pro forma disclosure.
<PAGE>
A summary of the Company's stock option activity and the Company's pro forma
earnings information for fiscal 1997 and fiscal 1996 follows:
1997 1996
------------------- -------------------
Weighted Weighted
Average Price Average Price
STOCK OPTION ACTIVITY Shares per Share Shares per Share
- --------------------- ------ --------- ------- ---------
Total options outstanding:
Beginning Balance ...... 2,804,114 $ 9.60 2,784,838 $ 7.27
Granted ................ 446,618 17.80 813,066 13.89
Exercised .............. (426,641) 5.56 (728,640) 4.94
Canceled ............... (58,086) 14.92 (65,151) 10.85
------- -------
Ending Balance ........ 2,766,005 11.44 2,804,114 9.60
========= =========
Shares authorized for grant: .... 9,991,600 9,991,600
Shares exercisable: ............. 1,955,856 1,811,808
Shares reserved for
future grants: ............... 1,133,103 1,539,506
Weighted average
remaining contractual life: .... 6.4 years 6.6 years
Weighted average fair value
per share of options granted
during the year
At market price ........... $ 6.21 $ 4.01
At less than market ....... $10.26 $ 7.93
PRO FORMA INFORMATION (in thousands, except for earnings per share information)
- -------------------------------------------------------------------------------
Pro forma net income $37,537 $33,989
Pro forma earnings per share $1.02 $0.95
<PAGE>
Note J--EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share. Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Basic
earnings per share excludes any dilutive effects of options, warrants, and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share.
Baldor has historically presented diluted earnings per share in all financial
reports. The presentation of financial results now includes both diluted
earnings per share and basic earnings per share.
1997 1996 1995
---- ---- ----
Numerator Reconciliation:
The numerator is the same for
diluted and basic EPS:
Net earnings (in thousands) ...... $ 40,365 $ 35,173 $ 32,305
=========== =========== ===========
Denominator Reconciliation:
The denominator for basic
earnings per share:
Weighted average shares ............ 35,691,572 35,091,161 36,862,329
Effect of dilutive securities:
Stock options .................. 1,371,052 1,199,151 1,659,385
--------- --------- ---------
The denominator for diluted
earnings per share:
Adjusted weighted
average shares ......... 37,062,624 36,290,312 38,521,714
========== ========== ==========
Basic earnings per share ............. $ 1.13 $ 1.00 $ 0.88
Diluted earnings per share ........... $ 1.09 $ 0.97 $ 0.84
Note K--ACQUISITIONS
On April 5, 1997, Baldor Electric Company acquired Optimised Control Ltd. for
cash and shares of the Company's common stock. The acquisition has been
accounted for as a purchase and the results of operations of Optimised Control
Ltd. have been included in the accompanying financial statements beginning April
1997. Optimised Control Ltd.'s operations are not material to the Company's
results of operations in prior years. Goodwill associated with the acquisition
is being amortized on a straight-line basis over 25 years.
NOTE L--SUBSEQUENT EVENTS
On March 3, 1998, the Company reached an agreement to acquire Northern
Magnetics, Inc., a motor manufacturer. The financial results of operations for
Northern Magnetics for the years 1997, 1996, and 1995 are not anticipated to be
material to Baldor's results of operations.
<PAGE>
REPORT OF ERNST & YOUNG, LLP
INDEPENDENT AUDITORS
SHAREHOLDERS AND BOARD OF DIRECTORS
BALDOR ELECTRIC COMPANY AND AFFILIATES
We have audited the accompanying consolidated balance sheets of Baldor Electric
Company and affiliates as of January 3, 1998 and December 28, 1996, and the
related consolidated statements of earnings, cash flows and shareholders' equity
for each of the three years in the period ended January 3, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Baldor Electric
Company and affiliates at January 3, 1998 and December 28, 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 3, 1998, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
- ----------------------------------
Ernst & Young LLP
Little Rock, Arkansas
February 3, 1998,
except for Note L,
as to which the date
is March 3, 1998
<PAGE>
REPORT OF MANAGEMENT ON RESPONSIBILITY FOR FINANCIAL REPORTING
Baldor management is responsible for the integrity and objectivity of the
financial information contained in this Annual Report. The accompanying
financial statements have been prepared in conformity with generally accepted
accounting principles, applying informed judgements and estimates where
appropriate.
Baldor maintains a system of internal accounting control that provides
reasonable assurance that assets are safeguarded and transactions are executed
in accordance with management's authorization and recorded properly to permit
the preparation of financial statements in accordance with generally accepted
accounting principles.
The Audit Committee of the Board of Directors is composed solely of outside
directors and is responsible for recommending to the Board the independent
accounting firm to be retained for the coming year. The Audit Committee meets
regularly with the independent auditors, with the Manager of Audit Services, as
well as with Baldor management, to review accounting, auditing, internal
accounting controls and financial reporting matters. The independent auditors,
Ernst & Young LLP, and the Manager of Audit Services have direct access to the
Audit Committee without the presence of management to discuss the results of
their audits.
Ernst & Young LLP, independent certified public accountants, have audited
Baldor's financial statements. Management has made available to Ernst & Young
LLP all of the Company's financial records and related data, as well as the
minutes of shareholders' and directors' meetings.
/s/ R. S. Boreham, Jr. /s/ R. L. Qualls
- ------------------------------------- -------------------------------
R. S. Boreham, Jr. R. L. Qualls
Chairman of the Board Vice Chairman
/s/ John McFarland /s/ Lloyd G. Davis
- ------------------------------------- ------------------------------
John McFarland Lloyd G. Davis
President Executive Vice President-Finance,
Chief Financial Officer,
Secretary and Treasurer
<PAGE>
SHAREHOLDER INFORMATION
STOCK SPLITS
Baldor Electic Company distributed a four-for-three stock split effected in the
form of a 33% stock dividend on December 15, 1997. All applicable financial
reports have been restated to reflect this stock split.
DIVIDEND POLICY
Baldor's dividend policy is to periodically increase dividends as earnings and
financial strength warrant, but also to reinvest a major portion of earnings to
help finance growth opportunities. The objective is for shareholders to
obtain dividend increases over time, while also participating in the growth of
the Company.
DIVIDENDS PAID
Baldor's dividend rate was increased twice in 1997. There have been ten dividend
increases since the 1st quarter of 1992.
1997 1996 1995
---- ---- ----
1st quarter $0.08 $0.07 $0.06
2nd quarter 0.09 0.07 0.06
3rd quarter 0.09 0.08 0.07
4th quarter 0.10 0.08 0.07
----- ----- -----
Year $0.36 $0.30 $0.26
===== ===== =====
COMMON STOCK PRICE RANGE
1997 1996
---- ----
High Low High Low
---- --- ---- ---
1st quarter 19.9688 18.1875 16.7813 13.8750
2nd quarter 22.3125 18.4688 18.7500 14.2500
3rd quarter 23.8125 21.7969 16.8750 14.3438
4th quarter 23.4844 21.2500 18.5625 13.9688
SHAREHOLDERS
At January 3, 1998, there were 4,921 shareholders of record and employee
shareholders through participation in the benefit plans.
<PAGE>
INDEPENDENT AUDITORS
Ernst & Young LLP
425 West Capitol - Suite 3600
Little Rock, Arkansas 72201
GENERAL COUNSEL
Peper, Martin, Jensen, Maichel and Hetlage
720 Olive Street
St. Louis, Missouri 63101
TICKER
The common stock of Baldor Electric Company trades on the New York Stock
Exchange (NYSE) with the ticker symbol BEZ.
FORM 10-K REPORT
Baldor's Form 10-K report is filed with the Securities and Exchange Commission.
Shareholders may obtain a copy of the Form 10-K report (without charge) by
contacting the Company's Investor Relations Department.
SHAREHOLDER INQUIRIES
To request additional copies of the Annual Report, or other materials and
information about Baldor Electric Company, please contact us at:
Baldor Electric Company
Attn: Investor Relations
P.O. Box 2400
Fort Smith, Arkansas 72902
Phone: (501) 646-4711
Fax: (501) 648-5752
Internet: www.baldor.com
TRANSFER AGENT AND REGISTRAR
Wachovia Bank of North Carolina, N.A.
Wachovia Shareholder Services
P.O. Box 8218
Boston, Massachusetts 02266-8218
(800) 633-4236
SHAREHOLDERS' ANNUAL MEETING
The Company's Annual Meeting of Shareholders will be held at 10:30 a.m.,
Saturday, May 2, 1998, at the Holiday Inn, 700 Rogers Avenue, Fort Smith,
Arkansas.
<PAGE>
<PAGE>
EXHIBIT 21
BALDOR ELECTRIC COMPANY AND AFFILIATES
AFFILIATES OF THE REGISTRANT
NAME OF AFFILIATE
- -----------------
Baldor of Arkansas Arkansas
Baldor of Nevada, Inc. Nevada
BEC Business Trust Massachusetts
Baldor of Texas, L.P Texas
Baldor International, Inc. U.S.Virgin Islands
Southwestern Die Casting, Inc. Arkansas
Baldor UK Holding Company, Inc. Delaware
Optimised LTD United Kingdom
Optimized NZ New Zealand
Baldor Holdings, Inc. Delaware
Baldor de Mexico, S.A. de C.V. Mexico
Baldor ASR, AG Switzerland
Baldor ASR GmbH fuer Antriebstechnik Germany
Baldor ASR U.K. Limited United Kingdom
Baldor Italia S.R.L. Italy
Australian Baldor Pty. Limited Australia
Baldor Electric (Far East) PTE. Ltd. Singapore
Baldor Electric (Thailand) Ltd. Thailand
Baldor Industrial Automation PTE.Ltd. Singapore
Northern Magnetics, Inc. California
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Baldor Electric Company and affiliates of our report dated February 3, 1998,
except for Note L, as to which the date is March 3, 1998, included in the 1997
Annual Report to Shareholders of Baldor Electric Company and affiliates.
Our audits also included the financial statement schedule of Baldor Electric
Company and affiliates listed in Item 14(a). This schedule is the responsibility
of the Company's management. Our responsibility is to express an opinion based
on our audits. In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-8, No. 2-77046) pertaining to the Baldor Electric Company 1982 Incentive
Stock Option Plan, (Form S-8, No. 33-16766) pertaining to the Baldor Electric
Company 1987 Incentive Stock Plan, (Form S-8, No. 33-28239) pertaining to the
Baldor Electric Company Employee Savings Plan, (Form S-8, No. 33-36421)
pertaining to the Baldor Electric Company 1989 Stock Option Plan for
Non-Employee Directors and (Forms S-8, No. 33-59281 and No. 33-60731) pertaining
to the Baldor Electric Company 1994 Incentive Stock Plan, (Form S-8, No.
333-33109) pertaining to the Baldor Electric Company 1996 Stock Option Plan for
Non-Employee Directors, (Form S-8, No. 333-33287) pertaining to the Baldor
Electric Company Employees' Profit Sharing and Savings Plan of our report dated
February 3, 1998, except for Note L, as to which the date is March 3, 1998,
with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the proceeding
paragraph with respect to the financial statement schedule included in this
Annual Report (Form 10-K) of Baldor Electric Company and affiliates.
/s/ Ernst & Young LLP
- ---------------------
Ernst & Young LLP
Little Rock, Arkansas
March 27, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Amounts from the audited financial statements for Baldor Electric Company as of
January 3, 1998.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JAN-03-1998
<CASH> 9575
<SECURITIES> 11900
<RECEIVABLES> 92265
<ALLOWANCES> 3525
<INVENTORY> 96541
<CURRENT-ASSETS> 219440
<PP&E> 227769
<DEPRECIATION> 123672
<TOTAL-ASSETS> 355889
<CURRENT-LIABILITIES> 78172
<BONDS> 0
0
0
<COMMON> 3795
<OTHER-SE> 239639
<TOTAL-LIABILITY-AND-EQUITY> 355889
<SALES> 557940
<TOTAL-REVENUES> 559783
<CGS> 389711
<TOTAL-COSTS> 494148
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 509
<INTEREST-EXPENSE> 2124
<INCOME-PRETAX> 65635
<INCOME-TAX> 25270
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40365
<EPS-PRIMARY> 1.13
<EPS-DILUTED> 1.09
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000009342
<NAME> BALDOR ELECTRIC COMPANY
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-28-1996 DEC-30-1995
<PERIOD-END> DEC-28-1996 DEC-30-1995
<CASH> 7950 6322
<SECURITIES> 17892 28487
<RECEIVABLES> 83383 80568
<ALLOWANCES> 3200 2800
<INVENTORY> 92387 83689
<CURRENT-ASSETS> 218157 212095
<PP&E> 202470 182214
<DEPRECIATION> 107106 93143
<TOTAL-ASSETS> 325486 313462
<CURRENT-LIABILITIES> 71182 67026
<BONDS> 45027 25255
0 0
0 0
<COMMON> 2862 2817
<OTHER-SE> 197463 208561
<TOTAL-LIABILITY-AND-EQUITY> 325486 313462
<SALES> 502875 473103
<TOTAL-REVENUES> 505372 475699
<CGS> 353345 334306
<TOTAL-COSTS> 448180 422753
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 695 886
<INTEREST-EXPENSE> 2668 1260
<INCOME-PRETAX> 57192 52946
<INCOME-TAX> 22019 20641
<INCOME-CONTINUING> 35173 32305
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 35173 32305
<EPS-PRIMARY> 1.00 0.88
<EPS-DILUTED> 0.97 0.84
</TABLE>
