<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
June 30, 1998 1-13906
BALLANTYNE OF OMAHA, INC.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 47-0587703
- ------------------------------ ---------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
4350 McKinley Street, Omaha, Nebraska 68112
--------------------------------------------
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code:
(402) 453-4444
Indicate by check mark whether 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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date:
Class Outstanding as of July 31, 1998
- ----------------
Common Stock, $.01
par value 13,832,368 shares
<PAGE>
<TABLE>
<CAPTION>
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
INDEX
<S> <C>
Part I. Financial Information
Item 1. Consolidated Financial Statements Page
Consolidated Balance Sheets-June 30, 1998 and December 31, 1997 .. 3
Consolidated Statements of Income- Three and six months ended
June 30, 1998 and 1997 ........................................ 4
Consolidated Statements of Stockholders' Equity-
Six months ended June 30, 1998 ................................ 5
Consolidated Statements of Cash Flows- Six months ended
June 30, 1998 and 1997 ........................................ 6
Notes to Consolidated Financial Statements
Six months ended June 30, 1998 ................................ 7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition ............................ 11
Part II. Other Information ................................................. 16
Item 4. Submission of Matters to a Vote of Security Holders ............... 16
Item 6. Exhibits and reports on form 8-K .................................. 17
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Ballantyne of Omaha, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents $ 492,945 $ 7,701,507
Accounts receivable, net 11,468,399 11,728,231
Inventories 23,426,574 17,445,632
Recoverable income taxes - 490,766
Deferred income taxes 677,459 626,133
Other current assets 130,973 118,028
------------- -------------
Total current assets 36,196,350 38,110,297
Plant and equipment, net 10,950,515 7,399,990
Other assets, net 3,911,286 1,242,211
------------- -------------
Total assets $ 51,058,151 $ 46,752,498
------------- -------------
------------- -------------
Liabilities and Stockholders' equity
- ------------------------------------
Current liabilities:
Notes payable to bank $ 893,000 $ -
Current installments of long-term debt 70,000 70,000
Accounts payable 5,296,062 8,351,392
Accrued expenses 2,321,660 2,286,001
Income taxes payable 231,193 -
------------- ----------
Total current liabilities 8,811,915 10,707,393
Deferred income taxes 271,778 250,315
Long-term debt, excluding current installments 138,179 171,761
Stockholders' equity:
Preferred stock, par value $.01 per share;
Authorized 1,000,000 shares, none outstanding - -
Common stock, par value $.01 per share;
Authorized 25,000,000 shares; issued
and outstanding 13,832,368 shares at
June 30, 1998 and 13,548,594 shares
at December 31, 1997 138,324 135,486
Additional paid-in capital 25,624,773 22,741,511
Retained earnings 16,073,182 12,746,032
------------- -------------
Total stockholders' equity 41,836,279 35,623,029
------------- -------------
Total liabilities and stockholders' equity $ 51,058,151 $ 46,752,498
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Consolidated Statements of Income
Three and Six Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------- -------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 15,412,796 $ 16,348,995 $ 32,684,683 $ 31,073,809
Cost of revenues 10,644,092 11,416,489 22,607,557 21,785,256
------------ ------------ ------------ ------------
Gross profit 4,768,704 4,932,506 10,077,126 9,288,553
Operating expenses:
Selling 964,794 758,380 1,827,029 1,407,587
General and administrative 1,583,389 1,382,146 3,154,062 2,673,705
------------ ------------ ------------ ------------
Total operating expenses 2,548,183 2,140,526 4,981,091 4,081,292
Income from operations 2,220,521 2,791,980 5,096,035 5,207,261
Interest income 13,399 71,287 86,569 135,650
Interest expense (8,464) (19,694) (12,654) (30,877)
------------ ------------ ------------ ------------
Net interest income 4,935 51,593 73,915 104,773
------------ ------------ ------------ ------------
Income before income taxes 2,225,456 2,843,573 5,169,950 5,312,034
Income taxes 799,724 988,323 1,842,800 1,888,582
------------ ------------ ------------ ------------
Net income $ 1,425,732 $ 1,855,250 $ 3,327,150 $ 3,423,452
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per share:
Basic $ 0.10 $ 0.14 $ 0.24 $ 0.27
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted $ 0.10 $ 0.13 $ 0.23 $ 0.24
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Weighted average shares outstanding:
Basic 13,827,734 12,894,918 13,690,578 12,874,898
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Diluted 14,496,120 14,053,491 14,355,283 14,025,078
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Additional
Preferred Common paid-in- Retained
stock stock capital earnings Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997 - $ 135,486 $ 22,741,511 $ 12,746,032 $ 35,623,029
Net income 3,327,150 3,327,150
Issuance of 259,058 shares
of common stock upon
acquisition of business 2,590 2,797,410 - 2,800,000
Issuance of 24,750 shares of
common stock upon exercise
of stock options - 248 85,852 - 86,100
-----------------------------------------------------------------------------------------
Balance at June 30, 1998 - $ 138,324 $ 25,624,773 16,073,182 $ 41,836,279
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,327,150 $ 3,423,452
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 760,210 435,333
Changes in assets and liabilities, net of assets acquired:
Accounts receivable 543,421 (415,599)
Inventories (5,057,755) (2,745,958)
Other current assets (9,586) (42,223)
Accounts payable (3,201,890) 339,913
Accrued expenses (24,593) (143,557)
Income taxes 692,096 339,237
Other assets (310,675) (16,506)
----------- -----------
Net cash provided by (used in)
operating activities (3,281,622) 1,174,092
----------- -----------
Cash flows from investing activities:
Acquisitions, net of cash acquired (3,811,922) (750,000)
Capital expenditures (1,044,118) (1,287,858)
----------- -----------
Net cash used in investing
activities (4,856,040) (2,037,858)
Cash flows from financing activities:
Repayments of long-term debt (50,000) (811,957)
Proceeds from long-term debt - 1,896
Net proceeds from revolving
credit facility 893,000 -
Proceeds from exercise of stock options 86,100 1,316,305
----------- -----------
Net cash provided by financing activities 929,100 506,244
----------- -----------
Net decrease in cash and cash equivalents (7,208,562) (357,522)
Cash and cash equivalents at beginning of period 7,701,507 6,042,593
----------- -----------
Cash and cash equivalents at end of period $ 492,945 $ 5,685,071
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements
6
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Six Months Ended June 30, 1998
(Unaudited)
1. Company
Ballantyne of Omaha, Inc., a Delaware corporation ("Ballantyne" or the
"Company"), and its wholly-owned subsidiaries, Strong Westrex, Inc., Xenotech
Strong, Inc., Xenotech Rental Corp. and Design and Manufacturing, Inc.,
design, develop, manufacture and distribute commercial motion picture
projection equipment, lighting systems and restaurant equipment. The
Company's products are distributed worldwide through a domestic and
international dealer network and are sold to major movie exhibition
companies, sports arenas, auditoriums, amusement parks, special venues,
restaurants, supermarkets and convenience food stores. Approximately 22.3% of
the Company's common stock is owned by Canrad of Delaware, Inc. ("Canrad")
which is an indirect wholly-owned subsidiary of ARC International Corporation.
2. Summary of Significant Accounting Policies
The principal accounting policies upon which the accompanying consolidated
financial statements are based are summarized as follows:
a. Basis of Presentation
The consolidated financial statements include the accounts of the Company and
its subsidiaries and have been prepared by the Company without audit. All
significant intercompany balances and transactions have been eliminated in
consolidation. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and include all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the periods presented. All such adjustments
are, in the opinion of management, of a normal, recurring nature. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
latest annual report on Form 10-K. The results of operations for the period
ended June 30, 1998 are not necessarily indicative of the operating results
for the full year.
b. Stock Splits
The Company's Board of Directors declared a 3-for-2 stock split of the
Company's common stock on April 21, 1998. The stock split was in the form of
a 50% common stock dividend payable June 12, 1998 to shareholders of record
on May 29, 1998. As a result of the stock split, the Company's outstanding
shares of common stock increased 4,610,767 shares. Share information and per
share prices in the accompanying financial statements reflect this stock
split as of the earliest period presented.
c. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market
and include appropriate elements of material, labor and manufacturing
overhead.
d. Revenue Recognition
The Company recognizes revenue from product sales upon shipment to the
customer. Revenues related to equipment rental and services are recognized as
earned over the terms of the contracts.
7
<PAGE>
e. Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
f. Earnings Per Common Share
Earnings per share of common stock have been computed on the basis of the
weighted average number of shares of common stock outstanding after giving
effect to equivalent common shares from dilutive stock options. In February
1997, the Financial Accounting Standards Board ("FASB") issued SFAS No. 128
"Earnings Per Share" which revised the calculation and presentation
provisions of Accounting Principles Board ("APB") Opinion 15 and related
interpretations. SFAS No. 128, which was effective for periods ending after
December 15, 1997, requires companies to present both currently and
retroactively, basic earnings per share and diluted earnings per share
instead of primary and fully-diluted earnings per share which was previously
required under APB Opinion 15. Accordingly, earnings per share for all
periods presented have been restated to apply the provisions of SFAS No. 128.
g. Reclassifications
Certain of the 1997 amounts have been reclassified to conform to the 1998
presentation.
3. Equity Offerings
On June 30, 1997, the Company completed a public offering pursuant to a
Registration Statement on Form S-3 (the "Offering"). Pursuant to the
Offering, Canrad sold 1,932,860 shares of Ballantyne common stock to the
public at the price of $16.875 per share. In addition, Canrad granted the
Underwriters an option to purchase an aggregate of up to 333,729 additional
shares of common stock at $16.875 per share less underwriting discounts and
commissions to cover over-allotments, if any. The Underwriters purchased all
333,729 shares. While the Company did not offer any shares or pay any
expenses incurred in the Offering, the Company did receive approximately
$1,146,000 from the exercise of a warrant and certain stock options, which in
aggregate totaled 280,750 shares and were sold in connection with the
Offering. Share information and per share prices have not been adjusted for
the stock split declared on April 21, 1998 for the above Offering.
4. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Raw materials and supplies $ 17,270,976 $ 13,857,783
Work in process 3,176,727 2,451,078
Finished goods 2,978,871 1,136,771
------------ ------------
$ 23,426,574 $ 17,445,632
------------ ------------
------------ ------------
</TABLE>
8
<PAGE>
5. Supplemental Cash Flow Information
Supplemental disclosures to the consolidated statements of cash flows are as
follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
1998 1997
---- ----
<S> <C> <C>
Interest paid 12,654 30,877
--------- ---------
--------- ---------
Income taxes paid (net of refunds) 1,150,704 1,563,537
--------- ---------
--------- ---------
</TABLE>
Non-cash activities in 1998 include the issuance of $2.8 million of common
stock as partial consideration for the purchase of the net assets of Design
and Manufacturing, Ltd. Other non-cash activities in 1997 include recording
the present value of non-compete contracts for approximately $197,000.
6. Acquisitions
Effective April 1, 1998, the Company purchased substantially all of the net
assets of Design and Manufacturing, Ltd. ("Design") for cash and stock of
approximately $5.5 million. The Company also assumed liabilities of
approximately $207,000. The common stock issued in this acquisition is
subject to a one year lock-up agreement. The cash portion of the purchase
price was financed through operating cash flows. The purchase price was
assigned to the assets acquired and liabilities assumed based upon the fair
market value of such assets and liabilities. In connection with the
acquisition, goodwill of approximately $2.5 million was recorded and will be
amortized over 15 years. Design is a leading supplier of film platter systems
to the motion picture exhibition industry and was a vendor of the Company. In
a related transaction in May 1998, the Company purchased land and a building
for $500,000 from the former owner of Design.
During January of 1998, the Company purchased substantially all of the net
assets of Sky-Tracker of Florida, Inc. ("Sky-Tracker of Florida") for cash of
$575,000. Sky-Tracker of Florida is a rental agent and distributor of high
intensity promotional searchlights.
The allocation of the purchase prices for Design and Sky-Tracker of Florida
are as follows, net of cash acquired:
<TABLE>
<CAPTION>
<S> <C>
Accounts receivable $ 283,589
Inventories 923,187
Other current assets 3,359
Plant and equipment 3,088,599
Other assets 2,520,000
Accounts payable (146,560)
Accrued expenses (60,252)
Purchase price paid in stock (2,800,000)
----------
Purchase price paid in cash $3,811,922
----------
----------
</TABLE>
During September of 1997, the Company acquired certain assets of Sky-Tracker
of America, Inc. ("Sky-Tracker") for cash of approximately $400,000. In
connection with the purchase, the Company recorded approximately $167,000 of
Goodwill which will be amortized over 5 years. In addition, the Company
entered into a 3-year non-compete agreement with the owner of Sky-Tracker.
The agreement is for a total of $60,000 payable in equal installments and is
included in other assets and long-term debt in the accompanying consolidated
balance sheets.
9
<PAGE>
Effective April 1, 1997, the Company purchased certain net assets, primarily
accounts receivable, inventories and fixed assets of Xenotech, Inc.
("Xenotech") for cash of $750,000. The Company also assumed liabilities of
$1,175,897. The purchase price has been assigned to the assets acquired and
liabilities assumed based upon the fair market value of such assets and
liabilities. No Goodwill was recorded in connection with the acquisition.
Xenotech produces, sells and rents a complete line of stationary searchlights
and computer operated lighting systems for the motion picture production,
television, live entertainment, theme parks and architectural industries. In
addition, the Company entered into a 5-year non-compete agreement with
Xenotech's founder and sole proprietor. The agreement is for a total of
$250,000 payable by the Company in equal installments of $50,000. The present
value of the non-compete payments has been included in other assets and
long-term debt in the accompanying consolidated balance sheets.
These acquisitions have been accounted for as purchases and, accordingly, the
Company's consolidated financial statements reflect the operations of the
acquired companies subsequent to the effective date of the acquisitions. If
the above business combinations had occurred on January 1, 1997, the proforma
operations of the Company would not have been materially different than that
reported in the accompanying statements of income.
7. Stock repurchase
On June 26, 1998, the Company's Board of Directors authorized the repurchase
of up to 10% of the Company's outstanding common stock. Purchases may be made
in the open market from time to time. The timing of the purchases and the
actual number of shares to be purchased will depend on market conditions.
During July 1998, the Company repurchased 17,000 shares of stock for
$132,430.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This 10-Q report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of Company
management. Such statements reflect the current view of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions. Should one or more of such risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those described herein as believed, estimated or expected.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1997
Net revenues for the three months ended June 30, 1998 (the "1998
Period") decreased $.9 million or 5.7% to $15.4 million from $16.3 million
for the three months ended June 30, 1997 (the "1997 Period"). The following
table shows comparative net revenues of theatre and lighting and restaurant
products for the respective periods:
<TABLE>
<CAPTION>
Three Months Ended June 30,
-------------------------------
1998 1997
---- ----
<S> <C> <C>
Theatre and lighting $ 14,835,473 $ 15,656,506
Restaurant 577,323 692,489
------------- -------------
Total net revenues $ 15,412,796 $ 16,348,995
------------- -------------
------------- -------------
</TABLE>
The decrease for the 1998 Period reflects lower revenues from the sale
and rental of theatre and lighting products. The decrease in theatre products
reflects decreased sales of commercial motion picture projector equipment
("projection equipment"), which declined $.7 million or 5.9%. This decrease
was mainly attributable to decreased sales of such equipment to foreign
customers where sales declined approximately $.6 million. Specifically, sales
to foreign customers in Asia and Mexico were lower than the 1997 Period and
also lower than expected. Sales to domestic customers decreased from $11.4
million in the 1997 Period to $11.1 million in the 1998 Period. Offsetting
the decrease in revenue were sales from Design and Manufacturing, Ltd.
("Design") which contributed approximately $805,000, most of which were
theatre sales. Net revenues from lighting products decreased approximately
1.3% from $1.29 million in the 1997 Period to $1.27 million in the 1998
Period. Sales of ISCO-Optic lenses and replacement parts remained relatively
flat. Sales of ISCO-Optic lenses, which are included as part of projection
equipment sales, rose approximately $11,000 while sales of replacement parts
decreased approximately $52,000 from the 1997 Period. The smaller increase in
sales of ISCO-Optic lenses can be tied to the softening of sales of
projection equipment as many times the lenses are sold with the projector as
a unit. Sales of replacement parts fluctuate from quarter to quarter and the
decrease noted above was not directly related to the softening in the
projection equipment business but is a function of the needs of current
customers with projection systems previously purchased from the Company.
ISCO-Optic is a trademark of ISCO-Optic GmbH.
Gross profit as a percentage of net revenues increased from 30.2% in the
1997 Period to 30.9% in the 1998 Period. The small increase can be attributed
to synergies obtained through the purchase of Design at the beginning of the
1998 Period. Design had formerly been one of the Company's largest vendors.
This increase was offset to a degree by certain manufacturing inefficiencies
due to a decrease in production volume during the 1998 Period.
11
<PAGE>
Operating expenses in the 1998 Period increased approximately $407,700
or 19.0% from the 1997 Period. As a percentage of net revenues, such expenses
increased to 16.5% for the 1998 Period from 13.1% for the 1997 Period. The
increase can be attributed to the acquisition of Design at the beginning of
the 1998 Period and the addition of a new salesperson in Europe. Had revenues
been at originally forecasted levels for the period, the increase as a
percentage of net revenues would have been consistent, since the additional
sales would have been made without the occurrence of significant operating
expenses.
Net interest income decreased to $4,935 from $51,593 in the 1997 Period
reflecting lower cash on hand and higher interest expense due to borrowings
on the Company's line of credit with Norwest Bank. Borrowings on the line of
credit was necessitated due to the acquisition of Design and also to lower
cash flow from operations related to the buildup of inventory for sales in
the second half of fiscal 1998.
The Company's effective tax rate for the 1998 Period was 35.9% compared
to 34.8% for the 1997 Period. The increase from the 1997 Period reflects
increased sales in the state of California due to sales from Xenotech
products. The difference between the Company's effective tax rate and the
Federal statutory rate of 34% reflects the non-deductibility of certain
intangible assets, principally goodwill and the impact of state income taxes.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1997
Net revenues for the six months ended June 30, 1998 (the "1998 Period")
increased $1.6 million or 5.2% to $32.7 million from $31.1 million for the
six months ended June 30, 1997 (the "1997 Period"). The following table shows
comparative net revenues of theatre and lighting and restaurant products for
the respective Periods:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------
1998 1997
---- ----
<S> <C> <C>
Theatre and lighting $ 31,575,520 $ 29,768,622
Restaurant 1,109,163 1,305,187
------------ ------------
Total net revenues $ 32,684,683 $ 31,073,809
------------ ------------
------------ ------------
</TABLE>
The increase for the 1998 Period reflects higher revenues from the sale
and rental of theatre and lighting products and also to the acquisition of
Design which contributed approximately $805,000 of revenue. The increase in
theatre products reflects increased sales of projection equipment in the
first quarter of 1998. Overall, sales of projection equipment for the 1998
period increased approximately $.5 million or 1.9% from $24.6 million in the
1997 Period to $25.1 million in the 1998 Period. This increase was
attributable to increased sales of such equipment to domestic customers where
sales increased $2.5 million. Sales to foreign customers decreased from $8.8
million in the 1997 Period to $8.0 million in the 1998 Period, primarily due
to the softening of sales in Asia and Mexico.
12
<PAGE>
Restaurant sales, including restaurant replacement part sales, declined
approximately $196,000 or 15.0% due to fewer sales of pressure fryers and
smoker ovens. Sales of ISCO-Optic lenses, replacement parts and sales and
rentals of lighting equipment also contributed to the increased revenue.
Sales of ISCO-Optic lenses rose approximately 4.8% to $2.8 million from $2.7
million in the 1997 Period, while sales of replacement parts increased
approximately 7.4% to $3.7 million from $3.46 million in the 1997 Period.
ISCO-Optic is a trademark of ISCO-Optic GmbH. These increases reflect the
continued demand for theatre products and a higher installed base of
projection equipment. As with the projection equipment, the growth primarily
relates to the first quarter of 1998 as the second quarter of the year was
generally lower than the period a year ago. Net revenues from lighting
products increased approximately $1.1 million from $1.9 million in the 1997
Period to $3.0 million in the 1998 Period. This increase primarily reflects
the acquisition of Xenotech, Inc. in the second quarter of 1997, the
acquisition of Sky-Tracker of America, Inc. in the third quarter of 1997 and
the acquisition of Sky-Tracker of Florida, Inc. in the first quarter of 1998.
Gross profit as a percentage of net revenues increased from 29.9% in the
1997 Period to 30.8% in the 1998 Period. The increase was attributed to
synergies obtained through the purchase of Design at the beginning of the
1998 period.
Operating expenses in the 1998 Period increased approximately $900,000
or 22.0% from the 1997 Period. The increase can be attributed to the
acquisition of Design at the beginning of the 1998 Period and the addition of
a salesperson in Europe. As a percentage of net revenues, such expenses
increased to 15.2% for the 1998 Period from 13.1% for the 1997 Period. Had
revenues been at originally forecasted levels, the increase as a percentage
of net revenues would have been consistent, since the additional sales would
have been made without the occurrence of significant operating expenses.
Net interest income decreased to $73,915 from $104,773 in the 1997
Period reflecting lower cash on hand and more interest expense due to
borrowings on the Company's line of credit with Norwest Bank. Borrowings on
the line of credit was necessitated due to the acquisition of Design and also
to lower cash flow from operations. The Company expects to pay back the line
of credit during the third quarter of 1998.
The Company's effective tax rate for the 1998 Period of 35.6% was
consistent with that of the 1997 Period. The difference between the Company's
effective tax rate and the Federal statutory rate of 34% reflects the
non-deductibility of certain intangible assets, principally goodwill and the
impact of state income taxes.
13
<PAGE>
Liquidity and Capital Resources
- -------------------------------
At June 30, 1998, the Company had approximately $208,000 of long-term debt.
The debt relates entirely to non-compete agreements set up to be paid in
installments.
As of June 30, 1998, the Company has a $10 million line of credit with
Norwest Bank, N.A. (the "Norwest Facility"). There were $893,000 of borrowings
on the line of credit as of June 30, 1998 compared to no borrowings at June 30,
1997. These borrowings were necessitated by the purchase of Design this quarter
and the buildup of inventories to be sold in the second half of the fiscal year
and are expected to be repaid during the third quarter. Borrowings outstanding
under the Norwest Facility bear interest, payable monthly, at a rate equal to
Norwest Bank's National Money Market Rate as announced from time to time (8.5%
at June 30, 1998). All of the Company's assets secure the Norwest Facility. The
Norwest Facility agreement contains certain restrictive covenants which include,
among other things, a prohibition on the payment of cash dividends and
requirements relating to current debt, current debt service coverage and total
debt to tangible net worth ratios and tangible net worth. The Company was in
compliance with such covenants at June 30, 1998 and December 31, 1997.
Historically the Company has funded its working capital requirements
through cash flow generated by its operations, however, net cash used in
operating activities for the 1998 Period was $3,281,622 compared to net cash
provided by operating activities for the 1997 Period of $1,174,092. The decrease
in net cash provided by operating activities was due primarily to a $3.2 million
decrease in accounts payable and a $5.1 million inventory buildup for sales in
the second half of 1998. The Company anticipates that internally generated funds
and borrowings under the Norwest Facility will be sufficient to meet its working
capital needs. The Company expects that it will have capital expenditures of
approximately $1.5 million in 1998.
Net cash used in investing activities was $4,856,040 for the 1998 Period
compared to $2,037,858 in the 1997 Period. Investing activities for the 1998
Period reflect the acquisition of Sky-Tracker of Florida, Inc. during January
of 1998 and the purchase of Design in the second quarter of 1998. Capital
expenditures were approximately $1.0 million for the six months ended June
30, 1998 and primarily relate to the purchase of rental and plant equipment.
Net cash provided by financing activities was $929,100 for the 1998
Period compared to $506,244 in the 1997 Period. The increase relates to
borrowings on the Company's line of credit.
The Company does not engage in any currency hedging activities in
connection with its foreign operations and sales. To date, all of the
Company's international sales have been denominated in U.S. dollars,
exclusive of Strong Westrex, Inc. sales, which are denominated in Hong Kong
dollars.
Seasonality
- -----------
Generally, the Company's business exhibits a moderate level of
seasonality as sales of theatre products typically increase during the third
and fourth quarters. The Company believes that such increased sales reflect
seasonal increases in the construction of new motion picture screens in
anticipation of the holiday movie season.
Inflation
- ---------
The Company believes that the relatively moderate rates of inflation in
recent years have not had a significant impact on its net revenues or
profitability. Historically, the Company has been able to offset any
inflationary effects by either increasing prices or improving cost
efficiencies.
14
<PAGE>
Year 2000
- ---------
During 1997, the Company developed a plan to deal with the Year 2000
problem and began converting its computer systems to be Year 2000 compliant.
The plan provides for the conversion efforts to be completed by the end of
1999. The Year 2000 problem is the result of computer programs being written
using two digits rather than four to define the applicable year. The total
cost of the project is being funded through operating cash flows. The Company
is expensing all costs associated with these systems changes as the costs are
incurred. As of June 30, 1998, an immaterial amount has been expensed and the
total estimated costs of the Year 2000 problem are expected to be immaterial.
Recent Accounting Pronouncements
- --------------------------------
Also in June of 1997, the FASB issued Statement No. 131, "Disclosures
about Segments of an Enterprise and Related Information" which establishes
standards for the way that public business enterprises report information
about operating segments in annual financial statements and requires these
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas, and major
customers. This statement is effective for financial statements for fiscal
periods beginning after December 15, 1997. In the initial year of
application, comparative information for earlier years is to be restated. The
Company may be required to disclose additional information with regard to
segments relating to this statement.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.
The Company's regular Annual Meeting of Stockholders was held on May 27,
1998 for the purpose of electing two nominees as directors and approving
amendments to the Company's 1995 Stock Option Plan and to the 1995 Outside
Directors Stock Option Plan. Amendment No. 1 to the Stock Option Plan
increased the number of shares that may be issued under the plan by 390,000
shares. Amendment No. 2 to the 1995 Stock Option Plan removed the 75,000
share limitation on options that any participant in the plan can receive in
any calendar year. The amendment to the 1995 Outside Directors Stock Option
Plan decreased the automatic grant to outside directors from 37,125 shares to
22,500 shares. All share information has been adjusted to reflect the 3-for-2
stock split effected June 12, 1998. With respect to the election of
directors, both were re-elected. With respect to the amendments, the
following table summarizes the results of the voting:
<TABLE>
<CAPTION>
1995 Stock Option Plan 1995 Stock Option Plan
1995 Outside Directors (Increasing number (Removing 75,000
Stock Option Plan of shares) share limitation)
----------------- --------- ----------------
<S> <C> <C> <C>
For 8,033,371 7,519,226 7,720,108
Against 55,383 574,263 369,199
Abstain 20,130 15,395 19,577
Broker Non-Vote - - -
--------- --------- ---------
--------- --------- ---------
</TABLE>
16
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.17 Amendment to the Company's 1995 Stock Option Plan.
10.18 Amendment to the Company's 1995 Outside Directors Stock
Option Plan.
10.3.6 Employment Agreement dated May 1, 1998 between the Company and
Brad French.
11 Computation of net earnings per share for the three and six
months ended June 30, 1998 and 1997
27 Financial Data Schedule (for SEC information only)
(b) Reports on Form 8-K filed for the three months ended June 30, 1998
No reports on Form 8-K were filed during the three months ended June 30,
1998.
17
<PAGE>
SIGNATURES
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.
BALLANTYNE OF OMAHA, INC.
By: /s/ John Wilmers By: /s/ Brad French
------------------------------- -------------------------------
John Wilmers, President, Brad French, Secretary, Treasurer,
Chief Executive Officer, and and Chief Financial Officer
Director
Date: August 10, 1998 Date: August 10, 1998
18
<PAGE>
SECOND AMENDMENT TO BALLANTYNE OF OMAHA, INC.
1995 STOCK OPTION PLAN
The Ballantyne of Omaha, Inc., 1995 Stock Option Plan is hereby amended
as follows:
1. The second paragraph of Section 6 of the Plan as amended on June 25,
1997, is hereby further amended to read as follows:
"The maximum aggregate number of shares that may be issued under
the Plan is 1,320,000 shares."
2. All other terms, conditions and provisions of said Plan remain
the same.
DATED this 27th day of May, 1998.
BALLANTYNE OF OMAHA, INC.
By: /s/John Wilmers
------------------------------------
John Wilmers, President
Attest:
/s/Brad French
- -----------------------------------
Brad French, Secretary
I hereby certify that the above amendment to the Ballantyne of
Omaha, Inc., 1995 Stock Option Plan was approved by the Board of Directors of
the corporation at a special meeting of the Board of Directors duly called
and held on the 24th day of March, 1998, and was approved by the Stockholders
of the corporation at the Annual Meeting of Stockholders held on the 27th day
of May, 1998.
DATED at Omaha, Nebraska, this 28th day of May, 1998.
/s/Brad French
---------------------------------------
Brad French, Secretary
<PAGE>
FIRST AMENDMENT TO THE BALLANTYNE OF OMAHA, INC.
1995 OUTSIDE DIRECTORS' STOCK OPTION PLAN
The Ballantyne of Omaha, Inc., 1995 Outside Directors' Stock Option
Plan, as amended, is hereby further amended to read as follows:
1. Sections 8(a), (b) and (c) of the 1995 Outside Director's
Stock Option Plan, are hereby amended to read as follows:
"8. NON-QUALIFIED STOCK OPTIONS.
(a) GRANT OF NQSOs.
Any Non-Employee Director who first becomes a member of
the Board on or after the effective date of this amended
Section 8(a), shall be granted NQSOs to purchase 15,000
shares automatically on the next succeeding business day
following his election to the Board. In addition to the
initial NQSO grants to each Non-Employee Director, whether
before or after the effective date of this amended Section,
NQSOs to purchase 15,000 Shares shall be granted
automatically to each Non-Employee Director on the next
succeeding business day after the third consecutive annual
meeting of the shareholders following his initial NQSO
grant, and on the next succeeding business day after every
third consecutive annual meeting of the shareholders
thereafter during the term of the Plan, provided that said
Non-Employee Director continues to be a member of the Board
on the date of each such additional grant. NQSOs shall be
granted in the aforesaid manner until the date on which the
Shares available for grant shall no longer be sufficient to
permit grants of NQSOs covering 15,000 Shares to be made to
each Non-Employee Director entitled to a grant as of such
date, in which event the Shares then available for grant
shall be allocated on a pro rata basis among the Non-Employee
Directors entitled to a grant of NQSOs as of such date.
The provisions of this Section shall not be amended
more than once every six months, other than to comport with
changes in the Code, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or the rules thereunder.
<PAGE>
(b) EXERCISE PRICE.
Each share covered by a NQSO granted on the business day
next succeeding the Effective Date of this Plan may be purchased
at a purchase price equal to the initial public offering price of
a Share. Each Share covered by a NQSO granted after the business
day next succeeding the effective date of this amended section
may be purchased at a purchase price equal to the Fair Market
Value of a Share on the date of the NQSO grant. The provisions
of this Section shall not be amended more than once every six
months, other than to comport with changes in the Code, ERISA, or
the rules thereunder.
(c) TERMS AND CONDITIONS.
(i) Except as set forth in Section 10, all NQSOs
granted to a Participant shall vest and become
first exercisable as follows:
i.i 5,000 shares on the next succeeding business
day following a Participant's initial election to
the Board.
i.ii Thereafter, 5,000 shares on the next
succeeding business day following each annual
meeting of the Stockholders of the Company.
2. All other terms, conditions, and provisions of said Plan remain
the same.
DATED this 27th day of May, 1998.
BALLANTYNE OF OMAHA, INC.
By: /s/John Wilmers
------------------------------------
John Wilmers, President
Attest:
/s/Brad French
- -----------------------------------
Brad French, Secretary
<PAGE>
I hereby certify that the above amendment to the Ballantyne of
Omaha, Inc., 1995 Stock Option Plan was approved by the Board of Directors of
the corporation at a special meeting of the Board of Directors duly called
and held on the 24th day of March, 1998, and was approved by the Stockholders
of the corporation at the Annual Meeting of Stockholders held on the 27th day
of May, 1998.
DATED at Omaha, Nebraska, this 28th day of May, 1998.
/s/Brad French
---------------------------------------
Brad French, Secretary
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT made on May 1, 1998, by and between Ballantyne of Omaha,
Inc., (Ballantyne), an Omaha corporation with offices at 4350 McKinley
Street, Omaha, Nebraska 68112 (the "Company") and Brad J. French, an
individual residing at 1602 Clark Street, Fort Calhoun, Nebraska 68023 (the
"Employee").
W I T N E S S E T H:
In consideration of the mutual promises and covenants herein contained,
the parties intending to be legally bound agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee and the
Employee hereby agrees to be employed by the Company upon the terms and
conditions hereinafter set forth. The Employee agrees to serve as Secretary,
Treasurer and Chief Financial Officer (CFO) of Ballantyne of Omaha, Inc.
2. DUTIES AND SERVICES.
(a) The Employee shall perform such services as may be assigned to
the Employee by the Chairman, President, or Board of Directors of Ballantyne of
Omaha, Inc.
(b) The Employee agrees to devote all of the Employee's time and
efforts to the performance of the Employee's duties as an employee of the
Company. The Employee shall not during the term hereof perform any services for
any person, firm or corporation, other than as approved in writing by the
Company. The prohibitions of this section shall apply to indirect activities of
the Employee as well as direct activities, and will accordingly prohibit
activities of persons with whom the Employee is "affiliated," as that term is
defined under the Securities Act of 1933, as amended, and the Rules and
Regulations thereunder.
(c) The Employee shall undertake such travel as may be necessary or
desirable to promote the business and affairs of the Company.
3. TERM
(a) Except as otherwise hereinafter specifically provided, the term
of this employment agreement shall be for a period of five years from the date
hereof.
(b) Either party may give notice to the other of its intention to
extend the term of this employment agreement within 120 days of its then
expiration date. In the event no such notice is given, the term described at
subparagraph (a) above shall automatically continue for an additional year, and
this subsection (b) shall be applicable again within such extension.
(c) This Agreement may be terminated by the Company, at any time,
at its discretion, upon the Employee's death, inability to perform or incapacity
(being
Page 1
<PAGE>
defined as inability to perform normal activities and functions for a period
of one hundred eighty consecutive days), or for cause. A termination for
cause for purposes of this Agreement shall be that the Employee (i) acted
dishonestly or incompetently or engaged in willful misconduct in the
performance of the Employee's duties, (ii) breached a fiduciary duty to the
Company, (iii) intentionally failed to perform reasonably assigned duties,
(iv) willfully violated any law, rule or regulation (other than minor traffic
violations or similar offenses) or any final cease and desist order, or (v)
breached this Agreement and such breach is not cured by Employee after ten
(10) days written notice.
(d) This Agreement may be terminated by the Employee in the
event the Company breaches this Agreement and such breach is not cured by the
Company after 10 days notice.
(e) In the event the Company shall be sold, whether by a sale of
assets or stock, such sale will automatically trigger a simultaneous renewal
of the term of this Agreement as provided in paragraph 4(a) hereof, with the
first day of such renewal term being the day of closing of the sale, and this
Agreement shall remain in full force and effect.
4. COMPENSATION.
(a) BASIC COMPENSATION. For all of the services to be rendered by
the Employee in any capacity hereunder, the Company shall pay the Employee
salary at the annual rate of one hundred ten thousand dollars effective January
1, 1998. The Company shall review such salary annually as of January 1 during
each subsequent year of this Agreement but in no event shall the basic
compensation in each subsequent year be less than the aforesaid amount. The
compensation paid hereunder to the Employee shall be paid in accordance with the
payroll practices conducted by the Company and shall be subject to the customary
withholding taxes and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(b) The Company agrees to furnish an automobile, selected by the
Company, for the use of the Employee. All expenses for the maintenance,
insurance and upkeep of the automobile shall be borne by the Company.
5. EXPENSES AND VACATIONS.
(a) The Company shall reimburse the employee for all reasonable and
necessary travel and entertainment expenses incurred by the Employee in the
performance of the Employee's duties hereunder upon submission of vouchers and
receipts evidencing such expenses.
(b) The Employee shall be entitled to vacation during each twelve
months of employment in accordance with applicable Company policy. All
vacations shall be in addition to recognized national holidays. During all
vacations, the Employee's compensation and other benefits as stated herein shall
continue to be paid in full. Such vacations shall be taken only at times
convenient for the Company, as approved by the President.
Page 2
<PAGE>
6. OTHER BENEFITS. In addition to the compensation and to the rights
provided for elsewhere in this agreement, the employee shall be entitled to
participate in each plan of the Company now or hereafter adopted for the benefit
of executive employees of the Company, to the extent permitted by such plans and
by applicable law, including, but not limited to, (i) profit sharing plan, (ii)
medical expense insurance program, (iii) pension plan, and (iv) incentive
compensation plan.
7. DISCLOSURE OF INFORMATION. The Employee acknowledges that the
Company's trade secrets, as they may exist from time to time, including, but not
limited to, the Company's list of customers, processes, ideas, plans, programs,
procedures and know how, are valuable, special and unique assets of the
Company's business, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. The parties agree that the
Employee will not, during or after the term of the Employee's employment by the
Company, disclose such secrets to any person, firm, corporation, association or
other entity or use such trade secrets for any reason or purpose whatsoever; nor
shall the Employee make use of any such property for the Employee's own purposes
or for the benefit of any person, firm, corporation or other entity (except the
Company) under any circumstances during or after the term of the Employee's
employment. Nothing in this section shall limit the Employee's right to carry
the Employee's accumulated career knowledge and professional skills to any
future employment, subject to the specific limitations of the foregoing
provisions of this section and the restrictive covenant elsewhere set forth
herein.
8. RESTRICTIVE COVENANT. The Employee agrees that at the expiration of
this Agreement or at termination for any reason whatsoever, the Employee shall
not, for a period of three years thereafter, engage in any business, as
principal employee or otherwise, which competes with the Company in the United
States with respect to the manufacture, production, assembling, distribution, or
sale of products which are the same or similar or related to use or function to
those which are manufactured, assembled, sold, or being developed by the Company
at any time during the Employee's employment with the Company, or directly or
indirectly solicit or contact any present or past (one having active contact
within twelve months prior to termination of the Employee's employment)
distributor, dealer, customer, client, employee or consultant of the Company (or
the Company's subsidiaries or affiliates). In the event that this agreement is
not renewed and the Employee is terminated, the Employee will be entitled to one
week of severance for each year of employment. In addition all existing
insurance benefits shall remain in force during the severance period. It is the
desire and intent of the parties that the provision of this section shall be
enforced to the fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
The parties hereto recognize and agree that in the event of the breach of
any provision of this covenant, there is not a remedy at law adequate to protect
the rights and interest of the Company set forth herein, and the parties
therefor agree that the Company shall have the right to an injunction enjoining
the Employee from violating the provisions of this section. Nothing herein
shall be construed as prohibiting the Company from
Page 3
<PAGE>
pursuing any other remedies available for such breach or threatened breach,
including the recovery of damages from the Employee. In the event that any
restriction contained in this covenant is deemed by any court to be void
because it is for an excessive period of time or restricts the Employee from
engaging in a business competing with the Company in an excessive
geographical area, it is agreed by the parties that said court shall have the
right to decrease the time period or geographical area covered by such
restriction to a time period and/or geographical area which is not excessive.
It is understood and agreed that in the event the Company terminates the
Employee without cause or if the Company breaches this Agreement and does not
cure said breach as provided in paragraph 3(d), the provisions of paragraph 9
are null and void.
9. INVENTIONS AND DISCOVERIES. The Employee hereby sells, transfers
and assigns to the Company or to any person or entity designated by the Company
all of the entire right, title and interest of the Employee in and to all
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material made or conceived by the Employee, solely or jointly,
during the term hereof which relate to the products and services provided by the
Company or which otherwise relate or pertain to the business, functions or
operations of the Company. The Employee agrees to communicate promptly and to
disclose to the Company in such form as the Employee may be required to do so
all information, details and data pertaining to such inventions, ideas,
disclosures and improvements and to execute and deliver to the Company such
formal transfers and assignments and such other papers and documents as may be
required of the Employee to permit the Company or any person or entity
designated by the Company to file and prosecute the patent applications and, as
to copyrightable material, to obtain copyrights thereof.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified mail,
return receipt requested, to the Employee's residence, in the case of the
Employee, or to the Company, at the principal offices of Ballantyne of Omaha,
Inc., attention of the President.
11. CONSTRUCTION OF AGREEMENT. This Agreement is intended to be
construed and enforced in accordance with the laws of the State of Nebraska and
without regard to or aid of any presumption or other rule requiring construction
against the party drawing or causing this Agreement to be drawn.
12. COMMENCEMENT OF ACTIONS OR PROCEEDINGS. Any action or proceeding
brought by a party hereto against another and arising out of the Agreement or
any breach thereof, may be commenced by the service of process in the same
manner as a notice may be served under this Agreement.
13. NON-WAIVER. No provision of this agreement shall be deemed to have
been waived except if such waiver is contained in a notice given to the party
claiming such waiver has occurred and no such waiver shall be deemed to be a
waiver of any other
Page 4
<PAGE>
or further similar or dissimilar obligation or liability of the party in
whose favor the waiver was given.
14. ILLEGALITY. If any provision or provisions hereof (or any part
thereof) or the application thereof to any particular facts or circumstances
shall be illegal and unenforceable by reason of any statute or rule of law, the
remaining provisions (or parts thereof) of this Agreement or the application of
the particular provision or provisions (or parts thereof) to the other facts or
circumstances shall not be affected thereby and shall remain in full force and
effect, it being the intention by this section to make clear the agreement of
the parties that this Agreement shall be enforced insofar as it may be enforced
consistent with law.
15. HEADINGS. The headings of the sections herein are for convenience
only and are not part of this Agreement and shall not affect the interpretation
thereof.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties. All prior agreements or understandings are merged herein. It may
not be changed orally, but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall insure to the benefit of, the successors and assigns of the Company,
whether by merger, consolidation, sale or lease of assets, or otherwise.
18. DEFINITION AND GENDER. All terms used herein shall have their
defined meaning, unless the context clearly indicates otherwise. Pronouns for
defined terms shall be construed as masculine, feminine, or neuter, or in the
singular or plural, as the sense requires, and to include any and all successors
and substitutions therefor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date and year first above written.
By: /s/ John P. Wilmers
---------------------------------
John P. Wilmers
President and Chief Executive Officer
/s/ Brad J. French
----------------------------------
Brad J. French
Secretary, Treasurer and Chief Financial Officer
May 1, 1998
--------------------------
Date
Page 5
<PAGE>
Exhibit 11
Ballantyne of Omaha, Inc. and Subsidiaries
Computation of Earnings Per Share of Common Stock
Three Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
BASIC EARNINGS
Earnings applicable to
common stock $ 1,425,732 $ 1,855,250
Weighted average common
shares outstanding - Basic * 13,827,734 12,894,918
----------- -----------
Basic earnings per share $ 0.10 $ 0.14
----------- -----------
----------- -----------
DILUTED EARNINGS
Earnings applicable to
common stock $ 1,425,732 $ 1,855,250
Weighted average common
shares outstanding - Basic * 13,827,734 12,894,918
Assuming conversion
of options outstanding 668,386 1,158,573
----------- -----------
Weighted average common
shares outstanding - Diluted 14,496,120 14,053,491
----------- -----------
Diluted earnings per share $ 0.10 $ 0.13
----------- -----------
----------- -----------
</TABLE>
*Adjusted for 3-for-2 stock split effected June 12, 1998
<PAGE>
Exhibit 11 continued ...
Ballantyne of Omaha, Inc. and Subsidiaries
Computation of Earnings Per Share of Common Stock
Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
BASIC EARNINGS
Earnings applicable to
common stock - Basic * $ 3,327,150 $ 3,423,452
Weighted average common
shares outstanding 13,690,578 12,874,898
----------- -----------
Basic earnings per share $ 0.24 $ 0.27
----------- -----------
----------- -----------
DILUTED EARNINGS
Earnings applicable to
common stock $ 3,327,150 $ 3,423,452
Weighted average common
shares outstanding - Basic* 13,690,578 12,874,898
Assuming conversion
of options outstanding 664,705 1,150,180
----------- -----------
Weighted average common
shares outstanding - Diluted 14,355,283 14,025,078
----------- -----------
Diluted earnings per share $ 0.23 $ 0.24
----------- -----------
----------- -----------
</TABLE>
* Adjusted for 3-for-2 stock split effected June 12, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-Q FOR BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES FOR
THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 492,945
<SECURITIES> 0
<RECEIVABLES> 11,698,053
<ALLOWANCES> 229,654
<INVENTORY> 23,426,574
<CURRENT-ASSETS> 36,196,350
<PP&E> 14,948,753
<DEPRECIATION> 3,998,238
<TOTAL-ASSETS> 51,058,151
<CURRENT-LIABILITIES> 8,811,915
<BONDS> 893,000
0
0
<COMMON> 138,324
<OTHER-SE> 41,697,955
<TOTAL-LIABILITY-AND-EQUITY> 51,058,151
<SALES> 32,684,683
<TOTAL-REVENUES> 32,684,683
<CGS> 22,607,557
<TOTAL-COSTS> 22,607,557
<OTHER-EXPENSES> 4,896,091
<LOSS-PROVISION> 85,000
<INTEREST-EXPENSE> 86,569
<INCOME-PRETAX> 5,169,950
<INCOME-TAX> 1,842,800
<INCOME-CONTINUING> 3,327,150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,327,150
<EPS-PRIMARY> .24<F1>
<EPS-DILUTED> .23<F2>
<FN>
<F1>Adjusted for 3-for-2 stock split effected June 12, 1998
<F2>Adjusted for 3-for-2 stock split effected June 12, 1998
</FN>
</TABLE>
