<PAGE>
SECURITIES AND EXCHANGE COMMMISSION
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
March 31, 2000 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 May 5, 2000
- ----------------------
Common Stock, $.01
Par value 12,459,323 shares
<PAGE>
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
INDEX
Part I. Financial Information
<TABLE>
<CAPTION>
Item 1. Consolidated Financial Statements Page
----
<S> <C>
Consolidated Balance Sheets - March 31, 2000 and December 31, 1999.............. 2
Consolidated Statements of Operations - Three Months Ended
March 31, 2000 and 1999..................................................... 3
Consolidated Statements of Cash Flows - Three Months Ended
March 31, 2000 and 1999..................................................... 4
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000........................................... 5
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.......................................... 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................... 13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K..................................................... 14
</TABLE>
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
Ballantyne of Omaha, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 388,054 $ 857,089
Accounts receivable (less allowance for doubtful
accounts of $560,939 in 2000 and $526,221 in 1999) 12,705,073 15,510,265
Inventories 29,025,853 26,210,431
Recoverable income taxes 230,556 -
Deferred income taxes 1,009,697 1,039,733
Other current assets 521,076 523,841
----------------- -----------------
Total current assets 43,880,309 44,141,359
Plant and equipment, net 13,255,150 13,319,706
Other assets, net 3,203,039 3,295,165
----------------- -----------------
Total assets $ 60,338,498 $ 60,756,230
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ - $ 20,000
Accounts payable 3,306,950 6,063,078
Accrued expenses 3,187,154 3,437,885
Income taxes payable - 219,499
----------------- -----------------
Total current liabilities 6,494,104 9,740,462
Deferred income taxes 684,713 735,271
Long-term debt - 48,877
Note payable to bank 14,106,000 10,369,000
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 14,557,128 shares 145,571 145,571
Additional paid-in capital 31,663,043 31,663,043
Retained earnings 22,560,521 23,369,460
----------------- -----------------
Less cost of 2,097,805 common shares in treasury, at cost 54,369,135 55,178,074
(15,315,454) (15,315,454)
----------------- -----------------
Total stockholders' equity 39,053,681 39,862,620
----------------- -----------------
Total liabilities and stockholders' equity $ 60,338,498 $ 60,756,230
================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Net revenues $ 11,849,586 $ 20,197,020
Cost of revenues 9,371,706 14,017,333
----------------- ----------------
Gross profit 2,477,880 6,179,687
Operating expenses:
Selling 1,375,474 1,091,545
General and administrative 2,097,671 1,878,241
----------------- ----------------
Total operating expenses 3,473,145 2,969,786
----------------- ----------------
Income (loss) from operations (995,265) 3,209,901
Interest income 6,301 2,877
Interest expense (244,474) (235,041)
----------------- ----------------
Net interest expense (238,173) (232,164)
----------------- ----------------
Income (loss) before income taxes (1,233,438) 2,977,737
Income tax expense (benefit) (424,499) 1,141,185
----------------- ----------------
Net income (loss) $ (808,939) $ 1,836,552
================= ================
Net income (loss) per share:
Basic $ (.06) $ 0.14
================= ================
Diluted $ (.06) $ 0.14
================= ================
Weighted average shares outstanding:
Basic 12,459,323 12,677,434
================= ================
Diluted 12,459,323 13,328,863
================= ================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (808,939) $ 1,836,552
Adjustments to reconcile net income (loss) to
net cash provided by operating
activities:
Depreciation and amortization 798,150 663,856
Gain on sale of fixed assets (22,858) -
Changes in assets and liabilities, net
of assets acquired:
Accounts receivable 2,805,192 1,026,110
Inventories (2,815,422) (1,914,300)
Other current assets 2,765 13,780
Accounts payable (2,756,128) (190,608)
Accrued expenses (250,731) (115,926)
Income taxes (470,577) 858,303
Other assets (89,998) (27,489)
----------------- -----------------
Net cash provided by (used in)
operating activities (3,608,546) 2,150,278
----------------- -----------------
Cash flows from investing activities:
Proceeds from sales of fixed assets 45,025 -
Capital expenditures (573,637) (894,313)
Net cash used in investing ----------------- -----------------
activities (528,612) (894,313)
----------------- -----------------
Cash flows from financing activities:
Payments of long-term debt (68,877) -
Net proceeds (payments) on revolving credit facility 3,737,000 (802,000)
Proceeds from exercise of stock options - 43,777
----------------- -----------------
Net cash provided by (used in) financing activities 3,668,123 (758,223)
----------------- -----------------
Net increase (decrease) in cash
and cash equivalents (469,035) 497,742
Cash and cash equivalents at beginning of period 857,089 594,686
----------------- -----------------
Cash and cash equivalents at end of period $ 388,054 $ 1,092,428
================ =================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000
(Unaudited)
1. Company
Ballantyne of Omaha, Inc., a Delaware corporation ("Ballantyne" or the
"Company"), and its wholly-owned subsidiaries, Strong Westrex, Inc., Design &
Manufacturing, Inc., Xenotech Rental Corp. and Xenotech Strong, Inc., design,
develop, manufacture and distribute commercial motion picture 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 26% 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. 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. While the
Company believes that the disclosures presented are adequate to make the
information not misleading, it is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial statements and
related notes included in the Company's latest annual report on Form 10-K.
b. Stock Dividend
The Company's Board of directors declared a 5% stock dividend of the Company's
common stock on January 28, 1999. The stock dividend was paid on March 1, 1999
to shareholders of record on February 15, 1999. The stock dividend resulted in
the issuance of 601,455 shares of common stock. The dividend has been accounted
for as if it occurred on December 31, 1998.
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.
5
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000
(Unaudited)
d. Plant and Equipment
Significant expenditures for the replacement or expansion of plant and equipment
are capitalized. Depreciation of plant and equipment is provided over the
estimated useful lives of the respective assets using the straight-line method.
Estimated useful lives range from 3 to 20 years.
e. 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.
f. 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.
g. Net Income (Loss) Per Common Share
Basic net income (loss) per share has been computed on the basis of the weighted
average number of shares of common stock outstanding. Diluted net income per
share has been computed on the basis of the weighted average number of shares of
common stock outstanding after giving effect to potential common shares from
dilutive stock options. Diluted net income per share for the three months ended
March 31, 1999 includes an increase in the weighted average shares outstanding
for dilutive stock options of 651,429. Diluted net loss per share for the three
months ended March 31, 2000 exclude potentially dilutive stock options of
450,218 shares because to do so would have been antidilutive.
h. Reclassifications
Certain of the 1999 amounts have been reclassified to conform to the 2000
presentation.
3. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------------- -----------------
<S> <C> <C>
Raw materials $ 20,488,297 $ 20,041,081
Work in process 3,820,468 3,564,972
Finished goods 4,717,088 2,604,378
----------------- -----------------
$ 29,025,853 $ 26,210,431
================= =================
</TABLE>
6
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000
(Unaudited)
4. Comprehensive Income
The Company's comprehensive income consists solely of net income (loss). The
Company had no other comprehensive income for the three months ended March 31,
2000 and 1999.
5. Related Party Transaction
On June 24, 1999, the Company advanced $500,000 to the Chairman of the Board
under a term loan agreement. The loan bears interest, payable monthly, at 1%
above the current interest rate on the Company's revolving credit facility. At
March 31, 2000 the unpaid balance on the loan was $500,000 and is due on June
24, 2000. In conjunction with the agreement, the Chairman entered into an
agreement with ARC International Corporation ("ARC") to loan the proceeds from
this note to ARC under similar terms.
6. Business Segment Information
The Company's operations are conducted principally through three business
segments: Theatre, Lighting and Restaurant. Theatre operations include the
design, manufacture, assembly and sale of motion picture projectors, xenon
lamphouses and power supplies, sound systems and the sale of film handling
equipment and lenses for the theatre exhibition industry. The lighting
segment operations include the sale and rental of follow spotlights,
stationary searchlights, audio visual equipment and computer operated
lighting systems for the motion picture production, television, live
entertainment, theme parks, audio visual and architectural industries. The
restaurant segment includes the design, manufacture, assembly and sale of
pressure fryers, smoker ovens and rotisseries and the sale of seasonings,
marinades, mesquite and hickory woods and point of purchase displays.
The Company allocates resources to business segments and evaluates the
performance of these segments based upon reported segment gross profit. However,
certain key operations of a particular segment are tracked on the basis of
operating profit. There are no significant intersegment sales. All intersegment
transfers are recorded at historical cost.
7
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000
(Unaudited)
6. Business Segment Information (continued)
SUMMARY BY BUSINESS SEGMENTS
<TABLE>
<CAPTION>
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Net revenue
Theatre $ 8,895,966 $ 17,600,018
Lighting
Sales 1,064,284 1,168,453
Rental 1,447,158 914,621
------------ ------------
Total lighting 2,511,442 2,083,074
Restaurant 442,178 513,928
------------ ------------
Total revenue $ 11,849,586 $ 20,197,020
Gross profit
Theatre $ 1,693,055 $ 5,424,426
Lighting
Sales 232,442 465,854
Rental 463,947 179,513
------------ ------------
Total lighting 696,389 645,367
Restaurant 88,436 109,894
------------ ------------
Total gross profit 2,477,880 6,179,687
Corporate overhead (3,473,145) (2,969,786)
------------ ------------
Operating income (loss) (995,265) 3,209,901
Net interest expense (238,173) (232,164)
------------ ------------
Income (loss) before income taxes $ (1,233,438) $ 2,977,737
============ ============
Identifiable assets
Theatre $ 49,161,878 $ 49,884,233
Lighting 9,780,134 7,597,511
Restaurant 1,396,486 853,261
------------ ------------
Total $ 60,338,498 $ 58,335,005
============ ============
Expenditures on capital equipment
Theatre $ 250,932 $ 493,186
Lighting 322,705 401,127
Restaurant - -
------------ ------------
Total $ 573,637 $ 894,313
============ ============
Depreciation and amortization
Theatre $ 488,504 $ 397,691
Lighting 309,646 266,165
Restaurant - -
------------ ------------
Total $ 798,150 $ 663,856
============ ============
</TABLE>
8
<PAGE>
Ballantyne of Omaha, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Three Months Ended March 31, 2000
(Unaudited)
6. Business Segment Information (continued)
SUMMARY BY GEOGRAPHICAL AREA:
<TABLE>
<CAPTION>
March 31, March 31,
2000 1999
---- ----
<S> <C> <C>
Net revenue
United States $ 7,868,230 $17,168,340
Canada 1,589,602 1,098,416
Asia 1,100,005 912,508
Mexico 264,663 74,346
Europe 733,812 769,422
Other 293,274 173,988
----------- -----------
Total $11,849,586 $20,197,020
=========== ===========
Identifiable assets
United States $59,270,834 $57,499,702
Canada - -
Asia 1,067,664 835,303
Mexico - -
Europe - -
Other - -
----------- -----------
Total $60,338,498 $58,335,005
=========== ===========
</TABLE>
Net revenues by business segment are to unaffiliated customers. Net sales by
geographical area are based on destination of sales. Identifiable assets by
geographical area are based on location of facilities.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
document. Management's Discussion and Analysis contains forward-looking
statements that involve risks and uncertainties, including but not limited to,
quarterly fluctuations in results; customer demand for the Company's products;
the development of new technology for alternate means of motion picture
presentation; domestic and international economic conditions; the management of
growth; and other risks detailed from time to time in the Company's other
Securities and Exchange Commission filings. Actual results may differ materially
from management expectations.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999
Net revenues for the three months ended March 31, 2000 (the "2000 Period")
decreased $8.4 million or 41.3% to $11.8 million from $20.2 million for the
three months ended March 31, 1999 (the "1999 Period"). Consolidated domestic net
revenues decreased $9.3 million to $7.9 million in the 2000 Period from $17.2
million in the 1999 Period due to the reasons described below. Net revenues from
foreign sales increased $1.0 million or 31.4% to $4.0 million from $3.0 million
in the 1999 Period. This increase was attributable to higher sales in Canada and
Asia. The Company expects foreign sales to continue to increase as the year
progresses. The following table shows comparative net revenues of theatre,
lighting and restaurant products for the respective periods:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------
2000 1999
---- ----
<S> <C> <C>
Theatre $ 8,895,966 $ 17,600,018
Lighting 2,511,442 2,083,074
Restaurant 442,178 513,928
----------------- -----------------
Total net revenues $ 11,849,586 $ 20,197,020
================= =================
</TABLE>
REVENUES
Theatre Segment
The decrease in net revenues primarily relates to lower sales of theatre
products, which decreased $8.7 million or 49.5% from $17.6 million in the 1999
Period to $8.9 million in the 2000 Period. In particular, sales of projection
equipment decreased $7.4 million from $14.0 million in the 1999 Period to $6.6
million in the 2000 Period. The Company also experienced softer sales of lenses,
which decreased $1.5 million to $0.3 million in the 2000 Period from $1.8
million in the 1999 Period.
The lower projection equipment and lens sales were mainly due to less theatre
construction, which was a result of over construction in certain areas of the
country, rising interest rates and reduced attendance at older theatres. All of
this has negatively impacted the Company's customers in the form of reduced
operating margins and higher financial leverage causing them to build fewer
theatres. The Company expects the curtailed theatre growth to continue for the
rest of the year, however, revenues are expected to increase as the year
progresses but at lower levels than the year before.
Partially offsetting the lower projection equipment and lens sales in the
segment were replacement part sales which increased $0.2 million to $2.0 million
in the 2000 Period compared to $1.8 million in the 1999 Period, an increase of
14.4%, reflecting a higher installed base of projection equipment.
10
<PAGE>
Lighting Segment
Sales and rentals in the lighting segment increased $0.4 million or 20.6% from
$2.1 million in the 1999 Period to $2.5 million in the 2000 Period, mainly due
to revenue generated from the Company's audio visual products where revenue
increased $0.5 million from the prior year. Revenues from promotional lighting
products increased $0.13 million from the prior year but continued to be
disappointing, as the increase did not allow this product line to break even.
Spotlight sales were softer resulting in a decrease in revenue of $0.19 million
from the prior year.
Restaurant Segment
Restaurant sales remained flat at approximately $0.5 million for the 1999 and
2000 Periods.
GROSS PROFIT
Overall, consolidated gross profit decreased $3.7 million to $2.5 million in the
2000 Period from $6.2 million in the 1999 Period. The decrease relates to the
theatre segment where gross profit decreased $3.7 million compared to the 1999
Period. Additionally, gross profit in the theatre segment as a percentage of net
revenues decreased from 30.8% to 19.0% in the 2000 Period. The decreases
resulted from two main items, the first of which were lower revenues in the
theatre segment, which resulted in lost gross profit of approximately $2.4
million. Also contributing to the lost gross profit were negative manufacturing
variances created by less volume through the Company's two main manufacturing
plants. This was the result of the levels of sales not being sufficient to fully
absorb the Company's manufacturing overhead. Additionally, the level of sales
coupled with increased inventory caused plant labor utilization to drop
considerably. The Company is actively taking steps to reduce its cost structure,
which included reducing personnel during the quarter by approximately 17% and
lowering inventory to offset these negative trends.
Gross profit in the lighting segment rose $0.05 million during the quarter but
as a percentage of gross revenue decreased to 27.7% in the 2000 Period from
31.0% in the 1999 Period. The decrease was mainly due to margins on spotlight
sales, which was related to the manufacturing inefficiencies discussed earlier.
Restaurant gross profit and margins were slightly lower due to the same
manufacturing inefficiencies.
OPERATING EXPENSES
Operating expenses in the 2000 Period increased approximately $0.5 million or
16.9% from the 1999 Period and as a percentage of net revenues, increased to
29.3% for the 2000 Period from 14.7% for the 1999 Period. Included in operating
expenses for the quarter were restructuring charges of approximately $0.5
million relating to the Company reducing its workforce by approximately 17% and
also terminating the contract of the president of Xenotech Strong, Inc. As of
March 31, 2000 approximately $0.15 million has been paid with regard to the
restructuring charges and the remainder has been paid in the second quarter. The
workforce reduction was the first step by the Company to reduce costs and
inventory in anticipation of softer sales during fiscal 2000. The increase in
operating expenses as a percentage of revenues was mainly due to lower sales
volume in the theatre segment as a large percentage of the Company's operating
expenses are fixed in the short-term.
OTHER ITEMS
Net interest expense was approximately $0.2 million for the 1999 and 2000
Periods due to borrowings on the Company's line of credit.
11
<PAGE>
The Company's effective tax rate for the 2000 Period was 34.4% compared to 38.3%
in the 1999 Period. The decline from 1999 reflects certain state tax credits and
the benefit of the new foreign sales corporation. 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.
For reasons outlined above, the Company experienced a net loss for the 2000
Period of approximately $0.8 million compared to net income of $1.8 million in
the 1999 Period. This translated into a net loss per share - basic and diluted
of $.06 per share in the 2000 Period compared to net income per share - basic
and diluted of $0.14 per share in the 1999 Period.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company maintained a $20 million line of credit with
Norwest Bank Nebraska, N.A. (the "Norwest Facility"). At March 31, 2000, $5.9
million of the Norwest Facility was unused. Borrowings outstanding under the
Norwest Facility bear interest, payable monthly, at a rate equal to the Prime
Rate less 0.75% (8.25% at March 31, 2000). All of the Company's assets secure
the Norwest Facility. The Company was in compliance with all restrictive
covenants at March 31, 2000 and 1999.
Historically, the Company has funded its working capital requirements through
cash flow generated by its operations. Net cash used in operating activities was
$3.6 million in the 2000 Period compared to cash provided by operating
activities of $2.2 million in the 1999 Period. The decrease in operating cash
flow was due to lower operating income coupled with an increase in inventory and
a decrease in accounts payable during the 2000 Period. The increase in inventory
was due to less sales volume compared to the 1999 Period and the decrease in
accounts payable was due to a substantial reduction in the purchase of raw
materials compared to the 1999 Period.
The Company anticipates that internally generated funds and borrowings available
under the Norwest Facility will be sufficient to meet its working capital needs,
planned 2000 capital expenditures and to pursue opportunities to expand its
markets and businesses.
Net cash used in investing activities was $0.5 million and $0.9 million for the
2000 and 1999 Periods, respectively. Investing activities in both periods mainly
reflect capital expenditures.
Net cash provided by financing activities was $3.7 million for the 2000 Period
compared to cash used in financing activities of $0.8 million in the 1999
Period. The change mainly represents draws on the Company's line of credit due
to the operating cash flow shortfalls discussed earlier.
The Company does not engage in any hedging activities, including
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.
12
<PAGE>
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.
YEAR 2000
The Company did not experience any significant malfunctions or errors in its
operating or business systems when the date changed from 1999 to 2000.
Additionally, the Company is not currently aware of any significant year 2000 or
similar problems that have arisen for its customers or suppliers. The Company
expended an immaterial amount to ready itself for the year 2000. Management does
not expect year 2000 issues to have a material adverse effect on the Company's
operations or financial results in 2000.
DIGITAL CINEMA UPDATE
The current motion picture exhibition industry is based on the use of film
technology to deliver motion pictures to the public. However, in the last few
years, there have been innovations in technology to show motion pictures
digitally. While this technology is still in the prototypical stage, the Company
is currently in the process of weighing a number of alternatives. The Company
has started developing a proprietary digital projector by partnering with
Lumavision Display, Inc., however, that is only one of the alternatives that the
Company is currently considering. The Company has committed initial funding to
the project and approximately $0.2 million was expensed to cost of revenues
during the 2000 Period. Although there can be no assurance that the Company will
participate in the digital cinema industry, the Company believes that it is well
positioned to maintain its current position as the industry's leading supplier
of motion picture projection equipment whether it be digital or film.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has evaluated its exposure to fluctuation in the foreign currency
environment and has concluded that its exposure to fluctuation in the foreign
currency environment would not be material to the consolidated financial
statements. The Company has also evaluated its exposure to fluctuations in
interest rates and the corresponding effect on the rate of interest on the
Company's floating rate line of credit. Assuming amounts remain outstanding on
the line of credit, increases in interest rates would increase interest expense.
At current amounts outstanding on the line of credit, a one percent increase in
the interest rate would increase yearly interest expense by approximately
$141,000. The Company has not historically and is not currently using derivative
instruments to manage the above risks.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11 Computation of net income per share
27 Financial Data Schedule (for SEC information only)
(b) Reports on Form 8-K filed for the three months ended March 31, 2000
No reports on Form 8-K were filed during the three months ended March
31, 2000.
14
<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 Director and Chief Financial Officer
Date: May 5, 2000 Date: May 5, 2000
15
<PAGE>
Exhibit 11
Ballantyne of Omaha, Inc. and Subsidiaries
Computation of Net Income Per Share of Common Stock
Three Months Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
BASIC NET INCOME (LOSS PER SHARE)
Net income (loss) applicable to
common stock $ (808,939) $ 1,836,552
Weighted average common
shares outstanding 12,459,323 12,677,434
------------ ------------
Basic income (loss) per share $ (0.06) $ 0.14
============ ============
DILUTED NET INCOME (LOSS PER SHARE)
Net income (loss) applicable to
common stock $ (808,939) $ 1,836,552
Weighted average common
shares outstanding 12,459,323 12,677,434
Assuming conversion
of options outstanding # - 651,429
------------ ------------
Weighted average common
shares outstanding, as adjusted 12,459,323 13,328,863
------------ ------------
Diluted net income (loss) per share $ (0.06) $ 0.14
============ ============
</TABLE>
# Diluted net loss per share for the three months ended March 31, 2000 exclude
potentially dilutive stock options of 450,218 shares because to do so
would have been antidilutive.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 388,054
<SECURITIES> 0
<RECEIVABLES> 13,266,012
<ALLOWANCES> 560,939
<INVENTORY> 29,025,853
<CURRENT-ASSETS> 43,880,309
<PP&E> 20,762,742
<DEPRECIATION> 7,507,592
<TOTAL-ASSETS> 60,338,498
<CURRENT-LIABILITIES> 6,494,104
<BONDS> 0
0
0
<COMMON> 145,571
<OTHER-SE> 38,908,110
<TOTAL-LIABILITY-AND-EQUITY> 60,338,498
<SALES> 10,402,428
<TOTAL-REVENUES> 11,849,586
<CGS> 8,388,495
<TOTAL-COSTS> 9,371,706
<OTHER-EXPENSES> 3,299,145
<LOSS-PROVISION> 174,000
<INTEREST-EXPENSE> 244,474
<INCOME-PRETAX> (1,233,438)
<INCOME-TAX> (424,499)
<INCOME-CONTINUING> (808,939)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (808,939)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)<F1>
<FN>
<F1> Excludes potentially dilutive stock options of 450,218 shares because to
do so would have been antidilutive.
</FN>
</TABLE>
