BALDOR ELECTRIC CO - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2004

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 01-07284

Baldor Electric Company

Exact name of registrant as specified in its charter


Missouri		43-0168840
State or other jurisdiction of incorporation		IRS Employer Identification No

5711 R. S. Boreham Jr, St Fort Smith, Arkansas		72901
Address of principal executive offices		Zip Code

479-646-4711

Registrant’s telephone number, including area code

N/A

Former name, former address and former fiscal year, if changed since last report

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 (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. x Yes ¨ No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ¨ No

At July 3, 2004, there were 32,942,290 shares of the registrant’s common stock outstanding.

Baldor Electric Company and Affiliates

Index


PART I – FINANCIAL INFORMATION

	Item 1.	Financial Statements (Unaudited)	3

		Condensed consolidated balance sheets - July 3, 2004 and January 3, 2004	3

		Condensed consolidated statements of earnings - Three and six months ended July 3, 2004 and June 28, 2003	4

		Condensed consolidated statements of cash flows - Six months ended July 3, 2004 and June 28, 2003	5

		Notes to unaudited condensed consolidated financial statements - July 3, 2004	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12

	Item 4.	Controls and Procedures	13

PART II – OTHER INFORMATION

	Item 2.	Changes in Securities and Use of Proceeds	13

	Item 4.	Submission of Matters to a Vote of Security Holders	14

	Item 6.	Exhibits and Reports on Form 8-K	14

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Baldor Electric Company and Affiliates

Condensed Consolidated Balance Sheets (Unaudited)


*(in thousands, except share data)*	Jul 3, 2004			Jan 3, 2004
ASSETS
Current Assets:
Cash and cash equivalents	$	7,926		$	10,635
Marketable securities		41,155			36,654
Receivables, less allowance for doubtful accounts of $3,870		104,181			83,200
Inventories:
Finished products		81,543			73,668
Work in process		11,216			10,721
Raw materials		51,341			51,295

		144,100			135,684
LIFO valuation adjustment		(25,869	)		(23,561	)

		118,231			112,123
Prepaid expenses		3,005			3,703
Other current assets and deferred income taxes		21,254			28,578

Total Current Assets		295,752			274,893
Property, Plant and Equipment:
Land and improvements		6,287			6,287
Buildings and improvements		59,560			59,530
Machinery and equipment		291,885			286,629
Allowances for depreciation and amortization		(224,377	)		(216,812	)

Net Property, Plant and Equipment		133,355			135,634
Other Assets:
Goodwill		62,845			62,845
Other		2,128			3,583

	$	494,080		$	476,955

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	41,730		$	28,966
Employee compensation		8,849			6,820
Profit sharing		3,316			5,436
Accrued warranty costs		6,625			6,625
Accrued insurance obligations		12,506			12,515
Dividends payable		0			4,595
Other accrued expenses		7,242			7,494
Income taxes payable		10,514			4,821
Current maturities of long-term obligations		25,054			25,819

Total Current Liabilities		115,836			103,091

Long-Term Obligations		79,465			79,465
Deferred Income Taxes		31,199			32,911

Shareholders’ Equity:
Preferred stock, $.10 par value
Authorized shares: 5,000,000
Issued and outstanding shares: None
Common stock, $.10 par value
Authorized shares: 150,000,000
Issued shares: July 3, 2004 - 40,215,287;		4,023			4,002
January 3, 2004 - 40,018,261
Additional capital		57,201			53,683
Retained earnings		345,388			338,696
Accumulated other comprehensive loss		(2,808	)		(675	)
Treasury stock, at cost: July 3, 2004 - 7,272,997;
January 3, 2004 - 7,188,523		(136,224	)		(134,218	)

Total Shareholders’ Equity		267,580			261,488

	$	494,080		$	476,955

See notes to unaudited condensed consolidated financial statements.

Baldor Electric Company and Affiliates

Condensed Consolidated Statements of Earnings (Unaudited)


	Three Months Ended				Six Months Ended
*(in thousands, except per share data)*	Jul 3, 2004		Jun 28, 2003		Jul 3, 2004		Jun 28, 2003
Net sales	$	163,695	$	138,523	$	316,518	$	275,912
Cost of goods sold		119,079		100,763		229,714		200,773

Gross Margin		44,616		37,760		86,804		75,139

Selling and administrative		29,142		26,706		57,697		52,558

Operating Margin		15,474		11,054		29,107		22,581

Other income		443		475		947		927
Profit sharing expense		1,756		1,305		3,316		2,657
Interest expense		710		720		1,482		1,543

Earnings before income taxes		13,451		9,504		25,256		19,308
Income taxes		4,979		3,505		9,345		7,144

Net Earnings	$	8,472	$	5,999	$	15,911	$	12,164

Net earnings per share-basic	$	0.26	$	0.18	$	0.48	$	0.37

Net earnings per share-diluted	$	0.25	$	0.18	$	0.48	$	0.36

Weighted average shares outstanding-basic		32,933		32,718		32,917		33,073

Weighted average shares outstanding-diluted		33,427		33,253		33,432		33,556

Dividends declared and paid per common share	$	0.14	$	0.13	$	0.28	$	0.26

See notes to unaudited condensed consolidated financial statements.

Baldor Electric Company and Affiliates

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended
*(in thousands)*	Jul 3, 2004			Jun 28, 2003
Operating activities:
Net earnings	$	15,911		$	12,164
Adjustments to reconcile net earnings to net cash provided by operating activities:
Losses (gains) on sales of marketable securities		2			(292	)
Depreciation		8,698			8,208
Amortization		863			860
Deferred income taxes		(2,015	)		45
Changes in operating assets and liabilities:
Increase in receivables		(20,981	)		(4,780	)
(Increase) decrease in inventories		(6,108	)		342
Decrease in other current assets		6,919			4,505
(Increase) decrease in other assets, net		(189	)		2,450
Increase in accounts payable		12,764			158
Decrease in accrued expenses and other liabilities		(4,947	)		(2,124	)
Increase in income taxes payable		5,693			6,785

Net cash provided by operating activities		16,610			28,321

Investing activities:
Additions to property, plant and equipment		(6,109	)		(6,601	)
Marketable securities purchased		(13,918	)		(15,134	)
Marketable securities sold		8,765			26,251
Acquisitions		0			(5,831	)

Net cash used in investing activities		(11,262	)		(1,315	)

Financing activities:
Reduction of long-term obligations		(765	)		(2,728	)
Unexpended debt proceeds		396			0
Dividends paid		(9,221	)		(8,503	)
Common stock repurchased		0			(26,686	)
Stock option plans		1,533			1,359

Net cash used in financing activities		(8,057	)		(36,558	)

Net decrease in cash and cash equivalents		(2,709	)		(9,552	)
Beginning cash and cash equivalents		10,635			24,515

Ending cash and cash equivalents	$	7,926		$	14,963

See notes to unaudited condensed consolidated financial statements.

Baldor Electric Company and Affiliates

Notes to Unaudited Condensed Consolidated Financial Statements

July 3, 2004

NOTE A - Significant Accounting Policies

Basis of Presentation

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