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 October 2, 2004
OR
| ¨ | 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 October 30, 2004, there were 32,985,506 shares of the registrant’s common stock outstanding.
Baldor Electric Company and Affiliates
Index
2
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Baldor Electric Company and Affiliates
Condensed Consolidated Balance Sheets (Unaudited)
| (in thousands, except share data)
|
Oct 2, 2004 |
Jan 3, 2004 |
||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 13,744 | $ | 10,635 | ||||
| Marketable securities |
37,991 | 36,654 | ||||||
| Receivables, less allowance for doubtful accounts of $3,659 and $3,870, respectively |
107,408 | 83,200 | ||||||
| Inventories: |
||||||||
| Finished products |
81,352 | 73,668 | ||||||
| Work in process |
13,463 | 10,721 | ||||||
| Raw materials |
57,323 | 51,295 | ||||||
| 152,138 | 135,684 | |||||||
| LIFO valuation adjustment |
(31,507 | ) | (23,561 | ) | ||||
| 120,631 | 112,123 | |||||||
| Prepaid expenses |
2,679 | 3,703 | ||||||
| Other current assets and deferred income taxes |
24,234 | 28,578 | ||||||
| Total Current Assets |
306,687 | 274,893 | ||||||
| Property, Plant and Equipment: |
||||||||
| Land and improvements |
6,126 | 6,287 | ||||||
| Buildings and improvements |
59,608 | 59,530 | ||||||
| Machinery and equipment |
293,983 | 286,629 | ||||||
| Allowances for depreciation and amortization |
(228,123 | ) | (216,812 | ) | ||||
| Net Property, Plant and Equipment |
131,594 | 135,634 | ||||||
| Other Assets: |
||||||||
| Goodwill |
62,785 | 62,845 | ||||||
| Other |
2,786 | 3,583 | ||||||
| $ | 503,852 | $ | 476,955 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Accounts payable |
$ | 40,642 | $ | 28,966 | ||||
| Employee compensation |
9,218 | 6,820 | ||||||
| Profit sharing |
5,160 | 5,436 | ||||||
| Accrued warranty costs |
6,625 | 6,625 | ||||||
| Accrued insurance obligations |
11,712 | 12,515 | ||||||
| Dividends payable |
0 | 4,595 | ||||||
| Other accrued expenses |
7,155 | 7,494 | ||||||
| Income taxes payable |
12,660 | 4,821 | ||||||
| Current maturities of long-term obligations |
15,002 | 25,819 | ||||||
| Total Current Liabilities |
108,174 | 103,091 | ||||||
| Long-Term Obligations |
89,025 | 79,465 | ||||||
| Deferred Income Taxes |
33,457 | 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: October 2, 2004 - 40,242,650; |
4,024 | 4,002 | ||||||
| January 3, 2004 - 40,018,261 |
||||||||
| Additional capital |
57,672 | 53,683 | ||||||
| Retained earnings |
349,470 | 338,696 | ||||||
| Accumulated other comprehensive loss |
(1,697 | ) | (675 | ) | ||||
| Treasury stock, at cost: October 2, 2004 - 7,275,058; |
||||||||
| January 3, 2004 - 7,188,523 |
(136,273 | ) | (134,218 | ) | ||||
| Total Shareholders’ Equity |
273,196 | 261,488 | ||||||
| $ | 503,852 | $ | 476,955 | |||||
See notes to unaudited condensed consolidated financial statements.
3
Baldor Electric Company and Affiliates
Condensed Consolidated Statements of Earnings (Unaudited)
| Three Months Ended |
Nine Months Ended | |||||||||||
| (in thousands, except per share data)
|
Oct 2, 2004 |
Sep 27, 2003 |
Oct 2, 2004 |
Sep 27, 2003 | ||||||||
| Net sales |
$ | 168,832 | $ | 138,980 | $ | 485,350 | $ | 414,893 | ||||
| Cost of goods sold |
124,093 | 102,154 | 353,807 | 302,927 | ||||||||
| Gross Margin |
44,739 | 36,826 | 131,543 | 111,966 | ||||||||
| Selling and administrative |
28,744 | 25,769 | 86,441 | 78,328 | ||||||||
| Operating Margin |
15,995 | 11,057 | 45,102 | 33,638 | ||||||||
| Other income |
467 | 579 | 1,415 | 1,505 | ||||||||
| Profit sharing expense |
1,844 | 1,335 | 5,160 | 3,992 | ||||||||
| Interest expense |
758 | 674 | 2,241 | 2,216 | ||||||||
| Earnings before income taxes |
13,860 | 9,627 | 39,116 | 28,935 | ||||||||
| Income taxes |
5,128 | 3,562 | 14,473 | 10,706 | ||||||||
| Net Earnings |
$ | 8,732 | $ | 6,065 | $ | 24,643 | $ | 18,229 | ||||
| Net earnings per share-basic |
$ | 0.27 | $ | 0.19 | $ | 0.75 | $ | 0.55 | ||||
| Net earnings per share-diluted |
$ | 0.26 | $ | 0.18 | $ | 0.74 | $ | 0.54 | ||||
| Weighted average shares outstanding-basic |
32,957 | 32,770 | 32,930 | 32,972 | ||||||||
| Weighted average shares outstanding-diluted |
33,419 | 33,251 | 33,422 | 33,451 | ||||||||
| Dividends declared and paid per common share |
$ | 0.14 | $ | 0.13 | $ | 0.42 | $ | 0.39 | ||||
See notes to unaudited condensed consolidated financial statements.
4
Baldor Electric Company and Affiliates
Condensed Consolidated Statements of Cash Flows (Unaudited)
| Nine Months Ended |
||||||||
| (in thousands)
|
Oct 2, 2004 |
Sep 27, 2003 |
||||||
| Operating activities: |
||||||||
| Net earnings |
$ | 24,643 | $ | 18,229 | ||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
||||||||
| Losses (gains) on sales of marketable securities |
32 | (441 | ) | |||||
| Depreciation |
12,970 | 12,512 | ||||||
| Amortization |
1,404 | 1,289 | ||||||
| Deferred income taxes |
(1,455 | ) | 455 | |||||
| Changes in operating assets and liabilities: |
||||||||
| Increase in receivables |
(24,208 | ) | (5,293 | ) | ||||
| (Increase) decrease in inventories |
(8,508 | ) | 2,711 | |||||
| Decrease in other current assets |
6,859 | 3,629 | ||||||
| (Increase) decrease in other assets, net |
(1,992 | ) | 44 | |||||
| Increase in accounts payable |
11,676 | 3,128 | ||||||
| (Decrease) increase in accrued expenses and other liabilities |
(3,615 | ) | 1,208 | |||||
| Increase in income taxes payable |
7,839 | 9,841 | ||||||
| Net cash provided by operating activities |
25,645 | 47,312 | ||||||
| Investing activities: |
||||||||
| Additions to property, plant and equipment |
(8,372 | ) | (9,548 | ) | ||||
| Marketable securities purchased |
(21,790 | ) | (31,828 | ) | ||||
| Marketable securities sold |
20,342 | 27,974 | ||||||
| Acquisitions |
0 | (5,831 | ) | |||||
| Net cash used in investing activities |
(9,820 | ) | (19,233 | ) | ||||
| Financing activities: |
||||||||
| Additional long-term obligations |
3,000 | 0 | ||||||
| Reduction of long-term obligations |
(4,257 | ) | (3,895 | ) | ||||
| Unexpended debt proceeds |
396 | 0 | ||||||
| Dividends paid |
(13,835 | ) | (12,923 | ) | ||||
| Common stock repurchased |
0 | (26,686 | ) | |||||
| Stock option plans |
1,980 | 1,723 | ||||||
| Net cash used in financing activities |
(12,716 | ) | (41,781 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
3,109 | (13,702 | ) | |||||
| Beginning cash and cash equivalents |
10,635 | 24,515 | ||||||
| Ending cash and cash equivalents |
$ | 13,744 | $ | 10,813 | ||||
See notes to unaudited condensed consolidated financial statements.
5
Baldor Electric Company and Affiliates
Notes to Unaudited Condensed Consolidated Financial Statements
October 2, 2004
NOTE A - Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements, and therefore should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended January 3, 2004. In the opinion of management, all adjustments (consisting only of normal recurring items) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended October 2, 2004, may not be indicative of the results that may be expected for the fiscal year ending January 1, 2005.
Fiscal Year
The Company’s fiscal year ends on the Saturday nearest to December 31, which results in a 52-week or 53-week year. Fiscal year 2004 will contain 52 weeks. Fiscal year 2003