Attached files
file | filename |
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EX-32 - EXHIBIT 32 - LADISH CO INC | c13866exv32.htm |
EX-23 - EXHIBIT 23 - LADISH CO INC | c13866exv23.htm |
EX-21 - EXHIBIT 21 - LADISH CO INC | c13866exv21.htm |
EX-31.A - EXHIBIT 31(A) - LADISH CO INC | c13866exv31wa.htm |
EX-31.B - EXHIBIT 31(B) - LADISH CO INC | c13866exv31wb.htm |
Table of Contents
SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Wisconsin (State of Incorporation) |
31-1145953 (I.R.S. Employer Identification No.) |
|
5481 S. Packard Avenue | ||
Cudahy, Wisconsin | 53110 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Common stock, $0.01 par value | Nasdaq |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
(Number of Shares of common stock outstanding as of March 8, 2011)
Table of Contents
Item 1. Business |
Years Ended December 31, | ||||||||||||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Jet Engine Components |
$ | 238 | 51 | % | $ | 193 | 55 | % | $ | 199 | 49 | % | ||||||||||||
Aerospace Components |
124 | 26 | % | 114 | 33 | % | 143 | 36 | % | |||||||||||||||
General Industrial Components |
107 | 23 | % | 43 | 12 | % | 61 | 15 | % | |||||||||||||||
Total |
$ | 469 | 100 | % | $ | 350 | 100 | % | $ | 403 | 100 | % | ||||||||||||
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| Market conditions and demand for the Companys products
|
||
| Interest rates and capital costs
|
||
| Unstable governments and business conditions in emerging economies
|
||
| Health care costs |
||
| Legal, regulatory and environmental issues
|
||
| Competition | ||
| Technologies | ||
| Raw material and energy prices | ||
| Taxes |
Number of Employees | ||||||
Represented by | ||||||
Collective | ||||||
Union | Expiration Date | Bargaining Agreement | ||||
International Association of
Machinists & Aerospace Workers, Local
1862
|
February 26, 2012 | 226 | ||||
International Brotherhood of
Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers & Helpers,
Subordinate Lodge 1509
|
October 1, 2012 | 178 | ||||
International Federation of
Professional & Technical Engineers,
Technical Group, Local 92
|
August 19, 2012 | 97 | ||||
International Association of Machinists
& Aerospace Workers, Die Sinkers, Local
140
|
March 26, 2012 | 53 | ||||
Office & Professional Employees
International Union, Clerical Group,
Local 35
|
July 15, 2013 | 17 | ||||
International Brotherhood of Electrical
Workers, Local 662
|
November 11, 2012 | 22 | ||||
Service Employees International, Local 1
|
April 22, 2012 | 5 |
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Name | Age | Position | ||||
Gary J. Vroman
|
51 | President & CEO and Director | ||||
Wayne E. Larsen
|
56 | Vice President Law/Finance & Secretary and Director | ||||
Lawrence C. Hammond
|
63 | Vice President, Human Resources | ||||
Randy B. Turner
|
61 | President Pacific Cast Technologies, Inc. (PCT) | ||||
John Delaney
|
61 | President Stowe Machine Co., Inc. (Stowe) & Aerex LLC (Aerex) | ||||
Robert C. Miller
|
60 | President Valley Machining, Inc. (Valley) | ||||
Jozef Burdzy
|
59 | President Zaklad Kuznia Matrycowa Sp. z o.o. (ZKM) & Zaklad Obrobki i Procesow Specjalnych Sp. z o.o. (ZOPS) | ||||
Shannon J. S. Ko
|
68 | President Chen-Tech Industries, Inc. (Chen-Tech) |
Item 1A. Risk Factors |
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| currency fluctuations; |
| general economic and political uncertainties and potential for social unrest in
international markets; |
| limitations on our ability to enforce legal rights and remedies; |
| changes in trade policies; |
| tariff regulations; |
| difficulties in obtaining export and import licenses; and |
| the risk of government financed competition. |
Item 1B. Unresolved Staff Comments |
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Item 2. Properties |
Approximate Acreage | Approximate Square Footage | |||||||
Forging Cudahy, Wisconsin |
140.0 | 1,650,000 | ||||||
Stowe Windsor, Connecticut |
8.2 | 40,000 | ||||||
PCT Albany, Oregon |
14.0 | 149,000 | ||||||
Valley Coon Valley, Wisconsin |
3.0 | 40,000 | ||||||
ZKM Stalowa Wola, Poland |
70.0 | 820,000 | ||||||
Chen-Tech Irvine, California |
2.0 | 55,000 | ||||||
Aerex Windsor, Connecticut |
1.0 | 15,000 |
Item 3. Legal Proceedings |
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Item 4. Removed and Reserved |
Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities |
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
December 31, 2008 | December 31, 2009 | December 31, 2010 | ||||||||||||||||||||||
High | Low | High | Low | High | Low | |||||||||||||||||||
First quarter |
$ | 41.94 | $ | 32.90 | $ | 15.34 | $ | 5.36 | $ | 21.64 | $ | 15.02 | ||||||||||||
Second quarter |
$ | 37.35 | $ | 20.59 | $ | 15.04 | $ | 7.28 | $ | 28.40 | $ | 20.39 | ||||||||||||
Third quarter |
$ | 27.56 | $ | 18.75 | $ | 16.48 | $ | 10.88 | $ | 31.73 | $ | 21.94 | ||||||||||||
Fourth quarter |
$ | 19.74 | $ | 11.47 | $ | 16.03 | $ | 11.79 | $ | 50.39 | $ | 29.33 |
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Dec-31-05 | Dec-31-06 | Dec-31-07 | Dec-31-08 | Dec-31-09 | Dec-31-10 | |||||||||||||||||||
Ladish |
22.35 | 37.08 | 43.19 | 13.85 | 15.05 | 48.62 | ||||||||||||||||||
Russell 2000 |
673.22 | 796.89 | 765.90 | 499.45 | 625.39 | 783.65 | ||||||||||||||||||
Industry Peers |
67.53 | 73.05 | 86.93 | 24.94 | 45.51 | 56.97 |
Item 6. Selected Financial Data |
Year Ended December 31, | ||||||||||||||||||||
(Dollars in millions, except earnings per share) | ||||||||||||||||||||
INCOME STATEMENT DATA | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||
Net sales |
$ | 369.290 | $ | 424.631 | $ | 469.466 | $ | 349.832 | $ | 403.132 | ||||||||||
Income from operations |
48.960 | 52.319 | 39.538 | 9.248 | 46.985 | |||||||||||||||
Interest expense |
3.548 | 2.528 | 1.971 | 5.050 | 5.613 | |||||||||||||||
Net income |
28.481 | 32.288 | 32.205 | 6.094 | 25.375 | |||||||||||||||
Basic earnings per share |
2.01 | 2.22 | 2.15 | 0.38 | 1.61 | |||||||||||||||
Diluted earnings per share |
2.00 | 2.22 | 2.15 | 0.38 | 1.61 | |||||||||||||||
Dividends paid |
| | | | | |||||||||||||||
Shares used to compute earnings per share: |
||||||||||||||||||||
Basic |
14,136,946 | 14,516,120 | 14,998,437 | 15,901,833 | 15,742,247 | |||||||||||||||
Diluted |
14,205,641 | 14,550,258 | 15,000,844 | 15,902,246 | 15,743,201 |
December 31, | ||||||||||||||||||||
BALANCE SHEET DATA | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||
Total assets |
$ | 329.060 | $ | 381.833 | $ | 509.466 | $ | 469.514 | $ | 485.568 | ||||||||||
Net working capital |
123.764 | 130.855 | 138.910 | 137.515 | 149.685 | |||||||||||||||
Total debt |
54.100 | 53.500 | 118.900 | 90.000 | 84.285 | |||||||||||||||
Stockholders equity |
152.670 | 201.554 | 223.411 | 225.582 | 251.921 |
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations |
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Years Ended December 31, | ||||||||||||||||
2009 | 2010 | |||||||||||||||
(Dollars in millions) | ||||||||||||||||
Jet Engine Components |
$ | 193 | 55 | % | $ | 199 | 49 | % | ||||||||
Aerospace Components |
114 | 33 | % | 143 | 36 | % | ||||||||||
General Industrial Components |
43 | 12 | % | 61 | 15 | % | ||||||||||
Total |
$ | 350 | 100 | % | $ | 403 | 100 | % | ||||||||
(Dollars in Millions) | 2009 | 2010 | ||||||
Interest expensed |
$ | 5.050 | $ | 5.613 | ||||
Interest capitalized |
0.953 | 0.043 | ||||||
Total |
$ | 6.003 | $ | 5.656 | ||||
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(Dollars in millions) | 2008 | 2009 | ||||||
Interest expensed |
$ | 1.971 | $ | 5.050 | ||||
Interest capitalized |
2.418 | 0.953 | ||||||
Total |
$ | 4.389 | $ | 6.003 | ||||
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(Dollars in Millions)
Less Than | More Than | |||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||
Senior Notes (1) |
$ | 15.714 | $ | 31.429 | $ | 31.429 | $ | 5.714 | ||||||||
Interest on Senior Notes |
5.135 | 7.294 | 3.326 | .175 | ||||||||||||
Bank Facility |
| | | | ||||||||||||
Operating Leases |
.921 | 1.505 | 1.150 | 1.344 | ||||||||||||
Purchase Obligations (2) |
63.991 | 21.427 | | | ||||||||||||
Other Long-Term Obligations: |
||||||||||||||||
Pensions (3) |
13.251 | 28.860 | | | ||||||||||||
Postretirement Benefits (4) |
3.474 | 6.549 | 6.023 | 12.428 |
(1) | The Company expects to fund the payment of long-term debt through the
use of cash on hand, cash generated from operations, the reduction of working capital
and, if necessary, through access to the Facility. |
|
(2) | The purchase obligations relate primarily to raw material purchase orders
necessary to fulfill the Companys production backlog for the Companys products
along with commitments for energy supplies also necessary to fulfill the Companys
production backlog. There are no net settlement provisions under any of these
purchase orders nor is there any market for the underlying materials. |
|
(3) | The Companys estimated cash pension contribution is based upon the
calculation of the Companys independent actuary for 2011. There are no estimates
beyond 2013. |
|
(4) | The Companys cash expenditures for Postretirement Benefits have only been
projected out through the year 2020. |
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Projected Plan Benefit Obligation as of December 31, 2010 | ||||
(Dollars in Millions) | ||||
At 4.30% discount rate |
$ | 233.557 | ||
At 4.55% discount rate |
$ | 227.930 | ||
At 4.80% discount rate |
$ | 222.542 |
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Net Periodic Cost for Year Ending December 31, 2011 | ||||
(Dollars in Millions) | ||||
8.22% expected return |
$ | 9.247 | ||
8.47% expected return |
$ | 8.873 | ||
8.72% expected return |
$ | 8.499 |
Level 1 | Quoted prices in active markets for identical assets or liabilities. |
||
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities. |
||
Level 3 | Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities. |
Quoted | Significant | |||||||||||||||
Prices in | Other | Significant | ||||||||||||||
Fair Values at | Active | Observable | Unobservable | |||||||||||||
December 31, 2010 | Markets | Inputs | Inputs | |||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Pension Plan Assets |
||||||||||||||||
Money Market Accounts |
$ | 2.976 | $ | | $ | | $ | 2.976 | ||||||||
US Government Issues |
26.506 | 10.991 | | 37.497 | ||||||||||||
Corporate Issues |
| 27.508 | | 27.508 | ||||||||||||
Foreign Issues |
| 7.488 | | 7.488 | ||||||||||||
Municipal Issues |
| .771 | | .771 | ||||||||||||
Domestic Common Stocks |
79.354 | | | 79.354 | ||||||||||||
Foreign Stocks |
1.168 | | | 1.168 | ||||||||||||
Mutual Funds |
5.658 | | | 5.658 | ||||||||||||
Total |
$ | 115.662 | $ | 46.758 | $ | | $ | 162.420 | ||||||||
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk |
Item 8. Financial Statements and Supplementary Data |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Item 9A. Controls and Procedures |
Item 9B. Other Information |
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Ladish Co., Inc.
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Chicago, Illinois
March 8, 2011
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Item 10. Directors and Executive Officers of the Registrant |
Name | Age | |||
Lawrence W. Bianchi |
69 | |||
James C. Hill |
62 | |||
Leon A. Kranz |
71 | |||
Wayne E. Larsen |
56 | |||
J. Robert Peart |
48 | |||
John W. Splude |
65 | |||
Gary J. Vroman |
51 |
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| the Audit Committee has reviewed and discussed the audited financial statements
with management; |
| the Audit Committee has discussed with Grant Thornton LLP the matters required to
be discussed by SAS 114, as amended (AICPA, professional standards, Vol. 1., AU Section
380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; |
| the Audit Committee has received the written disclosures and the letter from Grant
Thornton LLP required by Independence Standards Board Statement No. 1, as adopted by
the Public Company Accounting Oversight Board in Rule 3600T, and has discussed with
Grant Thornton LLP the independence of Grant Thornton LLP; and |
| the Audit Committee recommended, based on the reviews and discussions described
above, to the Board of Directors that the audited financial statements be included in
our Annual Report on Form 10-K. |
Lawrence W. Bianchi, J. Robert Peart and John W. Splude
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| A director must display high personal and professional ethics, integrity and
values. |
| A director must have the ability to exercise sound business judgment. |
| A director must be accomplished in his or her respective field, with broad
experience at the administrative and/or policy-making level in business, government,
education, technology or public interest. |
| A director must have relevant expertise and experience, and be able to offer advice
and guidance based on that expertise and experience. |
| A director must be independent of any particular constituency, be able to represent
all of our stockholders and be committed to enhancing long-term stockholder value. |
| A director must have sufficient time available to devote to activities of the Board
of Directors and to enhance his or her knowledge of our business. |
| At least one independent director must have the requisite experience and expertise
to be designated as an audit committee financial expert, as defined by applicable
rules of the Securities and Exchange Commission, and have past employment experience in
finance or accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the members financial
sophistication, as required by the rules of NASDAQ. |
| One or more of the directors generally must be active or former executive officers
of public or private companies or leaders of major complex organizations, including
commercial, scientific, government, educational and other similar institutions. |
| Directors should be selected so that the Board is comprised of persons with diverse
business experience and skills. |
Lawrence W. Bianchi, James C. Hill, Leon A. Kranz, J. Robert Peart and John W. Splude
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James C. Hill, Leon A. Kranz and John W. Splude
Change in | ||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||
Fees Earned | Stock | Option | Incentive Plan | Deferred | All Other | |||||||||||||||||||||||
or Paid in | Awards | Awards | Compensation | Compensation | Compensation | |||||||||||||||||||||||
Name | Cash ($) | ($) | ($) | ($) | Earnings ($) | ($) | Total ($) | |||||||||||||||||||||
Lawrence W. Bianchi |
$ | 48,000 | $ | 558,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 606,000 | ||||||||||||||
James C. Hill |
$ | 44,000 | $ | 558,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 602,000 | ||||||||||||||
Leon A. Kranz |
$ | 48,000 | $ | 558,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 606,000 | ||||||||||||||
J. Robert Peart |
$ | 44,000 | $ | 558,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 602,000 | ||||||||||||||
John W. Splude |
$ | 44,000 | $ | 558,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 602,000 |
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Item 11. Executive Compensation |
| We strive to compensate our executives at levels competitive with industry and
geographic peers to ensure we attract and retain key management employees. |
| We provide our executives with the opportunity to earn reasonable pay for targeted
performance as measured against our peer group of companies. |
| We link our executives compensation, particularly annual cash bonuses, to
established performance goals. |
| Periodically utilized studies and surveys of Towers Watson and Hewitt Associates to
assess the competitiveness of our overall executive compensation and benefits program,
and provide a high level review of our Executive Officer Incentive Plan, the Stock
Option Program, the Long-Term Incentive Plan and the Restricted Stock Unit Plan; |
| Aligned executive compensation structures based on targeting a competitive level of
pay as measured against our peer group of companies; |
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| Maintained a practice of reviewing the performance and determining the total
compensation earned, paid or awarded to our CEO independent of input from him; |
| Reviewed on an annual basis the performance of our other named executive officers
and other key employees with assistance from our CEO and determined proper total
compensation based on competitive levels as measured against similarly situated
companies; and |
| Maintained the practice of holding executive sessions (without management present)
at every Committee meeting. |
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Change in | ||||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||||
& | ||||||||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||||||
Incentive | Deferred | All Other | ||||||||||||||||||||||||||||||||||
Plan | Compensa- | Compen- | ||||||||||||||||||||||||||||||||||
Name and Principal | Stock | Option | Compensa- | tion Earnings | sation | |||||||||||||||||||||||||||||||
Position | Year | Salary | Bonus | Awards | Awards | tion | (1)(2)(3) | (4) | Total | |||||||||||||||||||||||||||
Gary J. Vroman |
2010 | $ | 449,040 | | $ | 5,880,000 | | $ | 960,000 | $ | 296,703 | $ | 15,593 | $ | 7,601,336 | |||||||||||||||||||||
President & Chief |
2009 | $ | 311,235 | | | | | $ | 173,839 | $ | 13,847 | $ | 498,921 | |||||||||||||||||||||||
Executive Officer |
2008 | $ | 286,312 | $ | 24,650 | | | $ | 95,700 | $ | 131,985 | $ | 12,425 | $ | 551,072 | |||||||||||||||||||||
Wayne E. Larsen |
2010 | $ | 311,815 | | $ | 4,410,000 | | $ | 640,000 | $ | 300,421 | $ | 11,740 | $ | 5,673,976 | |||||||||||||||||||||
Vice President Law/ |
2009 | $ | 295,386 | | | | | $ | 237,961 | $ | 10,264 | $ | 543,611 | |||||||||||||||||||||||
Finance & Secretary |
2008 | $ | 280,963 | $ | 25,500 | | | $ | 169,500 | $ | 62,626 | $ | 9,364 | $ | 547,953 | |||||||||||||||||||||
Randy B. Turner |
2010 | $ | 229,173 | | $ | 1,764,000 | | $ | 320,000 | $ | 16,988 | $ | 9,034 | $ | 2,339,195 | |||||||||||||||||||||
President Pacific Cast |
2009 | $ | 215,000 | | | | $ | 60,200 | $ | 15,784 | $ | 7,968 | $ | 298,952 | ||||||||||||||||||||||
Technologies, Inc. |
2008 | $ | 214,519 | $ | 18,275 | | | $ | 81,700 | $ | (18,944 | ) | $ | 7,961 | $ | 303,511 | ||||||||||||||||||||
John J. Delaney (5)
|
2010 | $ | 200,000 | | $ | 1,764,000 | | $ | 320,000 | $ | 9,827 | $ | 15,611 | $ | 2,309,438 | |||||||||||||||||||||
President Stowe |
2009 | | | | | | | | | |||||||||||||||||||||||||||
Machine Co., Inc. & Aerex LLC |
2008 | | | | | | | | | |||||||||||||||||||||||||||
Lawrence C. Hammond |
2010 | $ | 190,864 | | 1,764,000 | | $ | 320,000 | $ | 94,685 | $ | 15,181 | $ | 2,384,730 | ||||||||||||||||||||||
Vice President |
2009 | $ | 178,500 | | | | | $ | 205,445 | $ | 14,316 | $ | 398,261 | |||||||||||||||||||||||
Human Resources |
2008 | $ | 173,693 | $ | 15,470 | | | $ | 63,700 | $ | (30,027 | ) | $ | 18,647 | $ | 241,483 |
(1) | The 2010 change in pension value of $285,414, $188,573 and $12,893,
respectively, for Messrs. Vroman, Larsen and Hammond reflects an actuarial calculation of the
annual increase in pension value resulting from an additional year of credited service for each
individual. |
|
(2) | The nonqualified deferred compensation earnings of $11,289, $111,848 and
$81,792, respectively, for Messrs. Vroman, Larsen and Hammond reflects earnings on income from
prior periods these individuals have previously deferred into the Elective Deferred Compensation
Plan and the Long Term Incentive Plan. |
|
(3) | Mr. Turners deferred earnings of $16,988 arise from our previous grant
into Mr. Turners deferral account and the Long Term Incentive Plan. |
|
(4) | All other compensation primarily consists of supplemental life insurance
provided to the above-listed executives along with automobile allowances. |
|
(5) | Mr. Delaney was promoted to the position of President of the Companys
Stowe Machine and Aerex business units on November 13, 2009. |
All | ||||||||||||||||||||||||||||||||||||||||
Other | All Other | |||||||||||||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||||||||||||
Awards: | Awards: | |||||||||||||||||||||||||||||||||||||||
Number | Number | Exercise | ||||||||||||||||||||||||||||||||||||||
of | of | or Base | ||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts Under | Estimated Future Payouts Under | Shares | Securities | Price of | ||||||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan Awards | Equity Incentive Plan Awards | of Stock | Underlying | Option | ||||||||||||||||||||||||||||||||||||
Grant | No | Threshold | Target | Maximum | or Units | Options | Awards | |||||||||||||||||||||||||||||||||
Name | Date | Threshold | Target | Maximum | (#) | (#) | (#) | (#) | (#) | ($/Sh) | ||||||||||||||||||||||||||||||
Gary J. Vroman |
1/28/10 | $ | 190,000 | $ | 403,750 | | | | | | | | ||||||||||||||||||||||||||||
Wayne E. Larsen |
1/28/10 | $ | 109,200 | $ | 234,000 | | | | | | | | ||||||||||||||||||||||||||||
Randy B. Turner |
1/28/10 | $ | 78,750 | $ | 168,750 | | | | | | | | ||||||||||||||||||||||||||||
John J. Delaney |
1/28/10 | $ | 70,000 | $ | 150,000 | | | | | | | | ||||||||||||||||||||||||||||
Lawrence C. Hammond |
1/28/10 | $ | 66,850 | $ | 143,250 | | | | | | | |
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Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||||||
Market | Incentive | Plan | ||||||||||||||||||||||||||||||||||
Value | Plan | Awards: | ||||||||||||||||||||||||||||||||||
Number | of | Awards: | Market or | |||||||||||||||||||||||||||||||||
Equity | of | Shares | Number of | Payout | ||||||||||||||||||||||||||||||||
Incentive | Shares | or | Unearned | Value of | ||||||||||||||||||||||||||||||||
Plan Awards | or Units | Units | Shares, | Unearned | ||||||||||||||||||||||||||||||||
Number of | Number of | Number of | of Stock | of | Units or | Shares, | ||||||||||||||||||||||||||||||
Securities | Securities | Securities | That | Stock | Other | Units or | ||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | Option | Have | That | Rights | Other | |||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Expira- | Not | Have | That Have | Rights | ||||||||||||||||||||||||||||
Options (#) | Options (#) | Unearned | Exercise | tion | Vested | Not | Not Vested | That Have | ||||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | Options (#) | Price | Date | (#) | Vested | (#) | Not Vested | |||||||||||||||||||||||||||
Gary J. Vroman |
| | | | | 122,500 | $ | 5,880,000 | | | ||||||||||||||||||||||||||
Wayne E. Larsen |
| | | | | 91,875 | $ | 4,410,000 | | | ||||||||||||||||||||||||||
Randy B. Turner |
| | | | | 36,750 | $ | 1,764,000 | | | ||||||||||||||||||||||||||
John J. Delaney |
| | | | | 36,750 | $ | 1,764,000 | | | ||||||||||||||||||||||||||
Lawrence C.
Hammond |
| | | | | 36,750 | $ | 1,764,000 | | |
Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares Acquired | Value Realized | Shares Acquired | Value Realized | |||||||||||||
Name | on Exercise (#) | on Exercise | on Vesting (#) | on Vesting | ||||||||||||
Gary J. Vroman |
| | | | ||||||||||||
Wayne E. Larsen |
| | | | ||||||||||||
Randy B. Turner |
| | | | ||||||||||||
John J. Delaney |
| | | | ||||||||||||
Lawrence C. Hammond |
| | | |
38
Table of Contents
Payments | ||||||||||||||
Years of | Present Value of | During | ||||||||||||
Credited | Accumulated | Last | ||||||||||||
Name | Plan Name | Service | Benefit | Fiscal Year | ||||||||||
Gary J. Vroman |
Salaried Pension Plan | 28.6 | $ | 463,252 | | |||||||||
Supplemental Retirement Agreement | 15.3 | $ | 716,373 | | ||||||||||
Wayne E. Larsen |
Salaried Pension Plan | 29.9 | $ | 634,652 | | |||||||||
Supplemental Retirement Agreement | 24.9 | $ | 812,927 | | ||||||||||
Randy B. Turner |
| | | | ||||||||||
John J. Delaney |
| | | | ||||||||||
Lawrence C. Hammond |
Salaried Pension Plan | 30.2 | $ | 620,423 | | |||||||||
Supplemental Retirement Agreement | 17.1 | $ | 570,293 | |
Average Annual Earnings | ||||||||||||||||||||||||
for Highest 5-Year Period | ||||||||||||||||||||||||
Within the 10-Years | Years of Benefit Service | |||||||||||||||||||||||
Preceding Retirement | 10 | 15 | 20 | 25 | 30 | 40 | ||||||||||||||||||
$50,000 |
$ | 6,250 | $ | 9,375 | $ | 12,500 | $ | 15,625 | $ | 18,750 | $ | 25,000 | ||||||||||||
$100,000 |
$ | 12,500 | $ | 18,750 | $ | 25,000 | $ | 31,250 | $ | 37,500 | $ | 50,000 | ||||||||||||
$150,000 |
$ | 18,750 | $ | 28,125 | $ | 37,500 | $ | 46,875 | $ | 56,250 | $ | 75,000 | ||||||||||||
$200,000 |
$ | 25,000 | $ | 37,500 | $ | 50,000 | $ | 62,500 | $ | 75,000 | $ | 100,000 | ||||||||||||
$250,000 |
$ | 31,250 | $ | 46,875 | $ | 62,500 | $ | 78,125 | $ | 93,750 | $ | 125,000 | ||||||||||||
$300,000 |
$ | 37,500 | $ | 56,250 | $ | 75,000 | $ | 93,750 | $ | 112,500 | $ | 150,000 |
39
Table of Contents
Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
Contributions in | Contributions in | Earnings in | Withdrawals/ | Balance at | ||||||||||||||||
Name | 2010 | 2010 (1) | 2010 | Distributions | December 31, 2010 | |||||||||||||||
Gary J. Vroman |
| | $ | 11,289 | | $ | 78,422 | |||||||||||||
Wayne E. Larsen |
$ | 31,182 | | $ | 111,848 | | $ | 976,173 | ||||||||||||
Randy B. Turner |
| | $ | 16,988 | | $ | 115,700 | |||||||||||||
John J. Delaney |
| | $ | 9,827 | | $ | 81,913 | |||||||||||||
Lawrence C. Hammond |
$ | 124,630 | | $ | 81,792 | | $ | 602,848 |
(1) | These amounts are reported as compensation in the Summary
Compensation Table for each of the named executive officers. |
40
Table of Contents
Involuntary | ||||||||||||||||||||
Executive Benefits and | Voluntary | Not For Cause | For Cause | |||||||||||||||||
Payments Upon Termination | Termination | Termination | Termination | Death | Disability | |||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
$ | | $ | 1,187,500 | $ | | $ | | $ | | ||||||||||
Supplemental Retirement Plan |
716,373 | 716,373 | 716,373 | 716,373 | 716,373 | |||||||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Post-Termination Health Insurance
(1) |
360,098 | 360,098 | 360,098 | 215,269 | 360,098 | |||||||||||||||
Life Insurance Proceeds (2) |
100,000 | 100,000 | 100,000 | 200,000 | 100,000 | |||||||||||||||
Disability Benefits (3) |
180,000 | 180,000 | 180,000 | | 180,000 | |||||||||||||||
Total: |
$ | 1,356,471 | $ | 2,543,971 | $ | 1,356,471 | $ | 1,131,642 | $ | 1,356,471 |
Involuntary | ||||||||||||||||||||
Executive Benefits and | Voluntary | Not For Cause | For Cause | |||||||||||||||||
Payments Upon Termination | Termination | Termination | Termination | Death | Disability | |||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
$ | | $ | 780,000 | $ | | $ | | $ | | ||||||||||
Supplemental Retirement Plan |
812,927 | 812,927 | 812,927 | 812,927 | 812,927 | |||||||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Post-Termination Health Insurance
(1)(4) |
339,463 | 339,463 | 339,463 | 201,078 | 339,463 | |||||||||||||||
Life Insurance Proceeds (2) |
100,000 | 100,000 | 100,000 | 200,000 | 100,000 | |||||||||||||||
Disability Benefits (3) |
180,000 | 180,000 | 180,000 | | 180,000 | |||||||||||||||
Total: |
$ | 1,432,390 | $ | 2,212,390 | $ | 1,432,390 | $ | 1,214,005 | $ | 1,432,390 |
Involuntary | ||||||||||||||||||||
Executive Benefits and | Voluntary | Not For Cause | For Cause | |||||||||||||||||
Payments Upon Termination | Termination | Termination | Termination | Death | Disability | |||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
$ | | $ | 225,000 | $ | | $ | | $ | | ||||||||||
Supplemental Retirement Plan |
| | | | | |||||||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Post-Termination Health Insurance |
| | | | | |||||||||||||||
Life Insurance Proceeds (2) |
380,000 | 380,000 | 380,000 | 380,000 | 380,000 | |||||||||||||||
Disability Benefits (3) |
123,876 | 123,876 | 123,876 | | 123,876 | |||||||||||||||
Total: |
$ | 503,876 | $ | 728,876 | $ | 503,876 | $ | 380,000 | $ | 503,876 |
41
Table of Contents
Involuntary | ||||||||||||||||||||
Executive Benefits and | Voluntary | Not For Cause | For Cause | |||||||||||||||||
Payments Upon Termination | Termination | Termination | Termination | Death | Disability | |||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
$ | | $ | | $ | | $ | | $ | | ||||||||||
Supplemental Retirement Plan |
| | | | | |||||||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Post-Termination Health Insurance |
| | | | | |||||||||||||||
Life Insurance Proceeds (2) |
25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |||||||||||||||
Disability Benefits |
| | | | | |||||||||||||||
Total: |
$ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 | $ | 25,000 |
Involuntary | ||||||||||||||||||||
Executive Benefits and | Voluntary | Not For Cause | For Cause | |||||||||||||||||
Payments Upon Termination | Termination | Termination | Termination | Death | Disability | |||||||||||||||
Compensation: |
||||||||||||||||||||
Severance |
$ | | $ | 380,000 | $ | | $ | | $ | | ||||||||||
Supplemental Retirement Plan |
570,293 | 570,293 | 570,293 | 570,293 | 570,293 | |||||||||||||||
Benefits and Perquisites: |
||||||||||||||||||||
Post-Termination Health Insurance
(1) |
237,870 | 237,870 | 237,870 | 149,319 | 237,870 | |||||||||||||||
Life Insurance Proceeds (2) |
100,000 | 100,000 | 100,000 | 200,000 | 100,000 | |||||||||||||||
Disability Benefits (3) |
121,940 | 121,940 | 121,940 | | 121,940 | |||||||||||||||
Total: |
$ | 1,030,103 | $ | 1,410,103 | $ | 1,030,103 | $ | 919,612 | $ | 1,030,103 |
(1) | All assumptions used in the determination of these present values are the same as the assumptions used
in the January 1, 2010 actuarial valuation of the postretirement medical benefits for footnote No. 8 to the audited
financial statements contained in our Form 10-K for the year ending December 31, 2010. |
|
(2) | Vested life insurance benefits under the Officer Plans for Messrs. Vroman, Larsen and Hammond
provide for a $200,000 term life policy while employed and a $100,000 term life policy after employment terminates. We
provide Mr. Turner with a $380,000 term life policy and Mr. Delaney with a $25,000 term life policy. |
|
(3) | Disability insurance is provided for 66.6% of base salary up to a maximum monthly benefit of
$15,000. The above figure represents an annual benefit until the age of 65. |
|
(4) | Mr. Larsen does not accept medical benefits from us. This entry represents an actuarial
assumption should he have received such benefits. |
Value of Restricted Stock Units | Value of Deferred Compensation | |||||||
Name | Vested on Accelerated Basis | Awards Vested on Accelerated Basis | ||||||
Gary J. Vroman |
$ | 5,880,000 | $ | 34,418 | ||||
Wayne E. Larsen |
$ | 4,410,000 | $ | 32,554 | ||||
Randy B. Turner |
$ | 1,764,000 | $ | 23,285 | ||||
John J. Delaney |
$ | 1,764,000 | $ | 22,521 | ||||
Lawrence C. Hammond |
$ | 1,764,000 | $ | |
42
Table of Contents
James C. Hill and John W. Splude
Item 12. Security Ownership of Certain Beneficial Owners and Management |
Name & Address of Beneficial Owner | No. of Shares Beneficially Owned | Percent of Class | ||||||
Water Island Capital LLC |
1,226,380 | 7.81 | % | |||||
41 Madison Avenue, Floor 42 New York, New York 10010 |
||||||||
Waddell & Reed Financial, Inc. |
1,125,978 | 7.17 | % | |||||
6300 Lamar Avenue Overland Park, Kansas 66202 |
||||||||
Dimensional Fund Advisors, Inc. |
865,415 | 5.51 | % | |||||
6300 Bee Cave Road Austin, Texas 78746 |
||||||||
Ko Family Irrevocable Trusts |
856,211 | 5.45 | % | |||||
9 Wrigley Irvine, California 92618 |
||||||||
Black Rock Global Investors |
843,906 | 5.37 | % | |||||
400 Howard Street San Francisco, California 94105 |
||||||||
Century Capital Management LLC |
786,063 | 5.00 | % | |||||
100 Federal Street, Floor 29 Boston, Massachusetts 02110 |
43
Table of Contents
Number of Shares Beneficially | Percent | |||||||
Name | Owned At March 8, 2010 | Of Class | ||||||
Lawrence W. Bianchi |
1,000 | * | ||||||
James C. Hill |
1,000 | * | ||||||
Shannon J. S. Ko |
856,211 | 5.45 | % | |||||
Leon A. Kranz |
0 | * | ||||||
Wayne E. Larsen |
0 | * | ||||||
J. Robert Peart |
0 | * | ||||||
John W. Splude |
25,000 | * | ||||||
Lawrence C. Hammond |
5,000 | * | ||||||
Randy B. Turner |
0 | * | ||||||
Gary J. Vroman |
0 | * | ||||||
Directors and Executive Officers as a Group (10 persons) |
888,211 | 5.65 | % |
* | Less than one percent (1%) |
Item 13. Certain Relationships and Related Transactions |
| A related person means any of our directors, executive officers or nominees for
director or any of their immediate family members; and |
| A related person transaction generally is a transaction (including any
indebtedness or a guarantee of indebtedness) in which we were or are to be a
participant and the amount involved exceeds $120,000, and in which a related person had
or will have a direct or indirect material interest. |
44
Table of Contents
Item 14. Principal Accountant Fees and Services |
Audit Fees (1) | Tax Fees | Audit-Related Fees | Other Fees | |||||||||||||
2009 |
$ | 335,835 | $ | 0 | $ | 0 | $ | 0 | ||||||||
2010 |
$ | 525,057 | $ | 0 | $ | 0 | $ | 0 |
(1) | The 2009 and 2010 fees were for integrated audits which included a
review of Internal Controls over Financial Reporting. |
Item 15. Exhibits and Financial Statement Schedules |
45
Table of Contents
LADISH CO., INC. | ||||||
By: | /s/ Wayne E. Larsen
|
|||||
March 8, 2011
|
Vice President Law/Finance & Secretary |
Signature | Title | Date | ||
/s/ Gary J. Vroman
|
Director, President and
Chief Executive Officer (Principal Executive Officer) |
March 7, 2011 | ||
/s/ Wayne E. Larsen
|
Director, Vice President
Law/Finance & Secretary
(Principal Financial and Accounting Officer) |
March 7, 2011 | ||
/s/ Lawrence W. Bianchi
|
Director | March 6, 2011 | ||
/s/ James C. Hill
|
Director | March 6, 2011 | ||
/s/ Leon A. Kranz
|
Director | March 4, 2011 | ||
/s/ J. Robert Peart
|
Director | March 7, 2011 | ||
/s/ John W. Splude
|
Director | March 8, 2011 |
46
Table of Contents
F-3 | ||||
F-4 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-9 |
F-1
Table of Contents
F-2
Table of Contents
Ladish Co., Inc.
Chicago, Illinois
F-3
Table of Contents
December 31, 2009 and 2010
Assets | 2009 | 2010 | ||||||
Current Assets: |
||||||||
Cash and Cash Equivalents |
$ | 19,917 | $ | 23,335 | ||||
Accounts Receivable, Less Allowance for Doubtful Accounts
of $75 and $200, respectively |
59,382 | 82,364 | ||||||
Inventories, Net |
92,697 | 100,693 | ||||||
Deferred Income Taxes |
5,144 | 4,843 | ||||||
Prepaid Expenses and Other Current Assets |
6,118 | 2,105 | ||||||
Total Current Assets |
183,258 | 213,340 | ||||||
Property, Plant and Equipment: |
||||||||
Land and Improvements |
6,905 | 6,906 | ||||||
Buildings and Improvements |
60,416 | 62,153 | ||||||
Machinery and Equipment |
240,352 | 297,969 | ||||||
Construction in Progress |
58,451 | 8,920 | ||||||
366,124 | 375,948 | |||||||
Less Accumulated Depreciation |
(167,688 | ) | (180,295 | ) | ||||
Net Property, Plant and Equipment |
198,436 | 195,653 | ||||||
Deferred Income Taxes |
26,522 | 16,175 | ||||||
Goodwill |
37,571 | 37,571 | ||||||
Other Intangible Assets, Net |
19,465 | 19,065 | ||||||
Other Assets |
4,262 | 3,764 | ||||||
Total Assets |
$ | 469,514 | $ | 485,568 | ||||
F-4
Table of Contents
December 31, 2009 and 2010
(Dollars in Thousands Except Per Share Data)
Liabilities and Equity | 2009 | 2010 | ||||||
Current Liabilities: |
||||||||
Accounts Payable |
$ | 23,613 | $ | 27,317 | ||||
Senior Notes |
5,714 | 15,714 | ||||||
Accrued Liabilities: |
||||||||
Pensions |
259 | 202 | ||||||
Postretirement Benefits |
3,464 | 3,818 | ||||||
Officers Deferred Compensation |
155 | 328 | ||||||
Wages and Salaries |
3,314 | 4,342 | ||||||
Taxes, Other Than Income Taxes |
289 | 313 | ||||||
Interest |
1,355 | 1,323 | ||||||
Profit Sharing |
611 | 3,567 | ||||||
Paid Progress Billings |
2,428 | 1,306 | ||||||
Other |
4,541 | 5,425 | ||||||
Total Current Liabilities |
45,743 | 63,655 | ||||||
Noncurrent Liabilities: |
||||||||
Senior Notes |
84,286 | 68,571 | ||||||
Pensions |
69,653 | 57,231 | ||||||
Postretirement Benefits |
30,215 | 29,899 | ||||||
Officers Deferred Compensation |
9,276 | 10,082 | ||||||
Other Noncurrent Liabilities |
4,220 | 3,653 | ||||||
Total Liabilities |
243,393 | 233,091 | ||||||
Commitments and Contingencies |
| | ||||||
Stockholders Equity: |
||||||||
Common Stock-Authorized 100,000,000, and Issued
15,907,552 Shares at Each Date of $.01 Par Value |
159 | 159 | ||||||
Additional Paid-In Capital |
153,292 | 153,361 | ||||||
Retained Earnings |
145,378 | 170,753 | ||||||
Treasury Stock, 4,548 and 200,000 Shares, Respectively, of
Common Stock at Cost |
(33 | ) | (3,250 | ) | ||||
Accumulated Other Comprehensive Loss |
(73,214 | ) | (69,102 | ) | ||||
Total Stockholders Equity |
225,582 | 251,921 | ||||||
Noncontrolling Interest in Equity of Subsidiary |
539 | 556 | ||||||
Total Equity |
226,121 | 252,477 | ||||||
Total Liabilities and Equity |
$ | 469,514 | $ | 485,568 | ||||
F-5
Table of Contents
(Dollars in Thousands Except Per Share Data)
Years Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Net Sales |
$ | 469,466 | $ | 349,832 | $ | 403,132 | ||||||
Cost of Sales |
410,163 | 322,745 | 337,476 | |||||||||
Gross Profit |
59,303 | 27,087 | 65,656 | |||||||||
Selling, General and Administrative Expenses |
19,765 | 17,839 | 18,671 | |||||||||
Income from Operations |
39,538 | 9,248 | 46,985 | |||||||||
Other (Income) Expense: |
||||||||||||
Interest Expense |
1,971 | 5,050 | 5,613 | |||||||||
Other, Net |
(683 | ) | 1,062 | (241 | ) | |||||||
Income Before Income Tax Provision (Benefit) |
38,250 | 3,136 | 41,613 | |||||||||
Income Tax Provision (Benefit) |
5,876 | (2,894 | ) | 16,209 | ||||||||
Net Income |
32,374 | 6,030 | 25,404 | |||||||||
Noncontrolling Interest in Net Earnings (Loss) of Subsidiary |
169 | (64 | ) | 29 | ||||||||
Net Income Attributable to Ladish Co., Inc. |
$ | 32,205 | $ | 6,094 | $ | 25,375 | ||||||
Earnings Per Share: |
||||||||||||
Basic |
$ | 2.15 | $ | 0.38 | $ | 1.61 | ||||||
Diluted |
$ | 2.15 | $ | 0.38 | $ | 1.61 |
F-6
Table of Contents
(Dollars in Thousands Except Per Share Data)
Non- | ||||||||||||||||||||||||||||||||
Accumulated | Controlling | |||||||||||||||||||||||||||||||
Common Stock | Additional | Treasury | Other | Interest in | ||||||||||||||||||||||||||||
Par | Paid-in | Retained | Stock, | Comprehensive | Equity of | |||||||||||||||||||||||||||
Shares | Value | Capital | Earnings | at Cost | Income (Loss) | Subsidiary | Total | |||||||||||||||||||||||||
Balance, December 31, 2007 |
14,605,591 | $ | 146 | $ | 125,158 | $ | 107,079 | $ | (521 | ) | $ | (30,308 | ) | $ | 497 | $ | 202,051 | |||||||||||||||
Comprehensive Net Income (Loss): |
||||||||||||||||||||||||||||||||
Net Income |
| | | 32,205 | | | 169 | 32,374 | ||||||||||||||||||||||||
Other Comprehensive Income
(Loss): |
||||||||||||||||||||||||||||||||
Foreign Currency Translation
Adjustments |
| | | | | (7,519 | ) | | (7,519 | ) | ||||||||||||||||||||||
Adjustment for Unrealized
Investment Losses, Net of
Tax of $(315) |
| | | | | (473 | ) | | (473 | ) | ||||||||||||||||||||||
Adjustment for Pension &
Post-retirement Plans, Net
of Tax
of $(20,647) |
| | | | | (30,971 | ) | | (30,971 | ) | ||||||||||||||||||||||
Comprehensive Loss |
(6,589 | ) | ||||||||||||||||||||||||||||||
Issuance of Common Stock |
| | 655 | | 475 | | | 1,130 | ||||||||||||||||||||||||
Acquisition of Aerex |
45,750 | 1 | 940 | | | | | 941 | ||||||||||||||||||||||||
Acquisition of Chen-Tech |
1,256,211 | 12 | 31,808 | | | | | 31,820 | ||||||||||||||||||||||||
Pre-reorganization Deferred Tax
Basis Adjustment |
| | (5,498 | ) | | | | | (5,498 | ) | ||||||||||||||||||||||
Tax Effect Related to Stock Options |
| | 222 | | | | | 222 | ||||||||||||||||||||||||
Balance, December 31, 2008 |
15,907,552 | $ | 159 | $ | 153,285 | $ | 139,284 | $ | (46 | ) | $ | (69,271 | ) | $ | 666 | $ | 224,077 | |||||||||||||||
Comprehensive Net Income (Loss): |
||||||||||||||||||||||||||||||||
Net Income |
| | | 6,094 | | | (64 | ) | 6,030 | |||||||||||||||||||||||
Other Comprehensive Income
(Loss): |
||||||||||||||||||||||||||||||||
Foreign Currency Translation
Adjustments |
| | | | | 1,175 | | 1,175 | ||||||||||||||||||||||||
Adjustment for Unrealized
Investment Gains, Net of Tax
of $210 |
| | | | | 316 | | 316 | ||||||||||||||||||||||||
Adjustment for Pension &
Post-retirement Plans, Net
of Tax
of $(3,623) |
| | | | | (5,434 | ) | | (5,434 | ) | ||||||||||||||||||||||
Comprehensive Income |
2,087 | |||||||||||||||||||||||||||||||
Purchase of Subsidiary Shares |
| | | | | | (63 | ) | (63 | ) | ||||||||||||||||||||||
Issuance of Common Stock |
| | 2 | | 13 | | | 15 | ||||||||||||||||||||||||
Tax Effect Related to Stock Options |
| | 5 | | | | | 5 | ||||||||||||||||||||||||
Balance, December 31, 2009 |
15,907,552 | $ | 159 | $ | 153,292 | $ | 145,378 | $ | (33 | ) | $ | (73,214 | ) | $ | 539 | $ | 226,121 | |||||||||||||||
Comprehensive Net Income (Loss): |
||||||||||||||||||||||||||||||||
Net Income |
| | | 25,375 | | | 29 | 25,404 | ||||||||||||||||||||||||
Other Comprehensive Income
(Loss): |
||||||||||||||||||||||||||||||||
Foreign Currency Translation
Adjustments |
| | | | | (1,090 | ) | | (1,090 | ) | ||||||||||||||||||||||
Adjustment for Unrealized
Investment Gains, Net of Tax
of $117 |
| | | | | 176 | | 176 | ||||||||||||||||||||||||
Adjustment for Pension &
Post-retirement Plans, Net
of Tax
of $3,351 |
| | | | | 5,026 | | 5,026 | ||||||||||||||||||||||||
Comprehensive Income |
29,516 | |||||||||||||||||||||||||||||||
Purchase of Subsidiary Shares |
| | | | | | (12 | ) | (12 | ) | ||||||||||||||||||||||
Purchase of Treasury Stock |
| | | | (3,250 | ) | | | (3,250 | ) | ||||||||||||||||||||||
Issuance of Common Stock |
| | 14 | | 33 | | | 47 | ||||||||||||||||||||||||
Tax Effect Related to Stock Options |
| | 55 | | | | | 55 | ||||||||||||||||||||||||
Balance, December 31, 2010 |
15,907,552 | $ | 159 | $ | 153,361 | $ | 170,753 | $ | (3,250 | ) | $ | (69,102 | ) | $ | 556 | $ | 252,477 | |||||||||||||||
F-7
Table of Contents
(Dollars in Thousands)
Years Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Cash Flows from Operating Activities: |
||||||||||||
Net Income |
$ | 32,374 | $ | 6,030 | $ | 25,404 | ||||||
Adjustments to Reconcile Net Income to Net Cash Provided by
(Used in) Operating Activities: |
||||||||||||
Depreciation |
13,320 | 15,339 | 15,967 | |||||||||
Amortization of Intangibles |
| 546 | 400 | |||||||||
Non-Cash Deferred Compensation |
(788 | ) | 527 | 293 | ||||||||
Deferred Income Taxes |
767 | (1,838 | ) | 4,655 | ||||||||
Gain on Purchase of Stock Noncontrolling Interest |
| (23 | ) | (7 | ) | |||||||
Loss (Gain) on Disposal of Property, Plant and Equipment |
(137 | ) | 308 | 269 | ||||||||
Changes in Assets and Liabilities, Net of Acquired Businesses: |
||||||||||||
Accounts Receivable |
2,595 | 19,405 | (23,223 | ) | ||||||||
Inventories |
8,969 | 36,666 | (8,071 | ) | ||||||||
Other Assets |
3,759 | 2,246 | 4,561 | |||||||||
Accounts Payable and Accrued Liabilities |
(13,882 | ) | (17,421 | ) | 8,695 | |||||||
Other Liabilities |
(21,450 | ) | 1,331 | (3,981 | ) | |||||||
Net Cash Provided by Operating Activities |
25,527 | 63,116 | 24,962 | |||||||||
Cash Flows from Investing Activities: |
||||||||||||
Additions to Property, Plant and Equipment |
(49,751 | ) | (13,883 | ) | (14,558 | ) | ||||||
Proceeds from Sale of Property, Plant and Equipment |
468 | 88 | 189 | |||||||||
Purchase of ZKM Stock Noncontrolling Interest |
| (37 | ) | (5 | ) | |||||||
Cash Paid for Acquired Companies, Net of Cash Acquired |
(40,271 | ) | | | ||||||||
Proceeds from Aerex Acquisition Working Capital Adjustment |
| 1,200 | | |||||||||
Net Cash Used in Investing Activities |
(89,554 | ) | (12,632 | ) | (14,374 | ) | ||||||
Cash Flows from Financing Activities: |
||||||||||||
Borrowings from (Repayment of) Facility |
21,400 | (28,900 | ) | | ||||||||
Issuance of Senior Notes |
50,000 | | | |||||||||
Repayment of Senior Notes |
(6,000 | ) | | (5,715 | ) | |||||||
Repayment of Notes Payable |
(4,610 | ) | | | ||||||||
Retirement of Capital Leases |
| (1,660 | ) | | ||||||||
Deferred Financing Costs |
(299 | ) | | | ||||||||
Issuance of Common Stock |
215 | 15 | 47 | |||||||||
Purchase of Treasury Stock |
| | (3,250 | ) | ||||||||
Increase (Decrease) in Outstanding Checks |
3,158 | (4,828 | ) | 1,743 | ||||||||
Net Cash Provided by (Used in) Financing Activities |
63,864 | (35,373 | ) | (7,175 | ) | |||||||
Effect of Exchange Rate Change on Cash and Cash Equivalents |
(886 | ) | (97 | ) | 5 | |||||||
Increase (Decrease) in Cash and Cash Equivalents |
(1,049 | ) | 15,014 | 3,418 | ||||||||
Cash and Cash Equivalents, Beginning of Year |
5,952 | 4,903 | 19,917 | |||||||||
Cash and Cash Equivalents, End of Year |
$ | 4,903 | $ | 19,917 | $ | 23,335 | ||||||
Supplemental Cash Flow Information: |
||||||||||||
Income Taxes Paid (Refunded) |
$ | 8,417 | $ | (3,255 | ) | $ | 6,729 | |||||
Interest Paid |
$ | 3,734 | $ | 6,008 | $ | 5,668 | ||||||
Non-Cash Supplemental Information: |
||||||||||||
Issuance of Stock for Acquisitions |
$ | 32,761 | $ | | $ | |
F-8
Table of Contents
(Dollars in Thousands Except Per Share Data)
(1) | Business Information |
Ladish Co., Inc. (the Company), headquartered in Cudahy, Wisconsin, engineers, produces and
markets high-strength, high technology forged and cast metal components for a wide variety of
load-bearing and fatigue-resisting applications in the jet engine, aerospace and industrial
markets, for both domestic and international customers. The Companys manufacturing site in
Irvine, California produces forgings for commercial and military jet engine applications. The
Companys manufacturing site in Albany, Oregon produces cast metal components, the Companys
manufacturing site in Stalowa Wola, Poland produces forgings for the industrial and aerospace
markets and its sites in Windsor, Connecticut and western Wisconsin are finished machining
operations. The Company operates as a single segment. Net sales to jet engine, aerospace and
industrial customers were approximately 51%, 26% and 23% in 2008, 55%, 33% and 12% in 2009 and
49%, 36% and 15% in 2010, respectively, of total company net sales. |
In 2008, 2009 and 2010, the Company had three customers that collectively accounted for
approximately 47%, 56% and 56%, respectively, of total Company net sales. Net sales to
Rolls-Royce were 23%, 26% and 26%, United Technologies 15%, 19% and 17% and General Electric
9%, 11% and 13% of total Company net sales for the respective years. |
U.S. exports accounted for approximately 46%, 46% and 43% of total Company net sales in 2008,
2009 and 2010, respectively, with exports to England constituting approximately 25%, 26% and
26%, respectively, of total Company net sales. |
As of December 31, 2010, approximately 48% of the Companys domestic employees were represented
by one of seven collective bargaining units. New collective bargaining agreements were
negotiated with six of these units during 2006 and negotiations with one unit were successfully
concluded in 2007. Internationally, the Company had approximately 460 employees in Poland as
of December 31, 2010, most of whom are represented by the Solidarity trade union. |
(2) | Summary of Significant Accounting Policies |
(a) | Consolidation |
The consolidated financial statements include the accounts of the Company and all of its
subsidiaries, including the results of operations of Aerex and Chen-Tech from their
respective acquisition dates. All significant intercompany accounts and transactions have
been eliminated in consolidation. |
The assets and liabilities of the Companys foreign subsidiary are translated at year-end
exchange rates and the related statements of earnings are translated at the average
exchange rates for the respective years. Gains or losses resulting from translating
foreign currencies are recorded as accumulated other comprehensive income or loss, a
separate component of stockholders equity. |
Gains or losses resulting from foreign currency transactions (transactions denominated in
a currency other than the Companys local currency) are included in net earnings, but are
not significant in the years presented. |
F-9
Table of Contents
(b) | Cash and Cash Equivalents |
Cash in excess of daily requirements is invested in marketable securities consisting of
commercial paper and money market instruments which mature in three months or less. Such
investments are deemed to be cash equivalents due to the high liquidity and short term
duration of such money market accounts. The Company maintains deposits in financial
institutions that consistently exceed the FDIC limit of $250. At December 31, 2010, the
Company had deposits of $23,085 which exceeded the FDIC limit. The Company has not
experienced any losses in such accounts and management believes the Company is not at
significant risk. |
(c) | Outstanding Checks |
Outstanding payroll and accounts payable checks related to certain bank accounts are
recorded as accounts payable on the balance sheets. These checks amounted to $105 and
$1,848 as of December 31, 2009 and 2010, respectively. |
(d) | Inventories |
Inventories are stated at the lower of cost, first-in, first-out (FIFO) basis, or market.
Inventory values include material and conversion costs. |
Inventories for the years ended December 31, 2009 and 2010 consist of the following: |
December 31, | ||||||||
2009 | 2010 | |||||||
Raw Materials |
$ | 18,038 | $ | 15,259 | ||||
Work-In-Process and Finished |
77,209 | 87,801 | ||||||
95,247 | 103,060 | |||||||
Less Progress Payments |
(2,550 | ) | (2,367 | ) | ||||
Total Inventories |
$ | 92,697 | $ | 100,693 | ||||
The Company is operating at less than normal capacity, as a result the Company had
unabsorbed fixed expenses of approximately $15,700, $16,600 and $16,100 in the years
ending December 31, 2008, 2009 and 2010, respectively. |
(e) | Property, Plant and Equipment |
Additions to property, plant, and equipment are recorded at cost. Normal repair and
maintenance costs are expensed as incurred. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, as follows: |
Land Improvements |
39 years | |||
Buildings and Improvements |
39 years | |||
Machinery and Equipment |
5 to 25 years |
Interest is capitalized in connection with construction of plant and equipment. Interest
capitalization ceases when the construction of the asset is substantially complete and the
asset is available for use. Interest capitalization was $2,418, $953 and $43 in 2008,
2009 and 2010, respectively. |
(f) | Goodwill and Other Intangible Assets |
Goodwill represents the cost of acquired net assets in excess of their fair market values.
Goodwill and other intangible assets with indefinite useful lives are not amortized but
are tested
for impairment at least annually. Intangible assets with estimable useful lives are
amortized over their respective estimated useful lives and also reviewed at least annually
for impairment. |
F-10
Table of Contents
A two-step impairment test is required to identify potential goodwill impairment and
measure the amount of the goodwill impairment loss to be recognized. In the first step,
the fair value of each reporting unit is compared to its carrying value to determine if
the goodwill is impaired. If the fair value of the reporting unit exceeds the carrying
value of the net assets assigned to that unit, then goodwill is not impaired and the
second step is not required. If the carrying value of the net assets assigned to the
reporting unit exceeds its fair value, then the second step is performed in order to
determine the implied fair value of the reporting units goodwill and an impairment loss
is recorded for an amount equal to the difference between the implied fair value and the
carrying value of the goodwill. |
For the purpose of goodwill analysis, the Company has only one reporting unit. Goodwill
amounted to $37,571 at December 31, 2009 and 2010. There was a significant increase in
goodwill in 2008 due to the acquisitions of Aerex and Chen-Tech. A $1,000 opening balance
sheet deferred tax asset related to the Chen-Tech acquisition was charged to Goodwill in
lieu of taxes upon realization in 2009. Goodwill has been subjected to fair value
impairment tests as of September 30, 2008, 2009 and 2010 and no impairments were
recognized. |
The Company conducted its annual impairment analysis as of September 30, 2010. The fair
value of the Company as measured by the Company market capitalization plus a control
premium exceeded its carrying value. The Company reviewed the analysis at year-end and
concluded it remained accurate. |
The control premium that a third party would be willing to pay to obtain a controlling
interest in the Company was considered when determining fair value. Management considered
recent transactions with comparable companies in the industry, and possible synergies to a
market participant. The Company also considered the valuation ATI was proposing for the
Company in a merged transaction. Management concluded there was a reasonable basis for
the excess of estimated fair value of the Company over its market capitalization. |
The estimated fair value requires judgment and the use of estimates by management.
Potential factors requiring assessment include a decline in the Companys stock price and
variance in results of operations from projections. Any of these potential factors may
cause the Company to re-evaluate goodwill during any quarter throughout the year. If an
impairment charge were to be taken for goodwill it would be a non-cash charge and would
not impact the Companys cash position or cash flows, however, such a charge could have a
material impact to equity and the statement of operations. |
The Company has amortizable customer relationships of $19,465 and $19,065 at December 31,
2009 and 2010, respectively, included in other intangible assets, that are being amortized
over 50 years. The Company recorded amortization expense of $0, $546 and $400 for 2008,
2009 and 2010, respectively. The 2009 amortization expense of $546 included partial year
expense of $146 from 2008. The Company estimates annual amortization expense of $400 in
2011, and $1,600 in years 2012 through 2015. |
(g) | Long-Lived Assets |
The Company monitors the recoverability of the carrying value of its long-lived assets.
An impairment charge is recognized when an indicator of impairment occurs and the expected
net undiscounted future cash flows from an assets use (including any proceeds from
disposition) are less than the assets carrying value and the assets carrying value
exceeds its fair value.
Assets to be disposed of by sale are stated at the lower of their fair values or carrying
amounts and depreciation or amortization is no longer recognized. |
F-11
Table of Contents
(h) | Fair Values of Financial Instruments |
Authoritative guidance defines fair value, establishes a framework for measuring fair
value in accounting principles generally accepted in the United States of America, and
expands disclosures about fair value measurements. The provisions of this standard apply
to other accounting pronouncements that require or permit fair value measurements and are
to be applied prospectively with limited exceptions. |
Fair value is defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the
measurement date. This standard is now the single source in GAAP for the definition of
fair value, except for the fair value of leased property. A fair value hierarchy
distinguishes between (1) market participant assumptions developed based on market data
obtained from independent sources (observable inputs) and (2) an entitys own assumptions,
about market participant assumptions, that are developed based on the best information
available in the circumstances (unobservable inputs). The fair value hierarchy consists
of three broad levels, which gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The three levels of the fair value hierarchy are described
below: |
Level 1 | Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or liabilities. |
Level 2 | Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly, including
quoted prices for similar assets or liabilities in active markets; quoted prices for
identical or similar assets or liabilities in markets that are not active; inputs
other than quoted prices that are observable for the asset or liability (e.g.,
interest rates); and inputs that are derived principally from or corroborated by
observable market data by correlation or other means. |
Level 3 | Inputs that are both significant to the fair value measurement and
unobservable. These inputs rely on managements own assumptions about the
assumptions that market participants would use in pricing the asset or liability.
(The unobservable inputs are developed based on the best information available in the
circumstances and may include the Companys own data.)
|
F-12
Table of Contents
The following table presents the Companys fair value hierarchy for those assets and
liabilities measured at fair value on a recurring basis as of December 31, 2009 and 2010: |
Quoted | Significant | |||||||||||||||
Prices in | Other | Significant | ||||||||||||||
Fair Values at | Active | Observable | Unobservable | |||||||||||||
December 31, 2009 | Markets | Inputs | Inputs | |||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Pension Plan Assets |
||||||||||||||||
Money Market Accounts |
$ | 3,734 | $ | | $ | | $ | 3,734 | ||||||||
US Government Issues |
15,262 | 16,290 | | 31,552 | ||||||||||||
Corporate Issues |
| 29,632 | | 29,632 | ||||||||||||
Foreign Issues |
| 6,769 | | 6,769 | ||||||||||||
Municipal Issues |
| 24 | | 24 | ||||||||||||
Domestic Common Stocks |
64,534 | | | 64,534 | ||||||||||||
Foreign Stocks |
695 | | | 695 | ||||||||||||
Mutual Funds |
6,027 | | | 6,027 | ||||||||||||
Sub-Total |
$ | 90,252 | $ | 52,715 | $ | | $ | 142,967 | ||||||||
Investments |
||||||||||||||||
Money Market Accounts |
$ | 1,524 | | | $ | 1,524 | ||||||||||
Mutual Funds |
2,199 | | | 2,199 | ||||||||||||
Sub-Total |
$ | 3,723 | $ | | $ | | $ | 3,723 | ||||||||
Total |
$ | 93,975 | $ | 52,715 | $ | | $ | 146,690 | ||||||||
Quoted | Significant | |||||||||||||||
Prices in | Other | Significant | ||||||||||||||
Fair Values at | Active | Observable | Unobservable | |||||||||||||
December 31, 2010 | Markets | Inputs | Inputs | |||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Pension Plan Assets |
||||||||||||||||
Money Market Accounts |
$ | 2,976 | $ | | $ | | $ | 2,976 | ||||||||
US Government Issues |
26,506 | 10,991 | | 37,497 | ||||||||||||
Corporate Issues |
| 27,508 | | 27,508 | ||||||||||||
Foreign Issues |
| 7,488 | | 7,488 | ||||||||||||
Municipal Issues |
| 771 | | 771 | ||||||||||||
Domestic Common Stock |
79,354 | | | 79,354 | ||||||||||||
Foreign Stocks |
1,168 | | | 1,168 | ||||||||||||
Mutual Funds |
5,658 | | | 5,658 | ||||||||||||
Sub-Total |
$ | 115,662 | $ | 46,758 | $ | | $ | 162,420 | ||||||||
Investments |
||||||||||||||||
Money Market Accounts |
$ | 81 | | | $ | 81 | ||||||||||
Mutual Funds |
3,273 | | | 3,273 | ||||||||||||
Sub-Total |
$ | 3,354 | $ | | $ | | $ | 3,354 | ||||||||
Total |
$ | 119,016 | $ | 46,758 | $ | | $ | 165,774 | ||||||||
The Company considers the carrying amounts of cash and cash equivalents, accounts
receivable and accounts payable to approximate fair value because of the short maturities
of these financial instruments. The fair values of the Senior Notes do not materially
differ from their carrying values. |
F-13
Table of Contents
(i) | Revenue Recognition and Accounts Receivable |
Sales revenue is recognized when the title and risk of loss have passed to the customer,
there is pervasive evidence of an arrangement, delivery has occurred or the service has
been provided,
the sale price is determinable and collectibility is reasonably assured. This occurs at
the time of shipment. Net sales include freight out as well as reductions for returns and
allowances, and sales discounts. Progress payments on contracts are generally recognized
as reductions of the related inventory costs. Progress payments in excess of inventory
costs are reflected as a liability. The Company does not recognize revenue from the
disposal of by-products. Any proceeds received from by-product disposal are considered an
offset to cost of sales. The Company recognized by-product credits of $14,200, $6,300 and
$13,100 in the years ending December 31, 2008, 2009 and 2010, respectively. The Company
generally grants uncollateralized credit to customers on an individual basis based upon
the customers financial condition and credit history. Credit is typically on net 30-day
terms and progress payments are frequently required for customers with long production
cycles to minimize credit risk. The Companys allowance for doubtful accounts is based on
a review of sales reports, open deduction reports, trends in collections, historical
experience and existing economic conditions. Bad debt write-offs occur upon notice of
insolvency or other evidence of business closure. |
(j) | Income Taxes |
Deferred income taxes are accounted for under the asset and liability method whereby
deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates. Deferred income tax provisions or
benefits are based on the change in the deferred tax assets and liabilities from period to
period. |
There are many transactions and calculations where the ultimate tax determination is
uncertain and the Company must exercise its judgment in determining its provision for
income taxes and recording the related assets and liabilities. The FASB has issued
guidance for how a company should recognize, measure, present, and disclose in its
financial statements, uncertain tax positions that a company has taken or expects to take
on a return. The Company has adopted this guidance, and as such, accruals for tax
contingencies are provided for accordingly. |
(k) | Use of Estimates |
The preparation of financial statements in conformity with generally accepted accounting
principles in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results will likely
differ from those estimates, but management believes such differences are not material. |
(l) | Reclassification |
Certain reclassifications have been made to the 2008 and 2009 financial statements to
conform with the 2010 presentation. |
F-14
Table of Contents
(m) | New Accounting Pronouncements |
In January 2010, the FASB issued Accounting Standards Update (ASU) 2010-06, Fair Value
Measurements and Disclosures Improving Disclosures about Fair Value Measurements, (ASU
2010-06), that amends Accounting Standards Codification (ASC) Subtopic 820-10, Fair
Value Measurements and Disclosures Overall, and requires reporting entities to disclose
(1) the amount of significant transfers in and out of Level 1 and Level 2 fair value
measurements and describe the reasons for the transfers, and (2) separate information
about purchases, sales, issuance and settlements in the reconciliation of fair value
measurements
using significant unobservable inputs (Level 3). ASU 2010-06 also requires reporting
entities to provide fair value measurement disclosures for each class of assets and
liabilities and disclose the inputs and valuation techniques for fair value measurements
that fall within Levels 2 and 3 of the fair value hierarchy. These disclosures and
clarification are effective for interim and annual reporting periods beginning after
December 15, 2009, except for the disclosures about purchases, sales, issuance, and
settlements in the roll forward of activity in Level 3 fair value measurements. Those
disclosures are effective for fiscal years beginning after December 15, 2010 and for
interim periods within those fiscal years. The Company adopted the provisions of ASU
2010-06 and the provisions of ASU 2010-06 did not have a material impact on the Companys
consolidated financial statements. |
In February 2010, the FASB issued ASU 2010-09, Subsequent Events Amendments to Certain
Recognition and Disclosure Requirements, (ASU 2010-09), that amends ASC Subtopic 855-10,
Subsequent Events Overall (ASC 855-10). ASU 2010-09 requires an SEC filer to
evaluate subsequent events through the date that the financial statements are issued but
removed the requirement to disclose this date in the notes to the entitys financial
statements. The amendments are effective upon issuance of the final update and
accordingly, the Company has adopted the provisions of ASU 2010-09. The adoption of these
provisions did not have a material impact on the Companys consolidated financial
statements. |
In December 2010, the FASB issued ASU 2010-28, Intangibles Goodwill and Other When
to Perform Step 2 of the Goodwill Impairment test for Reporting Units with Zero or
Negative Carrying Amounts, (ASU 2010-28), that amends ASC Subtopic 350-20, Intangibles
Goodwill and Other, and requires entities with reporting units that have carrying
amounts that are zero or negative to assess whether it is more likely than not that the
reporting units goodwill is impaired. In considering whether it is more likely than not
that goodwill impairment exists, the entities shall evaluate whether there are adverse
qualitative factors. If the entity determines that it is more likely than not that the
goodwill of one or more of its reporting units is impaired, the entity should perform Step
2 of the goodwill impairment test for those reporting units. ASU 2010-08 is effective for
fiscal years, and interim periods within those fiscal years, beginning after December 15,
2010. Early adoption is not permitted. The adoption of these provisions is not expected
to have a material impact on the Companys consolidated financial statements. |
In December 2010, the FASB issued ASU 2010-29, Business Combinations Disclosure of
Supplementary Pro Forma Information for Business Combinations, (ASU 2010-29), that
amends ASC Subtopic 805-50, Business Combinations Disclosures, and requires public
entities that are required to present comparative financial statements to disclose revenue
and earnings of the combined entity as though the business combination that occurred
during the current year had occurred as of the beginning of the comparable prior annual
reporting period only. The amendment also requires public entities to include a
description of the nature and amount of material, nonrecurring pro forma adjustments
directly attributable to the business combination included in the reported pro forma
revenue and earnings. The Company adopted the provisions of ASU 2010-29. The adoption of
these provisions did not have a material impact on the Companys consolidated financial
statements. |
(n) | Investments |
Investments in marketable securities are stated at fair value and are included in cash and
cash equivalents on the balance sheet. Investments with no readily determinable fair
value are carried at cost. Fair value is determined using quoted market prices at the end
of the reporting period and, when appropriate, exchange rates at that date. Unrealized
gains and losses on marketable securities classified as available-for-sale are recorded in
accumulated other comprehensive income, net of tax. If the decline in fair value is
judged to be other-than-temporary, the cost basis of the security is written down to fair value and the amount of
the write-down is included in the consolidated statements of operations. |
F-15
Table of Contents
Investment securities are exposed to various risks including, but not limited to, interest
rate and market and credit risks. Due to the level of risks associated with certain
investment securities, it is at least reasonably possible that changes in the values of
investment securities will occur in the near term. |
The Company regularly reviews its investments to determine whether a decline in fair value
below the cost basis is other-than-temporary. To determine whether a decline in value is
other-than-temporary, the Company evaluates several factors, including current economic
environment, market conditions, operational and financial performance of the investee, and
other specific factors relating to the business underlying the investment, including
business outlook of the investee, future trends in the investees industry and the
Companys intent to carry the investment for a sufficient period of time for any recovery
in fair value. If a decline in value is deemed as other-than-temporary, the Company
records reductions in carrying values to estimated fair values, which are determined based
on quoted market prices if available or on one or more of the valuation methods such as
pricing models using historical and projected financial information, liquidation values,
and values of other comparable public companies. |
Investments, all of which are classified as available-for-sale, are stated at fair value
based on market quotes, when available. Unrealized gains and losses, net of deferred
taxes, are recorded as a component of other comprehensive income. |
(o) | Pensions |
The Company has domestic noncontributory defined benefit pension plans (Plans) covering
a number of its employees. Plans covering salaried and management employees provide
pension benefits that are based on the highest five consecutive years of an employees
compensation during the last ten years prior to retirement. Plans covering hourly
employees and union members generally provide benefits of stated amounts for each year of
service. The Companys funding policy is to contribute annually an amount equal to or
greater than the minimum amount required under the Employee Retirement Income Security Act
of 1974. The Companys annual measurement date is December 31. |
(p) | Postretirement Benefits |
A number of the Companys employees are provided certain postretirement healthcare and
life insurance benefits. The employees may become eligible for these benefits when they
retire. The Company accrues, as current costs, the future lifetime retirement benefits
for both active and retired employees and their dependents. Steps have been taken by the
Company to reduce the amount of the future obligation for pensions and postretirement
healthcare benefits of future retirees by capping the amount of funds payable on behalf of
the retirees. |
(q) | Officers Deferred Compensation |
As a part of the total compensation program at the Company, a number of nonqualified plans
have been adopted which entail a portion of deferred compensation. For the individuals
participating in these deferred compensation programs, the deferred portion of their
salary and/ or incentive pay has been placed into a Rabbi Trust for the benefit of those
individuals until such time as the assets are payable pursuant to the terms of the
deferred compensation programs. In the event of a liquidation of the assets of the
Company, the assets placed in the Rabbi Trusts are subject to the general claims of
creditors of the Company. |
F-16
Table of Contents
(3) | Debt |
On May 16, 2006, the Company sold $40,000 of Series B Notes in a private placement to certain
institutional investors. The Series B Notes are unsecured and bear interest at a rate of 6.14%
per annum with interest being paid semiannually. The Series B Notes have a ten-year duration
with the principal amortizing equally over the duration after the fourth year. The first
amortization payment of $5,714 was made on May 17, 2010. |
On September 2, 2008, the Company sold $50,000 of Series C Notes in a private placement to
certain institutional investors. The Series C Notes are unsecured and bear interest at a rate
of 6.41% per annum with interest being paid semiannually. The Series C Notes have a seven-year
duration with the principal amortizing equally over the duration after the third year. |
The Companys Series B and Series C Notes contain financial covenants which (a) limit the
incurrence of certain additional debt; (b) require a certain level of consolidated adjusted net
worth; (c) require a minimum fixed charges coverage ratio; and (d) require a limited amount of
funded debt to consolidated cash flow. The covenant on incurrence of additional debt limits
funded debt to 60% of total capitalization. At December 31, 2010, funded debt at Ladish was at
23% of total capitalization. This covenant also limits priority debt to 20% of adjusted net
worth. Ladish had no priority debt at December 31, 2010. The covenant on adjusted net worth
requires a minimum of $119,173. At December 31, 2010, Ladish had $286,194 of adjusted net
worth. The covenant on fixed charges coverage ratio requires that consolidated cash flow to
fixed charges be a minimum of 2.00. The Companys fixed charges coverage ratio at December 31,
2010 was 11.33. The final covenant on funded debt to consolidated cash flow allows for a
maximum level of 4.00. At December 31, 2010, the Companys actual level was 0.96. The Note
Agreement for the Series B and Series C Notes also contains customary representations and
warranties and events of default. |
The Company and a syndicate of lenders entered into a revolving credit facility (the
Facility), which was most recently renewed on April 8, 2010. The Facility consists of a
$35,000 unsecured revolving line of credit which bears interest at a rate of LIBOR plus 2.00%
or at a base rate. At December 31, 2010, there were no borrowings under the Facility and
$35,000 of credit was available pursuant to the terms of the Facility. The Facility has a
maturity date of April 7, 2011. |
The Company and the syndicate of lenders participating in the Facility entered into Amendment
No. 2 to the Facility. This amendment, effective as of April 8, 2010, modified the covenant on
minimum EBITDA by deleting that covenant and substituting in its place a covenant on the ratio
of net debt to EBITDA. The covenant requires a maximum ratio of net debt to EBITDA to be no
more than 3.50:1. As of December 31, 2010, the Companys ratio was 0.96:1. The Facility also
contains a covenant that requires a minimum fixed charge coverage ratio of 1.7x. As of
December 31, 2010, the Company had a fixed charge coverage ratio of 4.71x. |
At December 31, 2010, the Company was in compliance with all covenants in the Series B and
Series C Notes and the Facility. |
Long Term Debt Repayment Schedule | |||||||||||||
Senior Notes | |||||||||||||
Series B | Series C | ||||||||||||
$ | 5,714 |
May 16, 2011 | $ | 10,000 | September 2, 2011 | ||||||||
$ | 5,714 |
May 16, 2012 | $ | 10,000 | September 2, 2012 | ||||||||
$ | 5,714 |
May 16, 2013 | $ | 10,000 | September 2, 2013 | ||||||||
$ | 5,714 |
May 16, 2014 | $ | 10,000 | September 2, 2014 | ||||||||
$ | 5,714 |
May 16, 2015 | $ | 10,000 | September 2, 2015 | ||||||||
$ | 5,715 |
May 16, 2016 |
F-17
Table of Contents
The total interest incurred by the Company amounted to $4,389, $6,003 and $5,656 in 2008, 2009
and 2010, respectively. The capacity expansion programs at the Company resulted in higher
interest capitalization in 2008. Debt and interest declined in 2010 as the Company began to
amortize the Series B Senior Notes. |
The following table reflects the Companys treatment of interest for the years 2008, 2009 and
2010: |
2008 | 2009 | 2010 | ||||||||||
Interest Expensed |
$ | 1,971 | $ | 5,050 | $ | 5,613 | ||||||
Interest Capitalized |
2,418 | 953 | 43 | |||||||||
Total |
$ | 4,389 | $ | 6,003 | $ | 5,656 | ||||||
(4) | Stockholders Equity |
(a) | Treasury Shares |
The treasury shares represent shares of common stock of the Company which the Company
repurchased on the open market. The value reflects the purchase price for those shares. |
(b) | Stock Option Plan |
The Company had a Long-Term Incentive Plan (the Stock Option Program) that covered
certain employees. Under the Stock Option Program, incentive stock options for up to
983,333 shares may be granted to employees of the Company of which 943,833 options have
been granted. These options expire ten years from the grant date. For the years 2009 and
2010, no options were granted under the Stock Option Program. As of December 31, 2010,
all options granted under the Stock Option Program have been exercised. |
During 2008, 2009 and 2010, 26,000, 1,788 and 4,548 shares of common stock, respectively,
were issued from treasury stock for the exercise of stock options. The shares had a cost
of $7.32 per share. In 2008, 2009 and 2010, the difference of $24, $2 and $14,
respectively, between the cost of the shares released from treasury stock and the cash
proceeds from the exercise of stock options was credited to additional paid-in capital, a
component of stockholders equity. During the years ending December 31, 2008, 2009 and
2010, the Company received $215, $15 and $47, respectively, from the exercise of employee
stock options. |
A summary of options for 2008, 2009 and 2010 is as follows: |
2008 | 2009 | 2010 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Options | Price | Options | Price | Options | Price | |||||||||||||||||||
Outstanding at
Beginning of Year |
32,336 | $ | 8.57 | 6,336 | $ | 9.87 | 4,548 | $ | 10.50 | |||||||||||||||
Granted |
| | | | | | ||||||||||||||||||
Forfeited |
| | | | | | ||||||||||||||||||
Exercised |
(26,000 | ) | 8.25 | (1,788 | ) | 8.25 | (4,548 | ) | 10.50 | |||||||||||||||
Outstanding at
End of Year |
6,336 | 9.87 | 4,548 | 10.50 | | | ||||||||||||||||||
Exercisable at
End of Year |
6,336 | $ | 9.87 | 4,548 | $ | 10.50 | | $ | | |||||||||||||||
There were no options outstanding as of December 31, 2010. |
F-18
Table of Contents
(c) | Comprehensive Income (Loss) |
Comprehensive income (loss) is defined as the sum of net income and all other non-owner
changes in equity. The components of the non-owner changes in equity, or accumulated
other comprehensive income (loss) were as follows (net of tax): |
December 31, | ||||||||
2009 | 2010 | |||||||
Foreign Currency Translation Adjustments |
$ | 2,779 | $ | 1,689 | ||||
Amounts in Accumulated Other Comprehensive Income that have
not yet been Recognized as: |
||||||||
Components of Net Periodic Benefit Cost: |
||||||||
Actuarial Loss |
(74,567 | ) | (69,843 | ) | ||||
Prior Service Cost |
(1,269 | ) | (967 | ) | ||||
Unrealized Investment Loss |
(157 | ) | 19 | |||||
Accumulated Other Comprehensive Loss |
$ | (73,214 | ) | $ | (69,102 | ) | ||
(d) | Additional Paid-In Capital |
In 2008, the Company recognized a deferred tax liability of $5,498 which related to an IRS
audit adjustment for 1987. As the adjustment related to a time period prior to the
Companys reorganization in 1993, under fresh-start accounting, the adjustment is charged
to paid-in capital instead of the current tax provision. |
(5) | Research and Development |
Research and development expenses were $3,061, $2,725 and $3,304 in 2008, 2009 and 2010,
respectively. Customers reimbursed the Company for $1,282, $1,231 and $1,659 of research and
development expenses in 2008, 2009 and 2010, respectively. The expenses and related
reimbursement are included in cost of sales on the statements of operations. |
(6) | Leases |
Certain office and warehouse facilities and equipment are leased under noncancelable operating
leases expiring on various dates through the year 2018. Rental expense was $630, $1,225 and
$1,092 in 2008, 2009 and 2010, respectively. |
Minimum lease obligations under noncancelable operating leases are as follows: |
2011 |
$ | 921 | ||
2012 |
827 | |||
2013 |
678 | |||
2014 |
642 | |||
2015 |
508 | |||
2016 and Thereafter |
1,344 | |||
Total |
$ | 4,920 | ||
Certain equipment were leased under noncancelable capital leases assumed as a part of the
Chen-Tech acquisition in 2008. The Company paid off these leases in 2009 and exercised the
purchase option for equipment. |
F-19
Table of Contents
(7) | Income Taxes |
Deferred income taxes are accounted for under the asset and liability method whereby deferred
tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates. Deferred income tax provisions or benefits are based on the change in the deferred
tax assets and liabilities from period to period. |
There are many transactions and calculations where the ultimate tax determination is uncertain
and the Company must exercise its judgment in determining its provision for income taxes and
recording the related assets and liabilities. The FASB has issued guidance for how a company
should recognize, measure, present, and disclose in its financial statements, uncertain tax
positions that a company has taken or expects to take on a return. The Company has adopted
this guidance, and as such, accruals for tax contingencies are provided for accordingly. |
In regards to uncertain tax provisions, the Company has recorded a charge to income tax expense
of $546, $69 and $43 and has corresponding unrecognized tax benefit reserves of $546, $615 and
$658 in 2008, 2009 and 2010, respectively, in connection with research and development (R&D)
tax credits recognized in those years. The reserves established are 10% of the R&D tax credit
for each year and include any applicable penalties. The Company has recorded $0, $79 and $51
in interest costs with regard to the foregoing that are included in the 2008, 2009 and 2010
income tax provisions and corresponding reserve balances, respectively. |
The entire $615 and $658 of unrecognized tax benefits as of December 31, 2009 and 2010,
respectively, would impact the effective tax rate if recognized. A reconciliation of the
beginning and ending amount of unrecognized tax benefits is as follows: |
2009 | 2010 | |||||||
Beginning Balance |
$ | 546 | $ | 615 | ||||
Additions for Tax Positions Related to the Current Year |
51 | 53 | ||||||
True-up of Tax Positions of Prior Years |
18 | (10 | ) | |||||
Ending Balance |
$ | 615 | $ | 658 | ||||
Realization of the domestic net deferred tax assets over time is dependent upon the Company
generating sufficient taxable income in future periods. In determining that realization of the
net deferred tax assets was more likely than not, the Company gave consideration to a number of
factors including its recent earnings history, expectations for earnings in the future, the
timing of reversal of temporary differences, tax planning strategies available to the Company
and the expiration dates associated with NOL and tax credit carryforwards. If, in the future,
the Company determines that it is no longer more likely than not that the domestic net deferred
tax assets will be realized, a valuation allowance will be established against all or part of
the net deferred tax assets through a charge to the income tax provision. |
The Company has total net deferred income tax assets of $31,666 and $21,018 as of December 31,
2009 and 2010, respectively. As of December 31, 2009 and 2010, respectively, ZKM has net
deferred Polish income tax assets of $2,503 and $1,985 which include $1,951 and $1,719 of
foreign economic zone credits along with NOL carryforwards with a net realizable value of $677
and $531 that were generated by its ZKM and ZOPS operations. The NOL carryforwards expire in
the years 2012 through 2015. A valuation allowance has been established against $177 of the
foreign NOLs related to the ZOPS operation. |
Certain deferred tax liabilities associated with the acquisitions of Aerex and Chen-Tech in the
amounts of $2,567 and $6,068, respectively, have been recorded against goodwill. |
F-20
Table of Contents
Deferred taxes were classified in the consolidated balance sheets for the years ended December
31, 2009 and 2010 as follows: |
December 31, | ||||||||
2009 | 2010 | |||||||
Other Current Assets |
$ | 6,434 | $ | 7,248 | ||||
Other Noncurrent Assets |
47,964 | 41,323 | ||||||
Other Current Liabilities |
(1,290 | ) | (2,405 | ) | ||||
Other Noncurrent Liabilities |
(21,442 | ) | (25,148 | ) | ||||
Total Net Deferred Tax Assets |
$ | 31,666 | $ | 21,018 | ||||
The components of net deferred income tax assets and liabilities for the years ended December
31, 2009 and 2010 are as follows: |
December 31, | ||||||||
2009 | 2010 | |||||||
Deferred Tax Assets: |
||||||||
Inventory Adjustments |
$ | 1,491 | $ | 1,654 | ||||
Accrued Employee Costs |
2,665 | 2,861 | ||||||
Operating Loss Carryforwards |
712 | 531 | ||||||
Pension Benefit Liabilities |
30,067 | 24,350 | ||||||
Postretirement Healthcare Benefit Liabilities |
13,472 | 13,487 | ||||||
Wisconsin Manufacturing Investment Credit |
5,335 | 4,049 | ||||||
53,742 | 46,932 | |||||||
Valuation Allowances |
(115 | ) | (177 | ) | ||||
Net Deferred Tax Assets |
53,627 | 46,755 | ||||||
Deferred Tax Liabilities: |
||||||||
Property, Plant and Equipment |
(21,442 | ) | (25,148 | ) | ||||
Other |
(519 | ) | (589 | ) | ||||
Net Deferred Tax Liabilities |
(21,961 | ) | (25,737 | ) | ||||
Total Net Deferred Tax Assets |
$ | 31,666 | $ | 21,018 | ||||
The Wisconsin Manufacturing Investment Credit usage is limited to $337 annually and the credit
expires in the year 2022. |
A reconciliation of the Federal statutory tax rate to the Companys effective tax rate for the
years ended December 31, 2008, 2009 and 2010 is as follows: |
Years Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Pre-tax Income |
$ | 38,250 | $ | 3,136 | $ | 41,613 | ||||||
Federal Tax at Statutory Rate of 35% |
$ | 13,387 | $ | 1,098 | $ | 14,565 | ||||||
State Tax, Net of Federal Effect |
(144 | ) | 574 | 2,360 | ||||||||
Permanent Differences and Other, Net |
(737 | ) | 458 | 476 | ||||||||
Research & Development Credits |
(3,582 | ) | (316 | ) | (331 | ) | ||||||
Domestic Production Activities Deduction |
(553 | ) | (21 | ) | (894 | ) | ||||||
Reversal of Domestic Valuation Allowance |
| (5,335 | ) | | ||||||||
Establishment of Foreign Valuation Allowance |
35 | 80 | 62 | |||||||||
Foreign Economic Zone Credits |
(1,907 | ) | | | ||||||||
Foreign Tax Rate Differential |
(623 | ) | 568 | (29 | ) | |||||||
Total Tax Provision (Benefit) |
$ | 5,876 | $ | (2,894 | ) | $ | 16,209 | |||||
Effective Tax Rate |
15.4 | % | (92.3 | )% | 39.0 | % | ||||||
F-21
Table of Contents
The components of income tax expense (benefits) for the years ended December 31, 2008, 2009 and
2010 are as follows: |
2008 | ||||||||||||||||
Federal | State | Foreign | Total | |||||||||||||
Current |
$ | 5,339 | $ | (506 | ) | $ | 14 | $ | 4,847 | |||||||
Deferred |
1,741 | 249 | (1,223 | ) | 767 | |||||||||||
Charge in Lieu of Taxes Related to: |
||||||||||||||||
Goodwill |
35 | 5 | | 40 | ||||||||||||
Stock Options |
194 | 28 | | 222 | ||||||||||||
Total Income Tax Expense (Benefit) |
$ | 7,309 | $ | (224 | ) | $ | (1,209 | ) | $ | 5,876 | ||||||
2009 | ||||||||||||||||
Federal | State | Foreign | Total | |||||||||||||
Current |
$ | (1,072 | ) | $ | 9 | $ | 2 | $ | (1,061 | ) | ||||||
Deferred |
3,111 | (4,593 | ) | (356 | ) | (1,838 | ) | |||||||||
Charge in Lieu of Taxes Related to
Stock Options |
4 | 1 | | 5 | ||||||||||||
Total Income Tax Expense (Benefit) |
$ | 2,043 | $ | (4,583 | ) | $ | (354 | ) | $ | (2,894 | ) | |||||
2010 | ||||||||||||||||
Federal | State | Foreign | Total | |||||||||||||
Current |
$ | 8,650 | $ | 2,702 | $ | 147 | $ | 11,499 | ||||||||
Deferred |
3,796 | 590 | 269 | 4,655 | ||||||||||||
Charge in Lieu of Taxes Related to Stock Options |
48 | 7 | | 55 | ||||||||||||
Total Income Tax Expense |
$ | 12,494 | $ | 3,299 | $ | 416 | $ | 16,209 | ||||||||
The Company has not provided additional U.S. income taxes on $7,639 of undistributed earnings
of its Polish subsidiary, ZKM, included in stockholders equity. Such earnings could become
taxable upon the sale or liquidation of ZKM or upon dividend repatriation. The Companys
intent is for such earnings to be reinvested by ZKM or to be repatriated only when it would be
tax effective through the utilization of foreign tax credits. |
The Company is currently being audited by the State of Wisconsin for tax years 2005-2008. The
Company has not been notified of any other audit of its U.S. or state tax returns. Federal
returns for the years 2007-2010 are still open. |
(8) | Pensions and Postretirement Benefits |
The Company has domestic noncontributory defined benefit pension plans (Plans) covering a
number of its employees. Plans covering salaried and management employees provide pension
benefits that are based on the highest five consecutive years of an employees compensation
during the last ten years prior to retirement. Plans covering hourly employees and union
members generally provide benefits of stated amounts for each year of service. The Companys
funding policy is to contribute annually an amount equal to or greater than the minimum amount
required under the Employee Retirement Income Security Act of 1974. The Company contributed
$8,955, $3,428 and $10,478 to the Plans in 2008, 2009 and 2010, respectively, and the Company
expects to contribute $13,251, $15,422 and $13,438 in 2011, 2012 and 2013, respectively, to the
Plans. The Plans assets are primarily invested in U.S. Government securities, investment
grade corporate bonds and marketable common stocks. The Plans may hold shares of the Companys
common stock, which comprise less than ten percent of any individual plans total assets. The
market value of Company
shares held in all Plans as of December 31, 2009 and 2010 total $5,099 and $16,472,
respectively. The Companys annual measurement date is December 31. |
F-22
Table of Contents
The following table reflects the funding status of each of the Plans as of December 31, 2010
relative to the Pension Protection Act of 2006, per the Companys Adjusted Funding Target
Attainment Percentage (AFTAP): |
Black- | Service | Electrical | Die | |||||||||||||||||||||||||||||
smiths | Salaried | Machinists | OPEIU | Employees | Technicians | Workers | Sinkers | |||||||||||||||||||||||||
Funding Target |
$ | 27,517 | $ | 80,700 | $ | 43,086 | $ | 8,308 | $ | 2,245 | $ | 15,387 | $ | 2,750 | $ | 6,658 | ||||||||||||||||
Actuarial Value of
Assets |
22,178 | 68,540 | 38,646 | 6,580 | 1,853 | 12,496 | 2,207 | 6,323 | ||||||||||||||||||||||||
Market Value of
Assets |
21,110 | 64,961 | 36,296 | 6,204 | 1,766 | 11,913 | 2,102 | 5,954 | ||||||||||||||||||||||||
Carryover Balance |
1,980 | 9,248 | 2,766 | 497 | 118 | 1,187 | 197 | 780 | ||||||||||||||||||||||||
2010 AFTAP |
73.4 | % | 73.5 | % | 83.3 | % | 73.2 | % | 77.3 | % | 73.5 | % | 73.1 | % | 83.3 | % |
In the above table, the funding status for each Plan is calculated by subtracting the
carryover balance from the actuarial value of assets and dividing the result by the funding
target. The Company has the option of waiving the carryover balance for any Plan. A waiver of
the carryover balances would result in every Plan but the OPEIU Plan being over 80% of 2010
AFTAP. For any Plan under 80% of 2010 AFTAP, the Company is under a number of restrictions
with respect to such Plan which include, i) the prohibition of increasing benefits under such a
Plan, ii) the prohibition of lump-sum payments under such a Plan, iii) increased reporting
requirements to the Plan participants, and iv) increased insurance premiums to the Pension
Benefit Guaranty Corporation. |
A summary of the Plans asset allocation at December 31, 2009 and 2010 is as follows: |
December 31, | ||||||||
Asset Category | 2009 | 2010 | ||||||
Fixed Income Securities |
51.8 | % | 48.6 | % | ||||
Equity Securities |
45.6 | % | 49.6 | % | ||||
Cash |
2.6 | % | 1.8 | % | ||||
Total |
100.0 | % | 100.0 | % | ||||
The Plans target asset allocation percentages are fixed income 50% and equities 50%. The
variance from the target in 2009 was due to the decline in the U.S. equity market in 2008. |
In addition to pension benefits, a number of the Companys employees are provided certain
postretirement healthcare and life insurance benefits. The employees may become eligible for
these benefits when they retire. The Company accrues, as current costs, the future lifetime
retirement benefits for both active and retired employees and their dependents. Steps have
been taken by the Company to reduce the amount of the future obligation for pensions and
postretirement healthcare benefits of future retirees by capping the amount of funds payable on
behalf of the retirees. |
The benefits estimated to be paid in the next five years for the pension plans range between
$15,600 and $16,500 per year and for years six through ten in aggregate total $74,100. For
postretirement healthcare and life insurance benefits, the estimated benefit payments over the
next five years approximate $3,200 per year and $12,400 in aggregate for years six through ten. |
In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was
enacted. In May 2004, the FASB issued ASC 715-60, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, in
response to the new law which may provide a federal subsidy to sponsors of retiree healthcare
benefit plans. The Company has concluded that certain benefits provided by its postretirement
benefit plan are actuarially equivalent to Medicare Part D under the Act and has filed refund
requests with the Claims Management Services, a division of the Health and Human Services
Department. Refunds of $169, $274 and $168 have been received in 2008, 2009 and 2010,
respectively. |
F-23
Table of Contents
Certain officers have deferred compensation agreements (the Officers Plan) which, upon
retirement, provide them with, among other things, supplemental pension and other
postretirement benefits. An accumulated unfunded liability of $9,431 and $10,410 as of
December 31, 2009 and 2010, respectively, has been recorded under these agreements as
actuarially determined. The expense was $552, $662 and $904 in 2008, 2009 and 2010,
respectively. |
The Company has established a Rabbi Trust for the beneficiaries of the Officers Plan to fund a
portion of the benefits earned under the Officers Plan. The Rabbi Trust does not hold any
Company stock and is considered in the calculations determined by the actuary. The Rabbi Trust
had assets of $175 and $122 as of December 31, 2009 and 2010, respectively, and are included in
other assets on the balance sheets. The investments are held on the balance sheet and are
considered available-for-sale securities. The unrealized gain or loss on these investments is
recognized as a component of other comprehensive income. |
Fair Value Measurement of Pension Assets |
FASB ASC 820-10, Fair Value Measurements and Disclosures, establishes a framework and provides
guidance on measuring the fair value of assets in a pension plan and how an employer should
disclose the same. The framework establishes a fair value hierarchy that prioritizes the
inputs to the valuation techniques used to measure fair value. The three levels of fair value
hierarchy are described as follows: |
Level 1 | Quoted prices in active markets for identical assets or liabilities. |
||
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities. |
||
Level 3 | Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities. |
The following table sets forth by level, within the fair value hierarchy, the Plans assets at
fair value as of December 31, 2009 and 2010: |
Quoted | Significant | |||||||||||||||
Prices in | Other | Significant | ||||||||||||||
Fair Values at | Active | Observable | Unobservable | |||||||||||||
December 31, 2009 | Markets | Inputs | Inputs | |||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Pension Plan Assets |
||||||||||||||||
Money Market Accounts |
$ | 3,734 | $ | | $ | | $ | 3,734 | ||||||||
US Government Issues |
15,262 | 16,290 | | 31,552 | ||||||||||||
Corporate Issues |
| 29,632 | | 29,632 | ||||||||||||
Foreign Issues |
| 6,769 | | 6,769 | ||||||||||||
Municipal Issues |
| 24 | | 24 | ||||||||||||
Domestic Common Stocks |
64,534 | | | 64,534 | ||||||||||||
Foreign Stocks |
695 | | | 695 | ||||||||||||
Mutual Funds |
6,027 | | | 6,027 | ||||||||||||
Total |
$ | 90,252 | $ | 52,715 | $ | | $ | 142,967 | ||||||||
F-24
Table of Contents
Quoted | Significant | |||||||||||||||
Prices in | Other | Significant | ||||||||||||||
Fair Values at | Active | Observable | Unobservable | |||||||||||||
December 31, 2010 | Markets | Inputs | Inputs | |||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Pension Plan Assets |
||||||||||||||||
Money Market Accounts |
$ | 2,976 | $ | | $ | | $ | 2,976 | ||||||||
US Government Issues |
26,506 | 10,991 | | 37,497 | ||||||||||||
Corporate Issues |
| 27,508 | | 27,508 | ||||||||||||
Foreign Issues |
| 7,488 | | 7,488 | ||||||||||||
Municipal Issues |
| 771 | | 771 | ||||||||||||
Domestic Common Stock |
79,354 | | | 79,354 | ||||||||||||
Foreign Stocks |
1,168 | | | 1,168 | ||||||||||||
Mutual Funds |
5,658 | | | 5,658 | ||||||||||||
Total |
$ | 115,662 | $ | 46,758 | $ | | $ | 162,420 | ||||||||
The following is a reconciliation of the change in benefit obligation and Plans assets
for the years ended December 31, 2009 and 2010: |
Pension & Officers | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Change in Benefit Obligation: |
||||||||||||||||
Projected Benefit Obligation at Beginning of Yr. |
$ | 204,035 | $ | 219,756 | $ | 33,256 | $ | 33,679 | ||||||||
Service Cost |
1,346 | 1,605 | 190 | 229 | ||||||||||||
Interest Cost |
11,856 | 10,926 | 1,903 | 1,649 | ||||||||||||
Amendments |
1,229 | | | | ||||||||||||
Actuarial (Gains) Losses |
17,887 | 12,550 | 1,835 | 1,100 | ||||||||||||
Benefits Paid |
(16,597 | ) | (16,907 | ) | (5,912 | ) | (5,469 | ) | ||||||||
Participants Contributions |
| | 2,407 | 2,529 | ||||||||||||
Projected Benefit Obligation at End of Yr. |
$ | 219,756 | $ | 227,930 | $ | 33,679 | $ | 33,717 | ||||||||
Change in Plans Assets: |
||||||||||||||||
Plans Assets at Fair Value at Beginning of Yr. |
$ | 136,472 | $ | 142,967 | $ | | $ | | ||||||||
Actual Return on Plans Assets |
19,478 | 25,489 | | | ||||||||||||
Company Contributions |
3,614 | 10,871 | 3,505 | 2,940 | ||||||||||||
Benefits Paid |
(16,597 | ) | (16,907 | ) | (5,912 | ) | (5,469 | ) | ||||||||
Participants Contributions |
| | 2,407 | 2,529 | ||||||||||||
Plans Assets at Fair Value at End of Yr. |
$ | 142,967 | $ | 162,420 | $ | | $ | | ||||||||
Funded Status of Plans |
$ | (76,789 | ) | $ | (65,510 | ) | $ | (33,679 | ) | $ | (33,717 | ) | ||||
F-25
Table of Contents
Pension & Officers | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Plans with Benefit Obligations in Excess of
Plan Assets: |
||||||||||||||||
Projected Benefit Obligation |
$ | 219,756 | $ | 227,930 | $ | 33,679 | $ | 33,717 | ||||||||
Accumulated Benefit Obligation |
211,461 | 221,085 | | | ||||||||||||
Plan Assets |
142,967 | 162,420 | | | ||||||||||||
Plans with Plan Assets in Excess of Benefit
Obligations: |
||||||||||||||||
Projected Benefit Obligation |
$ | | $ | | $ | | $ | | ||||||||
Accumulated Benefit Obligation |
| | | | ||||||||||||
Plan Assets |
| | | | ||||||||||||
Weighted Average Assumptions: |
||||||||||||||||
Discount Rate |
5.16 | % | 4.55 | % | 5.16 | % | 4.55 | % | ||||||||
Rate of Increase in Compensation Levels |
3.00 | % | 3.00 | % | | | ||||||||||
Expected Long-Term Rate of Return on Assets |
8.05 | % | 8.47 | % | | |
The total accumulated pension benefit obligation for the Plans is $211,461 and $221,085 at
December 31, 2009 and 2010, respectively. All of the individual Plans and the Officers Plan
have accumulated benefit obligations exceeding the fair value of the Plans assets at December
31, 2010. |
Pension & Officers | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Amounts Recognized in the Consolidated
Balance Sheets: |
||||||||||||||||
Other Assets |
$ | 175 | $ | 122 | $ | | $ | | ||||||||
Accrued Liabilities Postretirement |
| | (3,464 | ) | (3,818 | ) | ||||||||||
Accrued Liabilities Officers Deferred Comp. |
(155 | ) | (328 | ) | | | ||||||||||
Noncurrent Liabilities Pensions |
(67,533 | ) | (55,222 | ) | | | ||||||||||
Noncurrent Liabilities Postretirement |
| | (30,215 | ) | (29,899 | ) | ||||||||||
Officers Deferred Compensation |
(9,276 | ) | (10,082 | ) | | | ||||||||||
Net Amount Recognized |
$ | (76,789 | ) | $ | (65,510 | ) | $ | (33,679 | ) | $ | (33,717 | ) | ||||
The amounts in accumulated other comprehensive loss that have not yet been recognized as
components of net periodic benefit cost at December 31, 2010 are as follows: |
Pension & Officers | Postretirement | |||||||
Benefits | Benefits | |||||||
Prior Service Cost |
$ | 1,524 | $ | 88 | ||||
Net Loss |
110,739 | 5,666 | ||||||
Total |
$ | 112,263 | $ | 5,754 | ||||
The amounts in accumulated other comprehensive loss that are expected to be recognized as
components of net periodic benefit cost during 2011 are as follows: |
Pension & Officers | Postretirement | |||||||
Benefits | Benefits | |||||||
Prior Service Cost |
$ | 403 | $ | 14 | ||||
Net Loss |
9,520 | 180 | ||||||
Total |
$ | 9,923 | $ | 194 | ||||
F-26
Table of Contents
The components of the net periodic benefit costs for the years ended December 31, 2008, 2009
and 2010 are: |
Pension & Officers Benefits | Postretirement Benefits | |||||||||||||||||||||||
2008 | 2009 | 2010 | 2008 | 2009 | 2010 | |||||||||||||||||||
Service Cost-Benefit Earned
During the Period |
$ | 891 | $ | 1,346 | $ | 1,605 | $ | 154 | $ | 190 | $ | 229 | ||||||||||||
Interest Cost on Projected
Benefit Obligation |
11,998 | 11,856 | 10,926 | 2,051 | 1,903 | 1,649 | ||||||||||||||||||
Expected Return on Pension Assets |
(15,713 | ) | (13,265 | ) | (12,237 | ) | | | | |||||||||||||||
Net Amortization and Deferral |
3,631 | 5,273 | 8,170 | 4 | 5 | 101 | ||||||||||||||||||
Prior Service Cost |
400 | 390 | 490 | 14 | 14 | 14 | ||||||||||||||||||
Net Periodic Benefit Cost |
$ | 1,207 | $ | 5,600 | $ | 8,954 | $ | 2,223 | $ | 2,112 | $ | 1,993 | ||||||||||||
Assumptions used in the determination of net periodic benefit costs for these years are: |
Pension & Officers Benefits | Postretirement Benefits | |||||||||||||||||||||||
2008 | 2009 | 2010 | 2008 | 2009 | 2010 | |||||||||||||||||||
Discount Rate |
6.11 | % | 6.05 | % | 5.16 | % | 6.11 | % | 6.05 | % | 5.16 | % | ||||||||||||
Rate of Increase in
Compensation Levels |
3.00 | % | 3.00 | % | 3.00 | % | | | | |||||||||||||||
Expected Long-Term Rate of
Return on Assets |
8.90 | % | 7.95 | % | 8.05 | % | | | |
Assumed healthcare cost trend rates have a significant effect on the amounts reported for the
postretirement healthcare plans. The Company assumes annual increases of 0% on life insurance,
7% on pre-65 healthcare and 5% on post-65 healthcare. A one-percentage-point change in assumed
healthcare cost trend rates would have the following effects: |
1% | 1% | |||||||
Increase | Decrease | |||||||
Effect on Total of Service and Interest Cost Components |
$ | 87 | $ | (76 | ) | |||
Effect on Postretirement Healthcare Benefit Obligation |
$ | 1,703 | $ | (1,515 | ) |
As a result of union labor renegotiations finalized during 2000, the benefits in certain
Company sponsored pension plans were frozen and replaced with comparable benefits in national
multi-employer plans not administered by the Company. The Company contributed $2,291 and
$2,766 to these plans during 2009 and 2010, respectively. Should the Company cease to
participate in these plans it could be subject to a withdrawal liability. |
ZKM sponsors an unfunded retirement plan and the Company has estimated ZKMs liability for this
plan to be approximately $2,379 and $2,211 at December 31, 2009 and 2010, respectively. The
Company has included ZKMs estimated liability in the pension liability in the consolidated
balance sheets. |
(9) | Deferred Compensation |
As a part of the total compensation program at the Company, a number of nonqualified plans have
been adopted which entail a portion of deferred compensation. For the individuals
participating in these deferred compensation programs, the deferred portion of their salary
and/or incentive pay has been placed into a Rabbi Trust for the benefit of those individuals
until such time as the assets are payable pursuant to the terms of the deferred compensation
programs. In the event of a liquidation of the assets of the Company, the assets placed in the
Rabbi Trusts are subject to the general claims of creditors of the Company. The deferred
compensation assets held in the Rabbi Trusts amounted
to $3,723 and $3,354 as of December 31, 2009 and 2010, respectively, and are included as a part
of other assets on the consolidated balance sheets of the Company. The obligation to release
these assets to participating individuals is reflected as a part of other noncurrent
liabilities on the consolidated balance sheets of the Company. The investments are held on the
balance sheet and are considered available-for-sale securities. The unrealized gain (loss) on
the Rabbi Trust assets amounted to $526 and $293 in 2009 and 2010, respectively, and is
recorded net of tax as other comprehensive income on the balance sheets. |
F-27
Table of Contents
(10) | Profit Sharing |
Forging has a profit sharing program in which substantially all of the employees are eligible
to participate. The profit sharing payout is derived from a formula based on net income and is
payable no later than February 15th of the subsequent year. The expense was $1,517,
$350 and $2,677 in 2008, 2009 and 2010, respectively. PCT has a profit sharing program in
which all employees are eligible to participate. The profit sharing pool is calculated based
on various internal operating measurements. The expense was $368, $261 and $602 in 2008, 2009
and 2010, respectively. For Stowe, a profit sharing program for all employees had an expense
of $64, $0 and $207 in 2008, 2009 and 2010, respectively. Profit sharing at Aerex and
Chen-Tech for 2008 was provided by the former owners of each business. In 2009, Aerex and
Chen-Tech did not pay profit sharing. In 2010, Aerex and Chen-Tech had the respective expense
of $120 and $169 for profit sharing. |
(11) | Commitments and Contingencies |
(a) | The Company is involved in various stages of investigations relative to
environmental protection matters relating to various waste disposal sites. The potential
costs related to such matters and the possible impact thereof on future operations are
uncertain due in part to uncertainty as to the extent of the pollution, the complexity of
laws and regulations and their interpretations, the varying costs and effectiveness of
alternative cleanup technologies and methods, and the questionable level of the Companys
involvement. The Company had an accrual of $300 at December 31, 2009 and 2010, included
in other noncurrent liabilities on the consolidated balance sheets of the Company, for
potential losses related to these matters. The Company does not anticipate such losses
will have a material impact on the financial statements beyond the aforementioned
provisions. |
(b) | The Company has been named as a defendant in a number of asbestos cases in
Mississippi, six cases in Illinois, one case in Wisconsin and one case in California. As
of December 31, 2010, the Company has been dismissed from the case in California and has
nine claims in Mississippi, two claims in Illinois and one in Wisconsin. The Company has
notified its insurance carriers of these claims and is vigorously defending these
actions. The Company has never manufactured or processed asbestos. The Companys only
exposure to asbestos involves products the Company purchased from third parties. The
Company has not made any provision in its financial statements for the asbestos
litigation. |
(c) | The Company is participating in an investigation initiated by U.S. Customs & Border
Protection (Customs) into duty drawback claims filed on behalf of the Company by its
former export agent. The Company is cooperating with Customs in this investigation and
has voluntarily suspended its duty drawback claims. Based upon its internal
investigation, the Company believes any errors or omissions with respect to its filings
were solely attributable to its former export agent. The Company and Customs have
tentatively agreed to an Offer in Compromise whereby both parties agree to settle the
matter for the amount of approximately $146 and the repayment of approximately $130 of
prior duty drawback claims. The Company has made adequate provisions in its financial
statements for this resolution. |
F-28
Table of Contents
(d) | The Company has unconditional fixed price purchase obligations (take-or-pay
contracts) of approximately $85,418 comprised of commitments to purchase natural gas of
approximately $12,084 and raw material of approximately $73,334. These obligations are
for purchases necessary to fulfill the Companys production backlog. None of these
obligations may be net settled. The Companys future commitments approximate $63,991 in
2011 and $21,427 in 2012 through 2013. During 2008, 2009 and 2010, the Company fulfilled
its minimum contractual purchase obligations for those periods. |
(e) | The Company and each of its directors have been named as defendants in a lawsuit in
Wisconsin State Circuit Court and in a separate lawsuit in federal court in the eastern
district of Wisconsin. Each of these cases is brought by a stockholder of the Company
alleging a breach of fiduciary duty in connection with the proposed merger with ATI.
Neither case seeks monetary damages. Rather, each case requests equitable relief in
enjoining the merger. The Company is defending these actions and has alerted its
insurer. |
Various other lawsuits and claims arising in the normal course of business are pending against
the Company and losses that might result from such actions are not expected to be material to
the financial statements. |
(12) | Related Party Transactions |
Since 1995, the Company has participated in a relationship with Weber Metals, Inc. (Weber).
The relationship is directed toward serving the jet engine market by combining the Companys
technology and market presence with Webers unique equipment. A director of the Company is the
former chief executive officer of Weber. The Companys payments to Weber under the
relationship were $367, $371 and $372 in 2008, 2009 and 2010, respectively. |
The Company has entered into a long-term lease for the Irvine, California facilities occupied
by Chen-Tech from the former owners of Chen-Tech for an annual rental of $504. One of the
former owners of Chen-Tech is continuing to serve as President of Chen-Tech. |
(13) | Earnings Per Share |
Basic earnings per share of common stock are computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted earnings per share of
common stock are computed by dividing net income by the weighted average number of common
shares and common share equivalents related to the assumed exercise of stock options and
warrants, using the treasury stock method. |
The following shares were used to calculate basic and diluted earnings per share for the years
ended December 31, 2008, 2009 and 2010; there were no anti-dilutive shares in any year: |
December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Average Basic Common Shares Outstanding |
14,998,437 | 15,901,833 | 15,742,247 | |||||||||
Incremental Shares Applicable to
Common Stock Options |
2,407 | 413 | 954 | |||||||||
Average Diluted Common Shares Outstanding |
15,000,844 | 15,902,246 | 15,743,201 | |||||||||
F-29
Table of Contents
(14) | Acquisitions |
On July 9, 2008, the Company acquired all of the outstanding equity of Aerex Manufacturing,
Inc. (Aerex) for a combined cash, $11,817, and stock consideration of 45,750 shares which
equated to $941. The net purchase price of $12,758 reflects a post-closing reduction of
$1,200. Located in
South Windsor, Connecticut, Aerex provides precision machining of titanium components for the
aerospace industry. |
A summary of the amounts assigned to the assets and liabilities of Aerex is as follows: |
Net Working Capital |
$ | 1,892 | ||
Property, Plant and Equipment |
3,116 | |||
Goodwill |
6,666 | |||
Amortizable Intangibles |
3,651 | |||
Deferred Income Tax Liability |
(2,567 | ) | ||
Other Noncurrent Liabilities |
| |||
$ | 12,758 | |||
The Company acquired all of the outstanding equity of Chen-Tech Industries, Inc. (Chen-Tech)
on September 4, 2008 for a combined cash, $27,254, and stock consideration of 1,256,211 shares
which equated to $31,820. Chen-Tech is a forger of nickel and titanium rotating components for
commercial and military jet engines. The Chen-Tech facility is located in Irvine, California. |
A summary of the amounts assigned to the assets and liabilities of Chen-Tech is as follows: |
Net Working Capital |
$ | 7,222 | ||
Property, Plant and Equipment |
21,359 | |||
Goodwill |
21,624 | |||
Amortizable Intangibles |
16,360 | |||
Deferred Income Tax Liability |
(6,068 | ) | ||
Other Noncurrent Liabilities |
(1,423 | ) | ||
$ | 59,074 | |||
Goodwill and amortizable intangibles for both acquisitions are not deductible for income tax
purposes. |
The amortizable intangibles for both acquisitions are composed of customer relationships which
will be amortized over 50 years. |
For both of the acquisitions, the number of shares was determined by the average thirty-day
closing price prior to the acquisition closing dates. |
F-30
Table of Contents
(15) | Quarterly Results of Operations (Unaudited) |
The following table sets forth unaudited consolidated income statement data for each quarter of
the Companys last two fiscal years. The unaudited quarterly financial information has been
prepared on the same basis as the annual information presented in the financial statements and,
in managements opinion, reflects all adjustments (consisting of normal recurring entries)
necessary for a fair presentation of the information provided. The operating results for any
quarter are not necessarily indicative of results for any future period. |
Quarters Ended | ||||||||||||||||
2009 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Net Sales |
$ | 105,739 | $ | 84,686 | $ | 76,191 | $ | 83,216 | ||||||||
Gross Profit |
7,324 | 6,337 | 4,722 | 8,704 | ||||||||||||
Operating Income (Loss) |
3,282 | 2,064 | (970 | ) | 4,872 | |||||||||||
Net Income (Loss) |
1,200 | 650 | (2,209 | ) | 6,453 | |||||||||||
Basic Earnings (Loss) Per Share |
0.08 | 0.04 | (0.14 | ) | 0.41 | |||||||||||
Diluted Earnings (Loss) Per Share |
0.08 | 0.04 | (0.14 | ) | 0.41 |
Quarters Ended | ||||||||||||||||
2010 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Net Sales |
$ | 98,948 | $ | 99,407 | $ | 100,280 | $ | 104,497 | ||||||||
Gross Profit |
13,663 | 16,698 | 16,262 | 19,033 | ||||||||||||
Operating Income |
9,463 | 12,666 | 11,733 | 13,123 | ||||||||||||
Net Income |
5,348 | 7,538 | 6,218 | 6,271 | ||||||||||||
Basic Earnings Per Share |
0.34 | 0.48 | 0.40 | 0.40 | ||||||||||||
Diluted Earnings Per Share |
0.34 | 0.48 | 0.40 | 0.40 |
Per share amounts for the quarters and the full years have each been calculated separately.
Accordingly, quarterly amounts may not add to the annual amounts because of differences in the
average shares outstanding in each period. |
(16) | Valuation and Qualifying Accounts |
Accounts | ||||||||||||||||
Balance at | Provision | Written Off/ | Balance at | |||||||||||||
Beginning | Charged to | Reserve | End of | |||||||||||||
of Year | Profit & Loss | Increased | Year | |||||||||||||
Year ended December
31, 2008 Allowance
for Doubtful
Accounts |
$ | 88 | $ | 3 | $ | (7 | ) | $ | 84 | |||||||
Year ended December
31, 2009 Allowance
for Doubtful
Accounts |
$ | 84 | $ | 914 | $ | (923 | ) | $ | 75 | |||||||
Year ended December
31, 2010 Allowance
for Doubtful
Accounts |
$ | 75 | $ | 60 | $ | 65 | $ | 200 |
F-31
Table of Contents
Exhibit | Page | |||
Numbers | Description | Number | ||
3 (a)
|
Articles of Incorporation of the Company as filed with the Secretary of the State of Wisconsin filed with Form S-1 as Exhibit 3.2 on December 23, 1997 are incorporated by reference. | |||
3 (b)
|
The Ladish Co., Inc. Amended and Restated By-Laws filed with Form 10-Q as Exhibit 3(b) on November 5, 2003 are incorporated by reference. | |||
10 (a)
|
Form of Ladish Co., Inc. 1996 Long Term Incentive Plan filed with Form S-1 as Exhibit 10.4 on December 23, 1997 is incorporated by reference. | |||
10 (b)
|
Form of Employment Agreement between Ladish Co., Inc. and certain of its executive officers filed with Form S-1 as Exhibit 10.5 on December 23, 1997 is incorporated by reference. | |||
10 (c)
|
Amendment No. 1 dated April 13, 2001 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and Firstar Bank Milwaukee, N.A. and the Financial Institutions Parties thereto, filed with Form 10-K on February 22, 2002 is incorporated by reference. | |||
10 (d)
|
Amendment No. 2 dated July 17, 2001 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and Firstar Bank Milwaukee, N.A. and the Financial Institutions Parties thereto, filed with Form 10-K on February 22, 2002 is incorporated by reference. | |||
10 (e)
|
Amendment No. 3 dated April 12, 2002 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party thereto, filed with Form 10-K on March 25, 2003 is incorporated by reference. | |||
10 (f)
|
Amendment No. 4 dated December 31, 2002 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party thereto, filed with Form 10-K on March 25, 2003 is incorporated by reference. | |||
10 (g)
|
Amendment No. 5 dated December 30, 2003 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party thereto, filed with Form 10-K on February 25, 2004 is incorporated by reference. | |||
10 (h)
|
Amendment No. 6 dated December 29, 2004 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party Thereto, filed with Form 10-K on March 14, 2005 is incorporated by reference. | |||
10 (i)
|
Amendment No. 7 dated July 20, 2005 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party Thereto, filed with Form 10-K on March 13, 2006 is incorporated by reference. | |||
10 (j)
|
Amendment No. 8 dated April 28, 2006 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party Thereto, filed with Form 10-K on March 7, 2007 is incorporated by reference. | |||
10 (k)
|
Amendment No. 9 dated April 25, 2007 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party Thereto, filed with Form 10-K on February 22, 2008 is incorporated by reference. | |||
10 (l)
|
Amendment No. 10 dated April 25, 2008 to Credit Agreement dated April 14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party Thereto, filed with Form 10-Q on April 29, 2008 is incorporated by reference. | |||
10 (m)
|
Second Amended and Restated Credit Agreement dated April 10, 2009 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party Thereto, filed with Form 8-K on April 10, 2009 is incorporated by reference. |
X-1
Table of Contents
Exhibit | Page | |||
Numbers | Description | Number | ||
10 (n)
|
Amendment No. 1 dated July 31, 2009 to Second Amended and Restated Credit Agreement dated April 10, 2009 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party Thereto, filed with Form 10-Q on July 31, 2009 is incorporated by reference. | |||
10 (o)
|
Amendment No. 2 dated April 8, 2010 to Second Amended and Restated Credit Agreement dated April 10, 2009 among Ladish Co., Inc. and U.S. Bank National Association and the Financial Institutions Party thereto, filed with Form 8-K on April 9, 2010 is incorporated by reference. | |||
10 (p)
|
Note Purchase Agreement dated May 16, 2006 between Ladish Co., Inc. and the Purchasers listed therein, filed with Form 8-K on May 17, 2006 is incorporated by reference. | |||
10 (q)
|
Note Purchase Agreement dated September 2, 2008 between Ladish Co., Inc. and the Purchasers listed therein, filed with Form 8-K on September 2, 2008 is incorporated by reference. | |||
10 (r)
|
Third Amendment dated December 21, 2009 to Note Purchase Agreements dated as of July 20, 2001 between Ladish Co., Inc. and the Purchasers listed therein, filed with Form 10-K on March 5, 2010 is incorporated by reference. | |||
10 (s)
|
Agreement dated September 15, 1995 between Ladish Co., Inc. and Weber Metals, Inc. filed with Form S-1 as Exhibit 10.7 on February 23, 1998 is incorporated by reference. | |||
10 (t)
|
Agreement dated February 24,2005 between Ladish Co., Inc. and Huta Stalowa Wola S.A. filed with Form 8-K on March 2, 2005 is incorporated by reference. | |||
10 (u)
|
Ladish Co., Inc. Long-Term Incentive Plan dated January 1, 2006, filed with Form 10-K on March 7, 2007 is incorporated by reference. | |||
14
|
Ladish Co., Inc. Policies filed with Form 10-K on March 25, 2003 is incorporated by reference. | |||
21
|
List of Subsidiaries of the Company. | X-3 | ||
23
|
Consent of Independent Registered Public Accounting Firm. | X-4 | ||
31 (a)
|
Written statement of the chief executive officer of the Company certifying this Form 10-K complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934. | X-5 | ||
31 (b)
|
Written statement of the chief financial officer of the Company certifying this Form 10-K complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934. | X-6 | ||
32
|
Written Statement of the chief executive officer and chief financial officer of the Company certifying this Form 10-K complies with the requirements of 18 U.S.C. §1350 | X-7 |
X-2