SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2001
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Commission File Number 0-23539
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LADISH CO., INC.
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(Exact name of registrant as specified in its charter)
Wisconsin 31-1145953
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(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5481 South Packard Avenue, Cudahy, Wisconsin 53110
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(Address of principal executive offices) (Zip Code)
(414) 747-2611
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes__X__ No_____
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at March 31, 2001
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Common Stock, $0.01 Par Value 12,912,477
Page 2 of 10
PART I - FINANCIAL INFORMATION
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Page 3 of 10
LADISH CO., INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Share and Per Share Data)
For the Three Months
Ended March 31,
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2001 2000
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Net sales .......................................$ 67,863 $ 54,852
Cost of sales ....................................... 59,205 46,249
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Gross income on sales....................... 8,658 8,603
Selling, general and administrative expenses......... 3,001 2,228
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Income from operations...................... 5,657 6,375
Other income (expense):
Interest expense................................ ( 483 ) ( 444 )
Other, net...................................... 8 36
Income before provision for income taxes.... 5,182 5,967
Provision for income taxes........................... 1,036 1,074
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Net income..................................$ 4,146 $ 4,893
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Basic earnings per share.............................$ 0.32 $ 0.36
Diluted earnings per share...........................$ 0.32 $ 0.35
Basic weighted average shares outstanding............ 12,912,477 13,464,804
Diluted weighted average shares outstanding.......... 13,127,064 14,015,573
Page 4 of 10
LADISH CO., INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Share and Per Share Data)
March 31, December 31,
Assets 2001 2000
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Current assets:
Cash and cash equivalents............................................................$ 394 $ 3,521
Accounts receivable, less allowance of $337.......................................... 46,576 38,615
Inventories.......................................................................... 56,564 54,942
Prepaid expenses and other current assets............................................ 1,107 483
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Total current assets............................................................. 104,641 97,561
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Property, plant and equipment:
Land and improvements 4,622 4,622
Buildings and improvements........................................................... 25,543 25,484
Machinery and equipment.............................................................. 132,175 131,770
Construction in progress............................................................. 13,723 10,777
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176,063 172,653
Less - accumulated depreciation...................................................... ( 78,459 ) ( 74,828 )
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Net property, plant and equipment 97,604 97,825
Other assets ............................................................................ 10,696 10,377
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Total assets.....................................................................$ 212,941 $ 205,763
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Liabilities and Stockholders' Equity
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Current liabilities:
Senior debt..........................................................................$ 23,520 $ 15,000
Accounts payable..................................................................... 27,757 25,057
Accrued liabilities:
Pensions......................................................................... 248 332
Postretirement benefits.......................................................... 5,745 5,745
Wages and salaries............................................................... 5,450 4,201
Taxes, other than income taxes................................................... 365 243
Interest......................................................................... 180 163
Profit sharing................................................................... 462 1,366
Paid progress billings........................................................... 5,058 6,014
Other............................................................................ 2,156 3,459
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Total current liabilities................................................... 70,941 61,580
Long term liabilities:
Senior debt, less current portion.................................................... 8,000 10,000
Pensions ............................................................................ 5,758 7,742
Postretirement benefits.............................................................. 38,302 38,682
Other noncurrent liabilities......................................................... 793 621
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Total liabilities........................................................... 123,794 118,625
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Stockholders' equity:
Common stock - authorized 100,000,000, issued and outstanding 14,573,515
shares of $.01 par value as of March 31, 2001 and December 31, 2000................ 146 146
Additional paid-in capital........................................................... 81,667 83,804
Retained earnings.................................................................... 19,495 15,349
Treasury stock, 1,661,038 shares of common stock at cost
as of March 31, 2001 and December 31, 2000......................................... ( 12,161 ) ( 12,161 )
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Total stockholders' equity.................................................. 89,147 87,138
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Total liabilities and stockholders' equity..................................$ 212,941 $ 205,763
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Page 5 of 10
LADISH CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
For the Three Months
Ended March 31,
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2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...........................................................................$ 4,146 $ 4,893
Adjustments to reconcile net income to net cash
provided from (used for) operating activities:
Depreciation..................................................................... 3,635 3,538
Amortization..................................................................... 131 208
Reduction in valuation allowance................................................. 930 1,007
Non-cash compensation expense.................................................... 160 --
Change in assets and liabilities:
Accounts receivable.............................................................. ( 7,961 ) ( 4,431 )
Inventories...................................................................... ( 1,622 ) ( 3,642 )
Other assets..................................................................... ( 1,073 ) ( 226 )
Accounts payable and accrued liabilities......................................... 841 10,785
Other liabilities................................................................ ( 2,192 ) ( 2,501 )
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Net cash provided from (used for) operating activities...................... ( 3,005 ) 9,631
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment........................................... ( 3,419 ) ( 2,531 )
Proceeds from sale of property, plant and equipment.................................. 4 --
Acquisition of business.............................................................. -- ( 26,600 )
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Net cash used for investing activities...................................... ( 3,415 ) ( 29,131 )
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior debt............................................................ 6,520 26,600
Repurchase of common stock........................................................... -- ( 969 )
Retirement of warrants............................................................... ( 3,227 ) ( 28 )
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Net cash provided from financing activities................................. 3,293 25,603
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................................... ( 3,127 ) 6,103
CASH AND CASH EQUIVALENTS, beginning of period............................................ 3,521 1,008
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CASH AND CASH EQUIVALENTS, end of period..................................................$ 394 $ 7,111
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Page 6 of 10
LADISH CO., INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(1) Basis of Presentation
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In the opinion of the Company, the accompanying unaudited consolidated condensed
financial statements contain all adjustments necessary to present fairly its
financial position at March 31, 2001 and December 31, 2000 and its results of
operations and cash flows for the three months ended March 31, 2001 and March
31, 2000. All adjustments are of a normal recurring nature.
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with Article 10 of Regulation S-X and therefore do not
include all information and footnotes necessary for a fair presentation of the
financial position, results of operations and cash flow in conformity with
generally accepted accounting principles. In conjunction with its Form 10-K, the
Company filed audited consolidated financial statements which included all
information and footnotes necessary for a fair presentation of its financial
position at December 31, 2000 and 1999, and the related consolidated statements
of operations, stockholders' equity, and cash flows for the years ended December
31, 2000, 1999 and 1998.
The results of operations for the three-month period ended March 31, 2001 are
not necessarily indicative of the results to be expected for the full year.
(2) Inventories
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Inventories consisted of:
March 31, December 31,
2001 2000
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Raw material and supplies $ 16,156 $ 16,319
Work-in-process and finished goods 42,867 41,381
Less progress payments ( 2,459 ) ( 2,758 )
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Total inventories $ 56,564 $ 54,942
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(3) Interest and Income Tax Payments
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For the three Months
Ended March 31,
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2001 2000
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Interest $ 458 $ 402
Income taxes 339 121
Page 7 of 10
(4) Cash and Cash Equivalents
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Cash in excess of daily requirements is invested in marketable securities
consisting of Commercial Paper and Repurchase Agreements which mature in three
months or less. Such investments are deemed to be cash equivalents for purposes
of the statement of cash flows.
(5) Revenue Recognition
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Revenue is recognized when products are shipped.
(6) Earnings Per Share
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The incremental difference between basic weighted average shares outstanding and
diluted weighted average shares outstanding is due to the dilutive impact of
outstanding options and warrants.
Page 8 of 10
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF RESULTS OF OPERATIONS AND
CHANGES IN FINANCIAL POSITION
RESULTS OF OPERATIONS
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First Quarter 2001 Compared to First Quarter 2000
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Net sales for the three months ended March 31, 2001 were $67.9 million compared
to $54.9 for the same period in 2000. The 24% increase in sales for the first
quarter of 2001 was primarily attributed to an improvement in the aerospace
market. Gross profit for the first three months of 2001 declined to 12.8% of
sales in contrast to 15.7% of sales in the first quarter of 2000 primarily as a
result of energy cost increases.
Selling, general and administrative expenses, as a percentage of sales, were
4.4% for the first quarter of 2001 compared to 4.1% for the same period in 2000.
The increase in SG&A expenses for the period was partially attributable to
increased foreign sales and the Pacific Cast Technologies, Inc. ("PCT")
operations. However, the most significant impact on SG&A was the Company's
recognition of approximately $0.16 million in non-cash expenses due to the
effective date of FIN 44 on stock option programs. Under the provisions of this
interpretation, repriced options are accounted for under variable accounting,
which records compensation expense or benefit for increases or decreases in the
market value of the Company's common stock until the options are exercised,
forfeited or expire.
Interest expense for the period was $0.483 million in contrast to $0.444 million
in 2000. The increase in interest expense was due to higher loan balances of
senior debt resulting from the PCT purchase and stock buyback program, partially
offset by lower interest rates. During the first quarter of 2001, the Company's
senior debt had an interest rate equal to the LIBOR rate plus 0.80% per annum.
The $1.04 million provision for income taxes for 2001 and $1.07 million for 2000
represent largely non-cash accounting charges. The reversal of valuation
allowances relating to pre-restructuring NOLs requires the Company to record a
tax provision and to reflect the offset as an addition to paid-in capital,
rather than as an offset to the provision for income taxes. The overall
effective rate differs substantially from the statutory tax rate due to the
reversal of valuation allowances relating to post-restructuring versus
pre-restructuring deferred tax assets. The Company intends to continue to use
its NOLs in the future to reduce actual payment of federal income taxes. The
future use of the NOLs is subject to certain statutory restrictions. See
"Liquidity and Capital Resources."
Net income for the first quarter of 2001 after increased energy costs and
non-cash compensation expense was $4.1 million, a 15% decline from the same
period in 2000. The decrease in profitability was due to the aforementioned
energy costs and non-cash compensation expense incurred in 2001 and the reduced
employment expenses incurred in 2000 due to the first quarter work stoppage.
Liquidity and Capital Resources
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As of July 1, 1999, the Company entered into a new credit facility (the
"Facility") with a syndicate of lenders. The Facility provides for borrowings of
up to $100 million subject to certain limitations. Borrowings under the Facility
are unsecured and were initially structured as revolving loans with the option
of conversion into term loans. Borrowings under the Facility bear interest at a
rate of LIBOR plus 0.75% per annum. Proceeds from the Facility were used to
terminate the prior credit agreement on July 1, 1999.
Page 9 of 10
On April 14, 2000, the Company and substantially the same group of lenders
entered into an amended and restated credit facility (the "New Facility"). The
New Facility is comprised of a $24 million term facility with a three-year
maturity and a $76 million revolving loan facility. The term facility bears
interest at a rate of LIBOR plus 1.25% and the revolving loan facility bears
interest at a rate of LIBOR plus 0.80%. At March 31, 2001, approximately $41.5
million was available and undrawn under the New Facility. The balance of the
borrowings under the New Facility as of March 31, 2001 was $31.5 million.
The Company has net operating loss ("NOL") carryforwards, which were generated
prior to a financial restructuring that was completed on April 30, 1993, as well
as NOL carryforwards that were generated in subsequent years. The total
remaining NOL carryforwards were approximately $34.5 million as of December 31,
2000. The NOL carryforwards expire gradually beginning in the year 2007 through
2010.
The Company's IPO created an ownership change as defined by the Internal Revenue
Service, ("IRS"). This ownership change generated an IRS imposed limitation on
the utilization of NOL carryforwards on future tax returns. The annual use of
the NOL carryforwards is limited to the lesser of the Company's taxable income
or the amount of the IRS imposed limitation. Approximately $12 million of the
NOL carryforwards is available for use annually. Approximately $2 million of the
$12 million annual limitation relates to a previous restriction on NOL
carryforwards generated prior to the financial restructuring.
Based on the limitations described above and certain other factors, a valuation
allowance has been recorded against the entire amount of the net deferred tax
assets. Any tax benefit that is realized in subsequent years from the reduction
of the valuation allowance established at or prior to the financial
restructuring will be recorded as an addition to paid-in capital. Any tax
benefit that is realized in subsequent years from the utilization of deferred
tax assets created after April 30, 1993, will be recorded as a reduction of
future income tax provisions.
Under the common stock repurchase program (the "Program") authorized by the
Company's Board of Directors, the Company repurchased 322,691 shares, or share
equivalents, of its common stock during the first quarter of 2001. As of March
31, 2001, the Company has repurchased approximately 2.82 million shares, or
share equivalents, of its common stock under the Program.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
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The Company believes that its exposure to market risk related to changes in
foreign currency exchange rates and trade accounts receivable is immaterial.
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Any statements contained herein that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Legislation Reform Act of 1995, and involve risks and uncertainties. These
forward-looking statements include expectations, beliefs, plans, objectives,
future financial performance, estimates, projections, goals and forecasts.
Potential factors which could cause the Company's actual results of operations
to differ materially from those in the forward-looking statements include market
conditions and demand for the Company's products; competition; technologies; raw
material prices; interest rates and capital costs; taxes; unstable governments
and business conditions in emerging economies; and legal, regulatory and
environmental issues. Any forward-looking statement speaks only as of the date
on which such statement is made. The Company undertakes no obligation to update
any forward-looking statement to reflect events or circumstances after the date
on which such statement is made.
Page 10 of 10
PART II - OTHER INFORMATION
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Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the stockholders during the period
covered by this report.
Item 5. Other Information
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None
Item 6. Reports on Form 8-K
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No reports on Form 8-K were filed during the period covered by this report.
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LADISH CO., INC.
Date: April 30, 2001 By: /s/ WAYNE E. LARSEN
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Wayne E. Larsen
Vice President Law/Finance
& Secretary