SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
March 31, 1996 1-13906
BALLANTYNE OF OMAHA, INC.
(Exact name of Registrant as specified in its charter)
Delaware 47-0587703
- - ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4350 McKinley Street, Omaha, Nebraska 68112
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(Address of principal executive offices including zip code)
Registrant's telephone number, including area code:
(402) 453-4444
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date:
Class Outstanding as of April 30, 1996
- - ------------------
Common Stock, $.01 4,400,000
par value
BALLANTYNE OF OMAHA, INC.
INDEX
Page No.
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Part I. Financial Information
Item I. Financial Statements
Consolidated Balance Sheets as of
March 31, 1996 and December 31, 1995 2 - 3
Consolidated Statements of Income
for the Three Months
ended March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows
for the Three months ended
March 31, 1996 and 1995 5 - 6
Notes to Consolidated Financial
Statements 7 - 8
Item II. Management's Discussion and Analysis
of Results of Operations and
Financial Condition 9 - 10
Part II. Other Information 11
Page 1
BALLANTYNE OF OMAHA, INC.
CONSOLIDATED BALANCE SHEETS
A S S E T S
March 31, December 31,
1996 1995
(Unaudited)
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Current
Cash $ 340,073 204,172
Accounts receivable (less
allowance of $104,433;
December 31, 1995 - $118,033) 7,291,603 5,713,141
Inventories 10,631,893 9,306,157
Deferred income taxes 515,926 515,926
Other current assets 35,087 51,873
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18,814,582 15,791,269
Net property, plant and equipment 3,052,562 2,934,619
Goodwill, other intangibles and
other assets, net 1,086,856 1,102,314
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$22,954,000 19,828,202
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See accompanying notes to consolidated financial statements.
Page 2
BALLANTYNE OF OMAHA, INC.
CONSOLIDATED BALANCE SHEETS
L I A B I L I T I E S
March 31, December 31,
1996 1995
(Unaudited)
-------------- ------------
Current
Loan from parent $ 124,056 135,588
Current portion of long-term debt 839,508 839,508
Accounts payable 5,312,748 3,680,020
Accrued expenses 1,119,851 1,444,937
Income taxes 721,237 1,066,532
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8,117,400 7,166,585
Deferred income taxes 386,472 386,472
Long-term debt 8,532,739 7,219,930
S T O C K H O L D E R S ' E Q U I T Y
Preferred stock, par value
$.01 per share; authorized
1,000,000 shares -- --
Common stock, par value
$.01 per share; authorized
10,000,000 shares; 4,400,000
shares outstanding 44,000 44,000
Additional paid-in capital 5,011,215 5,011,215
Retained earnings 862,174 0
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5,917,389 5,055,215
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$22,954,000 19,828,202
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BALLANTYNE OF OMAHA, INC.
See accompanying notes to consolidated financial statements.
Page 3
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended March 31,
1996 1995
----------- ---------
Net sales $11,362,637 8,037,720
Cost of sales 8,174,415 5,669,660
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Gross profit 3,188,222 2,368,060
Total operating expense 1,573,680 1,338,580
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Income from operations 1,614,542 1,029,480
Interest expense 186,105 22,193
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Income before income taxes 1,428,437 1,007,287
Income taxes 566,263 391,382
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Net income $ 862,174 615,905
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Net income per share $ 0.19 0.14
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Pro forma net income per share $ 0.19 0.11
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Weighted average shares outstanding 4,587,154 4,400,000
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See accompanying notes to consolidated financial statements.
Page 4
BALLANTYNE OF OMAHA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31,
1996 1995
----------- ---------
Cash flows from operating
activities:
Net income $ 862,174 615,905
Depreciation and amortization 126,333 135,847
Changes in assets and liabilities
Trade receivables (1,578,462) (578,190)
Other current assets 16,786 (38,128)
Inventories (1,325,736) (379,054)
Accounts payable 1,632,728 476,788
Accrued expenses (325,086) (55,005)
Income taxes (345,295) (10,139)
Net cash provided by
operating activities (936,558) 168,024
----------- ---------
Cash flows from
financing activities
Change in loan from parent (11,532) 261,344
Repayment of long-term debt (170,413) (304,211)
Net proceeds from revolving credit facility 1,289,000 --
----------- ---------
Net cash used in financing activities 1,107,055 (42,867)
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Page 5
BALLANTYNE OF OMAHA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
1996 1995
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Cash flows from investing
activities:
Capital expenditures (34,596) (54,404)
Net increase in cash 135,901 70,753
Cash at beginning of period 204,172 260,006
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Cash at end of period $340,073 330,759
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Supplemental disclosure of
cash flow information:
Interest payments $186,105 22,193
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Income tax payments $908,500 401,551
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Other noncash activities in 1996 include approximately $194,200 of additional
capital lease obligations in exchange for equipment.
See accompanying notes to consolidated financial statements.
Page 6
BALLANTYNE OF OMAHA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1996
1. General
Ballantyne of Omaha Inc. ("Ballantyne" or the "Company") and its
wholly-owned subsidiaries Strong International Inc. and Flavor-Crisp
of America Inc., design, develop, manufacture and distribute
commercial motion picture projection equipment, follow spotlights and
restaurant equipment. The Company's products are distributed
worldwide through a domestic and international dealer network and are
sold to major movie exhibition companies, sports arenas, auditoriums,
amusement parks, special venues, restaurants, supermarkets and
convenience food stores.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation. The consolidated financial statements have been
prepared in conformity with generally accepted accounting principles
and include all adjustments which are, in the opinion of management,
necessary to a fair presentation of the results for the periods
presented. All such adjustments are, in the opinion of management,
of a normal, recurring nature. While the Company believes that the
disclosures presented are adequate to make the information not
misleading, it is suggested that these consolidated financial
statements be read in conduction with the consolidated financial
statements and related notes included in the Company's latest annual
report on Form 10-K.
2. Inventories
Inventories consist of the following
March 31, December 31,
1996 1995
------------ ------------
Raw Material $ 7,573,974 6,708,016
Work-in-process 1,653,063 1,167,433
Finished goods 1,199,816 1,430,708
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$10,426,853 9,306,157
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Page 7
3. Net Income Per Share
Net income per share is based on the weighted average number of
common shares outstanding. The effects of the assumed exercise of
outstanding stock options and warrants have been included in the
income per share calculation for the period that the shares were
assumed issued using the treasury stock method. Weighted average
shares outstanding amounted to 4,587,154 for the three months ended
March 31, 1996 and 4,400,000 for the three months ended
March 31, 1995. Prior to the IPO, the Company was a wholly owned
subsidiary of Canrad.
4. Pro Forma Net Income Per Share
Pro forma net income per share has been calculated to reflect the
effects of the interest expense less related income tax effects of
the $8,000,000 borrowing pursuant to the Norwest Bank revolving
credit facility which is assumed to be outstanding as of the
beginning of each period presented, with no repayment being made
during such period, and the 400,000-to-1 common stock exchange.
5. Stock Dividend
The Company's Board of Directors declared a 10% stock distribution on
January 23, 1996, which issued on March 8, 1996, to shareholders of
record on February 9, 1996. This stock distribution resulted in the
issuance of 400,000 shares of common stock. Per share data have been
restated to reflect these stock distributions as of the earliest
period presented. The stock distribution is not considered a
distribution of earnings except to the extent that the Company has
retained earnings, but rather had the effect of increasing the number
of outstanding shares.
6. Related Party Transactions
Canrad Inc. provides services to its subsidiaries on a corporate
basis. Such services include strategic planning, acquisition
assistance, procurement of capital and debt arrangements, securing
health and business insurance overages, audit and income tax
planning and other matters. Fees charged for these services amounted
to $75,000 for the three month periods ended March 31, 1996 and 1995.
Page 8
Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
The following discussion and analysis relates to the accompanying
unaudited consolidated financial statements and presents a current assessment
of material changes in financial condition and results of operations. A
detailed discussion and analysis for the preceding years appears in the
Registrant's December 31, 1995 Annual Report to Stockholders.
Liquidity and Capital Resources
- - -------------------------------
The Company's borrowings (including long and short-term) of
$9,372,240 reflect an increase of approximately $1,312,800 as compared to
December 31, 1995. The principal reasons for the increase were $1,289,000
from borrowings under the Company's revolving credit facility and a capital
lease for the purchase of manufacturing equipment in the amount of $194,200.
These increases were offset by a payment of $100,000 pursuant to a
non-compete agreement with Optical Radiation Corporation, $47,300 of payments
made pursuant to the 7.9% Industrial Development Revenue Bond and $24,000 of
payments on capital lease obligations.
The Company's loan from parent reflects a decrease of approximately
$11,500 at March 31, 1996 as compared to the end of the prior year.
The Company anticipates that internally generated funds and
borrowings under its operating credit facilities will be sufficient to meet
its working capital needs. The Company expects that it will have capital
expenditures of approximately $700,000 in 1996. The Company does not engage
in any currency hedging activities in connection with its foreign operations
and sales.
Results of Operations
- - ---------------------
Consolidated net sales of $11,362,600 for the three month period
ended March 31, 1996 represents an increase of 41% over the respective prior
year period. The following table shows comparative net sales by industry
segment for the Company's operations:
Net Sales
---------
(000's Omitted)
--------------
Three Months Ended
March 31,
1996 1995
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Theatre Products $10,883 7,314
Restaurant Products 480 724
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$11,363 8,038
Page 9
Net sales in the Theatre segment increased approximately $3,569,000
or 48% for the three months ended March 31, 1996 as compared to the same
periods of the prior year. The increase is attributable to unit sales
increases of projectors, sound heads, platters and lenses which is
reflective of the continued planned industry-wide expansion of both the
domestic and world-wide theatre markets.
Gross profit as a percentage of net sales decreased to 28% for the
three months ended March 31, 1996 from 29% for the same three month period of
1995. The decrease is primarily attributable to the margins realized by
Westrex, the Company's new distribution operation in Hong Kong, and the mix
of Theatre Products that were sold between the periods.
Selling, general and administrative expenses increased approximately
$235,100 for the three month period ended March 31, 1996 as compared to the
same periods of the prior year. As a percentage of net sales, such
expenses decreased to 14% for the quarter from 17% for the same quarter of
the prior year. The additional theatre sales have been generated without a
significant increase in selling costs, travel and the number of employees.
Interest expense amounted to approximately $186,100 for the three
month period ended March 31, 1996 as compared to $22,193 for the same three
month period of 1995. The current three month period includes interest
expense attributable to the $8,000,000 borrowing made in September 1995 to
pay the Canrad dividend.
The actual income tax expense amounted to approximately 39% for the
current three month period as compared to a statutory rate of 34%. The
difference relates to the non-deductibility of certain intangible expenses,
principally goodwill, and the effects of state income taxes.
Page 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be filed on its behalf by the
undersigned, thereunto duly authorized.
BALLANTYNE OF OMAHA, INC.
Date: May 13, 1996 By: /s/ Ronald H. Echtenkamp
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Ronald H. Echtenkamp
President and Chief Executive Officer
Date: May 13, 1996 By: /s/ Brad French
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Brad French, Secretary, Treasurer, and
Chief Financial Officer