Exhibit 13
TAKING IT TO THE NEXT LEVEL
1998 ANNUAL REPORT
BALLANTYNE OF OMAHA
[GRAPHIC OMITTED]
ON THE COVER: The Company's Pattern Profile Projector (P3) illuminates a rock
formation at the Red Rocks Amphitheater near Denver, Colorado with the
Ballantyne of Omaha Logo at over 450 feet. For more information on the P3, see
page 9.
CONTENTS
1 Financial Highlights
2 Letter to Shareholders
4 Management's Review of Operations
Financial Review
10 Management's Discussion and Analysis
15 Selected Five-Year Financial Data
16 Report of Independent Accountants
17 Consolidated Financial Statements
21 Notes to Consolidated Financial Statements
36 Report of Management
37 Directors and Officers
Corporate Directory
Shareholder Information
This report contains forward-looking statements that involve risks and
uncertainties, including but not limited to, quarterly fluctuations in results;
customer demand for the Company's products; the development of new technology
for alternate means of motion picture presentation; failure of the Company's
computer systems or that of any of its suppliers, and/or products manufactured
and sold by the Company, resulting from the year 2000 problem; domestic and
international economic conditions; the management of growth; and, other risks
detailed from time to time in the Company's other Securities and Exchange
Commission filings. Actual results may differ materially from management
expectations.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share amounts) 1998 1997 1996
------- ------ ------
Net Revenues $75,057 70,205 51,754
Net Income 8,344 7,709 5,037
Net Income Per Share - Diluted .57 .52 .40
Domestic Revenues 53,079 51,657 37,628
Sales To Foreign Customers $21,978 18,548 14,126
------- ------ ------
Total Assets $56,553 46,752 32,462
Working Capital 31,002 27,403 19,742
Total Debt $12,276 242 458
------- ------ ------
Gross Profit as a % of Revenues 31.4% 29.5% 29.7%
Net Income as a % of Revenues 11.1% 11.0% 9.7%
Operating Income as a % of Revenues 17.3% 16.5% 16.1%
Return on Ending Equity 24.1% 21.6% 21.0%
------- ------ ------
BALLANTYNE 1
PRESIDENT'S LETTER
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TO OUR SHAREHOLDERS
"Taking It To The Next Level" is indicative of the momentum achieved and the
direction that Ballantyne of Omaha, Inc. has taken over the past year. For that
reason, we are proud to present this update of our progress and operating
results.
The expansion of megaplex building continues worldwide as the concept of
providing entertainment to the moviegoing public reaches beyond the simple
addition of theatre screens. In order to sustain the growth we have seen in
recent years, theatre owners are developing exciting new concepts in areas of
architecture, presentation and signage, patron comfort, concessions, and
alternative attractions such as special venue features, game rooms and retail
shopping and dining areas. Our ability to deliver large volume product orders on
a timely basis is facilitating this screen growth, an advantage that
distinguishes the Company from its competitors. This selling point proved
extremely valuable in 1998 as consolidated theatre chains began demanding
extremely large volume orders.
1998 was the seventh consecutive year of record results for the Company. We
achieved record revenue, net income and earnings per share during the year
despite a period of transition in the cinema exhibition industry. During the
year, revenue increased to $75.1 million and net income rose to $8.3 million or
$0.57 per diluted share. The increase is attributable to record motion picture
projection system sales in both domestic and foreign markets, and to continued
improvements in our manufacturing efficiency. Sales to foreign customers rose
19.0% to $22.0 million from $18.5 million in 1997, driven largely by strong
demand for our theatre products in Canada and Europe, which more than offset
flat demand in the emerging markets in Asia and South America. A testament to
our financial strength is the authorized repurchase by the Board of Directors of
2.6 million shares of our stock. Over 1.8 million shares have been repurchased
to date.
Throughout 1998, a number of steps were taken by management to insure our
position in the marketplace as the world's largest and preeminent supplier of
motion picture theatre projection equipment. New sales offices were established
in Europe and Southeast Asia in 1998 as the growth of multiplexing continues to
spread in areas around the World. We expect to see further growth as major
international
2 BALLANTYNE
exhibitors capitalize on the re-stabilization of economic conditions in Asia and
in the burgeoning Euro economy. Additionally, an ongoing sales goal for 1999 and
beyond is to continue market penetration into Mexico and Central and South
American countries. Sales growth in Canada has also been notable. Close,
strategic alliances with dealers and exhibitors in these growing areas of the
World is an encouraging element to our long-term growth prospects.
In 1998, we entered into an agreement with Mega Systems, Inc., located in St.
Augustine, Florida. Mega Systems will assist Ballantyne in the marketing of
custom, large film format special venue projection equipment to designers and
producers of such products as ride-film attractions, large screen, and 3-D movie
features. Ballantyne has established a reputation as a leader and innovator in
the design and manufacturing of this specialized variety of equipment.
Diversification is another major element of Ballantyne's near and long-term
plans. A key acquisition in 1998 was the purchase of Design and Manufacturing,
Ltd. located in Fisher, Illinois. Design and Manufacturing is a major supplier
of film transport systems and component parts for other cinema products. The
additional capacity realized by this acquisition has also allowed us to improve
manufacturing efficiencies and gross margins.
Strong Communications, a new operating division of Ballantyne in 1998, was
created to address the growing need for sophisticated audio visual systems such
as those found in corporate board rooms and hotel meeting rooms.
The entertainment lighting and rental division set its sights higher in 1998
with the development of three new products that will impact future sales and
rental earnings for the division. The Strong Truss Trouper was introduced in
October and is expected to be a popular new light for use in concerts and
theatrical productions. A massive new light fixture, the Pattern Profile
Projector, debuted at year end. This powerful xenon light is designed to project
logos or other images over great distances and should find considerable
acceptance for promotional events as we enter the new millennium. And finally,
Nocturn is the name of a new line of high-tech blacklight products featuring
ultraviolet light fixtures, and expendable products such as fluorescent paints
and plastics used extensively in discotheques, theatres and other themed
amusement parks and attractions.
In December, manufacturing and other business functions previously performed at
our North Hollywood facility, were consolidated into the Omaha location in order
to gain added efficiency. Sales, rental and technical support operations remain
in California and give us a strategic base of operations for that important
entertainment market.
Our aggressive pursuit of additional market share in all of our operating
divisions, new acquisitions, and a strong balance sheet as we approach the new
century, indicates that 1999 will be another excellent year. We are grateful for
our good fortune and deeply appreciate the continued confidence that our
investors have shown.
Sincerely,
/s/ John P. Wilmers
John P. Wilmers
President, Chief Executive Officer
BALLANTYNE 3
MANAGEMENTS REVIEW OF OPERATIONS
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KEEPING PACE WITH OUR INDUSTRY
...our exposure
to global markets
is expanded
and enhanced.
There is no such thing as staying in one place in the entertainment equipment
business. You are either moving forward or you are moving backward. In 1998,
Ballantyne's management took the steps necessary to remain a leader in the race
for motion picture exhibitor and entertainment lighting customers. To achieve
this, it was prudent for our company to move our operating goals upward. To take
the Company to the next level.
What fuels our growth is taking advantage of opportunity. To gain this
opportunity, we need to remain competitive and forward thinking.
SALES PRESENCE
When opportunity knocks, anywhere in the world, we are determined to answer. New
sales offices were opened in Asia and Europe in 1998 so that our exposure to
global markets is expanded and enhanced.
The Asian market, while still turbulent, has incredible potential. Other
multinational companies are investing in this huge market potential and
Ballantyne has followed suit with continued support for our Hong Kong
subsidiary, Strong-Westrex, and penetration into every Far East region.
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4 BALLANTYNE
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Theatre Product Sales ($ in millions)
1994 1995 1996 1997 1998
$25.7 $35.4 $47.2 $62.3 $65.8
The Euro Dollar's introduction was symbolic of the changes taking place in the
rapidly consolidated European market. A new sales office located in Wetzler,
Germany, places Ballantyne in the heart of where the action is on that
continent.
Our growth also remained strong in North America as the multiplexing concept
continues to favorably impact theatre construction throughout North America.
Salesmanship and our stature in the theatre equipment industry yielded, at
year's end, the single largest sales commitment in our history from Regal
Cinemas, Inc., headquartered in Knoxville, Tennessee. Regal is the worldwide
leader in the movie theatre business with over 3500 screens operating at over
400 locations in 30 states.
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BALLANTYNE 5
MANAGEMENTS REVIEW OF OPERATIONS
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DIVERSIFICATION
An on-going goal of the Company is to broaden our earnings base and to increase
profitability through diversification of our product line and through strategic
acquisitions.
Design and Manufacturing, Ltd. has been a long-time supplier of film transport
systems and other component parts for our cinema operation. Design and
Manufacturing was acquired in April 1998; the resulting benefits of improved
efficiency and greater profit margins was immediate. The newly acquired company
is now a wholly-owned subsidiary and Jack Spitz, previous owner of the company,
remains president of that operation.
[PHOTO OMITTED]
Jack Spitz, President; Design and Manufacturing, Inc.
6 BALLANTYNE
...creation of a
new operating division
known as
Strong Communications.
Strong Communications was established in 1998 with our first office located in
Orlando, Florida. By years end, additional offices were established in Ft.
Lauderdale and Tampa, Florida. The appeal of Florida as a destination for
meetings and conventions had a major bearing on the decision to base the
business in Orlando. Our knowledge of the entertainment industry and experience
with visual technologies created an opportunity, through Strong Communications,
to provide sophisticated audio visual products and services to the marketplace.
The scope of services at Strong Communications includes design consulting,
equipment sales and rental services in the ever-changing, fast moving audio
visual business. This includes design and installation services and systems
integration for corporate boardrooms, conference rooms, training facilities,
educational classrooms and auditoriums, religious assembly halls, theme parks,
and simulation applications. Also included in Strong's services are equipment
rental and show staging services for special events, corporate meetings, annual
meetings, product introductions and specialty entertainment venues.
BALLANTYNE 7
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MANAGEMENTS REVIEW OF OPERATIONS
New Products
New Strategies
New Markets
...strategic alliance
established
with Mega Systems.
In terms of product line expansion, 1998 was a significant year. Special venue
projection has always been an area where Ballantyne projector products have
excelled. The leadership that we hold in this industry, which includes IMAX(R)
and other ride-film attractions, continued its grip on the marketplace with a
strategic alliance established with Mega Systems, Inc., a leader in this very
specialized but growing form of entertainment.
Mega Systems provides consulting services for giant screen, large format film
applications. A joint development between Ballantyne and Mega Systems resulted
in the creation of the Cine Kinetic 870, a dual intermittent movement projector
that is a significant departure from traditional projector design. In addition
to a rock steady picture, the new projector greatly extends the life of film
prints, which is particularly useful with short, frequently shown features such
as those found in IMAX attractions.
[PHOTO OMITTED]
8 BALLANTYNE
Another new product, Nocturn Ultra Violet Visual Effects, reaches toward the
expanded use of quality UV products and light fixtures in a variety of
entertainment locations. New cinema theatre architecture and theme parks are
using Nocturn's UV lighting fixtures, paints and plastics. Nocturn expects to
take advantage of resurging interest in UV in worldwide markets.
The Follow Spotlight division broke through with an exciting new product in
1998. The Strong Xenon Truss Trouper 1.2 was developed as a powerful, dependable
versatile spotlight designed for use in the lighting trusses above stages.
Singer/songwriter Billy Joel was the first major act to hit the road with the
Truss Trouper. Joel's production company utilizes 14 Truss Troupers in his
concert lighting setup. Other big-name performers are expected to include this
new light in their shows.
A collaborative effort between the Xenotech and Strong Spotlight engineering
department resulted in the creation of the first Pattern Profile Projector (P3).
The P3 is a spectacular new product that has the capacity to project logos or
other graphics on mountains, buildings and clouds at distances up to a mile. The
cover of this report features a Ballantyne logo projected on a rock formation
above the Red Rocks Amphitheater in Denver, Colorado.
[PHOTOS OMITTED]
BALLANTYNE 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto appearing elsewhere in this
Annual Report. Management's Discussion and Analysis contains forward-looking
statements that involve risks and uncertainties, including but not limited to,
quarterly fluctuations in results; customer demand for the Company's products;
the development of new technology for alternate means of motion picture
presentation; failure of the Company's computer systems or that of any of its
suppliers, and/or products manufactured and sold by the Company, resulting from
the year 2000 problem; domestic and international economic conditions; the
management of growth; and, other risks detailed from time to time in the
Company's other Securities and Exchange Commission filings. Actual results may
differ materially from management expectations.
The following table sets forth, for the periods indicated, the percentage of net
revenue represented by certain items reflected in the Company's consolidated
statements of income:
RESULTS OF OPERATIONS:
Years Ended December 31,
----------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Net revenues 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues 68.6 70.5 70.3 71.4 70.0
Gross profit 31.4 29.5 29.7 28.6 30.0
Operating expenses 14.1 13.1 13.6 14.8 15.4
Income from operations 17.3 16.4 16.1 13.8 14.6
Net income 11.1 11.0 9.7 7.9 8.2
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997
Net revenues for 1998 increased $4.9 million or 6.9% to $75.1 million from $70.2
million for 1997. The increase reflects higher revenues from theatre and
lighting products. The following table shows comparative net revenues for
theatre, lighting and restaurant segments for the respective years:
Year Ended December 31,
-------------------------------
1998 1997
---- ----
Theatre $65,814,807 $62,306,249
Lighting 7,107,905 5,360,617
Restaurant 2,134,655 2,538,245
----------- -----------
Total net revenues $75,057,367 $70,205,111
----------- -----------
----------- -----------
The increase in total net revenues primarily reflects higher sales of theatre
products. The increase in theatre products relate to higher sales of commercial
motion picture projection equipment ("projection equipment"), which rose $4.2
million or 8.6% from $48.9 million in 1997 to $53.1 million in 1998. This
reflects increased sales of projection equipment to both foreign and domestic
customers as motion picture exhibitors continue to build new multi-screen
theatre complexes.
10 BALLANTYNE
Offsetting the higher sales of projection equipment among theatre sales were
lower sales of ISCO-Optic lenses which decreased $.6 million to $5.8 million in
1998 from $6.4 million in 1997. ISCO-Optic is a trademark of ISCO-Optic GmbH.
Replacement part sales for the theatre segment were also lower in 1998
decreasing from $6.9 million in 1997 to $6.8 million in 1998. Sales of
ISCO-Optic lenses and replacement parts fluctuate from quarter to quarter and
are not directly related to the volume of projection equipment sold, but are
more a reflection of the needs of current customers which have projection
systems previously purchased from the Company.
Lighting segment revenue also contributed to the increase in total net revenues,
contributing $7.1 million in sales and rentals, an increase of $1.7 million over
the $5.4 million contributed in 1997. This increase was entirely due to
acquisitions made by the Company during 1998 and 1997.
Restaurant sales decreased $0.4 million from $2.5 million in 1997 to $2.1
million in 1998. The decrease was due to lower sales of pressure fryers and
smokers.
Overall, consolidated net revenues from domestic customers increased $1.4
million to $53.1 million in 1998 from $51.7 million in 1997. The increase was
smaller than the previous year due to a temporary slowdown in the middle of the
year by a few of the larger theatre exhibition companies, however, as the year
progressed, sales returned to expected levels. Net revenues from foreign
customers increased $3.5 million or 18.5% to $22.0 million from $18.5 million in
1997. This increase was attributable to higher sales in Canada and Europe,
however, sales were lower in Asia and Mexico compared to the prior year.
Gross profit increased $2.8 million or 13.7% in 1998 to $23.6 million, and as a
percent of revenue increased to 31.4% from 29.5% in 1997. The higher gross
profit as a percentage of net revenues was primarily due to the theatre segment
where the gross margin increased to 32.8% in 1998 from 28.7% in 1997. This
increase can be attributed to synergies obtained through the purchase of Design
& Manufacturing, Ltd. ("Design") in April 1998 and certain manufacturing
efficiencies due to an increase in production volume during 1998. The purchase
of Design has enabled the Company to generate cost savings by vertically
integrating the supply of certain components sold with the Company's projection
equipment. Restaurant margins as a percent of sales increased from 25.6% in 1997
to 27.7% mainly due to a change in product mix while lighting segment margins
decreased from 41.2% in 1997 to 19.7%. The decline in lighting margins was due
to lower rental revenues as a percentage of total revenues in 1998. Rental
revenue generally carries a higher margin than product sales.
Operating expenses in 1998 increased approximately $1.4 million or 15.4% from
1997. As a percentage of net revenues, such expenses increased to 14.1% in 1998
from 13.1% in 1997. The increase can be attributed to the acquisition of Design
and to costs related to the lighting segment. Operating expenses as a percentage
of revenue are relatively high for Design because a majority of Design's sales
are eliminated in consolidation. This impact is offset by Design's ability to
produce a low-cost product for the Company and thus increase gross margins. The
reason for the increased operating expenses in the lighting segment was due to
the Company making a concerted effort to grow this segment but has not yet seen
the revenue growth that was anticipated.
Net interest expense was $36,265 in 1998 compared to net interest income of
$254,030 in 1997. The change from the prior year reflects lower cash on hand and
higher interest expense due to borrowings on the Company's line of credit with
Norwest Bank. These borrowings were necessitated due to lower cash flows from
operations and the repurchase of 1.8 million shares of common stock during the
third and fourth quarters of 1998.
BALLANTYNE 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's effective tax rate in 1998 was 35.5% compared to 34.7% in 1997.
The increase reflects higher state taxes related to the Company having
operations in more states than the prior year. The difference between the
Company's effective tax rate and the federal statutory rate of 34% reflects the
non-deductibility of certain intangible assets, principally goodwill and the
impact of state income taxes.
For the reasons outlined above, net income increased $0.6 million or 8.2% to
$8.3 million in 1998 from $7.7 million in 1997. Basic earnings per share were
$0.59 per share in 1998 compared to $0.56 per share in 1997. Diluted earnings
per share were $0.57 per share in 1998 compared to $0.52 per share in 1997.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996
Net revenues for 1997 increased 35.7% to $70.2 million from $51.8 million for
1996. The following table sets forth comparative consolidated net revenues of
theatre, lighting and restaurant products for the respective years:
Year Ended December 31,
-------------------------
1997 1996
---- ----
Theatre $62,306,249 $47,230,543
Lighting 5,360,617 2,157,125
Restaurant 2,538,245 2,366,196
----------- -----------
Total net revenues $70,205,111 $51,753,864
----------- -----------
----------- -----------
The increase for 1997 reflects higher revenues from the sale of theatre products
and the sale and rental of lighting products. The increase in theatre products
reflects increased sales of commercial motion picture projector equipment which
rose $11.8 million or 31.8%. This increase was mainly attributable to increased
sales of such equipment to domestic customers, however, sales to foreign
customers, for all Company products, rose $4.4 million or 31.3% to $18.5 million
in 1997 from $14.1 million in 1996. Also contributing to the increase in the
theatre sales were higher sales of ISCO-Optic lenses and replacement parts.
Sales of ISCO-Optic lenses increased $1.9 million or 44.6% to $6.4 million from
$4.5 million in 1996, while sales of replacement parts increased $1.2 million or
19.6% to $7.3 million from $6.1 million in 1996. These increases reflect the
continued demand for theatre products and a higher installed base of motion
picture projectors. Net revenues from lighting products increased $3.2 million
or 148.5% from $2.2 million in 1996 to $5.4 million in 1997. The increase
primarily reflects the acquisition of Xenotech in the second quarter of 1997 and
the acquisition of Sky-Tracker in the third quarter of 1997. The remaining
increase in lighting products was attributable to an increase in sales of follow
spotlights, which increased approximately $231,000 over 1996. Net sales of
restaurant products increased by $258,394 or 13.9%, mainly due to an increase in
the sales of pressure fryers and accessories.
Gross profit as a percentage of net revenues remained relatively constant from
year to year. The increase attributable to improved efficiencies was offset by
greater console sales, which carry a lower margin.
Operating expenses increased $2.1 million or 30.1% for 1997 as compared to 1996.
However, as a percentage of net revenues, such expenses decreased to 13.1% in
1997 from 13.6% in 1996 as a result of an increase in net revenues from theatre
products without a proportional increase in selling and general and
administrative expenses.
12 BALLANTYNE
Interest expense decreased to $31,902 from $473,627 in 1996 reflecting the
repayment of the Company's Industrial Revenue Bonds in March 1997 and the
absence of borrowings under the Company's line of credit. Interest income rose
$175,813 to $285,932 for 1997 compared to $110,119 in 1996. The increase was
attributed to more excess cash during 1997 compared to 1996 which was a direct
result of more cash flow from operations and from proceeds from the equity
offering in August of 1996.
The Company's effective tax rate for 1997 was 34.7% compared to 36.6 % for 1996.
The decline from 1996 reflects a lower state income tax related to the state of
Nebraska's "Throwback" law in which only a portion of the Company's sales are
subject to Nebraska taxes. The difference between the Company's effective tax
rate and the federal statutory rate of 34% reflects the non-deductibility of
certain intangible assets, principally goodwill and the impact of state income
taxes.
Due to the reasons described above, net income increased $2.7 million or 53.1%
to $7.7 million in 1997 from $5.0 million in 1996. Basic earning per share were
$0.56 per share in 1997 compared to $0.43 per share in 1997. Diluted earnings
per share were $0.52 per share in 1997 compared to $0.40 per share in 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1998, the Company maintained a $20 million line of credit
with Norwest Bank Nebraska, N.A. (the "Norwest Facility"). At December 31, 1998,
$7.8 million of the Norwest Facility was unused. Borrowings outstanding under
the Norwest Facility bear interest, payable monthly, at a rate equal to the
Prime Rate less 0.5% (7.25% at December 31, 1998). All of the Company's assets
secure the Norwest Facility. The Company was in compliance with all restrictive
covenants at December 31, 1998 and 1997.
Historically, the Company has funded its working capital requirements through
cash flow generated by its operations. Net cash provided by operating activities
("operating cash flow") for the years ended December 31, 1998, 1997 and 1996
were $0.49 million, $5.3 million and $0.9 million, respectively. The decrease in
operating cash flow was primarily due to a $2.6 million decrease in accounts
payable, a $5.2 million increase in accounts receivable and a $3.1 million
increase in inventory in 1998. The decrease in accounts payable relates mainly
to the timing of payments to vendors compared to the prior year. The increase in
accounts receivable relates to higher sales in the months of November and
December than the previous year.
The Company anticipates that internally generated funds and borrowings available
under the Norwest Facility will be sufficient to meet its working capital needs,
planned 1999 capital expenditures and to pursue opportunities to expand its
markets and businesses.
Net cash used in investing activities for the years ending December 31, 1998,
1997 and 1996 were $7.5 million, $4.7 million and $1.0 million, respectively.
Investing activities in 1998 reflect the purchase of Sky-Tracker of Florida,
Inc. during January of 1998 and the purchase of Design in the second quarter of
1998. Capital expenditures were approximately $3.6 million in 1998 and primarily
relate to the purchase of rental equipment in the lighting segment and plant
equipment in the theatre segment.
Net cash used in financing activities in 1998 was $0.15 million compared to net
cash provided by financing activities of $1.1 million in 1997 and $6.0 million
in 1996. The reasons for the change from prior years relate
BALLANTYNE 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
to the repurchase of treasury stock for $12.4 million during 1998. The stock
repurchase was financed by borrowings on the Norwest Facility. Also, the Company
received $1.8 million from the exercise of certain stock options in 1997
compared to only $0.09 million in 1998. Net cash provided by financing
activities in 1996 was higher due to a secondary offering of the Company's
common stock in August of that year.
The Company does not engage in any hedging activities, including currency
hedging activities, in connection with its foreign operations and sales. To
date, all of the Company's international sales have been denominated in U.S.
dollars, exclusive of Strong Westrex, Inc. sales, which are denominated in Hong
Kong dollars.
SEASONALITY
Generally, the Company's business exhibits a moderate level of seasonality as
sales of theatre products typically increase during the third and fourth
quarters. The Company believes that such increased sales reflect seasonal
increases in the construction of new motion picture screens in anticipation of
the holiday movie season.
INFLATION
The Company believes that the relatively moderate rates of inflation in recent
years have not had a significant impact on its net revenues or profitability.
Historically, the Company has been able to offset any inflationary effects by
either increasing prices or improving cost efficiencies.
YEAR 2000
The Company has developed a plan to deal with the year 2000 problem in
connection with its systems and has begun converting its systems to be year 2000
compliant. The plan provides for the conversions to be completed and tested
before the 1999 year-end. The year 2000 problem, frequently referred to as the
"millennium bug", results from the fact that computer programs in the past have
been written using only two digits to identify a year, rather than four digits.
Because of this, the computer would not recognize years commencing with the
digits "20", instead of "19", and could produce erroneous calculations resulting
in interruptions and crashes in business operating systems. The Company's
information technology systems contain inventory and accounting systems,
electronic data interchange, and mechanical systems affecting machinery and
equipment.
There are four phases involved in assessing the year 2000 problem described by
the Company as follows:
AWARENESS Identify all data-impacted systems and products; contact product
vendors concerning compliance status and plans.
ASSESSMENT Identify compliance status of all data-impacted systems and
equipment; prioritize systems and equipment based on business risk; estimate
cost and feasibility of repairing and replacing each non-compliant system and
product and finally, establish a testing approach.
IMPLEMENTATION Repair or replace each non-compliant system and product; build
contingency plans.
TESTING Test the Company's systems and products to gain assurance that the year
2000 problem is fixed.
The information technology systems are currently in the implementation phase
with approximately two months to complete. Year 2000 issues relating to third
parties relate to the automated equipment which the
14 BALLANTYNE
Company sells to its customers. While the Company is currently assessing the
impact to these products, it believes that the equipment already complies with
the year 2000 requirements. The Company has currently incurred an
inconsequential amount of costs relating to the year 2000 problem and believes
that the overall costs will be inconsequential. The Company could incur
substantial liabilities and potential losses if the Company's conversion efforts
or the conversion efforts of any of its suppliers do not adequately solve all
potential problems, or if the automation products which the Company sells do not
operate satisfactorily because of the "millennium bug." This represents the
Company's most reasonable likely worst case, year 2000 scenario.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No.133 establishes accounting and
reporting standards for derivatives and hedging. It requires that all
derivatives be recognized as either assets or liabilities at fair value and
establishes specific criteria for the use of hedge accounting. The Company's
required adoption date is January 1, 2000. SFAS No. 133 is not to be applied
retroactively to financial statements of prior periods and as of December 31,
1998, the Company had no derivatives or hedging activities.
SELECTED FIVE-YEAR FINANCIAL DATA
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
STATEMENT OF INCOME DATA
Net revenue $75,057 70,205 51,754 38,441 28,758
Gross profit 23,554 20,725 15,357 10,990 8,631
Net income $ 8,344 7,709 5,037 3,040 2,355
Net income per share (1)
Basic $ 0.59 0.56 0.43 0.29 0.19
Diluted $ 0.57 0.52 0.40 0.29 0.19
BALANCE SHEET DATA
Working capital $31,002 27,403 19,742 8,625 7,079
Total assets 56,553 46,753 32,462 19,828 16,674
Total debt 12,276 242 458 8,059 1,607
Stockholders' equity $34,615 35,623 24,029 5,055 10,015
(1) Adjusted for all stock dividends and stock splits
BALLANTYNE 15
INDEPENDENT AUDITOR'S REPORT
BOARD OF DIRECTORS AND SHAREHOLDERS
BALLANTYNE OF OMAHA, INC.
We have audited the accompanying consolidated balance sheets of
Ballantyne of Omaha, Inc. and subsidiaries as of December 31, 1998 and 1997, and
the related consolidated statements of income, stockholders' equity and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Ballantyne of Omaha,
Inc. and subsidiaries at December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Omaha, Nebraska
January 18, 1999
16 BALLANTYNE
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS 1998 1997
---- ----
Current assets:
Cash and cash equivalents $ 594,686 $ 7,701,507
Accounts receivable (less allowance for
doubtful accounts of $396,785 in
1998 and $215,823 in 1997) 17,255,221 11,728,231
Inventories 21,434,395 17,445,632
Recoverable income taxes -- 490,766
Deferred income taxes 864,568 626,133
Other current assets 43,611 118,028
------------ ------------
Total current assets 40,192,481 38,110,297
Plant and equipment, net 12,695,989 7,399,990
Other assets, net 3,664,710 1,242,211
------------ ------------
Total assets $ 56,553,180 $ 46,752,498
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ -- $ 70,000
Accounts payable 5,936,825 8,351,392
Accrued expenses 2,500,614 2,286,001
Income taxes payable 752,809 --
------------ ------------
Total current liabilities 9,190,248 10,707,393
Deferred income taxes 471,319 250,315
Long-term debt, excluding current installments 47,372 171,761
Notes payable to bank 12,229,000 --
Stockholders' equity:
Preferred stock, par value $.01 per share;
authorized 1,000,000 shares, none outstanding -- --
Common stock, par value $.01 per share;
authorized 25,000,000 shares; issued
14,450,702 shares in 1998 and 13,548,594
shares in 1997 144,507 135,486
Additional paid-in capital 31,211,329 22,741,511
Retained earnings 15,610,511 12,746,032
------------ ------------
46,966,347 35,623,029
Less cost of common shares in treasury, at cost
1,801,800 shares in 1998 (12,351,106) --
------------ ------------
Total stockholders' equity 34,615,241 35,623,029
------------ ------------
Total liabilities and stockholders' equity $ 56,553,180 $ 46,752,498
------------ ------------
------------ ------------
See accompanying notes to consolidated financial statements.
BALLANTYNE 17
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
---- ---- ----
Net revenues $ 75,057,367 $ 70,205,111 $ 51,753,864
Cost of revenues 51,503,053 49,480,113 36,396,527
------------ ------------ ------------
Gross profit 23,554,314 20,724,998 15,357,337
Operating expenses:
Selling 3,740,582 3,350,758 2,711,744
General and administrative 6,844,407 5,819,876 4,335,709
------------ ------------ ------------
Total operating expenses 10,584,989 9,170,634 7,047,453
------------ ------------ ------------
Income from operations 12,969,325 11,554,364 8,309,884
Interest income 103,207 285,932 110,119
Interest expense (139,472) (31,902) (473,627)
------------ ------------ ------------
Net interest income (expense) (36,265) 254,030 (363,508)
------------ ------------ ------------
Income before income taxes 12,933,060 11,808,394 7,946,376
Income taxes 4,589,326 4,099,055 2,909,683
------------ ------------ ------------
Net income $ 8,343,734 $ 7,709,339 $ 5,036,693
------------ ------------ ------------
------------ ------------ ------------
Net income per share:
Basic $ 0.59 $ 0.56 $ 0.43
------------ ------------ ------------
------------ ------------ ------------
Diluted $ 0.57 $ 0.52 $ 0.40
------------ ------------ ------------
------------ ------------ ------------
Weighted average shares outstanding:
Basic 14,098,491 13,854,304 11,605,091
------------ ------------ ------------
------------ ------------ ------------
Diluted 14,749,350 14,830,423 12,495,322
------------ ------------ ------------
------------ ------------ ------------
See accompanying notes to consolidated financial statements
18 BALLANTYNE
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Additional Total
Preferred Common Paid-in Retained Treasury Stockholders'
Stock Stock Capital Earnings Stock Equity
----------- ----------- ---------- ---------- ----------- -------------
Balance at December 31, 1995 $ -- 99,000 4,956,215 -- -- 5,055,215
Net income -- -- -- 5,036,693 -- 5,036,693
Issuance of 2,846,250 shares
of common stock, net of
offering expenses -- 28,463 13,622,324 -- -- 13,650,787
Issuance of 86,625 shares of
common stock upon
exercise of stock options -- 867 226,633 -- -- 227,500
Issuance of 21,814 shares of
common stock under
the employees stock
purchase plan -- 218 58,534 -- -- 58,752
----------- ----------- ---------- ---------- ----------- ----------
Balance at December 31, 1996 -- 128,548 18,863,706 5,036,693 -- 24,028,947
Net income -- -- -- 7,709,339 -- 7,709,339
Issuance of 684,075 shares of
common stock upon
exercise of stock options -- 6,840 1,838,042 -- -- 1,844,882
Issuance of 9,865 shares of
common stock under
the employees stock
purchase plan -- 98 60,673 -- -- 60,771
Income tax benefit related
to stock option plans -- -- 1,979,090 -- -- 1,979,090
----------- ----------- ---------- ---------- ----------- ----------
Balance at December 31, 1997 -- 135,486 22,741,511 12,746,032 -- 35,623,029
Net income -- -- -- 8,343,734 -- 8,343,734
Issuance of 25,950 shares of
common stock upon
exercise of stock options -- 259 88,997 -- -- 89,256
Issuance of 15,679 shares of
common stock under
the employees stock
purchase plan -- 156 99,405 -- -- 99,561
Issuance of 259,058 shares
for business combination -- 2,590 2,797,410 -- -- 2,800,000
Income tax benefit related to
stock option plans -- -- 10,767 -- -- 10,767
Purchase of treasury stock -- -- -- -- (12,351,106) (12,351,106)
Issuance of 5% stock dividend
declared January 28, 1999,
payable March 1, 1999 -- 6,016 5,473,239 (5,479,255) -- --
----------- ----------- ---------- ---------- ----------- ----------
Balance at December 31, 1998 $ -- 144,507 31,211,329 15,610,511 (12,351,106) 34,615,241
----------- ----------- ---------- ---------- ----------- ----------
----------- ----------- ---------- ---------- ----------- ----------
See accompanying notes to consolidated financial statements.
BALLANTYNE 19
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
Net income $ 8,343,734 $ 7,709,339 $ 5,036,693
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation of plant and equipment 1,476,275 783,338 470,040
Other amortization 376,948 218,434 137,080
Loss on sale of fixed assets 7,297 -- --
Deferred income taxes (17,431) (261,265) 14,901
Changes in assets and liabilities, net of assets acquired:
Accounts receivable (5,243,401) (2,210,958) (3,377,475)
Inventories (3,065,576) (4,676,096) (2,594,966)
Other current assets 77,776 (2,326) (51,829)
Accounts payable (2,561,127) 2,069,566 2,083,256
Accrued expenses 104,361 294,212 164,944
Income taxes payable 1,254,342 1,352,094 (986,778)
Other assets (253,836) (5,420) 5,882
------------ ------------ ------------
Net cash provided by
operating activities 499,362 5,270,918 901,748
------------ ------------ ------------
Cash flows from investing activities:
Business combinations (3,886,922) (1,150,000) --
Capital expenditures (3,594,472) (3,531,913) (1,016,930)
Proceeds from sale of equipment 28,500 -- --
------------ ------------ ------------
Net cash used in investing
activities (7,452,894) (4,681,913) (1,016,930)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from line of credit 12,229,000 -- --
Payments on long-term debt (220,000) (835,744) (7,983,436)
Net proceeds from equity offering -- -- 13,650,787
Proceeds from employee stock purchase plan 99,561 60,771 58,752
Proceeds from exercise of stock options 89,256 1,844,882 227,500
Purchase of common stock for treasury (12,351,106) -- --
------------ ------------ ------------
Net cash provided by (used in)
financing activities (153,289) 1,069,909 5,953,603
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents (7,106,821) 1,658,914 5,838,421
Cash and cash equivalents at beginning of year 7,701,507 6,042,593 204,172
------------ ------------ ------------
Cash and cash equivalents at end of year $ 594,686 $ 7,701,507 $ 6,042,593
------------ ------------ ------------
------------ ------------ ------------
See accompanying notes to consolidated financial statements.
20 BALLANTYNE
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
1. Company
Ballantyne of Omaha, Inc., a Delaware corporation ("Ballantyne" or the
"Company"), and its wholly-owned subsidiaries Strong Westrex, Inc., Design &
Manufacturing, Inc., Xenotech Rental Corp. and Xenotech Strong, Inc., design,
develop, manufacture and distribute commercial motion picture equipment,
lighting systems 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. Approximately 25.6% of the Company's common stock is owned by Canrad of
Delaware Inc. ("Canrad") which is an indirect wholly-owned subsidiary of ARC
International Corporation.
2. Summary of Significant Accounting Policies
The principal accounting policies upon which the accompanying consolidated
financial statements are based are summarized as follows:
a. Basis of Presentation
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.
b. Stock Dividend and Splits
The Company's Board of Directors declared a 5% stock dividend of the Company's
common stock on January 28, 1999. The stock dividend is payable March 1, 1999 to
shareholders of record on February 15, 1999. The stock dividend resulted in the
issuance of 601,455 shares of common stock. The dividend has been accounted for
as if it occurred on December 31, 1998.
The Company's Board of Directors declared a 3-for-2 stock split of the Company's
common stock on April 21, 1998. The stock split was in the form of a 50% common
stock dividend payable June 12, 1998 to shareholders of record on May 29, 1998.
The Company's Board of Directors declared a 3-for-2 stock split of the Company's
common stock on January 29, 1997. The stock split was in the form of a 50%
common stock dividend payable March 5, 1997 to shareholders of record on
February 10, 1997.
Unless otherwise noted, share and per share data have been restated to reflect
the stock dividend and stock splits as of the earliest period presented.
c. Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market and
include appropriate elements of material, labor and manufacturing overhead.
BALLANTYNE 21
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
d. Goodwill and Other Intangibles
The Company capitalizes and includes in other assets the excess of cost over the
fair value of assets of business acquired ("goodwill"), the present value of
non-compete agreements and the costs of acquiring patents on its products. These
assets are stated at cost less accumulated amortization and are being amortized
on a straight-line basis over the expected periods to be benefited, 3 to 25
years. Accumulated amortization as of December 31, 1998 and 1997 amounted to
$928,393 and $1,254,435, respectively. The Company assesses and would recognize
any deficiency of the recoverability of goodwill by determining whether the
amortization of the asset balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operations.
e. Plant and Equipment
Significant expenditures for the replacement or expansion of plant and equipment
are capitalized. Depreciation of plant and equipment is provided over the
estimated useful lives of the respective assets using the straight-line method.
Estimated useful lives range from 3 to 20 years.
f. Income Taxes
Income taxes are accounted for under the asset and liability method. 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 and operating
loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
g. Revenue Recognition
The Company recognizes revenue from product sales upon shipment to the customer.
Revenues related to equipment rental and services are recognized as earned over
the terms of the contracts.
h. Research and Development
Research and development costs are charged to operations in the period incurred.
Such costs charged to operations amounted to approximately $746,000, $647,000
and $485,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
i. Advertising Costs
Advertising and promotional costs are expensed as incurred and amounted to
approximately $1,046,000, $904,000 and $528,000 for the years ended December 31,
1998, 1997 and 1996, respectively.
22 BALLANTYNE
j. Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosure about
Fair Value of Financial Instruments," defines the fair value of a financial
instrument as the amount at which the instruments could be exchanged into a
current transaction between willing parties. Cash and cash equivalents, accounts
receivable, debt, notes payable to bank and accounts payable reported in the
consolidated balance sheets equal or approximate fair values.
k. Use of Estimates
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.
l. Cash and Cash Equivalents
All highly liquid financial instruments with maturities of three months or less
from date of purchase are classified as cash equivalents in the consolidated
balance sheets and statements of cash flows.
m. Earnings Per Common Share
Basic earnings per share of common stock have been computed on the basis of the
weighted average number of shares of common stock outstanding. Diluted earnings
per share has been computed on the basis of the weighted average number of
shares of common stock outstanding after giving effect to potential common
shares from dilutive stock options. Diluted earnings per share includes an
increase in the weighted average shares outstanding for dilutive stock options
of 650,859, 976,119 and 890,231 for 1998, 1997 and 1996, respectively.
n. Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of
The Company reviews long-lived assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
o. Reclassifications
Certain of the 1997 and 1996 amounts have been reclassified to conform to the
1998 presentation.
BALLANTYNE 23
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
3. Equity Offerings
On June 30, 1997, the Company completed a public offering pursuant to a
Registration Statement on Form S-3 (the "S-3 Offering"). Pursuant to the S-3
Offering, Canrad sold 1,932,860 shares of Ballantyne common stock to the public
at the price of $16.875 per share. In addition, Canrad granted the underwriters
an option to purchase an aggregate of up to 333,729 additional shares of common
stock at $16.875 per share less underwriting discounts and commissions to cover
over-allotments, if any. The underwriters purchased all 333,729 shares. While
the Company did not offer any shares or pay any expenses incurred in the S-3
Offering, the Company did receive approximately $1,146,000 from the exercise of
a warrant and certain stock options, which in aggregate totaled 280,750 shares
and were sold in connection with the S-3 Offering.
On August 1, 1996, the Company completed an offering of its shares of capital
stock pursuant to a Registration Statement on Form S-1 (the "Offering").
Pursuant to the Offering, the Company sold 1,100,000 shares of common stock to
the public at the price of $12.125 per share. In addition, the Company granted
the underwriters an option, exercisable until August 31, 1996, to purchase an
aggregate of up to 165,000 additional shares of common stock at $12.125 per
share less underwriting discounts and commissions, to cover over-allotments, if
any. The underwriters purchased all 165,000 shares on August 16, 1996. The net
proceeds to the Company from the Offering were $13,650,787.
Share information and per share prices have not been adjusted for the stock
dividend or stock splits for the above offerings.
4. Inventories
Inventories consist of the following:
December 31,
------------
1998 1997
---- ----
Raw materials and supplies $16,404,416 $13,857,783
Work in process 3,115,163 2,451,078
Finished goods 1,914,816 1,136,771
----------- -----------
$21,434,395 $17,445,632
----------- -----------
----------- -----------
24 BALLANTYNE
5. Plant and Equipment
Plant and equipment include the following:
December 31,
------------
1998 1997
---- ----
Land $ 343,500 $ 313,500
Buildings and improvements 4,456,186 3,344,292
Machinery and equipment 12,729,984 7,139,044
----------- -----------
17,529,670 10,796,836
Less accumulated depreciation 4,833,681 3,396,846
----------- -----------
Net plant and equipment $12,695,989 $ 7,399,990
----------- -----------
----------- -----------
6. Long-term Debt
Long-term debt consists entirely of non-competition contracts payable in
installments related to the acquisition of Xenotech, Inc. and Sky-Tracker of
America, Inc. in 1997.
Annual maturities of long-term debt at December 31, 1998 are as follows:
Year Amount
---- ------
1999 $ --
2000 20,000
2001 --
2002 50,000
------------
70,000
Less amounts representing imputed interest (22,628)
------------
Present value of non-competition contracts $ 47,372
------------
------------
The Company maintains a $20 million line of credit with Norwest Bank, N.A. At
December 31, 1998, $7.8 million of the line of credit was unused. Borrowings
outstanding under the line of credit bear interest, payable monthly, at a rate
equal to the Prime Rate less 0.5% (7.25% at December 31, 1998). The Company's
line of credit expires on May 31, 2000. The amounts outstanding have been
classified as long-term based on the maturity date of the agreement. All of the
Company's assets secure the credit facility. The Company was in compliance with
all restrictive covenants relating to the line of credit at December 31, 1998
and 1997.
BALLANTYNE 25
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
7. Income Taxes
The provisions for income taxes consists of:
Years Ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Current:
Federal $ 4,190,431 $ 4,124,265 $ 2,623,375
State 391,000 237,000 267,400
Foreign 25,326 (945) 4,007
Deferred-Federal (17,431) (261,265) 14,901
----------- ----------- -----------
$ 4,589,326 $ 4,099,055 $ 2,909,683
----------- ----------- -----------
----------- ----------- -----------
Actual tax expense differs from the "expected" tax expense (computed by applying
the U.S. Federal corporate tax rate of 34% to income before income taxes) as
follows:
Years Ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Computed "expected" tax expense $ 4,397,240 $ 4,014,854 $ 2,701,768
State income taxes, net of Federal benefit 258,060 156,420 176,484
Non-deductible amortization 16,356 16,356 16,356
Other (82,330) (88,575) 15,075
----------- ----------- -----------
$ 4,589,326 $ 4,099,055 $ 2,909,683
----------- ----------- -----------
----------- ----------- -----------
Deferred tax assets and the deferred tax liability were comprised of the
following:
December 31,
------------
1998 1997
---- ----
Deferred tax assets:
Inventory reserves $558,610 $441,929
Accounts receivable reserve 134,907 73,380
Other 255,703 174,533
-------- --------
Total deferred assets 949,220 689,842
Deferred tax liability:
Depreciation and amortization 555,971 314,024
-------- --------
Net deferred tax asset $393,249 $375,818
-------- --------
-------- --------
There was no valuation allowance for deferred tax assets as of December 31, 1998
or 1997. Based upon the scheduled reversal of deferred tax liabilities,
projected future taxable income and tax planning strategies, management believes
it is more likely than not the Company will realize the benefits of deferred tax
assets as of December 31, 1998.
26 BALLANTYNE
Deferred tax assets and liabilities are included in the accompanying balance
sheets based on their classification as current or long-term as follows:
1998 1997
---- ----
Current deferred tax assets $864,568 $626,133
Long-term deferred tax liability 471,319 250,315
-------- --------
Net deferred tax assets $393,249 $375,818
-------- --------
-------- --------
8. Supplemental Cash Flow Information
Supplemental disclosures to the consolidated statements of cash flows are as
follows:
Years Ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Interest paid $ 139,472 $ 31,902 $ 473,627
---------- ---------- -----------
---------- ---------- -----------
Income taxes paid $3,352,415 $3,072,840 $3,878,500
---------- ---------- -----------
---------- ---------- -----------
Other non-cash activities in 1998 included recording an income tax benefit
relating to the Company's stock option plans for $10,767. See Note 10 for
non-cash activities concerning acquisitions. Other non-cash activities in 1997
included recording the present value of non-compete contracts for approximately
$248,000 and an income tax benefit relating to the Company's stock option plans
for $1,979,090. Other non-cash activities in 1996 included approximately
$382,300 of capital lease obligations for equipment.
9. Related Party Transactions
Amounts charged to operations of the Company by Canrad were management fees of
$150,000, $225,000 and $300,000 for the years ended December 31, 1998, 1997 and
1996. Included in accrued expenses are payables to Canrad of $171,377 and
$110,524 as of December 31, 1998 and 1997.
One member of the Board of Directors serves as General Counsel for the Company.
Fees paid to the Board Member's firm in 1998, 1997 and 1996 were not
significant.
10. Acquisitions
During January of 1998, the Company purchased substantially all of the net
assets of Sky-Tracker of Florida, Inc. ("Sky-Tracker of Florida") for cash of
$575,000. Sky-Tracker of Florida is a rental agent and distributor of high
intensity promotional searchlights.
Effective April 1, 1998, the Company purchased substantially all of the net
assets of Design and Manufacturing, Ltd. ("Design") for cash and stock of
approximately $5.5 million. The Company also assumed liabilities of
approximately $207,000. The common stock issued in this acquisition is subject
to a one-year lock-up agreement. The cash portion of the purchase price was
financed through operating cash flows. In connection with the acquisition,
goodwill of approximately $2.5 million was recorded and will be amortized
BALLANTYNE 27
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
over 15 years. Design is a leading supplier of film platter systems to the
motion picture exhibition industry and was a vendor of the Company. In a related
transaction in May 1998, the Company purchased land and a building for $500,000
from the former owner of Design.
During June of 1998, the Company purchased substantially all of the assets of a
distributor of follow spotlights for a purchase price of $125,000.
Effective April 1, 1997, the Company purchased certain net assets, primarily
accounts receivable, inventories and fixed assets of Xenotech, Inc. ("Xenotech")
for cash of $750,000. The Company also assumed liabilities of $1,175,897. No
goodwill was recorded in connection with the acquisition. In addition, the
Company entered into a 5-year non-compete agreement with Xenotech's founder and
sole proprietor. The agreement is for a total of $250,000 payable by the Company
in equal installments of $50,000. During 1998, the Company prepaid certain
payments under the contract. The present value of the non-compete payments has
been included in other assets and long-term debt in the accompanying
consolidated balance sheets.
During September of 1997, the Company acquired certain assets of Sky-Tracker of
America, Inc. ("Sky-Tracker") for cash of approximately $400,000. In connection
with the purchase, the Company recorded approximately $167,000 of goodwill which
will be amortized over 5 years. In addition, the Company entered into a 3-year
non-compete agreement with the owner of Sky-Tracker. The agreement is for a
total of $60,000 payable in equal installments and is included in other assets
and long-term debt in the accompanying consolidated balance sheets.
The purchase prices for all acquisitions in 1998 and 1997 were assigned to the
assets acquired and liabilities assumed based upon the fair market value of such
assets and liabilities.
The allocations of the purchase prices for 1998 and 1997 are as follows:
1998 1997
---- ----
Accounts receivable $ 283,589 $ 426,657
Inventories 923,187 868,413
Other current assets 3,359 12,000
Plant and equipment 3,213,599 787,606
Other assets 2,520,000 479,332
Accounts payable (146,560) (522,104)
Accrued expenses (110,252) (242,766)
Income taxes payable -- (56,476)
Long-term debt -- (602,662)
Purchase price paid in stock (2,800,000) --
----------- -----------
Cash paid $ 3,886,922 $ 1,150,000
----------- -----------
----------- -----------
28 BALLANTYNE
The following unaudited pro forma financial information presents combined
results of operations of the Company as if the 1998 acquisitions had occurred as
of the beginning of 1997, after giving effect to certain adjustments, including
amortization of goodwill and related income tax effects. The pro forma impact of
the 1997 acquisitions would not be material. The pro forma financial information
does not necessarily reflect the results of operations that would have occurred
had the acquisitions constituted a single entity during such periods.
Years Ended December 31,
------------------------
1998 1997
---- ----
Net revenues $ 75,750,256 $ 72,970,757
-------------- --------------
-------------- --------------
Net income $ 8,784,851 $ 9,053,828
-------------- --------------
-------------- --------------
Earnings per share:
Basic $ 0.62 $ 0.65
-------------- --------------
-------------- --------------
Diluted $ 0.60 $ 0.61
-------------- --------------
-------------- --------------
11. Common Stock
a. Option Plans
The Company has adopted a 1995 Incentive and Non-Incentive Stock Option Plan and
a 1995 Non-Employee Directors Non-Incentive Stock Option Plan (the "Plans"). A
total of 777,131 shares of Ballantyne common stock have been reserved for
issuance pursuant to these Plans at December 31, 1998. The 1995 Stock Option
Plan provides for the granting of incentive and non-incentive stock options. The
1995 Outside Directors Stock Option Plan provides for the granting of
non-incentive stock options only. The per share exercise price of incentive
stock options may not be less than 100% of the fair market value of a share of
Ballantyne common stock on the date of grant (110% of fair market value in the
case of an incentive stock option granted to any person who, at the time the
incentive stock option is granted, owns (or is considered as owning within the
meaning of Section 424 (d) of the Internal Revenue Code of 1986, as amended)
stock possessing more than 10% of the total combined voting powers of all
classes of stock of the Company or any parent or subsidiary). With respect to
non-incentive stock options, the per share exercise price may not be less than
85% of the fair market value of a share of Ballantyne common stock on the date
of grant.
BALLANTYNE 29
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Information as to shares subject to stock option plans is as follows:
Number Exercise price Weighted average
of Options Per Option Exercise Price
---------- ---------- --------------
Options outstanding at December 31, 1995 1,182,431 $ 2.50 - 2.79 $ 2.54
Granted 38,981 3.08 3.08
Exercised (90,956) 2.50 2.50
--------- ---------- -------------
Options outstanding at December 31, 1996 1,130,456 2.50 -3.08 2.57
Granted 199,238 8.09 -11.43 10.35
Exercised (548,179) 2.50 -3.08 2.57
--------- ---------- -------------
Options outstanding at December 31, 1997 781,515 2.50 -11.43 3.91
Granted 336,000 7.29 -11.94 10.92
Exercised (27,248) 2.50 -11.43 3.28
--------- ---------- -------------
Options outstanding at December 31, 1998 1,090,267 $ 2.50 -11.94 $ 6.38
--------- ---------- -------------
--------- ---------- -------------
Exercisable options at December 31, 1998 1,043,017 $ 2.50 -11.94 $ 6.12
--------- ---------- -------------
--------- ---------- -------------
Options Outstanding at December 31, 1998 Exercisable at December 31, 1998
---------------------------------------- --------------------------------
Weighted Weighted Weighted Weighted
average average average average
remaining exercise remaining exercise
Range of option Number contractual price per Number contractual price per
exercise price of options life option of options life option
- --------------- ---------- ----------- --------- ---------- ----------- ---------
$ 2.50 to 3.08 557,393 5.44 2.55 557,393 5.44 2.55
$ 7.30 to 11.94 532,874 8.32 10.38 485,624 8.69 10.23
- --------- ----- ------- ---- ----- ------- ---- -----
$ 2.50 to 11.94 1,090,267 6.85 6.38 1,043,017 6.96 6.12
- --------- ----- --------- ---- ---- --------- ---- ----
- --------- ----- --------- ---- ---- --------- ---- ----
The Company has also adopted the 1995 Employee Stock Purchase Plan. The Employee
Stock Purchase Plan provides for the purchase of shares of Ballantyne common
stock by eligible employees at a per share purchase price equal to 85% of the
fair market value of a share of Ballantyne common stock at either the beginning
or end of the offering period, as defined, whichever is lower. Purchases are
made through payroll deductions of up to 10% of each participating employee's
salary and participants are limited to purchasing 1,000 shares of Ballantyne
common stock in any offering period. At December 31, 1998, 194,159 shares of
Ballantyne common stock have been reserved pursuant to the Employee Stock
Purchase Plan.
b. Warrants
The Company has granted Merita Bank, Ltd., a warrant to purchase 509,355 shares
of Ballantyne common stock. During 1997, Merita Bank, Ltd. exercised 170,100
shares under its warrant leaving 339,255 shares remaining to be purchased at
December 31, 1998 at an exercise price of $2.50 per share.
30 BALLANTYNE
c. Accounting for Stock-Based Compensation
The Company applies APB Opinion No. 25 and related Interpretations in accounting
for its plans and the exercise price of all options issued have equaled the
market value of the stock on the date of grant. Accordingly, no compensation
cost has been recognized for any of the aforementioned stock compensation plans.
Had compensation cost for the Company's stock compensation plans been determined
consistent with Statement of Financial Accounting Standards (SFAS) No. 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below:
Years Ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Net income
As reported $ 8,343,734 $ 7,709,339 $ 5,036,693
Pro forma $ 6,489,170 $ 7,136,263 $ 3,843,285
Basic earnings per share
As reported $ 0.59 $ 0.56 $ 0.43
Pro forma $ 0.46 $ 0.51 $ 0.33
Diluted earnings per share
As reported $ 0.57 $ 0.52 $ 0.40
Pro forma $ 0.44 $ 0.48 $ 0.31
The average fair value of each option granted in 1998, 1997 and 1996 was $7.77,
$8.18 and $2.03, respectively. The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option-pricing model made with the
following weighted average assumptions:
Years Ended December 31,
------------------------
1998 1997 1996
---- ---- ----
Risk-free interest rate ................. 4.73% 6.15% 6.15%
Dividend yield .......................... 0% 0% 0%
Expected volatility ..................... 78% 75.7% 75%
Expected life in years .................. 3-10 3-10 3-10
12. Commitments, Contingencies, Concentrations and Leases
a. Commitments and Contingencies
The Company has in place a profit sharing plan for key management employees.
Amounts due pursuant to the plan are based upon the attainment of specific
operating levels that are established by the Board of Directors. Amounts charged
to operations pursuant to the profit sharing plan amounted to $945,562,
$1,127,795 and $913,676 for 1998, 1997 and 1996, respectively. The amounts
payable of $945,818 and $1,125,256 at December 31, 1998 and 1997, respectively,
are included in accrued expenses in the accompanying consolidated balance
sheets.
BALLANTYNE 31
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
b. Retirement Plans
The Company sponsors a defined contribution 401-K plan (the "Plan") for all
employees. Pursuant to the provisions of the Plan, employees may defer up to 6%
of their compensation. The Company will match 50% of the amount deferred. An
additional amount of up to 9% of the employee's compensation for the year may
also be deferred with no matching contribution by the Company. The contributions
made to the Plan by the Company for the years ended December 31, 1998, 1997 and
1996 amounted to $182,077, $150,577 and $99,826, respectively.
c. Concentrations
For the years ended December 31, 1998, 1997 and 1996, sales to a customer
represented approximately fifteen percent (15%), twenty percent (20%) and
sixteen percent (16%) of consolidated net revenues, respectively. The balance in
trade receivable owed by this customer was $751,233 at December 31, 1998 and
$1,912,551 at December 31, 1997. For the year ended December 31, 1998, sales to
another customer represented approximately fourteen percent (14%) of
consolidated net revenues. The balance in trade receivable owed by this customer
was $1,888,594 at December 31, 1998. Financial instruments that potentially
expose the Company to a concentration of credit risk principally consist of
accounts receivable. The Company sells product to a large number of customers in
many different geographic regions. To minimize credit concentration risk, the
Company performs on going credit evaluations of its customers financial
condition.
Sales to foreign customers were approximately $22,000,000, $18,500,000 and
$14,100,000 for 1998, 1997 and 1996, respectively. These sales were principally
to customers in Mexico, Canada, Europe and Asia. To minimize credit risk, the
Company generally requires sales to foreign customers be guaranteed by letter of
credit or are shipped C.O.D.
d. Leases
The Company leases manufacturing facilities and office space from an employee of
a wholly-owned subsidiary. The lease expires on March 31, 2002 with the Company
having the option to renew the lease for one additional five-year term. The
Company expects to renew or replace this lease in the ordinary course of
business. The Company also leases other properties and equipment under operating
leases which contain renewal and escalation clauses.
Aggregate minimum rental commitments for leases having noncancelable lease terms
of more than one year are as follows: 1999 - $270,286; 2000 - $233,043; 2001 -
$229,391; 2002 - $130,391 and 2003 - $40,162.
e. Litigation
The Company is involved in certain pending litigation arising under the normal
course of business. Management believes the ultimate resolution of these matters
will not have a material adverse effect on the consolidated financial statements
of the Company.
32 BALLANTYNE
13. Business Segment Information
During 1998, the Company adopted SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for
reporting information about operating segments, products and services,
geographic areas and major customers. The presentation of segment information
reflects the manner in which management organizes segments for making operating
decisions and assessing performance. Prior year amounts have been presented to
conform with the current presentation format.
The Company's operations are conducted principally through three business
segments: Theatre, Lighting and Restaurant. Theatre operations include the
design, manufacture, assembly and sale of motion picture projectors, xenon
lamphouses and power supplies, sound systems and the sale of film handling
equipment and lenses for the theatre exhibition industry. The lighting segment
operations include the sale and rental of follow spotlights, stationary
searchlights and computer operated lighting systems for the motion picture
production, television, live entertainment, theme parks and architectural
industries. The restaurant segment includes the design, manufacture, assembly
and sale of pressure fryers, smoke ovens and rotisseries and the sale of
seasonings, marinades and barbecue sauces, mesquite and hickory woods and point
of purchase displays.
The Company allocates resources to business segments and evaluates the
performance of these segments based upon reported segment gross profit. However,
certain key operations of a particular segment are tracked on the basis of
operating profit. There are no significant intersegment sales. All intersegment
transfers are recorded at historical cost.
BALLANTYNE 33
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
SUMMARY BY BUSINESS SEGMENTS
1998 1997 1996
---- ---- ----
Net revenue
Theatre $ 65,814,807 $ 62,306,249 $ 47,230,543
Lighting 7,107,905 5,360,617 2,157,125
Restaurant 2,134,655 2,538,245 2,366,196
------------ ------------ ------------
Total $ 75,057,367 $ 70,205,111 $ 51,753,864
Gross profit
Theatre $ 21,559,565 $ 17,866,879 $ 13,978,101
Lighting 1,402,676 2,208,095 742,070
Restaurant 592,073 650,024 637,166
------------ ------------ ------------
Total 23,554,314 20,724,998 15,357,337
Corporate overhead (10,584,989) (9,170,634) (7,047,453)
------------ ------------ ------------
Operating income 12,969,325 11,554,364 8,309,884
Net interest income(expense) (36,265) 254,030 (363,508)
------------ ------------ ------------
Income before income taxes $ 12,933,060 $ 11,808,394 $ 7,946,376
------------ ------------ ------------
------------ ------------ ------------
Identifiable assets
Theatre $ 48,484,693 $ 42,239,030 $ 31,454,096
Lighting 7,187,781 3,665,474 117,014
Restaurant 880,706 847,994 891,110
------------ ------------ ------------
Total $ 56,553,180 $ 46,752,498 $ 32,462,220
------------ ------------ ------------
------------ ------------ ------------
Expenditures on capital equipment
Theatre $ 1,072,110 2,980,764 1,016,930
Lighting 2,522,362 551,149 --
Restaurant -- -- --
------------ ------------ ------------
Total $ 3,594,472 $ 3,531,913 $ 1,016,930
------------ ------------ ------------
------------ ------------ ------------
Depreciation and amortization
Theatre $ 1,243,061 $ 833,661 $ 607,120
Lighting 610,162 168,111 --
Restaurant -- -- --
------------ ------------ ------------
Total $ 1,853,223 $ 1,001,772 $ 607,120
------------ ------------ ------------
------------ ------------ ------------
34 BALLANTYNE
SUMMARY BY GEOGRAPHICAL AREA:
1998 1997 1996
---- ---- ----
Net revenue
United States $53,078,993 $51,656,965 $37,628,386
Canada 9,845,049 5,960,640 3,463,236
Asia 4,256,493 4,787,409 5,116,753
Mexico 1,726,712 2,722,675 1,157,667
Europe 4,197,172 3,735,009 3,185,001
Other 1,952,948 1,342,413 1,202,821
----------- ----------- -----------
Total $75,057,367 $70,205,111 $51,753,864
----------- ----------- -----------
----------- ----------- -----------
Identifiable Assets
United States $55,677,111 $45,792,078 $31,749,027
Canada -- -- --
Asia 876,069 960,420 713,193
Mexico -- -- --
Europe -- -- --
Other -- -- --
----------- ----------- -----------
Total $56,553,180 $46,752,498 $32,462,220
----------- ----------- -----------
----------- ----------- -----------
Net revenues by business segment are to unaffiliated customers. Net sales by
geographical area are based on destination of sales. Identifiable assets by
geographical area are based on location of facilities.
14. Quarterly Financial Data (Unaudited)
The following is a summary of the unaudited quarterly results of operations for
1998 and 1997.
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
1998:
Net revenue $17,271,887 15,412,796 20,852,022 21,520,662
Gross profit 5,308,422 4,768,704 6,570,393 6,906,795
Net income 1,901,418 1,425,732 2,418,041 2,598,543
Basic earnings per share .13 .10 .17 .20
Diluted earnings per share .13 .09 .16 .19
1997:
Net revenue $14,724,814 16,348,995 17,378,858 21,752,444
Gross profit 4,356,047 4,932,506 5,147,498 6,288,947
Net income 1,568,200 1,855,250 2,052,831 2,233,058
Basic earnings per share .12 .14 .15 .16
Diluted earnings per share .11 .13 .14 .15
BALLANTYNE 35
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
REPORT OF MANAGEMENT
The consolidated financial statements of Ballantyne of Omaha, Inc. and
Subsidiaries and the other information contained in the Annual Report were
prepared by and are the responsibility of management. The Statements have been
prepared in accordance with generally accepted accounting principles and
necessarily include amounts based on management's best estimates and judgements.
In fulfilling its responsibilities, management relies on a system of internal
controls, which provide reasonable assurance that the financial records are
reliable for preparing financial statements and maintaining accountability of
assets. Internal controls are designed to reduce the risk that material errors
or irregularities in the financial statements may occur and not be timely
detected. These systems are augmented by written policies, careful selection and
training of qualified personnel, an organizational structure providing for the
division of responsibilities and a program of financial, operational and systems
reviews.
The Audit Committee, composed of non-employee directors, is responsible for
recommending to the Board of Directors, the independent accounting firm to be
retained each year. The Audit Committee meets regularly, and when appropriate
separately, with the independent certified accountants and management to review
company performance. The independent certified public accountants and the Audit
Committee have unrestricted access to each other in the discharge of their
responsibilities.
/s/ John P. Wilmers
John P. Wilmers
President and Chief Executive Officer
/s/ Brad French
Brad French
Secretary/Treasurer and Chief Financial Officer
36 BALLANTYNE
DIRECTORS AND OFFICERS
OFFICERS
Arnold S. Tenney
Chairman
John Wilmers
President and Chief Executive Officer
Brad French
Secretary/Treasurer
and Chief Financial Officer
Ray F. Boegner
Senior Vice-President
DIRECTORS
Colin G. Campbell (1) (2)
Principal
Intrepid Partners
Jeffrey D. Chelin
Vice President Finance
and Chief Financial Officer
ARC International Corporation
Ronald H. Echtenkamp (1) (2)
Former President
and Chief Executive Officer
Marshall S. Geller
Chairman and Chief Executive Officer
Geller & Friend Capital Partners, Inc.
Yale Richards (1) (2)
Senior Partner
Marks, Clare & Richards
Arnold S. Tenney (2)
President and Chief Executive Officer
ARC International Corporation
John Wilmers
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
CORPORATE DIRECTORY
BALLANTYNE of Omaha, Inc.
4350 McKinley Street
Omaha, NE 68112
(402) 453-4444
(402) 453-7238 (fax)
SHAREHOLDER INFORMATION
SHARES TRADED
New York Stock Exchange
Symbol: BTN
TRANSFER AGENT
ChaseMellon Shareholder
Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
COUNSEL
Marks, Clare & Richards
Omaha, Nebraska
Cline, Williams, Wright,
Johnson & Oldfather
Omaha, Nebraska
AUDITORS
KPMG Peat Marwick LLP
Omaha, Nebraska
BANKERS
Norwest Bank Nebraska, N.A.
Omaha, Nebraska
ANNUAL MEETING
The Annual Meeting of Shareholders will be held on May 18, 1999 at:
The Westin Aquila Hotel
1615 Howard Street
Omaha, Nebraska 68102
ADDITIONAL INFORMATION
The form 10K annual report for December 31, 1998, filed with the U.S. Securities
and Exchange Commission is available upon request.
For copies of annual and quarterly reports write to:
The Secretary
Ballantyne of Omaha, Inc.
4350 McKinley Street
Omaha, NE 68112
BALLANTYNE 37
BALLANTYNE OF OMAHA, INC.
4350 MCKINLEY STREET
OMAHA, NE 68112
PHONE: 402/453-4444
800-424-1215
FAX: 402/453-7238
WWW.BALLANTYNE-OMAHA.COM
MEMBER - NYSE:BTN