SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2011
Commission File Number 1-34495
Ladish Co., Inc.
(Exact name of registrant as specified in its charter)
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Wisconsin
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31-1145953
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(State or other Jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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5481 South Packard Avenue, Cudahy, Wisconsin
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53110
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(Address of principal executive offices)
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(Zip Code)
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(414) 747-2611
(Registrants telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements for the past 90 days. Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes
o
No
o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated
filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer
in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes
o
No
þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as
of the latest practicable date.
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Class
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Outstanding at March 31, 2011
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Common Stock, $0.01 Par Value
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15,707,552
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TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Ladish Co., Inc.
Condensed Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Data)
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For the Three Months
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Ended March 31,
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(unaudited)
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2011
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2010
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Net sales
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$
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114,120
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$
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98,948
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Cost of sales
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95,312
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85,285
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Gross profit
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18,808
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13,663
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Selling, general and administrative expenses
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4,605
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4,200
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Income from operations
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14,203
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9,463
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Other (income) expense:
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Interest expense
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1,343
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1,475
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Other, net
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(26
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)
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(250
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)
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Income before income tax provision
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12,886
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8,238
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Income tax provision
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3,425
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2,886
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Net income
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9,461
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5,352
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Noncontrolling interest in net earnings of subsidiary
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19
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4
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Net income attributable to Ladish Co., Inc.
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$
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9,442
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$
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5,348
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Basic earnings per share
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$
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0.60
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$
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0.34
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Diluted earnings per share
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$
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0.60
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$
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0.34
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Basic weighted average shares outstanding
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15,707,552
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15,858,560
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Diluted weighted average shares outstanding
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15,707,552
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15,859,650
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See accompanying notes to condensed consolidated financial statements.
Page 2 of 14
Ladish Co., Inc.
Condensed Consolidated Balance Sheets
(Dollars in Thousands, Except per Share Data)
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March 31,
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December 31,
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2011
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2010
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(unaudited)
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Assets:
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Current assets:
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Cash and cash equivalents
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$
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25,240
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$
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23,335
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Accounts receivable, less allowance for doubtful accounts of $200 at each date
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91,607
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82,364
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Inventories, net
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109,063
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100,693
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Deferred income taxes
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4,956
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4,843
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Prepaid expenses and other current assets
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2,567
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2,105
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Total current assets
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233,433
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213,340
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Property, plant and equipment:
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Land and improvements
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6,941
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6,906
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Buildings and improvements
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62,819
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62,153
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Machinery and equipment
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302,763
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297,969
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Construction in progress
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7,767
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8,920
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380,290
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375,948
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Less accumulated depreciation
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(185,026
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)
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(180,295
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)
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Net property, plant and equipment
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195,264
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195,653
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Deferred income taxes
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15,298
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16,175
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Goodwill
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37,571
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37,571
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Other intangible assets, net
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18,965
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19,065
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Other assets
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4,155
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3,764
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Total assets
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$
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504,686
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$
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485,568
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Liabilities:
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Current liabilities:
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Accounts payable
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$
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34,460
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$
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27,317
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Senior notes
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15,714
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15,714
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Accrued liabilities:
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Pensions
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246
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202
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Postretirement benefits
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3,474
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3,818
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Officers deferred compensation
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328
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328
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Wages and salaries
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5,685
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4,342
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Taxes, other than income taxes
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1,064
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313
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Interest
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1,079
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1,323
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Profit sharing
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938
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3,567
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Paid progress billings
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630
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1,306
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Other
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6,515
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5,425
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Total current liabilities
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70,133
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63,655
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Noncurrent liabilities:
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Senior notes
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68,571
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68,571
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Pensions
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57,855
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57,231
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Postretirement benefits
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30,244
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29,899
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Officers deferred compensation
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10,225
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10,082
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Other noncurrent liabilities
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4,074
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3,653
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Total liabilities
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241,102
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233,091
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Commitments and contingencies
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Equity:
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Stockholders equity:
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Common stock authorized 100,000,000, issued 15,907,552 shares at each date
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159
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159
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Additional paid-in capital
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153,361
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153,361
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Retained earnings
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180,196
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170,753
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Treasury stock, 200,000 shares of common stock at each date at cost
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(3,250
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)
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(3,250
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)
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Accumulated other comprehensive loss
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(67,457
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)
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(69,102
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)
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Total stockholders equity
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263,009
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251,921
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Noncontrolling interest in equity of subsidiary
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575
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556
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Total equity
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263,584
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252,477
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Total liabilities and equity
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$
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504,686
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$
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485,568
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See accompanying notes to condensed consolidated financial statements.
Page 3 of 14
Ladish Co., Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
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For the Three Months
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Ended March 31,
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(unaudited)
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2011
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2010
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income
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$
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9,461
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$
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5,352
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Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
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Depreciation
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4,392
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3,838
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Amortization of intangibles
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100
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100
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Non-cash deferred compensation
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152
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93
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Deferred income taxes
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788
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1,560
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Gain on disposal of property, plant and equipment
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(6
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)
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(22
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)
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Changes in assets and liabilities:
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Accounts receivable
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(8,904
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)
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(13,811
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)
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Inventories
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(8,162
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)
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6,043
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Other assets
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(847
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)
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1,888
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Accounts payable and accrued liabilities
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5,757
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4,676
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Other liabilities
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3,524
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1,144
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Net cash provided by operating activities
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6,255
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10,861
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Additions to property, plant and equipment
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(2,852
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)
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(1,929
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)
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Proceeds from sale of property, plant and equipment
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10
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48
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|
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Net cash used in investing activities
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(2,842
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)
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(1,881
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)
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Increase (decrease) in outstanding checks
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(1,621
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)
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|
854
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Purchase of treasury stock
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(3,250
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)
|
|
|
|
|
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Net cash used in financing activities
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(1,621
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)
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|
|
(2,396
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)
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Effect of exchange rate changes on cash and cash equivalents
|
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|
113
|
|
|
|
7
|
|
|
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INCREASE IN CASH AND CASH EQUIVALENTS
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1,905
|
|
|
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6,591
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|
|
|
|
|
|
|
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CASH AND CASH EQUIVALENTS, beginning of period
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|
23,335
|
|
|
|
19,917
|
|
|
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CASH AND CASH EQUIVALENTS, end of period
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$
|
25,240
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|
|
$
|
26,508
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|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial statements.
Page 4 of 14
Ladish Co., Inc.
Notes to Condensed Consolidated Financial Statements
(Dollars in Thousands, Except Share Data)
(1)
Basis of Presentation
In the opinion of the Company, the accompanying unaudited condensed consolidated financial
statements contain all adjustments necessary to present fairly its financial position at March 31,
2011 and its results of operations and cash flows for the interim periods presented. All
adjustments are of a normal recurring nature.
The accompanying unaudited consolidated condensed financial statements have been prepared in
accordance with Article 10 of Regulation S-X and therefore do not include all disclosures required
for annual financial statements presented in conformity with accounting principles generally
accepted in the United States of America. The Company has filed a report on Form 10-K which
contains audited consolidated financial statements that include all information and footnotes
necessary for a fair presentation of its financial position at December 31, 2010 and 2009, and the
related consolidated statements of operations, stockholders equity, and cash flows for the years
ended December 31, 2010, 2009 and 2008.
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results will likely differ from those estimates, but
management believes such differences will not be material.
The results of operations for any interim period are not necessarily indicative of the results to
be expected for a full year.
(2)
Inventories
|
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|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2010
|
|
Raw materials
|
|
$
|
17,953
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|
|
$
|
15,259
|
|
Work-in-process and finished goods
|
|
|
94,699
|
|
|
|
87,801
|
|
Less progress payments
|
|
|
(3,589
|
)
|
|
|
(2,367
|
)
|
|
|
|
|
|
|
|
Total inventories
|
|
$
|
109,063
|
|
|
$
|
100,693
|
|
|
|
|
|
|
|
|
(3)
Interest and Income Tax Payments
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
|
Ended March 31,
|
|
|
|
2011
|
|
|
2010
|
|
Interest paid
|
|
$
|
1,603
|
|
|
$
|
1,686
|
|
Income taxes paid, net of refunds
|
|
|
414
|
|
|
|
204
|
|
Page 5 of 14
(4)
Cash and Cash Equivalents
Cash in excess of daily requirements is invested in marketable securities consisting of commercial
paper and money market instruments which mature in three months or less. Such investments are
deemed to be cash equivalents due to the high liquidity and short term duration of such money
market accounts. The Company maintains deposits in financial institutions that consistently exceed
the current FDIC limit of $250. At March 31, 2011, the Companys deposits exceeded the current
FDIC limit by $24,990. The Company has not experienced any losses in such accounts and management
believes the Company is not at significant risk. Outstanding payroll and accounts payable checks
related to certain bank accounts are recorded as accounts payable on the balance sheets. These
checks amounted to $227 and $1,848 as of March 31, 2011 and December 31, 2010, respectively.
(5)
Revenue Recognition
Sales revenue is recognized when the title and risk of loss have passed to the customer, there is
pervasive evidence of an arrangement, delivery has occurred or the services have been provided, the
sales price is determinable and collectibility is reasonably assured. This occurs at the time of
shipment. Net sales include freight out as well as reductions for returns and allowances, and
sales discounts. Progress payments on contracts are recognized as reductions of the related
inventory costs. Progress payments in excess of inventory costs are reflected as a liability. The
Company does not recognize revenue from the disposal of by-products. Any proceeds received from
by-product disposal are considered an offset to cost of sales. The Company recognized by-product
credits of $3,746 and $2,816 in the three-month periods ended March 31, 2011 and 2010,
respectively. The Company generally grants uncollateralized credit to customers on an individual
basis based upon the customers financial condition and credit history. Credit is typically on net
30-day terms and progress payments are frequently required for customers with long production
cycles to minimize credit risk. The Companys allowance for doubtful accounts is based on a review
of sales reports, open deduction reports, trends in collections, historical experience and existing
economic conditions. Bad debt write-offs occur upon notice of insolvency or other evidence of
business closure.
(6)
Income Taxes
The year-to-date income tax provision of $3,425 for 2011 was based on an annualized combined
federal, state and foreign effective rate of 26.6%, which differed from the statutory federal rate
of 35% due primarily to a discreet true-up adjustment of $1,085 to 2010 deferred taxes to reflect a
lower effective state tax rate. In 2010, the Company had a tax provision of $2,886, or 35.0%.
(7)
Pension and Postretirement Benefits
The components of net periodic benefit costs recognized for the three-month periods ended March 31,
2011 and 2010 are presented in the table below.
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Other
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Pension Benefits
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Postretirement Benefits
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2011
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2010
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2011
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2010
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Service cost
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$
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403
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$
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401
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$
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58
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$
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57
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Interest cost
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2,498
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2,731
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364
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413
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Expected return on plan assets
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(3,164
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)
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(3,059
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)
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Amortization of prior service cost
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101
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123
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3
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3
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Amortization of the net loss
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2,380
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2,043
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45
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25
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Net periodic benefit cost
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$
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2,218
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$
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2,239
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$
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470
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$
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498
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Page 6 of 14
The Company previously disclosed in its financial statements for the year ended
December 31, 2010, that it expected to contribute $13,251 to its pension plans
in 2011. As of March 31, 2011, the Company has made $1,369 of cash
contributions to the pension plans versus $873 during the same period in 2010.
The Company currently estimates its total contributions to its pension plans in
2011 will be $13,251.
In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was
enacted. The Company has concluded that certain benefits provided by its postretirement benefit
plan are actuarially equivalent to Medicare Part D under the Act and has filed a refund request
with the Claims Management Services, a division of the Health and Human Services Department. In
the first three months of 2011 and 2010, respectively, the Company received refunds of $38 and $54.
(8)
Debt
On May 16, 2006, the Company sold $40,000 of Series B senior notes (the Series B Notes) in a
private placement to certain institutional investors. The Series B Notes are unsecured and bear
interest at a rate of 6.14% per annum with interest being paid semiannually. The Series B Notes
have a ten-year duration with the principal amortizing equally over the duration after the fourth
year. The first amortization payment of $5,715 was made on May 17, 2010.
On September 2, 2008, the Company sold $50,000 of Series C senior notes (the Series C Notes) in a
private placement to certain institutional investors. The Series C Notes are unsecured and bear
interest at a rate of 6.41% per annum with interest being paid semiannually. The Series C Notes
have a seven-year duration with the principal amortizing equally over the duration after the third
year.
The Companys Series B and Series C Notes contain financial covenants which (a) limit the
incurrence of certain additional debt; (b) require a certain level of consolidated adjusted net
worth; (c) require a minimum fixed charges coverage ratio; and (d) require a limited amount of
funded debt to consolidated cash flow. The covenant on incurrence of additional debt limits funded
debt to 60% of total capitalization. At March 31, 2011, funded debt at Ladish was at 22% of total
capitalization. This covenant also limits priority debt to 20% of adjusted net worth. Ladish had
no priority debt at March 31, 2011. The covenant on adjusted net worth requires a minimum of
$119,173. At March 31, 2011, Ladish had $297,302 of adjusted net worth. The covenant on fixed
charges coverage ratio requires that consolidated cash flow to fixed charges be a minimum of 2.00.
The Companys fixed charges coverage ratio at March 31, 2011 was 12.53. The final covenant on
funded debt to consolidated cash flow allows for a maximum level of 4.00. At March 31, 2011, the
Companys actual level was 0.86. The Note Agreement for the Series B and Series C Notes also
contains customary representations and warranties and events of default.
The Company and a syndicate of lenders entered into a revolving credit facility (the Facility),
which was most recently renewed on April 8, 2010. The Facility consists of a $35,000 unsecured
revolving line of credit which bears interest at a rate of LIBOR plus 2.00% or at a base rate. At
March 31, 2011, there were no borrowings under the Facility and $35,000 was available pursuant to
the terms of the Facility. The Facility had a maturity date of April 7, 2011. The Company elected
to allow the Facility to expire on April 7, 2011 and did not extend the Facility. This decision
was based upon the available cash balance of the Company, the lack of any extraordinary need for
capital by the Company and the impending merger of the Company with Allegheny Technologies
Incorporated (ATI).
The Company and the syndicate of lenders participating in the Facility entered into Amendment No. 2
to the Facility. This Amendment, effective as of April 8, 2010, modified the covenant on minimum
EBITDA by deleting that covenant and substituting in its place a covenant on the ratio of net debt
to EBITDA. The covenant requires a maximum ratio of net debt to EBITDA to be no more than 3.50:1.
As
of March 31, 2011, the Companys ratio was 0.86:1. The Facility also contains a covenant that
requires a minimum fixed charge coverage ratio of 1.7x. As of March 31, 2011, the Company had a
fixed charge coverage ratio of 5.16x.
Page 7 of 14
At March 31, 2011, the Company was in compliance with all covenants in the Series B and Series C
Notes and the Facility.
(9)
Earnings Per Share
There is no difference between basic weighted average shares outstanding and diluted weighted
average shares outstanding in 2011.
(10)
Stockholders Equity
The Company had a Stock Option Plan (the Plan) that covered certain employees. Under the Plan,
incentive stock options for up to 983,333 shares could be granted to employees of the Company, of
which 943,833 options have been granted. These options expire ten years from the grant date.
Options granted vest over two years. As of March 31, 2011, all of the options granted under the
Plan have been exercised. There are no further options under the Plan.
On May 5, 2010, at the 2010 Annual Stockholders Meeting of the Company, the stockholders of the
Company approved the adoption of the Companys 2010 Restricted Stock Unit Plan (the RSU Plan).
Subsequent to that meeting, the Company granted 500,000 restricted stock units under the RSU Plan
to certain employees and directors of the Company.
(11)
Legal Proceedings
From time to time the Company is involved in legal proceedings relating to claims arising out of
its operations in the normal course of business. Although the Company believes that there are no
material legal proceedings pending or threatened against the Company or any of its properties, the
Company has been named as a defendant in a number of asbestos cases. As of the date of this
filing, the Company has nine individual claims pending in Mississippi, one claim pending in
Wisconsin, one claim pending in Missouri, one claim pending in Georgia and five individual claims
pending in Illinois. The Company has never manufactured or processed asbestos. The Companys only
exposure to asbestos involves products the Company purchased from third parties. Given that the
consortium of insurers are handling the defense of the Company, combined with the lack of actual
exposure or prior negative judgments, the Company has not made any provision in its financial
statements for the asbestos litigation.
The Company is also participating in an investigation initiated by U.S. Customs & Border Protection
(Customs) into duty drawback claims filed on behalf of the Company by its former export agent.
The Company is cooperating with Customs in this investigation. Based upon its internal
investigation, the Company believes any errors or omissions with respect to its filings were solely
attributable to its former export agent. The Company and Customs have tentatively agreed to an
Offer in Compromise whereby both parties agree to settle the matter for the amount of approximately
$146 and the repayment of approximately $130 of prior duty drawback claims. The Company has made
adequate provisions in its financial statements for this resolution.
The Company and each of its directors have been named as defendants in a lawsuit in Wisconsin State
Circuit Court and in a separate lawsuit in federal court in the eastern district of Wisconsin.
Each of these cases is brought by a stockholder of the Company alleging a breach of fiduciary duty
in connection with the proposed merger with ATI. Neither case seeks monetary damages. Rather,
each case requests
equitable relief in enjoining the merger. The federal court action was dismissed during the first
quarter of 2011. The Company is defending the state court action and has alerted its insurer.
Page 8 of 14
(12)
New Accounting Pronouncements
None.
The Company is not aware of any subsequent events which would require recognition or disclosure in
the financial statements.
Page 9 of 14
MANAGEMENTS DISCUSSION
AND ANALYSIS OF RESULTS OF OPERATIONS AND
CHANGES IN FINANCIAL POSITION
(Dollars in Thousands, except per share data)
RESULTS OF OPERATIONS
First Quarter 2011 Compared to First Quarter 2010
Net sales for the three months ended March 31, 2011 were $114,120 compared to $98,948 for the same
period in 2010. The amount of net sales for each of the three principal markets served by the
Company were as follows for the periods indicated:
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Three Months Ended March 31,
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2011
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2010
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|
Jet Engine Components
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$
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63,201
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55
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%
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$
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47,880
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|
49
|
%
|
Aerospace Components
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|
|
29,584
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|
26
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%
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37,813
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|
|
38
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%
|
General Industrial Components
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|
|
21,335
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|
19
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%
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|
13,255
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13
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%
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Total
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|
$
|
114,120
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|
|
|
100
|
%
|
|
$
|
98,948
|
|
|
|
100
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%
|
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|
Gross profit for the first quarter of 2011 was 16.5% of net sales in contrast to 13.8% of net sales
in the first quarter of 2010. The increase in gross profit in the first quarter of 2011 is
primarily a result of improved productivity, a better product mix with growth in jet engine
components, and higher by-product credits along with an improved absorption of fixed costs by the
increased level of net sales.
Selling, general and administrative expenses were $4,605 and $4,200 and, as a percentage of net
sales, were 4.0% and 4.2% for the first quarters of 2011 and 2010, respectively. The percentage
decrease in selling, general and administrative expenses was attributed to the higher net sales,
partially offset by higher legal and accounting expenses associated with the proposed merger with
ATI.
Interest expense for the first quarter of 2011 was $1,343 in contrast to $1,475 for the same period
in 2010. The lower interest expense in 2011 is due primarily to the reduced level of senior notes.
During the first quarter of 2011, the Companys revolving line of credit had an interest rate
equal to the LIBOR rate plus 2.00% or at a base rate. Series B and Series C senior notes bore
interest at the rate of 6.14% and 6.41%, respectively. The Company had no borrowings under the
revolving line of credit facility and had $84,285 of senior notes outstanding at the end of the
first quarter of 2011.
Pretax income for the first quarter of 2011 was $12,886 in contrast to $8,238 for the same period
in 2010. The increase in pretax income was due to the incremental sales increase, higher
by-product credits, and reduced utility costs.
The 2011 first quarter income tax provision of $3,425 is based on an effective tax rate of 26.6%,
which differed from the statutory federal rate of 35% due to a discreet true-up adjustment of
$1,085 to 2010 deferred taxes to reflect a lower effective state income tax rate. The 2010 tax
provision of $2,886 reflects a 35% effective tax rate.
The Companys net income for the first quarter of 2011 was $9,442, a $4,094, or 77%, increase from
$5,348 for the same quarter of 2010. Profitability increased from the prior period due to the
increased sales levels, improved productivity, higher by-product credits and a lower effective tax
rate. The
Companys contract backlog at March 31, 2011 was $602,916 in comparison to backlogs of $503,298 and
$555,917 at March 31, 2010 and December 31, 2010, respectively.
Page 10 of 14
Liquidity and Capital Resources
The Companys cash position as of March 31, 2011 was $1,905 more than it was at December 31, 2010.
For the first three months of 2011, the Company generated $6,255 of cash from operating activities
in contrast to $10,861 of cash from operations in the same period of 2010. The Company expended
$2,852 and $1,929 of cash on capital expenditures in the first three months of 2011 and 2010,
respectively. The Company expects capital expenditures for the remainder of 2011 will be
approximately $20,000.
On May 16, 2006, the Company sold $40,000 of Series B Notes in a private placement to certain
institutional investors. The Series B Notes are unsecured and bear interest at a rate of 6.14% per
annum with interest being paid semiannually. The Series B Notes have a ten-year duration with the
principal amortizing equally over the duration after the fourth year. The first amortization
payment of $5,715 was made on May 17, 2010.
On September 2, 2008, the Company sold $50,000 of Series C Notes in a private placement to certain
institutional investors. The Series C Notes are unsecured and bear interest at a rate of 6.41% per
annum with interest being paid semiannually. The Series C Notes have a seven-year duration with
the principal amortizing equally over the duration after the third year.
The Companys Series B and Series C Notes contain financial covenants which (a) limit the
incurrence of certain additional debt; (b) require a certain level of consolidated adjusted net
worth; (c) require a minimum fixed charges coverage ratio; and (d) require a limited amount of
funded debt to consolidated cash flow. The covenant on incurrence of additional debt limits funded
debt to 60% of total capitalization. At March 31, 2011, funded debt at Ladish was at 22% of total
capitalization. This covenant also limits priority debt to 20% of adjusted net worth. Ladish had
no priority debt at March 31, 2011. The covenant on adjusted net worth requires a minimum of
$119,173. At March 31, 2011, Ladish had $297,302 of adjusted net worth. The covenant on fixed
charges coverage ratio requires that consolidated cash flow to fixed charges be a minimum of 2.00.
The Companys fixed charges coverage ratio at March 31, 2011 was 12.53. The final covenant on
funded debt to consolidated cash flow allows for a maximum level of 4.00. At March 31, 2011, the
Companys actual level was 0.86. The Note Agreement for the Series B and Series C Notes also
contains customary representations and warranties and events of default.
The Company and a syndicate of lenders entered into a revolving credit facility which was most
recently renewed on April 8, 2010. The Facility consists of a $35,000 unsecured revolving line of
credit which bears interest at a rate of LIBOR plus 2.00% or at a base rate. At March 31, 2011,
there were no borrowings under the Facility and $35,000 was available pursuant to the terms of the
Facility. The Facility had a maturity date of April 7, 2011. The Company elected to allow the
Facility to expire on April 7, 2011 and did not extend the Facility. This decision was based upon
the available cash balance of the Company, the lack of any extraordinary need for capital by the
Company and the impending merger of the Company with ATI.
The Company and the syndicate of lenders participating in the Facility entered into Amendment No. 2
to the Facility. This Amendment, effective as of April 8, 2010, modified the covenant on minimum
EBITDA by deleting that covenant and substituting in its place a covenant on the ratio of net debt
to EBITDA. The covenant requires a maximum ratio of net debt to EBITDA to be no more than 3.50:1.
As of March 31, 2011, the Companys ratio was 0.86:1. The Facility also contains a covenant that
requires a
minimum fixed charge coverage ratio of 1.7x. As of March 31, 2011, the Company had a fixed charge
coverage ratio of 5.16x.
Page 11 of 14
At March 31, 2011, the Company was in compliance with all covenants in the Series B and Series C
Notes and the Facility.
As of March 31, 2011 and December 31, 2010, the Company had net deferred tax assets of $20,254 and
$21,018, respectively. Realization of net deferred tax assets is dependent upon the Company
generating sufficient taxable income in future periods. In determining that realization of net
deferred tax assets was more likely than not, the Company has given consideration to a number of
factors including its recent earnings history, expectations for earnings in the future, the timing
of reversal of temporary differences and tax planning strategies available to the Company. If, in
the future, the Company determines that it is no longer more likely than not that net deferred tax
assets will be realized, a valuation allowance will be established against all or part of the net
deferred tax assets with an offsetting charge to the income tax provision.
The Companys market capitalization at March 31, 2011 was approximately $858,418. The increase in
the trading price of the Companys common stock from November 16, 2010 is believed to be related to
the pending merger with ATI.
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|
|
Item 3.
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|
Quantitative and Qualitative Disclosures about Market Risk
|
The Company believes that its exposure to market risk related to changes in foreign currency
exchange rates and trade accounts receivable is immaterial as the vast majority of the Companys
sales are made in U.S. dollars. The Company does not consider itself subject to the market risks
addressed by Item 305 of Regulation S-K.
Any statements contained herein that are not historical facts are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and
uncertainties. These forward-looking statements include expectations, beliefs, plans, objectives,
future financial performance, estimates, projections, goals and forecasts. Potential factors which
could cause the Companys actual results of operations to differ materially from those in the
forward-looking statements include:
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|
Market conditions and demand for the Companys products
|
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|
Competition
|
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|
Interest rates and capital costs
|
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|
Technologies
|
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|
Unstable governments and business conditions in emerging economies
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|
Raw material and energy prices
|
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|
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|
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|
|
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|
Legal, regulatory and environmental issues
|
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|
|
Taxes
|
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|
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|
|
Health care costs
|
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|
Any forward-looking statement speaks only as of the date on which such statement is made. The
Company undertakes no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made.
Page 12 of 14
|
|
|
Item 4.
|
|
Controls and Procedures
|
Under the direction of the principal executive officer and principal financial officer, the Company
has evaluated the effectiveness of its disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2011. Based on that evaluation, the chief
executive officer and the chief financial officer have concluded that the Companys disclosure
controls and procedures were effective.
There were no significant changes in the Companys internal controls over financial reporting or in
other factors that could significantly affect these controls during the quarter ended March 31,
2011, including any corrective actions with regard to significant deficiencies and material
weaknesses.
Page 13 of 14
PART II OTHER INFORMATION
|
|
|
Item 5.
|
|
Other Information
|
None.
Exhibit 31.1 is the written statement of the chief executive officer of the Company certifying this
Form 10-Q complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934.
Exhibit 31.2 is the written statement of the chief financial officer of the Company certifying this
Form 10-Q complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934.
Exhibit 32.1 is the written statement of the chief executive officer and chief financial officer of
the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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|
|
LADISH CO., INC.
|
|
|
By:
|
/s/ Gary J. Vroman
|
|
|
|
Gary J. Vroman
|
|
|
|
President & Chief Executive Officer
|
|
|
|
|
|
By:
|
/s/ Wayne E. Larsen
|
|
|
|
Wayne E. Larsen
|
|
|
|
Vice President Law/Finance
& Secretary
|
|
Date: May 5, 2011
Page 14 of 14
Ladish Co., Inc. (MM) (NASDAQ:LDSH)
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