![](/cdn/assets/images/search/clock.png)
We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
Ladish Co., Inc. (MM) | NASDAQ:LDSH | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 56.17 | 0 | 01:00:00 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Wisconsin
( State of Incorporation ) |
31-1145953
( I.R.S. Employer Identification No. ) |
|
5481 S. Packard Avenue
Cudahy, Wisconsin ( Address of principal executive offices ) |
53110
( Zip Code ) |
Title of each class | Name of each exchange on which registered | |
Common stock, $0.01 par value | Nasdaq |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
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
|
Part of Form 10-K into Which | ||||
Documents* | Portions of Documents are Incorporated | |||
Proxy Statement for 2010
Annual Meeting of Stockholders
|
Part III, Item 10. | Directors and Executive Officers of the Registrant | ||
|
||||
|
Part III, Item 11. | Executive Compensation | ||
|
||||
|
Part III, Item 12. | Security Ownership of Certain Beneficial Owners and Management | ||
|
||||
|
Part III, Item 13. | Certain Relationships and Related Transactions | ||
|
||||
|
Part III, Item 14. | Principal Accountant Fees and Services |
* |
Only the portions of documents specifically listed herein are to be deemed incorporated by
reference.
|
Years Ended December 31, | ||||||||||||||||||||||||
2007 | 2008 | 2009 | ||||||||||||||||||||||
( Dollars in millions ) | ||||||||||||||||||||||||
Jet Engine Components
|
$ | 238 | 56 | % | $ | 239 | 51 | % | $ | 193 | 55 | % | ||||||||||||
Aerospace Components
|
102 | 24 | % | 124 | 26 | % | 114 | 33 | % | |||||||||||||||
General Industrial Components
|
85 | 20 | % | 107 | 23 | % | 43 | 12 | % | |||||||||||||||
|
||||||||||||||||||||||||
Total
|
$ | 425 | 100 | % | $ | 470 | 100 | % | $ | 350 | 100 | % | ||||||||||||
|
2
3
4
5
6
|
Market conditions and demand for the Companys products
|
|
|
Interest rates and capital costs
|
|
|
Unstable governments and business conditions in emerging
economies
|
|
|
Health care costs
|
|
|
Legal, regulatory and environmental issues
|
|
|
Competition
|
|
|
Technologies
|
|
|
Raw material and energy prices
|
|
|
Taxes
|
Number of Employees | ||||||
Represented by Collective | ||||||
Union | Expiration Date | Bargaining Agreement | ||||
International Association of Machinists & Aerospace Workers, Local 1862
|
February 26, 2012 | 193 | ||||
|
||||||
International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers & Helpers, Subordinate Lodge 1509
|
October 1, 2012 | 145 | ||||
|
||||||
International Federation of Professional & Technical Engineers,
Technical Group, Local 92
|
August 19, 2012 | 92 | ||||
|
||||||
International Association of Machinists & Aerospace Workers, Die
Sinkers, Local 140
|
March 26, 2012 | 47 | ||||
|
||||||
Office
& Professional Employees International Union, Clerical Group,
Local 35 |
July 15, 2013 | 16 | ||||
|
||||||
International Brotherhood of Electrical Workers, Local 662
|
November 11, 2012 | 20 | ||||
|
||||||
Service Employees International, Local 1
|
April 22, 2012 | 4 |
7
Name | Age | Position | ||||
Gary J. Vroman
|
50 | President & CEO and Director | ||||
Wayne E. Larsen
|
55 | Vice President Law/Finance & Secretary and Director | ||||
Lawrence C. Hammond
|
62 | Vice President, Human Resources | ||||
Randy B. Turner
|
60 | President Pacific Cast Technologies, Inc. (PCT) | ||||
John Delaney
|
60 |
President Stowe Machine Co., Inc. (Stowe) &
Aerex LLC (Aerex) |
||||
Robert C. Miller
|
59 | President Valley Machining, Inc. (Valley) | ||||
Jozef Burdzy
|
58 |
President Zaklad Kuznia Matrycowa Sp. z o.o. (ZKM) &
Zaklad Obrobki i Procesow Specjalnych Sp. z o.o. (ZOPS) |
||||
Shannon J. S. Ko
|
67 | President Chen-Tech Industries, Inc. (Chen-Tech) |
8
9
10
|
currency fluctuations;
|
|
|
general economic and political uncertainties and potential for social unrest in international markets;
|
|
|
limitations on our ability to enforce legal rights and remedies;
|
|
|
changes in trade policies;
|
|
|
tariff regulations;
|
|
|
difficulties in obtaining export and import licenses; and
|
|
|
the risk of government financed competition.
|
11
Approximate Acreage | Approximate Square Footage | |||||||
Forging Cudahy, Wisconsin
|
140.0 | 1,650,000 | ||||||
Stowe Windsor, Connecticut
|
8.2 | 40,000 | ||||||
PCT Albany, Oregon
|
14.0 | 149,000 | ||||||
Valley Coon Valley, Wisconsin
|
3.0 | 40,000 | ||||||
ZKM Stalowa Wola, Poland
|
70.0 | 820,000 | ||||||
Chen-Tech Irvine, California
|
2.0 | 55,000 | ||||||
Aerex Windsor, Connecticut
|
1.0 | 15,000 |
12
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
December 31, 2007 | December 31, 2008 | December 31, 2009 | ||||||||||||||||||||||
High | Low | High | Low | High | Low | |||||||||||||||||||
First quarter
|
$ | 44.40 | $ | 35.08 | $ | 41.94 | $ | 32.90 | $ | 15.34 | $ | 5.36 | ||||||||||||
Second quarter
|
$ | 44.39 | $ | 37.22 | $ | 37.35 | $ | 20.59 | $ | 15.04 | $ | 7.28 | ||||||||||||
Third quarter
|
$ | 56.21 | $ | 40.96 | $ | 27.56 | $ | 18.75 | $ | 16.48 | $ | 10.88 | ||||||||||||
Fourth quarter
|
$ | 59.30 | $ | 40.03 | $ | 19.74 | $ | 11.47 | $ | 16.03 | $ | 11.79 |
Dec-31-04 | Dec-31-05 | Dec-31-06 | Dec-31-07 | Dec-31-08 | Dec-31-09 | |||||||||||||||||||
Ladish
|
11.60 | 22.35 | 37.08 | 43.19 | 13.85 | 15.05 | ||||||||||||||||||
Russell 2000
|
651.57 | 673.22 | 796.89 | 765.90 | 499.45 | 625.39 | ||||||||||||||||||
Industry Peers
|
26.29 | 67.53 | 73.05 | 86.93 | 24.94 | 45.51 |
13
Year Ended December 31, | ||||||||||||||||||||
(Dollars in millions, except earnings per share) | ||||||||||||||||||||
INCOME STATEMENT DATA | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||
Net sales
|
$ | 266.841 | $ | 369.290 | $ | 424.631 | $ | 469.466 | $ | 349.832 | ||||||||||
Income from operations
|
23.847 | 48.960 | 52.319 | 39.538 | 9.248 | |||||||||||||||
Interest expense
|
2.072 | 3.548 | 2.528 | 1.971 | 5.050 | |||||||||||||||
Net income
|
13.715 | 28.481 | 32.288 | 32.205 | 6.094 | |||||||||||||||
Basic earnings per share
|
1.00 | 2.01 | 2.22 | 2.15 | 0.38 | |||||||||||||||
Diluted earnings per share
|
0.98 | 2.00 | 2.22 | 2.15 | 0.38 | |||||||||||||||
Dividends paid
|
| | | | | |||||||||||||||
Shares used to compute earnings per share:
|
||||||||||||||||||||
Basic
|
13,781,586 | 14,136,946 | 14,516,120 | 14,998,437 | 15,901,833 | |||||||||||||||
Diluted
|
13,931,539 | 14,205,641 | 14,550,258 | 15,000,844 | 15,902,246 |
December 31, | ||||||||||||||||||||
BALANCE SHEET DATA | 2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||
Total assets
|
$ | 296.556 | $ | 329.060 | $ | 381.833 | $ | 509.466 | $ | 469.514 | ||||||||||
Net working capital
|
71.116 | 123.764 | 130.855 | 138.910 | 137.515 | |||||||||||||||
Total debt
|
45.000 | 54.100 | 53.500 | 118.900 | 90.000 | |||||||||||||||
Stockholders equity
|
117.469 | 152.670 | 201.554 | 223.411 | 225.582 |
14
(Dollars in millions) | 2008 | 2009 | ||||||
Interest expensed
|
$ | 1.971 | $ | 5.050 | ||||
Interest capitalized
|
2.418 | 0.953 | ||||||
|
||||||||
Total
|
$ | 4.389 | $ | 6.003 | ||||
|
15
(Dollars in millions) | 2007 | 2008 | ||||||
Interest expensed
|
$ | 2.528 | $ | 1.971 | ||||
Interest capitalized
|
0.795 | 2.418 | ||||||
|
||||||||
Total
|
$ | 3.323 | $ | 4.389 | ||||
|
16
17
Less Than | More Than | |||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||
Senior Notes
(1)
|
$ | 5.715 | $ | 31.430 | $ | 31.430 | $ | 21.425 | ||||||||
Bank Facility
|
| | | | ||||||||||||
Operating Leases
|
.974 | 1.592 | 1.239 | 1.848 | ||||||||||||
Purchase Obligations
(2)
|
61.438 | 101.602 | | | ||||||||||||
Other Long-Term Obligations:
|
||||||||||||||||
Pensions
(3)
|
7.456 | 26.806 | | | ||||||||||||
Postretirement Benefits
(4)
|
3.464 | 6.737 | 6.262 | 13.137 |
(1) |
The Company expects to fund the payment of long-term debt through the
use of cash on hand, cash generated from operations, the reduction of working capital
and, if necessary, through access to the Facility.
|
|
(2) |
The purchase obligations relate primarily to raw material purchase orders
necessary to fulfill the Companys production backlog for the Companys products
along with commitments for energy supplies also necessary to fulfill the Companys
production backlog. There are no net settlement provisions under any of these
purchase orders nor is there any market for the underlying materials.
|
|
(3) |
The Companys estimated cash pension contribution is based upon the
calculation of the Companys independent actuary for 2010. There are no estimates
beyond 2012.
|
|
(4) |
The Companys cash expenditures for Postretirement Benefits have only been
projected out through the year 2019.
|
18
Projected Plan Benefit Obligation as of December 31, 2009 | ||||
(Dollars in Millions) | ||||
At 4.91% discount rate
|
$ | 225.019 | ||
At 5.16% discount rate
|
$ | 219.756 | ||
At 5.41% discount rate
|
$ | 214.709 |
19
Net Periodic Benefit for Year Ending December 31, 2010 | ||||
(Dollars in Millions) | ||||
7.80% expected return
|
$ | 9.334 | ||
8.05% expected return
|
$ | 8.954 | ||
8.30% expected return
|
$ | 8.573 |
Level 1 |
Quoted prices in active markets for identical assets or liabilities.
|
||
Level 2 |
Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities.
|
||
Level 3 |
Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities.
|
Plans Assets | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
$ |
142.967
|
$ | 142.967 | | | $ | 142.967 |
20
21
22
23
24
Name | Age | |||
Lawrence W. Bianchi
|
68 | |||
James C. Hill
|
61 | |||
Leon A. Kranz
|
70 | |||
Wayne E. Larsen
|
55 | |||
J. Robert Peart
|
47 | |||
John W. Splude
|
64 | |||
Gary J. Vroman
|
50 |
25
26
LADISH CO., INC. | ||||||
|
||||||
|
By: |
/s/ Wayne E. Larsen
|
||||
March 4, 2010
|
Vice President Law/Finance & Secretary |
Signature | Title | Date | ||
|
||||
/s/ Gary J. Vroman
|
Director, President and Chief Executive Officer (Principal Executive Officer) | March 2, 2010 | ||
|
||||
/s/ Wayne E. Larsen
|
Director, Vice President Law/Finance & Secretary (Principal Financial and Accounting Officer) | March 2, 2010 | ||
|
||||
/s/ Lawrence W. Bianchi
|
Director | March 2, 2010 | ||
|
||||
/s/ James C. Hill
|
Director | March 2, 2010 | ||
|
||||
/s/ Leon A. Kranz
|
Director | March 1, 2010 | ||
|
||||
/s/ J. Robert Peart
|
Director | March 3, 2010 | ||
|
||||
/s/ John W. Splude
|
Director | March 3, 2010 |
27
F-3 | ||||
|
||||
F-4 | ||||
|
||||
F-6 | ||||
|
||||
F-7 | ||||
|
||||
F-8 | ||||
|
||||
F-9 | ||||
|
F-1
F-2
F-3
2008 | 2009 | |||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and Cash Equivalents
|
$ | 4,903 | $ | 19,917 | ||||
Accounts Receivable, Less Allowance of $84
and $75
|
78,673 | 59,382 | ||||||
Inventories
|
129,307 | 92,697 | ||||||
Deferred Income Taxes
|
6,780 | 5,144 | ||||||
Prepaid Expenses and Other Current Assets
|
10,469 | 6,118 | ||||||
|
||||||||
Total Current Assets
|
230,132 | 183,258 | ||||||
|
||||||||
Property, Plant and Equipment:
|
||||||||
Land and Improvements
|
6,414 | 6,905 | ||||||
Buildings and Improvements
|
54,652 | 60,416 | ||||||
Machinery and Equipment
|
229,310 | 240,352 | ||||||
Construction in Progress
|
62,244 | 58,451 | ||||||
|
||||||||
|
352,620 | 366,124 | ||||||
Less Accumulated Depreciation
|
(153,351 | ) | (167,688 | ) | ||||
|
||||||||
|
||||||||
Net Property, Plant and Equipment
|
199,269 | 198,436 | ||||||
|
||||||||
Deferred Income Taxes
|
19,880 | 26,522 | ||||||
Goodwill
|
37,113 | 37,571 | ||||||
Other Intangible Assets, Net
|
20,011 | 19,465 | ||||||
Other Assets
|
3,061 | 4,262 | ||||||
|
||||||||
Total Assets
|
$ | 509,466 | $ | 469,514 | ||||
|
F-4
2008 | 2009 | |||||||
Liabilities and Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts Payable
|
$ | 37,748 | $ | 23,613 | ||||
Senior Bank Debt
|
28,900 | | ||||||
Senior Notes
|
| 5,714 | ||||||
Accrued Liabilities:
|
||||||||
Pensions
|
341 | 259 | ||||||
Postretirement Benefits
|
3,540 | 3,464 | ||||||
Officers Deferred Compensation
|
31 | 155 | ||||||
Wages and Salaries
|
4,911 | 3,314 | ||||||
Taxes, Other Than Income Taxes
|
304 | 289 | ||||||
Interest
|
1,425 | 1,355 | ||||||
Profit Sharing
|
1,898 | 611 | ||||||
Paid Progress Billings
|
4,683 | 2,428 | ||||||
Other
|
7,441 | 4,541 | ||||||
|
||||||||
Total Current Liabilities
|
91,222 | 45,743 | ||||||
|
||||||||
Noncurrent Liabilities:
|
||||||||
Senior Notes
|
90,000 | 84,286 | ||||||
Pensions
|
63,661 | 69,653 | ||||||
Postretirement Benefits
|
29,716 | 30,215 | ||||||
Officers Deferred Compensation
|
6,792 | 9,276 | ||||||
Other Noncurrent Liabilities
|
3,998 | 4,220 | ||||||
|
||||||||
Total Liabilities
|
285,389 | 243,393 | ||||||
|
||||||||
Stockholders Equity:
|
||||||||
Common Stock-Authorized 100,000,000, Issued and
Outstanding
15,907,552 Shares at Each Date of $.01 Par Value
|
159 | 159 | ||||||
Additional Paid-In Capital
|
153,285 | 153,292 | ||||||
Retained Earnings
|
139,284 | 145,378 | ||||||
Treasury Stock, 6,336 and 4,548 Shares, Respectively, of
Common Stock at Cost
|
(46 | ) | (33 | ) | ||||
Accumulated Other Comprehensive Loss
|
(69,271 | ) | (73,214 | ) | ||||
|
||||||||
Total Stockholders Equity
|
223,411 | 225,582 | ||||||
Noncontrolling Interest in Equity of Subsidiary
|
666 | 539 | ||||||
|
||||||||
Total Equity
|
224,077 | 226,121 | ||||||
|
||||||||
Total Liabilities and Equity
|
$ | 509,466 | $ | 469,514 | ||||
|
F-5
Years Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
|
||||||||||||
Net Sales
|
$ | 424,631 | $ | 469,466 | $ | 349,832 | ||||||
|
||||||||||||
Cost of Sales
|
355,628 | 410,163 | 322,745 | |||||||||
|
||||||||||||
|
||||||||||||
Gross Profit
|
69,003 | 59,303 | 27,087 | |||||||||
|
||||||||||||
Selling, General and Administrative Expenses
|
16,684 | 19,765 | 17,839 | |||||||||
|
||||||||||||
|
||||||||||||
Income from Operations
|
52,319 | 39,538 | 9,248 | |||||||||
|
||||||||||||
Other (Income) Expense:
|
||||||||||||
Interest Expense
|
2,528 | 1,971 | 5,050 | |||||||||
Other, Net
|
(363 | ) | (683 | ) | 1,062 | |||||||
|
||||||||||||
|
||||||||||||
Income Before Income Tax Provision
|
50,154 | 38,250 | 3,136 | |||||||||
|
||||||||||||
Income Tax Provision (Benefit)
|
17,798 | 5,876 | (2,894 | ) | ||||||||
|
||||||||||||
|
||||||||||||
Net Income
|
32,356 | 32,374 | 6,030 | |||||||||
|
||||||||||||
Noncontrolling Interest in Net Earnings (Loss) of Subsidiary
|
68 | 169 | (64 | ) | ||||||||
|
||||||||||||
|
||||||||||||
Net Income Attributable to the Controlling Interest
|
$ | 32,288 | $ | 32,205 | $ | 6,094 | ||||||
|
||||||||||||
|
||||||||||||
Earnings Per Share:
|
||||||||||||
Basic
|
$ | 2.22 | $ | 2.15 | $ | 0.38 | ||||||
Diluted
|
$ | 2.22 | $ | 2.15 | $ | 0.38 |
F-6
Non- | ||||||||||||||||||||||||||||||||
Accumulated | Controlling | |||||||||||||||||||||||||||||||
Common Stock | Additional | Treasury | Other | Interest in | ||||||||||||||||||||||||||||
Par | Paid-in | Retained | Stock, | Comprehensive | Equity of | |||||||||||||||||||||||||||
Shares | Value | Capital | Earnings | at Cost | Income (Loss) | Subsidiary | Total | |||||||||||||||||||||||||
Balance, December 31, 2006
|
14,605,591 | $ | 146 | $ | 115,688 | $ | 74,791 | $ | (2,962 | ) | $ | (34,993 | ) | $ | 635 | $ | 153,305 | |||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive Net Income (Loss):
|
||||||||||||||||||||||||||||||||
Net Income
|
| | | 32,288 | | | 68 | 32,356 | ||||||||||||||||||||||||
Other Comprehensive Income:
|
||||||||||||||||||||||||||||||||
Foreign Currency Translation Adjustments
|
| | | | | 6,139 | | 6,139 | ||||||||||||||||||||||||
Adjustment for Pension & Post-retirement Plans, Net of
Tax
|
| | | | | (1,454 | ) | | (1,454 | ) | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive Income
|
37,041 | |||||||||||||||||||||||||||||||
Purchase of Subsidiary Shares
|
| | | | | | (206 | ) | (206 | ) | ||||||||||||||||||||||
Issuance of Common Stock
|
| | 8,972 | | 2,441 | | | 11,413 | ||||||||||||||||||||||||
Tax Effect Related to Stock Options
|
| | 498 | | | | | 498 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance, December 31, 2007
|
14,605,591 | $ | 146 | $ | 125,158 | $ | 107,079 | $ | (521 | ) | $ | (30,308 | ) | $ | 497 | $ | 202,051 | |||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive Net Income (Loss):
|
||||||||||||||||||||||||||||||||
Net Income
|
| | | 32,205 | | | 169 | 32,374 | ||||||||||||||||||||||||
Other Comprehensive Income:
|
||||||||||||||||||||||||||||||||
Foreign Currency Translation Adjustments
|
| | | | | (7,519 | ) | | (7,519 | ) | ||||||||||||||||||||||
Adjustment for Unrealized Investment Losses, Net of Tax
|
| | | | | (473 | ) | | (473 | ) | ||||||||||||||||||||||
Adjustment for Pension & Post-retirement Plans, Net of
Tax
|
| | | | | (30,971 | ) | | (30,971 | ) | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive Loss
|
(6,589 | ) | ||||||||||||||||||||||||||||||
Issuance of Common Stock
|
| | 655 | | 475 | | | 1,130 | ||||||||||||||||||||||||
Acquisition of Aerex
|
45,750 | 1 | 940 | | | | | 941 | ||||||||||||||||||||||||
Acquisition of Chen-Tech
|
1,256,211 | 12 | 31,808 | | | | | 31,820 | ||||||||||||||||||||||||
Pre-reorganization Deferred Tax Basis Adjustment
|
| | (5,498 | ) | | | | | (5,498 | ) | ||||||||||||||||||||||
Tax Effect Related to Stock Options
|
| | 222 | | | | | 222 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance, December 31, 2008
|
15,907,552 | $ | 159 | $ | 153,285 | $ | 139,284 | $ | (46 | ) | $ | (69,271 | ) | $ | 666 | $ | 224,077 | |||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive Net Income (Loss):
|
||||||||||||||||||||||||||||||||
Net Income
|
| | | 6,094 | | | (64 | ) | 6,030 | |||||||||||||||||||||||
Other Comprehensive Income:
|
||||||||||||||||||||||||||||||||
Foreign Currency Translation Adjustments
|
| | | | | 1,175 | | 1,175 | ||||||||||||||||||||||||
Adjustment for Unrealized Investment Gains, Net of Tax
|
| | | | | 316 | | 316 | ||||||||||||||||||||||||
Adjustment for Pension & Post-retirement Plans, Net of
Tax
|
| | | | | (5,434 | ) | | (5,434 | ) | ||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive Income
|
2,087 | |||||||||||||||||||||||||||||||
Purchase of Subsidiary Shares
|
| | | | | | (63 | ) | (63 | ) | ||||||||||||||||||||||
Issuance of Common Stock
|
| | 2 | | 13 | | | 15 | ||||||||||||||||||||||||
Tax Effect Related to Stock Options
|
| | 5 | | | | | 5 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Balance, December 31, 2009
|
15,907,552 | $ | 159 | $ | 153,292 | $ | 145,378 | $ | (33 | ) | $ | (73,214 | ) | $ | 539 | $ | 226,121 | |||||||||||||||
|
F-7
Years Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Cash Flows from Operating Activities:
|
||||||||||||
Net Income Attributable to the Controlling Interest
|
$ | 32,288 | $ | 32,205 | $ | 6,094 | ||||||
Adjustments to Reconcile Net Income to Net Cash Provided by
(Used in) Operating Activities:
|
||||||||||||
Depreciation
|
11,134 | 13,320 | 15,339 | |||||||||
Amortization of Intangibles
|
| | 546 | |||||||||
Non-Cash Deferred Compensation
|
| (788 | ) | 527 | ||||||||
Deferred Income Taxes
|
4,957 | 1,650 | (1,017 | ) | ||||||||
Noncontrolling Interest in Net Earnings (Loss) of
Subsidiary
|
68 | 169 | (64 | ) | ||||||||
Gain on Purchase of Stock Noncontrolling Interest
|
| | (23 | ) | ||||||||
Loss (Gain) on Disposal of Property, Plant and Equipment
|
(443 | ) | (137 | ) | 308 | |||||||
Changes in Assets and Liabilities, Net of Acquired Businesses:
|
||||||||||||
Accounts Receivable
|
(4,161 | ) | 2,595 | 19,405 | ||||||||
Inventories
|
(10,647 | ) | 8,969 | 36,666 | ||||||||
Other Assets
|
(4,813 | ) | 3,759 | 2,246 | ||||||||
Accounts Payable and Accrued Liabilities
|
7,432 | (11,607 | ) | (23,070 | ) | |||||||
Other Liabilities
|
3,953 | (21,450 | ) | 1,331 | ||||||||
|
||||||||||||
Net Cash Provided by Operating Activities
|
39,768 | 28,685 | 58,288 | |||||||||
|
||||||||||||
|
||||||||||||
Cash Flows from Investing Activities:
|
||||||||||||
Additions to Property, Plant and Equipment
|
(38,096 | ) | (49,751 | ) | (13,883 | ) | ||||||
Proceeds from Sale of Property, Plant and Equipment
|
703 | 468 | 88 | |||||||||
Purchase of ZKM Stock Noncontrolling Interest
|
(215 | ) | | (37 | ) | |||||||
Cash Paid for Acquired Companies, Net of Cash Acquired
|
| (40,271 | ) | | ||||||||
Proceeds from Aerex Acquisition Working Capital Adjustment
|
| | 1,200 | |||||||||
|
||||||||||||
Net Cash Used in Investing Activities
|
(37,608 | ) | (89,554 | ) | (12,632 | ) | ||||||
|
||||||||||||
|
||||||||||||
Cash Flows from Financing Activities:
|
||||||||||||
Borrowings from (Repayment of) Facility
|
5,400 | 21,400 | (28,900 | ) | ||||||||
Issuance of Senior Notes
|
| 50,000 | | |||||||||
Repayment of Senior Notes
|
(6,000 | ) | (6,000 | ) | | |||||||
Repayment of Notes Payable
|
| (4,610 | ) | | ||||||||
Retirement of Capital Leases
|
| | (1,660 | ) | ||||||||
Deferred Financing Costs
|
| (299 | ) | | ||||||||
Issuance of Common Stock
|
289 | 215 | 15 | |||||||||
|
||||||||||||
Net Cash (Used in) Provided by Financing
Activities
|
(311 | ) | 60,706 | (30,545 | ) | |||||||
|
||||||||||||
|
||||||||||||
Effect of Exchange Rate Change on Cash and Cash Equivalents
|
672 | (886 | ) | (97 | ) | |||||||
|
||||||||||||
Increase (Decrease) in Cash and Cash Equivalents
|
2,521 | (1,049 | ) | 15,014 | ||||||||
|
||||||||||||
Cash and Cash Equivalents, Beginning of Period
|
3,431 | 5,952 | 4,903 | |||||||||
|
||||||||||||
|
||||||||||||
Cash and Cash Equivalents, End of Period
|
$ | 5,952 | $ | 4,903 | $ | 19,917 | ||||||
|
||||||||||||
|
||||||||||||
Supplemental Cash Flow Information:
|
||||||||||||
Income Taxes Paid (Refunded)
|
$ | 12,559 | $ | 8,417 | $ | (3,255 | ) | |||||
Interest Paid
|
$ | 3,467 | $ | 3,734 | $ | 6,008 | ||||||
|
||||||||||||
Non-Cash Supplemental Information:
|
||||||||||||
Issuance of Stock for Acquisitions
|
| $ | 32,761 | |
F-8
(1) |
Business Information
|
Ladish Co., Inc. (the Company), headquartered in Cudahy, Wisconsin, engineers, produces and
markets high-strength, high technology forged and cast metal components for a wide variety of
load-bearing and fatigue-resisting applications in the jet engine, aerospace and industrial
markets, for both domestic and international customers. The Companys manufacturing site in
Irvine, California produces forgings for commercial and military jet engine applications. The
Companys manufacturing site in Albany, Oregon produces cast metal components, the Companys
manufacturing site in Stalowa Wola, Poland produces forgings for the industrial and aerospace
markets and its sites in Windsor, Connecticut and western Wisconsin are finished machining
operations. The Company operates as a single segment. Net sales to jet engine, aerospace and
industrial customers were approximately 56%, 24% and 20% in 2007, 51%, 26% and 23% in 2008 and
55%, 33% and 12% in 2009, respectively, of total company net sales.
|
In 2007, 2008 and 2009, the Company had three customers that collectively accounted for
approximately 50%, 47% and 56%, respectively, of total Company net sales. Net sales to
Rolls-Royce were 28%, 23% and 26%, United Technologies 15%, 15% and 19% and General Electric
7%, 9% and 11% of total Company net sales for the respective years.
|
U.S. exports accounted for approximately 49%, 46% and 46% of total Company net sales in 2007,
2008 and 2009, respectively, with exports to England constituting approximately 29%, 25% and
26%, respectively, of total Company net sales.
|
As of December 31, 2009, approximately 45% of the Companys domestic employees were represented
by one of seven collective bargaining units. New collective bargaining agreements were
negotiated with six of these units during 2006 and negotiations with one unit were successfully
concluded in 2007. Internationally, the Company had approximately 500 employees in Poland as
of December 31, 2009, most of whom are represented by the Solidarity trade union.
|
(2) |
Summary of Significant Accounting Policies
|
(a) |
Consolidation
|
The consolidated financial statements include the accounts of the Company and all of its
subsidiaries, including the results of operations of Aerex and Chen-Tech from their
respective acquisition dates. All significant intercompany accounts and transactions have
been eliminated in consolidation.
|
The assets and liabilities of the Companys foreign subsidiary are translated at year-end
exchange rates and the related statements of earnings are translated at the average
exchange rates for the respective years. Gains or losses resulting from translating
foreign currencies are recorded as accumulated other comprehensive income or loss, a
separate component of stockholders equity.
|
Gains or losses resulting from foreign currency transactions (transactions denominated in
a currency other than the Companys local currency) are included in net earnings, but are
not significant in the years presented.
|
F-9
(b) |
Cash and Cash Equivalents
|
||
Cash in excess of daily requirements is invested in marketable securities consisting of
commercial paper and money market instruments which mature in three months or less. Such
investments are deemed to be cash equivalents due to the high liquidity and short term
duration of such money market accounts. The Company maintains deposits in financial
institutions that consistently exceed the FDIC limit of $250,000. The Company has not
experienced any losses in such accounts and management believes the Company is not at
significant risk.
|
|||
(c) |
Outstanding Checks
|
||
Outstanding payroll and accounts payable checks related to certain bank accounts are
recorded as accounts payable on the balance sheets. These checks amounted to $4,933 and
$105 as of December 31, 2008 and 2009, respectively.
|
|||
(d) |
Inventories
|
||
Inventories are stated at the lower of cost, first-in, first-out (FIFO) basis, or market.
Inventory values include material and conversion costs.
|
|||
Inventories for the years ended December 31, 2008 and 2009 consist of the following:
|
December 31, | ||||||||
2008 | 2009 | |||||||
Raw Materials
|
$ | 31,182 | $ | 18,038 | ||||
Work-In-Process and Finished
|
100,019 | 77,209 | ||||||
|
||||||||
|
131,201 | 95,247 | ||||||
Less Progress Payments
|
(1,894 | ) | (2,550 | ) | ||||
|
||||||||
Total Inventories
|
$ | 129,307 | $ | 92,697 | ||||
|
(e) |
Property, Plant and Equipment
|
Additions to property, plant, and equipment are recorded at cost. Normal repair and
maintenance costs are expensed as incurred. Depreciation is provided using the
straight-line method over the estimated useful lives of the assets, as follows:
|
Land Improvements
|
39 years | |||
Buildings and Improvements
|
39 years | |||
Machinery and Equipment
|
5 to 20 years |
Interest is capitalized in connection with construction of plant and equipment. Interest
capitalization ceases when the construction of the asset is substantially complete and the
asset is available for use. Interest capitalization was $795, $2,418 and $953 in 2007,
2008 and 2009, respectively.
|
(f) |
Goodwill and Other Intangible Assets
|
||
Goodwill represents the cost of acquired net assets in excess of their fair market values.
Goodwill and other intangible assets with indefinite useful lives are not amortized but
are tested for impairment at least annually in accordance with the provisions of FASB ASC
350-20,
Intangibles Goodwill and Other
. Intangible assets with estimable useful lives
are amortized over their respective estimated useful lives and also reviewed at least
annually for impairment.
|
F-10
In accordance with ASC 350-20, a two-step impairment test is required to identify
potential goodwill impairment and measure the amount of the goodwill impairment loss to be
recognized. In the first step, the fair value of each reporting unit is compared to its
carrying value to determine if the goodwill is impaired. If the fair value of the
reporting unit exceeds the carrying value of the net assets assigned to that unit, then
goodwill is not impaired and the second step is not required. If the carrying value of
the net assets assigned to the reporting unit exceeds its fair value, then the second step
is performed in order to determine the implied fair value of the reporting units goodwill
and an impairment loss is recorded for an amount equal to the difference between the
implied fair value and the carrying value of the goodwill.
|
|||
For the purpose of goodwill analysis, the Company has only one reporting segment, as
defined by ASC 350-20. Goodwill amounted to $37,113 and $37,571 at December 31, 2008 and
2009, respectively. There was a significant increase in goodwill in 2008 due to the
acquisitions of Aerex and Chen-Tech. A $1,000 opening balance sheet deferred tax asset
related to the Chen-Tech acquisition was charged to Goodwill in lieu of taxes upon
realization in 2009. Goodwill has been subjected to fair value impairment tests in 2007,
2008 and 2009 and no impairments were recognized.
|
|||
The Company has amortizable customer relationships of $20,011 and $19,465 at December 31,
2008 and 2009, respectively, included in other intangible assets that are being amortized
over 50 years with annual amortization of $400. The 2009 amortization expense of $546
included partial year expense of $146 from 2008.
|
|||
The Company conducted its annual impairment analysis in the third quarter of 2009. The
fair value of the Company as measured by the Company market capitalization plus a control
premium exceeded its carrying value. The Company reviewed the analysis at year-end and
concluded it remained accurate.
|
|||
The control premium that a third party would be willing to pay to obtain a controlling
interest in the Company was considered when determining fair value. Management considered
recent transactions with comparable companies in the industry, and possible synergies to a
market participant. In addition, factors such as the capital structure, the increase in
the Companys stock price and recent volatility in the Companys trading price prior to
December 31, 2009, were also considered. Management concluded there was a reasonable
basis for the excess of estimated fair value of the Company over its market
capitalization.
|
|||
The estimated fair value requires judgment and the use of estimates by management.
Potential factors requiring assessment include a decline in the Companys stock price and
variance in results of operations from projections. Any of these potential factors may
cause the Company to re-evaluate goodwill during any quarter throughout the year. If an
impairment charge were to be taken for goodwill it would be a non-cash charge and would
not impact the Companys cash position or cash flows, however, such a charge could have a
material impact to equity and the statement of operations.
|
|||
(g) |
Fair Values of Financial Instruments
|
||
The Company considers the carrying amounts of cash and cash equivalents, accounts
receivable and accounts payable to approximate fair value because of the short maturities
of these financial instruments. The fair values of the Senior Notes do not materially
differ from their carrying values.
|
F-11
(h) |
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 service has
been provided, the sale price is determinable and collectibility is reasonably assured.
This occurs at the time of shipment. Net sales include freight out as well as reductions
for returns and allowances, and sales discounts. Progress payments on contracts are
generally recognized as reductions of the related inventory costs. Progress payments in
excess of inventory costs are reflected as a liability. The Company does not recognize
revenue from the disposal of by-products. Any proceeds received from by-product disposal
are considered an offset to cost of sales. The 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. The Company has reviewed SEC Staff
Accounting Bulletin No. 104 and believes its revenue recognition policy to be in
compliance with FASB ASC 605-10-S99-1.
|
(i) |
Income Taxes
|
Deferred income taxes are accounted for under the asset and liability method whereby
deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates. Deferred income tax provisions or
benefits are based on the change in the deferred tax assets and liabilities from period to
period.
|
(j) |
Use of Estimates
|
The preparation of financial statements in conformity with generally accepted accounting
principles in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results will likely
differ from those estimates, but management believes such differences are not material.
|
(k) |
Reclassification
|
Certain reclassifications have been made to the 2008 financial statements to conform with
the 2009 presentation.
|
(l) |
New Accounting Pronouncements
|
Effective July 1, 2009, the Company adopted FASB ASC 105-10,
Generally Accepted Accounting
Principles Overall
. ASC 105-10 establishes the FASB ASC as the source of authoritative
accounting principles recognized by the FASB to be applied in the preparation of financial
statements in conformity with U.S. generally accepted accounting principles (GAAP). The
Company has updated GAAP referencing for this report. The FASB Codification had no impact
on financial reporting of the Company.
|
In December 2007, the FASB issued guidance for accounting and reporting of noncontrolling
interests in financial statements, which is included in ASC 810-10,
Consolidation
Overall
. The objective of ASC 810-10 is to improve the financial information provided in
consolidated financial statements. ASC 810-10 changes the way the consolidated income
statement is presented, establishes a single method of accounting for changes in a
parents ownership interest in a subsidiary that do not result in deconsolidation,
requires that a parent recognize a gain or loss in net income when a subsidiary is
deconsolidated, and expands disclosures in the
consolidated financial statements in order to clearly identify and distinguish between the
interests of the parents owners and the interest of the noncontrolling owners of a
subsidiary. The Company adopted ASC 810-10 effective January 1, 2009. ASC 810-10 modified
the manner in which the Company reported on the noncontrolling interest in ZKM as the
noncontrolling interest has been classified as a component of equity.
|
F-12
On December 30, 2008, the FASB issued guidance related to employers disclosures regarding
postretirement benefit plan assets, which is included in ASC 715-20,
Defined Benefit Plans
General
. ASC 715-20 provides additional guidance on employers disclosures about plan
assets of a defined benefit pension or other postretirement plan. The Company adopted
ASC 715-20 in fiscal year 2009. The disclosure requirements are annual and do not apply
to interim financial statements.
|
Effective June 30, 2009, the Company adopted FASB ASC 855-10,
Subsequent Events Overall
.
ASC 855-10 establishes standards for the accounting for and the disclosing of subsequent
events. ASC 855-10 introduces new terminology, defines a date through which management
must evaluate subsequent events, and lists the circumstances under which an entity must
recognize and disclose events or transactions occurring after the balance sheet date. The
Company is not aware of any subsequent events which would require recognition or
disclosure in the financial statements.
|
(m) |
Investments
|
Investments in marketable securities are stated at fair value. Investments with no
readily determinable fair value are carried at cost. Fair value is determined using
quoted market prices at the end of the reporting period and, when appropriate, exchange
rates at that date. Unrealized gains and losses on marketable securities classified as
available-for-sale are recorded in accumulated other comprehensive income, net of tax. If
the decline in fair value is judged to be other-than-temporary, the cost basis of the
security is written down to fair value and the amount of the write-down is included in the
consolidated statements of operations.
|
Investment securities are exposed to various risks including, but not limited to, interest
rate and market and credit risks. Due to the level of risks associated with certain
investment securities, it is at least reasonably possible that changes in the values of
investment securities will occur in the near term.
|
The Company regularly reviews its investments to determine whether a decline in fair value
below the cost basis is other-than-temporary. To determine whether a decline in value is
other-than-temporary, the Company evaluates several factors, including current economic
environment, market conditions, operational and financial performance of the investee, and
other specific factors relating to the business underlying the investment, including
business outlook of the investee, future trends in the investees industry and the
Companys intent to carry the investment for a sufficient period of time for any recovery
in fair value. If a decline in value is deemed as other-than-temporary, the Company
records reductions in carrying values to estimated fair values, which are determined based
on quoted market prices if available or on one or more of the valuation methods such as
pricing models using historical and projected financial information, liquidation values,
and values of other comparable public companies.
|
Investments, all of which are classified as available-for-sale, are stated at fair value
based on market quotes, when available. Unrealized gains and losses, net of deferred
taxes, are recorded as a component of other comprehensive income.
|
F-13
(3) |
Debt
|
F-14
Long Term Debt Repayment Schedule | ||||||||||||
Senior Notes | ||||||||||||
Series B | Series C | |||||||||||
|
||||||||||||
$ | 5,714 |
May 16, 2010
|
||||||||||
$ | 5,715 |
May 16, 2011
|
$ | 10,000 | September 2, 2011 | |||||||
$ | 5,715 |
May 16, 2012
|
$ | 10,000 | September 2, 2012 | |||||||
$ | 5,715 |
May 16, 2013
|
$ | 10,000 | September 2, 2013 | |||||||
$ | 5,715 |
May 16, 2014
|
$ | 10,000 | September 2, 2014 | |||||||
$ | 5,715 |
May 16, 2015
|
$ | 10,000 | September 2, 2015 | |||||||
$ | 5,711 |
May 16, 2016
|
2007 | 2008 | 2009 | ||||||||||
Interest Expensed
|
$ | 2,528 | $ | 1,971 | $ | 5,050 | ||||||
Interest Capitalized
|
795 | 2,418 | 953 | |||||||||
|
||||||||||||
Total
|
$ | 3,323 | $ | 4,389 | $ | 6,003 | ||||||
|
(4) |
Stockholders Equity
|
(a) |
Treasury Shares
|
The treasury shares represent shares of common stock of the Company which the Company
repurchased on the open market. The value reflects the purchase price for those shares.
|
(b) |
Stock Option Plan
|
The Company has a Long-Term Incentive Plan (the Stock Option Program) that covers
certain employees. Under the Stock Option Program, incentive stock options for up to
983,333 shares may be granted to employees of the Company of which 943,833 options have
been granted. These options expire ten years from the grant date. For the years 2008 and
2009, no options were granted under the Stock Option Program. As of December 31, 2009,
4,548 options granted under the Stock Option Program are fully vested and remain
outstanding.
|
During 2007, 2008 and 2009, 33,500, 26,000 and 1,788 shares of common stock, respectively,
were issued from treasury stock for the exercise of stock options. The shares had a cost
of $7.32 per share. In 2007, 2008 and 2009, the difference of $44, $24 and $2,
respectively, between the cost of the shares released from treasury stock and the cash
proceeds from the exercise of stock options was credited to additional paid-in capital, a
component of stockholders equity. During the years ending December 31, 2007, 2008 and
2009, the Company received $289, $215 and $15, respectively, from the exercise of employee
stock options.
|
The options outstanding were all granted and fully vested prior to the effective date of
FASB ASC 718-10,
Compensation Stock Compensation Overall
, and were accounted for under
the provisions of APB No. 25 Accounting for Stock Issued to Employees. As such, there
is no stock compensation expense for the remaining options.
|
F-15
A summary of options for 2007, 2008 and 2009 is as follows:
|
2007 | 2008 | 2009 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Options | Price | Options | Price | Options | Price | |||||||||||||||||||
Outstanding at Beginning of Year
|
65,836 | $ | 8.59 | 32,336 | $ | 8.57 | 6,336 | $ | 9.87 | |||||||||||||||
Granted
|
| | | | | | ||||||||||||||||||
Forfeited
|
| | | | | | ||||||||||||||||||
Exercised
|
(33,500 | ) | 8.62 | (26,000 | ) | 8.25 | (1,788 | ) | 8.25 | |||||||||||||||
|
||||||||||||||||||||||||
Outstanding at End of Year
|
32,336 | 8.57 | 6,336 | 9.87 | 4,548 | 10.50 | ||||||||||||||||||
|
||||||||||||||||||||||||
Exercisable at End of Year
|
32,336 | $ | 8.57 | 6,336 | $ | 9.87 | 4,548 | $ | 10.50 | |||||||||||||||
|
The options outstanding and exercisable as of December 31, 2009 consist of the
following:
|
Average | ||||||||||||||||||||
Weighted Average | Remaining | |||||||||||||||||||
Number of Options | Exercise Price | Contractual | ||||||||||||||||||
Range of Exercise Prices | Outstanding | Exercisable | Outstanding | Exercisable | LifeYears | |||||||||||||||
$10 to $15
|
4,548 | 4,548 | $ | 10.50 | $ | 10.50 | 1.38 |
(c) |
Comprehensive Income
|
Comprehensive income is defined as the sum of net income and all other non-owner changes
in equity. The components of the non-owner changes in equity, or accumulated other
comprehensive income (loss) were as follows (net of tax):
|
December 31, | ||||||||
2008 | 2009 | |||||||
Foreign Currency Translation Adjustments
|
$ | 1,604 | $ | 2,779 | ||||
Amounts in Accumulated Other Comprehensive Income that have
not yet been Recognized as:
|
||||||||
Components of Net Periodic Benefit Cost:
|
||||||||
Actuarial Loss
|
(69,627 | ) | (74,567 | ) | ||||
Prior Service Cost
|
(775 | ) | (1,269 | ) | ||||
Unrealized Investment Loss
|
(473 | ) | (157 | ) | ||||
|
||||||||
Accumulated Other Comprehensive Loss
|
$ | (69,271 | ) | $ | (73,214 | ) | ||
|
(d) |
Additional Paid-In Capital
|
In 2008, the Company recognized a deferred tax liability of $5,498 which related to an IRS
audit adjustment for 1987. As the adjustment related to a time period prior to the
Companys reorganization in 1993, under fresh-start accounting, the adjustment is charged
to paid-in capital instead of the current tax provision.
|
(5) |
Research and Development
|
Research and development expenses were $2,907, $3,061 and $2,725 in 2007, 2008 and 2009,
respectively. Customers reimbursed the Company for $1,175, $1,282 and $1,231 of research and
development expenses in 2007, 2008 and 2009, respectively. The expenses and related
reimbursement are included in cost of sales on the statements of operations.
|
F-16
(6) |
Leases
|
Certain office and warehouse facilities and equipment are leased under noncancelable operating
leases expiring on various dates through the year 2018. Rental expense was $370, $630 and
$1,225 in 2007, 2008 and 2009, respectively.
|
Minimum lease obligations under noncancelable operating leases are as follows:
|
|
||||
2010
|
$ | 974 | ||
2011
|
836 | |||
2012
|
756 | |||
2013
|
637 | |||
2014
|
602 | |||
2015 and Thereafter
|
1,848 | |||
|
||||
Total
|
$ | 5,653 | ||
|
Certain equipment were leased under noncancelable capital leases assumed as a part of the
Chen-Tech acquisition in 2008. The Company paid off these leases in 2009 and exercised the
purchase option for equipment.
|
(7) |
Income Taxes
|
The Company utilized the remaining $2,142 of domestic net operating loss (NOL) carryforwards
to reduce taxable income in 2008. In addition, the Company recognized a fixed asset tax basis
adjustment that occurred prior to its reorganization resulting in a tax effected deferred tax
liability of $5,498 in 2008 with a corresponding reduction in paid-in capital. Pursuant to
FASB ASC 740-10,
Income Taxes Overall
in regards to uncertain tax provisions, the Company has
recorded a charge to income tax expense of $546 and $69 and has corresponding unrecognized tax
benefit reserves of $546 and $615 in 2008 and 2009, respectively, in connection with research
and development (R&D) tax credits recognized in those years. The reserves established are
10% of the R&D tax credit for each year and include any applicable penalties. The Company has
recorded $79 in interest costs with regard to the foregoing that is included in the 2009 charge
to income tax expense and corresponding reserve balance. The Company has total net deferred
income tax assets of $26,660 and $31,666 as of December 31, 2008 and 2009, respectively.
|
The entire $615 of unrecognized tax benefits as of December 31, 2009 would impact the effective
tax rate if recognized. A reconciliation of the beginning and ending amount of unrecognized
tax benefits is as follows:
|
Beginning Balance
|
$ | 546 | ||
Additions for Tax Positions Related to the Current Year
|
51 | |||
Additions for Tax Positions of Prior Years
|
18 | |||
|
||||
Ending Balance
|
$ | 615 | ||
|
As of December 31, 2008, ZKM had net deferred Polish income tax assets totaling $2,060 which
included $1,799 of foreign economic zone credits and the net realizable value of $92 of NOL
carry-forwards that existed prior to Ladishs acquisition of ZKM. The foreign economic zone
credits expire in 2017 and the NOLs expired in 2009. Prior to 2007, the Company had determined
that it was not more likely than not that the ZKM NOLs would be utilized, therefore, a
valuation allowance was provided to reduce the benefit of the ZKM net deferred income tax
assets to zero. In 2007, in consideration of its recent earnings history and expectations of
future profitability, all of the valuation allowance against the net deferred tax assets was
reversed resulting in an $875 reduction in income tax expense. As of December 31, 2009, ZKM
has net deferred Polish income tax assets totaling $2,503 which include $1,951 of foreign
economic zone credits along with NOL carryforwards with a net realizable value of $35 and $677
in 2008 and 2009, respectively, that were generated by its ZKM and ZOPS operation. The NOL
carryforwards expire in the years 2012 through 2014. A valuation allowance has been
established against $115 of the foreign NOLs related to the ZOPS operation.
|
F-17
Realization of the domestic net deferred tax assets over time is dependent upon the Company
generating sufficient taxable income in future periods. In determining that realization of the
net deferred tax assets was more likely than not, the Company gave consideration to a number of
factors
including its recent earnings history, expectations for earnings in the future, the timing of
reversal of temporary differences, tax planning strategies available to the Company and the
expiration dates associated with NOL carryforwards. If, in the future, the Company determines
that it is no longer more likely than not that the domestic net deferred tax assets will be
realized, a valuation allowance will be established against all or part of the net deferred tax
assets through a charge to the income tax provision.
|
Certain deferred tax liabilities associated with the acquisitions of Aerex and Chen-Tech have
been recorded against goodwill.
|
Deferred taxes were classified in the consolidated balance sheets for the years ended December
31, 2008 and 2009 as follows:
|
December 31, | ||||||||
2008 | 2009 | |||||||
Other Current Assets
|
$ | 7,043 | $ | 6,434 | ||||
Other Noncurrent Assets
|
39,804 | 47,964 | ||||||
Other Current Liabilities
|
(263 | ) | (1,290 | ) | ||||
Other Noncurrent Liabilities
|
(19,924 | ) | (21,442 | ) | ||||
|
||||||||
Total Net Deferred Tax Assets
|
$ | 26,660 | $ | 31,666 | ||||
|
The components of net deferred income tax assets and liabilities for the years ended
December 31, 2008 and 2009 are as follows:
|
December 31, | ||||||||
2008 | 2009 | |||||||
Deferred Tax Assets:
|
||||||||
Inventory Adjustments
|
$ | 1,692 | $ | 1,491 | ||||
Accrued Employee Costs
|
3,393 | 2,665 | ||||||
Operating Loss Carryforwards
|
127 | 712 | ||||||
Pension Benefit Liabilities
|
27,563 | 30,067 | ||||||
Postretirement Healthcare Benefit Liabilities
|
13,302 | 13,472 | ||||||
Other
|
34 | 4,816 | ||||||
|
||||||||
|
46,111 | 53,223 | ||||||
Valuation Allowances
|
(35 | ) | (115 | ) | ||||
|
||||||||
Net Deferred Tax Assets
|
46,076 | 53,108 | ||||||
|
||||||||
|
||||||||
Deferred Tax Liabilities:
|
||||||||
Property, Plant and Equipment
|
(19,416 | ) | (21,442 | ) | ||||
|
||||||||
Net Deferred Tax Liabilities
|
(19,416 | ) | (21,442 | ) | ||||
|
||||||||
Total Net Deferred Tax Assets
|
$ | 26,660 | $ | 31,666 | ||||
|
F-18
A reconciliation of the Federal statutory tax rate to the Companys effective tax rate for
the years ended December 31, 2007, 2008 and 2009 is as follows:
|
Years Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
|
||||||||||||
Pre-tax Income
|
$ | 50,154 | $ | 38,250 | $ | 3,136 | ||||||
|
||||||||||||
|
||||||||||||
Federal Tax at Statutory Rate of 35%
|
$ | 17,554 | $ | 13,387 | $ | 1,098 | ||||||
State Tax, Net of Federal Effect
|
2,176 | (144 | ) | 574 | ||||||||
Permanent Differences and Other, Net
|
(104 | ) | (737 | ) | 458 | |||||||
Research & Development Credits
|
| (3,582 | ) | (316 | ) | |||||||
Domestic Production Activities Deduction
|
(717 | ) | (553 | ) | (21 | ) | ||||||
Reversal of Domestic Valuation Allowance
|
| | (5,335 | ) | ||||||||
Establishment (Reversal) of Foreign
Valuation Allowance
|
(875 | ) | 35 | 80 | ||||||||
Foreign Economic Zone Credits
|
| (1,907 | ) | | ||||||||
Foreign Tax Rate Differential
|
(236 | ) | (623 | ) | 569 | |||||||
|
||||||||||||
Total Tax Provision (Benefit)
|
$ | 17,798 | $ | 5,876 | $ | (2,893 | ) | |||||
|
||||||||||||
|
||||||||||||
Effective Tax Rate
|
35.5 | % | 15.4 | % | (92.3 | )% | ||||||
|
The Domestic Production Activities Deduction is a statutory deduction limited to income arising
from qualified production activities based in the United States.
|
The components of income tax expense (benefits) for the years ended December 31, 2007, 2008 and
2009 are as follows:
|
2007 | ||||||||||||||||
Federal | State | Foreign | Total | |||||||||||||
Current
|
$ | 9,553 | $ | 2,295 | $ | 75 | $ | 11,923 | ||||||||
Deferred
|
5,112 | 1,098 | (875 | ) | 5,335 | |||||||||||
Charge in Lieu of Taxes Related to:
|
||||||||||||||||
Goodwill
|
35 | 5 | | 40 | ||||||||||||
Stock Options
|
437 | 63 | | 500 | ||||||||||||
|
||||||||||||||||
Total Income Tax Expense (Benefit)
|
$ | 15,137 | $ | 3,461 | $ | (800 | ) | $ | 17,798 | |||||||
|
2008 | ||||||||||||||||
Federal | State | Foreign | Total | |||||||||||||
Current
|
$ | 5,339 | $ | (506 | ) | $ | 14 | $ | 4,847 | |||||||
Deferred
|
1,741 | 249 | (1,223 | ) | 767 | |||||||||||
Charge in Lieu of Taxes Related to:
|
||||||||||||||||
Goodwill
|
35 | 5 | | 40 | ||||||||||||
Stock Options
|
194 | 28 | | 222 | ||||||||||||
|
||||||||||||||||
Total Income Tax Expense (Benefit)
|
$ | 7,309 | $ | (224 | ) | $ | (1,209 | ) | $ | 5,876 | ||||||
|
2009 | ||||||||||||||||
Federal | State | Foreign | Total | |||||||||||||
Current
|
$ | (1,072 | ) | $ | 9 | $ | 2 | $ | (1,061 | ) | ||||||
Deferred
|
3,111 | (4,593 | ) | (355 | ) | (1,837 | ) | |||||||||
Charge in Lieu of Taxes Related to:
|
||||||||||||||||
Goodwill
|
| | | | ||||||||||||
Stock Options
|
4 | 1 | | 5 | ||||||||||||
|
||||||||||||||||
Total Income Tax Expense (Benefit)
|
$ | 2,043 | $ | (4,583 | ) | $ | (353 | ) | $ | (2,893 | ) | |||||
|
F-19
The Company has not provided additional U.S. income taxes on $6,662 of undistributed
earnings of its Polish subsidiary, ZKM, included in stockholders equity. Such earnings could
become taxable upon the sale or liquidation of ZKM or upon dividend repatriation. The
Companys intent is for such earnings to be reinvested by ZKM or to be repatriated only when it
would be tax effective through the utilization of foreign tax credits.
|
The Company is currently being audited by the State of Wisconsin for tax years 2005-2008. The
Company has not been notified of any other audit of its U.S. or state tax returns. Federal
returns for the years 2006-2009 are still open.
|
(8) |
Pensions and Postretirement Benefits
|
The Company has noncontributory defined benefit pension plans (Plans) covering a number of
its employees. Plans covering salaried and management employees provide pension benefits that
are based on the highest five consecutive years of an employees compensation during the last
ten years prior to retirement. Plans covering hourly employees and union members generally
provide benefits of stated amounts for each year of service. The Companys funding policy is
to contribute annually an amount equal to or greater than the minimum amount required under the
Employee Retirement Income Security Act of 1974. The Company contributed $8,955 and $3,428 to
the Plans in 2008 and 2009, respectively, and the Company expects to contribute $7,456, $11,761
and $15,045 in 2010, 2011 and 2012, respectively, to the Plans. The Plans assets are
primarily invested in U.S. Government securities, investment grade corporate bonds and
marketable common stocks. The Plans may hold shares of the Companys common stock, which
comprise less than ten percent of any individual plans total assets. The market value of
Company shares held in all Plans as of December 31, 2008 and 2009 total $4,692 and $5,099,
respectively. On September 10, 2008, the Company contributed 38,788 shares of the Company with
a market value of $915 to the Plans.
|
A summary of the Plans asset allocation at December 31, 2008 and 2009 is as follows:
|
December 31, | ||||||||
Asset Category | 2008 | 2009 | ||||||
Fixed Income Securities
|
54.5 | % | 54.4 | % | ||||
Equity Securities
|
39.0 | % | 44.4 | % | ||||
Cash
|
6.5 | % | 1.2 | % | ||||
|
||||||||
Total
|
100.0 | % | 100.0 | % | ||||
|
The Plans target asset allocation percentages are fixed income 50% and equities 50%. The
variance from the target in 2009 was due to the decline in the U.S. equity market in 2008.
|
In addition to pension benefits, a number of the Companys employees are provided certain
postretirement healthcare and life insurance benefits. The employees may become eligible for
these benefits when they retire. The Company accrues, as current costs, the future lifetime
retirement benefits for both active and retired employees and their dependents. Steps have
been taken by the Company to reduce the amount of the future obligation for pensions and
postretirement healthcare benefits of future retirees by capping the amount of funds payable on
behalf of the retirees.
|
The benefits estimated to be paid in the next five years for the pension plans range between
$15,900 and $16,500 per year and for years six through ten in aggregate total $76,100. For
postretirement healthcare and life insurance benefits, the estimated benefit payments over the
next five years approximate $3,300 per year and $13,100 in aggregate for years six through ten.
|
F-20
In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 was
enacted. In May 2004, the FASB issued ASC 715-60,
Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003
in
response to the new law which may provide a federal subsidy to sponsors of retiree healthcare
benefit plans. The Company has concluded that certain benefits provided by its postretirement
benefit plan are actuarially equivalent to Medicare Part D under the Act and has filed refund
requests with the Claims Management Services, a division of the Health and Human Services
Department. Refunds of $169 and $274 have been received in 2008 and 2009, respectively.
|
Certain officers have deferred compensation agreements (the Officers Plan) which, upon
retirement, provide them with, among other things, supplemental pension and other
postretirement benefits. An accumulated unfunded liability of $6,823 and $9,431 as of December
31, 2008 and 2009, respectively, has been recorded under these agreements as actuarially
determined. The expense was $440, $552 and $662 in 2007, 2008 and 2009, respectively.
|
The Company has established a Rabbi Trust for the beneficiaries of the Officers Plan to fund a
portion of the benefits earned under the Officers Plan. The Rabbi Trust does not hold any
Company stock and is considered in the calculations determined by the actuary. The Rabbi Trust
had assets of $217 and $175 as of December 31, 2008 and 2009, respectively, and are included in
other assets on the balance sheets. The investments are held on the balance sheet and are
considered available-for-sale securities. The unrealized gain or loss on these investments is
recognized as a component of other comprehensive income.
|
Fair Value Measurement of Pension Assets
|
FASB ASC 820-10,
Fair Value Measurements and Disclosures
, establishes a framework and provides
guidance on measuring the fair value of assets in a pension plan and how an employer should
disclose the same. The framework establishes a fair value hierarchy that prioritizes the
inputs to the valuation techniques used to measure fair value. The three levels of fair value
hierarchy are described as follows:
|
Level 1 |
Quoted prices in active markets for identical assets or liabilities.
|
||
Level 2 |
Observable inputs other than Level 1 prices, such as quoted prices
for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full
term of the assets or liabilities.
|
||
Level 3 |
Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets
or liabilities.
|
The following table sets forth by level, within the fair value hierarchy, the Plans assets at
fair value as of December 31, 2009:
|
Plans Assets | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
|
|||||||||||||||||
$
|
142,967 | $ | 142,967 | | | $ | 142,967 |
F-21
The following is a reconciliation of the change in benefit obligation and Plans assets for the
years ended December 31, 2008 and 2009:
|
Pension & Officers | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Change in Benefit Obligation:
|
||||||||||||||||
Projected Benefit Obligation at Beginning of Yr.
|
$ | 204,496 | $ | 204,035 | $ | 35,454 | $ | 33,256 | ||||||||
Service Cost
|
891 | 1,346 | 154 | 190 | ||||||||||||
Interest Cost
|
11,998 | 11,856 | 2,051 | 1,903 | ||||||||||||
Amendments
|
402 | 1,229 | | | ||||||||||||
Actuarial (Gains) Losses
|
2,684 | 17,887 | (274 | ) | 1,835 | |||||||||||
Benefits Paid
|
(16,436 | ) | (16,597 | ) | (5,956 | ) | (5,912 | ) | ||||||||
Participants Contributions
|
| | 1,827 | 2,407 | ||||||||||||
|
||||||||||||||||
Projected Benefit Obligation at End of Yr.
|
$ | 204,035 | $ | 219,756 | $ | 33,256 | $ | 33,679 | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Change in Plans Assets:
|
||||||||||||||||
Plans Assets at Fair Value at Beginning of Yr.
|
$ | 181,100 | $ | 136,472 | $ | | $ | | ||||||||
Actual Return on Plans Assets
|
(37,310 | ) | 19,478 | | | |||||||||||
Company Contributions
|
9,118 | 3,614 | 3,962 | 3,505 | ||||||||||||
Benefits Paid
|
(16,436 | ) | (16,597 | ) | (5,956 | ) | (5,912 | ) | ||||||||
Participants Contributions
|
| | 1,994 | 2,407 | ||||||||||||
|
||||||||||||||||
Plans Assets at Fair Value at End of Yr.
|
$ | 136,472 | $ | 142,967 | $ | | $ | | ||||||||
|
||||||||||||||||
|
||||||||||||||||
Funded Status of Plans
|
$ | (67,563 | ) | $ | (76,789 | ) | $ | (33,256 | ) | $ | (33,679 | ) | ||||
|
Pension & Officers | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Plans with Benefit Obligations in Excess of
Plan Assets:
|
||||||||||||||||
Projected Benefit Obligation
|
$ | 204,035 | $ | 219,756 | $ | 33,256 | $ | 33,679 | ||||||||
Accumulated Benefit Obligation
|
197,930 | 211,461 | | | ||||||||||||
Plan Assets
|
136,472 | 142,967 | | | ||||||||||||
Plans with Plan Assets in Excess of Benefit Obligations:
|
||||||||||||||||
Projected Benefit Obligation
|
$ | | $ | | $ | | $ | | ||||||||
Accumulated Benefit Obligation
|
| | | | ||||||||||||
Plan Assets
|
| | | | ||||||||||||
Weighted Average Assumptions:
|
||||||||||||||||
Discount Rate
|
6.05 | % | 5.16 | % | 6.05 | % | 5.16 | % | ||||||||
Rate of Increase in Compensation Levels
|
3.00 | % | 3.00 | % | | | ||||||||||
Expected Long-Term Rate of Return on Assets
|
7.95 | % | 8.05 | % | | |
The total accumulated pension benefit obligation for the Plans is $197,930 and $211,461 at
December 31, 2008 and 2009, respectively. All of the individual Plans and the Officers Plan
have accumulated benefit obligations exceeding the fair value of the Plans assets at December
31, 2009.
|
F-22
Pension & Officers | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2008 | 2009 | 2008 | 2009 | |||||||||||||
Amounts Recognized in the Consolidated
Balance Sheets:
|
||||||||||||||||
Other Assets
|
$ | 217 | $ | 175 | $ | | $ | | ||||||||
Accrued Liabilities Postretirement
|
| | (3,540 | ) | (3,464 | ) | ||||||||||
Accrued Liabilities Officers Deferred Comp.
|
(31 | ) | (155 | ) | | | ||||||||||
Noncurrent Liabilities Pensions
|
(60,957 | ) | (67,533 | ) | | | ||||||||||
Noncurrent Liabilities Postretirement
|
| | (29,716 | ) | (30,215 | ) | ||||||||||
Officers Deferred Compensation
|
(6,792 | ) | (9,276 | ) | | | ||||||||||
|
||||||||||||||||
Net Amount Recognized
|
$ | (67,563 | ) | $ | (76,789 | ) | $ | (33,256 | ) | $ | (33,679 | ) | ||||
|
The amounts in accumulated other comprehensive loss that have not yet been recognized as
components of net periodic benefit cost at December 31, 2009 are as follows:
|
Pension & Officers | Postretirement | |||||||
Benefits | Benefits | |||||||
Prior Service Cost
|
$ | 2,014 | $ | 102 | ||||
Net Loss
|
119,610 | 4,668 | ||||||
|
||||||||
Total
|
$ | 121,624 | $ | 4,770 | ||||
|
The amounts in accumulated other comprehensive loss that are expected to be recognized as
components of net periodic benefit cost during 2010 are as follows:
|
Pension & Officers | Postretirement | |||||||
Benefits | Benefits | |||||||
Prior Service Cost
|
$ | 490 | $ | 14 | ||||
Net Loss
|
8,170 | 101 | ||||||
|
||||||||
Total
|
$ | 8,660 | $ | 115 | ||||
|
The components of the net periodic benefit costs for the years ended December 31, 2007,
2008 and 2009 are:
|
Pension & Officers Benefits | Postretirement Benefits | |||||||||||||||||||||||
2007 | 2008 | 2009 | 2007 | 2008 | 2009 | |||||||||||||||||||
Service Cost-Benefit Earned
During the Period
|
$ | 876 | $ | 891 | $ | 1,346 | $ | 149 | $ | 154 | $ | 190 | ||||||||||||
Interest Cost on Projected
Benefit Obligation
|
11,267 | 11,998 | 11,856 | 2,028 | 2,051 | 1,903 | ||||||||||||||||||
Expected Return on Pension Assets
|
(15,529 | ) | (15,713 | ) | (13,265 | ) | | | | |||||||||||||||
Net Amortization and Deferral
|
3,762 | 3,631 | 5,273 | 18 | 4 | 5 | ||||||||||||||||||
Prior Service Cost
|
413 | 400 | 390 | 14 | 14 | 14 | ||||||||||||||||||
|
||||||||||||||||||||||||
Net Periodic Benefit Cost
|
$ | 789 | $ | 1,207 | $ | 5,600 | $ | 2,209 | $ | 2,223 | $ | 2,112 | ||||||||||||
|
F-23
Assumptions used in the determination of net periodic benefit costs for these years are:
|
Pension & Officers Benefits | Postretirement Benefits | |||||||||||||||||||||||
2007 | 2008 | 2009 | 2007 | 2008 | 2009 | |||||||||||||||||||
Discount Rate
|
5.68 | % | 6.11 | % | 6.05 | % | 5.68 | % | 6.11 | % | 6.05 | % | ||||||||||||
Rate of Increase in
Compensation Levels
|
3.00 | % | 3.00 | % | 3.00 | % | | | | |||||||||||||||
Expected Long-Term Rate of
Return on Assets
|
8.90 | % | 8.90 | % | 7.95 | % | | | |
Assumed healthcare cost trend rates have a significant effect on the amounts reported for
the postretirement healthcare plans. The Company assumes annual increases of 0% on life
insurance, 7% on pre-65 healthcare and 5% on post-65 healthcare. A one-percentage-point change
in assumed healthcare cost trend rates would have the following effects:
|
1% | 1% | |||||||
Increase | Decrease | |||||||
Effect on Total of Service and Interest Cost Components
|
$ | 92 | $ | (82 | ) | |||
Effect on Postretirement Healthcare Benefit Obligation
|
$ | 1,660 | $ | (1,486 | ) |
As a result of union labor renegotiations finalized during 2000, the benefits in certain
Company sponsored pension plans were frozen and replaced with comparable benefits in national
multi-employer plans not administered by the Company. The Company contributed $2,582 and
$2,291 to these plans during 2008 and 2009, respectively. Should the Company cease to
participate in these plans it could be subject to a withdrawal liability.
|
ZKM sponsors an unfunded retirement plan and the Company has estimated ZKMs liability for this
plan to be approximately $3,044 and $2,379 at December 31, 2008 and 2009, respectively. The
Company has included ZKMs estimated liability in the pension liability in the consolidated
balance sheets.
|
(9) |
Deferred Compensation
|
As a part of the total compensation program at the Company, a number of nonqualified plans have
been adopted which entail a portion of deferred compensation. For the individuals
participating in these deferred compensation programs, the deferred portion of their salary
and/or incentive pay has been placed into a Rabbi Trust for the benefit of those individuals
until such time as the assets are payable pursuant to the terms of the deferred compensation
programs. In the event of a liquidation of the assets of the Company, the assets placed in the
Rabbi Trusts are subject to the general claims of creditors of the Company. The deferred
compensation assets held in the Rabbi Trusts amounted to $2,461 and $3,723 as of December 31,
2008 and 2009, respectively, and are included as a part of other assets on the consolidated
balance sheets of the Company. The obligation to release these assets to participating
individuals is reflected as a part of other noncurrent liabilities on the consolidated balance
sheets of the Company. The investments are held on the balance sheet and are considered
available-for-sale securities. The unrealized gain (loss) on the Rabbi Trust assets amounted
to $(787) and $526 in 2008 and 2009, respectively, and is recorded net of tax as other
comprehensive income on the balance sheets.
|
F-24
(10) |
Profit Sharing
|
Forging has a profit sharing program in which substantially all of the employees are eligible
to participate. The profit sharing payout is derived from a formula based on net income and is
payable no later than February 15
th
of the subsequent year. The expense was $2,759,
$1,517 and $350 in 2007, 2008 and 2009, respectively. PCT has a profit sharing program in
which all employees are eligible to participate. The profit sharing pool is calculated based
on various internal operating measurements. The expense was $553, $368 and $261 in 2007, 2008
and 2009, respectively. For
Stowe, a profit sharing program for all employees had an expense of $158, $64 and $0 in 2007,
2008 and 2009, respectively. Profit sharing at Aerex and Chen-Tech for 2008 was provided by
the former owners of each business. In 2009, Aerex and Chen-Tech did not pay profit sharing.
|
(11) |
Commitments and Contingencies
|
(a) |
The Company is involved in various stages of investigation relative to
environmental protection matters relating to various waste disposal sites. The potential
costs related to such matters and the possible impact thereof on future operations are
uncertain due in part to uncertainty as to the extent of the pollution, the complexity of
laws and regulations and their interpretations, the varying costs and effectiveness of
alternative cleanup technologies and methods, and the questionable level of the Companys
involvement. The Company has an accrual of $300 at December 31, 2009, included in other
noncurrent liabilities on the consolidated balance sheets of the Company, for potential
losses related to these matters. The Company does not anticipate such losses will have a
material impact on the financial statements beyond the aforementioned provisions.
|
(b) |
The Company has been named as a defendant in a number of asbestos cases in
Mississippi, six cases in Illinois, one case in Wisconsin and one case in California. As
of December 31, 2009, the Company has been dismissed from the case in California and has
11 claims in Mississippi, two claims remaining in Illinois and one in Wisconsin. The
Company has notified its insurance carriers of these claims and is vigorously defending
these actions. The Company has never manufactured or processed asbestos. The Companys
only exposure to asbestos involves products the Company purchased from third parties.
The Company has not made any provision in its financial statements for the asbestos
litigation.
|
(c) |
The Company is participating in an investigation initiated by U.S. Customs & Border
Protection (Customs) into duty drawback claims filed on behalf of the Company by its
former export agent. The Company is cooperating with Customs in this investigation and
has voluntarily suspended its duty drawback claims. Based upon its internal
investigation, the Company believes any errors or omissions with respect to its filings
were solely attributable to its former export agent. The Company intends to continue to
cooperate with Customs in resolving this matter. The Company has not made any provision
in its financial statements for the Customs investigation.
|
(d) |
The Company has unconditional fixed price purchase obligations (take-or-pay
contracts) of approximately $163,040 comprised of commitments to purchase natural gas of
approximately $13,703 and raw material of approximately $149,337. These obligations are
for purchases necessary to fulfill the Companys production backlog. None of these
obligations may be net settled. The Companys future commitments approximate $61,438 in
2010, $68,096 in 2011 and $33,506 in 2012 and beyond. During 2007, 2008 and 2009, the
Company fulfilled its minimum contractual purchase obligations for those periods.
|
Various other lawsuits and claims arising in the normal course of business are pending against
the Company and losses that might result from such actions are not expected to be material to
the financial statements.
|
F-25
(12) |
Related Party Transactions
|
Since 1995, the Company has participated in a joint venture with Weber Metals, Inc. (Weber).
The joint venture is directed toward serving the jet engine market by combining the Companys
technology and market presence with Webers unique equipment. A director of the Company is the
former chief executive officer of Weber. The Companys payments to Weber under the joint
venture were $643, $367 and $371 in 2007, 2008 and 2009, respectively. The joint venture has
no assets or liabilities.
|
The Company has entered into a long-term lease for the Irvine, California facilities occupied
by Chen-Tech from the former owners of Chen-Tech for an annual rental of $504. One of the
former owners of Chen-Tech is continuing to serve as President of Chen-Tech.
|
(13) |
Earnings Per Share
|
Basic earnings per share of common stock are computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted earnings per share of
common stock are computed by dividing net income by the weighted average number of common
shares and common share equivalents related to the assumed exercise of stock options and
warrants, using the treasury stock method.
|
The following shares were used to calculate basic and diluted earnings per share for the years
ended December 31, 2007, 2008 and 2009:
|
December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
Average Basic Common Shares Outstanding
|
14,516,120 | 14,998,437 | 15,901,833 | |||||||||
Incremental Shares Applicable to
Common Stock Options
|
34,138 | 2,407 | 413 | |||||||||
|
||||||||||||
Average Diluted Common Shares Outstanding
|
14,550,258 | 15,000,844 | 15,902,246 | |||||||||
|
(14) |
Acquisitions
|
On July 9, 2008, the Company acquired all of the outstanding equity of Aerex Manufacturing,
Inc. (Aerex) for a combined cash, $11,817, and stock consideration of 45,750 shares which
equated to $941. The net purchase price of $12,758 reflects a post-closing reduction of
$1,200. Located in South Windsor, Connecticut, Aerex provides precision machining of titanium
components for the aerospace industry.
|
A summary of the amounts assigned to the assets and liabilities of Aerex is as follows:
|
Net Working Capital
|
$ | 1,892 | ||
Property, Plant and Equipment
|
3,116 | |||
Goodwill
|
6,666 | |||
Amortizable Intangibles
|
3,651 | |||
Deferred Income Tax Liability
|
(2,567 | ) | ||
Other Noncurrent Liabilities
|
| |||
|
||||
|
$ | 12,758 | ||
|
The Company acquired all of the outstanding equity of Chen-Tech Industries, Inc. (Chen-Tech)
on September 4, 2008 for a combined cash, $27,254, and stock consideration of 1,256,211 shares
which equated to $31,820. Chen-Tech is a forger of nickel and titanium rotating components for
commercial and military jet engines. The Chen-Tech facility is located in Irvine, California.
|
F-26
A summary of the amounts assigned to the assets and liabilities of Chen-Tech is as follows:
|
Net Working Capital
|
$ | 7,222 | ||
Property, Plant and Equipment
|
21,359 | |||
Goodwill
|
21,624 | |||
Amortizable Intangibles
|
16,360 | |||
Deferred Income Tax Liability
|
(6,068 | ) | ||
Other Noncurrent Liabilities
|
(1,423 | ) | ||
|
||||
|
$ | 59,074 | ||
|
Goodwill and amortizable intangibles for both acquisitions are not deductible for income tax
purposes.
|
The amortizable intangibles for both acquisitions are composed of customer relationships which
will be amortized over 50 years.
|
For both of the acquisitions, the number of shares was determined by the average thirty-day
closing price prior to the acquisition closing dates.
|
(15) |
Quarterly Results of Operations (Unaudited)
|
The following table sets forth unaudited consolidated income statement data for each quarter of
the Companys last two fiscal years. The unaudited quarterly financial information has been
prepared on the same basis as the annual information presented in the financial statements and,
in managements opinion, reflects all adjustments (consisting of normal recurring entries)
necessary for a fair presentation of the information provided. The operating results for any
quarter are not necessarily indicative of results for any future period.
|
Quarters Ended | ||||||||||||||||
2008 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Net Sales
|
$ | 117,197 | $ | 118,959 | $ | 120,761 | $ | 112,549 | ||||||||
Gross Profit
|
14,821 | 15,507 | 18,193 | 10,782 | ||||||||||||
Operating Income
|
10,418 | 10,666 | 12,116 | 6,338 | ||||||||||||
Net Income
|
5,983 | 6,219 | 10,435 | 9,568 | ||||||||||||
Basic Earnings Per Share
|
0.41 | 0.43 | 0.70 | 0.60 | ||||||||||||
Diluted Earnings Per Share
|
0.41 | 0.43 | 0.70 | 0.60 |
Quarters Ended | ||||||||||||||||
2009 | March 31 | June 30 | September 30 | December 31 | ||||||||||||
Net Sales
|
$ | 105,739 | $ | 84,686 | $ | 76,191 | $ | 83,216 | ||||||||
Gross Profit
|
7,324 | 6,337 | 4,722 | 8,704 | ||||||||||||
Operating Income (Loss)
|
3,282 | 2,064 | (970 | ) | 4,872 | |||||||||||
Net Income (Loss)
|
1,200 | 650 | (2,209 | ) | 6,453 | |||||||||||
Basic Earnings (Loss) Per Share
|
0.08 | 0.04 | (0.14 | ) | 0.41 | |||||||||||
Diluted Earnings (Loss) Per Share
|
0.08 | 0.04 | (0.14 | ) | 0.41 |
Per share amounts for the quarters and the full years have each been calculated
separately. Accordingly, quarterly amounts may not add to the annual amounts because of
differences in the average shares outstanding in each period.
|
F-27
(16) |
Valuation and Qualifying Accounts
|
Balance at | Provision | Balance at | ||||||||||||||
Beginning | Charged to | Accounts | End of | |||||||||||||
of Year | Profit & Loss | Written Off | Year | |||||||||||||
Year ended December 31, 2007
|
||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 126 | | $ | (38 | ) | $ | 88 | ||||||||
Year ended December 31, 2008
|
||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 88 | $ | 3 | $ | (7 | ) | $ | 84 | |||||||
Year ended December 31, 2009
|
||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 84 | $ | 929 | $ | (938 | ) | $ | 75 |
In 2009, the Company recognized a $914 loss associated with an uncollectable account
receivable at its subsidiary, ZKM.
|
F-28
Exhibit | Page | |||||
Numbers | Description | Number | ||||
|
||||||
3 | (a) |
Articles of Incorporation of the Company as filed with the Secretary of
the State of Wisconsin filed with Form S-1 as Exhibit 3.2 on December
23, 1997 are incorporated by reference.
|
||||
|
||||||
3 | (b) |
The Ladish Co., Inc. Amended and Restated By-Laws filed with Form 10-Q
as Exhibit 3(b) on November 5, 2003 are incorporated by reference.
|
||||
|
||||||
10 | (a) |
Form of Ladish Co., Inc. 1996 Long Term Incentive Plan filed with Form
S-1 as Exhibit 10.4 on December 23, 1997 is incorporated by reference.
|
||||
|
||||||
10 | (b) |
Form of Employment Agreement between Ladish Co., Inc. and certain of
its executive officers filed with Form S-1 as Exhibit 10.5 on December
23, 1997 is incorporated by reference.
|
||||
|
||||||
10 | (c) |
Amendment No. 1 dated April 13, 2001 to Credit Agreement dated April
14, 2000 among Ladish Co., Inc. and Firstar Bank Milwaukee, N.A. and
the Financial Institutions Parties thereto, filed with Form 10-K on
February 22, 2002 is incorporated by reference.
|
||||
|
||||||
10 | (d) |
Amendment No. 2 dated July 17, 2001 to Credit Agreement dated April 14,
2000 among Ladish Co., Inc. and Firstar Bank Milwaukee, N.A. and the
Financial Institutions Parties thereto, filed with Form 10-K on
February 22, 2002 is incorporated by reference.
|
||||
|
||||||
10 | (e) |
Amendment No. 3 dated April 12, 2002 to Credit Agreement dated April
14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and
the Financial Institutions Party thereto, filed with Form 10-K on March
25, 2003 is incorporated by reference.
|
||||
|
||||||
10 | (f) |
Amendment No. 4 dated December 31, 2002 to Credit Agreement dated April
14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and
the Financial Institutions Party thereto, filed with Form 10-K on March
25, 2003 is incorporated by reference.
|
||||
|
||||||
10 | (g) |
Amendment No. 5 dated December 30, 2003 to Credit Agreement dated April
14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and
the Financial Institutions Party thereto, filed with Form 10-K on
February 25, 2004 is incorporated by reference.
|
||||
|
||||||
10 | (h) |
Amendment No. 6 dated December 29, 2004 to Credit Agreement dated
April 14, 2000 among Ladish Co., Inc. and U.S. Bank National
Association and the Financial Institutions Party Thereto, filed with
Form 10-K on March 14, 2005 is incorporated by reference.
|
||||
|
||||||
10 | (i) |
Amendment No. 7 dated July 20, 2005 to Credit Agreement dated April 14,
2000 among Ladish Co., Inc. and U.S. Bank National Association and the
Financial Institutions Party Thereto, filed with Form 10-K on March 13,
2006 is incorporated by reference.
|
||||
|
||||||
10 | (j) |
Amendment No. 8 dated April 28, 2006 to Credit Agreement dated April
14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and
the Financial Institutions Party Thereto, filed with Form 10-K on March
7, 2007 is incorporated by reference.
|
||||
|
||||||
10 | (k) |
Amendment No. 9 dated April 25, 2007 to Credit Agreement dated April 14,
2000 among Ladish Co., Inc. and U.S. Bank National Association and the
Financial Institutions Party Thereto, filed with Form 10-K on February
22, 2008 is incorporated by reference.
|
Exhibit | Page | |||||
Numbers | Description | Number | ||||
|
||||||
10 | (l) |
Amendment No. 10 dated April 25, 2008 to Credit Agreement dated April
14, 2000 among Ladish Co., Inc. and U.S. Bank National Association and
the Financial Institutions Party Thereto, filed with Form 10-Q on April
29, 2008 is incorporated by reference.
|
||||
|
||||||
10 | (m) |
Second Amended and Restated Credit Agreement dated April 10, 2009 among
Ladish Co., Inc. and U.S. Bank National Association and the Financial
Institutions Party Thereto, filed with Form 8-K on April 10, 2009 is
incorporated by reference.
|
||||
|
||||||
10 | (n) |
Amendment No. 1 dated July 31, 2009 to Second Amended and Restated
Credit Agreement dated April 10, 2009 among Ladish Co., Inc. and U.S.
Bank National Association and the Financial Institutions Party Thereto,
filed with Form 10-Q on July 31, 2009 is incorporated by reference.
|
||||
|
||||||
10 | (o) |
Note Purchase Agreement dated May 16, 2006 between Ladish Co., Inc. and
the Purchasers listed therein, filed with Form 8-K on May 17, 2006 is
incorporated by reference.
|
||||
|
||||||
10 | (p) |
Note Purchase Agreement dated September 2, 2008 between Ladish Co.,
Inc. and the Purchasers listed therein, filed with Form 8-K on
September 2, 2008 is incorporated by reference.
|
||||
|
||||||
10 | (q) |
Third Amendment dated December 21, 2009 to Note Purchase Agreements
dated as of July 20, 2001 between Ladish Co., Inc. and the Purchasers
listed therein.
|
||||
|
||||||
10 | (r) |
Agreement dated September 15, 1995 between Ladish Co., Inc. and Weber
Metals, Inc. filed with Form S-1 as Exhibit 10.7 on February 23, 1998
is incorporated by reference.
|
||||
|
||||||
10 | (s) |
Agreement dated February 24,2005 between Ladish Co., Inc. and Huta
Stalowa Wola S.A. filed with Form 8-K on March 2, 2005 is incorporated
by reference.
|
||||
|
||||||
10 | (t) |
Ladish Co., Inc. Long-Term Incentive Plan dated January 1, 2006, filed
with Form 10-K on March 7, 2007 is incorporated by reference.
|
||||
|
||||||
14 |
Ladish Co., Inc. Policies filed with Form 10-K on March 25, 2003 is
incorporated by reference.
|
|||||
|
||||||
21 |
List of Subsidiaries of the Company.
|
|||||
|
||||||
23 |
Consent of Independent Registered Public Accounting Firm.
|
|||||
|
||||||
31 | (a) |
Written statement of the chief executive officer of the Company
certifying this Form 10-K complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934.
|
||||
|
||||||
31 | (b) |
Written statement of the chief financial officer of the Company
certifying this Form 10-K complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934.
|
||||
|
||||||
32 |
Written Statement of the chief executive officer and chief financial
officer of the Company certifying this Form 10-K complies with the
requirements of 18 U.S.C. §1350
|
1 Year Ladish Co., Inc. (MM) Chart |
1 Month Ladish Co., Inc. (MM) Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions